June 8 - A leading proxy advisory firm has advised Warner Bros. Discovery shareholders to oppose executive compensation and exit arrangements connected to the company's proposed merger with Paramount Skydance.
The recommendation from ISS directly targets the pay framework for CEO David Zaslav and other senior executives, which was structured around the $110 billion merger proposal that shareholders endorsed in April. While investors approved the merger itself, they previously delivered an advisory rebuke to compensation plans tied to the transaction.
Key elements cited by the adviser
- ISS identified Zaslav's base salary of $3 million and a target short-term bonus of $22 million as materially higher than peer medians.
- The proxy firm noted that, under the proposed pay packages, Zaslav could receive as much as $887 million if the sale is completed, calling the potential payout "extremely large."
- ISS's analysis pointed to a misalignment between CEO pay and company performance.
- The adviser characterized the compensation committee's response to last year's failed annual pay vote as inadequate. That proposal had secured only 40.5% of votes cast.
As a result of these findings, ISS recommended shareholders withhold support for five members of the compensation committee: Paul Gould, Richard Fisher, Debra Lee, Kenneth Lowe and Geoffrey Yang. The adviser said the committee failed to satisfactorily respond to shareholder concerns following the prior failed pay vote.
Separately, sources told news outlets last week that several state attorneys general, including those from California and New York along with other U.S. states, are preparing a lawsuit aimed at blocking the merger. The transaction also faces review in the European Union, which is scheduled to determine by July 7 whether to clear the deal.
Critics of the proposed combination, among them some Hollywood stars, have expressed concern that the merger could jeopardize film and television jobs. Those objections add to the governance questions raised by the proxy adviser over executive compensation tied to the transaction.
The ISS recommendation and the pending legal and regulatory processes together frame a range of governance and external risks for shareholders to weigh as the merger review progresses.
Summary
ISS has urged shareholders to vote against executive pay and exit packages linked to Warner Bros. Discovery's proposed $110 billion merger with Paramount Skydance, criticizing the scale of potential payouts for CEO David Zaslav and the compensation committee's response to a previous failed pay vote.