Shareholder Advisor ISS Dings Discovery CEO David Zaslav’s Pay – CB
ISS, an influential shareholder advisory agency, has beneficial “withhold” votes for the three Discovery administrators up for reelection on the April annual assembly “attributable to poor stewardship” in compensation. It cited longstanding considerations over pay on the firm that the majority just lately embrace a “problematic” severance association and a $200 million inventory possibility grant…
ISS, an influential shareholder advisory agency, has beneficial “withhold” votes for the three Discovery administrators up for reelection on the April annual assembly “attributable to poor stewardship” in compensation.
It cited longstanding considerations over pay on the firm that the majority just lately embrace a “problematic” severance association and a $200 million inventory possibility grant in CEO David Zaslav’s newest employment settlement. “Based mostly on an analysis of estimated price, plan options, and grant practices, assist for the fairness plan proposal is just not warranted,” ISS stated.
Zaslav’s complete pay package deal got here to greater than $246 million for 2021, inflated by the choice grants within the new contract awarded final 12 months that extends him by means of 2027. However ISS took challenge with most components of his compensation.
ISS is a proxy advisory agency — proxies being paperwork corporations ship shareholders every year laying out government compensation, board members up for election and different firm proposals up for vote on the annual assembly. Discovery’s is ready for April 8. (It held a particular shareholder assembly earlier this month to vote on its upcoming merger with WarnerMedia.)
ISS analyses public information, scores corporations on numerous metrics and make suggestions. On a scale of 1 to 10, it rated Discovery’s board construction, compensation, shareholder rights and audit & threat oversight all tens, the very best threat. On compensation, ISS calculated that the three-year common of Zaslav’s complete pay was $125.4 million, or 6.7 occasions the median of his CEO peer group. His cumulative three-year complete pay was $376.2 million.
As Discovery’s proxy famous, the grant of inventory choices isn’t money in hand. They arrive in tranches and require the share value to hit sure metrics over seven years earlier than they’re within the cash. The primary tranche has an train value of $35.65. That was the worth when Zaslav’s new employment settlement was authorised final 12 months. The inventory has slumped since and buying and selling decrease as we speak at about $26.
Discovery is just not holding a so-called “say-on-pay” vote at this assembly so shareholders can’t weigh in straight on government compensation. That’s why ISS is recommending shareholders dissent by not voting to reelect administrators Kenneth Lowe, Daniel Sanchez and Paul Gould. It’s a bit moot since Gould is the one one of many three named to the brand new board of the brand new Warner Bros. Discovery as soon as the merger is accomplished, probably someday subsequent month. Discovery has six designated board members and AT&T seven.
ISS additionally took challenge with the severance provisions in Zaslav’s new contract that make him eligible for money severance if he resigns, with or with out good cause, inside a sure interval after a change in management. “Stroll-away provisions that give the chief the flexibility to unilaterally discontinue employment and obtain severance put the compensation committee at an obstacle in subsequent negotiations. Modified single-trigger severance preparations aren’t the market norm and are a problematic pay observe,” ISS stated.
The contract additionally requires automated accelerated vesting of fairness awards upon a change-in-control. “Such single-trigger vesting might end in an financial windfall to the chief with out an accompanying termination of employment,” ISS stated.