David Zaslav Could Earn $800M in Paramount–WBD Deal

Following a months-long saga that resulted in Paramount winning the Warner Bros. Discovery sweepstakes and purchasing the company, Warner Bros. Discovery CEO David Zaslav stands to make hundreds of millions of dollars. 

According to CNBC, Zaslav will get about $800 million from the deal due to "an obscure tax rule originally designed to limit CEO pay." 

More About the Payout

CNBC reports that, per SEC filings, Zaslav's hundreds of millions will come from severance and other stock awards/payments should the deal go through. It would include $500 million in share awards, $115 million in vested stock awards, and $34 million in cash. 

Not only that, but there would be up to $335 million in possible payments because of the "golden parachute" excise tax. This tax was created in the 1980s by Congress to limit outsized payouts to chief executives following a change of control or sale. The tax has a 20% rate and applies when the executive payout exceeds 3x their typical base salary and target annual bonus. 

Well, per the deal with Paramount, they've agreed to pay his excise tax if other payments trigger that tax. However, the reimbursement declines over time and will reach zero if the deal doesn't close by 2027. The hope for Paramount is that the deal will close by this fall. 

Paramount Board Comments 

According to the Paramount board, the reimbursement would be paid by Paramount, not Warner shareholders. Thus, without the payment, also known as the "gross up," the board had this to say: “Mr. Zaslav would be at a substantial disadvantage in terms of excise tax exposure relative to the previously proposed transaction with Netflix." 

Without the tax, Zaslav's payout could be around $667 million. 

CNBC reports that management experts say that, rather than limiting pay, the golden parachute rule incentivizes CEOs to sell companies and reap rewards. Also, the tax has resulted in companies and their shareholders to spend even more to cover those taxes.