Proxy Advisory Firm ISS Criticizes Warner Bros. CEO David Zaslav’s $887 Million Extraordinary Golden Parachute

(SeaPRwire) –   A firm that advises major institutional investors on shareholder voting is urging support for Warner Bros. Discovery’s $77.7 billion acquisition by Paramount Skydance. However, it opposes a golden parachute plan that would grant executives a combined $1.35 billion upon the deal’s completion.

In a Wednesday report, Institutional Shareholder Services (ISS) stated that backing for the “extraordinary golden parachute” proposal—valued at $886.8 million for CEO David Zaslav and $466.2 million for other executives—is not justified. ISS criticized a $335 million “excise tax grossup” provision for Zaslav and the hundreds of millions he is set to receive simply due to the transaction occurring.

It remains uncertain whether Zaslav will hold a future position at the merged company or an affiliate, or continue in a senior capacity. Last year, when Warner Bros. was considering rival bids from David Ellison’s Paramount Skydance and Netflix, the Ellisons offered Zaslav a compensation package worth “several hundred million dollars,” as per deal disclosures. David Ellison also suggested Zaslav could become chairman of the new board, later enhancing the offer to a co-CEO and co-chairman role.

According to a proxy report filed last month, none of Warner Bros.’ executive officers have entered into employment agreements with Paramount, the combined entity, or its affiliates. Should Zaslav assume a chairman or CEO position, his golden parachute payment would not serve as compensation for job loss, as is typical, since he would be transitioning to another role within the merged company.

“The value disclosed in the golden parachute table for CEO Zaslav at over $886 million represents one of the highest golden parachute estimates ever observed, though the proxy notes that this value may decline depending on merger timing,” ISS wrote in its investor report.

The proxy advisor expressed “significant concerns” about the $335 million arrangement to cover an excise tax Zaslav will face from the acquisition, calling the grossup agreement “an extraordinary cost” that deviates from standard market practice. Such company-paid excise tax gross-ups are uncommon. They cover a 20% additional IRS tax triggered when an executive receives more than three times their average total compensation, effectively making the executive whole as if the tax never applied. ISS noted that other Warner Bros. executives are not receiving an excise tax gross-up.

Beyond the special tax treatment, ISS found that the bulk of Zaslav’s parachute payment stems from “single-trigger” benefits. Single-trigger acceleration means equity vests based solely on one event, typically a change in company ownership. Most large companies use double-trigger vesting, requiring both a change-in-control and the executive’s job termination. While other executives’ awards are subject to double-trigger terms, most of Zaslav’s outstanding equity will automatically accelerate upon the acquisition, ISS stated.

This includes awards granted to Zaslav by the Warner Bros. board in January, comprising over 3 million stock options and 2 million restricted stock units that ISS valued at $107 million, though the options could be worth less. ISS’s report indicates that over 94% of the value of Zaslav’s $887 million payment is attributable to the tax gross-up and equity that automatically vests because of the deal.

Warner Bros. disclosed that if the transaction occurred in 2027, Zaslav would incur no excise tax. However, Paramount Skydance and Warner Bros. aim to finalize the merger swiftly and anticipate closing by the end of the third quarter of 2026 in September.

Warner Bros. shareholders will vote on both the Paramount acquisition and the executives’ golden parachute payments on April 23, though the votes on the payouts are advisory and non-binding.

Warner Bros. did not reply to a request for comment on the ISS recommendation.