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Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, has recommended that the Compensation Discussion and Analysis be included in this proxy statement.
This report is respectfully submitted by the members of the Compensation Committee of the Board.
Paul A. Gould Chair
Richard W. Fisher
Steven A. Miron
Geoffrey Y. Yang
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) analyzes and discusses our executive compensation programs and provides information about the compensation we paid to our CEO, Chief Financial Officer (“CFO”), and the three other most highly compensated executive officers who were serving as executive officers at fiscal year end (December 31, 2022) (collectively with the CEO and CFO, the “Named Executive Officers” or “NEOs”). The Compensation Committee (referred to in this CD&A as the “Committee”) of the Board oversees all aspects of NEO compensation. The 2022 NEOs are:
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David M. Zaslav, President and Chief Executive Officer | Gunnar Wiedenfels, Chief Financial Officer | Bruce L. Campbell, Chief Revenue and Strategy Officer | Jean-Briac Perrette, President and CEO, Global Streaming and Games | Gerhard Zeiler, President, International |
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| 2022 Stockholder Engagement | |
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| Looking Ahead: 2023 Executive Compensation Program | |
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Compensation Philosophy & Practices
Compensation Philosophy
Our compensation philosophy is to pay for performance, encourage excellence, retain our high-performing executive talent across the blended organization and reward executives who deliver.
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| Our executive compensation programs are designed to implement our pay-for-performance compensation philosophy, as follows: ■ensure a strong alignment of the interests of our stockholders and employees; ■pay for performance, both short-term and long-term; ■pay competitively, across salary grades and geographies; and ■apply compensation policies in an internally consistent manner. |
As part of this design, the Committee is regularly provided with information regarding our program design, bonus targets and equity grant targets. The Committee reviews the results of the annual bonus and equity grant processes to assess whether we are effectively implementing our pay-for-performance philosophy. The Committee determines the group of executives over which it will retain oversight, which includes all of our executives whom the Board has determined to be "officers" as defined by Exchange Act Rule 16a-1(f) (such executives are referred to collectively as "Section 16 Officers"). All of our NEOs are Section 16 Officers.
Performance-Based Pay
We believe that our executive compensation program plays a key role in our operating and financial success. We place great importance on our ability to attract, retain, motivate and reward talented executives who can continue to grow our business and engage audiences around the world.
We seek to design compensation packages for individual executives based on the scope of the executive’s responsibilities, the executive’s proven performance, and a determination of what is competitive compensation in the market for similar roles, if such data is available. We continue to refine our compensation programs to strengthen the link between pay and performance and to effectively balance executive and stockholder interests. See "Looking Ahead: 2023 Executive Compensation Program" for details on changes we have made to our executive compensation program.
The Committee seeks to deliver the majority of target total direct compensation for each NEO in performance-based pay, with the balance between the annual cash bonus and LTI awards determined by the Committee as appropriate for each role. Approximately 92% of the CEO’s 2022 target total compensation was performance-based and approximately 70% of the 2022 target total compensation for our other NEOs was performance-based. The Committee has typically awarded a significant portion of each NEO’s performance-based compensation in the form of LTI awards, including stock options and, for the CEO, PRSUs. The Committee believes the use of stock options and PRSUs aligns the interests of our NEOs with our stockholders and will motivate the NEOs to achieve our business goals and strategies and increase stockholder value. We believe the mix of compensation for our NEOs is competitive with the compensation practices specific to our industry and appropriately balanced to benefit WBD in both the short- and long-term so as not to encourage our NEOs to take undue risks.
When determining compensation payouts for 2022 performance, the Committee considered that 2022 was an extraordinarily complex year which included the closing of a transformational acquisition, extensive post-closing adjustments and integration activities, and a challenging macroeconomic environment with considerable pressure on the media and entertainment industry. In spite of these complexities, the Committee believed our CEO and NEOs delivered outstanding performance in 2022, as evidenced by WBD's delivery of our external guidance and performance against the financial and strategic metrics established by the Committee for 2022 cash bonus awards and LTI awards. The Committee believes the 2022 compensation to our CEO and NEOs is commensurate with WBD's performance, recognizes their exceptional leadership during a challenging year and is aligned with our pay-for-performance philosophy. Annual cash bonus awards are more fully described in “NEO Compensation in 2022—Annual Cash Bonus Awards,” beginning on page 52, and our LTI compensation program is more fully described in “NEO Compensation in 2022—Long-Term Incentive Compensation,” beginning on page 57.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Long-Term Employment Contracts
We value fixed-term employment agreements when appropriate. We believe that entering into fixed-term employment contracts with our senior executives provides management stability and helps ensure that we can access their services to drive our strategic objectives over the mid- to long-term. In 2022 , each of our NEOs was subject to a fixed-term employment agreement. The terms of these agreements generally incorporate initial compensation elements, including a base salary, annual cash bonus target, and annual equity target. We also may make special “sign on” equity awards from time-to-time, typically to replace equity that an executive left behind when leaving another organization to join WBD. In the case of promotions, we may award additional equity to reflect the increase in the executive's responsibilities, or to bring the executive's total target direct compensation in line with executives in similar roles at peer companies.
The Committee approves the terms of employment agreements consistent with our overall compensation philosophy, taking into account appropriate compensation elements to secure the services of our senior executives for multi-year terms. When permitted by local law, these agreements also include customary restrictive covenants that protect our business from unfair competition after an executive separates from employment with us.
Compensation Decision Making
Role of the Compensation Committee
The Committee operates pursuant to a written charter, a copy of which is posted to the Investor Relations section of our corporate website at ir.wbd.com. The Committee is responsible for developing, implementing and regularly reviewing adherence to our compensation philosophy. In fulfilling these responsibilities, the Committee:
■regularly reviews best practices and market trends in executive compensation and modifies our programs, as the Committee deems appropriate, to support our business goals and strategies;
■conducts an annual risk assessment of our compensation programs;
■aligns compensation decisions with our corporate objectives and strategies;
■reviews and approves the amounts and elements of compensation and the terms of new employment agreements or extensions to existing employment agreements for our CEO, other NEOs and other Section 16 Officers; and
■approves the annual financial and strategic goals relevant to the compensation of our CEO and CFO, and the bonus design and metrics for our NEOs and other Section 16 Officers.
The Committee consults with the Board regarding the terms and structure of the CEO’s employment agreement, and reports out to the Board on its annual compensation decisions for the CEO.
Role of the CEO in Compensation Decisions
The CEO plays a significant role in the compensation decisions for the other NEOs and Section 16 Officers. The CEO makes annual recommendations to the Committee regarding base salary, annual cash bonus, and LTI awards for each of the Section 16 Officers, including the other NEOs. The CEO also recommends to the Committee proposed terms of new employment agreements and amendments to existing agreements for the other NEOs, working closely with Adria Alpert Romm, our Chief People and Culture Officer, to develop these recommendations. The CEO’s recommendations are based on:
■his assessment of various strategic and financial factors, generally including the executive’s annual and
long-term performance as documented in detailed self-assessments prepared by the executive and performance reviews prepared by the CEO;
■our enterprise-wide performance, as well as that of the line of business or function that the executive leads or provides services to;
■the executive’s compensation relative to that of our other executives (internal equity);
■the executive’s compensation relative to that of executives in similar roles at the companies in our peer group (external competitiveness);
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
■our overall approach to compensation for employees for the year; and
■contractual obligations under the executive’s employment agreement.
The CEO also provides the Committee with proposed strategic goals for himself. The Committee reviews and modifies these goals to ensure that they align with the approved strategies and priorities set by the Board and then discusses the revised goals with the CEO, including the weightings to reinforce which goals have the greatest priorities for the year. The degrees to which the CEO achieves the goals are used, in part, to determine the annual bonus and, in part, the vesting of his annual PRSU awards. The CEO provides his own assessment of his performance and achievement of goals but does not otherwise participate in the Committee’s deliberations or decisions regarding his annual compensation.
Relationship with and Role of the Independent Compensation Consultant
During 2022, the Committee retained two independent compensation consultants - Pay Governance LLC ("Pay Governance") and The Croner Company (“Croner”) - to advise it on compensation matters generally and specifically on compensation decisions for our Section 16 Officers. Croner had served as independent compensation consultant to Discovery, Inc. for several years prior to the WarnerMedia Transaction. After the closing of the WarnerMedia Transaction in April 2022, the Committee interviewed several potential compensation consultants and determined that it would engage Pay Governance as the independent compensation consultant for WBD. The Committee continued to retain Croner throughout 2022 and up through the date of filing of this proxy statement for purposes of continuity and historical perspective. It is expected that Croner will cease to serve as an independent compensation consultant to the Committee following the filing of this proxy statement.
Pay Governance and Croner are each retained directly by, and report to, the Committee. Pay Governance and Croner assisted the Committee by providing the following services, among others:
■assisting in peer group selection and competitive benchmarking for executive officers and other senior executives used in the annual salary review, bonus and long-term incentive decisions;
■advising the Committee on competitive and best practices, including executive compensation trends, performance measures, and annual cash bonus and long-term incentive plan designs;
■advising on employee equity grants, executive employment agreements and other executive compensation matters;
■assisting the Committee with the review of its charter;
■providing an evaluation and assessment of risk in compensation program design, policies and procedures;
■reviewing this CD&A; and
■benchmarking director compensation for Board and committee service.
Prior to initially being engaged by the Committee in 2010, Croner historically had provided management with compensation survey data and performed custom surveys on industry compensation practices. In 2011, the Committee adopted guidelines to address the ongoing need for this survey work and to determine the process under which work by Croner for management would be permitted. The Committee authorized Croner to provide survey services to management of up to $60,000 per year. Non-survey work, or survey work that exceeds $60,000 in the aggregate in a single year, requires pre-approval by the Committee. In 2022, the only services provided by Croner to management were the pre-authorized survey services. The total fees we paid to Croner in 2022 (other than fees for Croner’s services to the Committee) were less than $60,000.
The Committee annually reviews its relationship with any engaged independent compensation consultant to determine if any conflicts of interest exist in their provision of services to the Committee. The Committee also regularly conducts independence reviews for any current or newly engaged compensation consultant. In its 2022 review, after considering the factors set forth in the applicable securities regulations and stock exchange rules, the Committee concluded that neither Pay Governance nor Croner had a conflict of interest with respect to the services they provide to the Committee. The Committee’s conclusion was based on the following:
■Pay Governance and Croner report solely to the Committee. Our management is not involved in the negotiation of fees charged by either firm or in the determination of the scope of work performed by either firm. The Committee has the sole authority to hire and terminate any independent compensation consultant;
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
■there are no business or personal relationships between Pay Governance or Croner and any member of the Committee or any executive officer of the Company;
■the Committee has guidelines to address limited survey work performed by Croner for the Company, and any other non-survey services that are proposed to be performed by Croner for the Company;
■the survey work performed by Croner was very limited, and no non-survey work was performed by either firm (other than services for the Committee);
■revenue from WBD (other than fees for services to the Committee) represented less than 1% of each of Pay Governance's and Croner's total revenue for 2022, and for each of the previous fiscal years in which Croner served as independent consultant to the Committee;
■Pay Governance and Croner disclosed their respective conflicts of interest policies to the Committee. The Committee believes that these policies provide reasonable assurance that conflicts of interest will not arise; and
■Pay Governance and Croner have each represented to the Committee that, per their respective conflicts of interest policies, neither firm nor any of its respective employees is a WBD stockholder.
Compensation Decisions Framework
The Committee generally makes decisions in the first 90 days of the calendar year regarding annual adjustments to base salary (“Annual Base Salary Review”), the payout amount for annual cash bonus awards with respect to the immediately preceding year (“Annual Bonus Review”), and annual LTI awards (“Annual LTI Review”) for our executive officers. This annual process includes a review of the following factors, designed to align the Committee’s compensation actions with our compensation principles and objectives:
■executive compensation market data from our peer group (discussed below);
■relevant employment contract requirements;
■self-evaluation of each NEO’s annual performance;
■the CEO’s evaluation of each NEO’s annual performance (other than Mr. Zaslav himself);
■achievement of annual financial goals under the ICP, the annual cash bonus program that applies to the NEOs other than the CEO and CFO; and
■achievement of financial and strategic goals that are set by the Committee each year for the annual cash bonus for the CEO and CFO and the PRSU awards to the CEO.
These factors are considered as a whole, with no specific weight given to any particular factor or factors.
Additional detail about the factors considered in the Committee’s compensation decisions is provided throughout this CD&A.
Peer Group Analysis and Tally Sheets
Peer Group Analysis
The Committee annually reviews data from a group of peer companies to support compensation decisions for the NEOs. The peer companies are chosen by the Committee to best match our scope of business in terms of revenues, free cash flow, market capitalization and enterprise value, complexity of operations and global scope, as well as proximity to the sectors of the media and entertainment industry in which we operate. The peer group also represents meaningful competition for us in the executive labor market. The Committee reassesses this list annually and considers the inclusion of new, relevant peers, and the elimination of companies from the peer group that no longer provide a strong basis for comparison (including removing peers that have been acquired or otherwise materially have changed their corporate structure).
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Due to the then-pending WarnerMedia Transaction, the Committee did not make any changes to the peer group or international peer group for purposes of its February 2022 compensation review and decisions. In May 2022, following the closing of the WarnerMedia Transaction, the Committee reviewed the peer group to determine which companies should be used to help inform compensation decisions for the new combined company. For this review, the Committee used the most recently-available proxy statement compensation data at that time, which was, in most cases, from proxy statements filed during the first half of 2022, as well as additional survey data provided to it by its compensation consultants. As a result of this review, the Committee took the following actions:
■removed AMC Networks, Inc., Lions Gate Entertainment Corp. and Sirius XM Holdings Inc. from the peer group as the Committee no longer believed these companies were appropriate comparators for an enterprise with the size and scope of operations of WBD;
■added Comcast Corporation and Meta Platforms, Inc. due to their comparable business operations, global reach and status as competitors in the executive labor market; and
■retained Activision Blizzard, Inc., Charter Communications, Inc., Electronic Arts Inc., Fox Corporation, Liberty Global plc, Netflix, Inc., Paramount Global and The Walt Disney Company as the Committee continued to believe this group of companies were appropriate comparators for WBD due to their strong focus on content, similar lines of business and international reach.
The Committee used the 2022-2023 Peer Group ("WBD Peer Group") set forth below for the new employment contracts entered into with the NEOs in 2022, as well as the 2022 Annual Base Salary Review and 2022 Annual LTI Review and other compensation decisions made in the fall of 2022 and in February 2023. Where appropriate, the Committee also used survey data provided by its compensation consultants or publicly available data from certain other companies to inform its decisions with respect to specific roles, such as for Gerhard Zeiler, our President, International or JB Perrette, our President and CEO, Global Streaming and Games.
2022-2023 Peer Group
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| Activision Blizzard, Inc. (ATVI) | Electronic Arts Inc. (EA) | Netflix, Inc. (NFLX) |
| Charter Communications, Inc. (CHTR) | Fox Corporation (FOX) | Paramount Global (PARA) |
| Comcast Corporation (CMCSA) | Liberty Global plc (LBTYA) | The Walt Disney Company (DIS) |
| Meta Platforms, Inc. (META) | |
Tally Sheets
The Committee regularly reviews tally sheets prepared for each of the NEOs to allow consideration of both current and historical compensation. The tally sheets allow the Committee to review an integrated snapshot of the individual and aggregated elements of each NEO’s compensation.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2022 Stockholder Engagement
In the fall of 2022, we engaged with 10 of our top 15 stockholders, representing approximately 31% of our outstanding shares. Participating in this outreach were our independent Board Chair, Mr. Di Piazza, and our Compensation Committee Chair, Mr. Gould, with support from the Company's Investor Relations and Legal Departments. During these conversations, Messrs. Di Piazza and Gould sought feedback from our stockholders regarding our compensation program, philosophies and practices, as well as ESG and corporate governance matters. Much of the feedback we received aligned with our pay for performance philosophy and supported the Committee's vision for the design of the 2023 executive compensation program, as summarized below.
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| What we Heard | | What we Did |
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■Hold annual "Say on Pay" vote | | ■Recommending future "Say on Pay" votes be held every year. See Proposal Four on page 80 |
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■Better align pay and performance | | ■Resumed use of Performance-Based Restricted Stock Units ("PRSUs") and stock options in 2023 LTI program for NEOs (other than the CEO) ■In response to our stock price performance in 2022 and the strong focus on free cash flow and leverage reduction, the Committee chose not to fund a performance pool to provide additional cash bonuses or award an above-target bonus to the CEO despite strong individual performance by the CEO and the other NEOs |
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■Better align executive compensation with stock price | | ■Added a TSR-modifier to 2023 PRSU awards for NEOs (other than PRSU awards to the CEO) |
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■Utilize longer performance periods for equity compensation | | ■Set three-year performance period for 2023 PRSU TSR-modifier |
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■Don't repeat metrics in different portions of the executive compensation program | | ■Differentiated metrics used for 2023 annual bonus program (revenue, EBITDA, DTC subscribers) and the 2023 LTI program (adjusted free cash flow and total stockholder return) |
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■Focus Company leadership on reducing leverage | | ■Utilizing adjusted free cash flow as a financial metric in the 2023 LTI program ■Awarded special PRSUs to the NEOs and certain other executives to further incent achievement of the Company's free cash flow objectives |
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■Provide a rationale for the Committee's compensation decisions | | ■Enhanced our CD&A disclosures to place greater focus on Committee's decision-making |
See "Looking Ahead: 2023 Executive Compensation Program" on page 63 for additional details on changes the Committee is implementing for the 2023 executive compensation program.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
NEO Compensation in 2022
Elements of 2022 Compensation
Total direct compensation for the NEOs in 2022 consisted of three basic components:
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| Element of Compensation | Key Features | Purpose |
| Base Salary | Fixed annual cash amount, generally reviewed annually in the first 90 days of the calendar year. | Provide base salaries that are competitive to attract and retain high-performing executive talent. A competitive base salary is an important component of compensation providing a degree of financial stability for executives. Base salaries also form the basis for calculating other compensation opportunities, including, for example, and other than in the case of the CEO, the target amount of each NEO’s annual cash bonus as a percentage of their base salary. |
| Annual Cash Bonus | Each NEO has a target cash bonus opportunity, set as a percentage of their base salary (or in Mr. Zaslav’s case, as a specified dollar value). The actual amount paid/awarded for each year varies based on Company and individual performance. | Deliver a substantial portion of total direct compensation in annual cash bonus awards that are aligned with Company and/or line of business performance to focus our executives on our financial and operational goals and ensure that our cash compensation mix remains competitive with our industry. We generally set bonus targets as a percentage of base salary so that this performance-based element remains a similar proportion to the fixed base salary and the value of the bonus target automatically adjusts as salary adjustments are made. |
Long-Term Incentive
Awards | Annual equity and equity- type awards, in the form of non-qualified stock options, performance-based restricted stock units and restricted stock units. Each type of award instrument generally vests in tranches over multiple years. | Deliver a substantial portion of an executive’s annual total direct compensation in equity awards to align our executives’ interests with those of our stockholders. We also use LTI awards as a tool to encourage an executive to enter into a new employment agreement or when an executive is promoted. These awards serve as retention tools and align an executive’s interests to those of our stockholders. |
NEO Employment Agreements
The table below summarizes the compensatory terms for 2022 under the employment agreements that we have entered into with each of our NEOs. In each of these agreements, our NEOs are subject to customary restrictive covenants, including those relating to non-solicitation, non-interference, non-competition and confidentiality, during the term of the agreement and, depending on the circumstances of termination, for a period thereafter. The summaries of the NEO employment agreements provided below are qualified in their entirety by reference to the full text of the applicable NEO employment agreement, each of which is filed as an exhibit to the 2022 Form 10-K.
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| David Zaslav | Gunnar Wiedenfels | Bruce L. Campbell | Jean-Briac Perrette | Gerhard Zeiler |
| Term | Through December 31, 2027 | Through July 10, 2026 | Through July 8, 2025 | Through August 1, 2025 | Through April 7, 2025 |
Base Salary(1) | $3,000,000 | $2,000,000 | $2,500,000 | $2,500,000 | $1,800,000 |
| Target Cash Bonus | $22,000,000 | 175% of Base Salary | 200% of Base Salary | 200% of Base Salary | 178% of Base Salary |
| Equity Target in Contract | $12,000,000 | $8,000,000 | $8,500,000 | $8,500,000 | $6,000,000 |
| Annual Equity Vehicle | PRSUs | Annual equity awards to be provided in the same form and type as other similarly situated executives |
| Sign on/Promotion Grants Awarded in 2022 | None | $2,000,000 promotion RSU grant in 2022 | $2,000,000 promotion RSU grant in 2022 | $2,000,000 promotion RSU grant in 2022 | None |
(1)Base Salary is the base salary set forth in the applicable employment agreement. NEO base salaries are subject to review and adjustment by the Committee, at its discretion, as part of the Annual Base Salary Review.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2022 NEO Compensation Actions
The following chart summarizes the compensation decisions for 2022 with respect to each NEO’s base salary, annual cash bonus and long-term incentive awards. Detailed discussion of the decisions made with respect to each element is contained in the discussion immediately below the chart.
| | | | | |
Element of
Compensation | 2022 Compensation Actions |
| Base Salary | ■Maintained base salary for Mr. Zaslav per the terms of his employment agreement. ■Base salaries were adjusted for each of Messrs. Wiedenfels, Campbell, Perrette and Zeiler in connection with the renewal of each of their employment agreements to reflect their increased roles and responsibilities in the newly combined larger company; new base salaries were retroactively effective to April 8, 2022. |
| Annual Cash Bonus | ■Paid annual cash bonuses in March 2023 to each of the NEOs following the 2022 Annual Bonus Review which took place in February 2023; bonuses were paid based on the Committee's assessment of Company performance in 2022 versus pre-established financial metrics and, in the case of the CEO and CFO, each executive's individual performance versus pre-established strategic goals for each executive. |
Long-Term
Incentive Awards | ■Awarded PRSUs to Mr. Zaslav in March 2022 as specified in his employment agreement. ■Awarded RSUs to Messrs. Wiedenfels, Campbell and Perrette in March 2022 following the 2022 Annual LTI Review. ■Converted Mr. Zeiler's prior AT&T RSUs into WBD RSUs as of the closing of the WarnerMedia Transaction, pursuant to the terms of the transaction documents ■Awarded RSUs to Messrs. Wiedenfels, Campbell and Perrette in July and/or August 2022 in connection with the renewal of each executive's employment agreement that included increased responsibilities in connection with their new roles in the newly combined larger company. |
Base Salary
Mr. Zaslav: Under the terms of his employment agreement, Mr. Zaslav’s base salary was set at $3 million throughout its term (through December 31, 2027).
Mr. Wiedenfels: The Committee increased Mr. Wiedenfels’ base salary to $2,000,000 in July 2022, in connection with the execution of his new employment agreement and increased responsibilities in the newly combined larger company. Mr. Wiedenfels' new base salary was applied retroactively to April 8, 2022, the date the WarnerMedia Transaction closed. The Committee benchmarked Mr. Wiedenfels' new salary against similar positions within the WBD Peer Group, and believed the new base salary was appropriate in light of peer compensation and Mr. Wiedenfels' broader responsibilities as CFO of an organization with the size and complexity of WBD.
Mr. Campbell: The Committee increased Mr. Campbell's base salary to $2,500,000 in July 2022, in connection with the execution of his new employment agreement and increased responsibilities in the newly combined larger company. Mr. Campbell's new base salary was applied retroactively to April 8, 2022, the date the WarnerMedia Transaction closed. The Committee benchmarked Mr. Campbell's new salary against similar positions within the WBD Peer Group and broader media and entertainment industry, and believed the new base salary was appropriate in light of peer compensation and Mr. Campbell's new role as Chief Revenue and Strategy Officer and the broader responsibilities he was assuming within an organization with the size and complexity of WBD.
Mr. Perrette: The Committee increased Mr. Perrette's base salary to $2,500,000 in August 2022, in connection with the execution of his new employment agreement and increased responsibilities in the newly combined larger company. Mr. Perrette's new base salary was applied retroactively to April 8, 2022, the date the WarnerMedia Transaction closed. The Committee benchmarked Mr. Perrette's new salary against similar positions within the WBD Peer Group and broader media and entertainment industry, and believed the new base salary was appropriate in light of peer compensation and Mr. Perrette's new role as President and CEO, Global Streaming and Games and the broader responsibilities he was assuming within an organization with the size and complexity of WBD.
Mr. Zeiler The Committee increased Mr. Zeiler's base salary to $1,800,000 in April 2022, in connection with the execution of his new employment agreement and increased responsibilities in the newly combined larger company. Mr. Zeiler's new base salary was effective as of April 8, 2022, the date the WarnerMedia Transaction closed. The Committee benchmarked Mr. Zeiler's new salary against similar positions within the WBD Peer Group and broader media and entertainment industry, and believed the new base salary was appropriate in light of peer compensation and Mr. Zeiler's new role as President, International and the broader responsibilities he was assuming within an organization with the size and complexity of WBD.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Annual Cash Bonus Awards
We made annual cash bonus awards to each of our NEOs with respect to their 2022 performance as part of the 2022 Annual Bonus Review which took place in February 2023. The annual bonus target amount for each NEO other than Mr. Zaslav is set as a percentage of base salary. This percentage generally is set in the negotiation of each executive’s employment agreement and is determined by the Committee based on external market data, internal equity, and, if the executive is leaving other employment to join us, an assessment of what level of compensation is needed to encourage the individual to accept our offer of employment. If an executive works only part of the year, the bonus amount generally is subject to proration based the period of employment. The annual bonus target may be changed in the course of an executive’s employment or in the negotiation of a new or extended employment agreement when the scope of the new role and responsibilities would warrant such a change. For all employees who have a bonus target that is expressed as a percentage of base salary, including the NEOs, our policy is to apply the bonus target that is in effect on December 31 of the calendar year to calculate the bonus payment for that year. Therefore, in the case of the NEOs that entered into new employment agreements during 2022, their new bonus targets were applied for full-year 2022.
Each of our NEOs, other than Messrs. Zaslav and Wiedenfels, participated in the ICP in 2022, our annual bonus plan that applies broadly to employees around the world. As discussed below, the determination of the actual cash bonus under the ICP is based on achievement of annual financial targets as applied to the target value.
2022 Financial Metrics and Adjustments
The Committee sets annual financial metrics to determine the cash bonuses awarded to NEOs, either under our ICP or under the separate bonus program for the CEO and CFO. The ICP payout is calculated based solely on performance against these financial measures, and the annual cash bonuses for the CEO and CFO are based 50% on performance against these financial measures, and 50% on additional strategic goals established by the Committee for each of the CEO and CFO. The 2022 financial metrics, weighting and corresponding definitions are set out below:
| | | | | | | | |
| Financial Metric | Weighting | Definition |
| Net Revenue | 25% | Revenue from ordinary business operations. |
| Adjusted EBITDA | 25% | Adjusted EBITDA is defined as operating income excluding (i) employee share-based compensation; (ii) depreciation and amortization; (iii) restructuring and facility consolidation; (iv) certain impairment charges; (v) gains and losses on business and asset dispositions; (vi) certain inter-segment eliminations; (vii) third-party transaction and integration costs; (viii) amortization of purchase accounting fair value step-up for content; (ix) amortization of capitalized interest for content; and (x) other items impacting comparability. |
Adjusted Free
Cash Flow | 25% | Cash provided by operations less acquisitions of property and equipment, adjusted for long-term incentive payments. |
| Year-End Paid DTC Subscribers | 25% | DTC Subscription is defined as: (i) a retail subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue, whether directly or through a third party, from a direct-to-consumer platform;(ii) a wholesale subscription to discovery+, HBO, or HBO Max for which we have recognized subscription revenue from a fixed fee arrangement with a third party and where the individual user has activated their subscription; (iii) a wholesale subscription to discovery+, HBO or HBO Max for which we have recognized subscription revenue on a per subscriber basis; and (iv) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month immediately following the month in which their free trial expires. The aggregate number of DTC Subscriptions are “Paid DTC Subscribers." |
At the beginning of 2022 when the Committee met to consider the financial metrics it would use to measure 2022 performance, it was cognizant that the WarnerMedia Transaction was likely to close in the first half of the year. Therefore, in February 2022, the Committee established fiscal 2022 financial metrics for the ICP and cash bonuses to the CEO and CFO, as well as the CEO's PRSU awards granted on March 1, 2022, that were based on standalone Discovery, Inc. performance; however, the Committee reserved the right to adjust those metrics following the closing of the WarnerMedia Transaction, if appropriate. The WarnerMedia Transaction closed on April 8, 2022. Following the closing of the WarnerMedia Transaction, the Committee determined it was appropriate to do the following:
■Use the standalone Discovery metrics it adopted in February 2022 to assess the first-half of 2022 (January 1, 2022 through June 30, 2022) performance of those portions of the WBD business and those executives and employees that were historically a part of Discovery, Inc.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
■Use the metrics established prior to closing by WarnerMedia for its 2022 bonus program that were based on standalone WarnerMedia performance to assess the first-half of 2022 (January 1, 2022 through June 30, 2022) performance of the portions of the WBD business and those executives and employees that were historically a part of WarnerMedia.
■Adopt metrics in June 2022 for a combined WBD for the second-half of 2022 (July 1, 2022 through December 31, 2022) and measure second-half performance for the combined company against these WBD metrics.
■Calculate a combined or "blended" score for ICP, CEO and CFO cash bonuses and the CEO's 2022 PRSU awards based on the first-half performance of Discovery or WarnerMedia, as applicable, and the second-half performance of WBD.
The Committee annually reviews potential adjustments to performance against the financial measures. The principle applied in deriving the adjustments is to ensure that the calculation reflects the impact of operational decisions taken by management, excludes the impact of events over which management has little or no influence, and excludes the impact of items that were not considered at the time the targets were set. Adjustments for currency fluctuations are made to ensure that the results are currency neutral.
In 2022, the Committee grouped adjustments into the four categories set forth in the table below, and made the adjustments indicated in the table below. The 2022 adjustments made by the Committee had the effect of increasing our overall financial performance for purposes of calculating cash bonuses and ICP awards, as compared to our reported results.
| | | | | | | | |
| Category | 2022 Adjustments to Performance |
1 | unplanned acquisitions and divestitures (and related expenses and revenues); | ■Pre-closing legal and consulting expenses |
| 2 | unplanned significant investments or major strategy shifts in new or existing lines of business; | ■Significant shifts in theatrical and games releases ■Change in made-for-streaming movie strategy ■August 2022 renewal of our agreement with AT&T Wireless |
| 3 | major geopolitical business impacts; and | ■Exit of business in Russia, Ukraine, Belarus ■Currency development vs. planned rates |
| 4 | corporate transactions and legal expenses (including accounting standard/policy changes, fees for unforeseen legal matters, corporate debt transactions). | ■Financing fees for merger-related debt issuance ■Accounting policy changes relating to content amortization, deferred compensation recognition and securitization accounting |
Determination of 2022 Annual Cash Bonus Awards
2022 Incentive Compensation Program
The 2022 annual cash bonuses for Messrs. Campbell, Perrette and Zeiler were based on the terms of the ICP. The ICP specifies various financial metrics depending on an employee’s role and business alignment. The aggregate amount payable to an individual under the ICP is calculated by:
■first, determining the target bonus of each employee (the pre-established percentage of the employee’s base salary);
■second, establishing the amount payable as a result of our performance versus the ICP financial metrics and any applicable line of business performance measures, as applied to the target bonus amount (such amount, the “ICP Payout Percentage”); and
■third, adding to the total payout amount a specific dollar amount that is an allocation of the “performance pool” if applicable. The performance pool is a total amount of money that is available to allocate to high performers, with the amount available to allocate varying based on our overall financial performance and the Committee's discretion. There was no "performance pool" established for 2022.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
The 2022 annual cash bonus awards to Messrs. Campbell, Perrette and Zeiler were calculated as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Base Salary | X | NEO’s Individual Target
Bonus Percentage | X | ICP Payout
Percentage | + | Performance Pool Allocation
(if applicable) | = | Cash Bonus Award
paid to NEO |
For the 2022 ICP, the Committee established threshold (20% payout), target (100% payout) and above target (110% payout) amounts for each of the ICP financial metrics and a scale that would determine the amount payable for achievement of results between the threshold and the above target amounts. The metrics were designed to provide a payout of 110% only upon at least 110% performance for each of the ICP financial metrics. The threshold for a payout was achievement of at least 90% of the metric (performance at less than 90% would result in no payout based on the scale) and for prorated payout for performance between 90% and 110% of the metrics. Payments beyond the “above target” amount may be made at the Committee’s discretion.
The Committee determined that for 2022, in light of the significant changes to the Company's business, operating divisions and reporting segments as a result of the WarnerMedia Transaction, it was appropriate to use total Company performance for all ICP awards, including the awards to NEOs who work in or are fully dedicated to support a line of business within WBD. The Committee expects to resume its historical practice of tying a portion of ICP awards for NEOs who lead a line of business to the performance of their line of business in 2023.
The 2022 ICP performance targets and weightings are set forth in the following tables. As noted above, for 2022, the Committee used Net Revenue, EBITDA, Adjusted Free Cash Flow, and Year-End Paid DTC Subscribers as the ICP metrics, and the Committee utilized legacy Discovery and WarnerMedia performance to measure first-half performance and WBD performance to measure second-half performance. Prior to the closing of the WarnerMedia Transaction, the Committee weighted each of the performance metrics for Discovery, Inc. equally (25% each). When the Committee established the second-half metrics for combined WBD, it chose to weight EBITDA and Adjusted Free Cash Flow at 30% each and the remaining two metrics at 20% each, because the Committee wanted to focus the entire organization on driving earnings and free cash flow. WarnerMedia did not use revenue as a metric in its bonus program prior to closing, and it placed the highest weight on DTC subscribers (50%).
The numbers in the tables below under “Actual Achievement” reflect the adjustments discussed above.
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| Discovery, Inc. (H1 - Jan. 1, 2022 - June 30, 2022) | Weighting | Threshold | Target | Above Target | Actual Achievement |
| Net Revenue ($ in millions) | 25 | % | | $ | 5,660 | | | $ | 6,289 | | | $ | 6,918 | | | $ | 6,097 | |
| Adjusted EBITDA ($ in millions) | 25 | % | | $ | 1,686 | | | $ | 2,000 | | | $ | 2,315 | | | $ | 2,128 | |
| Adjusted Free Cash Flow ($ in millions) | 25 | % | | $ | 504 | | | $ | 818 | | | $ | 1,133 | | | $ | 796 | |
| Year-End Paid DTC Subscribers (# in millions) | 25 | % | | 11 | | | 22 | | | 33 | | | 24 | |
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| WarnerMedia (H1 - Jan. 1, 2022 - June 30, 2022) | Weighting | Threshold | Target | Above Target | Actual Achievement |
| WM Adjusted EBITDA ($ in millions) | 30 | % | | $ | 1,955 | | | $ | 2,384 | | | $ | 2,527 | | | $ | 2,396 | |
| WM Adjusted Free Cash Flow ($ in millions) | 20 | % | | $ | (2,257) | | | $ | (1,913) | | | $ | (1,798) | | | $ | (3,086) | |
| WM DTC Subscribers (# in millions) | 50 | % | | 71 | | | 76 | | | 81 | | | 77 | |
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| WBD (H2 - July 1, 2022 - December 31, 2022) | Weighting | Threshold | Target | Above Target | Actual Achievement |
| Net Revenue ($ in millions) | 20 | % | | $ | 20,879 | | | $ | 23,199 | | | $ | 25,519 | | | $ | 21,837 | |
| Adjusted EBITDA ($ in millions) | 30 | % | | $ | 4,520 | | | $ | 5,680 | | | $ | 6,840 | | | $ | 5,748 | |
| Adjusted Free Cash Flow ($ in millions) | 30 | % | | $ | 1,321 | | | $ | 2,481 | | | $ | 3,641 | | | $ | 2,383 | |
| Year-End Paid DTC Subscribers (# in millions) | 20 | % | | 48 | | | 95 | | | 143 | | | 96 | |
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2022 Cash Bonuses to CEO and CFO
The bonus structure for Messrs. Zaslav and Wiedenfels was designed by the Committee to meet specific objectives. Unlike the calculation of the ICP pool, which is calculated based solely on performance against financial measures, the annual cash bonus for these two NEOs is based 50% on performance against financial measures, and 50% on additional strategic goals established by the Committee. Given the role of each of the CEO and the CFO in setting the annual financial targets used for the ICP, the Committee concluded that it would be appropriate to have a substantial part of their bonus opportunities based on separate strategic measures.
The Committee determined that including all four financial measures described above for the ICP were appropriate for the CEO and CFO given the scope of their responsibilities and direct impact on resource allocation decisions. As the CEO and CFO were legacy Discovery, Inc. executives, their 2022 cash bonuses were based on first-half Discovery, Inc. performance and second-half WBD performance. For 2022, the financial targets, weighting and results for the cash bonuses to the CEO and CFO were as follows ("Actual Achievement" is after the aforementioned adjustments):
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| Discovery, Inc. (H1 - Jan. 1, 2022 - June 30, 2022) | Weighting | Threshold | Target | Above Target | Actual Achievement |
| Net Revenue ($ in millions) | 25 | % | | $ | 4,402 | | | $ | 6,289 | | | $ | 6,918 | | | $ | 6,097 | |
| Adjusted EBITDA ($ in millions) | 25 | % | | $ | 1,400 | | | $ | 2,000 | | | $ | 2,200 | | | $ | 2,128 | |
| Adjusted Free Cash Flow ($ in millions) | 25 | % | | $ | 573 | | | $ | 818 | | | $ | 900 | | | $ | 796 | |
| Year-End Paid DTC Subscribers (# in millions) | 25 | % | | 16 | | | 22 | | | 24 | | | 24 | |
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| WBD (H2 - July 1, 2022 - December 31, 2022) | Weighting | Threshold | Target | Above Target | Actual Achievement |
| Net Revenue ($ in millions) | 20 | % | | $ | 16,239 | | | $ | 23,199 | | | $ | 25,519 | | | $ | 21,837 | |
| Adjusted EBITDA ($ in millions) | 30 | % | | $ | 3,976 | | | $ | 5,680 | | | $ | 6,248 | | | $ | 5,748 | |
| Adjusted Free Cash Flow ($ in millions) | 30 | % | | $ | 1,737 | | | $ | 2,481 | | | $ | 2,729 | | | $ | 2,383 | |
| Year-End Paid DTC Subscribers (# in millions) | 20 | % | | 67 | | | 95 | | | 105 | | | 96 | |
The Committee sets annual individual strategic goals for Mr. Zaslav related to our enterprise-wide priorities, and for Mr. Wiedenfels based on the priorities in his role as CFO. The Committee sets updated goals each year based on changing priorities, and there is variation from year to year in both the substance of the annual goals and how they are weighted. The weighting was based on the Committee's determination of the relative priority of each of these goals.
For 2022, the Committee set substantially all of the strategic goals for the CEO and CFO following the closing of the WarnerMedia Transaction. These strategic goals were intended to incent the CEO and CFO to take actions that would create long-term value for stockholders and provide a competitive advantage for WBD, and were also designed to complement the financial goals and the separate strategic goals for the CEO's 2022 PRSU awards by focusing on key financial, operational and infrastructure priorities following the closing of the WarnerMedia Transaction.
For 2022, Mr. Zaslav’s strategic goals, with weighting based on the Committee’s determination of the relative priority of each, were to:
■lead the post-closing transition, following the WarnerMedia Transaction, including management of separation, integration and other operational matters (20%);
■oversee the pathway to delivering at least $3 billion in synergies beginning in 2023 (30%);
■create practices of financial accountability, transparency, operational discipline and creative coordination, integrating the business and striving toward a "One Company" culture (10%)
■oversee creation of a unified ad sales team (20%); and
■oversee meeting WBD's financial goals (20%).
For 2022, Mr. Wiedenfels’ strategic goals, with weighting based on the Committee’s determination of the relative priority of each, were to:
■build a successful finance leadership team, begin implementation of WBD finance operating model, begin finance ERP system transformation (30%);
■drive integration and transformation programs to support delivery of $3 billion in synergies by 2023, and support, sustain and enhance free cash flow generation (30%); and
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
■oversee appropriate control environment, ensure continued integrity of financial reporting for company, and prepare the combined company for Sarbanes-Oxley ("SOX") compliance in 2023 (25%).
In addition, in February 2022 prior to the closing of the WarnerMedia Transaction, the Committee established a 2022 strategic goal for Mr. Wiedenfels to close the WarnerMedia Transaction in or prior to the second-quarter of 2022, with a weighting of 15%.
Assessment of Performance
The determination as to whether the 2022 ICP financial performance measures were met was made in the 2022 Annual Bonus Review during the first quarter of 2023, following review of the full-year 2022 financial results. Based on our financial performance in 2022 versus the ICP performance targets, the Committee funded the ICP pool for legacy Discovery at 95.6% of target and for legacy WarnerMedia at 90.2% of target. The Committee awarded 2022 cash bonuses to Messrs. Campbell, Perrette and Zeiler based on their individual targets and the applicable legacy company ICP score.
In February 2022, the Committee also reviewed the CEO's and CFO's achievement of their respective strategic goals, considering the CEO’s and CFO’s self-assessments and, with respect to Mr. Wiedenfels, the input of the CEO and with respect to Mr. Zaslav, the input of the Board. Based on the performance against the four financial metrics noted above and the payout scale applicable to the CEO and CFO, the payout for the portion of the CEO's and CFO's 2022 cash bonus that is based on financial metrics is 98.4% of target. With respect to the strategic goals, the Committee determined that each of Mr. Zaslav and Mr. Wiedenfels had exceeded expectations and over-delivered with respect to their respective strategic goals. The Committee specifically noted the following accomplishments for each of Mr. Zaslav and Mr. Wiedenfels:
Mr. Zaslav
•leadership of the Company's integration and synergy capture goals;
•actions to focus the entire enterprise on cost-cutting measures, resulting in the realization of over $1 billion in synergies through the end of 2022;
•reimagining of the U.S. ad sales team; and
•effective implementation and activation of Company-wide marketing plans around tent pole content to fully leverage WBD's scope and the power of its diverse brands.
Mr. Wiedenfels
•leadership of all financial aspects of the WarnerMedia Transaction, including the debt issuance, investor communications and regulatory filings;
•efforts to establish a Finance leadership team, ensure the continued integrity of the combined Company's financial reporting processes, and begin the process of financial system integration; and
•leadership with respect to free cash flow generation and leverage reduction.
Actual cash bonus payouts for 2022 performance to each NEO are as follows:
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| NEO | Cash Bonus Target
Amount | Payout
Percentage | Cash Bonus Award |
| David Zaslav | $ | 22,000,000 | | 99.2 | % | | $ | 21,831,456 | |
| Gunnar Wiedenfels | $ | 3,500,000 | | 99.2 | % | | $ | 3,472,000 | |
| Bruce L. Campbell | $ | 5,000,000 | | 95.6 | % | | $ | 4,780,000 | |
| Jean-Briac Perrette | $ | 5,000,000 | | 95.6 | % | | $ | 4,780,000 | |
| Gerhard Zeiler | $ | 3,031,518 | | 90.2 | % | | $ | 2,734,429 | |
In prior years, the Committee, based on our financial performance, has elected to fund a "performance pool" that would be used to make additional cash bonus payments to employees, including the CFO and other NEOs but not the CEO, based on exceptional individual performance. Our CEO's employment agreement provides an opportunity for him to earn up to 125% of his target cash bonus for over-delivery of his financial and strategic objectives. Even though our financial performance in 2022 was sufficient to provide for the funding of a "performance pool" and the Committee believed many of our employees, including each of our NEOs, delivered exceptional performance in 2022, the Committee determined that in light of our 2022 stock price performance and focus on free cash flow generation and leverage reduction, it was not appropriate to fund a "performance pool" in 2022. For the same reason, despite exceptional performance from our CEO and his over-delivery of the strategic objectives established for him by the Committee, the Committee elected to not award any additional or above-target bonus to our CEO for 2022.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Long-Term Incentive Compensation
We make equity awards as part of our LTI compensation program under our Warner Bros. Discovery, Inc. Stock Incentive Plan (the "WBD Stock Incentive Plan"). We believe that delivering a substantial portion of an executive’s total direct compensation in equity awards helps to align our executives’ interests with those of our stockholders. In 2022, we made long-term equity awards to each of the NEOs, which we believe serves to focus their attention on increasing the Company’s value over time.
Annual LTI Review and New Hire/Contract Renewal Awards
The Committee generally considers LTI awards to the NEOs in two categories: annual awards, in the same process used for executive-level employees early each year in the Annual LTI Review, and special awards for newly-hired executives or in conjunction with promotion to a role with larger scope. The Committee made awards to Messrs. Wiedenfels, Campbell and Perrette as part of the 2022 Annual LTI Review which took place in February 2022. Mr. Zaslav’s LTI awards for each year are specified in his employment agreement, although the Committee determines performance metrics for each performance-based award to Mr. Zaslav at the time the award is made. Mr. Zeiler received WBD RSUs on April 8, 2022 upon the closing of the WarnerMedia Transaction in connection with the conversion of his AT&T RSUs. The Committee also made awards to Messrs. Wiedenfels, Campbell and Perrette in 2022 in connection with the entry into new employment agreements with each executive for roles with larger scope.
In the Annual LTI Review, as an initial matter, the Committee reviews market data for similar roles in the peer group and determines a target amount for the LTI awards that is expressed as a dollar value. With respect to each NEO other than the CEO, the CEO then reviews the target value approved by the Committee and recommends a dollar value for the award based on each NEO’s individual performance. The Committee approves the overall award value, which is then converted into a number of units, as further described below.
For new hire and awards to recognize promotion, the Committee follows a similar process, referring to market data, as well as internal equity and the overall compensation terms of the agreement. The Committee determines a target amount expressed as a dollar value, which is then converted into a number of units, as further described below.
Timing of Awards. The Committee’s intent is to approve equity awards annually in February each year, with new hire and promotion grants made throughout the year in the Committee’s regular meetings. The Committee uses a consistent effective date for annual grants approved in February of the later of March 1 or two business days following the filing of the Company's Annual Report on Form 10-K. This allows a consistent grant date and vesting schedule for annual awards made to employees and provides for consistent annual grant timing.
For new hire and promotion grants made at other times throughout the year to employees other than the Section 16 Officers, the Committee has delegated authority for making such grants to the CEO and Chief People and Culture Officer within certain dollar and share limits. These awards are typically made on the 15th of each month and all awards made pursuant to such delegation are reported to the Committee at its next regular meeting. On occasion for administrative convenience, the Committee may make a grant with a future effective date, with the grant price set on the future effective date. For the awards to the NEOs and other Section 16 Officers who entered into new employment agreements in 2022, the Committee granted the awards in connection with execution of the applicable agreement, however all awards were unitized using our closing stock price on July 14, 2022 to ensure no executive was benefited or harmed by fluctuations in stock price.
Our practice of adopting a consistent date for annual and off-cycle grants is designed to avoid the possibility that we could grant stock awards prior to the release of material, non-public information which is likely to result in an increase in our stock price, or to delay the grant of stock awards until after the release of material, non-public information that is likely to result in a decrease in the Company’s stock price.
2022 Long-Term Incentive Awards to CEO
The design of Mr. Zaslav’s compensation in his employment agreement emphasizes stockholder alignment through tying the vast majority of his compensation to WBD equity and requiring substantial stock holdings. Mr. Zaslav received an award of 427,808 PRSUs on March 1, 2022 with a one-year performance period that ended on December 31, 2022. The 2022 PRSU awards to Mr. Zaslav consisted of:
■an award of 106,952 PRSUs, which vested at 93.7% on February 27, 2023 based on the Committee’s certification of the Company’s performance against the financial goals it established for these PRSUs - Revenue, Adjusted EBITDA, Adjusted Free Cash Flow and Year-End Paid DTC Subscribers; and
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
■an award of 320,856 PRSUs, which vested at 100% on February 27, 2023 based on the Committee’s assessment of Mr. Zaslav’s performance versus the strategic goals it established for these PRSUs, which are more fully described below.
Performance vs. Financial Goals for PRSUs awarded to CEO in 2022
The performance against the financial goals established for the CEO’s 2022 PRSUs are set forth in the following tables. As with the ICP and cash bonuses to the CEO and CFO, the Committee used Discovery, Inc. performance for the first half of the year and combined WBD performance for the second half of the year.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Target | | Performance | Weighted
Payout |
H1 PRSU Performance
($ in millions) | Target
Weighting | PRSU
Target | | 2022 | Performance
against
Target |
| Revenue | 25% | | $ | 6,289 | | | | $ | 6,097 | | 96.9 | % | 22.5 | % |
| Adjusted EBITDA | 25% | | $ | 2,000 | | | | $ | 2,128 | | 106.4 | % | 25.0 | % |
| Adjusted Free Cash Flow | 25% | | $ | 818 | | | | $ | 796 | | 97.3 | % | 22.7 | % |
| Year-End Paid Subscribers | 25% | | 22 | | | 24 | | 106.7 | % | 25.0 | % |
| TOTAL | 100.0% | | | | | | | 95.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Target | | Performance | Weighted
Payout |
H2 PRSU Performance
($ in millions) | Target
Weighting | PRSU
Target | | 2022 | Performance
against
Target |
| Revenue | 20% | | $ | 23,199 | | | | $ | 21,837 | | 94.1 | % | 16.1 | % |
| Adjusted EBITDA | 30% | | $ | 5,680 | | | | $ | 5,748 | | 101.2 | % | 30.0 | % |
| Adjusted Free Cash Flow | 30% | | $ | 2,481 | | | | $ | 2,383 | | 96.0 | % | 26.0 | % |
| Year-End Paid Subscribers | 20% | | 95 | | | 96 | | 101.1 | % | 20.0 | % |
| TOTAL | 100.0% | | | | | | | 92.1 | % |
Performance vs. Strategic Goals for PRSUs awarded to CEO in 2022
In February 2022, the Committee established the following strategic goals for the 2022 PRSU awards granted to the CEO in 2022. These strategic goals were intended to incentivize the CEO to take actions that would create long-term value for stockholders and provide a competitive advantage for WBD, and were also designed to complement the separate strategic goals for the CEO's 2022 cash bonus by focusing on content development, reach and engagement and human capital priorities. The strategic goals for the CEO's 2022 PRSU awards were:
■finalize and close the WarnerMedia Transaction (15%);
■design an effective organization structure and establish a best in class leadership team, make effective use of human capital;
■maintain momentum on DTC subscriber growth, retention and engagement; and
■develop new, and continue to improve in existing event programming and big swing content across brands, networks, platforms and geographies.
The Committee assessed Mr. Zaslav’s 2022 performance against these goals and determined that he met 100% of the strategic goals established for his 2022 PRSU awards. The Committee noted the CEO's tremendous leadership during an especially challenging year and specifically considered his actions to finalize and close the WarnerMedia Transaction in a mere 11 months, appoint a best-in-class leadership team across all corporate functions and creative roles, lay the foundation for the 2023 launch of the Company's combined streaming service, and continue to deliver compelling content across the Company's brands, networks, platforms and geographies.
Based on 2022 performance versus the metrics set forth above, the Committee certified the vesting of the 1-Year Target PRSUs granted to Mr. Zaslav at 98.4%. For the PRSUs that vested in February 2023, 70% of the shares were distributed at the time of vesting, and 30% will be distributed in 2024 subject to Mr. Zaslav’s continued employment and the other terms and conditions of the award.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2022 Long-Term Incentive Awards to Other NEOs
For 2022, NEOs other than the CEO received grants of RSUs as part of the Annual LTI Review in February 2022 (Messrs. Wiedenfels, Campbell and Perrette), upon conversion of AT&T RSUs into WBD RSUs in connection with the closing of the WarnerMedia Transaction (Mr. Zeiler) and in connection with their entry into new employment agreements for roles with larger scopes of responsibility (Messrs. Wiedenfels, Campbell and Perrette). Stock options and PRSUs were not part of the awards granted during the Annual LTI Review in February 2022 because the terms of the transaction documents for the WarnerMedia Transaction prohibited the granting of stock options or PRSUs to legacy Discovery employees, other than the CEO, prior to closing.
The RSU awards granted to NEOs in 2022 have a four-year vesting schedule, vesting in four equal installments on each of the first four anniversaries of the date of grant, assuming continued employment, and are otherwise consistent with the terms of the applicable plan and award agreement. The following chart summarizes the equity awards made in 2022 to each NEO (other than the CEO).
| | | | | | | | | | | | | | |
| NEO | | 2022 Target
Amount or FMV | 2022 LTI Awards |
| Gunnar Wiedenfels, CFO | | | $ | 6,000,000 | | 213,904 RSUs 146,736 RSUs |
| | $ | 2,000,000 | |
| Total value: | | $ | 8,000,000 | |
Bruce L. Campbell,
Chief Revenue and Strategy Officer | | | $ | 4,500,000 | | 160,428 RSUs 146,736 RSUs |
| | $ | 2,000,000 | |
| Total value: | | $ | 6,500,000 | |
Jean-Briac Perrette,
President and CEO,
Global Steaming and Games | | | $ | 4,400,000 | | 156,863 RSUs 146,736 RSUs |
| | $ | 2,000,000 | |
| Total value: | | $ | 6,400,000 | |
Gerhard Zeiler,
President, International | | | $ | 3,178,270 | | 130,097 RSUs
|
| Total value: | | $ | 3,178,270 | |
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Retirement Plans and Other Benefits
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| Retirement Benefits | | |
| | | |
| | | |
Our U.S.-based NEOs generally participate in the same benefit plans on the same terms as are offered to other U.S.-based full-time employees. We offer a 401(k) defined contribution plan as well as a non-qualified Supplemental Retirement Plan (the “SRP”) that is available to U.S.-based senior employees, including all of the NEOs other than Mr. Zeiler. The eligible NEOs participate in these plans on the same terms and conditions as other eligible employees. To encourage participation in the 401(k) plan, we make a matching contribution of (i) 100% of the employee’s first 3% of salary contributions to the defined contribution plans and (ii) 50% of the employee’s next 3% of salary contributions, up to a maximum amount of 4.5% of eligible base salary in the form of matching contributions, subject to certain limits under applicable tax regulations. We do not make matching contributions into the SRP. In addition to base salary deferrals, participants in the SRP are also permitted to defer portions of their annual bonus awards into their SRP accounts. The 401(k) and SRP accounts offer the same investment options, with the amounts actually invested for the 401(k) plan and with earnings measured hypothetically for the SRP. We believe the SRP is necessary to allow employees who would otherwise be limited by IRS restrictions on the amount of compensation that may be considered in participation in our 401(k) plan to save a proportionate amount for retirement and support the goals of providing competitive compensation packages to our employees. Mr. Zeiler is employed in Austria and participates in the Company’s benefit plans and programs as offered to other Austria-based Company employees. Mr. Perrette was also employed in the U.K. for a portion of 2022 and participated in the Company's U.K. benefit plans and programs during his time in the U.K. Mr. Perrette relocated back to the U.S. during 2022 and has since transitioned to participating in our plans for U.S.-based employees. For more information about the SRP, please refer to the 2022 Nonqualified Deferred Compensation Table under “Executive Compensation Tables” below. | |
| Health, Welfare and Other Personal Benefits |
| | | |
| | | |
The U.S.-based NEOs are eligible to participate in the health, welfare and fringe benefits we generally make available to our U.S.-based regular full-time employees, such as basic and supplemental life insurance, short and long-term disability, commuter reimbursement, fitness reimbursement and access to legal resources. Mr. Zeiler is based in Austria and is eligible to participate in the health, welfare and fringe benefits we generally make available to our Austria-based regular full-time employees. Mr. Perrette was based in the U.K. for a portion of 2022 and participated in our U.K. benefits program during his time in the U.K. Mr. Perrette relocated back to the U.S. during 2022 and has since transitioned to participating in our plans for U.S.-based employees. In addition, we provide the following perquisites and other personal benefits to our NEOs: | |
| | | |
| | | |
| Relocation Expenses and International Assignment Benefits | We provide relocation and international assignment benefits consistent with our international long-term assignment policies, including reimbursing relocation costs, offering education and other allowances, providing tax equalization benefits, which are intended to maintain the executive’s out of pocket tax liabilities at the same level they would have been had the executive not been assigned to a foreign jurisdiction and, for some benefits, paying the executive an amount equal to the tax resulting from the reimbursement or allowance (a “gross-up”). Mr. Perrette was assigned to the U.K. for a portion of 2022 and received tax preparation assistance and repatriation benefits. During 2022, Mr. Perrette was relocated back to the U.S. and received relocation benefits under our standard relocation policies. | | |
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
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| Aircraft Usage | To facilitate executive travel for our global media and entertainment business, we own and operate two corporate aircraft, lease a third dedicated corporate aircraft and also have an agreement with NetJets Inc. where we lease the right to a specified amount of travel each calendar year on NetJets’ aircraft (collectively, "WBD Aircraft"). In 2022, as a result of the WarnerMedia Transaction and the subsequent expansion of our business operations, our executives and, in particular, our CEO, were required to frequently travel between the East and West coasts of the United States, as well as to other domestic and international locations. Per the terms of his employment agreement, Mr. Zaslav is permitted to utilize the WBD Aircraft for up to 250 hours of personal flight time each year. The first 125 hours are provided to him at the Company's expense, and, with respect to the second 125 hours, Mr. Zaslav is required to reimburse the Company at a rate of two times the cost of fuel, as provided in the aircraft time-sharing agreement between the Company and Mr. Zaslav. Family members may accompany Mr. Zaslav on authorized business flights on WBD Aircraft at no aggregate incremental cost to the Company. We typically provide a gross-up to Mr. Zaslav to cover taxes for imputed income arising when a family member accompanies him on business travel at the request of the Company (e.g., when Mr. Zaslav’s spouse accompanies him to a business event in which attendance by a spouse is customary and serves our business interests). | | |
| | | |
| Home Office Expenses, Security Expenses & Car Allowance | We provide Mr. Zaslav with home office audio-visual and computing equipment and reimburse Mr. Zaslav for limited home office expenses, including Internet access. We also provide Mr. Zaslav with a monthly car allowance as provided in his employment agreement, and we provide personal security services to ensure Mr. Zaslav's safety. For more information regarding the perquisites provided in 2022 to each NEO, please refer to the “All Other Compensation” column of the 2022 Summary Compensation Table. | | |
Other Compensation-Related Matters
Risk Considerations in our Compensation Programs
In view of the current economic and financial environment, the Committee has reviewed the design and operation of our incentive compensation arrangements. The Committee has determined that these arrangements do not provide our employees with incentive to engage in business activities or other actions that would threaten our value or the investment of our stockholders, or that would otherwise be reasonably likely to have a material adverse effect on us. The outside consultants to the Committee, Pay Governance and Croner, assisted the Committee in its risk assessment of our executive compensation programs in meetings throughout 2022 and advised the Committee in reaching this conclusion as to those plans.
Executive Stock Ownership Policy
We have a robust executive stock ownership policy that applies to each of the NEOs. The policy requires each NEO to hold a specified amount of our stock, calculated as a multiple of the executive’s base salary, as described in the table below.
| | | | | | | | |
| Position | Requirement
(multiple of base salary) | Timeframe to reach
(from later of effective date or
becoming covered by policy) |
| CEO* | 6X | 5 years |
| Other NEOs | 2X | 5 years |
* Mr. Zaslav is also required to hold an additional 1,500,000 shares of common stock pursuant to his employment agreement.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
The Committee determined that any shares of our stock beneficially owned by the covered executive, as well as unvested awards of PRSUs and RSUs, but not shares underlying unvested or unexercised stock options, would be counted for purposes of meeting the stock holding target. Once an executive meets the target, the executive is expected to maintain holdings at the target for as long as he or she remains in a role that is identified as a covered executive under the policy.The Committee may consider failure to meet the requirements of the policy in making compensation decisions for a covered executive and may take any other action appropriate to support the intent of the policy, including requiring an executive to retain a percentage of shares pursuant to stock option exercises or vesting events in future years.
In December of 2022, the Committee reviewed the NEOs’ progress toward meeting the requirements of the executive stock ownership policy. Each of the NEOs at the time of the review had met or was on track to meet their respective stock holding requirements. Please see "Stock Ownership—Security Ownership of Management" on beginning on page 89 for additional information on the stock ownership of our CEO and other NEOs.
Clawback Policy
All of our employees are subject to our compensation “clawback” policy. Under this policy, in addition to any other remedies available to us (but subject to applicable law), if the Board, or the Committee, determines that any employee has engaged in fraud or misconduct that resulted in a financial restatement, we may recover, in whole or in part, any bonus or other incentive-based or equity-based compensation, received by the employee from us in the 12 months after the filing of the financial statement that was found to be non-compliant. The Committee adopted this policy as a further deterrent to fraudulent activity. The Company will update its clawback policy to comply with the relevant Nasdaq listing standards, once finalized.
Hedging and Derivative Trading Transactions
Our insider trading policy prohibits employees, including the NEOs, and our directors from engaging in certain derivative transactions. Specifically, they may not, at any time:
■trade in any public puts, calls, covered calls or other derivative products involving Company securities; or
■engage in short sales of Company securities.
Hedging of our stock by the NEOs is only permitted with the prior approval of our General Counsel. In 2022, none of our NEOs engaged in any hedging transactions.
Impact of the Most Recent Say on Pay Vote
At our annual meeting of stockholders held on June 18, 2020 (the “2020 Annual Meeting”), we held an advisory vote on executive compensation, or “Say on Pay” vote, and a majority of stockholders voted in favor of our executive compensation program at that meeting. Stockholders previously voted in concurrence with the Board’s recommendation to hold future “Say on Pay” votes every three (3) years, meaning the next “Say on Pay” vote will take place at the 2023 Annual Meeting of Stockholders. See "Proposal Three—Advisory Vote to Approve Named Executive Officer Compensation ("Say on Pay") on page 79 for additional information on the 2023 "Say on Pay" vote.
Our executive compensation program is designed to pay for performance and effectively balance executive and stockholder interests. The Committee considered the outcome of the “Say on Pay” vote from the 2020 Annual Meeting, and continues to believe that our executive compensation structure, which includes long-term agreements with each of our NEOs and delivers a significant majority of NEO compensation in performance-based vehicles, is effective in meeting our compensation objectives.
While the Committee has maintained its overall compensation philosophy since the 2020 Annual Meeting, it recognized the opportunity to set a go-forward executive compensation program for a larger, more multifaceted organization. Based on detailed consideration and the feedback it received from stockholders during its 2022 engagement efforts, the Committee is implementing several elements that stockholders recommended in its 2023 executive compensation program, as described on page 63 "Looking Ahead: 2023 Executive Compensation Changes". In addition, the Committee recommended to the WBD Board, and the WBD Board is recommending to stockholders that future "Say on Pay" advisory votes take place every year. See "Proposal Four—Advisory Vote on the Frequency of Future "Say on Pay" Votes" on page 80.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Looking Ahead: 2023 Executive Compensation Program
During the fall of 2022, our Board Chair and the Chair of the Committee met with several of our largest stockholders, as further described on page 49 above. The Committee also met several times with its independent compensation consultants to ascertain how it might adjust the Company's executive compensation program for 2023 in order to better align with stockholder expectations and compensation best practices. The Committee ultimately decided to implement the following changes for the 2023 Executive Compensation Program:
■Reintroduced stock options for NEOs (other than the CEO who received an option grant upon execution of his employment agreement) to provide an element of executive compensation that is directly tied to stock price appreciation;
■Reintroduced PRSUs for NEOs (other than the CEO, who already receives PRSUs annually pursuant to his employment agreement) that will be earned based on Company performance against a designated financial metric over a one-year performance period (2023) and the Company's relative TSR, as compared to its peers in the S&P 500 Media and Entertainment Index, over a three-year period (2023-2025). This element will incent short-term financial performance while also rewarding stock price appreciation relative to peers; and
■Differentiated the financial metrics being used in the 2023 annual cash bonus programs for the NEOs and the CEO and CFO and the metrics being used in the 2023 LTI program, to incent our leadership team to deliver across several key financial objectives.
The Committee is also very cognizant of the importance for the Company's long-term financial health to reduce its leverage. In furtherance of these objectives, on March 6, 2023, the Committee announced its decision to implement an incremental incentive compensation program designed to promote and reward achievement of the Company’s initiatives with regard to increasing free cash flow and reducing leverage. As part of this program, in addition to our normal annual awards of equity-based incentive compensation awards, in 2023 the Committee determined it would do the following:
■make approximately $11.75 million of one-time, non-recurring grants of PRSUs to certain of our executive officers, including each of our NEOs (other than our CEO), as well as to select other executives with functional responsibility for cash flow management, debt reduction and synergy achievement;
■establish a separate pool of approximately $15 million of RSUs to recognize other employees throughout the organization, whose retention and efforts are also important to the overall success of the Company and these initiatives; and
■amend our CEO's employment agreement to, among other things:
■create upside potential (up to 200% of target) on his annual PRSU awards in 2023, 2024 and 2025 for over-delivery of a specific financial metric to be determined by the Committee each year. For 2023, the selected metric will be adjusted free cash flow;
■provide an additional grant of $11.5 million of PRSUs in 2023, 2024 and 2025 which will be based on a financial metric and could be earned at 200% of target for over-performance. For 2023 this metric will be adjusted free cash flow;
■shift the CEO's annual cash bonus mix, beginning in 2023, from 50% financial/50% strategic to 70% financial/30% strategic;
■provide flexibility for the Committee to set a one- or two-year performance period for his PRSU grants in 2023, 2024 and 2025; and
■shift the distribution schedule for the CEO's annual PRSUs and additional PRSUs to provide that 70% of any earned awards will be distributed at vesting, with the remaining 30% not distributed until the earlier to occur of three years after vesting or six months following his termination.
For additional information on these changes, please see the Company's Current Report on Form 8-K filed with the SEC on March 6, 2023. The March 2023 changes to our executive compensation program are designed to further incentivize the Company’s employees, including members of our leadership team and others whose efforts are critical to achieving the key near-term financial objectives of increased free cash flow and reduced leverage. The Committee and the Board believe that these additional incentives offer a more competitive package against the backdrop of ongoing industry-wide transformation and economic headwinds, and better position the Company to advance core drivers of stockholder value.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Executive Compensation Tables
The following tables set forth compensation information for our NEOs.
2022 Summary Compensation Table
The following Summary Compensation Table provides information concerning the 2022 compensation of our Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executive officers who were serving as executive officers at fiscal year end (December 31, 2022) (“named executive officers” or “NEOs”). Information is only included for Mr. Zeiler for those years within the last three fiscal years in which he was an NEO. For a complete understanding of the table, please read the footnotes and narrative disclosures that follow the table.
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Name and Principal
Position | Year | Salary
($)(1) | Bonus
($) | Stock
Awards
($)(2) | Option
Awards
($)(3) | Non-Equity
Incentive
Plan
Compensation
($)(4) | All Other
Compensation
($)(5) | Total
($) |
David M. Zaslav
President and Chief
Executive Officer | 2022 | 3,057,692 | | | | 12,025,683 | | 1,448,138 | | 21,831,456 | | 925,489 | | (6) | 39,288,458 | |
| 2021 | 3,000,000 | | 4,400,000 | | | 13,165,436 | | 202,889,764 | | 22,000,000 | | 1,118,281 | |
| 246,573,481 | |
| 2020 | 3,000,000 | | | | 12,501,020 | | — | | 21,799,921 | | 409,521 | | | 37,710,462 | |
Gunnar Wiedenfels
Chief Financial
Officer | 2022 | 1,952,996 | | | | 8,061,276 | | — | | 3,472,000 | | 18,342 | | | 13,504,614 | |
| 2021 | 1,682,761 | | | | 2,194,259 | | 2,791,808 | | 4,632,970 | | 17,667 | | | 11,319,466 | |
| 2020 | 1,195,267 | | | | 1,823,081 | | 1,518,050 | | 2,359,282 | | 17,442 | | | 6,913,122 | |
Bruce L. Campbell Chief Revenue and Strategy Officer | 2022 | 2,386,815 | | | | 6,558,066 | | — | | 4,780,000 | | 19,164 | | | 13,744,045 | |
| 2021 | 1,927,247 | | | | 2,194,259 | | 2,791,808 | | 5,690,558 | | 18,723 | | | 12,622,595 | |
| 2020 | 1,898,924 | | | | 1,666,825 | | 1,387,929 | | 4,152,113 | | 18,640 | | | 9,124,431 | |
Jean-Briac Perrette(7)
CEO and President,
Global Streaming and Games | 2022 | 2,337,916 | | | | 6,861,378 | | — | | 4,780,000 | | 95,904 | | (8) | 14,075,198 | |
| 2021 | 2,184,711 | | | | 2,194,259 | | 2,791,808 | | 5,900,498 | | 3,580 | | | 13,429,240 | |
| 2020 | 2,012,056 | | | | 1,823,081 | | 1,518,050 | | 4,695,645 | | 367,922 | | | 10,416,754 | |
Gerhard Zeiler*(9)
President,
International | 2022 | 1,330,813 | | 2,946,504 | | (10) | 3,178,270 | | — | | 2,734,429 | | 77,573 | |
| 10,267,589 | |
* Partial year. Mr. Zeiler joined the Company on April 8, 2022 upon completion of the WarnerMedia Transaction.
(1)The dollar amounts in this column represent the actual salary amount that each NEO received in 2022. Amounts may vary from salary amounts stated in their respective employment agreements due to increases from Annual Base Salary Review (as discussed in the CD&A) as well as timing of payments made under our normal payroll practices.
(2)The amounts in this column represent the grant date fair value, computed in accordance with FASB ASC Topic 718, of PRSUs and RSUs for each of the applicable fiscal years. For each of the PRSU and RSU awards, the grant date fair value is calculated using the closing price of our common stock on the grant date as if these awards were fully vested and issued on the grant date. See Note 15 to our 2022 Form 10-K for information regarding the value determination of the PRSU awards. There can be no assurance that these grant date fair values will ever be realized by any NEO. See the 2022 Grants of Plan-Based Awards table for additional information on PRSU and RSU awards made in 2022.
(3)The amounts in this column reflect the grant date fair value computed in accordance with FASB ASC Topic 718 with respect to option awards granted to our NEOs for each of the applicable fiscal years. We calculate the grant date fair value using the Black-Scholes model, using the assumptions described in Note 15 to our 2022 Form 10-K. These amounts do not reflect actual payments made to our NEOs. There can be no assurance that the full grant date fair value will ever be realized by any NEO.
(4)These amounts reflect the cash performance awards earned by the applicable NEO for 2022. These amounts were calculated as described in the CD&A beginning on page 43.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
(5)The table below outlines payments made on behalf of the NEOs under our U.S. benefit plans in 2022. For more information regarding these benefits, please see “NEO Compensation in 2022—Retirement Plans and Other Benefits” beginning on page 60 in the CD&A.
| | | | | | | | | | | | | | | | | |
| | Disability/Long
Term Care
($) | | Matching Contributions |
| Basic Life
($) | | 401(k)
($) | SRP
($) |
| Mr. Zaslav | 636 | | 6,474 | | | 13,725 | | 0 | |
| Mr. Wiedenfels | 636 | | 3,981 | | | 13,725 | | 0 | |
| Mr. Campbell | 636 | | 5,043 | | | 13,485 | | 0 | |
| Mr. Perrette | 220 | | 519 | | | 0 | | 0 | |
| Mr. Zeiler | 2,457 | | 1,309 | | | 0 | | 0 | |
In addition to the U.S. benefits described above, we made payments (i) on behalf of Mr. Perrette as follows: $2,148 for U.K. life assurance, $1,973 for disability insurance and $2,049 for a U.K. pension plan and (ii) on behalf of Mr. Zeiler as follows: $65,670 for an Austrian pension plan.
(6)The amount reported includes $16,800 for a car allowance and $50,462 for personal security services. This amount also includes $825,675 for personal use of WBD Aircraft (including family travel for which Mr. Zaslav is not provided a tax gross-up) and $11,718 for tax gross-ups associated with business associate and spousal travel at the request of the Company that is considered business use. See “NEO Compensation in 2022—Retirement Plans and Other Benefits—Aircraft Usage” on page 61 in the CD&A for more information regarding our policies for Mr. Zaslav’s use of the WBD Aircraft.
(7)Mr. Perrette was based in the U.K. for a portion of 2022. To the extent Mr. Perrette was paid in British pounds, we converted such amounts to United States dollars using a conversion rate of 1.23, which is the average of the monthly Bloomberg spot rates as of the second business day prior to each month end during 2022. This may not have been the conversion rate in effect at the time the payments were made to Mr. Perrette.
(8)During 2022, Mr. Perrette was relocated back to the U.S. and received relocation benefits under our standard relocation policies. This amount includes $37,485 for tax services, $110,715 for relocation services and $89,209 for associated tax gross-ups. The Company also provided tax equalization payments for Mr. Perrette, which resulted in a refund to the Company of $148,414.
(9)Mr. Zeiler is based in Austria and his salary is denominated in Euros. To the extent Mr. Zeiler is paid in Euros, we converted such amounts to United States dollars using a conversion rate of 1.05, which is the average of the monthly Bloomberg spot rates as of the second business day prior to each month end during 2022. This may not have been the conversion rate in effect at the time the payments were made to Mr. Zeiler.
(10)The amount reported in this column for Mr. Zeiler represents a retention bonus awarded to Mr. Zeiler by WarnerMedia prior to the closing of the WarnerMedia Transaction that became payable to him by WBD 90 days after the closing of the WarnerMedia Transaction.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2022 Grants of Plan-Based Awards
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | All
Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#) | All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | Exercise
or Base
Price of
Option
Awards
($/Sh) | Grant Date
Fair Value
of Stock
and Option
Awards
($) |
| Name | Grant Date | Approval
Date | | Threshold
($) | Target(1)
($) | Maximum(2)
(#) | | Threshold
(#) | Target
(#) | Maximum
(#) | |
D. Zaslav
WBD
Common
Stock | | | | 0 | | 22,000,000 | | | 27,500,000 | | | | | | | | | | | | | | | |
| 1/3/2022 | 5/16/2021 | | | | | | | | | | | | | | | | 198,132 | | (3) | 37.43 | | 1,448,138 | |
| 3/1/2022 | 2/28/2022 | | | | | | | | 256,685 | | (4) | 320,856 | | (4) | | | | | | | | 9,019,262 | |
| 3/1/2022 | 2/28/2022 | | | | | | | | 53,476 | | (5) | 106,952 | | (5) | | | | | | | | 3,006,421 | |
G. Wiedenfels | | 0 | | 3,500,000 | | | 8,750,000 | | | | | | | | | | | | | | | |
WBD
Common
Stock | 3/1/2022 | 2/28/2022 | | | | | | | | | | | | | | 213,904 | | (6) | | | | 6,012,841 | |
| 7/15/2022 | 5/3/2022 | | | | | | | | | | | | | | 146,736 | | (7) | | | | 2,048,435 | |
B. Campbell
WBD
Common
Stock | | | | 0 | | 5,000,000 | | | 12,500,000 | | | | | | | | | | | | | | | |
| 3/1/2022 | 2/28/2022 | | | | | | | | | | | | | | 160,428 | | (6) | | | | 4,509,631 | |
| 7/15/2022 | 5/3/2022 | | | | | | | | | | | | | | 146,736 | | (7) | | | | 2,048,435 | |
J. Perrette
WBD
Common
Stock | | | | 0 | | 5,000,000 | | | 12,500,000 | | | | | | | | | | | | | | | |
| 3/1/2022 | 2/28/2022 | | | | | | | | | | | | | | 156,863 | | (6) | | | | 4,409,419 | |
| 8/3/2022 | 5/3/2022 | | | | | | | | | | | | | | 146,736 | | (7) | | | | 2,451,959 | |
Gehard Zeiler
WBD Common Stock | | | | 0 | | 3,031,518 | | (8) | 7,578,795 | | (8) | | | | | | | | | | | | | |
| 4/8/2022 | 4/8/2022 | | | | | | | | | | | | | | 130,097 | | (9) | | | | 3,178,270 | |
(1)These amounts reflect the possible payouts with respect to awards of annual cash bonus for performance in 2022. Each of the foregoing bonuses are subject to the Compensation Committee’s authority to exercise “downward discretion.” The amounts of annual cash bonus awards actually paid for performance in 2022 are disclosed in the Non-Equity Incentive Plan Compensation column of the 2022 Summary Compensation Table. For more information regarding the terms of these annual cash bonus awards, please see “Compensation Discussion and Analysis—NEO Compensation in 2022—Annual Cash Bonus Awards,” beginning on page 52.
(2)Amounts in excess of this maximum may be paid by the Committee on a discretionary basis.
(3)These amounts represent stock options that will vest 25% per year for four years beginning on May 16, 2023, and which will expire on January 3, 2029.
(4)These amounts represent PRSU awards. The PRSUs vest if Mr. Zaslav achieves certain one-year strategic performance goals, which the Compensation Committee certified were achieved at 100% in February 2023. Of the grant, 70% was distributed on February 27, 2023 and 30% will be distributed on January 6, 2024, assuming Mr. Zaslav continues to be employed by us. For more information regarding these awards, please see “Compensation Discussion and Analysis— NEO Compensation in 2022—Long-Term Incentive Compensation.”
(5)These amounts represent PRSU awards. The PRSUs vest if WBD achieves certain one-year financial performance targets. In February 2023, the Compensation Committee certified that, based on WBD’s performance, these PRSUs would vest at 93.7%. Of the amount that vested, 70% was distributed on February 27, 2023 and 30% will be distributed on January 6, 2024, assuming Mr. Zaslav continues to be employed by us. For more information regarding these awards, please see “Compensation Discussion and Analysis—NEO Compensation in 2022—Long-Term Incentive Compensation.”
(6)These amounts represent RSUs that will vest in four equal installments on the first, second, third, and fourth anniversaries of the grant date.
(7)These amounts represent RSUs that will vest in three substantially equal installments on the first, second, and third anniversaries of the grant date.
(8)Mr. Zeiler's compensation is paid in Euros. Therefore, financial performance of Mr. Zeiler’s bonus payout was determined in Euros. Those amounts were then converted into United States dollars at the rate of 1.05 United States dollars per Euro, which is the average of the monthly Bloomberg spot rates as of the second business day prior to each month end during 2022. See “Compensation Discussion and Analysis—NEO Compensation in 2022—Annual Cash Bonus Awards” on page 52 for more information on the determination of Mr. Zeiler’s bonus payout.
(9)These amounts represent RSUs that were converted as of the closing of the WarnerMedia Transaction, pursuant to the terms of the transaction documents. They will vest in various installments on each of March 15, 2023, March 15, 2024, and March 15, 2025.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Outstanding Equity Awards at 2022 Fiscal Year-End
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
| Name | Number of
securities
underlying
unexercised
options (#)
exercisable | Number of
securities
underlying
unexercised
options (#)
unexercisable | Option
exercise
price
($) | Option
expiration
date | | Number of shares or units of stock
that have not
vested (#)(1) | Market value of shares or units of stock that have not vested ($)(1) |
D. Zaslav
WBD Common Stock | | | | | | | | | |
| 2,252,981 | 182,674 | (2) | $27.35 | 7/16/2025 | | 30,291 | (17)(18) | 287,159 |
| 1,879,643 | 331,701 | (3) | $28.72 | 7/16/2025 | | 91,204 | (17)(19) | 864,614 |
| 1,724,324 | 431,080 | (4) | $30.15 | 7/16/2025 | | 84,858 | (17)(20) | 804,454 |
| 1,675,418 | 718,036 | (5) | $31.66 | 7/16/2025 | | 28,286 | (17)(21) | 268,151 |
| 1,100,043 | 471,446 | (6) | $33.24 | 7/16/2025 | | 320,856 | (17)(22) | 3,041,715 |
| 692,510 | 296,789 | (6) | $33.24 | 7/16/2025 | | 106,952 | (17)(23) | 1,013,905 |
| 408,821 | 1,226,463 | (7) | $35.65 | 5/16/2028 | | | | |
| 0 | 1,519,414 | (8) | $37.43 | 5/16/2028 | | | | |
| 0 | 1,557,685 | (9) | $39.30 | 5/16/2028 | | | | |
| 0 | 1,603,292 | (10) | $41.27 | 5/16/2028 | | | | |
| 0 | 1,682,083 | (11) | $43.33 | 5/16/2028 | | | | |
| 0 | 1,360,127 | (12) | $35.65 | 5/16/2028 | | | | |
| 0 | 1,421,234 | (13) | $37.43 | 5/16/2028 | | | | |
| 0 | 1,401,917 | (14) | $39.30 | 5/16/2028 | | | | |
| 0 | 1,270,188 | (15) | $41.27 | 5/16/2028 | | | | |
| 0 | 1,322,488 | (16) | $43.33 | 5/16/2028 | | | | |
| 0 | 198,132 | (8) | $37.43 | 1/3/2029 | | | | |
G. Wiedenfels
WBD Common Stock | 40,001 | 0 | | $26.21 | 5/22/2024 | | 20,589 | (27) | 195,184 |
| 50,741 | 0 | | $24.06 | 3/1/2025 | | 47,528 | (28)) | 450,565 |
| 46,296 | 46,296 | (24) | $29.08 | 3/1/2026 | | 28,287 | (29) | 268,161 |
| 50,134 | 100,268 | (25) | $25.70 | 2/28/2027 | | 213,904 | (30) | 2,027,810 |
| 32,636 | 97,910 | (26) | $58.18 | 3/1/2028 | | 146,736 | (31) | 1,391,057 |
B. Campbell
WBD Common Stock | 202,962 | 0 | | $24.06 | 3/1/2025 | | 18,824 | (27) | 178,452 |
| 84,656 | 42,328 | (24) | $29.08 | 3/1/2026 | | 43,455 | (28) | 411,953 |
| 91,673 | 91,673 | (25) | $25.70 | 2/28/2027 | | 28,287 | (29) | 268,161 |
| 32,636 | 97,910 | (26) | $58.18 | 3/1/2028 | | 153,078 | (36) | 1,451,179 |
| | | | | | 140,014 | (32) | 1,327,333 |
J. Perrette
WBD Common Stock | 54,969 | 0 | | $24.06 | 3/1/2025 | | 46,687 | (33) | 442,593 |
| 46,296 | 46,296 | (24) | $29.08 | 3/1/2026 | | 20,589 | (27) | 195,184 |
| 50,134 | 100,268 | (25) | $25.70 | 2/28/2027 | | 47,528 | (28) | 450,565 |
| 32,636 | 97,910 | (26) | $58.18 | 3/1/2028 | | 28,287 | (29) | 268,161 |
| | | | | | 156,863 | (30) | 1,487,061 |
| | | | | | 146,736 | (34) | 1,391,057 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
| Name | Number of
securities
underlying
unexercised
options (#)
exercisable | Number of
securities
underlying
unexercised
options (#)
unexercisable | Option
exercise
price
($) | Option
expiration
date | | Number of
shares
or units of
stock
that have not
vested (#)(1) | Market value
of shares
or units of
stock that
have not
vested ($)(1) |
G. Zeiler
WBD Common Stock | | | | | | | | | |
| | | | | | 130,097 | | (35) | 1,233,320 | |
(1)For RSUs and PRSUs, the value is calculated based on the grant amount and assumes target performance for PRSUs.
(2)This award vested 25% on January 2, 2020, 25% on January 2, 2021 and 25% on January 2, 2022. On April 8, 2022, upon the closing of the WarnerMedia Transaction, 70% of the then-remaining unvested portion of this award vested. The award became fully vested on January 2, 2023.
(3)This award vested 25% on January 2, 2021 and 25% on January 2, 2022. On April 8, 2022, upon the closing of the WarnerMedia Transaction, 70% of the then-remaining unvested portion of this award vested, leaving 30% still unvested. Of that unvested 30% portion, 50% vested on January 2, 2023 and 50% will vest on December 31, 2023.
(4)33% of this award vested on January 2, 2022. On April 8, 2022, upon the closing of the WarnerMedia Transaction, 70% of the then-remaining unvested portion of this award vested, leaving 30% still unvested. Of that unvested 30% portion, 50% vested on January 2, 2023 and 50% will vest on December 31, 2023.
(5)On April 8, 2022, upon the closing of the WarnerMedia Transaction, 70% of this award vested, leaving 30% still unvested. Of that unvested 30% portion, 50% vested on January 2, 2023 and 50% will vest on December 31, 2023.
(6)On April 8, 2022, upon the closing of the WarnerMedia Transaction, 70% of this award vested, leaving 30% still unvested. The remaining unvested 30% of this award will vest on December 31, 2023.
(7)This award vested 25% on May 16, 2022 and will vest 25% on each of May 16, 2023, May 16, 2024 and May 16, 2025.
(8)This award vests 25% annually over four years beginning on May 16, 2023.
(9)This award vests 33% on May 16, 2024 and May 16, 2025 and 34% on May 16, 2026.
(10)This award vests 50% on May 16, 2025 and May 16, 2026.
(11)This award vests 100% on May 16, 2026.
(12)This award vests 25% annually over four years beginning on January 1, 2024.
(13)This award vests 25% on January 1, 2025, January 1, 2026, January 1, 2027, and December 31, 2027.
(14)This award vests 33% on January 1, 2026 and January 1, 2027 and 34% on December 31, 2027.
(15)This award vests 50% on January 1, 2027 and 50% on December 31, 2027.
(16)This award vests 100% on December 31, 2027.
(17)These amounts represent PRSUs granted pursuant to the terms of Mr. Zaslav’s employment agreement. The vesting of the PRSUs is subject to the achievement of certain performance metrics. For details regarding vesting and performance criteria for these PRSUs, please see “Compensation Discussion and Analysis—NEO Compensation in 2022—Long-Term Incentive Compensation.”
(18)These amounts represent PRSUs granted to Mr. Zaslav on February 28, 2020, with a performance period that expired December 31, 2020. In February 2021, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 99.64%, with 50% of the units distributed in February 2021, 25% distributed in January 2022 and the remaining 25% distributed in January 2023.
(19)These amounts represent PRSUs granted to Mr. Zaslav on February 28, 2020, with a performance period that expired December 31, 2020. In February 2021, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 100%, with 50% of the units distributed in February 2021, 25% distributed in January 2022 and the remaining 25% distributed in January 2023.
(20)These amounts represent PRSUs granted to Mr. Zaslav on March 1, 2021 with a performance period that expired December 31, 2021. In February 2022, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 100%, with 50% of the units distributed in February 2022, 25% distributed in January 2023 and the remaining 25% to be distributed in January 2024.
(21)These amounts represent PRSUs granted to Mr. Zaslav on March 1, 2021, with a performance period that expired December 31, 2021. In February 2022, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 100%, with 50% of the units distributed in February 2022, 25% distributed in January 2023 and the remaining 25% to be distributed in January 2024.
(22)These amounts represent PRSUs granted to Mr. Zaslav on March 1, 2022 with a performance period that expired December 31, 2022. In February 2023, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 100%, with 70% of the units distributed in February 2023, and the remaining 30% to be distributed in January 2024.
(23)These amounts represent PRSUs granted to Mr. Zaslav on March 1, 2022, with a performance period that expired December 31, 2022. In February 2022, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 93.67%, with 70% of the units distributed in February 2023, and the remaining 30% to be distributed in January 2024.
(24)These stock options vest in four equal annual installments beginning March 1, 2020, the first anniversary of the grant date.
(25)These stock options vest in four equal annual installments beginning February 28, 2021, the first anniversary of the grant date.
(26)These stock options vest in four equal annual installments beginning March 1, 2022, the first anniversary of the grant date.
(27)These RSU awards vested 33% on March 1, 2021, 33% on March 1, 2022 and 34% on March 1, 2023.
(28)These RSU awards vested 33% on February 28, 2022, 33% on February 28, 2023 and will vest 34% on February 28, 2024.
(29)These RSU awards vested 25% on March 1, 2022, 25% on March 1, 2023, and will vest 25% on each of March 1, 2024 and March 1, 2025.
(30)These RSU awards vested 25% on March 1, 2023, and will vest 25% on each of March 1, 2024, March 1, 2025 and March 1, 2026.
(31)This RSU award will vest in three substantially equal installments on July 11, 2023, July 11, 2024 and July 11, 2025.
(32)On December 28, 2022, 6,722 RSUs from the overall award of 146,736 RSUs were withheld to pay for FICA taxes. The remaining 140,014 RSUs will vest in three substantially equal installments on July 9, 2023, July 9, 2024 and July 9, 2025.
(33)This RSU award vested 33% on July 1, 2021, 33% on July 1, 2022 and will vest 34% on July 1, 2023.
(34)This RSU award will vest in three substantially equal installments on August 2, 2023, August 2, 2024 and August 2, 2025.
(35)This RSU award vested approximately 50% on February 15, 2023 and will vest 32% on February 15, 2024 and 18% on February 15, 2025.
(36)On December 28, 2022, 7,350 RSUs from the overall award of 160,428 RSUs were withheld to pay for FICA taxes. Of the remaining 153,078 RSUs, 25% vested on March 1, 2023, and 25% will vest on each of March 1, 2024, March 1, 2025 and March 1, 2026.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Option Exercises and Stock Vested in 2022
| | | | | | | | | | | | | | | | | | | | | | | |
| Option awards | | Stock awards |
| Name | Number of shares
acquired on exercise
(#) | Value realized
on exercise
($)(1) | | Number of shares
acquired on vesting
(#) | Value realized
on vesting
($)(2) |
| D. Zaslav | | | | | | | |
| Discovery, Inc. Series A Common Stock | 451,985 | | (3) | 1,505,110 | | | | | |
| Discovery, Inc. Series C Common Stock | 451,985 | | (3) | 1,708,503 | | | | | |
WBD Common Stock(4) | | | | | 631,126 | | (5) | 16,496,186 | |
| G. Wiedenfels | | | | | | | |
WBD Common Stock(4) | | | | | 73,791 | | (6) | 2,072,860 | |
| B. Campbell | | | | | | | |
WBD Common Stock(4) | | | | | 136,570 | | (7) | 3,582,855 | |
| J. Perrette | | | | | | | |
WBD Common Stock(4) | | | | | 122,224 | | (8) | 2,787,258 | |
| G. Zeiler | | | | | | | |
WBD Common Stock(4) | | | | | 0 | | | 0 | |
(1)Represents the value of cash and stock actually received upon exercise of the applicable SARs and stock options listed in the corresponding column of the table. For SARs, the value was computed by determining the difference between: (i) the average closing price of the underlying Discovery Series A common stock or Series C common stock (as applicable) on the 10 days preceding and including the award grant date and the 10 days following the award grant date and (ii) the average closing price of the underlying Discovery Series A common stock or Series C common stock (as applicable) on the 10 days preceding and including the exercise date and the 10 days following the exercise date. In connection with the WarnerMedia Transaction, each issued and outstanding share of Discovery Series A common stock and Discovery Series C common stock was reclassified and automatically converted into one share of WBD common stock.
(2)Represents the value realized upon RSU and PRSU vesting and distributions listed in the corresponding column of the table, using the closing market price of our common stock on the vesting or distribution date (as applicable).
(3)Represents the vesting and automatic exercise of Mr. Zaslav’s January 2, 2018 SARs grant.
(4)WBD Common Stock as used herein includes Discovery Series A common stock during the period from January 1, 2022 through April 8, 2022 and WBD Series A common stock during the period from April 12, 2022 through December 31, 2022
(5)Represents the distribution of Mr. Zaslav’s 127,075 shares of Discovery Series A common stock from his February 23, 2017 PRSU grant; 154,194 shares of Discovery Series A common stock from his March 1, 2018; 85,840 shares of Discovery Series A common stock from his March 1, 2019 PRSU grant; 29,377 shares of Discovery Series A common stock from his March 18, 2019 PRSU grant; 121,496 shares of Discovery Series A common stock from his February 28, 2020 PRSU grant; and 113,144 shares of Discovery Series A common stock from his March 1, 2021 PRSU grant.
(6)Represents the vesting of RSUs granted to Mr. Wiedenfels on March 1, 2018, March 1, 2019, February 28, 2020, and March 1, 2021.
(7)Represents the vesting of RSUs granted to Mr. Campbell on March 1, 2018, March 1, 2019, February 28, 2020, and March 1, 2021. Additionally, this represents the vesting of RSUs granted on March 1, 2022 and July 15, 2022 that were distributed for taxes due to retirement eligibility.
(8)Represents vesting of RSUs granted to Mr. Perrette on March 1, 2018, February 4, 2019, March 1, 2019, February 28, 2020, and March 1, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2022 Nonqualified Deferred Compensation(1)
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | Executive
contributions
in last FY
($) | Registrant
contributions
in last FY
($) | Aggregate
earnings
in last FY
($) | Aggregate
withdrawals/
distributions
($) | Aggregate
balance
at last FYE
($) |
| D. Zaslav | — | | | — | | 965,365 | | — | | 73,712,751 | | (3) |
| G. Wiedenfels | — | | | — | | (547,950) | | — | | 2,745,766 | | (4) |
| B. Campbell | 242,427 | | (2) | — | | (1,330,768) | | — | | 7,180,588 | | (5) |
| J. Perrette | — | | | — | | (420,499) | | — | | 2,098,964 | | (6) |
| G. Zeiler | — | | | — | | — | | — | | — | | |
(1)This table provides information with respect to the SRP for senior employees. For more information regarding the SRP, please see “Compensation Discussion and Analysis—2022 NEO Compensation—Retirement Benefits” above.
(2)This amount is also reported under “Salary” for 2022 in the 2022 Summary Compensation Table.
(3)$41,895,169 of this amount was reported as compensation to Mr. Zaslav in our Summary Compensation Tables for previous years.
(4)$2,034,602 of this amount was reported as compensation to Mr. Wiedenfels in our Summary Compensation Tables for previous years.
(5)$4,220,340 of this amount was reported as compensation to Mr. Campbell in our Summary Compensation Tables for previous years.
(6)$1,401,446 of this amount was reported as compensation to Mr. Perrette in our Summary Compensation Tables for previous years.
Potential Payments upon Termination or Change in Control
The following table and accompanying narrative disclosures summarize the potential payments and other benefits required to be made available to the NEOs in connection with a termination of their employment or a change in control. Payments or other benefits under benefit plans and policies that apply equally to all salaried employees participating in such plans, including our life insurance plan, are not included below. Similarly, amounts that could be recognized under equity awards that were vested as of December 31, 2022 are not included below, as the treatment of the vested awards for our NEOs is identical to the treatment afforded all employees under the termination scenarios described in this section.
In the event of a change of control, there is a double trigger on potential payments to the NEOs (other than the CEO), requiring both a change of control and an involuntary termination without cause or voluntary termination for good reason occurring within 12 months of the change of control. Under no circumstances would any of the NEOs be eligible for a post-termination payment if they were terminated for "cause." Defined terms such as “cause,” “good reason,” and “change of control” used in this section are described under “Defined Terms Used in this Section” below.
The quantitative examples provided in the table below assume:
■the applicable NEO ceased to be employed by WBD as of the close of business on December 31, 2022;
■the applicable NEO (other than the CEO) was eligible to receive their standard 2022 cash bonus (cash bonus target times Company performance, no performance pool allocation or other discretionary amounts) in all scenarios because the terms of our ICP and other cash bonus programs provide that cash bonus awards are deemed to be earned if the individual is employed on December 31, 2022;
■for stock option awards, the value shown in the table is calculated on a grant-by-grant basis by multiplying the number of unvested options granted by the difference between the exercise price for such option and $9.48 the closing price of our common stock on December 30, 2022, the last trading day of the year;
■For PRSU/RSU awards, the value shown in the table is calculated on a grant-by-grant basis by multiplying the number of unvested PRSUs/RSUs granted by $9.48, the closing price of our common stock on December 30, 2022, the last trading day of the year;
■no NEO met the definition of “retirement” in the applicable agreements and plans as of December 31, 2022;
■all accrued salary at that assumed termination date was previously paid; and
■all accrued vacation for 2022 was used.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Quantification of Payments Upon Termination or Change in Control
The table below summarizes the potential benefits that would have been paid to each of the NEOs had his employment been terminated under any of the circumstances noted as of December 31, 2022. Please see "Defined Terms Used in this Section" for additional information. The summary provided below is qualified in its entirety by reference to the full text of the applicable NEO employment agreement, each of which is filed as an exhibit to the 2022 Form 10-K.
| | | | | | | | | | | | | | | | | | | | | | | |
| Voluntary Termination ($) | Death ($) | Disability ($) | Involuntary Termination Without Cause ($) | Voluntary Termination for Good Reason ($) | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | Voluntary Termination Within 30 Days after 31st Day Following Change in Control ($) |
D. Zaslav | | | | | | |
| Base Salary | 0 | | 0 | | 0 | | 6,000,000 | | 6,000,000 | | 6,000,000 | | 6,000,000 | |
| Bonus | 21,824,000 | | 21,824,000 | | 21,824,000 | | 45,824,000 | | 45,824,000 | | 45,824,000 | | 45,824,000 | |
| Stock Options | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | |
| PRSUs | 0 | | 6,279,998 | | 6,279,998 | | 6,279,998 | | 6,279,998 | | 6,279,998 | | 6,279,998 | |
| Cobra Premiums | 0 | | 27,331 | | 44,033 | | 27,331 | | 27,331 | | 27,331 | | |
| Total | 21,824,000 | | 28,131,329 | | 28,148,031 | | 58,131,329 | | 58,131,329 | | 58,131,329 | | 58,103,998 | |
G. Wiedenfels | | | | | | |
| Base Salary | 0 | | 0 | | 0 | | 4,000,000 | | 4,000,000 | | 4,000,000 | | 0 | |
| Bonus | 3,472,000 | | 3,472,000 | | 3,472,000 | | 7,000,000 | | 7,000,000 | | 7,000,000 | | 0 | |
| Stock Options | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | |
| RSUs | 0 | | 4,332,777 | | 4,332,777 | | 1,945,913 | | 1,945,913 | | 4,332,777 | | 0 | |
| Cobra Premiums | 0 | | 0 | | 63,893 | | 39,658 | | 39,658 | | 39,658 | | 0 | |
| Repatriation | 0 | | 191,400 | | 191,400 | | 191,400 | | 191,400 | | 191,400 | | 0 | |
| Total | 3,472,000 | | 7,996,177 | | 8,060,070 | | 13,176,971 | | 13,176,971 | | 15,563,835 | | 0 | |
B. Campbell | | | | | | |
| Base Salary | — | | — | | — | | 5,000,000 | | 5,000,000 | | 5,000,000 | | — | |
| Bonus | 4,780,000 | | 4,780,000 | | 4,780,000 | | 10,000,000 | | 10,000,000 | | 10,000,000 | | — | |
| Stock Options | — | | — | | — | | — | | — | | — | | — | |
| RSUs | 2,778,512 | | 3,637,078 | | 3,637,078 | | 3,637,078 | | 3,637,078 | | 3,637,078 | | — | |
| Cobra Premiums | — | | — | | 63,893 | | 39,658 | | 39,658 | | 39,658 | | — | |
| Total | 7,558,512 | | 8,417,078 | | 8,480,971 | | 18,676,736 | | 18,676,736 | | 18,676,736 | | — | |
J. Perrette | | | | | | |
| Base Salary | 0 | | 0 | | 0 | | 5,000,000 | | 5,000,000 | | 5,000,000 | | 0 | |
| Bonus | 4,780,000 | | 4,780,000 | | 4,780,000 | | 10,000,000 | | 10,000,000 | | 10,000,000 | | 0 | |
| Stock Options | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | |
| RSUs | 0 | | 4,234,621 | | 4,234,621 | | 1,675,539 | | 1,675,539 | | 4,234,621 | | 0 | |
| Cobra Premiums | 0 | | 0 | | 61,218 | | 37,998 | | 37,998 | | 37,998 | | 0 | |
| Total | 4,780,000 | | 9,014,621 | | 9,075,839 | | 16,713,537 | | 16,713,537 | | 19,272,619 | | 0 | |
G. Zeiler | | | | | | |
| Base Salary | 0 | | 0 | | 0 | | 3,406,200 | | 3,406,200 | | 3,406,200 | | 0 | |
| Bonus | 2,734,429 | | 2,734,429 | | 2,734,429 | | 6,063,036 | | 6,063,036 | | 6,063,036 | | 0 | |
| RSUs | 1,233,320 | | 1,233,320 | | 1,233,320 | | 1,233,320 | | 1,233,320 | | 1,233,320 | | 0 | |
| Cobra Premiums | 0 | | 0 | | 45,198 | | 28,054 | | 28,054 | | 28,054 | | 0 | |
| Total | 3,967,749 | | 3,967,749 | | 4,012,947 | | 10,730,610 | | 10,730,610 | | 10,730,610 | | 0 | |
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Defined Terms Used in this Section
The descriptions of potential payments upon termination or change of control set forth above utilize certain terms that are defined in our 2013 Incentive Plan, our WBD Stock Incentive Plan, our Incentive Compensation Program, and in each of the individual employment agreements with our NEOs. Set forth below is a summary of the defined terms referred to in this section.
Defined Terms from 2013 Incentive Plan and WBD Stock Incentive Plan
Under each NEO’s respective award agreement and our standard form of award agreement, a “Change in Control” means an “Approved Transaction,” “Control Purchase,” or “Board Change,” each as defined in the 2013 Incentive Plan or WBD Stock Incentive Plan, as applicable, provided that the transaction actually closes and the qualifying separation from employment occurs within 12 months after the closing date. The meanings of those terms, under the 2013 Incentive Plan and WBD Stock Incentive Plane are as follows:
■“Approved Transaction” means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the stockholders of the Company) shall approve (i) any consolidation or merger of the Company, or binding share exchange, pursuant to which shares of Common Stock of the Company would be changed or converted into or exchanged for cash, securities, or other property, other than any such transaction in which the common stockholders of the Company immediately prior to such transaction have the same proportionate ownership of the Common Stock of, and voting power with respect to, the surviving corporation immediately after such transaction, (ii) any merger, consolidation or binding share exchange to which the Company is a party as a result of which the Persons who are common stockholders of the Company immediately prior thereto have less than a majority of the combined voting power of the outstanding capital stock of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors immediately following such merger, consolidation or binding share exchange, (iii) the adoption of any plan or proposal for the liquidation or dissolution of the Company, or (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, provided that, with respect to clauses (i) through (iv), the Approved Transaction will not occur until the closing of the event described in such clause.
■“Board Change” means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board cease for any reason to constitute a majority thereof unless the election, or the nomination for election, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.
■“Control Purchase” under the 2013 Incentive Plan means any transaction (or series of related transactions) in which (i) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company, any Subsidiary of the Company or any employee benefit plan sponsored by the Company or any Subsidiary of the Company or any Exempt Person (as defined below)) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the Company’s securities), other than in a transaction (or series of related transactions) approved by the Board. For purposes of this definition, “Exempt Person” means each of (a) the Chair of the Board, the President and each of the directors of Discovery Holding Company as of the Distribution Date, and (b) the respective family members, estates and heirs of each of the persons referred to in clause (a) above and any trust or other investment vehicle for the primary benefit of any of such persons or their respective family members or heirs. As used with respect to any person, the term “family member” means the spouse, siblings and lineal descendants of such person.
■"Control Purchase" under the WBD Stock Incentive Plan means any transaction (or series of related transactions) in which (i) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company, any Subsidiary of the Company or any employee benefit plan sponsored by the Company or any Subsidiary of the Company) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the Company’s securities), other than in a transaction (or series of related transactions) approved by the Board.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Defined Terms from Incentive Compensation Program (“ICP”)
■“Cause” means (i) the conviction of, or nolo contendere to guilty plea, to a felony (whether any right to appeal has been or may be exercised); (ii) conduct constituting embezzlement, material misappropriation or fraud, whether or not related to the executive’s employment with the Company; (iii) conduct constituting a financial crime, material act of dishonesty or conduct in violation of the Company’s Code of Business Conduct and Ethics; (iv) improper conduct substantially prejudicial to the Company’s business; (v) willful unauthorized disclosure or use of Company confidential information; (vi) material improper destruction of Company property; (vii) willful misconduct in connection with the performance of Executive’s duties; and (vii) any other conduct that constitutes Cause under the Company’s policies and procedures.
Defined Terms from Mr. Zaslav's Employment Agreement
■“Cause” means (i) gross neglect, willful malfeasance or willful gross misconduct in connection with Mr. Zaslav’s employment which has had a material adverse effect on the business, unless he reasonably believed in good faith that such act or non-act was in or not opposed to the best interests of the Company; (ii) conviction or plea of guilty or nolo contendere to, or failure to defend against, a felony; (iii) substantial and continuous refusal by Mr. Zaslav to perform his duties or to follow the lawful directions of the Board (provided such directions do not include meeting any specific financial performance metrics); (iv) material breach of the restrictive covenants in Mr. Zaslav’s employment agreement; (v) violation of any policy of the Company that is generally applicable to all employees or all officers or the Company’s code of conduct, that Mr. Zaslav knows or reasonably should know could reasonably be expected to result in a material adverse effect on the Company; or (vi) Ms. Zaslav’s failure to cooperate, if requested by the Board, with any investigation or inquiry into his or the Company’s business practices. The “Cause” definition includes a requirement of notice and certain opportunities to cure.
■“Good Reason” means (1) reduction of Mr. Zaslav’s base salary; (2) material reduction in the amount of the annual bonus which he is eligible to earn; (3) relocation of his primary office at Discovery to a facility or location that is more than 40 miles away from his primary office location immediately prior to such relocation and is further away from his residence; (4) material reduction of his duties; or (5) material breach of his employment agreement. The “Good Reason” definition includes a requirement of notice and an opportunity to cure.
■“Change in Control” means (A) the merger, consolidation or reorganization of the Company with any other company (or our issuance of voting securities as consideration in a merger, consolidation or reorganization of a subsidiary with any other company) other than such a merger, consolidation or reorganization which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the other entity) at least 50% of the combined voting power of the voting securities of the Company or such other entity outstanding immediately after such merger, consolidation or reorganization, (B) within any 12 month period, incumbent directors (those persons serving as members of the Board at the beginning of the applicable 12-month period and any other person nominated for election or elected to the Board by a majority of the persons then serving on the Board who are treated as Incumbent Directors, unless such person’s election, or nomination for election, to the Board was as a result of, or in connection with, a proxy contest) shall cease to constitute a majority of the members of the Board; (C) any person, including a group as defined for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, other (i) than Advance/Newhouse Programming Partnership (individually and with its affiliates) or (ii) John C. Malone (individually and with his respective affiliates) or his heirs shall acquire stock representing 33% or more of the combined voting power of the voting securities of the Company; or (D) the consummation by the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets. Notwithstanding the foregoing, a Change in Control will not accelerate the payment of any “deferred compensation” (as defined under Section 409A) unless the Change in Control also qualifies as a change in control under Treasury Regulation Section 1.409A-3(i)(5). Mr. Zaslav’s employment agreement specifically excluded the WarnerMedia Transaction, but not subsequent events, from the definition of Change in Control.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Defined Terms from Mr. Wiedenfels’ Employment Agreement
■"Cause” means: (i) the conviction of, or nolo contendere or guilty plea, to a felony (whether any right to appeal has been or may be exercised); (ii) conduct constituting embezzlement, material misappropriation or fraud, whether or not related to Mr. Wiedenfels’ employment with the Company; (iii) conduct constituting a financial crime, material act of dishonesty or conduct in violation of Company’s Code of Ethics or the Company's other written policies; (iv) improper conduct substantially prejudicial to the Company’s business (whether financial or otherwise); (v) willful unauthorized disclosure or use of Company confidential information; (vi) material improper destruction of Company property; or (vii) willful misconduct in connection with the performance of Mr. Wiedenfels’ duties. “Cause” also includes him materially neglecting his duties or engaging in other conduct that breaches his employment agreement, subject to a one-time notice and cure opportunity.
■“Good Reason” means the occurrence of any of the following events without Mr. Wiedenfels’ consent: (a) a material reduction in Mr. Wiedenfels’ duties or responsibilities; (b) a material change in his work location from the New York, NY metropolitan area; (c) a material breach by us of the agreement; or (d) a change of his reporting relationship to a level below the Company’s Chief Executive Officer. The “Good Reason” definition includes a requirement of notice and an opportunity to cure.
Defined Terms from Mr. Campbell’s Employment Agreement
■“Cause” generally has the same meaning as in Mr. Wiedenfels’ employment agreement.
■“Good Reason” generally has the same meaning as in Mr. Wiedenfels' employment agreement, but does not include the removal of legal and/or consumer products and experiences divisions from Mr. Campbell's duties or responsibilities.
Defined Terms from the Mr. Perrette’s Employment Agreement
■“Cause” generally has the same meaning as in Mr. Wiedenfels’ employment agreement.
■“Good Reason” means the occurrence of any of the following events without Mr. Perrette’s consent: (a) a material reduction in Mr. Perrette’s duties or responsibilities; (b) a material change in his work location from the Los Angeles, CA metropolitan area; or (c) a change of his reporting relationship to a level lower than the CEO of the Company. The “Good Reason” definition includes a requirement of notice and an opportunity to cure.
Defined Terms from the Mr. Zeiler’s Employment Agreement
■“Cause” generally has the same meaning as in Mr. Wiedenfels’ employment agreement.
■"Good Reason” means the occurrence of any of the following events without Mr. Zeiler’s consent: (a) a material reduction in Mr. Zeiler’s duties or responsibilities; (b) a material change in his work location from the London, U.K. metropolitan area; or (c) a material breach by us of the agreement. The “Good Reason” definition includes a requirement of notice and an opportunity to cure.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Security Ownership of Certain Beneficial Owners
The following table sets forth information, to the extent known by us or ascertainable from public filings, concerning the beneficial ownership of each person or entity, other than certain of our directors and executive officers whose ownership information follows, who owns more than five percent of the outstanding shares of our common stock as of March 13, 2023.
The Percent of Class shown below is based upon 2,435,599,994 shares of our common stock outstanding as of
March 13, 2023. | | | | | | | | | | | |
| Name and Address of Beneficial Owner | Amount
and Nature
of Beneficial
Ownership | Percent of
Class (%) |
| Advance/Newhouse Programming Partnership | 198,175,592 | | (1) | 8.1% |
| One World Trade Center | | | |
| New York, New York 10007 | | | |
| BlackRock, Inc. | 164,243,555 | | (2) | 6.7% |
55 East 52nd Street | | | |
| New York, NY 10055 | | | |
| The Vanguard Group, Inc. | 213,074,622 | | (3) | 8.8% |
| 100 Vanguard Boulevard | | | |
| Malvern, PA 19355 | | | |
(1)The number of shares is based on a Schedule 13D jointly filed on April 12, 2022 on behalf of Advance/Newhouse Programming Partnership (“ANPP”), Advance/ Newhouse Partnership (“ANP”), Newhouse Broadcasting Corporation (“NBCo”), and Advance Publications, Inc. (“API”). ANPP owns directly 194,023,290 shares and ANP owns directly 4,152,302 shares. NBCo beneficially owns such shares indirectly through its 65% interest in ANPP and 61.24% interest in ANP, and API beneficially owns such shares indirectly through its 35% interest in ANPP and 38.76% interest in ANP. API and NBCo may be deemed to beneficially own the shares due to their ownership and control of ANPP and ANP. Each reporting person disclaims beneficial ownership of the shares except to the extent of its pecuniary interest. The board of directors of API makes all voting and investment decisions with respect to the shares. The members of the board of directors of API are Samuel I. Newhouse, III, Steven O. Newhouse, Michael A. Newhouse, Victor F. Ganzi, and Thomas S. Summer. Each of Samuel I. Newhouse, III, Steven O. Newhouse, Michael A. Newhouse, Victor F. Ganzi, and Thomas S. Summer disclaims beneficial ownership of the shares.
(2)The number of shares is based on a Schedule 13G filed February 1, 2023 by BlackRock Inc., a parent holding company, on behalf of the subsidiaries listed in Exhibit A of its filing, none of which beneficially owns five percent or greater of our common stock. BlackRock, Inc. is deemed to be the beneficial owner of 164,243,555 shares of our common stock as a result of acting as a parent holding company.
(3)The number of shares is based on Amendment No. 13 to Schedule 13G filed February 9, 2023 by The Vanguard Group, Inc. (“Vanguard”). Vanguard is deemed to be the beneficial owner of 213,074,622 shares of our common stock as a result of acting as investment adviser.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Director and Executive Officer Stock Ownership Requirements
We require that all directors and executive officers maintain the significant stock ownership levels shown below, in order to align their interests with those of our stockholders.
| | | | | | | | |
| 6x | 2x | 5x |
base salary for the CEO | base salary for other named executive officers | cash component of annual retainer for non-employee directors |
Executive officers, including the CEO, are required to attain these stock ownership levels within five years of assuming their leadership roles, and directors are required to do so within five years of joining the Board. The CEO is also required to hold 1,500,000 shares of common stock during the term of his employment agreement.
To determine whether a director or executive officer meets the required ownership level, shares of our stock beneficially owned by the covered executive, as well as unvested awards of PRSUs and RSUs, but not shares underlying unvested or unexercised stock options, are counted for purposes of meeting the stock holding target. Once a director or executive meets the target, they are expected to maintain holdings at the target for as long as he or she remains a Board member or in a role that is identified as a covered executive under the policy.
The Compensation Committee and the Board may consider failure to meet the requirements of the policy in making compensation decisions for a covered executive and may take any other action appropriate to support the intent of the policy, including requiring an executive or director to retain a percentage of shares pursuant to stock option exercises or vesting events in future years.
Each of the directors and named executive officers is in compliance with the applicable stock ownership guidelines, or on track to meet them within the required period.
Security Ownership of Management
The following table sets forth information, as of March 13, 2023, with respect to the beneficial ownership of our shares of common stock by each of our named executive officers, directors, director nominees and all of our current directors and executive officers as a group.
The percentage ownership is based upon 2,435,599,994 shares of common stock outstanding as of March 13, 2023.
Shares of common stock that may be acquired on or within 60 days of March 13, 2023 are deemed to be outstanding and to be beneficially owned by the person holding the securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
The persons indicated below have sole voting power with respect to the shares owned by them, except as otherwise stated in the notes to the table. The address of each person listed below is 230 Park Avenue South, New York, New York 10003.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
| | | | | | | | | | | |
| Name of Beneficial Owner | Amount and
Nature of
Beneficial
Ownership(1) | Percent of
Class (%) |
| David M. Zaslav | 14,745,656 | | (2) | * |
| Chief Executive Officer, President and Director | | | |
| Gunnar Wiedenfels | 621,727 | | (3) | * |
| Chief Financial Officer | | | |
| Bruce L. Campbell | 887,993 | | (4) | * |
| Chief Revenue and Strategy Officer | | | |
| Jean-Briac Perrette | 675,355 | | | * |
| CEO and President, Global Streaming and Games | | | |
| Gerhard Zeiler | 129,457 | | | * |
| President, International | | | |
| Samuel A. Di Piazza, Jr. | 45,593 | | | * |
| Director, Board Chair | | | |
| Robert R. Bennett | 266,355 | | (5) | * |
| Director | | | |
| Li Haslett Chen | 0 | | | * |
| Director | | | |
| Richard W. Fisher | 0 | | | * |
| Director | | | |
| Paul A. Gould | 717,198 | | | * |
| Director | | | |
| Debra A. Lee | 3,786 | | | * |
| Director | | | |
| John C. Malone | 19,064,364 | | (6)(7) | * |
| Director | | | |
| Fazal Merchant | 51,106 | | | * |
| Director | | | |
| Steven A. Miron | 105,179 | | | * |
| Director | | | |
| Steven O. Newhouse | 16,449 | | | * |
| Director | | | |
| Paula A. Price | 0 | | | * |
| Director | | | |
| Geoffrey Y. Yang | 131,312 | | | * |
| Director | | | |
| Kenneth W. Lowe | 1,033,996 | | (8) | * |
| Director Nominee | | | |
| All current directors and executive officers as a group (21 persons) | 38,107,716 | | | 1.6% |
(*) Less than one percent.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
(1)Includes shares that may be acquired within 60 days of March 13, 2023, in the amounts below: | | | | | |
| Common Stock |
| David M. Zaslav | 10,656,823 | |
| Gunnar Wiedenfels | 348,875 | |
| Bruce L. Campbell | 532,728 | |
| Jean-Briac Perrette | 313,102 | |
| John C. Malone | 547,189 | |
| Fazal Merchant | 16,106 | |
| Steven A. Miron | 16,106 | |
| Steven O. Newhouse | 16,106 | |
| All current directors and executive officers as a group (21 persons) | 12,941,171 | |
(2)Includes 153 shares held by Mr. Zaslav's wife.
(3)Includes 4,000 shares held in UTMA accounts for Mr. Wiedenfels' children, of which Mr. Wiedenfels is the custodian.
(4)Includes 145,418 shares held in an LLC through a grantor retained annuity trust, of which Mr. Campbell is the settlor and trustee.
(5)On January 4, 2023, Mr. Bennett notified the WBD Board of his decision to resign from the Board, effective as of April 1, 2023. Includes (i) 173,163 shares owned by Hilltop Investments, LLC, which is jointly owned by Mr. Bennett and his wife, (ii) 34,690 shares owned by Hilltop Investments III, LLC, which is jointly owned by Mr. Bennett and his wife and (iii) 1,983 shares held by trust for the benefit of Mrs. Bennett.
(6)Includes (i) 1,211,353 shares held by Mr. Malone’s wife, as to which shares Mr. Malone disclaims beneficial ownership, (ii) 91,789 shares held by trusts for the benefit of Mr. Malone’s children with respect to which Mr. Malone is not the trustee, has no voting or investment power, and has a power of substitution with respect to the shares held in the trusts, as to which shares Mr. Malone disclaims beneficial ownership, (iii) 7,732,803 shares held by a trust, with respect to which Mr. Malone is the sole trustee and (iv) 455,400 shares held by the Malone Family Land Preservation Foundation with respect to which Mr. Malone has no pecuniary interest, disclaims beneficial ownership and has voting and investment power.
(7)Includes 3,650,000 shares which have been pledged in support of one or more lines of credit or margin accounts as of February 28, 2023.
(8)On January 17, 2023, in accordance with the procedures set forth in our Second Restated Certificate of Incorporation, Mr. Lowe was appointed to fill the vacancy created by Mr. Bennett's resignation, effective as of April 2, 2023.
Delinquent Section 16 Reports
Our directors and executive officers file reports with the SEC pursuant to Section 16(a) of the Exchange Act indicating the number of shares of any class of our equity securities they owned when they became a director or executive officer and, after that, any changes in their ownership of our equity securities. SEC rules require us to disclose any late filings of stock transaction reports by our directors and executive officers. Based solely on our review of such reports and written representations from the individuals required to file the reports, we believe that all filings required to be made by our reporting persons for 2022 were made on a timely basis, other than a late Form 4 filing on behalf of each of Gerhard Zeiler and Geoffrey Yang with respect to one transaction for each individual, each of which were subsequently reported within one business day of the filing due date.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
2023 Annual Meeting Information – Frequently Asked Questions
2023 Proxy Materials
Q: Why am I receiving these proxy materials?
A: You received these materials because you owned shares of Warner Bros. Discovery stock on March 13, 2023, the record date, and that entitles you to notice of, and to vote at, the 2023 Annual Meeting of Stockholders. This proxy statement describes the matters to be voted on at the meeting and provides information on those matters. The proxy materials (which include our 2022 Form 10-K) provide certain information about Warner Bros. Discovery that we must disclose to you when the Board of Directors solicits your proxy.
Q: How can I get electronic access to the proxy materials?
A: Stockholders may access the 2023 proxy materials at: www.proxyvote.com. Our 2023 proxy materials are also available in the Investor Relations section of our corporate website at ir.wbd.com.
Stockholders may elect to receive future distributions of proxy materials by electronic delivery. To take advantage of this service you will need an email account and access to an Internet browser. To enroll, go to www.proxyvote.com and click “Sign up for E-delivery”. Your enrollment for electronic delivery of proxy materials will remain in effect until you terminate it or for so long as the email address provided by you is valid.
Q: What is “householding”?
A: To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding Warner Bros. Discovery stock but sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive only one copy of our Notice and, as applicable, any additional proxy materials that are delivered until such time as one or more of these stockholders notifies us that they want to receive separate copies. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If you receive a single set of proxy materials as a result of householding, and you would like to have separate copies of our annual report, proxy statement and other materials mailed to you, please submit a request to our Corporate Secretary at the address noted above or call our Investor Relations department at (212) 548-5882, and we will promptly send you what you have requested. You can also contact our Investor Relations department at the telephone number above if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future, or if you would like to opt out of householding for future mailings.
Voting Procedures
Q: What matters will be voted on at the 2023 Annual Meeting?
A: The principal business of the meeting will be the following matters:
■the election of four Class I directors;
■the ratification of the appointment of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
■an advisory vote to approve our 2022 named executive officer compensation, commonly referred to as a “Say on Pay” vote;
■an advisory vote on whether future “Say on Pay” votes should be held every year, every two years, or every three years; and
■the consideration of two stockholder proposals, if properly presented at the 2023 Annual Meeting.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
We will also transact such other business as may properly be presented at the 2023 Annual Meeting of Stockholders or at any postponements or adjournments thereof. However, we are not aware of any other matters to be acted upon at the 2023 Annual Meeting of Stockholders.
Q: Who is entitled to vote at the 2023 Annual Meeting?
A: The close of business on March 13, 2023 was the record date for determining the holders of our common stock entitled to notice of, and to vote at, the 2023 Annual Meeting of Stockholders and any postponement or adjournment thereof.
Q: How many shares can vote at the 2023 Annual Meeting and how many votes does each share have?
A: As of March 13, 2022, we had outstanding 2,435,599,994 shares of common stock, with each of those shares being entitled to one vote. We do not have any other classes of stock outstanding.
Q: How many shares must be present or represented at the 2023 Annual Meeting to conduct business at the meeting?
A: The presence, in person or by properly executed proxy, of the holders of a majority of the total voting power of the outstanding shares of common stock entitled to vote at the 2023 Annual Meeting of Stockholders will constitute a quorum for the transaction of any business at the meeting.
If a quorum is not present, the meeting will be adjourned until a quorum is obtained. Shares present virtually during the annual meeting will be considered shares represented in person at the meeting for purposes of determining the presence of a quorum. Abstentions and broker non-votes (where a broker or nominee does not exercise discretionary authority to vote on a proposal) will be treated as present for purposes of determining the presence of a quorum.
Q: What vote is required for Proposal One – Election of Directors?
A: The Class I directors will be elected if they receive a plurality of the outstanding shares of common stock present virtually or by proxy and entitled to vote on Proposal One;
■If you withhold your vote, it will have no effect on the election of directors; and
■Broker non-votes are not considered votes cast on this proposal and therefore will have no effect on the election of directors.
Q: What vote is required for Proposal Two – Ratification of the Appointment of the Independent Registered Public Accounting Firm?
A: The affirmative vote of a majority of the outstanding shares of common stock present virtually or by proxy and entitled to vote on Proposal Two is required for ratification.
■Abstentions will have the same effect as a vote “AGAINST” this proposal; and
■If you are a street name stockholder and do not vote your shares, your bank, broker or other holder of record can vote your shares at its discretion on this item.
Q: What vote is required for Proposal Three – Advisory Vote to Approve Named Executive Officer Compensation ("Say on Pay")?
A: For Proposal Three, stockholders are being asked to vote on a non-binding advisory vote basis on our 2022 named executive officer compensation. The affirmative vote of a majority of the outstanding shares of common stock present virtually or by proxy and entitled to vote on Proposal Three is required to approve Proposal Three.
■Abstentions will have the same effect as a vote “AGAINST” this proposal; and
■Broker non-votes are not considered votes cast on this proposal and therefore will have no effect on the outcome of Proposal Three.
Q: What vote is required for Proposal Four – Advisory Vote on the Frequency of Future "Say on Pay" Votes?
A: For Proposal Four, stockholders are being asked to vote on a non-binding advisory vote basis with regard to the frequency with which the advisory vote to approve named executive officer compensation is held, by selecting from the following three options: (i) a vote held every year, (ii) a vote held every two years, or (iii) a vote held every three years. Stockholders may also abstain from voting. The frequency option receiving the plurality of the outstanding shares of common stock
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
present virtually or by proxy and entitled to vote on Proposal Four will be considered for the frequency recommendation of the stockholders.
■Abstentions will have no effect on this proposal;
■Proxy cards on which more than one option is chosen will not be counted; and
■Broker non-votes are not considered votes cast on this proposal and therefore will have no effect on the outcome of Proposal Four.
Q: What vote is required for Proposals Five and Six – Stockholder Proposals?
A: If properly presented at the 2023 Annual Meeting of Stockholders, the affirmative vote of a majority of the outstanding shares of common stock present virtually or by proxy and entitled to vote on each of Proposals Five and Six is required to approve each of Proposals Five and Six.
■Abstentions will have the same effect as a vote “AGAINST” these proposals; and
■Broker non-votes are not considered votes cast and therefore will have no effect on the outcome of the stockholder proposals.
Q: How can I vote my shares at the 2023 Annual Meeting?
A: If you are a holder of common stock as of the record date, telephone and Internet voting is available 24 hours a day through 11:59 p.m. (Eastern Time) on May 7, 2023. If you are located in the United States or Canada and are a stockholder of record as of the record date, you can vote your shares by calling toll-free 1-800-690-6903. Whether you are a stockholder of record or a beneficial owner, you can also vote your shares on the Internet at www.proxyvote.com.
Both the telephone and Internet voting systems have easy-to-follow instructions on how you may vote your shares and allow you to confirm that the system has properly recorded your vote. If you are voting your shares by telephone or Internet, you should have on hand when you call or access the website, as applicable, the proxy card or voting instruction card. If you vote by telephone or Internet, you do not need to return your proxy card to us.
If you have received, by request, a hard copy of the proxy card or voting instruction card and wish to submit your proxy by mail, you must complete, sign and date the proxy card or voting instruction card and return it in the envelope provided so that it is received prior to the 2023 Annual Meeting of Stockholders.
Properly completed proxies will be voted as you direct. Properly executed proxies that do not contain voting instructions will be voted “FOR” Proposals One, Two and Three, “EVERY YEAR” on Proposal Four and “AGAINST” Proposals Five and Six.
While we encourage holders of common stock to vote by proxy, you also have the option of voting your shares at the 2023 Annual Meeting of Stockholders. All holders of common stock, whether your shares are registered directly in your name with our transfer agent or held in a brokerage account by a bank or other nominee, may virtually attend the 2023 Annual Meeting of Stockholders and vote online, subject to compliance with the procedures described below. In order to vote online at the 2023 Annual Meeting of Stockholders, you will need the control number on your proxy card or voting instruction form, as further described below.
Q: If my Warner Bros. Discovery shares are held in “street name” by a broker, bank or other nominee, will the broker, bank or other nominee vote my shares on each of the annual business proposals?
A: If you hold your shares in street name and do not give instructions to your broker, bank or other nominee, the broker, bank or other nominee will be able to vote your shares with respect to “discretionary items” but will not be able to vote your shares with respect to “non-discretionary items,” in which case your shares will be treated as “broker non-votes” with respect to those items. “Broker non-votes” are shares that are held in street name by a bank, broker or other nominee that indicates on its proxy that it does not have discretionary authority to vote on a particular matter. The auditor ratification proposal (Proposal Two) is a “discretionary item,” whereas the election of directors (Proposal One), the advisory vote on 2022 named executive officer compensation (Proposal Three), the advisory vote on the frequency of future named executive officer compensation votes (Proposal Four) and the stockholder proposals (Proposals Five and Six) are “non-discretionary items.” Accordingly, if you hold your shares in street name and do not provide voting instructions to your broker, bank or other nominee, your shares may, in the discretion of the broker, bank or other nominee, be voted only on the auditor ratification proposal (Proposal Two). If you hold your shares in street name and do not provide voting instructions to your broker, bank or other nominee, your shares will NOT be voted on Proposal One, Proposal Three, Proposal Four, Proposal Five or Proposal Six.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Q: May I change or revoke my vote after returning a proxy card or voting by telephone or over the Internet?
A: Yes. Before your proxy is voted at the 2023 Annual Meeting of Stockholders, you may change or revoke your vote on the proposals by telephone or over the Internet (if you originally voted by telephone or over the Internet), by virtually attending the 2023 Annual Meeting and voting online during the meeting, or by delivering a signed proxy revocation or a new signed proxy with a later date to: Warner Bros. Discovery, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Any signed proxy revocation or new signed proxy card must be received before the start of the 2023 Annual Meeting of Stockholders. Your virtual attendance at the 2023 Annual Meeting of Stockholders will not, by itself, revoke your proxy.
If your shares are held in an account by a broker, bank or other nominee whom you previously contacted with voting instructions, you should contact your broker, bank or other nominee to change your vote.
Q: Whom should I contact if I have any questions about the proxy materials or voting?
A: If you have any questions about the proxy materials or if you need assistance submitting your proxy card or voting instruction card or voting your shares or need additional copies of this proxy statement or the enclosed proxy card, you should contact our proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue
20th Floor
New York, NY 10022
(877) 717-3922 (call toll-free)
(212) 750-5833 (banks and brokerage firms)
If your shares are held “street name,” through a bank, brokerage firm or other nominee, you should contact such bank, brokerage firm or other nominee if you need to obtain voting instruction cards or have questions on how to vote your shares.
Proxy Solicitation
Q: Who is soliciting my vote?
A: The Board of Directors of Warner Bros. Discovery, Inc. has sent you this proxy statement and is soliciting your vote on proposals being submitted for consideration at our 2023 Annual Meeting of Stockholders to be held virtually at www.virtualshareholdermeeting.com/WBD2023 on May 8, 2023 and any adjournment or postponement thereof.
In addition to solicitation by mail, our officers and employees, who will receive no extra compensation for their services, may solicit proxies by telephone, in writing, electronically or in person. We will reimburse brokers and nominees who hold shares in their names for their reasonable out-of-pocket expenses to furnish proxy materials to the beneficial owners of such shares.
We have also engaged Innisfree M&A Incorporated, a proxy solicitation agent, to assist us with our solicitation for this annual meeting and expect to pay no more than $35,000, plus reimbursement of out-of-pocket expenses for its efforts in connection with this annual meeting.
Q: Who will bear the cost of soliciting votes for the 2023 Annual Meeting?
A: We will pay the cost of solicitation of proxies, including the preparation, website posting, printing and delivery of the Notice of Internet Availability of Proxy Materials, proxy statement and related materials. We will furnish copies of these materials to banks, brokers, fiduciaries, custodians and other nominees that hold shares on behalf of beneficial owners so that they may forward the materials to beneficial owners.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Attending the 2023 Annual Meeting
Q: How do I virtually attend the 2023 Annual Meeting?
A: We will host the 2023 Annual Meeting of Stockholders live online via webcast. You may attend the 2023 Annual Meeting of Stockholders live online by visiting www.virtualshareholdermeeting.com/WBD2023. The webcast will start at 2:00 p.m.., Eastern Time, on Monday, May 8, 2023. You will need the control number included on your proxy card or voting instruction form in order to be able to vote or ask questions during the 2023 Annual Meeting of Stockholders. Instructions on how to attend and participate online are posted at www.virtualshareholdermeeting.com/WBD2023.
Online check-in will begin at 1:45 p.m., Eastern Time, on Monday, May 8, 2023, and you should allow ample time for the online check-in proceedings. We will have technicians standing by and ready to assist you with any technical difficulties you may have accessing the virtual meeting starting at 1:45 p.m., Eastern Time on Monday, May 8, 2023. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the 2023 Annual Meeting log-in page.
Q: Why is the 2023 Annual Meeting a virtual, online meeting?
A: There will not be a physical meeting location for the 2023 Annual Meeting. We believe that hosting a virtual meeting will facilitate stockholder attendance and participation at our 2023 Annual Meeting by enabling stockholders to participate remotely from any location around the world. Our virtual meeting will be governed by our Rules of Conduct of Meeting which will be posted at www.virtualshareholdermeeting.com/WBD2023 in advance of the meeting. We have designed the virtual annual meeting to provide the same rights and opportunities to participate as stockholders would have at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform.
Q: How do I submit a question at the 2023 Annual Meeting?
A: Stockholders may submit questions at the 2023 Annual Meeting of Stockholders by using the virtual meeting platform at www.virtualshareholdermeeting.com/WBD2023. Once you have logged into the site using your control number, you will be able to submit questions electronically via the virtual meeting platform.
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Proxy Statement Summary | | Proposal 1 | | Corporate Governance | | Audit Matters | | Executive Compensation | | Other Matters | | Additional Information | | Appendix A |
Additional Information