ISS Supports WBD-Paramount Merger While Criticizing David Zaslav’s Bonus Plan
Institutional Shareholder Services (ISS), a leading proxy advisory firm, has recommended that shareholders of Warner Bros. Discovery (WBD) support the company’s sale to Paramount Skydance. However, ISS urges investors to reject CEO David Zaslav’s potential $886 million golden parachute related to the merger, describing it as “extraordinary” in a negative light.
WBD stockholders are set to vote on both the sale and the golden parachute at a special meeting on April 23.
In its analysis, ISS highlighted the disclosed value of Zaslav’s potential payout as one of the highest golden parachute estimates ever recorded. The firm referenced figures laid out in an SEC proxy filing by WBD last month.
ISS particularly emphasized two aspects of the payout. Firstly, a significant portion—$335 million—is designated as an excise tax gross-up, which serves as a reimbursement for taxes. WBD has indicated that this amount could fluctuate depending on the merger’s timing, with Paramount anticipating the deal’s closure in the third quarter of 2026, pending shareholder approval and regulatory clearances.
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According to ISS, the excise tax gross-up is “an extraordinary cost that is inconsistent with common market practice,” noting that most companies have moved away from such entitlements as a standard of good governance.
Additionally, ISS pointed out that over $500 million of equity grants to Zaslav are structured as “single-trigger,” meaning they automatically vest upon the merger’s completion. “The auto-acceleration of unvested equity is not a best practice, and the full vesting acceleration of very recently granted equity intended to cover multiple years represents a windfall,” the firm stated. “Support for the golden parachute proposal is not warranted.”
This automatic vesting allows stockholders to receive some or all of their unvested shares ahead of schedule upon the occurrence of a single trigger event, in this case, WBD’s sale.
The overall payout package includes $34.2 million in cash severance.
The shareholder vote on the golden parachute will be advisory and non-binding.
Zaslav has consistently ranked among the highest-paid CEOs in the media sector, often appearing at the top across various industries.
In contrast, ISS supports the merger itself, underscoring that it followed a competitive sales process and offers a significant premium over the unaffected WBD share price, providing liquidity and certainty of value to shareholders.
Paramount is set to acquire WBD for $31 per share in cash, valuing the deal at an enterprise value of $110 billion. It recently secured $24 billion in equity commitments from three Middle Eastern funds. Industry concerns loom over the merger of these two major Hollywood studios, which would carry a substantial debt load. Paramount anticipates at least $6 billion in cost savings, which may lead to significant layoffs.
The merger follows the resignation of Paramount’s second-in-command, Jeff Shell, who stepped down amid a lawsuit from professional gambler RJ Cipriani alleging securities law violations and breach of contract. An external investigation concluded that the allegations did not constitute a violation of securities law, but Shell opted to leave his positions to focus on the ongoing lawsuit.
