It pays to pull off a massive media merger.
Discovery chief David Zaslav is certainly being handsomely rewarded for his role in pulling off the merger agreement between his company and WarnerMedia. A day before AT&T announced it was spinning off WarnerMedia and combining it with Discovery, Zaslav received 14.8 million stock options on Sunday as part of a contract extension, which the Wall Street Journal reports are worth $190 million. That value could change, of course, over the course of their eight-year term, particularly if the pact with WarnerMedia fails to bear fruit. Because of the way that options work the total amount could be substantially lower or higher depending on where the stock lands when the awards vest. Moreover, the stock needs to hit certain proscribed levels by a specific date in order for Zaslav to get the difference between the stock price and the equity value when it is exercisable.
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The first set of options, which vest on May 16, 2022 are priced at $35.65 per share, while the final set, which vest on Dec. 31, 2027 are priced at $43.33. The stock is currently trading at just over $32 a share. Zaslav’s contract was extended by seven years on Tuesday. He will head the combined WarnerMedia and Discovery, which will be renamed. Zaslav has been criticized for his lavish compensation packages in the past. In 2018, for instance, he earned $129 million in salary, bonuses and options. Last year, that fell to $37.7 million in total compensation.
The merger with WarnerMedia comes just two years after AT&T bought the entertainment company behind Warner Bros., HBO, and TNT for $85 billion. But the pact strained AT&T’s balance sheet and it is under pressure to expand its 5G capabilities, something that requires ample capital. In exchange for off-loading WarnerMedia, AT&T will have a 71% stake in the new entity. It will also receive $43 billion in a combination of cash, debt and WarnerMedia’s retention of certain debt.
A spokesperson for Discovery did not immediately comment on Zaslav’s stock awards.
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