CEO pockets $83m as media giant cuts jobs
Investors in Warner Bros Discovery slam payout as company loses US$3b in year
David Zaslav, the chief executive of Warner Bros Discovery, received US$49.7 million ($83.8m) in compensation last year, a 26 per cent increase from the previous year, according to a proxy statement filed on Friday with the US Securities and Exchange Commission.
It is common for CEOs in media to receive lavish pay packages. Zaslav’s compensation for 2023 is notable, however, because Warner Bros Discovery is not exactly a portrait of health. It owns Newshub in New Zealand, which it is closing down, citing heavy losses.
Company losses totalled US$3 billion in 2023, which was actually an improvement from US$7b in losses the year before. Revenue fell 4 per cent, largely because of the company’s atrophying cable television business, which includes CNN.
In addition, Warner Bros Discovery shareholders sent a clear message about Zaslav’s pay at the company’s most recent annual meeting: It’s too high.
In a nonbinding “say on pay” vote, only 50.8 per cent of shareholders approved of the US$39.3m he was paid in 2022. Approval by less than 70 per cent is considered “low support” by ISS, a leading corporate governance firm.
For 2023, the Warner Bros Discovery board adjusted compensation formulas for its top executives. The adjustment involved certain bonuses — tying them more to the generation of free cash flow, which is helpful in paying down debt, and less to the company’s stock price. (Shares have lately traded at about US$8, down from US$24 two years ago).
In terms of free cash flow, Warner Bros Discovery had a spectacular 2023. Free cash flow totalled US$6.2 billion, an 86 per cent increase from the year before, vastly more than Wall Street had expected. That was partly a result of improved financials at the company’s streaming division, which became profitable. The union strikes that shut down Hollywood for six months also contributed, saving on production costs.
The money allowed Warner Bros Discovery to trim its total debt by 11 per cent, to US$44.2b, in 2023.
Zaslav’s compensation for 2023 included a US$3m base salary and long-term stock awards of US$23m, according to the proxy. He also received US$22m in cash, a payment guaranteed by a 2021 employment contract and related to his role in merging Discovery and WarnerMedia. (In 2021, Zaslav, then running Discovery, received compensation valued at US$246.6m).
An additional US$1.6m was related to security and personal use of the company’s corporate jet.
“We were impacted by the changing landscape of advertising spending and continued weakness in the advertising market overall; declines in linear television viewing; increased competition from other traditional media companies and the enhanced presence of large technology companies in the media space; lingering effects of the Covid-19 pandemic on movie-theatre attendance,” Warner Bros Discovery said in the proxy.
Despite those challenges, Zaslav “provided exceptional leadership and delivered on several financial, operational and strategic priorities,” the company said. (It also gave hefty raises to its chief financial officer, president of streaming, chief revenue and strategy officer, and international president).
To compare, Robert Iger, Disney’s CEO, received a pay package worth US$31.6m in 2023, a 31 per cent decline from 2021. (In the interim, he retired and unretired).
Ted Sarandos, Netflix’s co-CEO, received US$49.8m, on par with a year earlier. Bob Bakish, CEO of the troubled Paramount Global, was paid US$31.3m in 2023, down 2 per cent.
Pay packages like these — when entertainment companies have been walloped by the shift to streaming from traditional television — played a major role in the union strikes.
“They plead poverty, that they’re losing money left and right when giving hundreds of millions of dollars to their CEOs,” Fran Drescher, the president of the actors’ union, said at a July rally. “It is disgusting.”
Most of the big media companies slashed costs in 2023, laying off thousands of people and announcing plans to make fewer movies and TV shows. But Zaslav and his lieutenants have been particularly aggressive, even shelving nearly finished content like Batgirl and Coyote vs. Acme.
“We said no sacred cows,” Zaslav said at The New York Times’ DealBook Summit in November.