Warner Bros. Discovery CEO David Zaslav stands to receive a payout exceeding $800 million following Paramount’s acquisition of a majority stake in the company, a figure that underscores the complexities of executive compensation and a decades-old tax rule intended to curb excessive payouts. The potential windfall, detailed in filings with the Securities and Exchange Commission, includes approximately $500 million in share awards, $115 million in vested stock, and $34 million in cash, according to CNBC reporting.
A significant portion of Zaslav’s potential earnings – up to $335 million – stems from a provision designed to offset the “golden parachute” excise tax. Originally enacted by Congress in the 1980s, this tax imposes a 20% penalty on severance payments exceeding three times an executive’s base salary and annual bonus. Paramount has agreed to cover this tax for Zaslav, a move that, according to the Paramount board, ensures he isn’t disadvantaged compared to previous acquisition discussions with Netflix, which would not have triggered the excise tax.
Without this “gross up” payment for the excise tax, Zaslav’s payout would be around $667 million, according to CNBC. The reimbursement amount is subject to a sliding scale, decreasing over time and potentially reaching zero if the deal isn’t finalized until 2027. Paramount anticipates completing the acquisition, pending regulatory approval, by this fall.
The substantial payout has reignited debate surrounding golden parachutes and their effectiveness. While initially intended to limit executive compensation, management experts suggest these provisions have instead incentivized CEOs to pursue company sales, resulting in increasingly lucrative rewards. Jeffrey Gordon, co-director of Columbia Law School’s Ira M. Millstein Center for Global Markets and Corporate Ownership, noted in a research paper that golden parachutes have turn into “platinum in many cases,” primarily benefiting the CEO while potentially leading to layoffs and hardship for other employees.
The deal itself, initially a pivot from a proposed merger with Netflix, was described by Zaslav as “whiplash-y” in a town hall meeting with Warner Bros. Discovery employees, according to the Recent York Post. The shift to a partnership with Paramount Skydance followed complications in negotiations with Netflix. Zaslav had recently touted the success of Warner Bros. Discovery films at the Academy Awards, where they secured 11 Oscars, as reported by The Guardian.
The $110 billion deal will notice Paramount Skydance acquire Warner Bros. Discovery. Other Warner Bros. Discovery executives are also in line for significant payouts, including JB Perrette, head of global streaming and games, who could receive $142 million, and Gunnar Wiedenfels, the chief financial officer, who is expected to receive $120 million.
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