Amid Sales Review, Warner Bros. Discovery Clarifies That CEO David Zaslav’s Employment Agreement Will Let Him Retain Stock Options in the Event of a ‘Change in Control’

Warner Bros. Discovery is reassuring president and CEO David Zaslav and other top execs that they will still be able to keep their stock options even if the company is sold.

WBD last month announced that it had received in-bound acquisition interest from “multiple parties” and has commenced a process to review such offers. David Ellison’s Paramount Skydance is known to have submitted bids for WBD in its entirety, while Comcast and Netflix have been putting together bids for the company’s streaming and studio operations.

The potential bidding war for WBD emerged after Warner Bros. Discovery started a process of splitting in two. In June, the media conglomerate said it would separate into two companies: one entity called Warner Bros. (comprising streaming and studios), to be led by Zaslav as CEO, and the other called Discovery Global (TV networks and Discovery+), which will be headed by current CFO Gunnar Wiedenfels. The separation is expected to be completed by April 2026.

With the strategic review process, WBD’s board said it will consider a deal structure that would enable a merger of Warner Bros. with a third-party acquirer alongside a spin-off of Discovery Global to shareholders.

The original plan for the separation was to spin off Warner Bros. an independent company, with Discovery Global the remaining entity. In an SEC filing Thursday, Warner Bros. Discovery said it was clarifying that if there’s a “reverse spinoff” in which Warner Bros. is the remaining entity and Discovery Global gets spun off, the terms of Zaslav’s employment agreement will remain in effect. The amendment specifies that a “reverse spinoff” that occurs before Dec. 31, 2026, will be treated the same as the originally planned separation for purposes of the forfeiture condition that applies to Zaslav’s signing options.

In addition, Zaslav’s signing options will remain “outstanding and eligible to vest and be exercised” following Dec. 31, 2026, to include not only a reverse spinoff but also an entry into a “definitive agreement for a transaction that would, upon completion, constitute a ‘change in control’ of WBD, but excluding any sale of Discovery Global or all or substantially all of its assets.”

If WBD enters into a “qualifying change in control agreement” before Dec. 31, 2026, and have not completed a separation (or reverse spinoff) by then, the amendment to Zaslav’s employment agreement provides that the term of the employment agreement will continue until Dec. 31, 2030 (as would have been the case had the separation been completed prior to the December 2026 end date) rather than ending Dec. 31, 2027. “This extension is intended to secure Mr. Zaslav’s leadership of WBD for the same period that we had contracted to have him serve as the Chief Executive Officer of Warner Bros. following a Separation,” Warner Bros. Discovery explained. “This ensures that, if the Strategic Review leads to our entering into a [qualifying change in control agreement] before [Dec. 31, 2026], Mr. Zaslav will have the same opportunity to vest in, and incentives from, the Signing Options that he would have received had a Separation been completed in 2026.”

The amendment also clarifies that “certain internal restructuring transactions necessary to effect any of the strategic alternatives that we are reviewing will not constitute a ‘Change in Control’ or ‘Qualifying Transaction’ for purposes of the Zaslav arrangements, and will not result in accelerated vesting or the release of any forfeiture conditions on the Signing Options.”

Warner Bros. Discovery said it also has sent letters to its other executive officers who have entered into new employment agreements that are subject to, and contingent upon, a separation (including Wiedenfels, chief revenue officer Bruce Campbell and head of streaming and games JB Perrette) clarifying that a “reverse spinoff” shall be treated in the same manner as a “separation” for all purposes of such agreements.

The new WBD employment agreement Zaslav entered into June 12 will “significantly reduce his target annual compensation, including lowering his annual cash compensation opportunity and reorienting the total pay mix toward long-term incentives,” according to an SEC filing. The WBD board’s compensation committee said it believes the new structure “will foster a stronger alignment with stockholders and incentivize sustained, long-term value creation.”

In 2024, Zaslav’s pay package increased 4.4% to total compensation of $51.9 million, including a cash bonus of $23.9 million and $23.1 million in performance-based restricted stock grants.

Once the WBD split is completed, Zaslav will become the CEO of Streaming & Studios with a term of employment that runs through Dec. 31, 2030. He will have a base salary of $3 million per year for the duration of the term, as he does now. Following the separation, Zaslav’s target annual cash bonus opportunity will be reduced to $6 million, with the actual payout based on the achievement of performance goals — down from a cash bonus target of $22 million under his previous agreement. Zaslav will also be eligible to receive annual equity awards following the separation or reverse spin under the new Warner Bros. equity incentive plan with a target value of $15.5 million the first year that he receives an equity grant from the company; that will be reduced to an annual target value of $7.5 million per year thereafter during the term of his employment. According to Zaslav’s previous Warner Bros. Discovery agreement, his equity bonus target value per year was $23.5 million.

Zaslav also received a one-time “inducement” that the board’s compensation committee believes “will incentivize the successful completion of the Separation and stockholder value creation.” That award consists of 20,898,776 stock options in the form of 60% performance-vesting stock options and 40% time-based stock options.