Warner Bros. Discovery has reassured President and CEO David Zaslav and other executives that they will retain their stock options if the company is sold.
WBD announced last month that it had received inbound acquisition interest from “multiple parties” and had begun the process of considering such offers. David Ellison’s Paramount Skydance is known to have made a bid for the entire WBD company, while Comcast and Netflix are finalizing bids for the company’s streaming and studio operations. The Wall Street Journal reports that Warner Bros. Discovery hopes to complete the deal by the end of the year, with a November 20 deadline for “non-binding first round bids.”
A potential bidding war for WBD emerged after Warner Bros. Discovery began the process of splitting it in two. In June, the media conglomerate announced it would separate into two companies. One will be Warner Bros. (consisting of HBO Max streaming and studios), which will be led by Zaslav as CEO, and the other will be called Discovery Global (TV network and Discovery+), which will be led by current CFO Gunnar Wiedenfels. Separation is expected to be completed by April 2026.
WBD’s board of directors said its strategic review process will consider a transaction structure that would allow for a merger of Warner Bros. with a third-party acquisition company, in parallel with a spin-off to Discovery Global’s shareholders.
The original plan for the split was to spin off Warner Bros. as an independent company, with Discovery Global as the remaining entity. Warner Bros. Discovery said in an SEC filing Thursday that Warner Bros. has made it clear that the same terms of Zaslav’s employment agreement would apply in the event of a “reverse spin-off” in which Discovery Global is separated from Warner Bros.’ remaining entities. The proposed amendments specify that any “reverse spin-off” that occurs before December 31, 2026 will be treated the same as an originally contemplated separation for purposes of the disenfranchisement conditions applicable to Zaslav’s contractual options.
Additionally, the proposed amendment to Zaslav’s employment agreement states that his signature options would remain “outstanding and eligible to vest and be exercised” not only in the event of a reverse spin-off, but also if WBD or the new Warner Bros. enters into a “definitive agreement relating to a transaction that, upon consummation, will result in a ‘change of control’ of WBD but excludes a sale of all or substantially all of Discovery Global or its assets.”
If WBD enters into a “qualified change of control agreement” before December 31, 2026 and has not completed a separation (or reverse spin-off) by then, the amendments to Mr. Zaslav’s employment agreement will not affect his employment agreement. provides that the period will not end on December 31, 2027, but will continue until December 31, 2030 (as if the separation had been completed before the end date of December 2026). “This extension” is intended to secure Mr. Zaslav’s leadership of WBD for the same period of time as the agreement under which Mr. Zaslav will serve as CEO of Warner Bros. post-separation,” Warner Bros. Discovery explained. “This ensures that if strategic considerations result in us entering into a (Qualified Change of Control Agreement) before (December 31, 2026), Mr. Zaslav will have the same opportunity to invest in, and incentives from, the signing options that he would have received had the separation been completed in 2026.”
The proposed amendments also clarify that “certain internal restructuring transactions necessary to implement any of the strategic alternatives we are considering do not constitute a ‘change of control’ or a ‘qualifying transaction’ for purposes of the Zaslav Agreement and do not result in accelerated vesting or termination of the signature option disenfranchisement conditions.”
Warner Bros. Discovery said in Thursday’s SEC filing that it also sent letters to other executive officers who entered into new employment agreements subject to (and attached to) the separation, including Wiedenfels, Chief Revenue Officer Bruce Campbell, and Head of Streaming Games JB Perrett, and similarly clarified that a “reverse spin-off” would be treated the same as a “separation” for all purposes of such agreements.
The new WBD employment agreement that Zaslav signed on June 12 will “significantly reduce his target annual compensation, including reducing the opportunity for annual cash compensation and realigning his total salary toward long-term incentives,” according to an SEC filing. The remuneration committee of WBD’s board of directors said it believes the new structure will “strengthen collaboration with shareholders and foster sustainable, long-term value creation.”
Mr. Zaslav’s total compensation for 2024 was $51.9 million, an increase of 4.4% from the previous year, which included a $23.9 million cash bonus and $23.1 million in performance-based restricted stock grants.
Under the new deal, Zaslav’s base salary during his tenure as Warner Bros. CEO will remain the same at $3 million a year. Following the separation (or “reverse spin-off”), Mr. Zaslav’s annual cash bonus target will be reduced to $6 million, with his actual payment determined based on the achievement of performance goals, down from the $22 million cash bonus target under his current agreement. Mr. Zaslav has also set a target amount of $15.5 million in the first year of receiving an equity grant from the company under Warner Bros.’ new equity incentive plan, which will also make him eligible for an annual equity award after separation or reverse spin. The annual target amount will then be reduced to $7.5 million per year for the duration of his employment. Zaslav’s current Warner Bros. Discovery contract calls for an annual stock bonus target of $23.5 million.
On June 12, Mr. Zaslav also received a one-time “solicitation” that the board’s compensation committee believes “encourages the successful completion of the separation and the creation of shareholder value.” This compensation consists of 20,898,776 stock options in the form of 60% performance stock options and 40% time-based stock options. In addition, Mr. Zaslav will receive 3,052,734 stock options on January 2, 2026, which will be subject to the same split of performance-based and time-based vesting conditions (provided he remains employed on that date). Depending on various scenarios and unforeseen circumstances, Zaslav may not be able to exercise all of these stock options.
Prior to the separation or spin-off, Mr. Zaslav will continue to serve as CEO of Warner Bros. Discovery under his prior agreement, with the same annual base salary, cash bonus opportunity and performance-based vesting of restricted stock units.
