warner bros discovery CEO David Zaslav could be paid more than $800 million from the Paramount Skydance deal, highlighting an opaque tax system originally designed to limit CEO pay.
Mr. Zaslav could collect hundreds of millions of dollars in severance and other stock awards and payments following Paramount’s acquisition of WBD, according to SEC filings. The payment will include approximately $500 million in stock-based compensation, approximately $115 million in vested stock-based compensation and $34 million in cash, according to the filing.
The deal also includes a potential payment of up to $335 million to Zaslav, known as the “golden parachute” sales tax. The tax was originally created by Congress in the 1980s, and many were created to limit large payouts to chief executives in the event of a change of control or the sale of a company. The 20% tax is triggered if an executive’s compensation exceeds three times his or her regular base salary and target annual bonus.
As part of the acquisition, Paramount agreed to pay Mr. Zaslav’s sales tax if his other payments resulted in sales tax. The redemption amount will decrease over time and reach zero when the deal closes in 2027. Paramount said it aims to complete the transaction by this fall, pending regulatory approval.
Paramount’s board said the redemption would be paid by Paramount, not Warner shareholders.
Without the payment, known as a “gross-up,” the board said “Mr. Zaslav would be placed at a significant disadvantage in terms of excise tax liability compared to his previously proposed transaction with the company.” Netflix”, this would not have involved a golden parachute tax.
The deal is expected to pay Zaslav approximately $667 million before taxes.
Management experts said the golden parachute rule does not limit compensation, but rather incentivizes CEOs to sell their companies and earn higher compensation than ever before. This tax forced corporations and their shareholders to spend more to pay the special tax.
“Over time, the golden parachute has become increasingly lucrative, and in many cases platinum, especially as executive compensation has fundamentally shifted toward stock-based pay,” Jeffrey Gordon, co-director of the Ira M. Milstein Center on Global Markets and Corporate Ownership at Columbia Law School, wrote in a paper. “Even if there is pain for those laid off when the company is sold and layoffs occur, there is clearly one winner: the CEO with the golden parachute.”
Correction: Paramount Skydance will acquire Warner Bros. Discovery. A previous version of this article incorrectly characterized this transaction.
