Stockholders have expressed serious displeasure with 2022 executive compensation at Warner Bros. Discovery led by CEO David Zaslav, according to the result of a vote at the annual meeting Monday that was filed with the SEC today.
The so called say-on-pay vote saw nearly half of all votes cast coming out against last year’s comp, which was ratified with just over 50% approval. The votes are advisory only, meaning they’re non-binding, but they do have a impact. Most public companies get over 90% approval and anything under 70% is considered pretty dismal.
In the case of a high percentage of votes against, management will often engage with shareholders and try to tweak things for the following year – in this case 2023. Netflix, Disney (under Bob Iger’s previous tenure) and others have faced shareholder dissent.
WBD’s annual meeting was virtual and only accessible to WBD shareholders. According to today’s filing, there were a very close 770.6 million votes against 2022 pay, with 795.3 million voting to ratify.
Companies lay out compensation policies and pay numbers for their top five highest-remunerated executives in proxy statements filed with the SEC early each year for the year before. CEO pay makes the headlines — media CEOs in particular these days as writers strike in large part for better pay, and layoffs continue across the entertainment industry whose chief executives are an extremely well paid group. Zaslav’s compensation for 2022 totaled nearly $39.3 million. The year before, in 2021, the figure was $246 million, swelled by a large option grant. Equity awards often vest over time, as that grant did, and only if the stock hits certain levels.
For 2022, Zaslav had a base salary of $3 million, stock and option awards of, respectively, $1.2 million and $1.4 million, and non-equity incentive plan compensation (like a cash bonus) of $21 million.
Public companies have been required to hold say-on-pay votes since 2010 under the Dodd-Frank Act. Most hold one every year. Legacy Discovery (which merged with Warner Media in April of 2022) held say-on-pay votes every three years, but will now move to an annual vote as well.
ISS, an influential shareholder advisory service, recommended a vote against WBD’s compensation in a report last month. It’s a bit technical — as is science, and art, of executive pay — but says, “A vote AGAINST this proposal is warranted.”
“The CEO’s employment agreement was recently materially amended and maintains a problematic severance arrangement. In addition, the CEO’s annual bonus and target bonus opportunity remain outsized. Annual equity grants continue to utilize a short performance period, and disclosure of strategic goal targets and performance under both annual and long-term incentive programs is lacking,” ISS said.
“Though some positive changes were made in response to shareholder feedback, someStoc changes appear to be merely incremental improvements, which will be further analyzed in next year’s report.” Earlier this year, WBD announced that part of Zaslav’s compensation will now be linked to free cash flow.
