● | Croner reports solely to the Committee. Our management is not involved in the negotiation of fees charged by Croner or in the determination of the scope of work performed by Croner. The Committee has the sole authority to hire and terminate the independent compensation consultant;there are no business or personal relationships between Croner and any member of the Committee or any executive officer of the Company;
the Committee has a Compensation Consultant Independence Policy to address limited survey work performed by Croner for the Company, and any othernon-survey services that are proposed to be performed by Croner for the Company;
the survey work performed by Croner was very limited, and nonon-survey work was performed (other than Croner’s services for the Committee);
according to data provided by Croner, revenue from Discovery (other than fees for Croner’s services to the Committee) represented less than 1% of Croner’s total revenue for each of fiscal years 2013, 2014, 2015, 2016, and 2017;
Croner disclosed its conflicts of interest policy to the Committee. The Committee believes that this policy provides reasonable assurance that conflicts of interest with Croner will not arise; and
Croner has represented to the Committee that, per its conflicts of interest policy, neither Croner nor any Croner employee is a stockholder of Discovery.
Compensation Philosophy
Discovery’s compensation philosophy is to pay for performance, to encourage excellence and to reward executives who deliver. Our programs are designed to provide above-median total direct compensation when our
executives deliver above-median performance, as evaluated against both internally set objectives and the peer group companies. We value fixed-term employment agreements when appropriate, and, in 2017, each of our NEOs was subject to a fixed-term employment agreement, as further described in “Executive Compensation—Executive Compensation Arrangements,” below. The terms of these agreements generally incorporate initial compensation elements, including an initial base salary, annual cash bonus target, and “sign on” or contract renewal equity awards. 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. The Committee also assesses the elements of transition and separation agreements to determine what is needed to ensure a smooth transition, as was the case in the transition agreement entered into in connection with Mr. Warren’s separation.
Discovery’s compensation programs are designed to implement its pay for performance compensation philosophy, as follows:
ensure a strong alignment of the interests of Discovery’s stockholders, employees, and the Company;
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 the program design, bonus targets and equity grant guidelines for our employees throughout the Company. The Committee reviews the results of the annual bonus and equity grant processes to assess whether the Company is implementing our pay for performance philosophy. The Committee determines the group of executives over which it will retain oversight, and includes senior executives other than Discovery’s NEOs in those reviews.
Elements of Compensation
Total direct compensation for each NEO consists of three basic components:
| | | | | Element of Compensation
| | Key Features
| | Purpose
| Base Salary | | Fixed annual cash amount, generally reviewed annually. | | 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, the target amount of each NEO’s annual cash bonus as a percentage of base salary. | | | | Annual Cash Bonus | | Each NEO has a target bonus opportunity, set as a percentage of 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 individual performance to focus our executives on our financial and operational goals. Ensure that our compensation mix remains competitive with our labor market. 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. |
| | | | | Element of Compensation
| | Key Features
| | Purpose
| Long-Term Incentive Awards | | Annual equity and equity-type awards, in the form ofnon-qualified stock options, performance-based restricted stock units, restricted stock units and stock appreciation rights. Each type of award instrument generally vests in tranches over multiple years.
| | Deliver a substantial portion of an executive’s total direct compensation in equity or equity-type awards to align our executives’ interests with those of our stockholders. We use long-term incentive awards as a tool to encourage an executive to enter into a new employment agreement or extend an existing agreement.
_____________
Awards of Stock Appreciation Rights (“SARs”) to our CEO align the CEO’s interests to those of our stockholders by tying the amount paid out (if any) directly to the increase in our stock price (if any) during the measurement period.
_____________
Performance-based Restricted Stock Units (“PRSUs”) incent our NEOs to achieve longer-term Company financial goals that are expected to lead to increased stockholder value. The multi-year service requirements also serve as a retention tool. Both the financial metrics and the longer-term vesting schedules are designed to discourage excessive risk-taking.
_____________
Restricted stock units (“RSUs”) also may be used in certain contract renewals, and the multi-year service requirements serve as a retention tool. In early 2018, the Committee determined to use RSUs in lieu of PRSUs for the annual awards made in February 2018 to NEOs other than Mr. Zaslav. This change in practice is further discussed in “Changes to Executive Compensation Programs and Arrangements in 2018,” below.
_____________
The Committee has adoptedthe sole authority to hire and terminate the independent compensation consultant; | ● | there are no business or personal relationships between Croner and any member of the Committee or any executive stock ownership guidelines (discussed below) and implemented more extensive holding and share purchase requirementsofficer of the Company; | ● | the Committee has a Compensation Consultant Independence Policy to address limited survey work performed by Croner for the CEO under his 2014 agreement. These provisionsCompany, and any other non-survey services that are designedproposed to further alignbe performed by Croner for the interestsCompany; | ● | the survey work performed by Croner was very limited, and no non-survey work was performed (other than Croner’s services for the Committee); | ● | according to data provided by Croner, revenue from Discovery (other than fees for Croner’s services to the Committee) represented less than 1% of our NEOsCroner’s total revenue for 2021, and for each of the previous fiscal years in which Croner served as independent consultant to the Committee; | ● | Croner disclosed its conflicts of interest policy to the Committee. The Committee believes that this policy provides reasonable assurance that conflicts of interest with thoseCroner will not arise; and | ● | Croner has represented to the Committee that, per its conflicts of our stockholders.interest policy, neither Croner nor any Croner employee is a Discovery stockholder. |
Performance-Based Pay
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 long-term incentive awards determined by the Committee as appropriate for each role. More than 75% of the total direct compensation for each NEO other than Messrs. Warren and Wiedenfels for 2017 was performance-based. Mr. Warren announced his intention to separate from the Company in February 2016 and the Committee did not approve a long-term incentive award for him in 2017. Mr. Wiedenfels joined the Company in April 2017 and received a new hire award that included time-based RSUs; Mr. Wiedenfels did not participate in the annual long-term incentive award cycle in 2017. These factors resulted in a lower proportion of performance-based compensation for these two executives for 2017.
We believe the mix of compensation for our NEOs is competitive with the compensation practices specific to our industry and appropriately balanced to benefit the Company in both the short- and long-term so as not to encourage our NEOs to take undue risks. Annual cash bonus awards are more fully described in “—2017 Compensation Decisions—Annual Cash Bonus Awards,” below, and our long-term incentive compensation programs are more fully described in “—2017 Compensation Decisions—Long-Term Incentive Compensation,” below.
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 long-term incentive (“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 the Company’s 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 quantitative goals for the Incentive Compensation Plan (“ICP”), the annual cash bonus program that applies to the NEOs other than the CEO;
achievement of quantitative and qualitative goals that are set by the Committee each year for the annual bonus for the CEO; and
Discovery’s Total Shareholder Return (“TSR”) and other comparative financial measures relative to the peer companies, as discussed below.
● | 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 quantitative goals for the ICP, the annual cash bonus program that applies to the NEOs other than the CEO and CFO; and | ● | achievement of quantitative and qualitative 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 below.provided throughout this CD&A. Peer Group Analysis, Target Pay Positioning and Tally Sheets Peer Group Analysis and Comparative Financial Review The Committee annually reviews data from a group of publicly-traded peer companies to support compensation decisions for the NEOs. The peer companies are chosen by the Committee to best match our Company’s 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). 2022 Proxy Statement 35
Table of Contents Executive Compensation In October 2020, the Committee reviewed the peer group to determine which companies should be used for purposes of 2021 compensation decisions. 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 2020. Following its review, the Committee determined that it would take the following actions with respect to the peer group for 2021 compensation decisions (the “2021 Peer Group”): ● | retain ViacomCBS Inc., the combined company of two 2020 peer group members, CBS Corporation and Viacom Inc., in the 2021 Peer Group; and | ● | add Electronic Arts Inc. and Sirius XM Holdings Inc. to the 2021 Peer Group due to each company’s comparable operating statistics, global reach and status as competitor in the executive labor market. |
The Committee used the following peer group2021 Peer Group set forth below for the 2021 Annual Base Salary Review and 2021 Annual LTI Review and other compensation decisions made in December 20162020 and 2017 (the “2017 Peer Group”) after concludingFebruary 2021. The Committee concluded that thethis group provided a good mix of companies with a strong focus on content and international reach:reach. 21st Century Fox
AMC Networks Inc.
CBS Corporation
Charter Communications, Inc.
Netflix, Inc.
Scripps Networks Interactive, Inc.
Time Warner Inc.
Viacom Inc.
The Committee considered market data from the 20172021 Peer Group in the Annual Base Salary Review and Annual LTI Review, and used this data in determining base salary adjustments and long-term incentive awards as applicable for Messrs. Campbell, Guagliardo, Perrette and Warren. With respect to Mr. Zaslav, his employment agreement provided that he was not eligible for a base salary increase in 2017, and specified the amount of his LTI award.
Activision Blizzard, Inc. | | Electronic Arts Inc. | | Netflix, Inc. | AMC Networks Inc. | | Fox Corporation | | Sirius XM Holdings Inc. | CBS Corporation | | Liberty Global plc | | The Walt Disney Company | Charter Communications, Inc. | | Lions Gate Entertainment Corp. | | ViacomCBS Inc. |
The Committee also reviewedreviews data from international companies, in an effort to identify relevant market data for Mr. Perrette’s role as leader of our international division. The Committee reviewed a group of media and content companies publicly traded in the UKUnited Kingdom (“U.K.”) and the European Union (the “E.U.”) determined that a mix of traditional media, broadcasting, and publishing companies would be relevant comparators. TheFor 2021, the Committee selected Informa plc, ITV plc, MediaSE, Mediaset S.p.A., Nordic Entertainment Group AB, Pearson, ProSiebenSat.1, RELX Group, Vivendi SA and WPP Group Sky PLC, RELX Group, Pearson, ITV PLC, Informa, and UBM (the “International“2021 International Peers”) to serve as a reference point in assessing Mr. Perrette’s compensation and reviewed compensation data for the CEOs of that group, applying a 30% discount to factor in Mr. Perrette’s role as a division president rather than CEO of a standalone entity. The Committee determined that 30% was a reasonable amount to discount the market data given the difference between leading a division and a company as a whole.versus leading an entire company. Mr. Wiedenfels joinedDue to the Company on April 1, 2017, pursuantpending WarnerMedia Transaction, the Committee did not make any changes to an employment agreement that was executed in September 2016. Mr. Wiedenfels was not considered in the Annual Base Salary Review or Annual LTI Review in 2017. The Committee reviewed market data in assessing the compensation terms in Mr. Wiedenfels’ employment agreement, using data from the peer group in effect at that time (the “2016 Peer Group”). The 2016 Peer Group consisted of:
AMC Networks Inc.
Cablevision Systems Corporation
CBS Corporation
Charter Communications, Inc.
DIRECTV
Netflix, Inc.
Scripps Networks Interactive, Inc.
Viacom Inc.
Yahoo, Inc.
In September 2016, after determining the compensation terms for Mr. Wiedenfels, the Committee assessed the 2016 Peer Group to address the merger of DIRECTV with AT&T and the acquisitions of Yahoo, Inc. and Cablevision Systems Corporation. The Committee determined to remove these three companies from the peer group and added Time Warner Inc. and 21st Century Fox, both of which are global media companies and competitors in the market for executive talent. This resulted in the 2017 Peer Group, described above.
Each year, the Committee reviews comparative TSR and other financial measures for the peer group. In December 2016, the Committee reviewed revenue, Adjusted OIBDA, free cash flow, enterprise value, earnings per share and TSR for the Company (the “Comparative Financial Measures”) as compared to the applicable peer group. The Committee conducted this review in December 2016, in preparation for the 2017 Annual Base Salary Review, Annual Bonus Review, and Annual LTI Review, and in December 2017 for the 2018 reviews. In December 2016, the Committee assessed performance against the 2017 Peer Group, and again in December 2017. In both reviews, the Committee concluded that the Company had performed at or above the median of the relevantinternational peer group for operational metrics but lagged peers in measures related to stock price.
Comparative Financial Measures Reviewed in December 2016
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Affiliate Revenues | | | Advertising Revenues | | | Total Revenues | | | Adjusted OIBDA | | | Free Cash Flow | | | Enterprise Value | | | Earnings Per Share | | | TSR | | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | 3 Year | | Median (excluding Discovery) | | | 7.5 | % | | | .7 | % | | | 2.5 | % | | | 0 | % | | | .9 | % | | | -6.2 | % | | | 6.2 | % | | | -17.5 | % | Discovery Communications, Inc. | | | 7.8 | % | | | 2.8 | % | | | 5.3 | % | | | 0 | % | | | 5.0 | % | | | -15.1 | % | | | 6.4 | % | | | -38.3 | % | Discovery Percentile Rank Among Peers | | | 52 | % | | | 63 | % | | | 56 | % | | | 50 | % | | | 66 | % | | | 6 | % | | | 51 | % | | | 8 | % |
(1) | CAGR = Compound Annual Growth Rate. Utilizes December 31, 2013 data for starting data point and TTM for the end data point. TTM = Trailing Twelve Months (October 1, 2015 – September 30, 2016). TTM was utilized because year end 2016 data was not yet available. |
Comparative Financial Measures Reviewed in December 2017
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Affiliate Revenues | | | Advertising Revenues | | | Total Revenues | | | Adjusted OIBDA | | | Free Cash Flow | | | Enterprise Value | | | Earnings Per Share | | | TSR | | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | CAGR(1) | | | 3 Year | | Median (excluding Discovery) | | | 6.6 | % | | | 1.7 | % | | | 8.9 | % | | | 2.3 | % | | | 6.9 | % | | | 4.2 | % | | | 6.6 | % | | | 10.1 | % | Discovery Communications, Inc. | | | 6 | % | | | -1 | % | | | 2.2 | % | | | .2 | % | | | 9.9 | % | | | -12.2 | % | | | 4.9 | % | | | -45.1 | % | Discovery Percentile Rank Among Peers | | | 33 | % | | | 18 | % | | | 32 | % | | | 48 | % | | | 56 | % | | | 6 | % | | | 48 | % | | | 5 | % |
(1) | CAGR = Compound Annual Growth Rate. Utilizes December 31, 2014 data for starting data point and TTM for the end data point. TTM = Trailing Twelve Months (October 1, 2016 – September 30, 2017). TTM was utilized because year end 2017 data was not yet available. |
purposes of its 2022 compensation review and decisions. The Committee used these reviewsexpects that the peer groups will be reviewed and amended, as a reference in determining that it was appropriate, to make equity awards infollowing the 2017 Annual LTI Review and in determining not to adjust downward, in accordance with their terms, the payout amount of PRSU awards made to Messrs. Campbell and Perrette in February 2015 that vested in February 2018. The CEO’s recommendations to the Committee, and the Committee’s approvals, factored in the resultsclosing of the review in generally reducing the performance pool amounts for the 2017 bonus in consideration of the Company’s performance against some of the Comparative Financial Measures.WarnerMedia Transaction. Target Pay Positioning The Committee generally targets executive compensation to be between the median and 75th75th percentile of the compensation paid by our peer group companies, identified above under “—Peer Group Analysis.”companies. The Committee uses the applicable peer group benchmark and survey data as a reference rather than as a strict guide for compensation decisions and retains flexibility in setting individual target total direct compensation. The Committee may set compensation at or below median for executives who are new to Discovery, to allow delivery of compensation over time that rewards sustained performance. Similarly, the Committee may set compensation above the 75th percentile to retain, motivate and reward the high-caliber executives we need to lead our business. In December 20162020 and again in February 2017,2021, prior to making any decisions with respect to 2021 base salaries or long-term incentive awards, the Committee reviewed market data for each NEO, except Mr. Wiedenfels, as compared to our 2017 peer group with respect to 2016 total direct compensation, both at target and actual, spreading the value of anyone-time contractual equity award over the term of the applicable contract.2021 Peer Group. In this review, the Committee compared each executive’s compensation to that of the corresponding position in the applicable peer group. The Committee undertook this review to aid it in making base salary and long-term incentive decisions for 2021. Based on its review, the review in settingCommittee believed it was appropriate to set 2021 target total direct compensation for 2017,Messrs. Zaslav and at that time,Perrette above the comparison to our peer group was as follows:75th percentile, Messrs. Wiedenfels and Leavy below median, and Mr. Campbell between median and 75th percentile. Actual compensation will differ from target compensation based on individual and Company performance and is disclosed in the Summary Compensation Table on page 56. | | | | | NEO
| | Target Pay Against 2017 Peer Group
(Before 2017
Compensation Actions)
| | Actual Pay Against 2017 Peer Group
(Before 2017
Compensation Actions)
| Mr. Zaslav
| | Above 75th percentile | | Above 75th percentile | Mr. Campbell
| | At median | | Between median and 75th | Mr. Perrette
| | Between median and 75th | | Between median and 75th | Mr. Guagliardo
| | Above 75th percentile | | Above 75th percentile | Mr. Warren
| | Below 25th percentile | | Below 25th percentile |
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. Tax Deductibility36Discovery
Table of Contents Executive Compensation NEO Employment Agreements Section 162(m)Provided below are summaries of the Internal Revenue Codeemployment agreements that we have entered into with our NEOs. In each of 1986 (“Section 162(m)”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 2021 Form 10-K.
CEO Employment Agreement We have had an employment agreement with David M. Zaslav, our President and Chief Executive Officer, since he joined Discovery in 2007. We entered into the previous employment agreement with Mr. Zaslav in 2018 (the “Zaslav 2018 Employment Agreement”) generally limitswhich commenced on July 1, 2018 and was in effect until May 16, 2021. On May 16, 2021, Discovery entered into an amended and restated employment agreement (the “Zaslav 2021 Employment Agreement”) with Mr. Zaslav, which was entered into in connection with the entry into the definitive agreements for the WarnerMedia Transaction. The Zaslav 2021 Employment Agreement amends and restates the Zaslav 2018 Employment Agreement and runs through December 31, 2027. Pursuant to $1 million the U.S. federal income tax deductibilityZaslav 2021 Employment Agreement, Mr. Zaslav is subject to customary restrictive covenants, including those relating to non-solicitation, non-interference and non-competition, during the term of compensationthe agreement and for a period of two years thereafter and to continuing confidentiality obligations. Below is a summary of the key terms of our employment agreement with our CEO. Base Salary and Target Bonus Throughout the term of the Zaslav 2021 Employment Agreement, Mr. Zaslav’s base salary will be maintained at $3,000,000 per year and his target annual bonus will be $22,000,000 per year, which are identical to the base salary and target annual bonus in the Zaslav 2018 Employment Agreement. After 2021, Mr. Zaslav’s annual bonus can exceed the target, subject to a cap of 125% of the target amount. In the event that the WarnerMedia Transaction closes, Mr. Zaslav’s annual bonus will be paid in one year to “covered employees.” Performance-based compensation paid throughat the target amount of $22,000,000 for the calendar year 2017 wasimmediately following the calendar year in which the WarnerMedia Transaction closes. For all other years under the Zaslav 2021 Employment Agreement, the target annual bonus is not guaranteed and the actual amount paid to Mr. Zaslav depends on the achievement of qualitative and quantitative performance objectives, which will be determined each year by the Committee in consultation with Mr. Zaslav. Long-Term Incentive Awards and Signing Grants The Zaslav 2018 Employment Agreement provided for the grant of nonqualified stock options (the “2018 Signing Options”) to Mr. Zaslav, with staggered exercise prices and vesting schedules and progressively higher exercise prices and vesting over the term of the agreement. The 2018 Signing Options were granted to Mr. Zaslav on July 16, 2018 and will be earned and become eligible to vest and be exercised in five tranches (determining each tranche’s vesting/exercisability beginning as of January 2 of the years set forth in the following table), and each successive tranche has a higher exercise price, as follows: Tranche | | Series A Shares | | Exercise Price ($) | | Vesting/Exercise Schedule* | 2019 | | 2,435,655 | | 27.35 | | 2020, 2021, 2022, 2023 (25%/yr) | 2020 | | 2,211,344 | | 28.72 | | 2021, 2022, 2023, 2024 (25%/yr) | 2021 | | 2,155,404 | | 30.15 | | 2022 (33%), 2023 (33%), 2024 (34%) | 2022 | | 2,393,454 | | 31.66 | | 2023 (50%), 2024 (50%) | 2023 | | 1,571,489 | | 33.24 | | 2024 (100%) |
* | Any vesting/exercise date designated as 2024 shall be December 31, 2023. |
Mr. Zaslav also received a grant of stock options for 989,299 shares of Series A common stock on January 2, 2019. That award, like the 2023 tranche of the 2018 Signing Options, had an exercise price of $33.24 per share and shall vest fully and become exercisable on December 31, 2023. Any unvested 2018 Signing Options granted under the Zaslav 2018 Employment Agreement shall become 70% vested upon and subject to the limitsclosing of the WarnerMedia Transaction, and the remaining 30% of such 2018 Signing Options shall remain outstanding and continue to vest as provided in the Zaslav 2018 Employment Agreement. The Zaslav 2021 Employment Agreement also provided for the grant of nonqualified stock options (the “2021 Signing Stock Options”) which were valued at $190 million using the Black-Scholes option-pricing model. The 2021 Signing Stock Options were granted to Mr. Zaslav on deductibilityMay 16, 2021 and were split into two groups – Group 1 and Group 2. Each group will be earned become eligible to vest and be exercised in five tranches, and each successive tranche has a higher exercise price, as follows: 2022 Proxy Statement 37
Table of Section 162(m)Contents Executive Compensation Group 1 2021 Signing Stock Options: The Group 1 2021 Signing Stock Options will be earned and become eligible to vest and be exercised in five tranches (with each tranche’s vesting/exercisability on May 16 in the year set forth under the Vesting/Exercise schedule heading in the following table), provided such compensation met specified requirements, including shareholder approvaland each successive tranche will have a higher exercise price, as follows: Tranche | | Series A Shares | | Exercise Price ($) | | Vesting/Exercise Schedule | 2021 | | 1,635,284 | | 35.65 | | 2022, 2023, 2024, 2025 (25%/yr) | 2022 | | 1,519,414 | | 37.43 | | 2023, 2024, 2025, 2026 (25%/yr) | 2023 | | 1,557,685 | | 39.30 | | 2024 (33%), 2025 (33%), 2026 (34%) | 2024 | | 1,603,292 | | 41.27 | | 2025 (50%), 2026 (50%) | 2025 | | 1,682,083 | | 43.33 | | 2026 (100%) |
Group 2 2021 Signing Stock Options: The Group 2 2021 Signing Stock Options will be earned and become eligible to vest and be exercised in five tranches (with each tranche’s vesting/exercisability on January 1 in the year set forth under the Vesting/Exercise schedule heading in the following table), and each successive tranche will have a higher exercise price, as follows: Tranche | | Series A Shares | | Exercise Price ($) | | Vesting/Exercise Schedule* | 2023 | | 1,360,127 | | 35.65 | | 2024, 2025, 2026, 2027 (25%/yr) | 2024 | | 1,421,234 | | 37.43 | | 2025, 2026, 2027, 2028 (25%/yr) | 2025 | | 1,401,917 | | 39.30 | | 2026 (33%), 2027 (33%), 2028 (34%) | 2026 | | 1,270,188 | | 41.27 | | 2027 (50%), 2028 (50%) | 2027 | | 1,322,488 | | 43.33 | | 2028 (100%) |
* | Any vesting/exercise date designated as 2028 shall be December 31, 2027. |
Mr. Zaslav also received a grant of material termsstock options for 198,132 shares of compensation. DeductibilitySeries A common stock on January 3, 2022. That award, like the 2022 tranche of performance-based compensation under Section 162(m)the Group 1 2021 Signing Stock Options, had an exercise price of $37.43 per share and shall vest fully and become exercisable in four equal tranches of 49,533 on May 16 of 2023, 2025, 2025 and 2026. Under the Zaslav 2018 Employment Agreement, Mr. Zaslav was eliminatedentitled to annual awards of PRSUs, determined by dividing $12 million by the Tax Cutsclosing price of our Series A common stock on the date prior to grant. In 2021, Mr. Zaslav received 226,288 PRSUs in accordance with the Zaslav 2018 Employment Agreement. The Zaslav 2021 Employment Agreement continues to provide for the same annual PRSU grant from 2022 to 2027, conditioned on his employment on the grant date of each tranche of PRSUs. The number of PRSUs in each grant from 2022 through 2027 will continue to be determined using the same methodology as in the Zaslav 2018 Employment Agreement, by dividing $12 million by the closing price of our Series A Common Stock on the last business day prior to grant. The PRSUs are earned based on the achievement of quantitative and Jobs Actqualitative performance metrics measured over a one-year performance period. The Committee sets the performance metrics for each one-year performance period at the time of 2017 effective January 1,grant in consultation with Mr. Zaslav. Each annual award of PRSUs made under the Zaslav 2018 Employment Agreement is distributed to Mr. Zaslav, to the extent the PRSUs are earned, in three installments as follows: 50% of the earned PRSUs will be paid and distributed in the calendar year immediately following the one-year performance period, as soon as practicable following the Committee’s determination of performance for such performance period, 25% of the earned PRSUs will be paid and distributed as soon as practicable after the beginning of the second calendar year following the one-year performance period, and the remaining 25% of the earned PRSUs will be paid and distributed as soon as practicable after the beginning of the third calendar year following the one-year performance period. The Zaslav 2021 Employment Agreement originally contained the same distribution schedule for earned PRSUs. However, on December 20, 2021, the Committee entered into a letter agreement with Mr. Zaslav amending the Zaslav 2021 Employment Agreement to amend the distribution schedule to provide that for any PRSUs to be granted in future calendar years (i.e., 2022, 2023, 2024, 2025, 2026 and 2027) the PRSUs will be distributed to Mr. Zaslav, to the extent the PRSUs are earned, in two installments as follows: 70% of the earned PRSUs shall be paid and distributed to Mr. Zaslav in the calendar year immediately following the end of the applicable one-year performance period, as soon as practicable following the Committee’s determination of performance for such performance period, and the remaining 30% of the earned PRSUs shall be paid and distributed to Mr. Zaslav as soon as practicable after the beginning of the second calendar year following the end of the applicable performance period. The Committee amended the timing of distribution of future PRSUs to be awarded to Mr. Zaslav in calendar years 2022, 2023, 2024, 2025, 2026 and 2027 under the Zaslav 2021 Employment Agreement after a review of market data indicated that the majority of the companies in Discovery’s compensation peer group distribute earned PRSUs immediately upon vesting. The Committee desired to more closely align the Zaslav’s 2021 Employment Agreement with prevailing market practice, while still maintaining part of the hold-back feature to encourage stock ownership and retention by Mr. Zaslav. Mr. Zaslav may elect to defer receipt of the shares issuable pursuant to his PRSUs and is also permitted to have applicable withholding taxes satisfied through a reduction in the number of shares issued to him upon settlement of PRSUs, subject to transition rules. In addition,limitations in certain areas. All references to vesting of Mr. Zaslav’s long-term incentive awards assume continued employment through the definitionapplicable vesting date or acceleration as provided below under “Termination Provisions.” Mr. Zaslav is required to hold 1,500,000 shares of “covered employees” under Section 162(m) was amended to expandour common stock throughout the definition of “covered employees.” As such, effective January 1, 2018 “covered employees” include any person who was the chief executive officer or chief financial officer at any time during the tax year, as well as the next three most highly paid NEOs asterm of the last dayZaslav 2021 Employment Agreement. 38Discovery
Table of the taxable year. In addition, any person who was a covered employee as of January 1, 2017 or becomes a covered employee thereafter will remain a covered employee in perpetuity.Contents Executive Compensation AsHealth, Welfare and Other Personal Benefits
Mr. Zaslav is eligible to participate in all employee benefit plans and arrangements that we offer for the benefit of our senior executive group, including insurance and retirement plans. He is entitled to four weeks of vacation each year and also receives a result,car allowance of $1,400 per month. Mr. Zaslav is entitled to use our corporate aircraft or our NetJets arrangement for taxable years beginning after December 31, 2017, all compensationup to 250 hours of personal use per year, which includes Mr. Zaslav’s spouse traveling separately on the aircraft if such travel is to join Mr. Zaslav at a location where he has travelled for business purposes. We will pay for the first 125 hours of personal use and Mr. Zaslav shall reimburse us for personal use in excess of $1 million paid to each125 hours, under the Aircraft Time Sharing Agreement between Mr. Zaslav and Discovery Communications, LLC entered into in 2014, which was in effect under the Zaslav 2018 Employment Agreement and continues in effect under the Zaslav 2021 Employment Agreement. See “Retirement Plans and Other Benefits –Health, Welfare and Other Personal Benefits” on page 53 for additional details on Mr. Zaslav’s personal aircraft use. Termination Provisions Termination by Reason of Death or Disability The Zaslav 2018 Employment Agreement provided for and the Zaslav 2021 Employment Agreement provides for the payment of the following amounts upon termination of Mr. Zaslav’s employment by reason of his death or disability: (1) | all accrued and unpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans; | (2) | a prorated portion of Mr. Zaslav’s then-current annual bonus, based on the portion of the calendar year during which Mr. Zaslav was employed by us, payable during the first quarter of the following year, in the ordinary course of our bonus payments; | (3) | payment for any unvested stock appreciation right (“SAR”) awards, in a lump sum, in accordance with the terms of the applicable plans (which provide for acceleration of vesting in such event); | (4) | accelerated vesting of his PRSU awards, prorated based on the number of full or partial years completed for the applicable performance period and the amount earned based on achievement of performance metrics during such full or partial years; and | (5) | the payment of (i) coverage under our group health benefits plan to the extent permitted by, and under the terms of, such plan and to the extent such benefits continue to be provided to former executives and/or the survivors of executives at Mr. Zaslav’s level in the Company generally, or (ii) Company-paid continuation health coverage (commonly referred to as COBRA), subject to a change to instead use comparable cash payments if required for legal compliance. |
In addition, all of Mr. Zaslav’s unvested stock options fully vest and become immediately exercisable in accordance with the terms of the applicable award agreement. As a condition of receiving the severance benefits described above (other than certain grandfathered compensation) will notin the event of his death), Mr. Zaslav would be deductiblerequired to sign a general release in our favor. Termination by us. The Committee considers tax deductibilityDiscovery for Cause; By Mr. Zaslav Other than for Good Reason If Mr. Zaslav’s employment is terminated by us for “Cause” or by Mr. Zaslav other than for “Good Reason” (“Cause” and “Good Reason” have the meanings set forth below under “Executive Compensation Tables— Potential Payments Upon Termination or Change in making compensation decisions,Control – Defined Terms Used in this Section” on page 68), the Zaslav 2018 Employment Agreement entitled him to the extent deductibility is reasonably practicable and consistent with our other compensation objectives. These considerations were a factor in determining the general long-term incentive program for our senior executivesreceive, and the use of PRSUZaslav 2021 Employment Agreement entitles him to receive, all accrued and SARunpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans, but all unvested or unexercised equity awards are forfeited. If such termination was effected by us for our senior executives, and the change in law was a factor in the Committee’s determining to make awards of RSUs to NEOs“Cause,” or by Mr. Zaslav before December 31, 2023 other than for “Good Reason” (except within 30 days beginning on the CEO in31st day following a Change of Control, as described below) Mr. Zaslav forfeits all rights under his stock option, SAR and PRSU awards (regardless of whether all or any portion of the February 2018 Annual LTI Review, as further discussed in “Changesaward is then vested or unvested). Termination by Discovery Other than for Death, Disability or Cause; By Mr. Zaslav for Good Reason If Mr. Zaslav’s employment is terminated by us other than for death, disability or “Cause” or by Mr. Zaslav for “Good Reason,” the Zaslav 2021 Employment Agreement entitles him to receive payments for the following: (1) | all accrued and unpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans; | (2) | a prorated portion of Mr. Zaslav’s annual bonus, based on the portion of the calendar year during which Mr. Zaslav was employed, payable during the first quarter of the following year, in the ordinary course of our bonus payments and subject to achievement of the applicable performance metric; | (3) | an amount equal to one-twelfth the average of Mr. Zaslav’s annualized base salary that Mr. Zaslav was earning in the calendar year of the termination and the immediately preceding calendar year, multiplied by 24, plus one-twelfth of the average of the annual bonus paid to Mr. Zaslav for the immediately preceding two years, multiplied by 24, payable over the course of the 24 months following his termination or resignation consistent with our normal payroll practices (disregarding for this purpose any portion of the average annual bonus that exceeds $12 million); |
2022 Proxy Statement 39
Table of Contents Executive Compensation Programs (4) | accelerated vesting and payment for all of his granted but unvested SARs; | (5) | accelerated vesting for all of his outstanding PRSU awards, with the amount earned based on achievement of the performance metrics during the applicable performance period and the awards distributed as if Mr. Zaslav remained employed; and | (6) | the payment of (i) coverage under our group health benefits plan to the extent permitted by, and under the terms of, such plan and to the extent such benefits continue to be provided to former executives at Mr. Zaslav’s level in the Company generally, or (ii) Company-paid COBRA, subject to a change to instead use comparable cash payments if required for legal compliance. |
In addition, Mr. Zaslav’s granted but unvested stock options will fully vest and Arrangementswill become exercisable in 2018,” below. The Committee continues to believe that shareholder interests are best served by not restricting its discretion and flexibility in structuring compensation programs, even though such programs will result inaccordance with their original vesting schedule following termination of service. non-deductible compensation expenses.Termination upon Expiration of the Zaslav 2021 Employment Agreement
In the event of the termination of Mr. Zaslav’s employment upon the expiration of the Zaslav 2021 Employment Agreement on December 31, 2027, Mr. Zaslav is entitled to receive: (1) | all accrued and unpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans; | (2) | the payment of (i) coverage under our group health benefits plan to the extent permitted by, and under the terms of, such plan and to the extent such benefits continue to be provided to former executives at Mr. Zaslav’s level in the Company generally, or (ii) Company-paid COBRA, subject to a change to instead use comparable cash payments if required for legal compliance; and | (3) | an amount equal to Mr. Zaslav’s annualized base salary in 2027, plus the average of the annual bonus paid to Mr. Zaslav for the immediately preceding two years, payable over the course of the 12 months following his separation from service after the expiration of the Zaslav 2021 Employment Agreement consistent with our normal payroll practices (disregarding for this purpose any portion of the average annual bonus that exceeds $12 million). |
NEO Responsibilities and AccomplishmentsChange in Control Provisions
In the event of a Change in Control (which has the meaning set forth below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control – Defined Terms Used in this Section” on page 68), the Zaslav 2021 Employment Agreement provides the following: (1) | If Mr. Zaslav remains employed by us (or our successor) for 30 days following such Change in Control, then: | | (a) | any granted and unvested SARs and stock options will become fully vested as of the 30th day following the Change in Control, and | | (b) | any outstanding PRSUs for which the performance period has not expired (including any PRSUs granted under the Zaslav 2018 Employment Agreement) will become fully vested as of the 30th day following the Change in Control and will be earned regardless of actual performance. | (2) | If Mr. Zaslav’s employment is terminated by us (or our successor) other than for “Cause” or by Mr. Zaslav for “Good Reason” within 60 days following a Change in Control, or if Mr. Zaslav resigns voluntarily within the 30 calendar days commencing on the thirty-first day following a Change in Control, then he will be treated as though he was terminated other than for “Cause” or “Good Reason”, meaning he will receive the payments described above under “Termination by Discovery Other than for Death, Disability or Cause; By Mr. Zaslav for Good Reason” except: | | (a) | any granted and unvested SARs will be earned regardless of actual performance; | | (b) | any outstanding PRSUs for which the performance period has not expired will be earned regardless of actual performance, and the PRSUs will be distributed immediately to Mr. Zaslav to the extent permissible under the Internal Revenue Code of 1986 Section 409A; and | | (c) | any granted and unvested stock options will become fully vested and immediately exercisable. |
The WarnerMedia Transaction shall not constitute a Change in Control for purposes of the Zaslav 2021 Employment Agreement. For more information regarding these payments, please see “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control” beginning on page 62. 40 Discovery
Table of Contents Executive Compensation Other NEO Employment Agreements in Effect During 2021 The table below summarizes the key provisions of the other NEO employment agreements. | | Gunnar Wiedenfels | | Bruce L. Campbell | | David C. Leavy | | Jean-Briac Perrette | Term | | Through April 21, 2024 | | Through February 14, 2022(1) | | Through March 1, 2023 | | Through June 30, 2022 | Base Salary(2) | | $1,700,000 | | $1,800,000 | | $1,300,000 | | £1,525,000 | Target Bonus | | 150% | | 150% | | 115% | | 175% | Annual Equity | | Annual equity awards to be provided in accordance with our normal executive compensation practices. | Sign on/Renewal Grants, Relocation and Other Benefits | | None | | $3,750,000 contract renewal RSU grant in 2018 | | None | | $4,000,000 contract renewal RSU grant in 2019
Tax preparation assistance and repatriation benefits | Termination for “Cause”(3) | | Upon termination for cause, executive is only entitled to receive amounts earned or vested at the time of termination.(4) | Termination without “Cause” or “Good Reason” Resignation | | If executive is terminated without “Cause” or resigns for “Good Reason”, the executive will be entitled to severance, provided that the executive signs a release in our favor.(5) | Resignation Provisions | | If executive resigns other than for “Good Reason” before the end of the term, the executive will be required to pay us six-months’ gross salary; we remain eligible to obtain further damages and injunctive relief. | Renewal Provisions | | We may elect to renew each executive employment agreement by providing advance notice (as specified in the applicable agreement). If we fail to renew, the executive is entitled to severance as if the executive were terminated without cause. In certain instances, we are required by the terms of the applicable agreement to make a “Qualifying Renewal Offer”(6) at the end of the term. If we make a “Qualifying Renewal Offer” that executive rejects, the executive is not eligible for severance, but is eligible for a non-competition payment of 50% of base salary.(7) | Covenants | | Customary restrictive covenants where permitted by law during the term and for 12 months thereafter, including non-interference, non-competition, non-solicitation (18 months for employee non-solicit); continuing confidentiality obligations. |
(1) | As of February 15, 2022, Mr. Campbell is an at-will employee of Discovery, in the same role, and receiving the same cash and equity compensation that he was entitled to under his most recent employment agreement. | (2) | 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. Mr. Perrette’s base salary is set forth in pounds sterling in his employment agreement. | (3) | “Cause” has the meaning set forth below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Defined Terms Used in this Section” on page 68. The Cause definition in the individual NEO Employment Agreements shall apply in lieu of that provided in any benefit plans in which the NEO participates. | (4) | Mr. Wiedenfels’ agreement also provides that we may terminate him for “Cause” if we provide notice that he has materially neglected his duties to us or engaged in other conduct that constitutes a breach, and he fails to cure such breach within 30 days of delivery of such notice. | (5) | “Good Reason” has the meaning set forth below under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Defined Terms Used in this Section” on page 68. Additional information about severance payments can be found under “Executive Compensation Tables—Potential Payments Upon Termination or Change-in-Control” on page 62. | (6) | “Qualifying Renewal Offer” is an offer to renew the employment agreement with a meaningful increase in base salary and a bonus target that is at least the same level as in effect at the end of the current term of employment, and with other material terms that are at least as favorable, in the aggregate, as the material terms of the current employment agreement. | (7) | The agreement with Mr. Leavy does not require us to make a “Qualifying Renewal Offer” but does provide for severance if we don’t renew the agreement at the end of the term. Mr. Perrette’s agreement provides that if he rejects a “Qualifying Renewal Offer”, in addition to the benefits provided in the table below, his non-competition payment would increase to 100% of base salary if he seeks to engage in competitive activity and permission is denied by us. |
2022 Proxy Statement 41
Table of Contents Executive Compensation NEO Compensation in 2021 Elements of 2021 Compensation Total direct compensation for the NEOs in 2021 consisted of three basic components: Element of Compensation | | Key Features | | Purpose | Base Salary | | Fixed annual cash amount, generally reviewed annually. | | 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, the target amount of each NEO’s annual cash bonus as a percentage of base salary. | Annual Cash Bonus | | Each NEO has a target cash bonus opportunity, set as a percentage of 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 individual performance to focus our executives on our financial and operational goals. Ensure that our 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, restricted stock units and stock appreciation rights. 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 or equity-type awards to align our executives’ interests with those of our stockholders. We also use long-term incentive awards as a tool to encourage an executive to enter into a new employment agreement or extend an existing agreement. These awards serve as retention tools and align an executive’s interests to those of our stockholders. |
42 Discovery
Table of Contents Executive Compensation 2021 NEO Accomplishments and Compensation Our performance and/orand individual achievements play a strong role in many of the compensation decisions for our NEOs, as further described below. The Committee considered Discovery’s overall strong results,our operational accomplishments and solid financial performance in 2021, as well as each of the individual NEOs’ responsibilities and 20172021 accomplishments in making compensation decisions. We have summarized each NEO’sA summary of overall 2021 performance and individual accomplishments for each NEO appears below. Mr. Zaslav: Zaslav: Mr. Zaslav serves as President and CEO and reports directly to the Board. In 2017,2021, Mr. Zaslav ledprovided extraordinary leadership during another pandemic-impacted year and delivered against our strategic and operational priorities, including the Companysuccessful launch of discovery+ and increases in achieving our overall strong performance. In additionrevenue, AOIBDA and free cash flow. The hallmark of Mr. Zaslav’s tremendous 2021 achievements was his initiation of the Warner Media Transaction and his leadership of the negotiation and signing of this historic transaction, as well as his efforts to operating performance,obtain regulatory approvals and meet other significant accomplishments included significantly increasingad-supporteddirect-to-consumer streaming in our U.S. GO applications andclosing conditions, putting us on pace to close during the ProSieben joint venture in Germany; driving strong ratings in our TLC, Investigation Discovery, and OWN networks; negotiating the Scripps transaction, which closed in March 2018; and driving growth in our international business through investments in sports rights.second quarter of 2022. Mr. Wiedenfels: Wiedenfels: Mr. Wiedenfels is our Chief Financial OfficerCFO and reports to our CEO. Mr. Wiedenfels joined the Company on April 1, 2017 and made strongsignificant contributions in 2017, building key relationships internally2021 and externally, establishing himselfprovided consistent and outstanding financial leadership. During 2021, Mr. Wiedenfels enabled and supported the required investments to successfully launch and grow discovery+, while continuing to drive cost savings and efficiencies in the finance function and helping to manage free cash flow. He also led our investor relations efforts as we navigated a trusted advisorchallenging market environment due to the leadership teamlingering effects of COVID and unusual volatility in our sector. Finally, Mr. Wiedenfels was the Board,financial architect of the WarnerMedia Transaction and making key contributionsplayed a vital role in driving the SEC filing process relating to the negotiation oftransaction, preparing for the Scripps transactionacquisition financing and the integration planning process.leading our investor communication strategy. Mr. Campbell: Campbell: Mr. Campbell is our Chief Development, Distribution & Legal Officer and reports to our CEO. During 2021, Mr. Campbell successfully led a number of significant acquisitionsprovided outstanding leadership to our corporate legal team and other transactions and investments in 2017, including the Scripps transaction and the formation of the MotorTrend joint venture. Mr. Campbell also led our Domestic Distribution division in 2017, with strong renewals ofbusiness affairs function, oversaw numerous key affiliate agreementsrenewals in the U.S., and expanding carriagewas a key contributor to the successful launch of discovery+ by working to establish and expand distribution arrangements for our bundle of channels onto new platforms.that product. Mr. Campbell also provided outstanding legal supporttremendous leadership for the CompanyWarnerMedia Transaction, acting as the principal negotiator, overseeing the regulatory approval process which spanned numerous U.S. government agencies and dozens of international markets, and making significant contributions to position us for closing during the second quarter of 2022. Mr. Leavy: Mr. Leavy is our Chief Corporate Operating Officer and reports to our CEO. In 2021, Mr. Leavy provided essential leadership across multiple Company-wide initiatives. He continued to lead our ongoing global response to the pandemic, which included preparing multiple Discovery locations for a safe return to our offices during the fall of 2021. Mr. Leavy was also a key leader and contributor to the successful launch and global expansion of discovery+ in 2021, and was instrumental to the Company’s response to legislative actions in Poland which threatened our TVN business affairs, production management,in that country. Finally, Mr. Leavy provided steady leadership around the announcement and our internal studios.ongoing communications efforts relating to the WarnerMedia Transaction and has been an invaluable member of the steering committee that is working towards a second-quarter 2022 closing. Mr. Perrette: Perrette: Mr. Perrette serves as CEO and President of Discovery Networks International and reports to our CEO. Despite the ongoing challenges of COVID and a turbulent regulatory environment, in 2021 Mr. Perrette drove strongPerrette’s leadership helped to grow our global DTC business, sustain our international linear business, and deliver solid financial performance and long-term value in our international division in 2017, including investment in digital businesses, negotiation of important affiliate agreement renewals, and effective cost management.division. Mr. Perrette drove robust operational planning for distributionled the development and growth of the Olympic Games in Europe beginning in February 2018. In addition,discovery+, integrated numerous DTC business and operating units into one global business and transitioned our streaming product onto one technology platform. Mr. Perrette was a key leader inalso provided necessary leadership throughout the negotiation of strategic sports rights acquisitions and sublicenses in international markets. Mr. Guagliardo: Mr. Guagliardo was our Chief Commercial Officer until December 31, 2017 and reportedlegislative challenges to our CEO. Mr. Guagliardo delivered strong performancebusiness in 2017Poland, and has been instrumental in supportlaying the foundation for closing the WarnerMedia Transaction during the second quarter of our U.S. Digital Media, Advertising Sales, and licensing businesses.
Mr. Warren: Until March 31, 2017, Mr. Warren was our CFO, reporting to our CEO. Mr. Warren made solid contributions in 2017, including managing the transition to a new CFO.
2017 Compensation Decisions2022.
The following chart summarizes the compensation decisions for 20172021 with respect to each NEO’s base salary, annual cash bonus and long-term incentive awards, other than Mr. Wiedenfels.awards. Detailed discussion of the decisions made with respect to each element is contained in the discussion immediately below the chart. 2022 Proxy Statement 43
Table of Contents Executive Compensation | | | Element of Compensation | | 20172021 Compensation DecisionsActions
| Base Salary | | ● Maintained base salary for Mr. Zaslav consistent withper the terms of the Zaslav 2018 Employment Agreement; Mr. Zaslav’s base salary was also maintained at the same level in the Zaslav 2021 Employment Agreement. ● Increased base salary for Mr. Wiedenfels in connection with the September 2020 amendment of his employment agreement, which keepsagreement; his new base salary the same for itssix-year term.was effective as of January 1, 2021. ● Increased base salary for Messrs. Campbell, GuagliardoLeavy and Perrette in February 2021 as part of the 20172021 Annual Base Salary Review described above. Maintained Mr. Warren’sReview; new base salary, consistent with the termssalaries were effective as of his employment agreement as amended in light of his transition.
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| | | Element of Compensation
| | 2017 Compensation DecisionsJuly 1, 2021.
| Annual Cash Bonus | | ● Paid annual cash bonuses in March 2022 to each of the NEOs under a program originally designed to exemptfollowing the bonus from the deduction limits of the then-applicable provisions of Section 162(m), in the2021 Annual Bonus Review (see discussion above under “Tax Deductibility of Executive Compensation”). The bonus payouts reflected strong Company performancewhich took place in 2017, as well as the assessment of each NEO’s individual performance. | | February 2022. | Long-Term Incentive Awards | | ● Awarded SARs and PRSUs to Mr. Zaslav as specified in amounts as agreed in his employment agreement.the Zaslav 2018 Employment Agreement. ● Awarded stock options and PRSUs to Messrs. Campbell, Guagliardo and PerretteMr. Zaslav in connection with the Annual LTI Review described above.signing of the Zaslav 2021 Employment Agreement. ● Awarded stock options and RSUs to Mr.Messrs. Wiedenfels, Campbell, Leavy and Perrette in amounts as agreed forFebruary 2021 following the new hire awards under his employment agreement.2021 Annual LTI Review. Did not make an equity award to Mr. Warren, given his decision to leave the Company.
| | | |
Base Salary Mr. Zaslav: Zaslav: Under the terms of Mr. Zaslav’s agreement,the Zaslav 2018 Employment Agreement, Mr. Zaslav’s base salary was set at $3 million for 2014 and remainsmillion; the Zaslav 2021 Employment Agreement maintains that same base salary throughout its term (through 2027). The Committee determined that it was appropriate to retain Mr. Zaslav’s base salary at the same forlevel and to focus the remainder of thesix-year termcompensation elements of the agreement. Theagreement on performance-based pay. Mr. Zaslav’s employment agreement is further described in “Executive Compensation—Executive Compensation Arrangements,” below.“NEO Employment Agreements” above. Mr. Wiedenfels: The Committee increased Mr. Wiedenfels’ base salary to $1,700,000 as specified by the September 2020 amendment of his employment agreement. Mr. Wiedenfels new base salary went into effect on January 1, 2021. The Committee considered Mr. Wiedenfels’ performance, market data, internal equity, and the long-term nature of the agreement in determining the appropriate base salary adjustment. This increase was in lieu of any further increase as part of the 2021 Annual Base Salary Review. Mr. Wiedenfels’ employment agreement is further described in “Other NEO Employment Agreements” above. CampbellMr. Campbell: : The Committee increased Mr. Campbell’s base salary by 3%,2% to $1,599,075$1,947,812 in the 20172021 Annual Base Salary Review. The Committee based this decision on the CEO’s recommendation, and Mr. Campbell’s strong performance, with reference to the 20172021 Peer Group market data. Mr. Campbell’s new base salary went into effect as of July 1, 2021.
Mr. Leavy: Perrette: The Committee increased Mr. Perrette’sLeavy’s base salary by 3%2% to £1,210,250$1,326,000 in the 20172021 Annual Base Salary Review. The Committee based this decision on the CEO’s recommendation, and Mr. Perrette’s strong performance, with reference to the 20172021 Peer Group market data. Mr. Leavy’s new base salary went into effect as of July 1, 2021. Mr. Perrette: Guagliardo: The Committee increased Mr. Guagliardo’sPerrette’s base salary by 4%2% to $1,456,000$2,062,307 in the 20172021 Annual Base Salary Review. The Committee based this decision on the CEO’s recommendation, Mr. Guagliardo’s strong performance and the exceptional performance of the divisions he led, with reference to the 20172021 International Peer Group market data. The Committee did not increase Mr. Warren’sPerrette’s new base salary in the 2017 Annual Base Salary Review, consistent with the termswent into effect as of his employment agreement and due to his impending separation. For more information about Mr. Warren’s employment agreement and separation agreement, please see “Executive Compensation—Executive Compensation Arrangements,” below.July 1, 2021.
Annual Cash Bonus Awards We made annual cash bonus awards to each of theour NEOs with respect to 2017 intheir 2021 performance as part of the 2021 Annual Bonus Review which took place in February 2018.2022. 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 our Company,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 bonus amounts for 2017 for Messrs. Warren and Wiedenfels both were prorated based on their service in 2017.employment. Each of theour NEOs, other than Mr.Messrs. Zaslav and Wiedenfels, participated in the ICP in 2017,2021, 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 and individual performance, as applied to the target value. The annual cash bonus structure for Mr. Zaslav was designed bydesign also rewards exceptional individual performance through allocation of a “performance pool.” Three percent of the CommitteeICP target is used to meet specific objectives. As discussed below,fund the annual bonus for the CEOperformance pool and additional funding is based 50% on achievementoverachievement of financial targets and 50% on qualitative goals. Unlike the ICP design,Adjusted Free Cash Flow metric. The performance pool is then allocated to high performing employees, which is calculated first based onmay include the NEOs other than Mr. Zaslav. Each eligible NEO received a performance against financial measures and then finalized based on an assessment of individual performance, the bonuspool award for Mr. Zaslav is based 50% on qualitative goals determined without reference to the Company’s performance against financial targets. Given the CEO’s role in setting the annual financial targets used for the ICP, the Committee concluded that it would be appropriate to have a substantial part of his bonus based on separate qualitative measures. This combination of financial targets and qualitative goals allows the Committee to incentivize and reward appropriate setting of financial targets by the CEO (and as needed, the CFO); the Committee adopted this design as a result of its ongoing risk assessment of our executive compensation programs.2021.
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. The following chart summarizes the 20172021 bonus target amount and actual payout for each NEO:NEO. Please refer to the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column of the 2021 Grants of Plan-Based Awards Table on page 58 for more information regarding the range of 2021 payouts available to these NEOs and the “Non-Equity Incentive Plan Compensation” column of the 2021 Summary Compensation Table on page 56 for the actual amounts paid to them with respect to their 2021 awards. 44 Discovery
Table of Contents Executive Compensation NEO | | 2021 Target Amount | | 2021 Metrics | | Total 2021 Cash Bonus Award | David M. Zaslav, CEO | | NEO● $22,000,000 | | 2017 Target Amount●
| | 2017 Metrics
| | 2017 Bonus Award
| David M. Zaslav,
CEO
| | $8.4 million
(equivalent of 280% of base salary)
| | 50% qualitative goals ● 50% quantitative goals | | ● $8,141,565,26,400,000, based on achievement of 99.9%100% of the quantitative goals and 94%100% of the qualitative goals.goals established for Mr. Zaslav’s 2021 cash bonus, and the Committee’s decision to award an additional one-time discretionary bonus of $4,400,000 to Mr. Zaslav. The aggregate payout amount was 97%above target, in recognition of target after applicationMr. Zaslav’s exceptional leadership through the pandemic, the successful launch of discovery+ and his efforts to initiate, negotiate and enter into the Committee’s downward discretion.WarnerMedia Transaction. See “2021 NEO Accomplishments and Compensation” on page 43 for additional discussion of Mr. Zaslav’s individual performance in 2021. | | | | | Gunnar Wiedenfels, CFO
| | ● $994,5202,550,000 120%● 150% of prorated base salary
| | ● 50% qualitative goals ● 50% quantitative goals ● Individual performance factored into allocation of performance pool | | ● $4,632,970, based on achievement of 100% of the quantitative goals and 100% of the qualitative goals and allocation of the performance pool. The aggregate payout amount was above target, reflecting Mr. Wiedenfels’ outstanding individual performance in 2021 and his contributions to the management of our business during the pandemic, the successful launch of discovery+, and the work done in 2021 to prepare for a successful closing of the WarnerMedia Transaction. See “2021 NEO Accomplishments and Compensation” on page 43 for additional discussion of Mr. Wiednefels’ individual performance in 2021. | Bruce L. Campbell, Chief Development, Distribution & Legal Officer | | ● $2,892,684 ● 150% of base salary | | ● 100% ICP calculation ● 100% of ICP assigned to achievement of Company-wide financial metrics ● Individual performance factored into ICP calculation withand allocation of performance pool | | ● $1,570,378,5,690,558, based on calculation of the ICP payout. ICP calculation based on Company performance and allocation of the performance pool. The aggregate payout amount was 158% ofabove target, reflecting Mr. Wiedenfels’ strongCampbell’s outstanding individual performance in 2021 and his contributions to the management of our business during the pandemic, the successful launch of discovery+, and the work done in 2017.2021 to prepare for a successful closing of the WarnerMedia Transaction. See “2021 NEO Accomplishments and Compensation” on page 43 for additional discussion of Mr. Campbell’s individual performance in 2021. |
2022 Proxy Statement 45
Table of Contents Executive Compensation | | | | Bruce L. Campbell,
David C. Leavy, Chief Development, Distribution & Legal Corporate Operating Officer | | ● $2,078,7981,509,746 130%● 115% of base salary
| | ● 100% ICP calculation ● 100% of ICP assigned to achievement of Company-wide financial metrics ● Individual performance factored into ICP calculation withand allocation of performance pool | | ● $3,307,846,2,645,692, based on calculation of the ICP payout. ICP calculation based on Company performance and allocation of the performance pool. The aggregate payout amount was 159% ofabove target, reflecting Mr. Campbell’s strongLeavy’s outstanding individual performance in 2021 and his contributions to the management of our business during the pandemic, the successful launch of discovery+, and the work done in 2017. |
| | | | | | 2021 to prepare for a successful closing of the WarnerMedia Transaction. See “2021 NEO Accomplishments and Compensation” on page 43 for additional discussion of Mr. Leavy’s individual performance in 2021. | NEO Jean-Briac Perrette, President and Chief Executive Officer, Discovery International | | 2017 Target Amount● $3,822,728
| | 2017 Metrics●
| | 2017 Bonus Award
| Jean-Briac Perrette,
President and Chief Executive Officer, Discovery
Networks International
| | £1,815,375
150%175% of base salary
| | ● 100% ICP calculation 60%● 40% of ICP assigned to achievement of internationalInternational division financial metrics
20% of ICP assigned to Eurosport Digital
● 20% of ICP assigned to Company-wide Net Revenue and Adjusted Free Cash Flow financial metrics ● 20% of ICP assigned to Company-wide Next Generation Digital Revenue financial metrics ● 20% of ICP assigned to Company-wide Next Generation Paid Subscribers financial metrics ● Individual performance factored into ICP calculation and allocation of performance pool | | £2,238,214,● $5,900,498, based on calculation of the ICP payout. ICP calculation based on Company and internationalInternational division performance and allocation of the performance pool. The aggregate payout amount was 123% ofabove target, reflecting Mr. Perrette’s impactful contributions andoutstanding individual performance in 2017. | | | | | Paul Guagliardo,
Former Chief Commercial Officer
| | $1,674,400
115%2021 and his contributions to the management of base salary
| | 100% ICP calculation
40%our business during the pandemic, the successful launch of ICP assigneddiscovery+, and the work done in 2021 to U.S. Advertising Sales line of business
20% of ICP assigned to U.S. Digital Media line of business
20% of ICP assigned to Eurosport Digital
20% of ICP assigned to Company-wide financial metrics
Individual performance factored into ICP calculation with allocation of performance pool
| | $1,674,400, based on calculationprepare for a successful closing of the ICP payout. ICP calculation basedWarnerMedia Transaction. See “2021 NEO Accomplishments and Compensation” on Company performance and allocation of the performance pool. The aggregate payout amount was 100% of target, consistent with the termspage 43 for additional discussion of Mr. Guagliardo’s separation agreement. | | | | | Andrew Warren,
Former CFO
| | $358,102
120% of prorated base salary
| | 100% ICP calculation
100% of ICP assigned to achievement of Company-wide financial metrics
| | $367,412, based on an aggregate payout percentage of 103% of target. Under the terms of Mr. Warren’s employment agreement (as amended to address his transition) and separation agreement, he was entitled to a prorated 2017 annual bonus payout.Perrette’s individual performance in 2021. |
Annual bonus compensation for the NEOs is paid under the Discovery Communications, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”)2021 Financial Metrics – Performance and has been intended to qualify as performance-based compensation under Section 162(m). At the beginning of 2017, the Committee set Adjusted OIBDA as the Company’s performance criterion and established a maximum annual bonus amount for each NEO and certain other senior executives as the initial step in structuring the bonus awards as performance-based under Section 162(m). If the
performance criterion for the year is met, the actual bonus award for each NEO is subject to the Committee’s negative discretion (“downward discretion”). Mr. Zaslav’s annual bonus opportunity was capped at a maximum of 300% of base salary, and each of the remaining NEOs’ annual bonus opportunity was capped at a maximum of 250% of base salary. As discussed above under “Tax Deductibility of Executive Compensation,” the performance-based exception from Section 162(m) does not apply to years beginning after December 31, 2017, and any payments for prior years made after December 31, 2017 will be deductible under the amended Section 162(m) only in accordance with “grandfathering” rules for which only limited guidance is currently available.Adjustments
The Committee exercises its downward discretion based on each executive’s individual performance and Company performance, calculated against target bonus amounts for each executivesets annual financial metrics that are expressed as a percentage of base salary. With respectused to Mr. Zaslav,determine the Committee considered the achievement of quantitativecash bonuses awarded to NEOs. The ICP is calculated based solely on performance against financial measures, and qualitative goals set by the Committee. For the remaining NEOs, the Committee considered the achievement of the applicable financial metrics of the ICP and their individual performance. Finally, with respect to Mr. Warren, the Committee considered the requirements of his employment agreement. For 2017, the Committee set the performance threshold at $1,241 million of Adjusted OIBDA for purposes of determining eligibility to receive payouts of the annual cash bonus opportunity for all NEOs.
In the Annual Bonus Review, the Committee determined that the Adjusted OIBDA performance threshold was met for 2017CEO and exercised its downward discretion to determine each NEO’s specific bonus payment amount as discussed below.
Annual Cash Bonus Awards for Mr. Zaslav
The annual cash bonus for Mr. ZaslavCFO is based on achievement of Company financial and individual qualitative goals. The Committee approved goals for Mr. Zaslav in March 2017, with goals based 50% on performance against financial measures, or quantitative financial achievementgoals, and 50% on qualitative goals relateddetermined without reference to individual accomplishments. This bonus design is intended to tie Mr. Zaslav’s annual bonus to overall Companyour performance as well as qualitative measures, to moderate the amount of the incentive based on purelyagainst financial measures.targets. The Committee determined this was appropriate given Mr. Zaslav’s significant role in setting the Company’s annual plan based on these2021 financial measures.
Themetrics or quantitative goals were based on:
Adjusted Free Cash Flow (as defined in the next table); and
Further Adjusted OIBDA (as defined in the next table).
The Committee determined that including all three measures was appropriate for the CEO given the scope of his responsibilities and direct impact on resource allocation decisions.
● | Net Revenue; | ● | Adjusted Free Cash Flow (as defined below); | ● | Further Adjusted OIBDA (as defined below); | ● | Next Generation Digital Revenue (as defined below) and | ● | Next Generation Year-End Paid Subscribers (as defined below). |
The Committee annually reviews potential adjustments to performance against these 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.currency neutral. The Committee typically groups adjustments into three categories: unplanned acquisitions and divestitures (and related expenses and revenues);
unplanned programming or new business investments; and
corporate transactions and legal expenses (including corporate debt transactions, accounting or legal changes that resulted in unforeseen changes, and significant legal and consulting fees for unbudgeted matters).
● | unplanned acquisitions and divestitures (and related expenses and revenues); | ● | unplanned programming or new business investments; and | ● | corporate transactions and legal expenses (including corporate debt transactions, accounting or legal changes that resulted in unforeseen changes, and significant legal and consulting fees for unbudgeted matters). |
The table below provides the definition of each of the threefive financial metrics and describes the 2021 adjustments at a high levellevel. The adjustments set forth below had the 2017 adjustments:effect of reducing our overall financial performance for purposes of calculating cash bonuses and ICP awards, as compared to our reported results. 46 Discovery
Table of Contents Executive Compensation | | | | | Financial Metric | | Definition | | 20172021 Adjustments
| Net Revenue | | Revenue from ordinary business operations. | | Adjustments in the following two areas: acquisitions (and related expenses), based on international ● release of the Board-approved COVID budget contingency; ● Committee exercising its discretion to reduce discovery+ over-performance by 1/3; ● unplanned divestiture of Great American Country; and ● unexpected corporate transactions including: releases of reserves, accounting policy impacts, tax prepayments, legal and domestic acquisitionssocial security provisions, and divestitures in 2017,transactions relating to PGA and unplanned new programming or new business investments (including adjustments for unplanned investment in kids programming on digital platforms and unbudgeted revenue in licensing content on new platforms). | | | GolfTV. | Adjusted Free Cash Flow | | Cash provided by operations less acquisitions of property and equipment, adjusted for long-term incentive payments. | | Adjustments on the same bases described above as well as adjustments for reclassification of debt refinancing costs, restructuring activities and legal fees incurred in several litigation and compliance matters. | | | Net Revenue. | Further Adjusted OIBDA | | Revenues less costs of revenues and selling, general and administrative expenses excluding:(i) mark-to-market share-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) impairment charges and (vi) gains (losses) on business and asset dispositions. | | Adjustments on the same bases described above for Adjusted Free Cash Flow.Net Revenue. | Next Generation Digital Revenue | | Revenue (distribution, advertising and other) recorded and generated on Discovery’s global digital distribution platforms. | | ● release of the Board-approved COVID budget contingency; ● Committee exercised its discretion to reduce discovery+ over-performance by 1/3 | Next Generation Year-End Paid Subscribers | | Paying subscribers for all of Discovery’s global digital distribution platforms at year end. | | ● Committee exercised its discretion to reduce discovery+ over-performance by 1/3 |
Determination of Annual Cash Bonus Awards to Messrs. Zaslav and Wiedenfels 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, or quantitative goals, and 50% on qualitative goals determined without reference to our performance against financial targets. 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 qualitative measures. Mr. Wiedenfels is also eligible for allocation of the performance pool consistent with the process for other senior executives. This combination of quantitative and qualitative goals allows the Committee to incentivize and reward the setting of appropriate financial targets by the CEO and the CFO; the Committee adopted this design as a result of its ongoing risk assessment of our executive compensation programs. The Committee determined that including all four financial measures described above was appropriate for the CEO and CFO given the scope of their responsibilities and direct impact on resource allocation decisions. The quantitative goals were each weighted at 20% to reflect equal emphasis on each of the threefour measures. The Committee approved the targets in early 2017. For 2017,2021, the quantitative targets, weighting and results were:for the cash bonuses to the CEO and CFO were as follows (actual achievement is after the aforementioned adjustments): | | Weighting | | Threshold | | Target | | Actual Achievement | | Net Revenue ($ in millions) | | | 20 | % | | $ | 7,769 | | $ | 11,098 | | $ | 11,893 | | Adjusted Free Cash Flow ($ in millions) | | | 20 | % | | $ | 1,310 | | $ | 1,871 | | $ | 2,186 | | Further Adjusted OIBDA ($ in millions) | | | 20 | % | | $ | 2,238 | | $ | 3,198 | | $ | 3,482 | | Next Generation Digital Revenue ($ in millions) | | | 20 | % | | $ | 821 | | $ | 1,173 | | $ | 1,360 | | Next Generation Year-End Paid Subscribers (# in millions) | | | 20 | % | | | 11 | | | 15 | | | 20 | |
2022 Proxy Statement 47
Table of Contents Executive Compensation | | | | | | | | | | | | | | | | | | | | | | | Weighting | | Threshold | | Target | | Actual Achievement | Net Revenue ($ in millions) | | | | 33.3 | % | | | $ | 5,412 | | | | $ | 6,765 | | | | $ | 6,759 | | Adjusted Free Cash Flow ($ in millions) | | | | 33.3 | % | | | $ | 1,098 | | | | $ | 1,372 | | | | $ | 1,541 | | Further Adjusted OIBDA ($ in millions) | | | | 33.3 | % | | | $ | 1,985 | | | | $ | 2,481 | | | | $ | 2,605 | |
The Committee set thesets annual individual qualitative goals for Mr. Zaslav related to areas ofour strategic prioritypriorities, and for Mr. Wiedenfels based on the Company.priorities in his role as CFO. The Committee sets newupdated goals each year based on the changing priorities, of the Company, and there is significant variation from year to year in both the substance of the annual goals and weighting. how they are weighted. For 2017,2021, Mr. Zaslav’s qualitative goals, with weighting, were to: ● | Transition and grow targeted total Company financial performance as the business and industry evolve (40%); | ● | grow discovery+ business in line with strategic goals (40%); and | ● | dynamically grow direct-to-consumer business, including subscriber and active user base across the portfolio (20%). |
For 2021 Mr. Wiedenfels’ qualitative goals, with weighting, were to: outperform peers in growth across domestic and international networks, drive strategic allocation of assets for long term growth and return on investment and further develop and curate viewer allegiance to our networks worldwide (20%);
drive revenue through strong affiliate sales on cable, free to air, and digital platforms to outperform domestic and international peers (20%);
further develop and integrate our overall digital and “over the top” strategy (15%);
drive international expansion, growing Eurosport and local markets (20%);
drive strong Olympics deals across Europe and prepare plan for Olympic coverage on all platforms (15%); and
develop robust succession plans for key operational roles, while continuing to attract, retain, mentor and reward exceptional talent (10%).
● | support the roll-out of our direct-to-consumer strategy (25)%; | ● | continue free cash flow improvement initiatives (25%); | ● | implement a continuous improvement program in the finance department and across the Company (20%); | ● | support work of the Finance and Audit Committees, including providing effective and timely reporting and analysis in priority areas (10%); and | ● | manage capital structure and equity story as we transition the Company (20%). |
The weighting was based on the Committee’s determination of the relative priority of each of these goals and reflects areas of focus for the year.significant emphasis on continued enterprise transformation. The Committee historically has set Mr. Zaslav’sannual qualitative goals with a significant degree of “stretch” and has evaluated his achievement against the goals by requiring a significant degree of over-performance to meet the goal. In early 2018,February 2022, the Committee reviewed the achievement of these quantitative and qualitative goals, considering the CEO’s and CFO’s self-assessments and, with respect to Mr. Zaslav’s self-assessmentWiedenfels, the input of the CEO and with respect to Mr. Zaslav, the input of the Board. TheWith respect to the quantitative goals, the Committee determined that the Companywe had achieved 99.9%107.2% of the Net Revenue metric, 112%116.8% of the Adjusted Free Cash Flow metric, and 105%108.9% of the Further Adjusted OIBDA metric. The metrics were designed to provide 100% achievement only upon 100% performance for eachmetric, 115.9% of the three quantitative goals. The threshold for a payout was achievement of more than 80%Next Generation Digital Revenue metric and 129.8% of the metric (performance at 80% or less would result in no payout based on the scale), and for prorated payout for performance between 80% and 100% of the metrics.Next Generation Year-End Paid Subscribers metric. Based on the performance against the threefour metrics, the overall calculation of the payout amount was 99.8%100% of the target amount. With respect to the qualitative goals, the Committee in consultation with the Board, determined that Mr. Zaslav had achieved his qualitative goals at the 94%100% level and that Mr. Wiedenfels had achieved his qualitative goals at the 100% level. Based on these assessments, the Committee certified achievement of the performance criteria and exercised its downward discretion from the maximum bonus to determine thatapproved a total bonus payment of $8,141,565$22,000,000 to Mr. Zaslav, (97%which represented his target bonus amount under the Zaslav 2018 Employment Agreement and an additional discretionary bonus of $4,400,000, in recognition of Mr. Zaslav’s exceptional leadership through the overall target amount,pandemic, the successful launch of discovery+ and his efforts to initiate, negotiate and enter into the WarnerMedia Transaction. With respect to Mr. Wiedenfels, the Committee approved a total bonus payment of $4,632,970, based on achievement of 99.9% of the quantitative and 94%qualitative goals, and the inclusion of a performance pool allocation as recommended by the CEO based on Mr. Wiedenfels’ strong performance in 2021, including his leadership of the qualitative goals) was appropriate.financial management of our business during the pandemic, the successful launch of discovery+, his efforts associated with the negotiation and signing of the WarnerMedia Transaction, and the work he did throughout 2021 to support the regulatory approval process and prepare for a successful closing of the WarnerMedia Transaction. Annual Cash Bonus Payments for Messrs. Wiedenfels, Campbell, Perrette, Guagliardo2021 ICP and WarrenPerformance Pool
The 20172021 annual cash bonus for the remaining NEOsMessrs. Campbell, Leavy and Perrette was based on the terms of the ICP. The ICP specifies various financial metrics depending on an employee’s role and business alignment. The financial metrics that applied to each executive’s bonus are reflected in the chart above. 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.” 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. |
The 2021 annual cash bonus of each employee (thepre-established percentage of the employee’s base salary);
second, establishing the amount payable dueawards to the achievement of Discovery as a wholeMessrs. Campbell, Leavy and any applicable line of business performance measures, as applied to the target bonus amount; and
third, adding to the total payout amount a specific dollar amount that is an allocation of the “performance pool.” 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 financial performance.
The calculation of the amount of the ICP award for each of the participating NEOs wasPerrette 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 |
(Base salary) X (Target bonus percentage) X (percentage based on achievement48 Discovery
Table of applicable financial metrics)] + (allocation of any available performance pool funds based on individual performance)Contents Each of the NEOs other than the CEO was eligible to receive a portion of his bonus in the form of a performance pool component. The CEO recommended a performance pool award to each of the NEOs based on individual performance, as further described below.
2017 ICP, Paid in March 2018Executive Compensation
In the first quarterFebruary of 2017,2021, the Committee established threshold (20% payout), target (100% payout) and maximumabove target (110% payout) amounts for each of the ICP financial metrics a ceiling beyond which higher payments would only be made relating to such metric at the Committee’s discretion and a scale that determinedwould determine the amount payable for achievement of results between the minimumthreshold and the over-achievementabove 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 also established that funding of the performance pool would be based on overachievement of the Adjusted Free Cash Flow metric under the ICP. For NEOs who work in or are fully dedicated to support a line of business within Discovery (e.g., Discovery International) a portion of their ICP award will be based on the performance of their line of business. For these NEOs, 20% of their ICP will be based on achievement of the total Company Net Revenue and Adjusted Free Cash Flow metrics described above and set forth in the table below, 20% each will be based on the achievement of the Next Generation Digital Revenue metric and the Next Generation Year-End Paid Subscribers metric described above and set forth in the table below, and the remaining 40% will be based on achievement of the ICP metrics for their line of business. In 2021, Mr. Perrette had a portion of his ICP award determined by the performance of his line of business. Corporate. The 20172021 Corporate ICP performance targets for the Company as a whole are set forth in the following table: | | | | | | | | | | | | | | | | | | | | | | | | | | Discovery Communications | | Weighting | | Threshold | | Target | | Maximum | | Actual Achievement | Net Revenue ($ in millions) | | | | 40 | % | | | $ | 6,089 | | | | $ | 6,765 | | | | $ | 7,442 | | | | $ | 6,759 | | Adjusted Free Cash Flow ($ in millions) | | | | 60 | % | | | $ | 1,068 | | | | $ | 1,372 | | | | $ | 1,730 | | | | $ | 1,541 | |
table. For 2021, the Committee used Net Revenue, Adjusted Free Cash Flow, Next Generation Digital Revenue and Next Generation Year-End Paid Subscribers as the ICP metrics. The 2017 ICP performance targets for Discovery Networks International (the metric used for 60% of Mr. Perrette’s 2017 bonus) and Eurosport Digital (the metric used for 20% of Mr. Perrette’s 2017 bonus and 20% of Mr. Guagliardo’s 2017 bonus) are set forth in the following table: | | | | | | | | | | | | | | | | | | | | | | | | | | Discovery Networks International | | Weighting | | Threshold | | Target | | Maximum | | Actual Achievement | Net Revenue ($ in millions) | | | | 30 | % | | | $ | 2,955 | | | | $ | 3,283 | | | | $ | 3,612 | | | | $ | 3,186 | | Further Adjusted OIBDA ($ in millions) | | | | 50 | % | | | $ | 646 | | | | $ | 876 | | | | $ | 1,106 | | | | $ | 925 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Eurosport Digital | | Weighting | | Threshold | | Target | | Maximum | | Actual Achievement | Net Revenue ($ in millions) | | | | 70 | % | | | $ | 35.6 | | | | $ | 44.5 | | | | $ | 53.4 | | | | $ | 47.4 | | Further Adjusted OIBDA ($ in millions) | | | | 30 | % | | | $ | -8.8 | | | | $ | -0.8 | | | | $ | 7.2 | | | | $ | -8.7 | |
The 2017 ICP performance targets for U.S. Advertising Sales (the metrics used for 40% of Mr. Guagliardo’s 2017 bonus) and U.S. Digital Media (the metric used for 20% of Mr. Guagliardo’s 2017 bonus) are set forth in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Advertising Sales | | Weighting | | Threshold | | Target | | Maximum | | Actual Achievement | Net Revenue ($ in millions) | | | | 70 | % | | | $ | 1,490 | | | | $ | 1,655 | | | | $ | 1,821 | | | | $ | 1,727 | | Further Adjusted OIBDA ($ in millions) | | | | 30 | % | | | $ | 1,388 | | | | $ | 1,537 | | | | $ | 1,686 | | | | $ | 1,606 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Digital Media | | Weighting | | Threshold | | Target | | Maximum | | Actual Achievement | Net Revenue ($ in millions) | | | | 70 | % | | | $ | 44 | | | | $ | 55 | | | | $ | 66 | | | | $ | 80 | | Further Adjusted OIBDA ($ in millions) | | | | 30 | % | | | $ | 0 | | | | $ | 17 | | | | $ | 33 | | | | $ | 36 | |
TheCommittee weighted Net Revenue and Adjusted Free Cash Flow at 30% each, recognizing the continuing importance of each of these measures to the Company’s overall performance. It weighted Next Generation Digital Revenue and Next Generation Year-End Paid Subscribers at 20% to focus all employees on this new revenue stream and our strategic objective to advance our digital and direct-to-consumer businesses. The Net Revenue, Adjusted Free Cash Flow, Next Generation Digital Revenue and Next Generation Year-End Paid Subscribers measures for the Company-wide metrics are the same measures used with respect to the annual cash bonus for Mr.Messrs. Zaslav and Wiedenfels, and were subject to the same adjustments
discussed above. The Committee also adjustednumbers in the performance against the metrics for U.S. Advertising Sales and U.S. Digital Media, within the same categories used fortables below under “Actual Achievement” reflect the adjustments discussed above. Corporate | | Weighting | | Threshold | | | Target | | | Above Target | | | Actual Achievement | | Net Revenue ($ in millions) | | | 30 | % | | $ | 9,989 | | | $ | 11,098 | | | $ | 12,208 | | | $ | 11,893 | | Adjusted Free Cash Flow ($ in millions) | | | 30 | % | | $ | 1,316 | | | $ | 1,871 | | | $ | 2,426 | | | $ | 2,186 | | Next Generation Digital Revenue ($ in millions) | | | 20 | % | | $ | 1,056 | | | $ | 1,173 | | | $ | 1,290 | | | $ | 1,360 | | Next Generation Year-End Paid Subscribers (# in millions) | | | 20 | % | | | 8 | | | | 15 | | | | 23 | | | | 20 | | | | | | | | | | | | | | | | | | | | | | | Discovery International. The 2021 ICP performance targets for Discovery International (the metric used for 40% of Mr. Perrette’s 2021 bonus) are set forth in the following table. The Committee adjusted the performance against the metrics for Discovery International, based on the same categories and adjustments applied to the Company-wide metrics. | | | | | | | | | | | | | | | | | | | | | | Discovery International | | Weighting | | Threshold | | | Target | | | Above Target | | | Actual Achievement | | Net Revenue ($ in millions) | | | 50 | % | | $ | 4,067.9 | | | $ | 4,519.9 | | | $ | 4,971.9 | | | $ | 4,634.9 | | Further Adjusted OIBDA ($ in millions) | | | 50 | % | | $ | 102.1 | | | $ | 418.5 | | | $ | 734.9 | | | $ | 552.8 | |
Assessment of Performance. The determination as to whether the annual cash bonus for Mr. Zaslav. In addition to2021 ICP financial performance measures were met was made in the calculation2021 Annual Bonus Review during the first quarter of 2022, following review of the full-year 2021 financial results. Based on our financial performance in 2021 versus the ICP performance targets, the Committee funded the Corporate ICP pool at 118.9% of target and Discovery International at 117.7%.
The Committee also funded the 2021 performance pool based on our significant over-delivery of our Adjusted Free Cash Flow target as disclosed above. As part of the February 2022 Annual Bonus Review, the Committee determined whether to allocate performance pool amounts to each NEO other than the CEO. The performance pool has been available only ifis funded as a total amount; all bonus-eligible employees (other than the Company metCEO) were eligible for an award under the threshold Section 162(m) performance criterion originally set for exemption from Section 162(m)’s deduction limits and allowspool in 2021. For NEOs other than the Committee to award up toCEO, the maximumCEO recommends individual awards that are paid as part of the overall annual bonus amountpayout. For 2021, the CEO’s recommendations were based on individual performance through exercise of downward discretion. The determination as noted above, with particular emphasis on the exemplary leadership shown by Messrs. Campbell, Leavy and Perrette throughout the COVID-19 pandemic, the actions taken to whetherdevelop and successfully launch discovery+, the 2017 financial performance measures were met was made inefforts associated with the Annual Bonus Review during the first quarter of 2018, following reviewnegotiation and signing of the full-year 2017 financial statements. WarnerMedia Transaction, and the work done throughout 2021 to support the regulatory approval process and prepare for a successful closing of the WarnerMedia Transaction.
2022 Proxy Statement 49
Table of Contents Executive Compensation Mr. Zaslav provided his assessment of each of Messrs. Campbell, Leavy and Perrette and a recommended ICP award and performance pool allocation for each NEO. The Committee reviewed Mr. Zaslav’s reviews and recommendations, as well as each NEOs’ self-assessment of his own individual performance for 2021. Based on its review, the Committee approved cash bonuses under the ICP and a performance pool award to each of the NEOs other than himself. The Committee reviewed this recommendation, each of the NEOs’ self-assessment of individual performance for 2017, and Mr. Zaslav’s review of each executive’s 2017 performance. With respect to Mr. Warren’s prorated bonus, the Committee considered the CEO’s recommendation and its own assessment of Mr. Warren’s performance. The Committee certified achievement of the performance threshold and exercised its downward discretion from the maximum bonus to determine a bonus payment of $1,570,378 for Mr. Wiedenfels (158% of the target amount), $3,307,846 for Mr. Campbell (159% of the target amount), $1,674,400 for Mr. Guagliardo (100% of target amount), £2,238,214 for Mr. Perrette (123% of the target amount) and $367,412 for Mr. Warren (103% of the target amount). The bonus amountsallocation for Messrs. WiedenfelsCampbell, Leavy and Campbell included particular consideration of their contributionsPerrette as set forth in entering into and supporting the pending acquisition of Scripps.table below: NEO | | ICP Target Amount | | | ICP Payout Percentage | | | Cash Bonus Award (ICP + Performance Pool) | | Bruce L. Campbell | | $ | 2,892,684 | | | | 118.9 | % | | $ | 5,690,558 | | David C. Leavy | | $ | 1,509,746 | | | | 118.9 | % | | $ | 2,645,692 | | Jean-Briac Perrette | | $ | 3,822,728 | | | | 117.7 | % | | $ | 5,900,498 | | | | | | | | | | | | | | |
Please refer to the “Estimated Future Payouts UnderNon-Equity Incentive Plan Awards” column of the Grants of Plan Based Awards Table for more information regarding the range of 2017 payouts available to these NEOs and the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the actual amounts paid to them with respect to their 2017 awards.
Long-Term Incentive Compensation We make equity awards as part of our long-term incentive compensation program under our 2013 Incentive Plan. We believe that delivering a substantial portion of an executive’s total direct compensation in equity or equity-type awards helps to align our executives’ interests with those of our stockholders. In 2017,2021, we made long-term equity or equity-type awards to each of the NEOs, other than Mr. Warren, 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 the renewal of an existing fixed-term contract. The Committee made awards to Messrs. Wiedenfels, Campbell, GuagliardoLeavy and Perrette as part of the 2021 Annual LTI Review. With respect to the remaining NEOs: Review which took place in February 2021. Mr. Zaslav’s LTI awards for each year are specified in his employment agreement, although the Committee determines financialperformance metrics for each performance-based award to Mr. Zaslav at the time the award is made. Mr. Zaslav’s 2017 LTI awards were consistent with his employment agreement (described in “Executive Compensation—Executive Compensation Arrangements,” below); Mr. Wiedenfels was hired in April 2017 and his employment agreement provided for new hire equity awards. Mr. Wiedenfels’ LTI award in 2017 was based on the terms of the agreement; he is eligible for consideration in the Annual LTI Review beginning in 2018 (described in “Executive Compensation—Executive Compensation Arrangements,” below); and
Mr. Warren announced his transition from the Company in February 2016; given his impending separation, the Committee determined not to make an LTI award to Mr. Warren in 2017.
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 contract renewal awards, 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. For 2017, as in prior years, the awards to Messrs. Campbell, Guagliardo and Perrette (the three NEOs who received awards in the Annual LTI Review) were in the form of stock options and PRSUs (50% of the target value in stock options with respect to the Company’s Series A common stock, 50% in PRSUs with respect to the Company’s Series A common stock (as described under “Executive Compensation—Defined Terms—2013 Incentive Plan,” below)). The approved value is converted into a number of stock options based on the Black-Scholes value of the stock option and PRSUs using the closing price of the Company’s Series A common stock on the Nasdaq Global Select Market. In 2017, the Committee continued the practice of using the Black-Scholes valuation of the stock options as of the last trading day of the month prior to the date of grant and the closing price of the Series A common stock as of the trading day before the date of grant with respect to these calculations. This administrative practice allows more efficient processing of equity grants and, with respect to stock options, the ability of the Committee to review the actual number of units at the time the grant is made.
The new hire award to Mr. Wiedenfels was made in the form of stock options and RSUs, pursuant to the terms of his employment agreement. The Committee approved an award of stock options and RSUs in May 2017. The terms of Mr. Wiedenfels’ employment agreement (including the new hire equity awards) are described in “Executive Compensation—Executive Compensation Arrangements,” below.
Timing of Awards. The Committee’s intent is to makeapprove equity awards annually in late February or early March of each year, with new hire, promotion, and contract grants made throughout the year in the Committee’s regular meetings. In 2017, this resultedThe Committee uses a consistent effective date for annual grants of March 1, with the approval of the grants occurring in late February but with a March 1 effective date. 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, promotion, and contract grants made at other times throughout the year, the Committee continued the practice of holdingmaking such grants at regularly-scheduled Committee meetings and making awards every two to three months, with the exercise price based on the closing price per share of the Company’s Series A common stock on the Nasdaq Global Select Market on the date the awards were granted.months. 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, as was the case with Mr. Zaslav’s SAR grants, approved in December 2016 with a grant date of January 2, 2017, as required by his employment agreement.date. Our practice of setting regular equity award grant dates based on scheduled Committee meetings, and adopting a consistent date for the annual grants, is designed to avoid the possibility that the Companywe could grant stock awards prior to the release of material,non-public information which is likely to result in an increase in its 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. Stock Plan. The Committee makes LTI awards under the 201350 Discovery
Table of Contents Executive Compensation 2021 Long-Term Incentive Plan, an equity-based long-term incentive plan that was approved by our stockholders in 2013. 2017 LTI Awards
The following chart summarizes the equity awards made in 20172021 to each NEO. As discussed above, because NEO | | | | 2021 Target Amount or FMV | | 2021 LTI Awards | David M. Zaslav, CEO | | | | $ | 9,000,000 | | 169,716 Series A PRSUs 56,572 Series A PRSUs 14,773,712 stock options | | | | $ | 3,000,000 | | | | | $ | 190,000,000 | | | Total value: | | $ | 202,000,000 | | Gunnar Wiedenfels, CFO | | | | $ | 2,000,000 | | 130,546 stock options 37,715 RSUs | | | | $ | 2,000,000 | | | Total value: | | $ | 4,000,000 | | Bruce L. Campbell, Chief Development, Distribution & Legal Officer | | | | $ | 2,000,000 | | 130,546 stock options 37,715 RSUs | | | | $ | 2,000,000 | | | Total value: | | $ | 4,000,000 | | David C. Leavy, Chief Corporate Operating Officer | | | | $ | 1,000,000 | | 65,273 stock options 18,858 RSUs | | | | $ | 1,000,000 | | | Total value: | | $ | 2,000,000 | | Jean-Briac Perrette, President and CEO, Discovery International | | | | $ | 2,000,000 | | 130,546 stock options 37,715 RSUs | | | | $ | 2,000,000 | | | Total value: | | $ | 4,000,000 | |
2021 Long-Term Incentive Awards to CEO PRSU Awards The design of Mr. Warren’s transition, he was not granted any new equity awards in 2017. Further, because the awards for Mr. Zaslav were specifiedZaslav’s compensation in his employment agreement asemphasizes stockholder alignment through tying the vast majority of his compensation to Discovery equity and requiring substantial stock holdings. Under the Zaslav 2018 Employment Agreement, Mr. Zaslav received an award of 226,288 Series A PRSUs on March 1, 2021 with a numberone-year performance period that ended on December 31, 2021. The 2021 PRSU awards to Mr. Zaslav consisted of: ● | an award of 56,572 Series A PRSUs, which vested at 100% on February 28, 2022 based on the Committee’s certification of the Company’s performance against the quantitative metrics it established for these PRSUs - Revenue, Adjusted OIBDA, Adjusted Free Cash Flow, Next Generation Year-End Paid Subscriber and Next Generation Digital Revenue performance during 2021; and | ● | an award of 169,716 Series A PRSUs, which vested at 100% on February 28, 2022 based on the Committee’s assessment of Mr. Zaslav’s performance versus the qualitative goals it established for these PRSUs, which are more fully described below. |
The performance against the quantitative performance metrics for the CEO’s 2021 PRSUs are set forth in the following table: Quantitative Performance Metrics for PRSUs awarded to David Zaslav in 2021 | | Target | | | Performance | | | | | 1-Year PRSU Performance ($ in millions) | | Target Weighting | | | PRSU Target | | | 2021 | | | Performance against Target | | | Weighted Payout | | Revenue | | | 25 | % | | | $11,098.0 | | | | $11,893.0 | | | | 107.2 | % | | | 100 | % | Adjusted OIBDA | | | 25 | % | | | $3,197.8 | | | | $3,481.6 | | | | 108.9 | % | | | 100 | % | Adjusted Free Cash Flow | | | 25 | % | | | $1,871.0 | | | | $2,186.3 | | | | 116.8 | % | | | 100 | % | Next Generation Year-End Paid Subscribers | | | 12.5 | % | | | 15.0 | | | | 19.6 | | | | 129.8 | % | | | 100 | % | Next Generation Digital Revenue | | | 12.5 | % | | | $1,173.1 | | | | $1,360.1 | | | | 115.9 | % | | | 100 | % | TOTAL | | | 100.0 | % | | | | | | | | | | | | | | | 100 | % |
The Committee also established qualitative goals for the 2021 PRSU awards to the CEO in the areas of units rather than an overall target value, we have included the fair market value asleadership and content, with each area weighted evenly. Leadership goals included: ● | mentoring and developing leadership candidates, including providing leadership development opportunities; | ● | designing a structure to empower executive decision-making and accountability; |
2022 Proxy Statement 51
Table of Contents Executive Compensation ● | building leadership team cohesion to promote core business revenue growth and strong cash flow while dramatically growing direct-to-consumer subscribers and active user base across the portfolio; | ● | provide strategic insight to support transformation to a more heavily-focused direct-to-consumer product strategy; and | ● | make efficient use of human capital and ensure maximum productivity. |
Content goals included: ● | improve and develop OTT and DTC to expand digital audiences; | ● | develop brand defining blue chip content with domestic and international appeal; | ● | develop engaging series programing and on-air talent and successfully launch direct-to-consumer products; and | ● | develop new, and continue to improve on existing, event programming and content across portfolios. |
The Committee assessed Mr. Zaslav’s 2021 performance against these goals and determined that he met 100% of the datequalitative goals established for his 2021 PRSU awards. Based on 2021 performance versus the quantitative and qualitative metrics set forth above, the Committee certified the vesting of grant forthe 1-Year Target PRSUs granted to Mr. Zaslav at 100%. For the PRSUs that awardvested in February 2022, 50% of the column that specifiesshares were distributed at the 2017 target amount fortime of vesting, and 25% will be distributed in each of 2023 and 2024 based on Mr. Zaslav’s continued employment and the other NEOs. In addition, becauseterms and conditions of the award. 2021 Signing Stock Options Under the Zaslav 2021 Employment Agreement, Mr. Zaslav received grants of stock options under the 2013 Incentive Plan (the “2021 Signing Stock Options”), which were valued at $190 million using the Black-Scholes option-pricing model. The 2021 Signing Stock Options were broken into the two groups described below. Each group of 2021 Signing Stock Options consists of five grants, with the number of units was specified in Mr. Zaslav’s employment agreement, which predated our 2014 Share Dividend, the SAR award forshares, exercise prices, vesting, and exercisability as follows: Group 1 2021 Signing Stock Options ● | A grant of 1,635,284 stock options with a per share exercise price equal to the closing price of our Series A common stock on the last business day prior to the date of grant (“Grant Date Price”), vesting in four equal installments on May 16 of 2022, 2023, 2024, and 2025; | ● | A grant of 1,519,414 stock options with a per share exercise price equal to 105% of the Grant Date Price, vesting in four equal installments on May 16 of 2023, 2024, 2025, and 2026; | ● | A grant of 1,557,685 stock options with a per share exercise price equal to 110.25% of the Grant Date Price, vesting in three substantially equal installments on May 16 of 2024, 2025, and 2026; | ● | A grant of 1,603,292 stock options with a per share exercise price equal to 115.76% of the Grant Date Price, vesting in two equal installments on May 16 of 2025 and 2026; and | ● | A grant of 1,682,083 stock options with a per share exercise price equal to 121.55% of the Grant Date Price, vesting on May 16, 2026. |
Group 2 2021 Signing Stock Options ● | A grant of 1,360,127 stock options with a per share exercise equal to the Grant Date Price, vesting in four equal installments on January 1 of 2024, 2025, 2026, and 2027; | ● | A grant of 1,421,234 stock options with a per share exercise price equal to 105% of the Grant Date Price, vesting in four equal installments on January 1 of 2025, 2026 and 2027 and December 31, 2027; | ● | A grant of 1,401,917 stock options with a per share exercise price equal to 110.25% of the Grant Date Price, vesting in three substantially equal installments on January 1 of 2026 and 2027 and December 31, 2027; | ● | A grant of 1,270,188 stock options with a per share exercise price equal to 115.76% of the Grant Date Price, vesting in two equal installments on January 1 of 2027 and December 31, 2027; and | ● | A grant of 1,322,488 stock options with a per share exercise price equal to 121.55% of the Grant Date Price, vesting on December 31, 2027. |
In addition, Mr. Zaslav was madereceived an additional grant of options on January 3, 2022 for 198,132 shares, which had the same characteristics as the second grant of the Group 1 2021 Signing Stock Options above. 52 Discovery
Table of Contents Executive Compensation 2021 Long-Term Incentive Awards to Other NEOs For 2021, the awards to Messrs. Wiedenfels, Campbell, Leavy and Perrette were in the form of stock options and RSUs (50% of the target value in stock options with respect to our Series A and Series C common stock, 50% in RSUs with respect to preserve the intrinsic value of the award as contemplated by the agreement. Mr. Zaslav’s employment agreement is further described in “Executive Compensation—Executive Compensation Arrangements,” below. our Series A common stock). The Committee adopted this long- term incentive design for NEOs after reviewing market trends and best practices and concluding that these awards would: ● | | | | provide appropriate incentives; | NEO ● | | 2017 Target
Amount or FMV
| | 2017 LTI Awards link the interests of our senior executives to those of our stockholders; and | ● | | | David M. Zaslav,
CEO
| | $30.6 million (fair market value at time of grant) | | 508,303 Series A PRSUs
1,446,351 SARs Series A
1,446,351 SARs Series C
| | | | Gunnar Wiedenfels,
CFO
| | $2,500,000 | | 160,001 stock options
48,319 RSUs
| | | | Bruce L. Campbell,
Chief Development, Distribution & Legal Officer
| | $2,750,000 | | 174,678 stock options
46,595 PRSUs
| | | | Jean-Briac Perrette,
President and CEO, Discovery Networks International
| | $3,250,000 | | 206,437 stock options
55,067 PRSUs
| | | | Paul Guagliardo,
Former Chief Commercial Officer
| | $2,750,000 | | 174,678 stock options
46,595 PRSUs serve as a retention tool. |
LTI Awards to NEOs other than the CEOStock Options
Stock Options.The stock option awards have a four-year vesting schedule, become exercisable (while the holder remains employed)employed by us) in equal tranches of 25% on the first four anniversaries of the date of grant, expire on the seventh anniversary of the date of grant, assuming continued employment, and are otherwise consistent with the terms of the applicable plan and award agreement.
PRSUs. The PRSU awards made to the NEOs other than Mr. Zaslav haveapproved value is converted into a four-year vesting schedule, but vest in two equal tranches, the first 50%number of stock options based on the third anniversaryBlack-Scholes value of the stock option using the closing price of our Series A common stock on Nasdaq. In 2021, the Committee continued the practice of using the Black-Scholes valuation of the stock options as of the last trading day of the month prior to the date of grant and the remaining 50%closing price of the Series A common stock as of the trading day before the date of grant with respect to these calculations. This administrative practice allows more efficient processing of equity grants.
RSUs The RSU awards granted to NEOs in 2021 have a four-year vesting schedule, vesting in four equal installments on March 1 following each of the fourth anniversary,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. Vesting of the PRSU awardsThe approved value is contingent on meeting Company financial performance metrics for Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow, forconverted into a three-year performance period. RSUs. The RSU award made to Mr. Wiedenfels as part of his new hire awards has a four-year vesting schedule, vesting in three substantially equal tranches, the first 33% on the second anniversary of the date of grant and the remaining 33% and 34% on the third and fourth anniversaries, assuming continued employment, and are otherwise consistent with the terms of the applicable plan and award agreement.
The Committee adopted the long-term incentive design for NEOs after reviewing market trends and best practices and concluding that the awards would:
provide appropriate incentives;
link the interests of our senior executives to those of our stockholders, focusing our senior executives on longer-term Company financial goals;
serve as a retention tool; and
allow for tax deductibility of the equity awards as performance-based.
The PRSU awards have been intended to qualify as performance-based compensation under Section 162(m) and follow a similar structure to that of the annual bonus design (see discussion above under “Tax Deductibility of Executive Compensation” and the discussion of Section 162(m) under “Annual Bonus”). At the beginning of each year, the Committee sets a Company performance threshold and a maximum number of PRSUs for each NEO and certain other senior executives as the initial step in structuring the awards. If the performance threshold for the three-year performance period is met, the actual number of PRSUs distributed to each NEO is subject to the Committee’s downward discretion. The maximum amount of the PRSU award is the target amount. There is no upside for over-performance, which the Committee determined was appropriate to discourage excessive risk-taking by our senior executives.
Once the Committee determines the performance threshold is met, the Committee exercises its downward discretion based on Company performance against the Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow targets. As part of the Committee’s downward discretion, the awards also provided that the Committee may determine, for the awards to the NEOs other than those made to Mr. Zaslav,RSUs based on the Company’s performance relative to peers, to (i) reduce the numberclosing price of vesting shares by up to 25% or (ii) increase the number of vesting shares by up to 25% (but not beyond 100% of the target amount for each PRSU award).
The performance metrics to be used by the Committee in its exercise of downward discretion are based on Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow. Over-performance on the Adjusted OIBDA or Adjusted Free Cash Flow measures may offset under-performance by any of the other two metrics, but over-performance on the Net Revenue metric cannot offset under-performance on the other two metrics. The metrics and weighting for the awards of PRSUs made in 2017 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Against Target ($ in millions) | | | | Weight | | | 120% | | | 110% | | | 100% | | | 95% | | | 90% | | | 85% | | | 81% | | | 80% | | Revenue | | | 20 | % | | | 22,956 | | | | 21,043 | | | | 19,130 | | | | 18,174 | | | | 17,217 | | | | 16,261 | | | | 15,495 | | | | 15,304 | | Adjusted OIBDA | | | 40 | % | | | 7,991 | | | | 7,325 | | | | 6,659 | | | | 6,326 | | | | 5,993 | | | | 5,660 | | | | 5,394 | | | | 5,327 | | Adjusted Free Cash Flow | | | 40 | % | | | 4,327 | | | | 3,967 | | | | 3,606 | | | | 3,426 | | | | 3,245 | | | | 3,065 | | | | 2,921 | | | | 2,885 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Maximum Vesting | | | | | | | 100% | | | | 100% | | | | 100% | | | | 95% | | | | 90% | | | | 75% | | | | 50% | | | | 0% | |
Zaslav PRSUs and Special SARs
The Committee made special awards of PRSUs and stock appreciation rights (“Special SARs”) to Mr. Zaslav as provided by his employment agreement. The agreement provided for the following awards in 2017, each of which was made early in the year:
an award of 508,303 PRSUs inour Series A common stock which vest after three years, assuming achievement of three-year performance metrics; and
a grant of 1,446,351 Special SARs in Series A common stock and 1,446,351 in Series C common stock.
The awards were made in Series A and Series C common stock becauseon Nasdaq on the awards were specified as a number of units in Mr. Zaslav’s employment agreement and the Committee adjusted the awards and unitslast trading day prior to preserve the intrinsic value of the awards contemplated by the employment agreement following the 2014 Share Dividend.
One-half of the PRSUs will be distributed in the year after the end of the performance period, and the remainingone-half will be distributed in two equal parts in the second and third years after the end of the performance period, unless Mr. Zaslav has validly elected to further defer distribution of the shares.
The Special SARs mature and pay out in four equal tranches, 25% each year, as of the first four anniversaries of the date of grant. The Special SARs are 25% stock-settled
Retirement Plans and 75% cash-settled. The amount of the payout for the Special SARs, if any, is based on the appreciation in our stock price from the grant date to the applicable anniversary. Both the base price and the exercise price are calculated based on a20-day average closing price, for the ten trading days preceding and including the date for which valuation is occurring and the ten trading days following the date for which valuation is occurring. These Special SARs are designed to auto-exercise; Mr. Zaslav does not choose the timing of exercise and each tranche exercises automatically on the relevant anniversary grant date. All of the units are exercised by the fourth anniversary of the date of grant.Other Benefits The design of Mr. Zaslav’s compensation in his employment agreement emphasizes stockholder alignment through requiring substantial stock holdings. Under the employment agreement, Mr. Zaslav is required to hold at least 60% of the net shares delivered to him under the PRSU awards and the stock-settled portion of the Special SAR award until the end of the term of the agreement. In addition, Mr. Zaslav is required to purchase shares in the Company with 35% of the net cash proceeds of the cash-settled Special SAR award, and similarly to hold the shares purchased until the end of the term of the agreement.
The Committee determined that these awards were appropriate as part of the overall agreement to secure Mr. Zaslav’s services in a long-term agreement, to structure an agreement under which the vast majority of compensation is performance-based compensation, primarily in the form of LTI awards, tie his compensation to increases in stockholder value, and require Mr. Zaslav to hold the majority of the equity distributed to him to the end of the term of the agreement.
Payouts under PRSU Awards for Measurement Periods 2014-2016 and 2015-2017
In February 2018, the Committee reviewed achievement of the performance thresholds for the measurement period that ran from January 1, 2015 through December 31, 2017, with respect to the awards made in February 2015 to Messrs. Campbell and Perrette. In May 2017, the Committee also reviewed achievement of the performance threshold for the 2.5 year measurement period from July 1, 2014 through December 31, 2016, with respect to the award made in September 2014 to Mr. Campbell.
For the 2015 PRSU awards, the performance threshold was set at $3,435 million in Adjusted OIBDA over the three-year performance period. For Mr. Campbell’s 2014 PRSU award, the performance threshold was set at $3,434 million in Adjusted OIBDA over the three-year performance period. The Committee determined that the Company had met or exceeded the performance thresholds for these awards.
As an initial matter, as discussed above, the Committee reviewed the Company’s performance relative to the applicable peer group during the three-year performance and determined that the Company’s performance was strong relative to its peers. Accordingly, the Committee decided not to exercise its discretion to reduce the number of shares payable upon settlement of these awards.
The Committee then reviewed the Company’s performance against the three financial metrics and concluded that the Company had met or exceeded the Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow metrics during the performance periods when measured on a currency-neutral basis. The multi-year
performance metrics are set based on foreign exchange rates prevailing at the time the metrics are established. In 2017, the Committee determined to measure the results using the same constant foreign exchange rates, so that the comparison would not be influenced by fluctuations in the foreign exchange environment. The Committee concluded that it was appropriate to measure performance without the effect of currency fluctuation as management has little or no control over the impact of foreign exchange rates. This adjustment increased the performance against the metrics by less than 1%.
For the 2015 PRSU awards to the NEOs, 50% of the shares vested and were distributed in 2018, and 50% will be distributed in 2019, based on each executive’s continued employment and the other terms and conditions of the award. Based upon the Company’s cumulative performance for each of these periods, the overall payout for the PRSU awards was 100%.
For the 2014 PRSU award to Mr. Campbell, 50% of the shares vested and were distributed in 2017, and 50% will be distributed in 2018 based on his continued employment and the other terms and conditions of the award. Based upon the Company’s cumulative performance for each of these periods, the overall payout for the PRSU awards was 100%.
The performance against each of the three metrics was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3-Year PRSU Performance ($ in millions) | | | | | | | Target | | Performance | | | | | Target Weighting | | Cumulative PRSU Target | | 2015 | | 2016 | | 2017 | | Cumulative | | Performance against Target | Revenue($ in millions) | | | | 20 | % | | | | 18,783 | | | | | 6,525 | | | | | 6,762 | | | | | 7,124 | | | | | 20,410 | | | | | 108.7 | % | Adjusted OIBDA($ in millions) | | | | 40 | % | | | | 6,883 | | | | | 2,467 | | | | | 2,555 | | | | | 2,637 | | | | | 7,659 | | | | | 111.3 | % | Adjusted Free Cash Flow($ in millions) | | | | 40 | % | | | | 3,739 | | | | | 1,239 | | | | | 1,378 | | | | | 1,577 | | | | | 4,194 | | | | | 112.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2.5-Year PRSU Performance ($ in millions) | | | | | Target | | Performance | | | | | Target Weighting | | Cumulative PRSU Target | | 2014 | | 2015 | | 2016 | | Cumulative | | Performance against Target | Revenue($ in millions) | | | | 20 | % | | | | 16,828 | | | | | 3,300 | | | | | 7,040 | | | | | 7,293 | | | | | 17,633 | | | | | 104.8 | % | Adjusted OIBDA($ in millions) | | | | 40 | % | | | | 6,868 | | | | | 1,294 | | | | | 2,683 | | | | | 2,793 | | | | | 6,770 | | | | | 98.6 | % | Adjusted Free Cash Flow($ in millions) | | | | 40 | % | | | | 3,710 | | | | | 883 | | | | | 1,364 | | | | | 1,542 | | | | | 3,789 | | | | | 102.1 | % |
The metrics for the 2014 PRSUs and 2015 PRSUs were based on the Company’s long-range plans as constructed in the year of grant. These long-range plans were developed on a constant currency basis, accordingly target amounts may vary.
Severance Payments Made to Mr. Warren
Mr. Warren notified the Company in February 2016 that he would be separating from employment with the Company, and we entered into subsequent amendments to his employment agreement, with Mr. Warren’s employment terminating on March 31, 2017. The terms of Mr. Warren’s employment agreement, as amended, are summarized under “Executive Compensation—Executive Compensation Arrangements—Warren Employment Agreement,” below. Under the terms of his amended employment agreement and his subsequent separation agreement, Mr. Warren was eligible to receive the following severance payments after March 31, 2017: (i) his annual base salary for a period of twelve months following his date of separation and (ii) a lump
sum cash payment equal to the unprorated portion of his 2017 cash bonus at the target amount equal to 120% of his base salary. These amounts are in addition to the base salary received by Mr. Warren until his date of separation, and a prorated amount equal to his earned 2017 cash bonus, which was paid in March 2018. For additional information regarding the amounts paid to Mr. Warren in 2017, see the Summary Compensation Table below.
Retirement Benefits TheOur U.S.-based NEOs generally participate in the same benefit plans and 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 anon-qualified Supplemental Deferred Compensation Plan (the “SRP”) that is available to U.S.-based senior employees, including all of the NEOs other than Mr. Perrette. 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, the Company makeswe 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 Company matching contributions, subject to certain limits under applicable tax regulations. Until 2018, we also made a supplemental contributionWe do not make matching contributions into the SRP for those employees whose base salary exceeded the IRS compensation limit under the 401(k) regulations. This Company contribution used the same formula applied for the 401(k) match (4.5%) and that is applied to the base salary in excess of the IRS limit (for 2017, this was $270,000), up to a maximum of $1 million in base salary. This SRP supplement contribution applied in 2017 but was eliminated effective January 1, 2018.SRP. In addition to base salary deferrals, participants in the SRP are also permitted to defer portions of ICPtheir annual bonus awards into their SRP accounts. These amounts are not included in the calculation of the supplemental Company contribution into the SRP. 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 the Company’sour 401(k) plan to save a proportionate amount for retirement and support the goals of providing competitive compensation packages to our employees. Mr. Perrette is employed in the United KingdomU.K. and participates in the Company’s benefit plans and programs as offered to otherUK-based U.K.-based Company employees. These benefits include a defined contribution pension plan. For more information about the SRP, please refer to the 2021 Non-Qualified 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 mademake available by the Company to itsour 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. Perrette wasis based in the U.K. and is eligible to participate in the health, welfare and fringe benefits we generally mademake available by the Company to itsUK-basedour U.K.-based regular full-time employees, such as life insurance benefits, short- and long-term disability, and an employer pension scheme. In addition, we provide the following perquisites and other personal benefits to our NEOs: Relocation Expenses and International Assignment Benefits; RelatedGross-Up. Gross-Up Consistent with our objective to attract and retain a high-performing executive management team for senior roles in our global business, we placetop-notch high performing executives on international assignments to fill key roles in the places where we do business. We provide relocation and international assignment benefits consistent with our international long-term assignment policies, including reimbursing relocation 2022 Proxy Statement 53
Table of Contents Executive Compensation 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” “gross-up”). Mr. Perrette had served initially in his role as an expatriate but was transferred to local pay and benefits in connection with his new employment agreement in 2016. After his localization in June 2016, Mr. Perrette no longer retains any international assignment-related benefits, other than his continuing eligibility for ongoing tax preparation assistance, and repatriation benefits in the event Mr. Perrette’s employment is terminated without Cause (as defined in his employment agreement) or due to the Company’s decision not to renew the employment agreement at the end of the term. For a description of Mr. Wiedenfels received relocation benefits associated with his relocation to the United States in 2017, including travel and moving of household goods, temporary furniture, tax preparation and filing assistance, immigration assistance and agross-up for taxable income related to relocation.Perrette’s employment agreement, see “NEO Employment Agreements.” Aircraft Usage; RelatedGross-Up. Gross-Up We lease a dedicated corporate aircraft and also have an agreement with NetJets Inc. pursuant to which we lease the right to a specified amount of travel each calendar year on NetJets’ aircraft. We allow Mr. Zaslav to use a portion of our allotted travel time on our corporate aircraft, or NetJets aircraft, for personal use. Under the Zaslav 2018 Employment Agreement and the Zaslav 2021 Employment Agreement, Mr. Zaslav is permitted to use up to 200250 hours of flight time each year for personal use. The first 100125 hours are provided to him by the Company; withCompany. With respect to the second 100125 hours, Mr. Zaslav is required to reimburse the Company at a rate of two times fuel cost, under a time sharingtime-sharing agreement entered into simultaneously withbetween the Company and Mr. Zaslav’s employment agreement.Zaslav. For details regarding Mr. Zaslav’s employment agreement, please see “Executive Compensation—Executive Compensation Arrangements—Zaslav“NEO Employment Agreement.Agreements.” Family members may accompany Mr. Zaslav on authorized business flights on corporate aircraft or NetJets flights at no aggregate incremental cost to the Company. For 2017,When this occurs, we providedtypically provide agross-up to Mr. Zaslav to cover taxes for imputed income arising when a family member accompaniedaccompanies him on business travel at the request of the Company (e.g., when Mr. Zaslav’s spouse accompaniedaccompanies him to a business event in which attendance by a spouse is customary and serves our business interests). Home Office Expenses.Expenses & Car Allowance We reimburse Mr. Zaslav for limited home office expenses, including Internet access. Car Allowance. We also provide Mr. Zaslav with a monthly car allowance as provided in his employment agreement.
For more information regarding the perquisites provided in 20172021 to each NEO, please refer to the “All Other Compensation” column of the 2021 Summary Compensation Table. Other Compensation-Related Matters Risk Considerations in our Compensation ProgramsIn 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 consultant to the Committee, Croner, assisted the Committee in its risk assessment of our executive compensation programs in meetings throughout 2021 and advised the Committee in reaching this conclusion as to those plans; however, Croner did not participate in the assessment of risk with respect to non-executive compensation arrangements. Executive Stock Ownership Policy In 2012, the Committee adopted an executive stock ownership policy that applies to each of the NEOs and certain other senior executives.NEOs. The policy requires each covered executiveNEO to hold a specified amount of our stock, calculated as a multiple of the executive’s base salary, as described in the table below. In 2015, the Committee increased the stock ownership requirement for Mr. Zaslav from five times base salary to six times base salary. | | | | | | | | | | | Position | | Requirement (multiple of base salary) | | Timeframe to reach (from later of effective date or becoming covered by policy) | | CEO and Chairman | | | | 6X | | | | | 5 years | | Covered executive with LTI target grant value > 1X of base salary
| | Other NEOs | | 2X | | | | | 5 years | | Covered executive with LTI target grant value <1X of base salary
| | | | 1X | | | | | 6 years | |
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. 54 Discovery
Table of Contents Executive Compensation Inmid-2017, December of 2021, the Committee reviewed the NEOs’ progress toward meeting the requirements of the executive stock ownership policy as adopted in 2012.policy. Each of the NEOs who were active employees at the time of the review had already met the stock holding requirement, except Mr. Wiedenfels who isor were on track to meet histhe stock holding requirementrequirement. Pursuant to the Zaslav 2021 Employment Agreement, Mr. Zaslav is also required to hold 1,500,000 shares of our common stock during the term of the agreement. As of the date of this proxy statement, Mr. Zaslav has met his stockholding requirement. Tax Implications Section 162(m) of the Internal Revenue Code of 1986 (“Section 162(m)”) was the U.S. federal tax provision that generally limited the tax deductibility of compensation paid to “covered employees” to $1 million, except to the extent the compensation was qualified performance-based compensation. Deductibility of performance-based compensation under Section 162(m) was eliminated by the Tax Cuts and Jobs Act of 2017. Historically, the Committee established performance goals for the cash bonuses to the CEO and CFO, as well as the ICP and LTI Program that were designed to qualify the annual and long-term incentives awarded to our NEOs as deductible under IRC Section 162(m). Now that the performance-based compensation exception is no longer available, we anticipate that we will no longer include Section 162(m)-related limitations or provisions or request stockholder approval for this purpose and may not generally attempt to meet the requirements previously included in our plans related to the exception. For example, the change in law was a factor in the timeframe required byCommittee’s prior decision to make awards of RSUs rather than PRSUs to NEOs other than the policy.CEO. However, the Committee intends to continue its pay-for-performance philosophy and will continue to provide for a significant portion of compensation paid to our NEOs to be subject to performance criteria. Clawback Policy All employees are subject to a “clawback” policy, adopted by the Committee in 2010. Under this policy, in addition to any other remedies available to the Companyus (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, the Companywe may recover, in whole or in part, any bonus or other incentive-based or equity-based compensation, received by the employee from the Companyus in the 12 months after the filing of the financial statement that was found to benon-compliant. The Committee determined that it was appropriate to adopt the policy to provide a further deterrent to fraudulent activity. Say on PayHedging and Derivative Trading Transactions
AtOur insider trading policy prohibits employees, including the Company’s Annual Meeting of Stockholders held on May 18, 2017, we held an advisory vote on executive compensation. A majority of stockholders votedNEOs, and our directors from engaging in favor of the Company’s executive compensation. The Committee considered the results of the vote and determinedcertain derivative transactions. Specifically, they may not, to makeat any changes to our executive compensation programs. The Company will solicit, in its proxy materials, an advisory vote on say on pay, every three years. The next advisory vote will be at the 2020 Annual Meeting.time:
Hedging
● | 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 Companyour stock by the NEOs is only permitted with the prior approval of our General Counsel. However, our Insider Trading Policy prohibits short sales and transactions in puts, calls, or other derivative securities on an exchange or in any other organized market. In 2017,2021, none of our NEOs engaged in any hedging transactions. Changes to Executive Compensation Programs and Arrangements in 2018
In the 2018 Annual LTI Review, the Committee determined to make RSU awards to the NEOs other than Mr. Zaslav. The Committee determined that it was appropriate to award RSUs rather than PRSUs based on the planned acquisition of Scripps, which the merger agreement had been entered into in July 2017 and was anticipated to close at the endImpact of the first quarterMost Recent Say on Pay Vote
At our annual meeting of 2018. The Committee determinedstockholders 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 use time-based RSUshold future “Say on Pay” votes every three (3) years, meaning the next “Say on Pay” vote will take place at our annual meeting of stockholders to be held in 2023. Our executive compensation program is designed to pay for the 2018 Annual LTI Review for NEOs other than Mr. Zaslav,performance and to make an award of PRSUs to Mr. Zaslav, as required by Mr. Zaslav’s employment agreement.effectively balance executive and stockholder interests. The Committee considered the needoutcome of the “Say on Pay” vote from the 2020 Annual Meeting, and continues to finalize integration planningbelieve 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. The Committee has not made material changes to our executive compensation program design or philosophy since the 2020 Annual Meeting. The Committee also believes that holding a “Say on Pay” vote every three years is a reasonable frequency because it allows for an appropriate interval between each vote, giving the Scripps acquisitionCommittee and the Board an opportunity to be able to set financial metrics for a three-year periodevaluate the results of the prior vote, as well as enabling our stockholders to assess the recent changeimpact of our executive compensation policies and decisions. Consistent with our view that our executive compensation program should serve as an incentive and retention tool, we take a long-term view of executive compensation and encourage our stockholders to Section 162(m), as discussed in “—Tax Deductibilitydo the same. A triennial vote will also give our Board sufficient time to engage with stockholders to better understand their views about executive compensation and respond effectively to their concerns. 2022 Proxy Statement 55
Table of Contents Executive Compensation” above. The Committee intends to return to making PRSU awards to NEOs in the 2019 Annual LTI Review. On February 9, 2018, the Company entered into an amendment to Mr. Campbell’s employment agreement. The terms of the amended agreement are summarized in “Executive Compensation—Executive Compensation Arrangements—Campbell Employment Agreement,” below.
EXECUTIVE COMPENSATIONTables
The following tables set forth compensation information for our NEOs. 2021 Summary Compensation Table The following Summary Compensation Table provides information concerning the 2021 compensation of our Chief Executive Officer, our Chief Financial Officer, our former Chief Financial Officer and ourthe three other most highly compensated executive officers (computed in accordance with the SEC’s rules) who were serving as executive officers asat fiscal year end (December 31, 2021) (“named executive officers” or “NEOs”). Information is only included for Mr. Leavy for those years within the last three fiscal years in which he was an NEO. For a complete understanding of December 31, 2017.the table, please read the footnotes and narrative disclosures that follow the table. Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Total ($) | | David M. Zaslav | | | 2017 | | | | 3,000,000 | | | | 14,994,939 | | | | 15,606,127 | | | | 8,141,565 | | | | 505,353 | (6) | | | 42,247,984 | | President and Chief Executive Officer | | | 2016 | | | | 3,000,000 | | | | 15,120,582 | | | | 11,142,690 | | | | 7,486,550 | | | | 442,532 | | | | 37,192,354 | | | | 2015 | | | | 3,115,385 | | | | 11,274,628 | | | | 10,487,784 | | | | 6,906,878 | | | | 592,671 | | | | 32,377,346 | | | | | | | | | | Gunnar Wiedenfels | | | 2017 | * | | | 803,846 | | | | 1,266,441 | | | | 1,155,207 | | | | 1,570,378 | | | | 1,202,432 | (7) | | | 5,998,304 | | Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bruce L. Campbell | | | 2017 | | | | 1,591,910 | | | | 1,374,553 | | | | 1,432,360 | | | | 3,307,846 | | | | 49,953 | | | | 7,756,622 | | Chief Development, Distribution and Legal Officer | | | 2016 | | | | 1,544,423 | | | | 1,209,659 | | | | 1,113,363 | | | | 2,750,000 | | | | 50,288 | | | | 6,667,733 | | | | 2015 | | | | 1,557,692 | | | | 1,202,434 | | | | 1,269,277 | | | | 2,767,765 | | | | 50,123 | | | | 6,847,291 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jean-Briac Perrette | | | 2017 | | | | 1,549,356 | (8) | | | 1,624,477 | | | | 1,692,783 | | | | 2,879,328 | (9) | | | 486,127 | (10) | | | 8,232,071 | | President and Chief Executive Officer, Discovery Networks International | | | 2016 | | | | 1,381,557 | | | | 5,567,676 | | | | 1,391,699 | | | | 2,864,120 | | | | 387,702 | | | | 11,592,754 | | | | 2015 | | | | 1,093,365 | | | | 1,411,544 | | | | 1,490,022 | | | | 2,012,522 | | | | 1,417,663 | | | | 7,425,116 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Paul Guagliardo | | | 2017 | | | | 1,447,385 | | | | 1,374,553 | | | | 1,432,360 | | | | 1,674,400 | | | | 51,727 | | | | 5,980,425 | | Former Chief Commercial Officer | | | 2016 | | | | 1,400,000 | | | | 1,008,040 | | | | — | | | | 2,185,670 | | | | 52,157 | | | | 4,645,866 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Andrew Warren | | | 2017 | * | | | 349,111 | | | | — | | | | — | | | | 367,412 | | | | 2,212,874 | (11) | | | 2,929,397 | | Former Chief Financial Officer | | | 2016 | | | | 1,183,135 | | | | — | | | | — | | | | 1,763,362 | | | | 50,397 | | | | 2,996,894 | | | | 2015 | | | | 1,220,192 | | | | 1,202,434 | | | | 1,269,277 | | | | 1,257,720 | | | | 53,090 | | | | 5,002,713 | |
Name and Principal Position | | Year | | | Salary ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Bonus ($) | | | Total ($) | | David M. Zaslav President and Chief Executive Officer | | | 2021 | | | | 3,000,000 | | | | 13,165,436 | | | | 202,889,764 | | | | 22,000,000 | | | | 1,118,281 | (6) | | | 4,400,000 | (7) | | | 246,573,481 | | | | 2020 | | | | 3,000,000 | | | | 12,501,020 | | | | 0 | | | | 21,799,921 | | | | 409,521 | | | | | | | | 37,710,462 | | | | 2019 | | | | 3,000,000 | | | | 13,451,226 | | | | 6,954,772 | | | | 21,763,500 | | | | 674,414 | | | | | | | | 45,843,912 | | Gunnar Wiedenfels Chief Financial Officer | | | 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 | | | | 2019 | | | | 1,160,453 | | | | 1,760,910 | | | | 1,787,026 | | | | 2,630,388 | | | | 46,928 | | | | | | | | 7,385,705 | | Bruce L. Campbell Chief Development, Distribution and Legal Officer | | | 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 | | | | 2019 | | | | 1,843,615 | | | | 1,609,985 | | | | 1,633,851 | | | | 4,061,765 | | | | 18,329 | | | | | | | | 9,167,545 | | David Leavy Chief Corporate Operating Officer | | | 2021 | | | | 1,312,000 | | | | 1,097,158 | | | | 1,395,904 | | | | 2,645,692 | | | | 18,174 | | | | | | | | 6,468,928 | | | | 2020 | | | | 1,233,873 | | | | 1,041,775 | | | | 867,461 | | | | 2,114,399 | | | | 17,981 | | | | | | | | 5,275,489 | | Jean-Briac Perrette President and Chief Executive Officer, Discovery International | | | 2021 | | | | 2,184,711 | (8) | | | 2,194,259 | | | | 2,791,808 | | | | 5,900,498 | (9) | | | 357,965 | (10) | | | | | | | 13,429,240 | | | | 2020 | | | | 2,012,056 | | | | 1,823,081 | | | | 1,518,050 | | | | 4,695,645 | | | | 367,922 | | | | | | | | 10,416,754 | | | | 2019 | | | | 1,948,645 | | | | 5,723,123 | | | | 1,787,026 | | | | 4,732,222 | | | | 275,622 | | | | | | | | 14,466,638 | |
* | Partial year. Mr. Wiedenfels joined the Company on April 1, 2017 and Mr. Warren departed from the Company effective March 31, 2017. |
(1) | The dollar amounts in this column represent the actual salary amount that each NEO earnedreceived in 2017. In converting2021. Amounts may vary from salary amounts stated in their respective employment agreements due to increases from Annual Base Salary Review (as discussed in the amounts for Mr. Perrette from British pounds to United States dollars, we used the averageCD&A) as well as timing of the monthly Bloomberg spot rate as of the second business day prior to each month end. The average rate for 2017 is 1.28644 British pounds per United States dollar.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 performance restricted stock units awards (“PRSUs”)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 Series A or Series C common stock, as applicable, on the grant date as if these awards were fully vested and issued on the grant date. See Note 1315 to our Annual Report on2021 Form10-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 “Grants2021 Grants of Plan-Based Awards in 2017” table below for additional information on PRSU and RSU awards made in 2017.2021. |
(3) | The amounts in this column reflect the grant date fair value computed in accordance with FASB ASC Topic 718 with respect to the cash- and stock-settled stock appreciation rights and option awards granted to our NEOs for each of the applicable fiscal years. For stock options, we calculate the grant date fair value using the Black-Scholes model, using the assumptions described in Note 1315 to our Annual Report on2021 Form10-K. For the cash- and stock-settled stock appreciation rights, we also calculate the grant date fair value using the Black-Scholes model, using the assumptions described in Note 1315 to our Annual Report on2021 Form10-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 under Discovery’s 2013 Incentive Plan for 2017, 2016 and 2015, which are more fully described under “Compensation Discussion and Analysis—Compensation Decisions-2017 ICP, Paid Out in March 2018” above. The 2017 award2021. These amounts were determined and paid out duringcalculated as described in the first quarter of 2018, the 2016 award amounts were determined and paid out during the first quarter of 2017 and the 2015 awards were determined and paid out during the first quarter of 2016.CD&A beginning on page 44. |
(5) | We offer executives basic life insurance as well as executive level disability and long-term care coverage. We also offer matching contributions to an executive’s 401(k) plan and contributions to the SRP, subject to certain limitations. Below are theThe table below outlines payments made on behalf of the NEOs to the foregoingunder our U.S. benefit plans in 2017:2021. For more information regarding these benefits, please see “NEO Compensation in 2021—Retirement Plans and Other Benefits” beginning on page 53 in the CD&A. |
| | | | | | | | | | | | | | | | | | | | | | | Basic Life ($) | | Disability/Long Term Care ($) | | Matching Contributions | | | | | 401(k) ($) | | SRP ($) | Mr. Zaslav | | | | 696 | | | | | 5,920 | | | | | 12,150 | | | | | 32,850 | | Mr. Wiedenfels | | | | 535 | | | | | 1,714 | | | | | 6,438 | | | | | 24,023 | | Mr. Campbell | | | | 696 | | | | | 4,447 | | | | | 11,960 | | | | | 32,850 | | Mr. Perrette | | | | — | | | | | — | | | | | 3,131 | | | | | — | | Mr. Guagliardo | | | | 870 | | | | | 6,008 | | | | | 12,000 | | | | | 32,850 | | Mr. Warren | | | | 187 | | | | | 1,139 | | | | | 11,965 | | | | | 2,513 | |
56 Discovery
Table of Contents Executive Compensation | | | | | | Disability/Long Term Care ($) | | | Matching Contributions | | | | | Basic Life ($) | | | | | 401(k) ($) | | | SRP ($) | | | Mr. Zaslav | | | 636 | | | | 6,474 | | | | 13,050 | | | | 0 | | | Mr. Wiedenfels | | | 636 | | | | 3,981 | | | | 13,050 | | | | 0 | | | Mr. Campbell | | | 636 | | | | 5,037 | | | | 13,050 | | | | 0 | | | Mr. Leavy | | | 795 | | | | 4,329 | | | | 13,050 | | | | 0 | | | Mr. Perrette | | | 0 | | | | 321 | | | | 0 | | | | 0 | |
In addition to the U.S. benefits described above, under the benefits we provide to executives based in the U.K., we made payments on behalf of Mr. Perrette as follows: £2,115£2,808 for U.K. life assurance, £2,250£2,663 for disability insurance and £6,344£2,500 for the U.K. pension plan. These amounts were converted from British pounds into United States dollars at the rate of 1.28644 dollars per British pound. For more information regarding these benefits, please see “Compensation Discussion and Analysis—Retirement Benefits” and “—Health, Welfare and Other Personal Benefits” above.
(6) | The amount reported includes $16,800 for a car allowance and $267,870 for personal security services. This amount also includes $392,676$774,688 for personal use of aircraft (including family travel for which Mr. Zaslav is not provided a taxgross-up) and $26,940$38,763 for taxgross-ups for business associate and spouse travel at the request of the Company that is considered business use. See “Compensation Discussion and Analysis—Health, Welfare“NEO Compensation in 2021 – Retirement Plans and Other Personal Benefits—Benefits – Aircraft Usage; RelatedGross-Up” above Gross-Up” on page 54 in the CD&A for more information regarding our policies for Mr. Zaslav’s use of our allotted travel on our corporate aircraft. | (7) | The table also includes $16,800amount reported in this column for Mr. Zaslav represents a car allowance, $837 in respect of home office expenses and $16,485 for personal security services. |
(7) | This amount includes $1 million for the Company’s discretionary contribution madebonus awarded to Mr. Wiedenfels SRP account, as providedZaslav for 2021 performance. See “NEO Compensation in his employment agreement. This amount also includes $25,000 in miscellaneous expense allowance, $2,3922021 – Annual Cash Bonus Awards – Determination of Annual Cash Bonus Awards to Messrs. Zaslav and Wiedenfels” on page 47 for tax services, $12,889 for immigration services and $77,307 in relocation expenses. The relocation expenses include $25,780 for move transportation fees, $18,915 for furniture rental and $9,800 for school search fees for Mr. Wiedenfels’ children, pursuant to the Company’s relocation policy. Additionally, this amount includes $52,133 in associated taxgross-ups, pursuant to the Company’s relocation policy. See “Executive Compensation Arrangements—Wiedenfels Employment Agreement” below for more information on the relocation benefits provided to Mr. Wiedenfels.additional information. |
(8) | Under the terms of Mr. Perrette’s employment agreement, he is to be paid in British pounds. For 2017,2021, Mr. PerrettePerrette’s salary was paid in the£1,586,457. This amount of £1,204,375. In converting the amounts from British poundswas converted to United States dollars we usedusing a conversion rate of 1.37 United States dollars per British pound, which is the average of the monthly Bloomberg spot rate as of the second business day prior to each month end. The average rate for 2017 is 1.28644 British pounds per United States dollar.end during 2021. |
(9) | Mr. Perrette’s bonusThis amount was calculated using hisMr. Perrette’s salary, which is denominated and paid in British pounds. After the financial performance of Mr. Perrette’s lines of business was established and Mr. Perrette’s bonus payoutICP and performance pool amounts were determined (see “Compensation Discussion and Analysis – 2017 ICP, Paidas further described on page 46 in March 2018” for more information on the determination of Mr. Perrette’s bonus payout),CD&A, those amounts were then converted into United States dollars atusing the same conversion rate of 1.28644 dollars per British pound.described in footnote (8) above. |
(10) | This amount includes $25,548$69,916 for tax services and $11,865 for immigration and relocation services, pursuant to the Company’sour relocation policy. Discovery also provided tax equalization payments for Mr. Perrette, (see “Compensation Discussion and Analysis—Health, Welfare and Other Personal Benefits—Relocation Expenses and International Assignment Benefits; RelatedGross-Up”), which resulted in Company expenses of $443,462. See “Executive Compensation Arrangements—Perrette Employment Agreement” below$264,886 for more information on the relocation benefits provided to Mr. Perrette.2021. In converting the amounts from British pounds to United States dollars, we used the average of the monthly Bloomberg spotsame conversion rate as of the second business day prior to each month end.described in footnote (8) above. This may not have been the exchange rate in effect at the time the payments in respect of the amounts described in this paragraph were made. The average rate for 2017 is 1.28644 British pounds per United States dollar. |
(11) | This amount includes $2,197,069 in severance payments, made up of $1,452,300 by reference to bonus amounts and $744,769 by reference to his salary. See “Compensation Discussion and Analysis—Severance Payments made to Mr. Warren” above and “Executive Compensation Arrangements—Warren Employment Agreement” below for more information on the severance benefits provided to Mr. Warren. |
Pay Ratio Disclosure In August 2015, pursuant to a mandate inUnder Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Securities and Exchange Commission (“SEC”) adopted a rule requiring annual disclosure of the ratio of the annual total compensation of the Company’s median employee to the annual total compensation of its Principal Executive Officer (“PEO”). For 2017, the Company’s PEO was David M. Zaslav, our President and CEO. The purpose of the disclosure is to provide shareholders with a company-specific metric to assist in their evaluation of the Company’s executive compensation practices. As required by Item 402(u) of RegulationS-K, we are providing the following information for 2017:
the annual total compensation of the median employee of our company was $80,858; and
the annual total compensation of Mr. Zaslav, our CEO, was $42,247,984.
Based on the above,required to provide the ratio of the annual total compensation of our PEOCEO to the median of the annual total compensation of all employees is 522the median-paid employee of the Company (“Median Employee”). Our 2021 CEO to 1.Median Employee pay ratio was calculated in accordance with Item 402(u) of Regulation S-K, and represents a reasonable estimate.
We identifiedAs permitted under SEC rules, we used the same median employee that we used for purposes of disclosing our 2019 pay ratio as there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure.
As described in our 2019 Proxy Statement, to identify our median employee, by using the annual cash compensation as of December 31, 2017, which consisted of actual base salary, target bonus and target sales commission for all employees as of November 30, 2017. For purposes of determining the median employee,we defined “employee” is defined as any full-time, part-time or temporary individual employed and paid by the Companyus or any of itsour consolidated subsidiaries. Thissubsidiaries as of November 30, 2019. We did not include any freelance workers, temporary employees who wereindividuals employed and paid by a third party or independent contractors.contractors (other than certain employees outside the United States who also work in part as independent contractors in accordance with local compensation practices). We then calculated each employee’s annual cash compensation, our consistently applied compensation measure, using actual base salary, target bonus and target sales commission (if applicable). For purposes of this disclosure,employees paid in local currencies, we calculated annual foreignconverted their base salary into U.S. dollar amounts using an average exchange rates by averaging the 2017 Bloomberg monthly spot ratesrate as of the second business day prior to each month end for the applicable currencies of regions and countries in which we have employees. These annual foreign exchange rates were applied for employees paid innon-U.S. dollar currencies, as appropriate. After we converted the total cash compensation of our employees, weend. We then sorted the employees from lowest to highest (excluding our CEO) and determined our median employee based onby their annual total cash compensation. After identifyingcompensation to determine the median employee, we calculated theof annual totalcash compensation for such employee usingto all employees and, thereby, identified our Median Employee.
Using the same methodology we useused for our named executive officersNEOs (including our CEO) as set forth in the 20172021 Summary Compensation Table resulted in this proxy statement. Givenour Median Employee having annual total compensation of $82,964. The 2021 annual total compensation for our CEO as disclosed in the global profile2021 Summary Compensation Table was $246,573,481. Therefore, the ratio of our workforce,CEO’s annual total compensation to the Median Employee’s annual total compensation was 2,972 to 1.
Mr. Zaslav was awarded a one-time grant of stock options in which approximately 60%2021 in connection with the Zaslav 2021 Employment Agreement. Without the value of our employees are located outside of the United States, the factors that influence the level of compensation of our CEO vary significantly from the factors that influence the compensation arrangements of our other employees. For employees in our international offices, we use various pay structures that reflect the compensation practices in those regions, which may differ greatly from that of our U.S. based pay programs. The form and amount ofthis one-time grant, Mr. Zaslav’s annual total compensation is consistent with that stated in his employment agreement, which is influenced by the prevailing compensation practices for CEOs in the United States, as well as the competitive market for senior executive talent in our industry. Another factor that affectswould have been $43,683,717. Based on this recalculated total the ratio of our median employee’s annual total compensation to our CEO’s annual total compensation is that employees are hired at various times ofto the year, skewing the data, as we have not annualized theMedian Employee’s annual total compensation of any employees. Therefore, the amounts used to determine our median employee may not represent the amount of compensation that an employee would have received in a full year. Duebeen 527 to the numerous job functions within our company, the pay structure will differ greatly between departments, experience levels and location, which will have a significant effect on the ratio. We believe that our employees are fairly compensated and appropriately incentivized under our current pay practices. 1.2022 Proxy Statement 57
Table of Contents Executive Compensation 2021 Grants of Plan-Based Awards in 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant Date | | | Estimated Future Payouts UnderNon-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards($) | | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | David M. Zaslav | | | (1) | | | | | | | | 8,400,000 | | | | 10,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 01/02/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,446,351 | (2) | | | 27.69 | | | | 8,056,175 | | | | | 02/23/2017 | | | | | | | | | | | | | | | | 254,152 | (3) | | | 508,303 | (3) | | | | | | | | | | | — | | | | 14,994,939 | | Series C Common Stock | | | 01/02/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,446,351 | (2) | | | 27.03 | | | | 7,549,952 | | | | | | | | | | | | | Gunnar Wiedenfels | | | (1) | | | | | | | | 994,520 | | | | 2,486,300 | | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 05/22/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 160,001 | (4) | | | 26.21 | | | | 1,155,207 | | | | | 05/22/2017 | | | | | | | | | | | | | | | | — | | | | 48,319 | (5) | | | | | | | | | | | — | | | | 1,266,441 | | | | | | | | | | | | | Bruce L. Campbell | | | (1) | | | | | | | | 2,078,798 | | | | 3,997,688 | | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 02/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 174,678 | (6) | | | 29.50 | | | | 1,432,360 | | | | | 02/23/2017 | | | | | | | | | | | | | | | | 23,978 | (7) | | | 46,595 | (7) | | | | | | | | | | | — | | | | 1,374,553 | | | | | | | | | | | | | Jean-Briac Perrette | | | (1) | | | | | | | | 2,335,371 | (8) | | | 3,892,285 | (8) | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 02/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 206,437 | (6) | | | 29.50 | | | | 1,692,783 | | | | | 02/23/2017 | | | | | | | | | | | | | | | | 27,534 | (7) | | | 55,067 | (7) | | | | | | | | | | | — | | | | 1,624,477 | | | | | | | | | | | | | Paul Guagliardo | | | (1) | | | | | | | | 1,674,000 | | | | 3,640,000 | | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 02/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 174,678 | (6) | | | 29.50 | | | | 1,432,360 | | | | | 02/23/2017 | | | | | | | | | | | | | | | | 23,978 | (7) | | | 46,595 | (7) | | | | | | | | | | | — | | | | 1,374,553 | | | | | | | | | | | | | Andrew Warren | | | (9) | | | | | | | | 358,102 | | | | 746,045 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | |
| | | 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 ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards ($) | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | | | | | | | Name | | Grant Date | | Approval Date | | Threshold ($) | | | Target(1) ($) | | | Maximum(2) (#) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | | | | | | D. Zaslav Series A Common Stock | | | | | | | 0 | | | | 22,000,000 | | | | 22,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | 135,773 | (3) | | | 169,716 | (3) | | | | | | | | | | | | | | | | | | | 9,874,077 | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | 28,286 | (4) | | | 56,572 | (4) | | | | | | | | | | | | | | | | | | | 3,291,359 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,635,284 | (5) | | | 35.65 | | | | 22,456,914 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,519,414 | (6) | | | 37.43 | | | | 20,034,127 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,557,685 | (7) | | | 39.30 | | | | 21,836,734 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,603,292 | (8) | | | 41.27 | | | | 21,221,798 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,682,083 | (9) | | | 43.33 | | | | 21,215,390 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,360,127 | (10) | | | 35.65 | | | | 20,153,247 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,421,234 | (11) | | | 37.43 | | | | 20,310,898 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,401,917 | (12) | | | 39.30 | | | | 19,654,624 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,270,188 | (13) | | | 41.27 | | | | 18,039,451 | | | 05/16/2021 | | 05/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,322,488 | (14) | | | 43.33 | | | | 17,966,581 | | G. Wiedenfels Series A Common Stock | | | | | | | 0 | | | | 2,550,000 | | | | 4,250,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 130,546 | (15) | | | 58.18 | | | | 2,791,808 | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,715 | (16) | | | | | | | | | | | 2,194,259 | | B. Campbell Series A Common Stock | | | | | | | 0 | | | | 2,892,684 | | | | 4,821,141 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 130,546 | (15) | | | 58.18 | | | | 2,791,808 | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,715 | (16) | | | | | | | | | | | 2,194,259 | | D. Leavy Series A Common Stock | | | | | | | 0 | | | | 1,509,747 | | | | 3,282,058 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,273 | (15) | | | 58.18 | | | | 1,395,904 | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,858 | (16) | | | | | | | | | | | 1,097,158 | | J. Perrette Series A Common Stock | | | | | | | 0 | | | | 3,822,729 | (17) | | | 5,461,041 | (17) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 130,546 | (15) | | | 58.18 | | | | 2,791,808 | | | 03/01/2021 | | 02/24/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,715 | (16) | | | | | | | | | | | 2,194,259 | |
(1) | These amounts reflect the possible payouts with respect to awards of annual cash bonus under the 2013 Incentive Plan for performance in 2017.2021. Each NEO is assigned a target bonus amount and is eligibleof the foregoing bonuses are subject to receive an annual cash bonus award of up to 300% of base salary for Mr. Zaslav and 250% of base salary for all other NEOs, subject in each case to the Compensation Committee’s authority to exercise “downward discretion” and the 2013 Incentive Plan’s $10 million limit.discretion.” The amounts of annual cash bonus awards actually paid for performance in 20172021 are disclosed in theNon-Equity Incentive Plan Compensation column of the 2021 Summary Compensation Table above.Table. For more information regarding the terms of these annual cash bonus awards and the factors used by the Committee in exercising its downward discretion, please see “Compensation Discussion and Analysis—2017NEO Compensation Decisions—in 2021—Annual Cash Bonus Awards.Awards,” beginning on page 44. | (2) | Amounts in excess of this maximum may be paid on a discretionary basis. |
(2) | These amounts reflect the number of cash- and stock-settled stock appreciation rights (“Special SARs”) granted. The awards automatically vest and pay out 25% on each anniversary of the grant date and are payable in 75% cash and 25% stock in connection with the vesting. |
(3) | These amounts represent PRSU awards. The PRSUs vest if we achieveMr. Zaslav achieves certain three-yearone-year performance targets.goals, which the Compensation Committee certified were achieved in February 2022. Of the grant, 50% will bewas distributed on the third anniversary of the grant dateFebruary 28, 2022 and 25% will be distributed on each of the fourthJanuary 6, 2023 and fifth anniversaries of the grant date,January 6, 2024, assuming achievement of the three-yearone-year performance targets. For more information regarding these awards, please see “Compensation Discussion and Analysis— NEO Compensation in 2021—Long-Term Incentive Compensation.” |
(4) | These amounts represent PRSU awards. The PRSUs vest if Discovery achieves certain one-year performance targets. In February 2022, the Compensation Committee certified that, based on Discovery’s performance, these PRSUs would vest at 100%. Of the amount that vested, 50% was distributed on February 28, 2022 and 25% will be distributed on each of January 6, 2023 and January 6, 2024, assuming achievement of the one-year performance targets. For more information regarding these awards, please see “Compensation Discussion and Analysis—NEO Compensation in 2021—Long-Term Incentive Compensation.” | (5) | This amount represents stock options thataward will vest 25% per year for four years beginning on May 16, 2022. The exercise price is equal to the anniversary ofclosing market price on May 14, 2021, the last business day prior the grant date and expire(the “Applicable Closing Price”). | (6) | This award will vest 25% per year for four years beginning on May 22, 2024.16, 2023. The exercise price is equal to 105% of the Applicable Closing Price. |
(5)(7) | These amounts represent restricted stock units thatThis award will vest 33% on the second and third anniversariesMay 16, 2024, 33% on May 16, 2025 and 34% on the fourth anniversaryMay 16, 2026. The exercise price is equal to 110.25% of the grant date.Applicable Closing Price. |
(6)(8) | This award will vest 50% on May 16, 2025 and 50% on May 16, 2026. The exercise price is equal to 115.76% of the Applicable Closing Price. | (9) | This award will vest 100% on May 16, 2026. The exercise price is equal to 121.55% of the Applicable Closing Price. | (10) | This award will vest 25% per year for four years beginning on January 1, 2024. The exercise price is equal to the Applicable Closing Price. | (11) | This award will vest 25% per year for four years beginning on January 1, 2025. The exercise price is equal to 105% of the Applicable Closing Price. | (12) | This award will vest 33% on January 1, 2026, 33% on January 1, 2027 and 34% on December 31, 2027. The exercise price is equal to 110.25% of the Applicable Closing Price. | (13) | This award will vest 50% on January 1, 2027 and 50% on December 31, 2027. The exercise price is equal to 115.76% of the Applicable Closing Price. | (14) | This award will vest 100% on December 31, 2027. The exercise price is equal to 121.55% of the Applicable Closing Price. | (15) | These amounts represent stock options that will vest 25% per year for four years beginning on the first anniversary of the grant date and will expire on February 23, 2024.March 1, 2028. |
(7)(16) | These amounts represent PRSU awards. The PRSUsRSUs that will vest if we achieve certain three-year performance targets. Ofin four substantially equal installments on the grant, 50% will be distributed on each of thefirst, second, third, and fourth anniversaries of the grant date, assuming the achievement of the three-year performance targets. For more information regarding these awards, including the performance targets, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”date. |
(8)(17) | Mr. Perrette’s target bonus was calculated using his salary, whichcompensation is denominated and paid in British pounds. TheseTherefore, financial performance of Mr. Perrette’s lines of business were established and Mr. Perrette’s bonus payout and performance pool amounts were determined in British pounds. Those amounts were then converted into USDUnited States dollars at the rate of 1.286441.3771 United States dollars per British pound,pound. See “Compensation Discussion and Analysis— NEO Compensation in 2021” on page 42 for purposesmore information on the determination of this table.Mr. Perrette’s bonus payout. |
58 Discovery (9) | Mr. Warren terminated his employment effective March 31, 2017 and did not receive any grants of equity awards in 2017. However, Mr. Warren was eligible to receive a prorated cash bonus based on his employment in 2017. |
Table of Contents Executive CompensationOutstanding Equity Awards at 2021 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 ($) | | D. Zaslav Series A Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 451,985 | (2) | | | 22.95 | | | 01/31/2022 | | | 127,075 | (18,19) | | | 2,991,346 | | | | 1,217,827 | | | | 1,217,828 | (3) | | | 27.35 | | | 07/16/2025 | | | 154,194 | (18,20) | | | 3,629,727 | | | | 552,836 | | | | 1,658,508 | (4) | | | 28.72 | | | 07/16/2025 | | | 85,840 | (18,21) | | | 2,020,674 | | | | | 0 | | | | 2,155,404 | (5) | | | 30.15 | | | 07/16/2025 | | | 29,377 | (18,22) | | | 691,535 | | | | | 0 | | | | 2,393,454 | (6) | | | 31.66 | | | 07/16/2025 | | | 60,583 | (18,23) | | | 1,426,124 | | | | | 0 | | | | 1,571,489 | (7) | | | 33.24 | | | 07/16/2025 | | | 182,408 | (18,24) | | | 4,293,884 | | | | | 0 | | | | 989,299 | (7) | | | 33.24 | | | 07/16/2025 | | | 56,572 | (18,25) | | | 1,331,705 | | | | | 0 | | | | 1,635,284 | (8) | | | 35.65 | | | 05/16/2028 | | | 169,716 | (18,26) | | | 3,995,115 | | | | | 0 | | | | 1,519,414 | (9) | | | 37.43 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,557,685 | (10) | | | 39.30 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,603,292 | (11) | | | 41.27 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,682,083 | (12) | | | 43.33 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,360,127 | (13) | | | 35.65 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,421,234 | (14) | | | 37.43 | | | 05/16/2028 | | | | | | | | | | | �� | 0 | | | | 1,401,917 | (15) | | | 39.30 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,270,188 | (16) | | | 41.27 | | | 05/16/2028 | | | | | | | | | | | | 0 | | | | 1,322,488 | (17) | | | 43.33 | | | 05/16/2028 | | | | | | | | | Series C Common Stock | | | 0 | | | | 451,985 | (2) | | | 21.71 | | | 01/31/2022 | | | | | | | | | G. Wiedenfels Series A Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | 40,001 | | | | 0 | | | | 26.21 | | | 05/22/2024 | | | 20,971 | (31) | | | 493,657 | | | | 0 | | | | 50,741 | (27) | | | 24.06 | | | 03/01/2025 | | | 40,572 | (32) | | | 955,065 | | | | 0 | | | | 92,592 | (28) | | | 29.08 | | | 03/01/2026 | | | 70,937 | (33) | | | 1,669,857 | | | | 0 | | | | 150,402 | (29) | | | 25.70 | | | 02/28/2027 | | | 37,715 | (34) | | | 887,811 | | | | | 0 | | | | 130,546 | (30) | | | 58.18 | | | 03/01/2028 | | | | | | | | | B. Campbell Series A Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | 152,221 | | | | 50,741 | (27) | | | 24.06 | | | 03/01/2025 | | | 73,398 | (31) | | | 1,727,789 | | | | 42,328 | | | | 84,656 | (28) | | | 29.08 | | | 03/01/2026 | | | 37,094 | (32) | | | 873,193 | | | | 45,836 | | | | 137,510 | (29) | | | 25.70 | | | 02/28/2027 | | | 64,857 | (33) | | | 1,526,734 | | | | | 0 | | | | 130,546 | (30) | | | 58.18 | | | 03/01/2028 | | | 37,715 | (34) | | | 887,811 | | D. Leavy Series A Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 16,914 | (27) | | | 24.06 | | | 03/01/2025 | | | 6,991 | (31) | | | 164,568 | | | | 0 | | | | 29,101 | (28) | | | 29.08 | | | 03/01/2026 | | | 12,752 | (32) | | | 300,182 | | | | 0 | | | | 85,944 | (29) | | | 25.70 | | | 02/28/2027 | | | 40,536 | (33) | | | 954,217 | | | | | 0 | | | | 65,273 | (30) | | | 58.18 | | | 03/01/2028 | | | 18,858 | (34) | | | 443,917 | | J. Perrette Series A Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 54,969 | (27) | | | 24.06 | | | 03/01/2025 | | | 22,719 | (31) | | | 534,805 | | | | 0 | | | | 92,592 | (28) | | | 29.08 | | | 03/01/2026 | | | 93,372 | (35) | | | 2,197,977 | | | | 0 | | | | 150,402 | (29) | | | 25.70 | | | 02/28/2027 | | | 40,572 | (32) | | | 955,065 | | | | | 0 | | | | 130,546 | (30) | | | 58.18 | | | 03/01/2028 | | | 70,937 | (33) | | | 1,669,857 | | | | | | | | | | | | | | | | | | | 37,715 | (34) | | | 887,811 | |
Year-End2022 Proxy Statement 59
| | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1) | | | Equity Incentive Plan Awards: Grant Date Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | David M. Zaslav | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | — | | | | 925,665 | | | | 43.92 | | | | (2 | ) | | | 602,894 | (3)(4) | | | 15,120,582 | | | | | — | | | | 462,833 | | | | 33.17 | | | | (2 | ) | | | 508,303 | (3)(5) | | | 14,994,939 | | | | | — | | | | 867,811 | | | | 26.38 | | | | (2 | ) | | | | | | | | | | | | — | | | | 1,446,351 | | | | 27.69 | | | | (2 | ) | | | | | | | | | Series C Common Stock | | | — | | | | 925,665 | | | | 42.60 | | | | (2 | ) | | | | | | | | | | | | — | | | | 462,833 | | | | 32.28 | | | | (2 | ) | | | | | | | | | | | | — | | | | 867,811 | | | | 25.17 | | | | (2 | ) | | | | | | | | | | | | — | | | | 1,446,351 | | | | 27.03 | | | | (2 | ) | | | | | | | | | | | | | | | | Gunnar Wiedenfels | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | — | | | | 160,001 | | | | 26.21 | | | | 05/22/2024 | (6) | | | 48,319 | (7) | | | 1,266,441 | | | | | | | | | Bruce L. Campbell | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 31,462 | | | | — | | | | 24.30 | | | | 03/15/2019 | (8) | | | 7,002 | (14) | | | 296,153 | | | | | 49,605 | | | | — | | | | 38.01 | | | | 03/01/2020 | (9) | | | 25,215 | (15) | | | 992,210 | | | | | 39,643 | | | | 13,215 | | | | 42.30 | | | | 02/28/2021 | (10) | | | 37,181 | (16)(17) | | | 1,202,248 | | | | | 74,140 | | | | 74,140 | | | | 32.34 | | | | 02/23/2022 | (11) | | | 48,232 | (4)(17) | | | 1,209,659 | | | | | 40,106 | | | | 120,321 | | | | 25.08 | | | | 02/26/2023 | (12) | | | 46,595 | (5)(17) | | | 1,374,553 | | | | | — | | | | 174,678 | | | | 29.50 | | | | 02/23/2024 | (13) | | | | | | | | | Series C Common Stock | | | 31,462 | | | | — | | | | 23.57 | | | | 03/15/2019 | (8) | | | 7,002 | (14) | | | 287,253 | | | | | 49,605 | | | | — | | | | 36.87 | | | | 03/01/2020 | (9) | | | | | | | | | | | | 39,643 | | | | 13,215 | | | | 41.02 | | | | 02/28/2021 | (10) | | | | | | | | | | | | | | | | Jean-Briac Perrette | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 25,976 | | | | — | | | | 21.33 | | | | 11/15/2018 | (18) | | | 8,524 | (14) | | | 360,527 | | | | | 12,585 | | | | — | | | | 24.30 | | | | 03/15/2019 | (8) | | | 43,647 | (16)(17) | | | 1,411,326 | | | | | 9,706 | | | | — | | | | 38.01 | | | | 03/01/2020 | (9) | | | 60,290 | (4)(17) | | | 1,512,073 | | | | | 8,618 | | | | 2,873 | | | | 42.30 | | | | 02/28/2021 | (10) | | | 158,732 | (17)(19) | | | 4,055,603 | | | | | 87,034 | | | | 87,034 | | | | 32.34 | | | | 02/23/2022 | (11) | | | 55,067 | (5)(17) | | | 1,624,477 | | | | | 50,133 | | | | 150,400 | | | | 25.08 | | | | 02/26/2023 | (12) | | | | | | | | | | | | — | | | | 206,437 | | | | 29.50 | | | | 02/23/2024 | (13) | | | | | | | | | Series C Common Stock | | | 25,976 | | | | — | | | | 20.68 | | | | 11/15/2018 | (18) | | | 8,524 | (14) | | | 349,692 | | | | | 12,585 | | | | — | | | | 23.57 | | | | 03/15/2019 | (8) | | | | | | | | | | | | 9,706 | | | | — | | | | 36.87 | | | | 03/01/2020 | (9) | | | | | | | | | | | | 8,618 | | | | 2,873 | | | | 41.02 | | | | 02/28/2021 | (10) | | | | | | | | |
Table of Contents | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1) | | | Equity Incentive Plan Awards: Grant Date Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Paul Guagliardo | | | | | | | | | | | | | | | | | | | | | | | | | Series A Common Stock | | | 71,123 | | | | 71,124 | | | | 28.83 | | | | 10/13/2022 | (20) | | | 40,193 | (4)(17) | | | 1,008,040 | | | | | — | | | | 174,678 | | | | 29.50 | | | | 02/23/2024 | (13) | | | 46,595 | (5)(17) | | | 1,374,553 | | Andrew Warren(21) | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Compensation (1) | For RSUs and PRSUs, the value is calculated based on the grant amount, assuming target performance for PRSUs. |
(2) | These awards represent Special SARs thatgranted in January 2018 pursuant to the terms of the then-current employment agreement with Mr. Zaslav. The SARs vest 25% on each anniversary of the grant date and are automatically payable in 75% cash and 25% stock in connection with the vesting. As of January 2022, these awards were fully vested and paid out. |
(3) | This award vested 25% on January 2, 2020, 25% on January 2, 2021, 25% on January 2, 2022 and will vest 25% on January 2, 2023. | (4) | This award vested 25% on January 2, 2021, 25% on January 2, 2022 and will vest 25% on January 2, 2023 and December 31, 2023. | (5) | This award vested 33% on January 2, 2022 and will vest 33% on January 2, 2023 and 34% on December 31, 2023. | (6) | This award vests 50% each year on January 2, 2023 and December 31, 2023. | (7) | This award vests 100% on December 31, 2023. | (8) | This award vests 25% annually over four years beginning on May 16, 2022. | (9) | This award vests 25% annually over four years beginning on May 16, 2023. | (10) | This award vests 33% on May 16, 2024 and May 16, 2025 and 34% on May 16, 2026. | (11) | This award vests 50% on May 16, 2025 and May 16, 2026. | (12) | This award vests 100% on May 16, 2026. | (13) | This award vests 25% annually over four years beginning on January 1, 2024. | (14) | This award vests 25% on January 1, 2025, January 1, 2026, January 1, 2027, and December 31, 2027. | (15) | This award vests 33% on January 1, 2026 and January 1, 2027 and 34% on December 31, 2027. | (16) | This award vests 50% on January 1, 2027 and December 31, 2027. | (17) | This award vests 100% on December 31, 2027. | (18) | 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 “Executive“Compensation Discussion and Analysis—NEO Compensation Arrangements—Zaslav Employment Agreement.in 2021—Long-Term Incentive Compensation.” |
(4)(19) | These PRSU amounts relate to the February 26, 2016 PRSU grant, with a performance period that expires December 31, 2018. |
(5) | These PRSU amounts relate toundistributed portion of the February 23, 2017 PRSU grant, with a performance period that expiresexpired December 31, 2019. In February 2020, 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 2020, 25% distributed in January 2021 and the remaining 25% distributed in January 2022. |
(6)(20) | These PRSU amounts relate to the undistributed portion of the March 1, 2018 PRSU grant, with a performance period that expired December 31, 2019. In February 2020, 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 2020, 25% distributed in January 2021 and the remaining 25% distributed in January 2022. | (21) | These PRSU amounts relate to the undistributed portion of the March 1, 2019 PRSU grant, with a performance period that expired December 31, 2019. In February 2020, the Compensation Committee certified that the performance metrics had been met and the PRSUs vested at 97.4%, with 50% of the units distributed in February 2020, 25% distributed in January 2021 and the remaining 25% distributed in January 2022. | (22) | These PRSU amounts relate to the undistributed portion of the March 18, 2019 PRSU grant, with a performance period that expired December 31, 2019. In February 2020, 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 2020, 25% distributed in January 2021 and the remaining 25% distributed in January 2022. | (23) | 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 99.6%, with 50% of the units distributed in February 2021, 25% distributed in January 2022 and the remaining 25% to be distributed in January 2023. | (24) | 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% to be distributed in January 2023. | (25) | 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% to be distributed in January 2023 and the remaining 25% to be distributed in January 2024. | (26) | 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% to be distributed in January 2023 and the remaining 25% to be distributed in January 2024. | (27) | These stock options vest in four equal annual installments beginning May 22, 2018. |
(7) | These RSU amounts vest 33% onMarch 1, 2019, the second and third anniversary and 34% on the fourthfirst anniversary of the May 22, 2017 grant date. |
(8)(28) | These stock options vested in four equal annual installments beginning March 15, 2013. |
(9) | These stock options vestedvest in four equal annual installments beginning March 1, 2014.2020, the first anniversary of the grant date. |
(10)(29) | These stock options vest in four equal annual installments beginning February 28, 2015.2021, the first anniversary of the grant date. |
(11)(30) | These stock options vest in four equal annual installments beginning March 1, 2022, the first anniversary of the grant date. | (31) | These RSU amounts vested 33% on March 1, 2020, 33% on March 1, 2021 and 34% on March 1, 2022. | (32) | These RSU amounts vested 33% on March 1, 2021, 33% on March 1, 2022 and will vest 34% on March 1, 2023. | (33) | These RSU amounts vested 33% on February 23, 2016.28, 2022 and will vest 33% on February 28, 2023 and 34% on February 28, 2024. | (34) | These RSU amounts vested 25% on March 1, 2022 and will vest 25% on March 1, 2023, March 1, 2024 and March 1, 2025. | (35) | This RSU award vests in three substantially equal installments on July 1, 2021, July 1, 2022 and July 1, 2023. |
60 Discovery (12) | These stock options vest in four equal annual installments beginning February 26, 2017. |
(13) | These stock options vest in four equal annual installments beginning February 23, 2018. |
(14) | These PRSU amounts relate to the unvested portion of the February 28, 2014 PRSU grant, with a performance period that expired on December 31, 2016. In February 2017, the Compensation Committee certified that the performance metrics had been met. |
(15) | These PRSU amounts relate to the unvested portion of the September 15, 2014 PRSU grant, with a performance period that expired on December 31, 2016. In February 2017, the Compensation Committee certified that the performance metrics had been met. |
Table of Contents(16) | These PRSU amounts relate to the February 23, 2015 PRSU grant, with a performance period that expires December 31, 2017. |
Executive Compensation (17) | The PRSU vesting is dependent on the achievement of three-year performance metrics. If performance targets are met, the award vests 50% after the third year and 50% after the fourth year. For more information regarding these awards, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.” |
(18) | These stock options vested in four equal annual installments beginning November 15, 2012. |
(19) | These PRSU amounts relate to the June 16, 2016 PRSU grant, with a performance period that expires December 31, 2018. |
(20) | These stock options vest in four equal annual installments beginning October 13, 2016. |
(21) | Mr. Warren has no outstanding equity awards due to his termination effective March 31, 2017. |
Option Exercises and Stock Vested in 20172021 | | | | | | | | | | | | | | | | | | | 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 ($)(2) | | | | | | | David M. Zaslav | | | | | | | | | | | | | | | | | Series A Common Stock | | | 289,270 | (3) | | | 378,944 | | | | 1,319,582 | (4) | | | 38,503,841 | (4) | Series C Common Stock | | | 289,270 | (3) | | | 538,042 | | | | 1,319,582 | (5) | | | 37,383,046 | (5) | | | | | | Gunnar Wiedenfels | | | | | | | | | | | | | | | | | Series A Common Stock | | | — | | | | — | | | | — | | | | — | | Series C Common Stock | | | — | | | | — | | | | — | | | | — | | | | | | | Bruce L. Campbell | | | | | | | | | | | | | | | | | Series A Common Stock | | | 7,988 | (6) | | | 18,567 | | | | 40,056 | (7) | | | 1,045,238 | | Series C Common Stock | | | 7,988 | (6) | | | 15,302 | | | | 14,842 | (8) | | | 415,046 | | | | | | | Jean-Briac Perrette | | | | | | | | | | | | | | | | | Series A Common Stock | | | — | | | | — | | | | 10,057 | (9) | | | 288,871 | | Series C Common Stock | | | — | | | | — | | | | 10,057 | (9) | | | 281,993 | | | | | | | Paul Guagliardo | | | | | | | | | | | | | | | | | Series A Common Stock | | | — | | | | — | | | | — | | | | — | | Series C Common Stock | | | — | | | | — | | | | — | | | | — | | | | | | | Andrew Warren | | | | | | | | | | | | | | | | | Series A Common Stock | | | — | | | | — | | | | 13,065 | (10) | | | 374,440 | | Series C Common Stock | | | 57,775 | (11) | | | 2,821 | | | | 13,065 | (10) | | | 365,644 | |
| | Option awards | | | Stock awards | | Name | | Number of shares acquired on exercise (#) | | | Value realized on exercise ($)(1) | | | Number of shares acquired on vesting (#) | | | Value realized on vesting ($)(2) | | D. Zaslav | | | | | | | | | | | | | | | | | Series A Common Stock | | | 813,572 | (3) | | | 5,689,578 | | | | 790,202 | (4) | | | 31,343,508 | | Series C Common Stock | | | 813,572 | (3) | | | 3,153,041 | | | | 0 | | | | 0 | | G. Wiedenfels | | | | | | | | | | | | | | | | | Series A Common Stock | | | 414,946 | (5) | | | 11,402,842 | | | | 56,765 | (6) | | | 2,863,769 | | B. Campbell | | | | | | | | | | | | | | | | | Series A Common Stock | | | 578,570 | (7) | | | 12,303,986 | | | | 112,806 | (8) | | | 6,441,205 | | Series C Common Stock | | | 52,858 | (9) | | | 162,652 | | | | | | | | | | D. Leavy | | | | | | | | | | | | | | | | | Series A Common Stock | | | 226,775 | (10) | | | 5,353,562 | | | | 20,478 | (11) | | | 1,152,640 | | Series C Common Stock | | | 11,491 | (12) | | | 33,437 | | | | | | | | | | J. Perrette | | | | | | | | | | | | | | | | | Series A Common Stock | | | 900,161 | (13) | | | 27,149,452 | | | | 116,251 | (14) | | | 5,359,919 | | Series C Common Stock | | | 11,491 | (15) | | | 45,683 | | | | | | | | | |
(1) | Represents the value of cash and stock actually received with respect to Special SAR units (theupon 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 the award grant price and the fair market value, which is calculated based onbetween: (i) the average closing price of a share of Discovery’the underlying Series A common stock or Series C common stock (as applicable) foron the ten trading10 days preceding and including the award grant date of exercise and the ten trading10 days following the award grant date of exercise) and stock options from exercises listed in(ii) the corresponding columnaverage closing price of the table.underlying 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. |
(2) | Represents the value realized upon RSU and PRSU vestingsvesting and distributions listed in the corresponding column of the table, using the closing market valueprice of the sharesSeries A common stock on the vesting or distribution date.date (as applicable). |
(3) | Represents the vesting and automatic exercise of Mr. Zaslav’s January 2, 2016 Special SAR grant.2017 and January 2, 2018 SARs grants. |
(4) | Represents the distribution and vesting of the followingMr. Zaslav’s 150,724 shares of Series A common stock PRSUs forfrom his February 26, 2016 PRSU grant; 127,075 shares of Series A common stock from his February 23, 2017 PRSU grant; 154,194 shares of Series A common stock from his March 1, 2018; 85,840 shares of Series A common stock from his March 1, 2019 PRSU grant; 29,377 shares of Series A common stock from his March 18, 2019 PRSU grant; and 242,992 shares of Series A common stock from his February 28, 2020 PRSU grant. | (5) | Represents the exercise of stock options granted to Mr. Zaslav. The table below shows the grant date of each award that vested or distributed inWiedenfels on May 22, 2017, the number of shares that vested or distributed in 2017, the number of shares for the undistributed portion of each award that will distribute on future dates,March 1, 2018, March 1, 2019 and the value realized upon vesting and distribution of each award in 2017:February 28, 2020. |
| | | | | | | | | | | | | | | | | | | | | Grant Date | | Shares Vested in 2017 | | | Shares Distributed in 2017 | | | Remaining Undistributed Shares | | | Value of Shares Vested in 2017 | | | Value of Shares Distributed in 2017 | | 03/15/2010 | | | — | | | | 83,704 | | | | — | | | | — | | | $ | 2,340,364 | | 03/16/2011 | | | — | | | | 69,836 | | | | — | | | | — | | | $ | 1,919,093 | | 03/15/2012 | | | — | | | | 70,544 | | | | — | | | | — | | | $ | 1,938,549 | | 2/28/2014 | | | — | | | | 5,622 | | | | — | | | | — | | | $ | 154,493 | | 2/28/2014 | | | 910,000 | | | | 455,000 | | | | 455,000 | | | $ | 26,845,000 | | | $ | 13,422,500 | | 2/23/2015 | | | 179,876 | | | | 89,938 | | | | 89,938 | | | $ | 5,306,342 | | | $ | 2,653,171 | |
(6) | Where an award has shares that have both vested and distributed in 2017, the amount reported in the “Value Realized on Vesting” column in the table above includes only the value of the shares vested in 2017 for the corresponding award. For example, the $26.8 million value forRepresents the vesting of the 2/28/RSUs granted to Mr. Wiedenfels on May 22, 2017, March 1, 2018 and March 1, 2019. | (7) | Represents exercise of stock options granted to Mr. Campbell on February 28, 2014, award is included in the “Value Realized on Vesting” column, whereas the $13.4 million value for the distribution of the 2/28/2014 award is not included in the “Value Realized on Vesting” column above.February 23, 2015, February 26, 2016, February 23, 2017 and March 1, 2019. |
(5)(8) | Represents the distribution and vesting of the following Series C Common Stock PRSUs forgranted to Mr. Zaslav. The table below shows the grant dateCampbell on February 23, 2017 and RSUs granted on March 1, 2018 and March 1, 2019. | (9) | Represents exercise of each award that vested or distributed in 2017, the number of shares that vested and distributed in 2017, the number of shares for the undistributed portion of each award that will distributestock options granted to Mr. Campbell on future dates, and the value realized upon vesting and distribution of each award in 2017:February 28, 2014. |
| | | | | | | | | | | | | | | | | | | | | Grant Date | | Shares Vested in 2017 | | | Shares Distributed in 2017 | | | Remaining Undistributed Shares | | | Value of Shares Vested in 2017 | | | Value of Shares Distributed in 2017 | | 03/15/2010 | | | — | | | | 83,704 | | | | — | | | | — | | | $ | 2,290,978 | | 03/16/2011 | | | — | | | | 69,836 | | | | — | | | | — | | | $ | 1,875,795 | | 03/15/2012 | | | — | | | | 70,544 | | | | — | | | | — | | | $ | 1,894,812 | | 2/28/2014 | | | — | | | | 5,622 | | | | — | | | | — | | | $ | 151,007 | | 2/28/2014 | | | 910,000 | | | | 455,000 | | | | 455,000 | | | $ | 26,026,000 | | | $ | 13,013,000 | | 2/23/2015 | | | 179,876 | | | | 89,938 | | | | 89,938 | | | $ | 5,144,454 | | | $ | 2,572,227 | |
| Where an award has shares that have both vested and distributed in 2017, the amount reported in the “Value Realized on Vesting” column in the table above includes only the value of the shares vested in 2017 for the corresponding award. |
(6)(10) | Represents the aggregate exercisesexercise of stock options granted to Mr. Campbell’sLeavy on February 28, 2014, February 23, 2015, February 26, 2016, February 23, 2017, March 16, 2011 stock option.1, 2018, March 1, 2019 and February 28, 2020. |
(7)(11) | Represents the aggregate vesting ofPRSUs granted to Mr. Campbell’sLeavy on February 23, 2017, and RSUs granted on March 1, 2013,2018 and March 1, 2019. | (12) | Represents the exercise of stock options granted to Mr. Leavy on February 28, 2014. | (13) | Represents exercise of stock options granted to Mr. Perrette on February 28, 2014, and September 15, 2014 PRSUs. |
(8) | Represents the aggregate vesting of Mr. Campbell’sFebruary 23, 2015, February 26, 2016, February 23, 2017, March 1, 20132018, March 1, 2019 and February 28, 2014 PRSUs.2020. | (14) | Represents vesting of PRSUs granted to Mr. Perrette on February 23, 2017, and RSUs granted on March 1, 2018, February 4, 2019 and March 1, 2019. | (15) | Represents exercise of stock options granted to Mr. Perrette on February 28, 2014. |
2022 Proxy Statement 61 (9) | Represents the aggregate vesting of Mr. Perrette’s March 1, 2013 and February 28, 2014 PRSUs. |
(10) | Represents the aggregate vesting of Mr. Warren’s March 1, 2013, February 28, 2014 and March 27, 2014 PRSUs. |
(11) | Represents the value realized from the exercise of Mr. Warren’s April 12, 2012 stock option grant. |
Table of ContentsExecutive Compensation2021 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 ($) | | D. Zaslav | | | — | | | — | | 7,895 | | — | | | 72,747,386 | (3) | G. Wiedenfels | | | — | | | — | | 434,075 | | — | | | 3,293,715 | (4) | B. Campbell | | | 92,617 | (2) | | — | | 928,552 | | — | | | 8,268,929 | (5) | D. Leavy | | | — | | | — | | 114,965 | | — | | | 934,412 | | J. Perrette | | | — | | | — | | 329,299 | | — | | | 2,519,463 | (6) |
(1) | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive Contributions in last fiscal year ($) | | Registrant Contributions in last fiscal year ($)(2) | | Aggregate Earnings in last fiscal year ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at 12/31/17 ($) | David M. Zaslav | | | | — | | | | | 32,850 | | | | | 8,372,704 | | | | | — | | | | | 64,522,845 | | Gunnar Wiedenfels | | | | — | | | | | 1,024,023 | (3) | | | | 110,954 | | | | | — | | | | | 1,134,977 | | Bruce L. Campbell | | | | 651,286 | (4) | | | | 32,850 | | | | | 785,264 | | | | | — | | | | | 5,226,227 | | Jean-Briac Perrette | | | | — | | | | | — | | | | | 630,004 | | | | | — | | | | | 2,942,753 | | Paul Guagliardo | | | | 419,742 | (5) | | | | 32,850 | | | | | 153,590 | | | | | — | | | | | 1,081,664 | | Andrew Warren | | | | — | | | | | 2,513 | | | | | 191,448 | | | | | 43,993 | | | | | 1,127,803 | |
(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—2021 NEO Compensation—Retirement Benefits” above. |
(2) | These amounts are reported under “All Other Compensation” for 2017 in the Summary Compensation Table. |
(3) | This amount includes the Company’s discretionary contribution of $1 million to Mr. Wiedenfels under the SRP, as provided in his employment agreement and $24,023, which represents the Company’s annual SRP contribution to Mr. Wiedenfels as reported under “All Other Compensation” for 2017 in the Summary Compensation Table. |
(4) | This amount includes $238,786, which relates to salary that is also reported under “Salary” for 20172021 in the Summary Compensation Table and $412,500, which relates to deferral of a portion of his ICP paid in 2017 for 2016 performance that was reported under“Non-Equity Incentive Plan Compensation” in 2016. |
(5) | This amount is related to the salary that is reported under “Salary” for 2017 in the2021 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) | $4,127,723 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. |
Executive Compensation Arrangements
Provided below are summaries of the employment agreements that we have entered into with our NEOs. For specific information regarding amounts paid to our NEOs in 2017, please see “—Summary Compensation Table” above. In addition, in each of these agreements, our NEOs are subject to customary restrictive covenants, including those relating tonon-solicitation,non-interference,non-competition and confidentiality, during the term of the agreement and, depending on the circumstances of termination, for a period thereafter.
Zaslav Employment Agreement
We have an employment agreement with David M. Zaslav, our President and Chief Executive Officer. We entered into the original agreement for a term of five years when Mr. Zaslav commenced employment with us in 2007. We amended the original employment agreement in 2009 and 2011, including extending the term of the employment agreement through February 1, 2015. On January 2, 2014, we entered into a new employment agreement with Mr. Zaslav, which replaced his prior employment agreement, as amended, with a term commencing January 2, 2014 and continuing through December 31, 2019 (the “2014 Zaslav Agreement”).
Under the terms of the 2014 Zaslav Agreement, Mr. Zaslav was entitled to and did receive a salary of $3,000,000 in 2017. Mr. Zaslav’s base salary remains $3,000,000 per annum for the duration of the agreement. Mr. Zaslav’s target annual bonus under the agreement for 2017 was $8,400,000. The target annual bonus increases by $600,000 each year until 2018. For 2018 and 2019, Mr. Zaslav’s target annual bonus will be $9,000,000. There is no guaranteed bonus amount and the actual amount paid to Mr. Zaslav will depend on the achievement of qualitative and quantitative performance objectives, which will be determined each year by the Compensation Committee in consultation with Mr. Zaslav.
Pursuant to the 2014 Zaslav Agreement, Mr. Zaslav is also entitled to receive equity awards each year from 2015 to 2018, conditioned on his employment on the grant date of each award. Two types of equity awards are required by the agreement: PRSUs, earned based on achievement of financial performance metrics, and Special SARs, which pay out based on growth in Company stock price.
Under the terms of the 2014 Zaslav Agreement, the PRSUs in each grant from 2016 to 2018 are determined by dividing $15 million by the closing price of the Company’s Series A common stock on the trading date prior to grant. In 2017, consistent with the requirements of that agreement, Mr. Zaslav received 508,303 PRSUs of the Company’s Series A common stock. The PRSUs granted in 2017 will be earned based on the achievement of performance metrics measured over a three-year performance period and the PRSUs granted in 2018 will be earned based on the achievement of performance metrics measured over atwo-year performance period. The Compensation Committee will set the performance metrics for applicable performance period at the time of grant in consultation with Mr. Zaslav. The PRSUs will be paid as follows: 50% shall be paid in the calendar year immediately following the last calendar year of the applicable performance period, as soon as practicable following the Compensation Committee’s determination of performance for such performance period, and the remaining 50% shall be paidone-half as soon as practicable after the beginning of the second calendar year following the last calendar year of the applicable performance period andone-half as soon as practicable after the beginning of the third calendar year following the last calendar year of the applicable performance period.
Mr. Zaslav may elect to defer receipt of the shares issuable pursuant to his PRSU awards, consistent with the deferral terms authorized by the Company. Mr. Zaslav has agreed to defer and/or hold at least 60% of the shares issued in settlement of the PRSUs awarded under the 2014 Zaslav Agreement until 2020 or beyond, unless there is an earlier “Separation From Service” (as defined in the agreement) or “Change in Control” (as defined in the agreement).
Under the 2014 Zaslav Agreement, Mr. Zaslav will no longer receive replenishment grants of cash-settled stock appreciation rights(“CS-SARs”) upon the maturity of any payouts under the Discovery Appreciation Plan orCS-SAR awards made to Mr. Zaslav prior to the execution of the 2014 Zaslav Agreement. Mr. Zaslav will receive grants of Special SARs under the 2013 Incentive Plan, as described below. The Special SARs will vest in four equal annual installments. Under the 2014 Zaslav Agreement, based on the adjustments approved by the Compensation Committee as a result of the 2014 Share Dividend approved by the Board in 2014, the Special SARs will be paid out 25% in Series A and Series C common stock, and the remaining 75% in cash, automatically after vesting. The base price of the Special SARs will be based on the average closing stock price of our Series A (for the Series A Special SARs) and Series C (for the Series C Special SARs) common stock over the ten trading days before and including the grant date and the ten trading days after the grant date; the payout on maturity will be determined using a similar average of the closing stock prices around the applicable vesting date. Mr. Zaslav received his first grant of 3,702,660 Special SARs on January 2, 2014 (as subsequently adjusted by the Compensation Committee to address the 2014 Share Dividend), and will receive subsequent Special SAR replenishment grants upon the payment of Special SARs in connection with scheduled payment dates until the final replenishment grant in 2018, provided Mr. Zaslav remains a full-time employee of the Company. Mr. Zaslav will, within 18 months of the date the cash-settled portion of a Special SAR is paid, use 35% of the netafter-tax proceeds therefrom to invest in the Company’s stock, unless there is an earlier “Separation From Service” (as defined in the agreement) or “Change in Control” (as defined in the agreement). Mr. Zaslav will also use reasonable efforts to hold the shares so acquired plus the net shares he receives from the stock-settled portion of the Special SARs for the term of his employment, unless there is an earlier “Separation From Service” (as defined in the agreement) or “Change in Control” (as defined in the agreement), provided that he may liquidate his holdings to finance a transaction that would result in a net increase in his exposure to the Company’s equity. If Mr. Zaslav’s employment is terminated without Cause or for Good Reason (as defined in the agreement), all of the Special SARs, as well asCS-SARs granted prior to the 2014 Zaslav Agreement, will become fully vested and payable in accordance with the terms of such agreement and the applicable awards.
Mr. Zaslav is eligible to participate in all employee benefit plans and arrangements sponsored by the Company for the benefit of its senior executive group, including insurance and retirement plans. Mr. Zaslav is entitled to four weeks of vacation each year. Mr. Zaslav receives a car allowance of $1,400 per month and is entitled to use the Company’s aircraft for up to 200 hours of personal use per year. The Company shall pay for the first 100 hours of personal use and Mr. Zaslav shall reimburse the Company for personal use in excess of 100 hours, in accordance with the Aircraft Time Sharing Agreement between Mr. Zaslav and Discovery Communications, LLC entered into in connection with the 2014 Zaslav Agreement (the “Time Sharing Agreement”). Under the Time Sharing Agreement, the reimbursement rate is two times the actual fuel cost for the airplane, in accordance withFAA-permitted reimbursement methods. Under the Time Sharing Agreement, if the Company requests that a family member or guest accompany Mr. Zaslav on a business trip, such use shall not be considered personal use, and to the extent the Company imputes income to Mr. Zaslav for such family member or guest travel, the Company may, consistent with Company policy, pay Mr. Zaslav a lump sum“gross-up” payment sufficient to make Mr. Zaslav whole for the amount of federal, state and local income and payroll taxes due on such imputed income as well as the federal, state and local income and payroll taxes with respect to suchgross-up payment.
Under the 2014 Zaslav Agreement, if Mr. Zaslav’s employment is terminated as a result of his death or “disability” (as defined in the agreement), Mr. Zaslav or his heirs, as applicable, shall be entitled to receive: (i) Mr. Zaslav’s accrued but unpaid base salary through the date of termination; plus (ii) any annual bonus for a completed year that was earned but not paid as of the date of termination; plus (iii) any accrued but unused vacation leave pay as of the date of termination; plus (iv) any accrued vested benefits under the Company’s employee welfare andtax-qualified retirement plans, in accordance with the terms of those plans; plus (v) reimbursement of any business expenses (“Accrued Benefits”). In addition, (x) the Company shall pay Mr. Zaslav or his heirs, as applicable, an amount equal to a fraction of the annual bonus Mr. Zaslav would have received for the calendar year of his death, where the numerator of the fraction is the number of calendar days Mr. Zaslav was actively employed during the calendar year and the denominator of the fraction is 365, which amount shall be payable at the time the Company normally pays the annual bonus; and (y) Mr. Zaslav’s family may elect to (1) continue to receive coverage under the Company’s group health benefits plan to the extent permitted by, and under the terms of, such plan and to the extent such benefits continue to be provided to the survivors of Company executives at Mr. Zaslav’s level in the Company generally, or (2) receive COBRA continuation of the group health benefits. Mr. Zaslav would be deemed to have a “disability” if he became unable to perform substantially all of his duties under the agreement in the normal and regular manner due to physical or mental illness or injury and remains unable to do so for 150 days or more during the 12 consecutive months then ending.
In the event of termination due to death or disability, the outstandingCS-SARs and Special SARs shall vest and be paid out pursuant to the terms of their award agreements, valued as of the date of death or termination. If Mr. Zaslav dies or separates due to disability during the term of the agreement and prior to the last day of the performance period for any tranche of PRSUs, then Mr. Zaslav shall be entitled to a pro rata portion of such tranche of PRSUs, based upon actual performance through the date of termination, provided that the maximum number of PRSUs in each tranche which may be earned is limited to (A) one divided by the number of years in the tranche’s performance period, multiplied by (B) the number of full or partial years completed for the performance period. If Mr. Zaslav dies prior to the grant date (within the first 90 days of the applicable performance period before the performance metrics for such performance period have been established) then there will be no grant of such tranche (and no prorated vesting for such tranche).
If Mr. Zaslav is terminated for “Cause” or resigns (other than for Good Reason or within the 30 days following the first anniversary of a Change in Control), he shall be entitled to receive the Accrued Benefits and all other benefits or payments due or owing Mr. Zaslav shall be forfeited. “Cause” means (i) willful malfeasance by Mr. Zaslav in connection with his employment, including embezzlement, misappropriation of funds, property or corporate opportunity or material breach of the agreement, as determined by the Board after investigation, notice to Mr. Zaslav of the charge and provision to Mr. Zaslav of an opportunity to respond; (ii) if Mr. Zaslav
commits any act or becomes involved in any situation or occurrence involving moral turpitude, which is materially damaging to the business or reputation of the Company; (iii) if Mr. Zaslav is convicted of, or pleads guilty or nolo contendere to, fails to defend against, or is indicted for a felony or a crime involving moral turpitude; or (iv) if Mr. Zaslav repeatedly or continuously refuses to perform his duties under the agreement or to follow the lawful directions of the Board (provided such directions do not include meeting any specific financial performance metrics).
If Mr. Zaslav’s employment is terminated by the Company without Cause, or if Mr. Zaslav terminates his employment for Good Reason, Mr. Zaslav shall be entitled to receive: (i) the Accrued Benefits; plus (ii) an amount equal to a fraction of the annual bonus Mr. Zaslav would have received for the calendar year of the termination (subject to the applicable performance metrics); (iii) an amount equal toone-twelfth (1/12) of the average annual base salary Mr. Zaslav was earning in the calendar year of the termination and the immediately preceding calendar year, multiplied by the applicable number of months in the “Severance Period” (as defined below), which amount shall be paid in substantially equal payments over the course of the Severance Period in accordance with the Company’s normal payroll practices during such period; plus (iv) an amount equal toone-twelfth (1/12) of the average annual bonus paid to Mr. Zaslav for the immediately preceding two years, multiplied by the number of months in the Severance Period, which amount shall be paid in substantially equal payments over the course of the Severance Period in accordance with the Company’s normal payroll practices during such period; plus (v) accelerated vesting and payment of Mr. Zaslav’s granted but unvestedCS-SARs and Special SARs, withone-half valued as of the date of termination or resignation and the remaining half valued as of the remaining applicable scheduled payment dates; plus (vi) Mr. Zaslav and his dependents may elect to (1) continue to receive coverage under the Company’s group health benefits plan to the extent permitted by, and under the terms of, such plan and to the extent such benefits continue to be provided to the former executives of the Company generally, or (2) receive COBRA continuation of the group health benefits previously provided to Mr. Zaslav and his family. The Severance Period shall be a period of 24 months commencing on the termination of Mr. Zaslav’s employment.
If Mr. Zaslav’s employment is terminated by Mr. Zaslav for Good Reason or by the Company other than for Cause, Mr. Zaslav shall continue to earn each of the outstanding PRSUs, if and to the extent the performance metrics are satisfied during the applicable performance period, based upon actual performance through the end of the applicable performance period, as certified by the Compensation Committee, as if Mr. Zaslav’s employment had not terminated. If such termination is prior to the grant date for a tranche, then there will be no grant of such tranche (and no PRSUs for such tranche may be earned), provided further that if such termination is prior to the grant date for: (i) the 2018 tranche of PRSUs (but after the grant date for the 2017 tranche of New PRSUs), then the Company shall pay Mr. Zaslav as additional severance benefits $15,000,000, to be paid to Mr. Zaslav during the first 90 days of 2018 (any such payments subject to the applicable withholding).
If Mr. Zaslav’s employment is terminated by Mr. Zaslav for Good Reason or by the Company other than for Cause prior to Mr. Zaslav receiving all of the replenishment awards associated with the 2014 Special SAR award (such awards to be received in 2015, 2016, 2017 and 2018), such future Special SAR awards will not be issued (“Ungranted SARs”); however, on each date in the future when Mr. Zaslav would have received a payment in settlement of such Ungranted SAR (had such Ungranted SARs in fact been granted), the Company shall pay to Mr. Zaslav a cash payment equal in amount to the payment Mr. Zaslav would have received had he continued to receive such Ungranted SARs, with such amount payable at the same time as Mr. Zaslav would have received payments under such Ungranted SARs, as if Mr. Zaslav’s employment had not terminated (“Phantom Equity”). In the event the Company does not have any publicly traded stock, or as a result of a Change in Control the publicly traded stock price does not (in the reasonable determination of the Board) accurately reflect the value of the business managed by Mr. Zaslav, then the “strike price” and “appreciated value on exercise” of such Phantom Equity shall be determined assuming a seven percent (7%) annual rate of growth (compounded annually), commencing from the date ten days prior the last business day the Company had publicly traded stock, or the date ten days prior to such Change in Control (as a result of which the Board determined the publicly traded
stock price does not accurately reflect the value of the business managed by Mr. Zaslav), as applicable, in each case with such value determined using the average closing price on the ten days preceding and including such date and the ten days following such date.
In the event of the termination of Mr. Zaslav’s employment upon the expiration of the 2014 Zaslav Agreement on December 31, 2019, (i) the Company shall pay to Mr. Zaslav the Accrued Benefits defined above; plus (ii) Mr. Zaslav and his dependents may elect to (1) continue to receive coverage under the Company’s group health benefits plan to the extent permitted by, and under the terms of, such plan and to the extent such benefits continue to be provided to the former executives of the Company generally, or (2) receive COBRA continuation of the group health benefits previously provided to Mr. Zaslav and his family; plus (iii) the Special SARs pursuant to the terms of their award agreements, valued and paid as of the remaining applicable scheduled payment dates; plus (iv) the Company shall pay to Mr. Zaslav an amount equal to two times the sum of (1) the average annualized base salary Mr. Zaslav was earning in the calendar year of the termination and the immediately preceding calendar year, plus (2) the average of the annual bonus paid to Mr. Zaslav for the immediately preceding two years, which amount shall be paid in substantially equal payments over the course of the 24 months immediately following his separation from service after the expiration of the agreement, in accordance with the Company’s normal payroll practices during such period. Mr. Zaslav shall continue to earn each of the outstanding PRSUs, if and to the extent the performance metrics are satisfied during the applicable performance period, based upon actual performance through the end of the applicable performance period, as certified by the Compensation Committee, as if Mr. Zaslav’s employment had not terminated. If he remains employed after December 31, 2019 but his employment ends thereafter for a reason other than Cause, death, or disability, he will be treated as continuing in employment for purposes of the payment of the Special SARs.
If Mr. Zaslav remains employed by the Company (or its successor) for 12 months following a Change in Control or is terminated other than for Cause or for Good Reason, then the outstanding PRSUs (for which the performance period has not expired) and the unvestedCS-SARs and Special SARs will become fully vested as of the first anniversary of the Change in Control (or earlier date of termination or resignation). In the event Mr. Zaslav’s employment is terminated (i) other than for Cause or for Good Reason within 13 months following a Change in Control, or (ii) voluntarily by Mr. Zaslav within the 30 calendar days commencing on the first anniversary of a Change in Control, then Mr. Zaslav shall be treated as if his employment was terminated without Cause or for Good Reason except that the Severance Period shall be the lesser of: (1) 36 months; or (2) the number of full calendar months remaining until the expiration of the term of the agreement; provided that in no event shall the Severance Period be less than 24 months. A “Change in Control” shall mean (A) the merger, consolidation or reorganization of the Company with any other company (or the issuance by the Company of its 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, provided that either (i) Advance/Newhouse Programming Partnership (individually and with its affiliates) continues to be entitled to exercise its special class voting rights described in Article IV, Section C 5(c) of the Company’s Certificate of Incorporation (as in effect on the date hereof) or the equivalent thereof (the “PreferredA-1 Blocking Rights”) and Robert Miron or Steven Miron is a member of the surviving company’s board (or Steven Newhouse has board observation rights), or (ii) John C. Malone (individually and with his respective affiliates) or his heirs shall beneficially own or control, directly or indirectly, more than 20% of the voting power represented by the outstanding voting securities (as defined in the Company’s Certificate of Incorporation) of the Company (such that Mr. Malone or his heirs effectively may block any action requiring a supermajority vote under Article VII of Company’s Certificate of Incorporation as in effect on the date hereof) or the equivalent thereof (the “Common B Blocking Rights”); (B) 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, other than any such sale or disposition to an entity for which either (i) Advance/Newhouse Programming Partnership (individually and with its affiliates) continues to be entitled to
exercise its PreferredA-1 Blocking Rights and Robert Miron or Steven Miron is a member of the surviving company’s board (or Steven Newhouse has board observation rights) or (ii) Mr. Malone (individually and with his affiliates) or his heirs continues to be entitled to exercise his Common B Blocking Rights; or (C) any sale, transfer or issuance of voting securities of the Company (including any series of related transactions) as a result of which neither Advance/Newhouse Programming Partnership (individually and with its affiliates) continues to be entitled to exercise its PreferredA-1 Blocking Rights nor Mr. Malone (individually and with his affiliates) or his heirs continues to be entitled to exercise his Common B Blocking Rights. For more information regarding these payments, please see “—Potential Payments Upon Termination or Change in Control” below.
Pursuant to the 2014 Zaslav Agreement, Mr. Zaslav is subject to customary restrictive covenants, including those relating tonon-solicitation,non-interference,non-competition and confidentiality, during the term of the agreement and, depending on the circumstances of termination, for a period of up to two years thereafter.
Wiedenfels Employment Agreement
We entered into an employment agreement with Gunnar Wiedenfels, our Chief Financial Officer, on October 3, 2016, with a term commencing on April 1, 2017 through April 1, 2021 (the “Wiedenfels Employment Agreement”). Pursuant to this agreement, Mr. Wiedenfels is entitled to receive a base salary of $1,100,000, with future salary increases to be reviewed and decided in accordance with our standard practices and procedures starting in 2018. Mr. Wiedenfels is eligible to receive an annual performance bonus under the ICP, with his target bonus equal to 120% of his base salary. The agreement provides that Mr. Wiedenfels’ bonus for 2017 will be prorated based on the number of days of employment in 2017.
The Wiedenfels Employment Agreement provides that during the first 60 days of his employment, he would be recommended to be grantednon-qualified stock options with a target value of $1,250,000 and RSUs with a target value of $1,250,000 under the 2013 Incentive Plan. Accordingly, on May 22, 2017, Mr. Wiedenfels received a stock option award with respect to 160,001 shares and a RSU award consisting of 48,319 shares.
Mr. Wiedenfels is also eligible for benefits under the Company’s international permanent relocation policy for executives at his job level, for relocation of Mr. Wiedenfels and his immediate family from Germany to New York. The Wiedenfels Employment Agreement also provided that during the first 30 days of his employment, the Company would make aone-timesign-on bonus in the amount of $250,000, less required withholdings, which payment was made on April 11, 2017. Consistent with the Wiedenfels Employment Agreement, the Company made a special contribution, within his first 30 days of employment, to the Discovery Communications Supplemental Deferred Compensation Plan in the amount of $1,000,000 (the “Special SRP Contribution”), on April 26, 2017. The Special SRP Contribution will vest in four equal annual installments on the first four anniversaries of the commencement of Mr. Wiedenfels’ employment.
Mr. Wiedenfels’ employment may be terminated for “Cause,” as defined in the Wiedenfels Employment Agreement. If Mr. Wiedenfels’ employment is terminated for “Cause,” he will be entitled to receive only amounts or benefits that have been earned or vested at the time of his termination. The Company may also terminate Mr. Wiedenfels’ employment for “Cause” if we notify Mr. Wiedenfels in writing that Mr. Wiedenfels materially neglected his duties to the Company under the Wiedenfels Employment Agreement or has engaged in other conduct that constitutes a breach by Mr. Wiedenfels of that agreement and Mr. Wiedenfels fails to cure such breach during a30-day cure period following delivery of such notice.
Under the terms of the Wiedenfels Employment Agreement, he is entitled to severance if we terminate his employment other than for “Cause” or if he resigns for “Good Reason” (as defined in the agreement). The payment of Mr. Wiedenfels’ severance is conditioned on his execution of a release in our favor. For more information regarding these payments, please see “—Potential Payments Upon Termination or Change in Control” below.
Pursuant to his agreement, beginning in 2018, Mr. Wiedenfels will be considered for annual equity awards under the Company’s normal executive compensation processes and practices.
Campbell Employment Agreement
We initially employed Bruce L. Campbell, our Chief Development, Distribution and Legal Officer, under an employment agreement commencing on March 13, 2007, which was further amended in 2008, 2010 and on July 31, 2014. On August 8, 2014, we entered into a new employment agreement with Mr. Campbell, which replaced his prior employment agreements, as amended, with a term commencing August 1, 2014 through August 1, 2018 (the “Campbell 2014 Employment Agreement”). The Campbell 2014 Employment Agreement was subsequently amended on September 24, 2015 to provide and reflect an expansion of Mr. Campbell’s role and position in the Company.
The Campbell 2014 Employment Agreement specified that Mr. Campbell’s base salary would be $1,500,000 and his bonus target would be 130% of base salary, both effective August 1, 2014. The Campbell 2014 Employment Agreement provided that during the first 60 days of execution of the agreement, he would be recommended to be granted a PRSU award with a target value of $2 million under the 2013 Incentive Plan. The agreement provided that Mr. Campbell would be considered for future salary increases, and annual long-term incentive awards in accordance with our standard practices and procedures.
On February 9, 2018, the Campbell 2014 Employment Agreement was further amended (the “Campbell Second Amendment”) to extend the term to February 14, 2022 and, effective February 15, 2018, to increase Mr. Campbell’s base salary to $1,800,000 and increase Mr. Campbell’s bonus target to 150% of his base salary, with a blended target for 2018 based on 45 days at his previous target of 130% and the remainder of the year at the new target of 150%. In addition, under the Campbell Second Amendment, Mr. Campbell was recommended for an equity grant with a target value of $3 million as part of the Company’s regular annual equity grants, as well as for a contract renewal grant of RSUs with a target value of $3.75 million, which award will provide for vesting in three substantially equal installments beginning on the second anniversary of grant. Under the terms of the Campbell Second Amendment, Mr. Campbell was not eligible for a further base salary increase in the February 2018 base salary merit increase review cycle.
Mr. Campbell was considered in the normal course for an equity award in the 2017 Annual LTI Review and the Committee approved an award, as discussed in “Compensation Discussion and Analysis—Long-Term Incentive Compensation,” above.
Mr. Campbell’s employment may be terminated for “Cause,” as defined in the agreement. If Mr. Campbell’s employment is terminated for “Cause,” he will be entitled to receive only amounts or benefits that have been earned or vested at the time of his termination. The Company may also terminate Mr. Campbell’s employment for “Cause” if we notify Mr. Campbell in writing that Mr. Campbell has materially neglected his duties to the Company under the Campbell 2014 Employment Agreement or has engaged in other conduct that constitutes a breach by Mr. Campbell of that agreement and Mr. Campbell fails to cure such breach during a30-day cure period following delivery of such notice.
Under the Campbell 2014 Employment Agreement, Mr. Campbell is entitled to severance if we terminate his employment other than for “Cause” or if he resigns for “Good Reason” (as defined in the agreement). The payment of Mr. Campbell’s severance is conditioned on his execution of a release in our favor. In the event we provide notice to Mr. Campbell that we will not extend his employment for any applicable period, Mr. Campbell is entitled to certain payments. For more information regarding these payments, please see “—Potential Payments Upon Termination or Change in Control” below.
Perrette Employment Agreement
We initially employed Jean-Briac Perrette, President and Chief Executive Officer of our Discovery Networks International division, under an employment agreement commencing on October 17, 2011. We amended and restated his agreement effective January 14, 2014, with a term commencing on January 1, 2014 and continuing through December 31, 2016, pursuant to which Mr. Perrette was employed by the Company in the United States but was seconded to Discovery Corporate Services Limited (“DCSL”), a wholly owned subsidiary of the Company in the United Kingdom (“UK”), and assigned to work as an expatriate in London. We subsequently entered into an amended and restated agreement effective June 13, 2016, with a term commencing on June 13, 2016 and continuing through June 30, 2019 (the “Perrette 2016 Employment Agreement”). Under the terms of the Perrette 2016 Employment Agreement, Mr. Perrette is directly employed by DCSL in the UK as a local employee and his compensation is provided locally, in British pounds sterling.
The 2016 Perrette Employment Agreement, specified that Mr. Perrette’s base salary would be £1,175,000 and his bonus target would be 150% of his base salary. The Perrette 2016 Employment Agreement provided that Mr. Perrette would be considered for future salary increases, and for annual long-term incentive awards, in accordance with our standard practices and procedures.
The Perrette 2016 Employment Agreement provided that we would recommend an award of 100,000 PRSUs, based on financial metrics relative to the international business, established by the Compensation Committee in consultation with Mr. Perrette. His agreement also provided that we would recommend an award of PRSUs with a target value of $1,500,000, with the number of PRSUs based on the target value divided by the closing price of Company’s Series A common stock on the trading day immediately preceding the date of grant. Both awards were subject to approval by the Compensation Committee. The Committee approved both awards in June 2016 and provided that the PRSUs will vest 50% on February 26, 2019 and 50% on February 26, 2020 (in both cases assuming satisfaction of the applicable performance metrics and the other terms and conditions of the awards). Mr. Perrette will also be considered for future equity grants in accordance with the Company’s standard practices for awards to senior executives.
Mr. Perrette will be entitled to participate in and to receive any and all benefits generally available to executives at his level in accordance with the plans or arrangements applicable in the UK during the period of his employment in the UK and additionally such benefits as they may apply to US citizens working abroad. Under the Perrette 2014 Employment Agreement, Mr. Perrette was eligible for benefits under the Company’s Long Term International Assignment Policy based on his expatriate assignment. Upon localization in June 2016, Mr. Perrette was no longer eligible for these benefits, except as they are available to executives following localization, including ongoing tax preparation assistance and repatriation benefits in the event that Mr. Perrette’s employment is terminated without Cause (as defined in the agreement), DCSL determines not to renew the employment agreement, Mr. Perrette resigns for Good Reason (as defined in the agreement), or Mr. Perrette separates from employment with DCSL at the natural expiration of the agreement.
Mr. Perrette was considered in the normal course for an equity award in the 2017 Annual LTI Review and the Committee approved an award, as discussed in “Compensation Discussion and Analysis—Long-Term Incentive Compensation,” above.
Mr. Perrette’s employment may be terminated for “Cause.” If Mr. Perrette’s employment is terminated for “Cause,” he will be entitled to receive only amounts or benefits that have been earned or vested at the time of his termination. DCSL may also terminate Mr. Perrette’s employment for “Cause” if DCSL notifies Mr. Perrette in writing that Mr. Perrette has materially neglected his duties to DCSL under the Perrette 2016 Employment Agreement or has engaged in other conduct that constitutes a breach by Mr. Perrette of that agreement and Mr. Perrette fails to cure such breach during aten-day cure period following delivery of such notice.
Under the Perrette 2016 Employment Agreement, he is entitled to severance if we terminate his employment other than for “Cause” or if he resigns for “Good Reason” (as defined in the agreement). The payment of Mr. Perrette’s severance is conditioned on his execution of a release in our favor. In the event we provide notice to Mr. Perrette that we will not extend his employment for any applicable period, Mr. Perrette is entitled to certain payments. For more information regarding these payments, please see “—Potential Payments Upon Termination or Change in Control” below.
Guagliardo Employment Agreement
We entered into an employment agreement with Paul Guagliardo, our Chief Commercial Officer, on September 18, 2015, with a term commencing on October 5, 2015 and continuing through October 4, 2018 (the “Guagliardo Employment Agreement”). Pursuant to this agreement, Mr. Guagliardo’s base salary would be $1,400,000, with future salary increases to be reviewed and decided in accordance with our standard practices and procedures starting in 2017. The Guagliardo Employment Agreement specified that Mr. Guagliardo is eligible to receive an annual performance bonus under the ICP, with his target bonus equal to 115% of his base salary.
The Guagliardo Employment Agreement provided that during the first 30 days of his employment, he would be recommended to be grantednon-qualified stock options with a target value of $1 million and, within the first 90 days of 2016, a PRSU award with a target value of $1 million under the 2013 Incentive Plan. Accordingly, on October 13, 2015, Mr. Guagliardo received a stock option award with respect to 142,247 shares and, on February 26, 2016, a PRSU award consisting of 40,193 shares. Pursuant to his agreement, beginning in 2017, Mr. Guagliardo will be considered for annual equity awards under the Company’s normal executive compensation processes and practices.
Mr. Guagliardo’s employment with the Company terminated on December 31, 2017. On January 2, 2018, the Company and Mr. Guagliardo entered into an Agreement and General Release concerning Mr. Guagliardo’s separation from employment (the “Guagliardo Release”). Under the terms of the Guagliardo Release, in return for releasing the Company from any future claims regarding his employment, Mr. Guagliardo would be entitled to receive the severance set forth in the Guagliardo Employment Agreement (the “Guagliardo Severance”). The Guagliardo Severance provided that Mr. Guagliardo was entitled to receive his annual base salary for a period of twelve (12) months, payable in accordance with the Company’s standard payroll practices. In addition, the Guagliardo Severance provides that Mr. Guagliardo is further entitled to receive the prorated portion of his bonus under the Company’s incentive or bonus plan for 2017. For more information, please see “—Potential Payments Upon Termination or Change in Control” below.
Mr. Guagliardo was eligible for an equity award in the 2017 Annual LTI Review, as discussed in “Compensation Discussion and Analysis—Long-Term Incentive Compensation,” above.
Warren Employment Agreement
We initially employed Andrew Warren, our Chief Financial Officer, under an employment agreement with a term of three years commencing on March 26, 2012, which was further amended on June 1, 2012. On September 18, 2014, we entered into a new employment agreement with Mr. Warren, which replaced his prior employment agreement, as amended, with a term commencing September 1, 2014 through March 26, 2018 (the “Warren 2014 Employment Agreement”).
The Warren 2014 Employment Agreement specified that Mr. Warren’s base salary would be $1,175,000 and his bonus target would be 120% of base salary, both effective September 1, 2014. The 2014 Warren Employment Agreement provided that within 60 days of execution of the agreement, he would be recommended to be granted a PRSU award with a target value of $2 million under the 2013 Incentive Plan. The agreement further provided that Mr. Warren would be considered for future salary increases and annual long-term incentive awards in accordance with our standard practices and procedures.
Mr. Warren notified us that he was resigning from employment and agreed to remain with the Company until December 31, 2016. Therefore, on February 22, 2016, we amended the Warren 2014 Employment Agreement, to reflect his separation from employment with Company as of December 31, 2016 (the “Warren First Amendment”). On September 30, 2016, we entered into a second amendment (the “Warren Second Amendment”) to the Warren 2014 Employment Agreement. The Warren Second Amendment adjusted Mr. Warren’s separation date to February 28, 2017, increased Mr. Warren’s base salary to $1,210,250, with retroactive effect as of February 22, 2016, and eliminated the offset provisions of the Warren 2014 Employment Agreement regarding Mr. Warren’s severance payments from the Company. The Warren Second Amendment also provided that Mr. Warren would be eligible for his annual bonus with respect to 2016 performance, and that the amount of his bonus would be no less than the median of the 2016 annual bonus payouts for the Company’s other executive officers who directly report to the CEO. In addition, pursuant to the Warren Second Amendment, Mr. Warren would also be eligible for a prorated bonus for 2017. On January 19, 2017, we entered into a third amendment to the agreement (the “Warren Third Amendment”), to further extend Mr. Warren’s separation date to March 31, 2017. Under the Warren Third Amendment, Mr. Warren waived any entitlement to equity awards that otherwise would vest more than 90 days after the separation date. The Company agreed that an additional lump sum component of his severance, set forth in the 2014 Warren Employment Agreement and as further described below, would be paid at the same time his severance payments would commence.
Mr. Warren’s employment with the Company terminated on March 31, 2017. On March 31, 2017, the Company and Mr. Warren entered into an Agreement and General Release concerning Mr. Warren’s separation from employment (the “Warren Release”) Under the terms of Warren Release, in return for releasing the Company from any future claims regarding his employment, Mr. Warren would be entitled to receive the severance set forth in the 2014 Warren Employment Agreement, amended by the Warren First Amendment, Warren Second Amendment, and Warren Third Amendment (the “Warren Severance”). The Warren Severance provided that Mr. Warren was entitled to receive his annual base salary for a period of one year, payable in accordance with the Company’s standard payroll practices. In addition, the Warren Severance provides that Mr. Warren is further entitled to receive the prorated portion of his 2017 bonus, payable on the date the Company pays its bonus/incentive payments to its other senior executives, and is also entitled to receive an additional severance payment equal to his unprorated 2017 bonus at the target amount equal to 120% of his base salary. The additional severance payment shall be paid in a lump sum when Mr. Warren begins to receive his severance payments. For more information, please see “—Potential Payments Upon Termination of Change in Control,” below.
Potential Payments Uponupon Termination or Change in Control
The following summarizestables 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. AmountsSimilarly, amounts that could be recognized under equity awards that were vested as of December 31, 2017 also2021 are not included below, as the treatment of the vested awards for our NEOs is identical forto 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, 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. Defined terms such as “cause,” “good reason,” and “change of control” used in this section are described under “—Definitions”“Defined Terms Used in this Section” below. The quantitative examples provided below are premised on: the applicable NEO ceasing to be employed by Discovery as of December 31, 2017;
for stock option awards, the value shown in the table is calculated on atables below assume:
● | the applicable NEO ceased to be employed by Discovery as of December 31, 2021; | ● | 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 the closing price of our respective series of common stock on December 31, 2021, the last trading day of the year; | | ● | The closing price of our Series A common stock on December 31, 2021 was $23.54; | | ● | The closing price of our Series C common stock on December 31, 2020 was $22.90; | ● | 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 the closing price of our respective series of common stock on December 31, 2021, the last trading day of the year; | | ● | The closing price of our Series A common stock on December 31, 2021 was $23.54; | | ● | The closing price of our Series C common stock on December 31, 2021 was $22.90; | ● | for SAR awards, the value shown in the table is calculated on a grant-by-grant basis by multiplying the number of unvested SAR units granted by the difference between the measurement price and the average price of the respective series of common stock on the ten days preceding and including December 31, 2021, and the ten trading days thereafter; | | ● | The average price of our Series A common stock on the ten trading days preceding and including December 31, 2021, and the ten trading days thereafter was $25.96; | | ● | The average price of our Series C common stock on the ten trading days preceding and including December 31, 2021, and the ten trading days thereafter was $25.17; | ● | no NEO met the definition of “retirement” in the applicable agreements and plans as of December 31, 2021; | ● | all accrued salary at that assumed termination date having previously been paid; and | ● | all accrued vacation for 2021 having been used. |
62 Discovery
Table of unvested options granted by the difference between the exercise price for such option and the closing price of our respective series of common stock on December 29, 2017, the last trading day of the year; The closing price of our Series A common stock on December 29, 2017 was $22.38;
The closing price of our Series C common stock on December 29, 2017 was $21.17;
ContentsExecutive Compensationfor PRSU/RSU awards, the value shown in the table is calculated on agrant-by-grant basis by multiplying the number of unvested PRSUs/RSUs granted by the closing price of our respective series of common stock on December 29, 2017, the last trading day of the year;
The closing price of our Series A common stock on December 29, 2017 was $22.38;
The closing price of our Series C common stock on December 29, 2017 was $21.17;
for SAR awards, the value shown in the table is calculated on agrant-by-grant basis by multiplying the number of unvested SAR units granted by the difference between the measurement price and the average price of the respective series of common stock on the ten days preceding and including December 29, 2017, and the ten trading days thereafter;
The average price of our Series A common stock on the ten trading days preceding and including December 29, 2017, and the ten trading days thereafter was $22.76;
The average price of our Series C common stock on the ten trading days preceding and including December 29, 2017, and the ten trading days thereafter was $21.52;
for Phantom Equity for Ungranted SARs, we applied an assumed 7% stock price growth rate to:
The average price of our Series A common stock on the ten trading days preceding and including December 29, 2017, and the ten trading days thereafter was $22.76;
The average price of our Series C common stock on the ten trading days preceding and including December 29, 2017, and the ten trading days thereafter was $21.52;
each NEO not meeting the definition of “retirement” in the applicable agreements and plans as of December 29, 2017;
all accrued salary at that assumed termination date having previously been paid; and
all accrued vacation for 2017 having been used.
David M. Zaslav By Discovery Other than for Death, Disability or Cause; By Mr. Zaslav for Good Reason. If Mr. Zaslav’s employment is terminated by Discovery other than for death, disability or “cause” as defined in his employment agreement or by Mr. Zaslav for “good reason,” Mr. Zaslav’s employment agreement entitles him to receive payments for the following:
(1) all accrued and unpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans;
(2) a prorated portion of Mr. Zaslav’s annual bonus, based on the portion of the calendar year during which Mr. Zaslav was employed, payable during the first quarter of the following year, in the ordinary course of our bonus payments and subject to achievement of the applicable performance metric;
(3) an amount equal toone-twelfth the average of Mr. Zaslav’s annualized base salary that Mr. Zaslav was earning in the calendar year of the termination and the immediately preceding calendar year, multiplied by the applicable number of months in the severance period, plusone-twelfth of the average of the annual bonus paid to Mr. Zaslav for the immediately preceding two years, multiplied by the number of months in the severance period, as defined below, payable over the course of the severance period consistent with our normal payroll practices;
(4) accelerated vesting and payment for all of his granted but unvested SARs;
(5) accelerated vesting for all of his outstanding PRSU awards, with the amount earned based on achievement of the performance metrics during the applicable performance period and the awards distributed as if Mr. Zaslav remained employed;
(6) if the separation occurs before the grant date for the 2018 award of PRSUs contemplated by the agreement, an additional cash severance benefit. If Mr. Zaslav had separated from the Company on December 31, 2017, the additional cash severance benefit would have been $15 million;
(7) if the separation occurs before all of the replenishment awards of SARs contemplated by the agreement have been made, a cash payment equivalent to the amount Mr. Zaslav would have received had he continued to receive the ungranted SARs contemplated by the agreement, payable at the same time that he would have received the payments under the SARs had Mr. Zaslav not separated employment; and
(8) the payment of COBRA premiums for the continuation of health insurance benefits under our group health plan to Mr. Zaslav and his family until the expiration of the severance period (or the earlier eligibility of such persons for coverage by a subsequent employer of Mr. Zaslav or when COBRA rights otherwise expire).
The severance period applicable to a December 31, 2017 termination was 24 months. Under Mr. Zaslav’s employment agreement, the severance period for a termination without cause or termination by Mr. Zaslav for “good reason” within 12 months following a change in control of Discovery would be the lesser of 36 months or the number of full calendar months remaining in the term of the agreement (which currently extends to December 31, 2019). In addition, Mr. Zaslav has the right to reduce his severance period to 12 months and to forego all SAR and PRSU payments that would be paid more than one year after separation in all events in exchange for a reduction in the period of hisnon-competition covenant to one year from termination.
By Reason of Death or Disability. Mr. Zaslav’s employment agreement provides for the payment of the following amounts upon termination of his employment by reason of his death or disability:
(1) all accrued and unpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans;
(2) a prorated portion of Mr. Zaslav’s then-current annual bonus, based on the portion of the calendar year during which Mr. Zaslav was employed by us, payable during the first quarter of the following year, in the ordinary course of our bonus payments;
(3) payment for his SAR awards, in a lump sum, in accordance with the terms of the applicable plans (which provide for acceleration of vesting in such event);
(4) accelerated vesting of his PRSU awards, prorated based on the number of full or partial years completed for the applicable performance period; and
(5) the payment of COBRA premiums for the continuation of health insurance benefits under our group health plan to Mr. Zaslav, if applicable, and his family for so long as they remain eligible to receive COBRA benefits.
As a condition of receiving the severance benefits described above (other than in the event of his death), Mr. Zaslav would be required to sign a general release in our favor.
By Discovery for Cause; By Mr. Zaslav Other than for Good Reason. If Mr. Zaslav’s employment is terminated by us for “cause” or by Mr. Zaslav other than for “good reason” (in each case, as defined in his employment agreement), his employment agreement entitles him to receive all accrued and unpaid salary, accrued and unpaid annual bonus for any completed year and accrued and unused vacation, in each case in a lump sum, and other vested benefits under our welfare and benefit plans. If such termination was effected by us for “cause,” or by Mr. Zaslav other than for “good reason” (except within 30 days after the first anniversary of a change of control, as described below) Mr. Zaslav forfeits all rights under his SAR, and PRSU awards (regardless of whether all or any portion of the award is then vested or unvested).
By Mr. Zaslav Upon Change in Control. If Mr. Zaslav remains employed by the Company (or its successor) for twelve (12) months following a “change in control,” then the outstanding PRSUs (for which the performance period has not expired) and the granted and unvested SARs will become fully vested as of the first anniversary of the “change in control” and the PRSUs shall be earned regardless of actual performance. If Mr. Zaslav resigns with or without “good reason” within 30 days after the first anniversary of a change in control of the Company, his employment agreement provides that he will be treated as if his employment were terminated by the Company other than for death, disability or “cause” as defined in his employment agreement or by Mr. Zaslav for “good reason,” except that the severance period would be the lesser of 36 months or the number of full calendar months remaining in the term of the agreement (which currently terminates to December 31, 2019).
The following table below summarizes the potential benefits that would have been paid to Mr. Zaslav had his employment been terminated under any of the circumstances described abovenoted as of December 31, 2017:2021. Please see “NEO Employment Agreements—CEO Employment Agreement” beginning on page 37 of the CD&A for a detailed discussion of the various termination scenarios reported in the table below. Benefits and Payments Upon Termination | | Voluntary Termination ($) | | Death ($) | | Disability ($) | | Involuntary Termination Without Cause ($) | | Voluntary for Good Reason ($) | | Voluntary Within 30 Days after 31st Day Following Change in Control ($) | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | | Involuntary Termination for Cause ($) | Compensation: | | | | | | | | | | | | | | | | | Base Salary | | 0 | | 0 | | 0 | | 6,000,000 | | 6,000,000 | | 6,000,000 | | 6,000,000 | | 0 | Bonus | | 22,000,000 | | 22,000,000 | | 22,000,000 | | 46,000000 | | 46,000000 | | 46,000000 | | 46,000000 | | 0 | Equity: | | | | | | | | | | | | | | | | | SARs | | 0 | | 2,921,857 | | 2,921,857 | | 2,921,857 | | 2,921,857 | | 2,921,857 | | 2,921,857 | | 0 | Stock Options | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | PRSU | | 0 | | 20,380,108 | | 20,380,108 | | 20,380,108 | | 20,380,108 | | 20,380,108 | | 20,380,108 | | 0 | Benefits: | | | | | | | | | | | | | | | | | COBRA premiums | | 0 | | 28,835 | | 46,457 | | 28,835 | | 28,835 | | 28,835 | | 28,835 | | 0 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments Upon Termination | | Voluntary Termination or Involuntary Termination for Cause ($) | | | Death ($) | | | Disability ($) | | | Involuntary Termination Without Cause ($) | | | Voluntary for Good Reason ($) | | | Voluntary Within 30 Days after First Anniversary of Change in Control ($) | | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | 0 | | | | 0 | | | | 0 | | | | 6,000,000 | | | | 6,000,000 | | | | 6,000,000 | | | | 6,000,000 | | Bonus | | | 8,400,000 | | | | 8,400,000 | | | | 8,400,000 | | | | 23,769,680 | | | | 23,769,680 | | | | 23,769,680 | | | | 23,769,680 | | | | | | | | | | Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CS-SARs | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Special SARs | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Phantom Equity for Ungranted SARS | | | 0 | | | | 0 | | | | 0 | | | | 5,622,687 | | | | 5,622,687 | | | | 5,622,687 | | | | 5,622,687 | | PRSU | | | 0 | | | | 45,331,889 | | | | 45,331,889 | | | | 57,413,330 | | | | 57,413,330 | | | | 57,413,330 | | | | 57,413,330 | | Cash Payment for Ungranted PRSUs | | | 0 | | | | 0 | | | | 0 | | | | 15,000,000 | | | | 15,000,000 | | | | 15,000,000 | | | | 15,000,000 | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COBRA premiums | | | 0 | | | | 38,896 | | | | 62,666 | | | | 38,896 | | | | 38,896 | | | | 38,896 | | | | 38,896 | |
Gunnar Wiedenfels The following table summarizes the potential benefits that would have been paid to Mr. Wiedenfels had his employment terminated under any of the circumstances noted as of December 31, 2021. Please see the narrative disclosure immediately below the table for a detailed discussion of the various termination scenarios reported in the table below. Benefits and Payments Upon Termination | | Voluntary Termination ($) | | Death ($) | | Disability ($) | | Involuntary Termination Without Cause ($) | | Voluntary Termination for Good Reason ($) | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | | Involuntary Termination for Cause ($) | Compensation: | | | | | | | | | | | | | | | Base Salary | | (850,000 | ) | 0 | | 0 | | 3,825,000 | | 3,825,000 | | 3,825,000 | | 0 | Bonus | | 3,032,970 | | 3,032,970 | | 3,032,970 | | 3,032,970 | | 3,032,970 | | 3,032,970 | | 0 | Equity: | | | | | | | | | | | | | | | Stock Options | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | RSU | | 0 | | 4,006,390 | | 4,006,390 | | 1,737,040 | | 0 | | 4,006,390 | | 0 | Benefits: | | | | | | | | | | | | | | | COBRA premiums | | 0 | | 0 | | 67,369 | | 41,815 | | 41,815 | | 41,815 | | 0 | Repatriation | | 0 | | 174,000 | | 174,000 | | 174,000 | | 174,000 | | 174,000 | | 0 |
By Discovery Other than for Death, Disability or Cause; By Mr. Wiedenfels for Good ReasonReason.. If Mr. Wiedenfels’ employment ishad been terminated by us other than for death, disability or “cause”“Cause” as defined in hisMr. Wiedenfels’ employment agreement and set forth on page 64 below, including termination by reason of ournon-renewal of his employment agreement without offering him a Qualifying Renewal Offer and his subsequent separation, or by Mr. Wiedenfels for “good reason,“Good Reason,” Mr. Wiedenfels’ employment agreement entitles him to receive payments for the following: (1) all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans;
(2) current salary for the longest of the balance of the term of the employment agreement, one year, or the length of time for which Mr. Wiedenfels would otherwise be eligiblefollowing (subject to receive severance payments under the Company’s severance plan then in effect;
(3) payment of Mr. Wiedenfels’ full, unprorated bonus under the Company’s bonus or incentive plan for the year in which the termination occurs, payable the following year, in the ordinary course of our bonus payments and subjectobligations to achievement of the applicable performance metric;
(4) reimbursement for up to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, provided that ifmitigate the severance period is longer than 18 months, Mr. Wiedenfels would be eligible to receive at the endand offset by compensation earned post- employment):
(1) | all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans; |
2022 Proxy Statement 63
Table of the18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period;Contents (5) the fully vested Special SRP Contribution conditioned on the execution of a release within the60-calendar day period following the date of Mr. Wiedenfels separation from service, with such release on the last day of the60-day period; andExecutive Compensation
(6) repatriation benefits to return Mr. Wiedenfels and his family to Germany, as those benefits would be if Mr. Wiedenfels were separating during an expatriate assignment from Germany to the United States.
(2) | current salary for the longest of the balance of the term of the employment agreement, one year, or the length of time for which Mr. Wiedenfels would otherwise be eligible to receive severance payments under our severance plan then in effect; | (3) | payment of Mr. Wiedenfels’ full, unprorated bonus under our bonus or incentive plan for the year in which the termination occurs, payable the following year, in the ordinary course of our bonus payments and subject to achievement of the applicable performance metric, but capped for Company and division performance at 100%; | (4) | reimbursement for up to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law, provided that if the severance period is longer than 18 months, Mr. Wiedenfels would be eligible to receive at the end of the 18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period; | (5) | the fully vested Wiedenfels SRP Contribution conditioned on the execution and effectiveness of a release within the 60-calendar day period following the date of Mr. Wiedenfels separation from service; and | (6) | repatriation benefits to return Mr. Wiedenfels and his family to Germany, as those benefits would be if Mr. Wiedenfels were separating during an expatriate assignment from Germany to the United States. |
The term of his employment agreement ends April 1, 20212024 and may be renewed by the parties for an additional term. If the Company doeswe do not elect to negotiate to renew the agreement, Mr. Wiedenfels would be entitled to the severance benefits described above at the end of his original employment term. Further, if the Company offerswe offer to renew the agreement with a Qualifying Renewal Offer, but the parties are unable to agree on final terms, and Mr. Wiedenfels terminates his employment at the end of his employment term, Mr. Wiedenfels will be eligible for a noncompetition payment consisting of an amount equal to 50% of his annual base salary for one year following the conclusion of his employment. Notwithstanding the foregoing, in the event Mr. Wiedenfels’ employment is terminated by us not for “cause” and we have a standard severance policy at the time of termination which would provide Mr. Wiedenfels with a sum greater than these arrangements, Mr. Wiedenfels will be entitled to such greater sum. As a condition to receiving the severance payments described above, Mr. Wiedenfels would be required to sign a general release and, if such termination occurs during the original employment term, comply with the restrictive covenants in his employment agreement. By Discovery for Cause; By Mr. Wiedenfels Other than for Good Reason. If Mr. Wiedenfels’ employment is terminated by us for “cause”“Cause” or by Mr. Wiedenfels other than for “good reason” (including retirement) (as defined in his employment agreement)“Good Reason”, his employment agreement entitles him to receive only those amounts or benefits that have been earned or vested at the time of the termination in accordance with our applicable plans and programs. This generally would include accrued and unpaid salary and accrued and unused vacation, in each case in a lump sum, and any other vested benefits under our welfare and benefit plans. If Mr. Wiedenfels resigns other than for “Good Reason” before the end of his term, he will be required to pay us six-months’ gross salary; we remain eligible to obtain further damages and injunctive relief. By Reason of Death or Disability. Mr. Wiedenfels’ employment agreement provides for the payment of the following amounts upon termination of his employment by reason of his death or disability: (1) | any amounts payable in accordance with the applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, a prorated portion of Mr. Wiedenfels’ then-current annual bonus target for the calendar year in which the death or disability occurred, and other vested benefits under our welfare and benefit plans; and | (2) | in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to our executives generally, until Mr. Wiedenfels is no longer disabled or reaches age 65, whichever occurs first, and payment, in a lump sum, of an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the employment term, should Mr. Wiedenfels be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law. |
64 Discovery
(1) any amounts payable in accordance with the Company’s applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, a prorated portionTable of Mr. Wiedenfels’ then-current annual bonus target for the calendar year in which the death or disability occurred, and other vested benefits under the Company’s welfare and benefit plans; andContents
(2) in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to the Company’s executives generally, until Mr. Wiedenfels is no longer disabled or reaches age 65, whichever occurs first, and payment, in a lump sum, of an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the employment term, should Mr. Wiedenfels be eligible for and elect COBRA benefits.
Executive CompensationBruce L. CampbellThe following table summarizes the potential benefits that would have been paid to Mr. WiedenfelsCampbell had his employment terminated under any of the circumstances described abovenoted as of December 31, 2017:2021. Please see the narrative disclosure immediately below the table for a detailed discussion of the various termination scenarios reported in the table below. Benefits and Payments Upon Termination | | 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 ($) | | Involuntary Termination for Cause ($) | Compensation: | | | | | | | | | | | | | | | Base Salary | | (973,906 | ) | 0 | | 0 | | 1,947,812 | | 1,947,812 | | 1,947,812 | | 0 | Bonus | | 3,440,558 | | 3,440,558 | | 3,440,558 | | 3,440,558 | | 3,440,558 | | 3,440,558 | | 0 | Equity: | | | | | | | | | | | | | | | Stock Options | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | RSU | | 0 | | 5,015,527 | | 5,015,527 | | 2,883,603 | | 0 | | 5,015,527 | | 0 | Benefits: | | | | | | | | | | | | | | | COBRA premiums | | 0 | | 0 | | 67,369 | | 41,815 | | 41,815 | | 41,815 | | 0 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments Upon Termination | | Voluntary Termination ($) | | | Death ($) | | | Disability ($) | | | Involuntary Termination Without Cause ($) | | | Voluntary Termination for Good Reason ($) | | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | | | Involuntary Termination for Cause ($) | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | (414,384 | ) | | | 0 | | | | 0 | | | | 3,666,667 | | | | 3,666,667 | | | | 3,666,667 | | | | 0 | | Bonus | | | 994,520 | | | | 994,520 | | | | 994,520 | | | | 994,520 | | | | 994,520 | | | | 994,520 | | | | 994,520 | | | | | | | | | | Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | RSU | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | PRSU | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 1,081,379 | | | | 0 | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COBRA premiums | | | 0 | | | | 0 | | | | 86,919 | | | | 86,919 | | | | 86,919 | | | | 86,919 | | | | 0 | | Repatriation | | | 0 | | | | 0 | | | | 0 | | | | 176,000 | | | | 0 | | | | 176,000 | | | | 0 | | Relocation Repayment | | | (169,722 | ) | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | (169,722 | ) |
Bruce L. Campbell
By Discovery Other than for Death, Disability or Cause; By Mr. Campbell for Good Reason. If Mr. Campbell’s employment ishad been terminated by us other than for death, disability or “cause”“Cause” as defined in hisMr. Campbell’s employment agreement and set forth on page 65 below, including termination by reason of ournon-renewal of his employment agreement without offering him a Qualifying Renewal Offer and his subsequent separation, or by Mr. Campbell for “good reason,“Good Reason,” Mr. Campbell’s employment agreement entitleswould have entitled him to receive payments for the following: (1) all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans;
(2) current salary for the longest of the balance of the term of the employment agreement, one year, or the length of time for which Mr. Campbell would otherwise be eligiblefollowing (subject to receive severance payments under the Company’s severance plan then in effect;
(3) payment of Mr. Campbell’s full, unprorated bonus under the Company’s bonus or incentive plan for the year in which the termination occurs, payable the following year, in the ordinary course of our bonus payments; and
(4) reimbursement for upobligations to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, provided that ifmitigate the severance period is longer than 18 months, Mr. Campbell would be eligible to receive at the end of the18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period.and offset by compensation earned post- employment):
(1) | all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans; | (2) | current salary for the longest of the balance of the term of the employment agreement, one year, or the length of time for which Mr. Campbell would otherwise be eligible to receive severance payments under our severance plan then in effect; | (3) | payment of Mr. Campbell’s full, unprorated bonus under our bonus or incentive plan for the year in which the termination occurs, payable the following year, in the ordinary course of our bonus payments but capped for Company and division performance at 100%; and | (4) | reimbursement for up to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law, provided that if the severance period is longer than 18 months, Mr. Campbell would be eligible to receive at the end of the 18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period. |
The term of his employment agreement ends August 1, 2018,ended on February 14, 2022, and may be renewed byexpired in accordance with the parties for an additional term. Ifterms of the Company does not elect to negotiate to renewagreement. Without a Qualifying Renewal Offer at the expiration of this employment agreement, Mr. Campbell would behave been entitled to the severance benefits described above at the end of his original employment term.term if he had separated from the Company. Further, if the Company offerswe had offered to renew the agreement, but the parties arewere unable to agree on final terms, and Mr. Campbell terminateshad terminated his employment at the end of his employment term, Mr. Campbell will bewould have been eligible for a noncompetition payment consisting of an amount equal to 50% of his annual base salary for one year following the conclusion of his employment. Notwithstanding the foregoing, if Mr. Campbell’s employment had been terminated by us not for “Cause” or by Mr. Campbell for “Good Reason,” and we had in place a standard severance policy at the time of termination which would have provided Mr. Campbell with a higher sum than these arrangements, Mr. Campbell would have been entitled to such higher sum. As a condition to receiving the severance payments described above, Mr. Campbell would have been required to sign a general release and, if such termination had occurred during the employment term, comply with the restrictive covenants in his employment agreement.By Discovery for Cause; By Mr. Campbell Other than for Good Reason. If Mr. Campbell’s employment had been terminated by us for “Cause” or by Mr. Campbell other than for “Good Reason”, his employment agreement entitled him to receive only those amounts or benefits that had been earned or vested at the time of the termination in accordance with our applicable plans and programs. This generally would include accrued and unpaid salary and accrued and unused vacation, in each case in a lump sum, and any other vested benefits under our welfare and benefit plans. If Mr. Campbell had resigned other than for “Good Reason” before the end of his term, he would have been be required to pay us six-months’ gross salary; and we would have remained eligible to obtain further damages and injunctive relief. 2022 Proxy Statement65
Table of Contents Executive Compensation By Reason of Death or Disability. Mr. Campbell’s employment agreement provided for the payment of the following amounts upon termination of his employment by reason of his death or disability: (1) | any amounts payable in accordance with the applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, a prorated portion of Mr. Campbell’s then-current annual bonus target for the calendar year in which the death or disability occurred, and other vested benefits under our welfare and benefit plans; and | (2) | in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to our executives generally, until Mr. Campbell is no longer disabled or reaches age 65, whichever occurs first, and payment, in a lump sum, of an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the employment term, should Mr. Campbell be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law. |
David Leavy The following table summarizes the potential benefits that would have been paid to Mr. Leavy had his employment terminated under any of the circumstances noted as of December 31, 2021. Please see the narrative disclosure immediately below the table for a detailed discussion of the various termination scenarios reported in the table below. Benefits and Payments Upon Termination | | 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 ($) | | Involuntary Termination for Cause ($) | Compensation: | | | | | | | | | | | | | | | Base Salary | | (663,000 | ) | 0 | | 0 | | 1,547,000 | | 1,547,000 | | 1,547,000 | | 0 | Bonus | | 1,795,692 | | 1,795,692 | | 1,795,692 | | 1,795,692 | | 1,795,692 | | 1,795,692 | | 0 | Equity: | | | | | | | | | | | | | | | Stock Options | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | RSU | | 0 | | 1,862,885 | | 1,862,885 | | 738,261 | | 0 | | 1,862,885 | | 0 | Benefits: | | | | | | | | | | | | | | | COBRA premiums | | 0 | | 0 | | 65,201 | | 40,470 | | 40,470 | | 40,470 | | 0 |
By Discovery Other than for Death, Disability or Cause; By Mr. Leavy for Good Reason. If Mr. Leavy’s employment is terminated by us other than for death, disability or “Cause” as defined in Mr. Leavy’s employment agreement and set forth below on page 67, including termination by reason of our non-renewal of his employment agreement, or by Mr. Leavy for “Good Reason,” Mr. Leavy’s employment agreement entitles him to receive payments for the following (subject to obligations to mitigate the severance and to offset by compensation earned post-employment): (1) | all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans; | (2) | current salary for the longest of the balance of the term of the employment agreement, 26 weeks, or the length of time for which Mr. Leavy would otherwise be eligible to receive severance payments under our severance plan then in effect; | (3) | payment of Mr. Leavy’s full, unprorated bonus under our bonus or incentive plan for the year in which the termination occurs, payable the following year, in the ordinary course of our bonus payments; and | (4) | reimbursement for up to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law, provided that if the severance period is longer than 18 months, Mr. Leavy would be eligible to receive at the end of the 18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period. |
The term of his employment agreement ends March 1, 2023 and may be renewed by the parties for an additional term. If we do not elect to negotiate to renew the agreement, Mr. Leavy would be entitled to the severance benefits described above at the end of his employment term. Further, if we offer to renew the agreement, but the parties are unable to agree on final terms, and Mr. Leavy terminates his employment at the end of his employment term, Mr. Leavy will be eligible for a noncompetition payment consisting of an amount equal to 50% of his annual base salary for six months following the conclusion of his employment. 66 Discovery
Table of Contents Executive Compensation Notwithstanding the foregoing, in the event Mr. Campbell’sLeavy’s employment is terminated by us not for “cause”“Cause” or by Mr. CampbellLeavy for “good reason,“Good Reason,” and we have a standard severance policy at the time of termination which would provide Mr. CampbellLeavy with a higher sum than these arrangements, Mr. CampbellLeavy will be entitled to such higher sum. As a condition to receiving the severance payments described above, Mr. CampbellLeavy would be required to sign a general release and, if such termination occurs during the original employment term, comply with the restrictive covenants in his employment agreement. By Discovery for Cause; By Mr. Campbell Leavy Other than for Good Reason. If Mr. Campbell’sLeavy’s employment is terminated by us for “cause”“Cause” or by Mr. CampbellLeavy other than for “good reason” (including retirement) (in each case, as defined in his employment agreement)“Good Reason”, his employment agreement entitles him to receive only those amounts or benefits that have been earned or vested at the time of the termination in accordance with our applicable plans and programs. This generally would include accrued and unpaid salary and accrued and unused vacation, in each case in a lump sum, and any other vested benefits under our welfare and benefit plans. If Mr. Leavy resigns other than for “Good Reason” before the end of his term, he will be required to pay us six-months’ gross salary; we remain eligible to obtain further damages and injunctive relief. By Reason of Death or Disability. Mr. Campbell’sLeavy’s employment agreement provides for the payment of the following amounts upon termination of his employment by reason of his death or disability: (1) | any amounts payable in accordance with the applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, a prorated portion of Mr. Leavy’s then-current annual bonus target for the calendar year in which the death or disability occurred, and other vested benefits under our welfare and benefit plans; and | (2) | in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to our executives generally, until Mr. Leavy is no longer disabled or reaches age 65, whichever occurs first, and payment, in a lump sum, of an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the employment term, should Mr. Leavy be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law. |
(1) any amounts payable in accordance with the Company’s applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, a prorated portion of Mr. Campbell’s then-current annual bonus target for the calendar year in which the death or disability occurred, and other vested benefits under the Company’s welfare and benefit plans; and
(2) in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to the Company’s executives generally, until Mr. Campbell is no longer disabled or reaches age 65, whichever occurs first, and payment, in a lump sum, of an amount equivalent to the monthly premium for COBRA coverage for the remaining balance of the employment term, should Mr. Campbell be eligible for and elect COBRA benefits.Jean-Briac Perrette
The following table summarizes the potential benefits that would have been paid to Mr. CampbellPerrette had his employment terminated under any of the circumstances described abovenoted as of December 31, 2017:2021. Please see the narrative disclosure immediately below the table for a detailed discussion of the various termination scenarios reported in the table below. Benefits and Payments Upon Termination | | Voluntary Termination ($) | | Death ($) | | Disability ($) | | Involuntary Termination Without Cause ($) | | Voluntary Termination for Good Reason ($) | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | | Involuntary Termination for Cause ($) | Compensation: | | | | | | | | | | | | | | | Base Salary | | (1,103,171 | ) | 0 | | 0 | | 2,206,341 | | 2,206,341 | | 2,206,341 | | 0 | Bonus | | 4,500,498 | | 4,500,498 | | 4,500,498 | | 4,500,498 | | 4,500,498 | | 4,500,498 | | 0 | Equity: | | | | | | | | | | | | | | | Stock Options | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | RSU | | 0 | | 6,245,515 | | 6,245,515 | | 1,778,188 | | 0 | | 6,245,515 | | 0 | Benefits: | | | | | | | | | | | | | | | COBRA premiums | | 0 | | 0 | | 49,045 | | 30,442 | | 30,442 | | 30,442 | | 0 | Repatriation | | 0 | | 144,200 | | 144,200 | | 144,200 | | 144,200 | | 144,200 | | 0 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments Upon Termination | | Voluntary Termination ($) | | | 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 ($) | | | Involuntary Termination for Cause ($) | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | (779,538 | ) | | | 0 | | | | 0 | | | | 1,599,075 | | | | 1,599,075 | | | | 1,599,075 | | | | 0 | | Bonus | | | 2,078,798 | | | | 2,078,798 | | | | 2,078,798 | | | | 2,078,798 | | | | 2,078,798 | | | | 2,078,798 | | | | 2,078,798 | | | | | | | | | | Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | PRSU | | | 0 | | | | 1,701,360 | | | | 1,701,360 | | | | 1,701,360 | | | | 0 | | | | 3,823,588 | | | | 0 | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COBRA premiums | | | 0 | | | | 0 | | | | 38,896 | | | | 38,896 | | | | 38,896 | | | | 38,896 | | | | 0 | |
Jean-Briac Perrette
By Discovery Other than for Death, Disability or Cause; By Mr. Perrette for Good Reason. If.If Mr. Perrette’s employment is terminated by us other than for death, disability or “cause”“Cause” as defined in his employment agreement, including termination by reason of ournon-renewal of his employment agreement without offering him a Qualifying Renewal Offer and his subsequent separation, or by Mr. Perrette for “good reason,“Good Reason,” Mr. Perrette’s employment agreement entitles him to receive payments for the following:following (subject to obligations to mitigate the severance and to offsets by compensation earned post-employment): (1) | all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans. | (2) | current salary for the longest of the balance of the term of the employment agreement, one year, or the length of time for which Mr. Perrette would otherwise be eligible to receive severance payments under our U.K. severance redundancy plan then in effect; |
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(1) all accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans.Table of Contents
(2) current salary for the longest of the balance of the term of the employment agreement, one year, or the length of time for which Mr. Perrette would otherwise be eligible to receive severance payments under the Company’s severance plan then in effect;Executive Compensation
(3)
(3) | the prorated portion of Mr. Perrette’s bonus under our bonus or incentive plan for the year in which the termination occurs (subject to achievement of the applicable performance metrics but capped for Company and division performance at 100%); and | (4) | reimbursement for up to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, subject to alternative treatment if required by applicable law, provided that if the severance period is longer than 18 months, Mr. Perrette would be eligible to receive at the end of the 18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period. |
Mr. Perrette’s bonus under the Company’s bonus or incentive plan for the year in which the termination occurs (subject to achievement of the applicable performance metrics); and (4) reimbursement for up to 18 months of continued health coverage under COBRA should he be eligible for and elect COBRA benefits, provided that if the severance period is longer than 18 months, Mr. Perrette would be eligible to receive at the end of the18-month period an amount equal to the then-current COBRA premium for the number of months remaining in the severance period.
His employment term endsis scheduled to end on June 30, 20192022 and may be renewed by the parties for an additional term. If the Company doeswe do not elect to negotiate to renew the agreement with a Qualifying Renewal Offer and he separates from the Company, Mr. Perrette would be entitled to the severance benefits described above at the end of the original employment term. Further, if the Company offerswe offer to renew the agreement, but the parties are unable to agree on final terms, and Mr. Perrette terminates his employment at the end of his employment term, Mr. Perrette will be eligible for a noncompetition payment consisting of an amount equal to 50% of his annual base salary for one year following the conclusion of his employment.employment, which will be increased to 100% if he seeks to engage in a competitive activity and permission to do so is denied by us.
Notwithstanding the foregoing, in the event Mr. Perrette’s employment is terminated by us not for “cause”“Cause” or by Mr. Perrette for “good reason,“Good Reason,” and we have a standard severance policy at the time of termination which would provide Mr. Perrette with a higher sum than these arrangements, Mr. Perrette will be entitled to such higher sum. As a condition to receiving the severance payments described above, Mr. Perrette would be required to sign a general release and, if such termination occurs during the original employment term, comply with the restrictive covenants in his employment agreement. By Discovery for Cause; By Mr. Perrette Other than for Good Reason. If Mr. Perrette’s employment is terminated by us for “cause”“Cause” or by Mr. Perrette other than for “good reason” (including retirement) (in each case, as defined in his employment agreement)“Good Reason”, his employment agreement entitles him to receive only those amounts or benefits that have been earned or vested at the time of the termination in accordance with our applicable plans and programs. This generally would include accrued and unpaid salary and accrued and unused vacation, in each case in a lump sum, and any other vested benefits under our welfare and benefit plans. If Mr. Perrette resigns other than for “Good Reason” before the end of his term, he will be required to pay us six-months’ gross salary; we remain eligible to obtain further damages and injunctive relief. By Reason of Death or Disability. Mr. Perrette’s employment agreement provides for the payment of the following amounts upon termination of his employment by reason of his death or disability: (1) | any amounts payable in accordance with the applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, and other vested benefits under our welfare and benefit plans; and | (2) | in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to our executives generally, until Mr. Perrette is no longer disabled or reaches age 65, whichever occurs first, subject to alternative treatment if required by applicable law. |
(1) any amounts payable in accordance with the Company’s applicable benefits program, including accrued and unpaid salary, accrued and unused vacation, and other vested benefits under the Company’s welfare and benefit plans; and
(2) in the event of termination for disability, continued coverage under our medical or disability plans to the extent permitted by the plans and to the extent such benefits continue to be provided to the Company’s executives generally, until Mr. Perrette is no longer disabled or reaches age 65, whichever occurs first.
Upon Discovery’s Election Not to Extend Term. If we exercise our option not to extend Mr. Perrette’s employment beyond the then-current term, Mr. Perrette’s employment agreement entitles him to receive the severance payments reflected above. Defined Terms Used in this Section The following table summarizes thedescriptions of potential benefits that would have been paid to Mr. Perrette hadpayments upon termination or change of his employment occurred under any of the circumstances described above as of December 31, 2017: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments Upon Termination | | Voluntary Termination ($) | | | Death ($) | | | Disability ($) | | | Involuntary Termination Without Cause ($) | | | Voluntary Termination for Good Reason ($) | | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason Following a Change in Control ($) | | | Involuntary Termination for Cause ($) | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | (774,560 | ) | | | 0 | | | | 0 | | | | 2,335,371 | | | | 2,335,371 | | | | 2,335,371 | | | | 0 | | Bonus | | | 2,335,371 | | | | 2,335,371 | | | | 2,335,371 | | | | 2,335,371 | | | | 2,335,371 | | | | 2,335,371 | | | | 2,335,371 | | | | | | | | | | Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options | | | 0 | | | | 40,003 | | | | 40,003 | | | | 40,003 | | | | 0 | | | | 40,003 | | | | 0 | | PRSU | | | 0 | | | | 1,348,040 | | | | 1,348,040 | | | | 1,348,040 | | | | 0 | | | | 7,482,152 | | | | 0 | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COBRA premiums | | | 0 | | | | 0 | | | | 24,073 | | | | 24,073 | | | | 24,073 | | | | 24,073 | | | | 0 | | Repatriation | | | 0 | | | | 127,700 | | | | 127,700 | | | | 127,700 | | | | 127,700 | | | | 127,700 | | | | 0 | |
Paul Guagliardo
Mr. Guagliardo resigned as Chief Commercial Officer of the Company effective December 31, 2017. In connection with his resignation, Mr. Guagliardo received the following severance benefits ascontrol set forth above utilize certain terms that are defined in his employment agreement: base salary of $1,456,000, bonus of $1,674,400, and payment of COBRA premiums for continuing medical coverage in the amount of $25,931.
Andrew Warren
Mr. Warren resigned as Chief Financial Officer of the Company effective March 31, 2017. In connection with his resignation, Mr. Warren received the following severance benefits set forth in his employment agreement: base salary of $1,210,250, bonus of $367,412, severance payment of $1,452,300 and stock awards of $265,132.
Defined Terms
The 2005 Stock Plan, theour 2013 Incentive Plan, our Incentive Compensation Plan, and in each of the individual employment agreements with our NEOs include definitions of various terms relevant to determining whether amounts will be paid.NEOs. Set forth below is a summary of the defined terms referred to in this section.
2005 StockDefined Terms from 2013 Incentive Plan. All stock option awards to the NEOs made prior to 2013 were made under the 2005 Stock Plan and implementing award agreements.
Under each NEO’s respective award agreement for awards made after 2013 and our standard form of award agreement, a Change of Control“Change in Control” means an “Approved Transaction,” “Control Purchase,” or “Board Change,” each as defined in the 2005 Stock2013 Incentive Plan, provided that the transaction actually closes and the qualifying separation from employment occurs within 12 months after the closing date. Under The meanings of those terms, under the 20052013 Incentive Plan 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 Plan, “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 |
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Table of Contents Executive Compensation | | 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” 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. |
Defined Terms from Incentive Compensation Plan (“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 Eligible Employee’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 the Zaslav 2021 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 contendre 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 nominated 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 |
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Table of Contents Executive Compensation 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 excludes the WarnerMedia Transaction, but not subsequent events, from the definition of Change in Control. If the WarnerMedia Transaction is abandoned or terminated, then “Change in Control” will have the meaning ascribed to it in the Zaslav 2018 Employment Agreement. 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; (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; or (vii) willful misconduct in connection with the performance of Mr. Wiedenfels’ duties. “Cause” also includes his 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, Chair, or the Board. The “Good Reason” definition includes a requirement of notice and an opportunity to cure. |
Defined Terms from Mr. Campbell’s Employment Agreement. | ● | “Cause” has the same meaning as in Mr. Wiedenfels’ employment agreement. | | ● | “Good Reason” means the occurrence of any of the following events without Mr. Campbell’s consent: (a) a material reduction in Mr. Campbell’s 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 CEO, Chair, or the Board. The “Good Reason” definition includes a requirement of notice and an opportunity to cure. |
Defined Terms from Mr. Leavy’s Employment Agreement. | ● | “Cause” has the same meaning as in Mr. Wiedenfels’ employment agreement. | | ● | “Good Reason” means the occurrence of any of the following events without Mr. Leavy’s consent: (a) a material reduction in Mr. Leavy’s duties or responsibilities; (b) a material change in his work location; or (c) a material breach by us of his employment agreement including a change of his reporting relationship to a level below the Company’s CEO. The “Good Reason” definition includes a requirement of notice and an opportunity to cure. |
Defined Terms from the Mr. Perrette’s Employment Agreement. | ● | “Cause” 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 London, U.K. metropolitan area, except repatriation to the New York, NY metropolitan area at the end of his term of employment; (c) a change of his reporting relationship to a level lower than the CEO of the Company; or (d) a material breach of his agreement through the Company’s failure to make the equity awards. The “Good Reason” definition includes a requirement of notice and an opportunity to cure. |
70 Discovery
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan Proposal 3 Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan |
On May 17, 2021, Discovery, our wholly owned subsidiary Drake Subsidiary, Inc., AT&T Inc. (“AT&T”) and AT&T’s wholly owned subsidiary Magallanes, Inc. entered into definitive agreements pursuant to which and subject to the terms and conditions therein (1) AT&T will transfer the business, operations and activities that constitute the WarnerMedia segment of AT&T, subject to certain exceptions (the “WarnerMedia Business”) to Magallanes, Inc. (such transfer, the “Separation”), (2) AT&T will distribute to its stockholders the issued and outstanding shares of common stock of Magallanes, Inc. held by AT&T (such distribution, the “Distribution”) and (3) Drake Subsidiary, Inc. will merge with and into Magallanes, Inc. with Magallanes, Inc. as the surviving entity and wholly owned subsidiary of the Company (such merger, the “Merger” and the Separation, Distribution and Merger collectively, the “WarnerMedia Transaction”). Our Board believes that we must continue to offer a competitive equity incentive program following the closing of the WarnerMedia Transaction if we are to continue to attract and retain the best possible employees and independent contractors. Following the closing of the WarnerMedia Transaction, with our larger size, we recognize that we will require a larger pool of available shares to maintain a competitive equity incentive program for our employees and independent contractors. Our Compensation Committee and our Board considered adopting a new Warner Bros. Discovery, Inc. Stock Incentive Plan, which we refer to as the WBD Incentive Plan, in light of such belief. On March 1, 2022, our Board of Directors adopted the WBD Incentive Plan, subject to stockholder approval, to be effective upon the closing date of the WarnerMedia Transaction. At this meeting, we are asking you to approve the WBD Incentive Plan, which includes (i) an available pool of 135,000,000 (135 million) shares of Series A Common Stock of Warner Bros. Discovery, Inc., par value $0.01 per share, which we refer to as common stock, plus an additional number of shares of common stock equal to the number of shares Discovery, Inc. common stock that remain available for issuance immediately prior to the effective date of the WBD Incentive Plan under the Discovery Communications, Inc. 2013 Incentive Plan, which is the current long-term incentive plan under which Discovery, Inc. has granted awards and which we refer to as the 2013 Incentive Plan, plus the number of shares that would have been added back to the share reserve under the 2013 Incentive Plan, as further described below (ii) a limit on the maximum number of shares of our common stock that may be granted under awards to any individual in any calendar year of 25,000,000 (25 million) shares; and (iii) a maximum cash award for any individual in any calendar year of $25 million per calendar year covered by the award. The WBD Incentive Plan also permits withholding of shares of common stock for taxes, and refers to our policies on clawbacks and stock ownership. The WBD Incentive Plan is intended to replace our 2013 Incentive Plan at the close of business on the first business day following the date on which the WarnerMedia Transaction closes. As described below under the heading, “Substitute Awards,” substitute awards will be made under the 2013 Incentive Plan to eligible WarnerMedia and former AT&T employees in connection with the closing of the WarnerMedia Transaction. If the WBD Incentive Plan is approved by our stockholders, no additional awards will be made under the 2013 Incentive Plan once the WBD Incentive Plan becomes effective at the close of business on the first business day following the date on which the WarnerMedia Transaction closes, but awards then outstanding under the 2013 Incentive Plan (including the substitute awards referenced in the immediately prior sentence) will remain in effect and be administered under the 2013 Incentive Plan. Upon the closing of the WarnerMedia Transaction, all outstanding Discovery equity incentive awards will be converted into awards denominated in shares of common stock on the same terms and conditions (including applicable vesting requirements after giving effect to the Merger) in effect prior to the WarnerMedia Transaction. If the WBD Incentive Plan is not approved by our stockholders or if the WarnerMedia Transaction does not close, the 2013 Incentive Plan will remain in effect in accordance with its terms. As of March 4, 2022, we had the following outstanding awards under the 2013 Incentive Plan: ● | 30,577,548 options to purchase shares of Discovery, Inc. Series A common stock, the weighted average exercise price of all such options was 34.96, and the weighted average remaining term was 4.9 years; | ● | 46,695 options to purchase shares of Discovery, Inc. Series C common stock, the weighted average exercise price of all such options was $16.49, and the weighted average remaining term was 1.7 years; | ● | there were no shares of restricted stock; | ● | 12,222,973 shares of restricted stock units with respect to Discovery, Inc. Series A common stock; | ● | 6,132 shares of restricted stock units with respect to Discovery, Inc. Series C common stock; | ● | no stock-settled stock appreciation rights with respect to Discovery, Inc. Series A common stock; | ● | no stock-settled stock appreciation rights with respect to Discovery, Inc. Series C common stock; | ● | 15,965 cash-settled stock appreciation rights with respect to Discovery, Inc. Series A common stock; and | ● | no cash-settled stock appreciation rights with respect to Discovery, Inc. Series C common stock. |
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Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan In addition to these arrangements, as of March 4, 2022, we had: ● | our employee stock purchase plans, under which 8,136,719 shares of Discovery, Inc. Series A common stock and no shares of Discovery, Inc. Series C common stock remain available, | ● | the Directors’ Plan, under which there were no outstanding options to purchase shares of Discovery, Inc. Series A common stock, no outstanding options to purchase shares of Discovery, Inc. Series C common stock, 260,264 restricted stock units outstanding with respect to Discovery, Inc. Series A common stock, and no restricted stock units outstanding with respect to Discovery, Inc. Series C common stock, with a remaining pool of 6,953,915 shares of Discovery, Inc. Series A common stock and no shares of Discovery, Inc. Series C common stock, and | ● | our 2005 Stock Plan, under which there were no outstanding options to purchase shares of Discovery, Inc. Series A common stock, no outstanding options to purchase shares of Discovery, Inc. Series C common stock, no restricted stock units outstanding with respect to Discovery, Inc. Series A common stock, 19,906 restricted stock units outstanding with respect to Series C common stock, no outstanding cash-settled stock appreciation rights with respect to Discovery, Inc. Series A common stock, and no outstanding cash-settled stock appreciation rights with respect to Discovery, Inc. Series C common stock. |
On March 4, 2022, the last reported sales price of our Discovery, Inc. Series A common stock on Nasdaq was $26.89 and the last reported sales price of our Discovery, Inc. Series C common stock on Nasdaq was $26.81. As disclosed in our proxy statement relating to the WarnerMedia Transaction, we expect the total shares of Warner Bros. Discovery, Inc. common stock outstanding immediately after the closing of the WarnerMedia Transaction to be approximately 2,396,318,000 shares. The requested shares are estimated to be approximately 5.6% of the total shares expected to be outstanding immediately after the closing of the WarnerMedia Transaction. We expect that the proposed share pool under the WBD Incentive Plan will allow us to continue to grant equity awards at our historic rates for approximately 5 years but that may vary based on changes in participation and the stock price. Our Board believes that the adoption of the WBD Incentive Plan is in the best interests of the Company and its stockholders and recommends that you vote “FOR” Proposal Three to approve the WBD Incentive Plan. 72 Discovery
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan Why You Should Vote for the WBD Incentive Plan Equity Incentive Awards Are an Important Part of Our Compensation Philosophy Our Board believes that our success depends, in large part, upon our ability to maintain a competitive position in attracting, retaining and motivating key personnel and, as discussed in the “Compensation Discussion and Analysis” section of this proxy statement, our equity-based award program is the primary vehicle for offering long-term incentives to our executives. As a media company, competing with many successful companies for a limited pool of talented people, we believe that we must continue our use of equity compensation to help retain our skilled employees and independent contractors and recruit new employees and consultants to continue to grow, develop new markets and services and deliver increased stockholder value. We are asking stockholders to approve the WBD Incentive Plan, which will provide the Company with the ability to make equity awards to employees and independent contractors of the Company following the closing of the WarnerMedia Transaction. We Believe the WBD Incentive Plan Combines Compensation and Governance Best Practices We believe the WBD Incentive Plan includes provisions that are designed to protect our stockholders’ interests and to reflect compensation and governance best practices, including: ● | No Evergreen. The WBD Plan does not provide for any automatic increases in the number of shares available for issuance under the WBD Plan. | ● | Repricing is not allowed without stockholder approval. The WBD Incentive Plan prohibits the repricing or other exchange of underwater stock options and stock appreciation rights without prior stockholder approval. | ● | No discount stock options or stock appreciation rights. All stock options and stock appreciation rights will have an exercise price or base price equal to at least the fair market value of common stock on the date the stock option or stock appreciation right is granted, except in certain situations in which we are substituting awards granted by another company with which we are merging or consolidating or that we are acquiring. | ● | No Liberal Share Recycling. In general, when an award granted under the WBD Incentive Plan expires or is canceled without having been fully exercised, is an award of stock appreciation rights or restricted stock units that is exercised or settled in cash or is an award of restricted shares or restricted stock units that is forfeited in whole or in part prior to becoming vested, the shares reserved for such award will be returned to the share reserve and be available for future awards. However, shares that are tendered by participants or withheld by us to pay the purchase price of an award or to satisfy tax withholding obligations will not be available for future awards. If a stock appreciation right is exercised for stock, we will subtract from the shares available under the WBD Incentive Plan the full number of shares subject to the stock appreciation right multiplied by the percentage of the stock appreciation right actually exercised, regardless of the number of shares actually used to settle the stock appreciation right upon exercise. Shares repurchased by us on the open market using the proceeds from the exercise of an award will not increase the number of shares available for the future grant of awards under the WBD Plan. | ● | No tax gross-ups. The WBD Incentive Plan does not provide for any tax gross-ups. | ● | Director Equity Compensation. Directors receive their equity-based compensation through the 2005 Director Plan. Directors would not, consequently, be interested parties with respect to the operation of the WBD Incentive Plan. | ● | No Dividend Equivalents on Options or Stock Appreciation Rights. No options or stock appreciation rights granted under the WBD Incentive Plan may provide for the payment or accrual of dividends or dividend equivalents. | ● | Dividends and Dividend Equivalents on Restricted Stock, Restricted Stock Units and Other-Stock Based Awards Not Paid Until Award Vests. Any dividends or dividend equivalents paid with respect to restricted stock, restricted stock units or other stock-based awards will be subject to the same restrictions on transfer and forfeitability as the award with respect to which it is paid. | ● | Administered by an Independent Committee. The WBD Incentive Plan is administered by the Compensation Committee, which is made up entirely of independent directors. No member of the Compensation Committee, while serving as such, shall be eligible to receive an award under the WBD Incentive Plan. |
Description of the WBD Incentive Plan The following is a summary of the WBD Incentive Plan. This summary is qualified in its entirety by reference to the WBD Incentive Plan, a copy of which is attached as Appendix A to this proxy statement. You may also obtain a copy of the WBD Incentive Plan by accessing the proxy statement as filed with the SEC on the Internet at www.sec.gov, by accessing the Investor Relations section of our website at https://ir.corporate.discovery.com/investor-relations/ or by contacting our Corporate Secretary. Effectiveness; Number of Shares Available for Issuance The WBD Incentive Plan will become effective upon the closing date of the WarnerMedia Transaction. Following the closing of the WarnerMedia Transaction, subject to adjustment in the event of stock splits and other similar events as provided under the WBD Incentive Plan, the maximum number of shares of common stock with respect to which awards may be granted under the WBD Incentive Plan is the sum of (i) 135 million shares; plus (ii) such additional number of shares as is equal to the sum of (A) the number of shares reserved for issuance under the 2013 Incentive Plan that remain available for grant under the 2013 Incentive Plan as of immediately prior to closing date of the WarnerMedia Transaction and (B) the number of shares of common stock subject to awards granted under the 2013 Incentive Plan, that (1) expire, terminate or are annulled for any reason without having been exercised, (2) are stock 2022 Proxy Statement 73
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan appreciation rights under the 2013 Incentive Plan that are exercised for cash and (3) are awards of restricted shares or restricted stock units under the 2013 Incentive Plan that are forfeited prior to becoming vested (provided that the holder received no benefits of ownership of such restricted shares or restricted stock units other than voting rights and the accumulation of unvested dividends and unpaid dividend equivalents that are likewise forfeited). Shares issued under the WBD Incentive Plan may consist in whole or in part of authorized but unissued shares or may be issued shares that we have reacquired, including shares purchased in the open market (which open market purchases of shares using the proceeds from the exercise of awards will not increase the number of shares available for future grants). If an award granted under the WBD Incentive Plan (i) expires or is terminated, surrendered or canceled without having been fully exercised, (ii) is an award of stock appreciation rights or restricted stock units that is exercised or settled, as the case may be, in cash or (iii) is an award of restricted shares or restricted stock units that is forfeited in whole or in part prior to becoming vested (provided that the holder received no benefits of ownership of such awards other than voting rights and the accumulation of unvested dividends and unpaid dividend equivalents that are likewise forfeited), then the unused common stock covered by such award will become available for issuance pursuant to a new award under the WBD Incentive Plan. Shares that are tendered or withheld (including through net exercise) to pay the purchase price of an award or to satisfy tax withholding obligations will not be available for future issuance pursuant to awards under the WBD Incentive Plan. Under the WBD Incentive Plan, all shares of common stock covered by stock-settled stock appreciation rights are counted against the number of shares available for the grant of awards under the WBD Incentive Plan. If a stock-settled stock appreciation right is exercised, we will subtract from the shares available under the WBD Incentive Plan the full number of shares subject to the stock appreciation right multiplied by the percentage of the stock appreciation right actually exercised, regardless of the number of shares actually used to settle such stock appreciation right upon exercise. Types of Awards The WBD Incentive Plan provides for the grant of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash-based awards, each of which is described below. Nonqualified stock options. Optionees receive the right to purchase a specified number of shares of common stock at a specified exercise price, subject to such other terms and conditions as are specified in connection with the option grant. Options must be granted at an exercise price that will not be less than 100% of the fair market value of the common stock on the date of grant, except in connection with substitute awards relating to mergers, consolidations, or acquisitions. Options may not provide for the payment or accrual of dividends or dividend equivalents. The method of payment of the exercise price of an option is determined by the Compensation Committee and may consist of: (i) payment by cash or check or through the delivery of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the exercise price, (ii) surrender to us of shares of common stock or attestation of ownership of sufficient shares, (iii) “net exercise” in which a portion of the shares to be issued on exercise are withheld to pay the exercise price, (iv) any other lawful means, or (v) any combination of these forms of payment. Stock appreciation rights. A stock appreciation right is an award entitling the holder, upon exercise, to receive an amount in common stock or cash or a combination thereof determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of common stock on the date of grant over the base price. The base price of a stock appreciation right may be no less than 100% of the fair market value of the common stock on the date of grant, which may be determined based on a single day’s price or using an average of prices around the date of grant, except in connection with substitute awards relating to mergers, consolidations or acquisitions. No stock appreciation right granted under the WBD Incentive Plan may provide for the payment or accrual of dividends or dividend equivalents. Restricted stock and restricted stock unit awards. Restricted stock awards entitle recipients to acquire shares of common stock, subject to our right to repurchase or cause the forfeiture of all or part of such shares from the recipient in the event that the conditions specified in the applicable award are not satisfied prior to the end of the applicable restriction period established for such award. Restricted stock unit awards entitle the recipient to receive shares of common stock to be delivered at or after the time such shares vest pursuant to the terms and conditions of the awards, as established by our Compensation Committee, although our Compensation Committee may provide that these awards will be settled in cash. The Compensation Committee may also provide for a supplemental cash payment with respect to an award of restricted shares, subject to such restrictions as the Compensation Committee designates, to be paid in connection with or after vesting. Our Compensation Committee will determine the terms and conditions of each restricted stock or restricted stock unit award, including the conditions for vesting and repurchase (or forfeiture) and the purchase price, if any. We have not historically granted restricted stock awards, but the 2013 Incentive Plan and the WBD Incentive Plan permit such grants. Any dividends (whether paid in cash, stock or property) declared and paid by us with respect to restricted shares, or unvested dividends, shall be paid to the holder only if and when such restricted shares vest. Each payment of previously unvested dividends will be made no later than the later of (i) the end of the calendar year in which the dividends are paid to stockholders of that series of stock or (ii) the 15th day of the third month following the date on which the restricted stock to which the dividends pertain vests, absent a further deferral permitted by the Compensation Committee that complies with Section 409A of the Internal Revenue Code, or the Code. No interest will be paid on the unvested dividends. The holder will have the right to vote such restricted shares and to exercise other stockholder rights subject to the terms, conditions and restrictions set forth in the WBD Incentive Plan. 74 Discovery
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan To the extent provided by our Compensation Committee, in its sole discretion, a grant of restricted stock units may provide participants with the right to receive dividend equivalents. Dividend equivalents may be settled in cash and/or shares of common stock and will be subject to the same restrictions on transfer and forfeitability as the restricted stock units with respect to which they are paid, as determined by our Compensation Committee in its sole discretion, subject in each case to such terms and conditions as our Compensation Committee may establish, in each case to be set forth in the applicable award agreement. No interest will be paid on the dividend equivalents. Other stock-based and cash-based awards. Under the WBD Incentive Plan, our Compensation Committee or the Board has the right to grant other awards that are valued in whole or in part by reference to, or otherwise based on shares of common stock, subject to such terms and conditions as our Compensation Committee or the Board may determine. Such other stock-based awards shall also be available as a form of payment in the settlement of other awards granted under the WBD Incentive Plan or as payment in lieu of compensation to which a holder is otherwise entitled. Other stock-based awards may be paid in shares of common stock or cash, as the Board or the Compensation Committee may determine. Other stock-based awards may provide holders with the right to receive dividend equivalents. Dividend equivalents may be settled in cash and/or shares of common stock and will be subject to the same restrictions on transfer and forfeitability as the other stock-based awards with respect to which they are paid. No interest will be paid on the dividend equivalents. We may also grant under the WBD Incentive Plan awards denominated in cash rather than shares of common stock. Performance conditions. Our Compensation Committee may determine, at the time of grant, that an award granted under the WBD Incentive Plan will vest or otherwise be earned upon the achievement of specified performance criteria. The performance criteria for each such award will be based on one or more of the following measures, as applied to the recipient, one or more of our business units, our divisions or subsidiaries or applicable sector, or of us as a whole, and if so desired by the Compensation Committee, by comparison with a peer group of companies: increased revenue; net income measures (including income after capital costs and income before or after taxes); stock price measures (including growth measures and total stockholder return); price per share of common stock; market share; audience metrics (such as program ratings, web impressions, and subscribers); earnings per share (actual or targeted growth); earnings before interest, taxes, depreciation, and amortization (EBITDA); economic value added; market value added; debt to equity ratio; cash flow measures (including cash flow return on capital, cash flow return on tangible capital, net cash flow and net cash flow before financing activities); return measures (including return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); operating measures (including operating income, adjusted operating income before depreciation and amortization, funds from operations, cash from operations, after-tax operating income; sales volumes, production volumes and production efficiency); expense measures (including overhead cost and general and administrative expense); margins; stockholder value; total stockholder return; proceeds from dispositions; total market value and corporate values measures (including ethics compliance, environmental and safety) or any other business criteria established by the Compensation Committee. Unless otherwise stated, such a performance measure need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). These performance measures may be adjusted to exclude any one or more of (i) non-recurring or unusual gains or losses, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the write-down of any asset, (v) fluctuation in foreign currency exchange rates, (vi) charges for restructuring and rationalization programs and (vii) any other adjustment determined by the Compensation Committee. Such performance measures: (x) may vary by participant and may be different for different awards; and (y) may be particular to a participant or the department, branch, line of business, subsidiary or other unit in which the participant works and may cover such period as may be specified by our Compensation Committee. The Compensation Committee shall have the discretion to modify or waive the performance criteria or conditions to the grant or vesting of an award unless the relevant award agreement states otherwise. Eligibility to Receive Awards Our employees, officers, consultants and advisors and those of our subsidiaries are eligible to be granted awards under the WBD Incentive Plan. As of March 4, 2022, approximately 11,000 persons were eligible to receive awards under the WBD Incentive Plan, including our five named executive officers, our three executive officers who are not named executive officers, our approximately 10,975 other employees who are not executive officers and our approximately 15 independent contractors who are not executive officers. Following the consummation of the WarnerMedia Transaction, the employees, officers, consultants and advisors of Warner Bros. Discovery, Inc. will be eligible to be granted awards under the WBD Incentive Plan. The granting of awards under the WBD Incentive Plan is discretionary, and the Company cannot now determine the number or type of awards to be granted in the future to any particular person or group. Subject to certain exceptions as set forth in the WBD Incentive Plan in connection with the award of substitute awards and changes in our capital structure and subject to adjustment in the event of stock splits and other similar events, the maximum number of shares with respect to which awards may be granted to any participant under the WBD Incentive Plan may not exceed 25,000,000 shares per calendar year. No person may be awarded cash awards during any calendar year that are designed to pay out in excess of $25,000,000 per calendar year covered by the cash award. 2022 Proxy Statement 75
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan Administration The WBD Incentive Plan is administered by our Compensation Committee; provided, that our Board may appoint another committee of the Board (or a subcommittee of such committee) to administer the WBD Incentive Plan comprised of not less than two persons. References in this “--Description of the WBD Incentive Plan” shall refer to our Compensation Committee or such other committee of the Board (or subcommittee of such committee) as may be appointed by the Board to administer the WBD Plan from time to time. Our Compensation Committee has the authority to adopt, amend and repeal the administrative rules, guidelines and practices relating to the WBD Incentive Plan and to interpret the provisions of the WBD Incentive Plan and any award agreements thereunder. Subject to any applicable limitations contained in the WBD Incentive Plan, our Compensation Committee selects the recipients of awards and determines the terms of such awards. The WBD Incentive Plan provides limitations on liability with respect to persons acting on our behalf in connection with the WBD Incentive Plan and also provides for indemnifying and holding harmless such persons. The Committee’s actions and determinations under the WBD Incentive Plan shall be final and conclusive for all purposes and upon all persons. Our Compensation Committee is required to make equitable and appropriate adjustments in connection with the WBD Incentive Plan and any outstanding awards to reflect stock splits, stock dividends, recapitalizations, spin-offs and other similar changes in capitalization or corporate events (including mergers or consolidations other than those which constitute Approved Transactions, as described and defined below) to preserve the benefits or potential benefits intended to be made available under the WBD Incentive Plan. Such adjustments shall be made in a manner as the Compensation Committee, in its sole discretion, deems equitable and appropriate and shall adjust any or all of (i) the number and kind of shares of stock which thereafter may be awarded, optioned or otherwise made subject to the benefits contemplated by the WBD Incentive Plan, (ii) the number and kind of shares of stock subject to outstanding awards, and (iii) the exercise, base or purchase price and the relevant appreciation base with respect to any of the foregoing, provided, however, that the number of shares subject to any award shall always be a whole number. In addition, if all shares of any series of common stock are redeemed, then each outstanding award under such series shall be adjusted to substitute for the shares of such series of common stock subject to the award the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of shares of such series of common stock, with the other terms of the award remaining constant (including for this purpose the aggregate exercise price or aggregate base price, shall remain constant before and after the substitution (unless otherwise determined by the Compensation Committee)). The Compensation Committee, in its sole discretion, may provide for a cash payment in connection with any of the foregoing adjustments. Changes in Control The WBD Incentive Plan also contains provisions addressing the consequences of any mergers, certain changes in ownership, and certain changes in the composition of our Board. The description below is of the default rule under the WBD Incentive Plan, but the Compensation Committee also imposes double trigger requirements on substantially all awards to executive officers, such that the occurrence of an event without a connected employment termination will not cause vesting unless the awards are not being assumed or replaced. If an Approved Transaction, Board Change or Control Purchase (each as defined below) occurs, unless the applicable agreement provides otherwise, any options or stock appreciation rights will immediately become exercisable in full in respect of the aggregate number of shares covered thereby and restricted stock and restricted stock units will vest, as will any unpaid dividends or dividend equivalents, while cash awards and other stock-based awards will have the treatment their agreements provide, in each case effective upon the Board Change or Control Purchase or immediately prior to consummation of the Approved Transaction. Notwithstanding the foregoing, unless otherwise provided in the applicable agreement, the Compensation Committee may, in its discretion, determine that any or all outstanding awards of any or all types granted pursuant to the WBD Incentive Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Compensation Committee, is equitable and appropriate to substitute a new award for such award or to assume such award and to make such new or assumed award, as nearly as may be practicable, equivalent to the prior award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which the common stock may be changed, converted or exchanged in connection with the Approved Transaction. Notwithstanding any provision of the WBD Incentive Plan to the contrary, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Compensation Committee shall be authorized, in its discretion, (i) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the award and, if the transaction is a cash merger, provide for the termination of any portion of the award that remains unexercised at the time of such transaction, or (ii) to cancel any such awards and to deliver to the participants cash in an amount that the Compensation Committee shall determine in its sole discretion is equal to the fair market value of such awards on the date of such event, which in the case of options or stock appreciation rights will be the excess of the fair market value of the common stock on such date over the exercise price of the options or the base price of the stock appreciation rights, as applicable. Under the WBD Incentive Plan, Approved Transaction means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, our stockholders) approves (i) any consolidation or merger of us, or binding share exchange, pursuant to which shares of our common stock would be changed or converted into or exchanged for cash, securities, or other property, other than any such transaction in which our common stockholders 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 our common stockholders of the Company immediately prior thereto have less than a majority of the combined voting power of theour 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 theour liquidation or dissolution, or 76 Discovery
Table of the Company, or Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of our assets, provided that the assetsApproved Transaction will not occur under any of the Company. Underforegoing until the 2005 Stock Plan, “Board Change”closing of the described event. 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 leasttwo-thirds of the directors then still in office who were directors at the beginning of the period.
Under the 2005 Stock Plan, “Control Purchase” Control Purchase 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 Securities and Exchange Act),Act of 1934, or the Exchange Act, corporation or other entity (other than the Company, any subsidiary of the Companyour subsidiaries or any employee benefit plan sponsored by the Companyus or any subsidiary of the Company) shall purchase any common stock of the Company (or securities convertible into common stock of the Company) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (ii) any person (as such term is so defined), corporation or other entity (other than the Company, any subsidiary of the Company, any employee benefit plan sponsored by the Company or any subsidiary of the Company or any exempt person (as defined in the 2005 Stock Plan))our subsidiaries) shall become the “beneficial owner” (asbeneficial owner, as such term is defined in Rule13d-3 under the Exchange Act),Act, directly or indirectly, of our securities of the Company representing 20%30% or more of the combined voting power of theour 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 inRule 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.
Substitute Awards In connection with a merger or consolidation of an entity with us or the acquisition by us of property or stock of an entity, our Board may grant awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute awards may be granted on such terms as our Board deems appropriate in the circumstances, notwithstanding any limitations on awards contained in the WBD Incentive Plan. Substitute awards will not count against the overall share limit of the WBD Incentive Plan. Substitute awards to be made to former AT&T or WarnerMedia employees who will become employees of the Company following the closing of the WarnerMedia Transaction are being issued under the 2013 Incentive Plan. The WBD Incentive Plan will not be used to make substitute awards in connection with the closing of the WarnerMedia Transaction. Restrictions on Repricing Unless our stockholders approve such action (or it is appropriate under a change in capitalization), the WBD Incentive Plan provides that we may not (1) amend any outstanding option or stock appreciation right granted under the WBD Incentive Plan to provide an exercise price or base price per share that is lower than the then-current exercise price or base price per share of such outstanding award, (2) cancel any outstanding option or stock appreciation right (whether or not granted under the WBD Incentive Plan) and grant in substitution therefor new awards under the WBD Incentive Plan (other than as substitute awards as described above) covering the same or a different number of shares of common stock and having an exercise price or base price per share lower than the then-current exercise price or base price per share of the cancelled award, (3) cancel in exchange for a cash payment any options or stock appreciation rights that have an exercise price or base price per share above the then-current fair market value (other than in connection with an Approved Transaction, Board Change or Control Purchase as described above), or (4) take any other action that constitutes a “repricing” within the meaning of the rules of Nasdaq or any other exchange or marketplace on which the Company’s stock is listed or traded. Clawback Policy All awards are subject to recovery or clawback by us under any clawback policy we adopt in accordance with Securities and Exchange Commission regulations or other applicable law, as amended or superseded from time to time. Stock Ownership Guidelines All awards are subject to any applicable stock ownership guidelines we adopt, as amended or superseded from time to time. Withholding Our obligation to deliver shares of common stock or pay cash in respect of any award under the WBD Incentive Plan is subject to applicable federal, state and local tax withholding requirements. The Compensation Committee or our Board may permit participants to pay applicable withholding in shares of the common stock already owned by the participant (either by delivery or attestation) or through the withholding of shares otherwise issuable to such participant; provided, however, except as otherwise provided by our Board or the Compensation Committee, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed our minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that we are able to retain shares of common stock having a fair market value that exceeds the statutory minimum applicable withholding tax without financial accounting implications or we are withholding in a jurisdiction that does not have a statutory minimum withholding tax, we may retain such number of shares of common stock (up to the number of shares having a fair market value equal to the maximum individual statutory rate of tax (determined by, or in a manner approved by, us)) as we may determine to satisfy the tax liability associated with any award. If the participant does not satisfy the tax withholding through one of those means, the Company may withhold from the same or other compensation. Transferability of Awards In general, awards may not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order. During the life of the participant, awards are exercisable only by the participant. However, except for awards subject to Code Section 409A, with our Compensation Committee’s or the Board’s consent, a participant can transfer an award without payment to an immediate family member, family trust, or certain other related entities (to the extent a Registration Statement on Form S-8 would cover the transferee). Under each NEO’s respective 2022 Proxy Statement77
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan Acceleration Our Compensation Committee may at any time provide that any award will become immediately vested or exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be. Termination of Employment or Service The award agreements provide rules with respect to the treatment of awards when employment or service ends and may overrule the general principles in the WBD Incentive Plan. If a participant dies or has a Disability (as defined in the WBD Incentive Plan), unless the award agreement provides otherwise, any options or stock appreciation rights will immediately become exercisable in full in respect of the aggregate number of shares covered thereby and will remain exercisable for awards madeat least one year after 2013death or Disability termination (unless the award expires earlier) and our standard form(ii) restricted stock and restricted stock units will vest, as will any unpaid dividends or dividend equivalents. The effect on a cash award or other stock-based award of the termination of employment or service for any reason, other than for cause, shall be prescribed in the applicable award agreement,agreement. On a Change of Control means an “Approved Transaction,” “Control Purchase,” or “Board Change,” eachtermination for cause, as defined in the 2013WBD Incentive Plan, and unless the award agreement provides otherwise, all awards of unexercised options and stock appreciation rights, unvested restricted shares, unpaid cash awards, unvested dividends, unvested and unsettled restricted stock units and unvested dividend equivalents and any related cash amounts will terminate immediately. In addition, the Compensation Committee may determine retroactively, within one year after employment or service ends, that we or our subsidiary had cause at the time of termination and may forfeit any still outstanding awards. Provisions for Foreign Participants Our Board or the Compensation Committee may establish sub-plans for purposes of satisfying applicable securities, tax or other laws of various jurisdictions, by adopting supplements to the WBD Incentive Plan that cover only a particular jurisdiction and contain such limitations or exercises of discretion as are not otherwise inconsistent the with WBD Incentive Plan. All supplements adopted by the Board or the Compensation Committee shall be deemed to be part of the WBD Incentive Plan, but each supplement shall apply only to holders within the affected jurisdiction. Stockholder Rights Except as provided in the WBD Incentive Plan with respect to awards of restricted shares and except as expressly set forth in an award agreement, no holder shall have voting or other rights with respect to the shares of common stock covered by an award prior to the delivery of such shares. Amendment or Termination No award may be made under the WBD Incentive Plan on or after the tenth anniversary of the effective date of the WBD Incentive Plan, but awards previously granted may extend beyond that date. Our Compensation Committee may at any time amend, suspend or terminate the WBD Incentive Plan, provided that such actions may not materially adversely affect a recipient with respect to a previously granted award without his or her consent, except as required for compliance with Section 409A of the transaction actually closesCode. No modification, extension, renewal or other change in any award granted under the WBD Incentive Plan shall be made after the grant of such award, unless the same is consistent with the provisions of the WBD Incentive Plan. In general, with the consent of the applicable holder, the Compensation Committee may amend outstanding award agreements, including any amendment which would (i) accelerate the time or times at which the award may be exercised and/or (ii) extend the scheduled expiration date of the award. Without limiting the generality of the foregoing, the Compensation Committee may, but solely with the holder’s consent, unless otherwise provided in the award agreement, agree to cancel any award and grant a new award in substitution therefor, provided that the award so substituted shall satisfy all of the requirements of the WBD Incentive Plan as of the date such new award is made. Notwithstanding the foregoing, the Compensation Committee may provide in any award agreement that the rights of the holder with respect to the award shall be subject to such rules and regulations as the Compensation Committee may adopt from time to time. If our stockholders do not approve the adoption of the WBD Incentive Plan, the WBD Incentive Plan will not go into effect, and the qualifying separation from employment occurs within 12 months afterCompany will not grant any awards under the closing date. UnderWBD Incentive Plan. In this event, the Company will continue to make grants under the 2013 Incentive Plan “Approved Transaction” means any transaction in whichand the Board (or, if approvalwill consider whether to adopt additional or alternative arrangements based on its assessment of the Board is not required as a matter of law, the stockholdersneeds of the Company) shall approve (i) any consolidation or mergerCompany.
Certain Material U.S. Federal Income Tax Consequences The following is a summary 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 powercertain material United States federal income tax consequences that generally will arise with respect to awards granted under the surviving corporation immediately after such transaction, (ii) any merger, consolidation or binding share exchange to whichWBD Incentive Plan. This summary is based on the Company is a partyfederal tax laws in effect as a result of which the Persons who are common stockholders of the Company immediately prior thereto have less than a majoritydate of this proxy statement. In addition, this summary assumes that all awards are exempt from, or comply with, the rules under Section 409A of the combined voting powerCode regarding nonqualified deferred compensation. Changes to these laws could alter the tax consequences described below. Nonqualified Stock Options A participant will not have income upon the grant of a nonqualified stock option. A participant will have compensation income upon the exercise of a nonqualified stock option equal to the value of the outstanding capital stock on the day the participant exercised the option less the exercise price. Upon sale of the Company ordinarily (and apart fromstock, the rights accruing under special circumstances) havingparticipant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the stock for more than one year and otherwise will be short-term. 78 Discovery
Table of Contents Proposal 3: Approval of Warner Bros. Discovery, Inc. Stock Incentive Plan Stock Appreciation Rights A participant will not have income upon the grant of a stock appreciation right. A participant generally will recognize compensation income upon the exercise of a stock appreciation right equal to vote in the electionamount of directors immediately following such merger, consolidation or binding share exchange, (iii) the adoptioncash and the fair market value of any plan or proposal forstock received. Upon the liquidation or dissolutionsale of the Company,stock, the participant will have capital gain or (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all,loss equal to the difference between the sales proceeds and the value of the assetsstock on the day the stock appreciation right was exercised. This capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.
Restricted Stock Awards A participant will not have income upon the grant of restricted stock unless an election under Section 83(b) of the Company, provided that,Code is made within 30 days of the date of grant. If a timely Section 83(b) election is made, then a participant will have compensation income equal to the value of the stock less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the date of grant. If the participant does not make a Section 83(b) election, then when the stock vests, the participant will have compensation income equal to the value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term. Restricted Stock Units A participant will not have income upon the grant of a restricted stock unit. A participant is not permitted to make a Section 83(b) election with respect to clauses (i) through (iv),a restricted stock unit award. When the Approved Transaction will not occur until the closing of the event described in such clause. Under the 2013 Incentive Plan, “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,stock or the nomination for election, of each new director was approved by a vote of at leasttwo-thirds of the directors then still in office who were directors at the beginning of the period.
Under the 2013 Incentive Plan, “Control Purchase” means any transaction (or series of related transactions) in which (i) any person (as such termcash 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 Rule13d-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 Rule13d-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 Chairman 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 useddistributed with respect to restricted stock unit, the participant will have income in an amount equal to the fair market value of the stock or the amount of cash on the date of distribution less the purchase price, if any. When any person,such stock is sold, the term “family member” meansparticipant will have capital gain or loss equal to the spouse, siblingssales proceeds less the value of the stock previously taxed. Any capital gain or loss will be long-term if the participant held the stock for more than one year and lineal descendantsotherwise will be short-term.
Other Stock-Based Awards The tax consequences associated with any other stock-based award granted under the WBD Incentive Plan will vary depending on the specific terms of such person. Incentive Compensation Plan. Underaward. Among the ICP, “cause” means any willfulrelevant factors are whether or intentional act of misconduct, including, but not limitedthe award has a readily ascertainable fair market value, whether or not the award is subject to fraud, embezzlement, theftforfeiture provisions or any other material violation of law that occurs during or inrestrictions on transfer, the course of an employee’s employment, intentional damage to or misuse of Company assets, unauthorized disclosure of confidential informationnature of the Company,property to be received by the participant under the award and the participant’s holding period and tax basis for the award or violationunderlying common stock.
Tax Consequences to Us There will be no tax consequences to us for any awards made under the WBD Incentive Plan, except that we may be entitled to a deduction when a participant has compensation income. Any such deduction will be subject to the limitations of Section 162(m) of the Code. Zaslav Employment Agreement. UnderNew Plan Benefits
As of March 4, 2022, approximately 11,000 persons were eligible to receive awards under the termsWBD Incentive Plan, including our five named executive officers. The granting of David Zaslav’s employment agreement, “cause” means (i) willful malfeasance byawards under the WBD Incentive Plan is discretionary, except we are obligated to grant Mr. Zaslav $12,000,000 in connection with his employment, including embezzlement, misappropriation of funds, propertyshare-settled performance-based restricted stock units, or corporate opportunity or material breach of his employment agreement, as determined by the Board after investigation, notice to Mr. Zaslav of the charge and provision to him of an opportunity to respond; (ii) if Mr. Zaslav commits any act or becomes involved in any situation or occurrence involving moral turpitude, which is materially damaging to our business or reputation; (iii) if Mr. Zaslav is convicted of, or pleads guilty or nolo contendere to, fails to defend against, or is indicted for a felony or a crime involving moral turpitude; or (iv) if Mr. Zaslav repeatedly or continuously refuses to perform his duties or to follow the direction of the Board. UnderPRSUs, annually through 2027 under the terms of Mr. Zaslav’s employment agreement “good reason” means (1) reduction ofwith us.
Except for these grants to Mr. Zaslav’s base salary; (2) material reductionZaslav, which are summarized in the amounttable below, we cannot now determine the number or type of awards to be granted in the future to any particular person or group. If our stockholders do not approve the adoption 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, provided that a relocation to Silver Spring, Maryland shall not constitute good reason; (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. Under the terms of Mr. Zaslav’s employment agreement, “change in control” means (A) the merger, consolidation or reorganization ofWBD Incentive Plan, the Company with any other company (or our issuance bywill grant the Company of its 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, provided that either (i) Advance/Newhouse Programming Partnership (individually and with its affiliates) continues to be entitled to exercise its special class voting rights described in Article IV, Section C 5(c) of the Company’s Certificate of Incorporation (as in effect on the date hereof) or the equivalent thereof (the “PreferredA-1 Blocking Rights”), or (ii) John Malone (individually and with his respective affiliates) or his heirs shall beneficially own more than 20% of the voting power represented by the outstanding “Voting Securities” (as defined in the Company’s Certificate of Incorporation as in effect on the date hereof) or the equivalent thereof (the “Common B Blocking Rights”); (B) the consummation by the Company of a plan of complete liquidation or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than any such sale or disposition to an entity for which Advance/Newhouse Programming Partnership (individually and with its affiliates) continues to be entitled to exercise itsPreferred A-1 Blocking Rights or Mr. Malone (individually and with his affiliates) or his heirs continues to be entitled to exercise his Common B Blocking Rights; or (C) any sale, transfer or issuance of voting securities of the Company (including any series of related transactions) as a result of which Advance/Newhouse Programming Partnership (individually and with its affiliates) continues to be entitled to exercise its PreferredA-1 Blocking Rights nor Mr. Malone (individually and with his affiliates) or his heirs continues to be entitled to exercise his Common B Blocking Rights. 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 RegulationSection 1.409A-3(i)(5).
Wiedenfels Employment Agreement. Under the terms of 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 relatedPRSUs to Mr. Wiedenfels’ employment withZaslav under the Company; (iii) conduct constituting a financial crime, material act2013 Incentive Plan.
2022 Proxy Statement 79
Table of dishonesty or conduct in violationContents Proposal 3: Approval of Company’s CodeWarner Bros. Discovery, Inc. Stock Incentive Plan Warner Bros. Discovery, Inc. Stock Incentive Plan Name and Position | | Dollar Value($) | | Number of PRSUs | David M. Zaslav President and Chief Executive Officer(b) | | 12,000,000 | | 427,808 | Gunnar Wiedenfels Chief Financial Officer(a) | | — | | — | Bruce L. Campbell Chief Development, Distribution, and Legal Officer(a) | | — | | — | David Leavy Chief Corporate Operating Officer(a) | | — | | — | Jean-Briac Perrette President and Chief Executive Officer, Discovery International(a) | | — | | — | Executive Group(b) | | 12,000,000 | | 427,808 | Non-Executive Director Group(a) | | — | | — | Non-Executive Officer Employee Group(a) | | — | | — |
(a) | Amount is indeterminable. Non-executive directors are not eligible to participate in the WBD Incentive Plan. | (b) | Represents share-settled PRSUs that Mr. Zaslav is entitled to receive under his employment agreement in 2023. Excludes (1) share-settled PRSUs that Mr. Zaslav will be entitled to receive under his employment agreement for subsequent years following 2023 and (2) any discretionary awards that Mr. Zaslav may be awarded under the WBD Incentive Plan. The number of shares underlying the PRSUs above are based on the closing price of the Discovery common stock on the last business day of 2021, which was $23.54. |
80 Discovery
Table of 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; or (vii) willful misconduct in connection with the performance of Mr. Wiedenfels’ duties. Under the terms of Mr. Wiedenfels’ employment agreement, “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, Chairman, or the Board. The “good reason” definition includes a requirement of notice and an opportunity to cure.
Campbell Employment Agreement. Mr. Campbell’s employment agreement contains the same definition of “cause” that is included in Mr. Wiedenfels’ agreement. Under the terms of Mr. Campbell’s employment agreement, “good reason” means the occurrence of any of the following events without Mr. Campbell’s consent: (a) a material reduction in Mr. Campbell’s 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 CEO, Chairman, or the Board. The “good reason” definition includes a requirement of notice and an opportunity to cure.
Perrette Employment Agreement. Mr. Perrette’s employment agreement contains the same definition of “cause” that is included in Mr. Wiedenfels’ agreement. Under the terms of Mr. Perrette’s 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 London, UK metropolitan area, except that repatriation to the New York, NY metropolitan area at the end of his term of employment; (c) a change of his reporting relationship to a level lower than the CEO of the
Company; (d) a material breach of his agreement through the Company’s failure to make the equity awards. The “good reason” definition includes a requirement of notice and an opportunity to cure.
Guagliardo Employment Agreement. Mr. Guagliardo’s employment agreement contains the same definition of “cause” that is included in Mr. Wiedenfels’ agreement. Under the terms of Mr. Guagliardo’s employment agreement, “good reason” means the occurrence of any of the following events without Mr. Guagliardo’s consent: (a) a material reduction in Mr. Guagliardo’s duties, title, or responsibilities; (b) a material change in his work location from the New York, NY metropolitan area; (c) a reduction in his annual base salary or annual bonus target opportunity; (d) a material breach by us, our subsidiaries or affiliates of this agreement or any other material agreement between Mr. Guagliardo and us, our subsidiaries or affiliates; (e) a change of his reporting relationship to a level below the Company’s CEO, Chairman, or the Board; (f) the failure to approve the stock options and PRSU equity awards specified in the agreement; or (g) the failure to appoint him as Chief Commercial Officer within 90 days of his first day of employment. The “good reason” definition includes a requirement of notice and an opportunity to cure.
Warren Employment Agreement. Mr. Warren’s employment agreement contains the same definition of “cause” that is included in Mr. Wiedenfels’ agreement. Under the terms of Mr. Warren’s employment agreement, “good reason” means the occurrence of any of the following events without Mr. Warren’s consent: (a) a material reduction in Mr. Warren’s duties or responsibilities (e.g. a reduction in his responsibilities such that he is no longer the senior-most finance executive of the Company); or (b) a material change in his work location from the Company’s offices in New York City, New York. The “good reason” definition includes a requirement of notice and an opportunity to cure.Contents
Risk Considerations in ourSecurities Authorized for Issuance under Equity Compensation Programs
In view of the current economic and financial environment, the Compensation Committee has reviewed the design and operation of our incentive compensation arrangements. The Compensation Committee has determined that these arrangements do not provide our Company’s employees with incentive to engage in business activities or other actions that would threaten the value of our Company or the investment of our stockholders, or that would otherwise be reasonably likely to have a material adverse effect on our Company. The outside consultant to the Compensation Committee, Croner, assisted the Compensation Committee in its risk assessment of our executive compensation programs in meetings throughout 2017 and advised the Compensation Committee in reaching this conclusion as to those plans; however, Croner did not participate in the assessment of risk with respect tonon-executive compensation arrangements.
Prohibition on Derivative Trading
Our Company prohibits certain derivative transactions in our stock by officers, directors and their families. 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.
Certain Relationships and Related Person Transactions
In the ordinary course of business, we were a party during 2017 to certain business transactions with institutions affiliated with members of our Board. Management believes that the terms and conditions of the transactions were no more and no less favorable to us than the terms of similar transactions with unaffiliated institutions to which we are, or expect to be, a party. Those transactions that are required to be disclosed under rules promulgated by the SEC are described below.
On July 31, 2017, Discovery entered into a Preferred Share Exchange Agreement (the “Exchange Agreement”) with Advance/Newhouse Programming Partnership (“Advance/Newhouse”), pursuant to which Discovery agreed to issue a number of shares of DiscoverySeries A-1 preferred stock, and a number of shares of DiscoverySeries C-1 preferred stock, (collectively, “the New Preferred Stock”) to Advance/Newhouse in exchange for all of Advance/Newhouse’s shares of Discovery Series A preferred stock and all of Advance/Newhouse’s shares of Discovery Series C preferred stock. The terms of the Exchange Agreement resulted in Advance/Newhouse’s aggregate voting and economic rights before the exchange being equal to their aggregate voting and economic rights after the exchange. The terms of the exchange agreement also provide that certain of the shares of DiscoverySeries C-1 preferred stock received by Advance/Newhouse in the exchange (including the Discovery Series C common stock into which such shares are convertible) are subject to transfer restrictions on the terms set forth in the Exchange Agreement. While subject to transfer restrictions, such shares may be pledged in certain bona fide financing transactions, but may not be pledged in connection with hedging or similar transactions.
On August 7, 2017, upon the terms set forth in the exchange agreement, Discovery and Advance/Newhouse completed the exchange. Prior to the exchange the Discovery Series A preferred stock had a carrying value of $108 million as a class of securities and each share of Discovery Series A preferred stock was convertible into one share of Discovery Series A common stock and one share of Discovery Series C common stock (referred to as the “embedded Discovery Series C common stock”). Through its ownership of the Discovery Series A preferred stock, Advance/Newhouse had the right to elect three directors (the “preferred directors”) and maintained special voting rights on certain matters, including but not limited to blocking rights for material acquisitions, the issuance of debt securities and the issuance of equity securities (collectively, the “preferred rights”). Additionally, Advance/Newhouse had certain transfer restrictions with respect to its governance rights. Prior to the exchange, the Discovery Series C preferred stock was considered the economic equivalent of Series C common stock.
Discovery considers the legal exchange of the Discovery Series A preferred stock for DiscoverySeries A-1 preferred stock and DiscoverySeries C-1 preferred stock to be a modification to the conversion option of the Discovery Series A preferred stock. Previously, conversion required simultaneous conversion into Series A common stock and Series C common stock. The exchange agreement allows for the independent conversion of the DiscoverySeries C-1 preferred stock without the conversion of DiscoverySeries A-1 preferred stock. However, Advance/Newhouse’s aggregate voting, economic and preferred rights before the exchange are equal to their aggregate voting, economic and preferred rights after the exchange. Additionally, the exchange agreement results in the exchange of legal form preferred stock for new legal form preferred stock.
Discovery valued the securities immediately prior to and immediately after the exchange and determined that the exchange increased the fair value of Advance/Newhouse’s preferred stock by $35 million from $3.340 billion to $3.375 billion, or 1.05%, which was not considered significant in the context of the total value of the preferred stock.
Other than as described above, there were no other related person transactions during 2017. The Nominating and Corporate Governance Committee has guidelines for evaluating potential related person transactions, which are described in the section below.
Policy Governing Related Person Transactions
Our current written policies and procedures for the review, approval or ratification of related person transactions and other conflict of interest matters are based on our Guidelines and our Code, which apply to all directors, officers and employees of Discovery. Among other things, the Guidelines provide that when a director has an actual or potential conflict of interest, the director should promptly inform the Chief Executive Officer, the General Counsel and the chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, or another independent committee of the Board designated by the Board,
will resolve any conflict of interest involving a director, the Chief Executive Officer or any other executive officer. No related person transaction may be effected by Discovery without the approval of the Nominating and Corporate Governance Committee or another independent committee designated by the Board.
In evaluating potential related person transactions, the Nominating and Corporate Governance Committee considers:
the nature of the related person’s interest in the transaction;
the approximate total dollar value of, and extent of the related person’s interest in, the transaction;
whether the transaction would be undertaken in our ordinary course of business;
whether the transaction is proposed to be entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party; and
the purpose of, and potential benefits to the Company of, the transaction.
For purposes of the Guidelines, a “related person transaction” refers to any transaction which Discovery would be required to disclose pursuant to Item 404 of RegulationS-K.
All transactions that would have required the approval of the Nominating and Corporate Governance Committee were reviewed and approved by that committee.
PROPOSAL 4: STOCKHOLDER PROPOSAL TO REQUIRE DIVERSE CANDIDATES FOR NEW DIRECTOR NOMINEES
Certain stockholders have advised the Company that they intend to present the proposal set forth below at the 2018 Annual Meeting. The names and addresses of, and the number of shares owned by, each such stockholder will be provided upon written request to the Corporate Secretary.
Resolved:Shareholders request that the Board of Directors of Discovery Communications adopt a policy for improving board diversity (the “Policy”) requiring that the initial list of candidates from which new management supported director nominees are chose (the “Initial List”) by the Nominating and Corporate Governance Committee should include (but need not be limited to) qualified women and minority candidates. The Policy should provide that any third-party consultant asked to furnish an Initial List will be asked to include such candidates.
Supporting Statement
As of November 2017, Discovery Communications did not appear to have any minorities on its board. This is unfortunate, because a growing body of empirical research indicates a significant positive relationship between firm value and the percentage of women and minorities on boards. For instance, one study found a significant positive correlation between gender diversity and the inclusion of people of color on boards and both return on assets and return on investment. (http://ssrn.com/abstract=416337) Another found a positive and significant relationship between racial diversity and innovation, reputation and firm performance. (http://ssrn.com/abstract=1410337) A 2015 McKinsey study of 366 companies found that companies with corporate leadership in the top quartile for racial and ethnic diversity were 35 percent more likely to have financial returns above their national industry median. (http://www.diversitas.co.nz/Portals/25/Docs/Diversity%20Matters.pdf)
We believe that the search process used by boards can play an important role in improving board diversity. According to a 2016 study published by theHarvard Business Review, including more than one woman or member of a racial minority in a finalist pool helps combat unconscious bias among interviewers and increases the likelihood of a diverse hire.(https://hbr.org/2016/04/if-theres-only-one-woman-in-your-candidate-pool-theres-statistically-no-chance-shell-be-hired)
A 2012 report by the National Association of Corporate Directors recommended that no less thanone-third of candidates for new board seats should match the board’s definition of diverse. (https://www.nacdonline.org/files/PDF/NACD_BRC_BoardDiversity%20(Watermark).pdf) In its 2016 Principles of Corporate Governance, the Business Roundtable calls on boards to “develop a framework for identifying appropriately diverse candidates that allows the nominating/corporate governance committee to consider women, minorities, and others with diverse backgrounds as candidates for each open board seat.”(https://businessroundtable.org/sites/default/files/Principles-of-Corporate-Governance-2016.pdf)
Policies like the one advanced in this proposal have been adopted by the nominating and governance committees of many leading companies, including Gentex Corporation, Costco Wholesale Corporation, Home Depot, IDEXX Labs, Stryker Corporation and Neogen Corporation. While corporate boards may face differing circumstances, it is difficult to ignore the positive impact of diversity. In 2017, a similar request was supported by more thanone-third of shares voted as percentage of shares cast for and against the proposal. We urge the Board to join other leading companies and adopt this important governance reform.
Board of Directors’ Statement in Opposition
The Board has carefully considered this proposal and, for the reasons set forth below, does not believe that it is in the best interests of Discovery and its stockholders.
The Board acknowledges the benefits of diversity throughout the Company. For example, globally, 41% of our executive team is female and 42% of our U.S. executive team is female. Discovery ranks first in percentage of female managers in our industry in the U.S. and second for female executives (Senior Vice President and above) in our industry in the U.S. We also have strong ethnic minority representation in our employee base, at 35% of our U.S. employee base, as compared to the U.S. industry average of 32%. We are in the 67th percentile for overall percentage of executive-level minorities in our industry in the U.S.
The Board and the Nominating and Corporate Governance Committee believe that the Company’s current director nomination process allows for identification of the best possible nominees for director, regardless of their gender, racial background, religion or ethnicity. The Board and Nominating and Corporate Governance Committee seek to obtain qualified director candidates and consider diversity as a factor. The Company’s existing nomination process considers the needs of the Company in connection with the current breadth of director skills and attributes, while identifying the most suitable candidates for director based on merit. When evaluating individual nominees, the Nominating and Corporate Governance Committee considers a variety of factors, including their range of experience, soundness of judgment, commitment to understand the Company and its industry, and willingness and ability to contribute positively to the decision-making process of the Company.
We believe that adopting such a policy would hinder our ability to tailor our director search to the specific needs of the Board and would bind us to a nominating process that may not provide additional value given the specific skills or expertise sought by the Board. Additionally, we believe that the obligations expected in this proposal would be distracting and time consuming, without any corresponding benefit to our stockholders.
For the foregoing reasons, the Discovery Board of Directors recommends a vote “AGAINST” Proposal 4.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANSPlans
The following table sets forth information, as of December 31, 2017,2021, regarding our securities authorized for issuance pursuant to equity compensation plans. Pursuant to these plans, we may issue common stock or stock options, restricted stock, RSUs, PRSUs, SARs, or other rights to acquire shares of our common stock from time to time. | | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | | Equity compensation plans approved by security holders: | | | | | | | | | | | | | Discovery Communications, Inc. 2013 Incentive Plan: | | | | | | | | | | | | | Series A common stock | | | 14,440,967 | (1)(2) | | $ | 29.86 | (3) | | | 57,054,910 | (4)(5) | Series B common stock | | | — | | | | — | | | | — | | Series C common stock | | | 2,271,230 | (1)(6) | | $ | 34.34 | (3) | | | — | | Discovery Communications, Inc. 2005 Incentive Plan (As Amended and Restated Effective September 16, 2008):(7)(8) | | | | | | | | | | | | | Series A common stock | | | 2,095,482 | (1)(2) | | $ | 21.58 | (3) | | | — | | Series B common stock | | | — | | | | — | | | | — | | Series C common stock | | | 1,883,022 | (1)(6) | | $ | 21.58 | (3) | | | — | | Discovery Communications, Inc. 2005Non-Employee Director Incentive Plan (As Amended and Restated):(7) | | | | | | | | | | | | | Series A common stock | | | 262,745 | (9) | | $ | 21.55 | (10) | | | 9,188,050 | (4) | Series B common stock | | | — | | | | — | | | | — | | Series C common stock | | | 131,001 | (9) | | $ | 30.26 | (10) | | | — | | Discovery Employee Stock Purchase Plan | | | | | | | | | | | | | Series A common stock | | | — | | | | — | | | | 8,921,365 | | Equity compensation plans not approved by security holders: | | | — | | | | — | | | | — | | Total | | | 21,084,447 | | | $ | 27.82 | | | | 75,164,325 | |
Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | | Equity compensation plans approved by security holders: | | | | | | | Discovery Communications, Inc. 2013 Incentive Plan: | | | | | | | | | | | Series A common stock | | | 39,186,418 | (1)(2) | | $ | 34.96 | (3) | | | 34,969,877 | (4)(5) | Series B common stock | | | — | | | | — | | | | — | | Series C common stock | | | 175,737 | (1)(5) | | $ | 17.42 | (3) | | | — | | Discovery Communications, Inc. 2005 Non-Employee Director Incentive Plan (As Amended and Restated):(6) | | | | | | | | | | | Series A common stock | | | 260,264 | (7) | | | — | | | | 6,953,915 | (4) | Series B common stock | | | — | | | | — | | | | — | | Series C common stock | | | 19,906 | (7) | | | — | | | | — | | Discovery Communications, Inc. 2011 Employee Stock Purchase Plan | | | | | | | | | | | | | Series A common stock | | | — | | | | — | | | | 8,188,482 | | Equity compensation plans not approved by security holders: | — | | | | — | | | | — | | TOTAL | | | 39,642,326 | | | $ | 34.64 | | | | 50,112,274 | |
(1) | Includes RSUs and PRSUs. |
(2) | Includes shares of common stock related to SARs that will be net settled through the issuance of our Series A common stock. The number of shares of common stock issued to settle such SARs is determined at the time of exercise based on the amount by which the price of our Series A common stock at the time of exercise exceeds the grant price divided by the price of our Series A common stock at the time of exercise. The number of shares of our Series A common stock was estimated using the closing market price of our Series A common stock on December 29, 2017,31, 2021, which was $22.38.$23.54. |
(3) | The determination of the weighted average exercise price of outstanding stock options, warrants and rights excludes RSUs and PRSUs. |
(4) | Each plan permits the issuance of stock options, warrants and rights in addition to other forms of equity-based awards to acquire shares of our Series A common stock, Series B common stock, or Series C common stock, subject to a single aggregate limit per plan. |
(5) | Includes securities reserved for outstanding SARs that will be settled through cash payments. Pursuant to the terms of the plan, such securities are not available for future issuance until the SARs are settled through a cash payment, or otherwise forfeited or cancelled. |
(6) | Includes shares of common stock related to SARs that will be net settled through the issuance of our Series C common stock. The number of shares of common stock issued to settle such SARs is determined at the time of exercise based on the amount by which the price of our Series C common stock at the time of exercise exceeds the grant price divided by the price of our Series C common stock at the time of exercise. The number of shares of our Series C common stock was estimated using the closing market price of our Series C common stock on December 29, 2017, which was $21.17. |
(7) | We assumed this equity compensation plan in connection with the transaction in which we became a public company, which was completed in September 2008 (the “Transaction”). Because the Transaction provided for the exchange of securities between us and Discovery Holding Company, which is the predecessor entity to the Company, this plan effectively has been approved by our security holders. |
(8) | The Discovery Communications, Inc. 2013 Incentive Plan replaced the Discovery Communications, Inc. 2005 Incentive Plan and Discovery no longer has the ability to make further grants under the 2005 Incentive Plan. |
(9)(7) | Includes unvested RSUs and vested RSUs as to which settlement has been deferred. |
2022 Proxy Statement81 (10) | The determination of the weighted average exercise price of outstanding stock options, warrants and rights excludes RSUs. |
Table of Contents SECURITY OWNERSHIP INFORMATION OF CERTAIN BENEFICIAL OWNERS ANDSecurity Ownership of Certain Beneficial Owners and Management
MANAGEMENT OF DISCOVERY
Security Ownership of Certain Beneficial Owners of Discovery The following table sets forth information, to the extent known by Discoveryus or ascertainable from public filings, concerning the beneficial ownership of each person or entity, other than certain of Discovery’sour directors and executive officers whose ownership information follows, who owns more than five percent of the outstanding shares of each class of our common stock and preferred stock as of March 1, 2018.4, 2022. The percentage ownershipPercent of Class shown below is based upon 155,987,214171,542,669 shares of Series A common stock, 6,512,3796,511,917 shares of Series B common stock, 219,850,044330,166,667 shares of Series C common stock, 7,852,582 and 4/9th shares of Series A-1 convertible preferred stock and 4,313,349 and 1/2 shares of Series C-1 convertible preferred stock outstanding as of March 1, 2018, 7,852,5824, 2022. The Voting Power shown in the table below reflects the beneficial owner’s voting power to elect common stock directors and four-ninths (4/9ths)preferred stock directors (as applicable) with respect to applicable class of stock held by such beneficial owner. The preferred stock directors are elected by the holders of Series A-1 convertible preferred stock. The common stock directors are elected by the holders of Series A common stock and the holders of Series B common stock. Shares of Series C common stock and shares of SeriesA-1 C-1 preferred stock and 6,017,473.5 shares of SeriesC-1 preferred stock outstanding on March 1, 2018. Ashave no voting rights except to the holder of SeriesA-1 preferred stock, Advance/Newhouse Programming Partnership (“Advance/Newhouse”) will be entitled to vote, on anas-converted basis, with the holders of common stock on matters other than the election of common stock directors. With respect toextent required by law. On all matters other than the election of directors, the holders of Series A-1 convertible preferred stock are entitled to vote, on an as-converted basis, with the holders of Series A common stock directors, the voting percentages represented by the shares included in the table (other than those beneficially owned by Advance/Newhouse) would be significantly lower because Advance/Newhouse, the holder of theand SeriesA-1 preferred stock, votes with our B common stock on all other matters. Conversely,stock. On such matters, therefore, the holders of common stock do not votewill have a lower voting power percentage than the percentage shown in the election of preferred stock directors.Voting Power column below.
| | | | | | | | | | | | | | | Name and Address of Beneficial Owner | | Title of Class | | Amount and Nature of Beneficial Ownership | | | Percent of Class | | | Voting Power (%) | | Advance/Newhouse | | Series A common stock | | | 70,673,242 | (1)(2) | | | 31.2 | | | | 24.2 | | Programming Partnership | | Series C common stock | | | 116,527,171 | (1)(2) | | | 34.6 | | | | — | | 6350 Court Street Road | | Series A-1 preferred stock | | | 7,852,582 4/9ths | (2) | | | 100 | | | | 100 | | E. Syracuse, NY 13057 | | SeriesC-1 preferred stock | | | 6,017,473.5 | (2) | | | 100 | | | | — | | | | | | | BlackRock Inc. | | Series A common stock | | | 10,033,075 | (3) | | | 6.4 | | | | 4.5 | | 55 East 52nd Street New York, NY 10022 | | Series C common stock | | | 13,617,520 | (4) | | | 6.2 | | | | — | | | | | | | Capital Research Global Investors | | Series A common stock | | | 8,698,115 | (5) | | | 5.6 | | | | 3.9 | | 333 South Hope Street Los Angeles, CA 90071 | | | | | | | | | | | | | | | | | | | | Clearbridge Investments, LLC | | Series A common stock | | | 18,325,805 | (6) | | | 11.7 | | | | 8.3 | | 620 8th Avenue New York, NY 10018 | | | | | | | | | | | | | | | | | | | | Hotchkis and Wiley Capital Management, LLC | | Series A common stock | | | 21,309,461 | (7) | | | 13.7 | | | | 9.6 | | 725 S. Figueroa Street, 39th Floor Los Angeles, CA 90017 | | Series C common stock | | | 11,453,035 | (8) | | | 5.2 | | | | | | | | | | | State of Wisconsin Investment Board | | Series C common stock | | | 13,528,070 | (9) | | | 6.2 | | | | — | | 225 Liberty Street New York, NY 10286 | | | | | | | | | | | | | | | | | | | | The Vanguard Group, Inc. | | Series A common stock | | | 16,072,565 | (10) | | | 10.3 | | | | 7.3 | | 100 Vanguard Boulevard Malvern, PA 19355 | | Series C common stock | | | 20,644,274 | (11) | | | 9.4 | | | | — | |
Name and Address of Beneficial Owner | | Title of Class | | Amount and Nature of Beneficial Ownership | | | Percent of Class (%) | | Voting Power (%) | Advance/Newhouse Programming Partnership(1) | | Series A common stock | | 70,673,242 | (2) | | 29.2 | | 23.0 | 6350 Court Street | | Series C common stock | | 96,034,376 | (3) | | 23.2 | | — | East Syracuse, NY | | Series A-1 preferred stock | | 7,852,583 | | | 100.0 | | 100.0 | 13057-1211 | | Series C-1 preferred stock | | 4,313,350 | | | 100.0 | | — | BlackRock Inc. | | Series A common stock | | 14,225,676 | (4) | | 8.3 | | 6.0 | 55 East 52nd Street | | Series C common stock | | 25,175,506 | (5) | | 7.6 | | — | New York, NY 10055 | | | | | | | | | | Brahman Capital Corp. | | Series A common stock | | 8,907,654 | (6) | | 5.2 | | 3.8 | 655 Third Avenue, 11th Fl | | | | | | | | | | New York, NY 10017 | | | | | | | | | | Clearbridge Investments, LLC | | Series A common stock | | 8,559,368 | (7) | | 5.0 | | 3.6 | 620 8th Avenue | | | | | | | | | | New York, NY 10018 | | | | | | | | | | GI Execution Services, LLC | | Series A common stock | | 8,887,623 | (8) | | 5.2 | | 3.8 | 175 W. Jackson Blvd., Suite 1700 | | | | | | | | | | Chicago, IL 60604 | | | | | | | | | | Hotchkis and Wiley Capital Management, LLC | | Series C common stock | | 23,834,438 | (9) | | 7.2 | | — | 601 S. Figueroa Street, 39th FL | | | | | | | | | | Los Angeles, CA 90017 | | | | | | | | | | Morgan Stanley | | Series A common stock | | 9,851,339 | (10) | | 5.7 | | 4.2 | 1585 Broadway | | | | | | | | | | New York, NY 10036 | | | | | | | | | | State Street Corporation | | Series C common stock | | 20,828,139 | (11) | | 6.3 | | — | One Lincoln Street | | | | | | | | | | Boston, MA 02111 | | | | | | | | | | The Vanguard Group, Inc. | | Series A common stock | | 17,883,756 | (12) | | 10.4 | | 7.6 | 100 Vanguard Boulevard | | Series C common stock | | 33,779,787 | (13) | | 10.2 | | — | Malvern, PA 19355 | | | | | | | | | |
(1) | Represents sharesAn Amendment No. 15 to Schedule 13D was jointly filed on May 17, 2021 on behalf of Series A common stock and Series C common stock that would be acquired upon conversion of the shares of SeriesA-1 preferred stock and SeriesC-1 preferred stock that are currently outstanding. |
(2) | Advance/Newhouse is owned 100% by A/NPP Holdings LLC, in part through a wholly-owned subsidiary, A/NPP Holdings Sub LLC. A/NPP Holdings, LLC is owned 65% by Newhouse Programming Holdings Corp.Partnership (“ANPP”), which is a wholly-owned subsidiary ofAdvance/ Newhouse Partnership (“ANP”), Newhouse Broadcasting Corporation which we refer to as “NBCo,” and 35% by The Patriot-News Co.(“NBCo”), Advance Magazine Publishers, Inc., Condé Nast International Inc., Newark Morning Ledger Co. and Advance Programming Holdings LLC, which are wholly-owned subsidiaries of Advance Publications, Inc. (“API”), which we refer to as “API.” Newhouse Family Holdings, L.P., which we refer to as “NFH”, holds 100% (“NFH”) and Advance Long-Term Management Trust (“Advance Long-Term Trust”). NBCo beneficially owns such shares indirectly through its 65% interest in ANPP and 61.24% interest in ANP, and each of the commonAPI, NFH and Advance Long-Term Trust beneficially owns such shares of API.indirectly through its 35% interest in ANPP and 38.76% interest in ANP. NFH disclaims beneficial ownership of the shares of our preferred stock held by Advance/NewhouseANPP and the shares of our common stock into which the preferred stock is convertible. Advance Long-Term Trust, Management Trust, which we refer to as “Advance Long-Term Trust”, is the sole general partner of NFH and also disclaims beneficial ownership of the shares of preferred stock and the shares of our common stock into which the preferred stock is convertible. The trustees of the Advance Long-Term Trust are Samuel I. Newhouse, III, Steven O. Newhouse, Michael A. Newhouse, Victor F. Ganzi, and Peter C. Gould,Thomas S. Summer, each of whom disclaims beneficial ownership of the shares of preferred stock held by Advance/NewhouseANPP and the common stock into which the preferred stock is convertible. |
82 Discovery
Table of Contents Security Ownership of Certain Beneficial Owners and Management (2) | Includes shares of Series A common stock that would be acquired upon conversion of the shares of Series A-1 convertible preferred stock that are currently outstanding. ANPP has beneficial ownership of 70,673,242 shares of Series A common stock on an as-converted basis. Each of NBCo, API, NFH and Advance Long-Term Trust beneficially owns such shares indirectly through its interest in ANPP. | (3) | Includes shares of Series C common stock that would be acquired upon conversion of the shares of Series C-1 preferred stock that are currently outstanding. ANPP has beneficial ownership of 91,889,280.86 shares of Series C common stock. ANP has beneficial ownership of 4,145,095.53 shares of Series C common stock. Each of NBCo, API, NFH and Advance Long-Term Trust beneficially owns such shares indirectly through its interest in ANPP and ANP. | (4) | The number of shares is based uponon Amendment No. 712 to the Schedule 13G filed January 29, 2018February 3, 2022 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 Series A common stock. BlackRock Inc. is deemed to be the beneficial owner of 10,033,07514,225,676 shares of our Series A common stock as a result of acting as a parent holding company. |
(4)(5) | The number of shares is based uponon Amendment No. 37 to the Schedule 13G filed February 8, 20183, 2022 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 Series C common stock. BlackRock Inc. is deemed to be beneficial owner of 13,617,52025,175,506 shares of our Series C common stock as a result of acting as a parent holding company. |
(5)(6) | The number of shares is based uponon the Schedule 13G jointly filed on February 14, 2018January 7, 2022 by Brahman Capital Research Global Investors (“Corp., Brahman Management, L.L.C., Robert J. Sobel and Mitchell A. Kuflik. Brahman Capital Research”), an investment adviser. Capital ResearchCorp. is deemed to be the beneficial owner of 8,698,1158,907,654 shares of Discovery Series A common stock as a result of acting as an investment advisor. | (7) | The number of shares is based on Amendment No. 8 to Schedule 13G filed February 8, 2022 by Clearbridge Investments, LLC (“Clearbridge”). Clearbridge is deemed to be the beneficial owner of 8,559,368 shares of our Series A common stock as a result of acting as investment adviser. |
(6)(8) | The number of shares is based upon Amendment No. 3on the Schedule 13G jointly filed February 14, 2022 by GI Execution Services, LLC (“GI”), Susquehanna Investment Group (“Susquehanna Investment”) and Susquehanna Securities, LLC (“Susquehanna Securities”), who are affiliated independent broker dealers which may be deemed a group. GI has sole voting and dispositive power with respect to 88 shares of our Series A common stock, Susquehanna Investment has sole voting and dispositive power with respect to 152,500 shares of our Series A common stock and Susquehanna Securities has sole voting power and dispositive power with respect to 8,735,035 shares of our Series A common stock. | (9) | The number of shares is based on the Schedule 13G filed February 14, 201811, 2022 by ClearBridge Investments,Hotchkis and Wiley Capital Management, LLC (“ClearBridge”Hotchkis and Wiley”), an investment adviser. ClearBridge. Hotchkis and Wiley is deemed to be the beneficial owner of 18,325,80523,834,438 shares of our Series C common stock as a result of acting as investment advisor. | (10) | The number of shares is based on the Schedule 13G filed February 10, 2022 by Morgan Stanley. Morgan Stanley is deemed to be beneficial owner of 9,851,339 shares of Discovery Series A common stock as a result of acting as a parent holding company. | (11) | The number of shares is based on the Schedule 13G filed February 11, 2022 by State Street Corporation, a parent holding company on behalf of the subsidiaries listed in Exhibit 1 of its filing. | (12) | The number of shares is based on Amendment No. 12 to Schedule 13G filed February 9, 2022 by The Vanguard Group, Inc. (“Vanguard”). Vanguard is deemed to be the beneficial owner of 17,883,756 shares of our Series A common stock as a result of acting as investment adviser. ClearBridge Aggressive Growth Fund, an investment company owned by ClearBridge, beneficially owns 7,942,226 of these Series A shares. |
(7)(13) | The number of shares is based upon Amendment No. 38 to the Schedule 13G filed February 13, 20189, 2022 by Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), an investment adviser. HotchkisVanguard. Vanguard is deemed to be the beneficial owner of 21,309,461 shares of Series A common stock as a result of acting as investment adviser. |
(8) | The number of shares is based upon the Schedule 13G filed February 14, 2018 by Hotchkis. Hotchkis is deemed to be the beneficial owner of 11,453,03533,779,787 shares of our Series C common stock as a result of acting as investment adviser. |
(9) | The number of shares is based upon the Schedule 13G filed February 9, 2018 by State of Wisconsin Investment Board (“Wisconsin Investment Board”), a public pension fund. Wisconsin Investment Board is deemed to be the beneficial owner of 13,528,070 shares of our Series C common stock as a result of acting as a public pension fund. |
(10) | The number of shares is based upon Amendment No. 8 to the Schedule 13G filed February 12, 2018 by The Vanguard Group, Inc. (“Vanguard”), an investment adviser. Vanguard is deemed to be the beneficial owner of 16,072,565 shares of our Series A common stock as a result of acting as investment adviser. Vanguard
|
| Fiduciary Trust Company and Vanguard Investments Australia, Ltd., both wholly owned subsidiaries of Vanguard, share beneficial ownership of 163,745 and 111,453 of these Series A shares, as a result of serving as investment managers of collective trust accounts and Australian investment offerings, respectively. |
(11) | The number of shares is based upon Amendment No. 3 to the Schedule 13G filed February 12, 2018 by Vanguard. Vanguard is deemed to be the beneficial owner of 20,644,274 shares of our Series C common stock as a result of acting as investment adviser. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., both wholly owned subsidiaries of Vanguard, share beneficial ownership of 225,537 and 186,110 of these Series C shares, as a result of serving as investment managers of collective trust accounts and Australian investment offerings, respectively. |
Security Ownership of Discovery Management The following table sets forth information with respect to the beneficial ownership by each of our named executive officers and directors and all of our directors and executive officers as a group of shares of Series A common stock, Series B common stock and Series C common stock. The percentage ownership is based upon 155,987,214171,542,669 shares of Series A common stock, 6,512,3796,511,917 shares of Series B common stock, 219,850,044and 330,166,667 shares of Series C common stock outstanding as of March 1, 2018.4, 2022. Shares of common stock issuable upon exercise or conversion of options, warrants and convertible securities that were exercisable or convertiblemay be acquired on or within 60 days of March 1, 20184, 2022 are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible 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. For purposes of the following presentation, beneficial ownership of shares of Series B common stock, though convertible on aone-for-one basis into shares of Series A common stock, is reported as beneficial ownership of Series B common stock only, and not as beneficial ownership of Series A common stock, but the voting power of the Series A and Series B common stock have been aggregated. The voting power percentagesVoting Power shown in the table representbelow reflects the beneficial owner’s voting power to elect common stock directors as of March 4, 2022. The common stock directors are elected by the holders of Series A common stock and the holders of Series B common stock. Shares of Series C common stock have no voting rights except to vote onthe extent required by law. On all matters other than the election of directors. Thedirectors, the holders of SeriesA-1 convertible preferred stock are entitled to vote, on anas-converted basis, with the holders of Series A common stock and Series B common stock; on such matters, othertherefore, each person’s voting power will be lower than the electionVoting Power shown below. 2022 Proxy Statement83
Table of common stock directors. With respect to matters other than the electionContents Security Ownership of directors, the voting percentages represented by the shares included in the table would therefore be significantly lower. Conversely, the holders of common stock do not vote in the election of preferred stock directors. Certain Beneficial Owners and Management 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 One Discovery Place, Silver Spring, Maryland 20910.230 Park Avenue South, New York, New York 10003. Name of Beneficial Owner | | Title of Class of Common Stock | | Amount and Nature of Beneficial Ownership(1) | | | Percent of Class (%) | | Voting Power (%) | David M. Zaslav | | Series A | | 6,193,729 | | | 3.5 | | 1.1 | Chief Executive Officer, President and Director | | Series C | | 1,265,843 | | | * | | | Gunnar Wiedenfels | | Series A | | 290,987 | | | * | | * | Chief Financial Officer | | Series C | | 75,000 | | | * | | | Bruce L. Campbell | | Series A | | 672,456 | | | * | | * | Chief Development, Distribution and Legal Officer | | Series C | | 40,794 | | | * | | | David C. Leavy | | Series A | | 105,012 | | | * | | * | Chief Corporate Operating Officer | | Series C | | 5,521 | | | * | | | Jean-Briac Perrette | | Series A | | 478,746 | | | * | | * | President and CEO of Discovery International | | Series C | | 538 | | | * | | | Robert J. Miron | | Series A | | 22,893 | | | * | | * | Director, Board Chair | | Series B | | 56 | | | * | | | | | Series C | | 23,417 | | | * | | | Robert R. Beck | | Series A | | 28,565 | | | * | | * | Director | | Series B | | 11,258 | | | * | | | | | Series C | | 119,720 | | | * | | | Robert R. Bennett | | Series A | | 15,458 | (2) | | * | | * | Director | | Series C | | 197,219 | (2) | | | | | Paul A. Gould | | Series A | | 177,626 | | | * | | * | Director | | Series B | | 87,317 | | | 1.3 | | | | | Series C | | 447,255 | | | * | | | Robert L. Johnson | | Series A | | 0 | | | * | | * | Director | | | | | | | | | | Kenneth W. Lowe | | Series A | | 7,878 | | | * | | * | Director | | Series C | | 1,007,903 | | | * | | | John C. Malone | | Series A | | 1,104,323 | (3) | | * | | 26.6 | Director | | Series B | | 6,185,279 | (3)(4) | | 95.0 | | | | | Series C | | 11,774,762 | (3)(5) | | 3.6 | | | Steven A. Miron | | Series A | | 64,712 | | | * | | * | Director | | Series C | | 24,361 | | | * | | | Daniel E. Sanchez | | Series A | | 13,008 | | | * | | * | Director | | Series C | | 22 | | | * | | | Susan M. Swain | | Series A | | 0 | | | * | | * | Director | | | | | | | | | | J. David Wargo | | Series A | | 6,649 | | | * | | * | Director | | Series C | | 137,582 | | | * | | | All directors and executive officers as a group (19 persons) | | Series A | | 9,427,497 | | | 5.4 | | 28.5 | | | Series B | | 6,283,910 | | | 96.5 | | | | | Series C | | 15,131,026 | | | 4.6 | | |
| | | | | | | | | | | | | | | Name of Beneficial Owner
| | Title of Class of
Common Stock | | Amount and Nature of
Beneficial Ownership | | | Percent
of Class
(%(*) | | | Voting
Power
(%) | | David M. Zaslav
| | Series A | | | 1,097,922 | | | | * | | | | | | Chief Executive Officer,
| | Series B | | | — | | | | — | | | | * | | President and Director
| | Series C | | | 1,080,206 | | | | * | | | | | | Gunnar Wiedenfels
| | Series A | | | — | | | | * | | | | | | Chief Financial Officer
| | Series B | | | — | | | | — | | | | * | | | | Series C | | | 50,000 | | | | * | | | | | | Bruce L. Campbell
| | Series A | | | 431,644 | (1) | | | * | | | | | | Chief Development, Distribution and Legal Officer
| | Series B | | | — | | | | — | | | | * | | | | Series C | | | 174,719 | (1) | | | * | | | | | |
| | | | | | | | | | | | | | | Name of Beneficial Owner | | Title of Class of Common Stock | | Amount and Nature of Beneficial Ownership | | | Percent of Class (%) | | | Voting Power (%) | | Jean-Briac Perrette | | Series A | | | 369,100 | (1) | | | * | | | | | | President and Chief Executive Officer, | | Series B | | | — | | | | — | | | | * | | Discovery Networks International | | Series C | | | 74,282 | (1) | | | * | | | | | | Paul Guagliardo | | Series A | | | 10,000 | | | | * | | | | | | Former Chief Commercial Officer | | Series B | | | — | | | | — | | | | * | | | | Series C | | | — | | | | * | | | | | | Andrew Warren | | Series A | | | 25,627 | | | | * | | | | | | Former Chief Financial Officer | | Series B | | | — | | | | — | | | | * | | | | Series C | | | 22,843 | | | | * | | | | | | Robert J. Miron | | Series A | | | 30,053 | (1) | | | * | | | | | | Chairman of the Board and Director | | Series B | | | 56 | | | | * | | | | * | | | | Series C | | | 30,577 | (1) | | | * | | | | | | S. Decker Anstrom | | Series A | | | 11,521 | (1) | | | * | | | | | | Director | | Series B | | | — | | | | — | | | | * | | | | Series C | | | 21,521 | (1) | | | * | | | | | | Robert R. Beck | | Series A | | | 51,724 | (1) | | | * | | | | | | Director | | Series B | | | 11,258 | | | | * | | | | * | | | | Series C | | | 126,880 | (1) | | | * | | | | | | Robert R. Bennett | | Series A | | | 104,675 | (1)(2) | | | * | | | | | | Director | | Series B | | | 20 | (2) | | | * | | | | * | | | | Series C | | | 207,292 | (1)(2) | | | * | | | | | | Paul A. Gould | | Series A | | | 191,983 | (1) | | | * | | | | | | Director | | Series B | | | 87,317 | | | | 1.3 | | | | * | | | | Series C | | | 461,796 | (1) | | | * | | | | | | Kenneth W. Lowe(3) | | Series A | | | — | | | | — | | | | | | Director | | Series B | | | — | | | | — | | | | — | | | | Series C | | | — | | | | — | | | | | | John C. Malone | | Series A | | | 1,048,688 | (1)(4)(5) | | | * | | | | | | Director | | Series B | | | 6,093,490 | (4)(6) | | | 93.6 | | | | 28 | | | | Series C | | | 13,096,723 | (1)(4)(5) | | | 6.0 | | | | | | Steven A. Miron | | Series A | | | 44,453 | (1) | | | * | | | | | | Director | | Series B | | | — | | | | — | | | | * | | | | Series C | | | 35,010 | (1) | | | * | | | | | | Daniel E. Sanchez | | Series A | | | 22 | | | | * | | | | | | Director | | Series B | | | — | | | | — | | | | * | | | | Series C | | | 22 | | | | * | | | | | | Susan M. Swain | | Series A | | | — | | | | — | | | | | | Director | | Series B | | | — | | | | — | | | | — | | | | Series C | | | — | | | | — | | | | | | J. David Wargo | | Series A | | | 47,076 | (1) | | | * | | | | | | Director | | Series B | | | — | | | | — | | | | * | | | | Series C | | | 277,292 | (1) | | | * | | | | | | All directors and executive | | Series A | | | 3,779,625 | (1) | | | 2.4 | | | | | | officers as a Group | | Series B | | | 6,192,141 | | | | 95 | | | | 29.6 | | (21 persons) | | Series C | | | 15,771,421 | (1) | | | 7.2 | | | | | |
* | Less than one percentpercent. |
84 Discovery
Table of Contents Security Ownership of Certain Beneficial Owners and Management | (1) | Includes beneficial ownership of shares that may be acquired upon exercise of stock options already vested or exercisable within 60 days of March 1, 2018,4, 2022, in the amounts below: |
| | | | | | | | | | | Series A | | | Series C | | Bruce L. Campbell | | | 369,017 | | | | 133,925 | | Jean-Briac Perrette | | | 342,184 | | | | 59,758 | | Robert J. Miron | | | 14,743 | | | | 14,743 | | S. Decker Anstrom | | | 9,123 | | | | 9,123 | | Robert R. Beck | | | 14,743 | | | | 14,743 | | Robert R. Bennett | | | 14,743 | | | | 14,743 | | Paul A. Gould | | | 14,743 | | | | 14,743 | | John C. Malone | | | 14,743 | | | | 14,743 | | Steven A. Miron | | | 14,743 | | | | 14,743 | | J. David Wargo | | | 14,743 | | | | 14,743 | | All directors and executive officers as a group (21 persons) | | | 1,093,932 | | | | 397,347 | |
| Series A | | Series B | | Series C | David M. Zaslav | 3,650,881 | | 0 | | 0 | Gunnar Wiedenfels | 219,807 | | 0 | | 0 | Bruce L. Campbell | 411,927 | | 0 | | 0 | Jean-Briac Perrette | 184,036 | | 0 | | 0 | John C. Malone | 0 | | 91,789 | | 0 | All directors and executive officers as a group (19 persons) | 4,771,514 | | 91,789 | | 0 |
| (2) | Includes 54,913(i) 8,364 shares of Series A common stock, 20 shares of Series B common stock and 164,799 shares of Series C common stock owned by Hilltop Investments, LLC, which is jointly owned by Mr. Bennett and his wife. |
(3) | Mr. Lowe was appointed to our Board of Directors on March 6, 2018, following the acquisition of Scripps. As of March 1, 2018, the date of this table, Mr. Lowe did not own shares of our stock. However, as of the record date, he did own 298,433 shares of our Series C common stock. |
(4) | Includes 268,337wife, (ii) 6,768 shares of Series A common stock and 27,922 shares of Series C common stock owned by Hilltop Investments III, LLC, which is jointly owned by Mr. Bennett and his wife and (iii) 326 shares of Series A common stock and 979 shares of Series C common stock held by trust for the benefit of Mrs. Bennett. | | (3) | Includes (i) 170,471 shares of Series B common stock and 1,316,424 shares of Series C common stock held by Mr. Malone’s wife, as to which shares Mr. Malone disclaims beneficial ownership. |
(5) | Includes 765,608ownership, (ii) 91,789 shares of Series B common stock 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) 1,104,323 shares of Series A common stock and 11,765,5567,669,362 shares of Series C common stock held by a trust, with respect to which have been pledged in supportMr. Malone is the sole trustee and (iv) 455,400 shares of one or more lines of credit or margin accounts.Series C common stock held by the Malone Family Land Preservation Foundation, as to which Mr. Malone disclaims beneficial ownership. |
(6) | (4) | On February 13, 2014, Mr. Malone entered into an agreement with Mr. Zaslav granting Mr. Zaslav voting and purchase rights with respect to the 5,923,019 shares of Discovery Series B common stock that Mr. Malone owns, which will be in effect for as long as Mr. Zaslav is employed as the principal executive officer of Discovery or serving on its Board of Directors.Board. Pursuant to the agreement, Mr. Zaslav will have the right to vote the shares of Discovery Series B common stock any time Mr. Malone is not personally voting or directing the vote of the Discoverysuch shares of Series B shares.common stock. Any proposals regarding the transfer of the Discoverysuch shares of Series B sharescommon stock will require that Mr. Zaslav be first notified and that exclusive negotiation discussions be entered into to seek agreement on mutually acceptable terms for Mr. Zaslav to purchase the shares. If Mr. Zaslav or an entity he controls does not purchase the shares, Mr. Zaslav will not have any further rights under the agreement or any further rights to purchase the Discoverysuch shares of Series B shares.common stock. | | (5) | Includes 3,650,000 shares of Series C common stock which have been pledged in support of one or more lines of credit or margin accounts as of February 28, 2022. |
2022 Proxy StatementSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE85
Section 16(a)Table of the Securities Exchange Act of 1934, as amended, requires Discovery executive officers and directors and persons who own more than ten percent of a registered class of Discovery equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16 forms they file.
Based solely on a review of the copies of the Forms 3, 4 and 5 and amendments to those forms furnished to Discovery with respect to its most recent fiscal year, or written representations that no Forms 5 were required, Discovery believes that, during the year ended December 31, 2017, all Section 16(a) filing requirements applicable to Discovery officers, directors and greater than ten percent beneficial owners were complied with, except for the following filing: on August 2, 2017, a Form 4 relating to a May 22, 2017 performance-based restricted stock units award acquisition for Bruce Campbell was filed late.Contents
AVAILABILITY OF ANNUAL REPORT2022 Annual Meeting Information – Frequently Asked Questions
2022 Proxy Materials Q: | Why am I receiving these proxy materials? | A: | You received these materials because you owned shares of Discovery stock on March 4, 2022, the record date, and that entitles you to notice of, and to vote at, the 2022 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 2021 Annual Report on Form 10-K) provide certain information about 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 2022 proxy materials at: www.proxyvote.com. Our 2022 proxy materials are also available in the Investor Relations section of our corporate website at ir.corporate.discovery.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 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 2022 Annual Meeting? | A: | The principal business of the meeting will be the following matters: | | ● | the election of three Class II common stock directors by the holders of our Series A common stock and Series B common stock, voting together as a single class, and the election of three preferred stock directors by the holders of our Series A-1 convertible preferred stock, voting separately as a class; | | ● | the ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and | | ● | the approval of the Warner Bros. Discovery, Inc. Stock Incentive Plan. | | We will also transact such other business as may properly be presented at the 2022 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 2022 Annual Meeting of Stockholders. | Q: | Who is entitled to vote at the 2022 Annual Meeting? | A: | The close of business on March 4, 2022 was the record date for determining the holders of our Series A and Series B common stock and Series A-1 convertible preferred stock entitled to notice of, and to vote at, the 2022 Annual Meeting of Stockholders and any postponement or adjournment thereof. | Q: | How many shares can vote at the 2022 Annual Meeting and how many votes does each share have? | A: | As of March 4, 2022, we had outstanding: | | ● | 171,542,669 shares of Series A common stock, with each of those shares being entitled to one vote; |
86 Discovery
Table of Contents 2022 Annual Meeting Information – Frequently Asked Questions | ● | 6,511,917 shares of Series B common stock, with each of those shares being entitled to ten votes; and | | ● | 7,852,582 and four-ninths (4/9ths) shares of Series A-1 convertible preferred stock, with each of those shares being entitled to nine votes on all matters to be voted on at the 2022 Annual Meeting of Stockholders other than the election of common stock directors, which is equal to the number of votes the holder of the Series A-1 convertible preferred stock would have been entitled to cast had it converted its shares of Series A-1 convertible preferred stock into shares of Series A common stock on the record date. | Q: | How many shares must be present or represented at the 2022 Annual Meeting to conduct business at the meeting? | A: | With respect to Proposal One, 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 (a) the Series A common stock and Series B common stock, voting together as a single class, entitled to a separate vote on the election of three Class II common stock directors at the 2022 Annual Meeting of Stockholders will constitute a quorum for purposes of this class vote and (b) the Series A-1 convertible preferred stock entitled to a separate class vote on three Series A-1 preferred stock directors at the 2022 Annual Meeting of Stockholders will constitute a quorum for purposes of this class vote. | | With respect to Proposals Two and Three, the presence, in person or by properly executed proxy, of the holders of a majority in voting power of the Series A common stock, Series B common stock and Series A-1 convertible preferred stock, with the preferred stock considered on an as-converted to common stock basis, voting together as a single class, will constitute a quorum for the purposes of the combined class vote. | | 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: | With respect to Proposal One, the three Class II common stock directors are to be elected by the holders of our Series A common stock and Series B common stock, voting together as a single class, and the three Series A-1 preferred stock directors are to be elected by the holder of our Series A-1 convertible preferred stock, voting separately as a class. | | ● | The Class II common stock directors will be elected if they receive a plurality of the combined voting power of the outstanding shares of Series A common stock and Series B common stock present virtually or by proxy and entitled to vote on the election of common stock directors, voting together as single class; | | ● | The preferred stock directors will be elected if they receive the written consent or the affirmative vote of the holder of a majority of the outstanding shares of the Series A-1 convertible preferred stock; | | ● | If you withhold your vote, it will have no effect on the election of directors; and | | ● | Broker non-votes are not considered shares entitled to vote 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 combined voting power of the outstanding Series A common stock, Series B common stock and Series A-1 convertible preferred stock, voting as a single class, present virtually or by proxy and entitled to vote, is required to ratify Proposal Two. | | ● | 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 – Approval of the Warner Bros. Discovery, Inc. Stock Incentive Plan? | A: | The affirmative vote of a majority of the combined voting power of the outstanding Series A common stock, Series B common stock and Series A-1 convertible preferred stock, voting as a single class, present virtually or by proxy and entitled to vote, is required to ratify Proposal Two. | | ● | Abstentions will have the same effect as a vote “AGAINST” this proposal; and | | ● | Broker non-votes are not considered shares entitled to vote on this proposal and therefore will have no effect on the outcome of Proposal Three. | Q: | How can I vote my shares at the 2022 Annual Meeting? | A: | If you are a holder of Series A or Series B common stock or Series A-1 convertible preferred stock as of the record date, telephone and Internet voting is available 24 hours a day through 11:59 p.m. (Eastern Time) on April 7, 2022. 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. |
2022 Proxy Statement87
Table of Contents 2022 Annual Meeting Information – Frequently Asked Questions | 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 2022 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. | | While we encourage holders of Series A and Series B common stock and Series A-1 convertible preferred stock to vote by proxy, you also have the option of voting your shares of Series A and Series B common stock and Series A-1 convertible preferred stock at the 2022 Annual Meeting of Stockholders. All holders of Series A or Series B common stock or Series A-1 convertible preferred 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 2022 Annual Meeting of Stockholders and vote online, subject to compliance with the procedures described below. In order to vote online at the 2022 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 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) and the approval of the Warner Bros. Discovery, Inc. Stock Incentive Plan (Proposal Three) 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. 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 or Proposal Three. | 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 2022 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 2022 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: 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 2022 Annual Meeting of Stockholders. Your virtual attendance at the 2022 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. 88 Discovery
Table of Contents 2022 Annual Meeting Information – Frequently Asked Questions Proxy Solicitation Q: | Who is soliciting my vote? |
A: | The Board of Directors of Discovery, Inc. is soliciting your vote on proposals being submitted for consideration at our 2022 Annual Meeting of Stockholders to be held virtually at www.virtualshareholdermeeting.com/DISCA2022 on April 8, 2022 and any adjournment or postponement thereof. |
Q: | Who will bear the cost of soliciting votes for the 2022 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. | | Our Board has sent you this proxy statement. We will pay all expenses in connection with the solicitation of the enclosed proxy. 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 $25,000, plus reimbursement of out-of-pocket expenses for its efforts in connection with this annual meeting. |
Attending the 2022 Annual Meeting Q: | How do I virtually attend the 2022 Annual Meeting? |
A: | We will host the 2022 Annual Meeting of Stockholders live online via webcast. You may attend the 2022 Annual Meeting of Stockholders live online by visiting www.virtualshareholdermeeting.com/DISCA2022. The webcast will start at 10:00 a.m., Eastern Time, on Monday, April 8, 2022. 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 2022 Annual Meeting of Stockholders. Instructions on how to attend and participate online are posted at www.virtualshareholdermeeting.com/DISCA2022. | | Online check-in will begin at 9:45 a.m., Eastern Time, on Monday, April 8, 2022, 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 9:45 a.m., Eastern Time on Monday, April 8, 2022. 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 2022 Annual Meeting log-in page. |
Q: | Why is the 2022 Annual Meeting a virtual, online meeting? |
A: | To support the health and well-being of our stockholders, employees and directors in light of the ongoing COVID-19 pandemic, our 2022 Annual Meeting of Stockholders will once again be a virtual meeting of stockholders where stockholders will participate by accessing a website using the Internet. There will not be a physical meeting location. In light of the continuing public health and safety concerns related to COVID-19, we believe that hosting a virtual meeting will facilitate stockholder attendance and participation at our 2022 Annual Meeting of Stockholders 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/ DISCA2022 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 2022 Annual Meeting? |
A: | Stockholders may submit questions at the 2022 Annual Meeting of Stockholders by using the virtual meeting platform at www.virtualshareholdermeeting.com/DISCA2022. Once you have logged into the site using your control number, you will be able to submit questions electronically via the virtual meeting platform. |
2022 Proxy Statement89
Table of Contents Additional Information Availability of Annual Report We filed our Annual Report on2021 Form10-K for the year ended December 31, 2017 with the SEC on February 28, 2018.24, 2022. The Annual Report on2021 Form10-K, including all exhibits, can also be found onin the Investor Relations section of our corporate website:http://corporate.discovery.comir.corporate.discovery.com and can be downloaded free of charge. Paper copies of the Annual Report on2021 Form10-K may be obtained without charge, and paper copies of exhibits to the Annual Report on2021 Form 10-K are available, but a reasonable fee per page will be charged to the requesting stockholder. Stockholders may make requests in writing to the attention of Investor Relations by mail at Discovery, Inc., One Discovery Place, Silver Spring, Maryland 20910,230 Park Avenue South, New York, New York 10003, by telephone at(240) 662-2000 (212) 548-5882 (or toll-free at (877) 324-5850), or by email at investor_relations@discovery.com.investor_relations@discovery.com. STOCKHOLDER PROPOSALSSubmission of Stockholder Proposals for 2023 Annual Meeting
In orderThe table below summarizes the requirements for stockholders who wish to be eligible for inclusion in our proxy materials for our 2019 annual meeting, any stockholder proposal must be submitted in writing to the attention of the Corporate Secretary at Discovery, Inc., One Discovery Place, Silver Spring, Maryland 20910, by November 28, 2018. Our bylaws require that Discovery be given advance written notice of stockholdersubmit proposals or director nominations for election to our Board of Directors and of other matters which stockholders wish to present for action at an annual meeting of stockholders (other than matters included in Discovery’s proxy materials in accordance with Rule14a-8 under the Exchange Act). The Corporate Secretary must receive such notice at the address noted above not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting, provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from such anniversary date, the Corporate Secretary must receive such notice not earlier than the 100th day prior to such annual meeting and not later than the close of business on the later of the 70th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made. Assuming that the 20182023 Annual Meeting of Stockholders. Stockholders is held between April 10, 2019are encouraged to consult Rule 14a-8 of the Exchange Act and July 9, 2019 (as it is expectedour Bylaws, as appropriate, to be), in order to comply with the time periods set forth in Discovery’s bylaws, appropriate notice would needsee all applicable requirements.
| | Proposals for inclusion in 2023 Proxy Statement | | Other proposals/nominees to be presented at 2023 Annual Meeting of Stockholders* | | Type of Proposal | | SEC rules permit stockholders to submit proposals for inclusion in our 2023 Proxy Statement by satisfying the requirements set forth in Rule 14a-8 of the Exchange Act | | Stockholders may present proposals or director nominations directly at the 2023 Annual Meeting of Stockholders (and not for inclusion in our proxy materials) by satisfying the requirements set forth in Section 1.6 of our Bylaws** | | When proposal must be received byDiscovery | | No later than November 14, 2022 | | No earlier than January 9, 2023 and no later than February 7, 2023*** | | Where to send | | By mail: Corporate Secretary, Discovery, Inc. 230 Park Avenue South, New York, NY 10003 By Email: CorporateSecretary@discovery.com | | What to include | | The information required by Rule 14a-8 | | The information required by our Bylaws** | |
| | * | Any proposal without the required notice will not be considered properly submitted under our Bylaws. Any proposal that is received by us after February 7, 2023, will not be considered filed on a timely basis under Rule 14a-4(c)(1). Proposals that are not properly submitted or timely filed will not be presented at the 2023 Annual Meeting. For proposals that are properly submitted and timely filed, SEC rules permit management to retain discretion to vote proxies we receive, provided that: (1) we include in our proxy statement advice on the nature of the proposal and how we intend to exercise our voting discretion; and (2) the proponent does not issue a proxy statement. | ** | Our Bylaws are filed as an exhibit to our 2021 Form 10-K and are available in the corporate governance section of our Investor Relations website at ir.corporate.discovery.com. | *** | Assumes our 2023 Annual Meeting of Stockholders is held between March 9, 2023 and June 7, 2023, as it is expected to be. Please see our Bylaws for additional information regarding the advance notice deadline in the event the 2023 Annual Meeting of Stockholders is not held between March 9, 2023 and June 7, 2023. |
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Table of Contents Additional Information Other Business The Board knows of no other business to be provided tobrought before the Corporate Secretary at2022 Annual Meeting of Stockholders. If, however, any other business should properly come before the address noted above no earlier than February 9, 2019 and no later than March 11, 2019. If a stockholder fails to provide timely notice of a proposal to be presented at the 20192022 Annual Meeting of Stockholders, the proxies designated by the Board of Directors of Discovery will have discretionary authority to vote on any such proposal which may come before the meeting. Discovery’s bylaws also specify requirements relating to the content of the notice which stockholders must provide to the Corporate Secretary for any matter, including a stockholder nomination for director, to be properly presented at a stockholder meeting.
All stockholder proposals for inclusion in our proxy materials will be subject to the requirements of the proxy rules adopted under the Exchange Act and, as with any stockholder proposal (regardless of whether it is included in our proxy materials), our restated charter, our bylaws and Delaware law.
HOUSEHOLDING
To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding 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 Notice, annual report or proxy statement mailed to you, please submit a request to our Corporate Secretary at the address noted above or call our Investor Relations department at(240) 662-2000, and we will promptly send you what you have requested. However, please note that if you want to receive a paper proxy or voting instruction form or other proxy materials for purposes of this year’s annual meeting, follow the instructions includedpersons named in the Notice that was sent to you. 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.
SOLICITATION BY THE BOARD; EXPENSES OF SOLICITATION
Our Board has sent you thisaccompanying proxy statement. We will pay all expenses in connection with the solicitation of the enclosed proxy. In addition to solicitation by mail, our officers and employees, who will receive no extra compensation for their services, may solicitvote proxies by telephone, in writing or in person. We will reimburse brokers and nominees who hold sharesas in their names for their reasonableout-of-pocket expensesdiscretion they may deem appropriate, unless they are directed by a proxy to furnish proxy materials to the beneficial owners of such shares.do otherwise.
By Order of the Board of Directors, ![](https://files.docoh.com/DEF 14A/0001206774-22-000691/disca3983581-def14ax91x1.jpg)
![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-099577/g560962g05n07.jpg) Tara L. Smith
Stephanie D. MarksSenior Vice President,
Securities & Executive Compensation and Corporate Secretary March 28, 2018 14, 20222022 Proxy Statement 91
Table of Contents Appendix A DISCOVERY COMMUNICATIONS, INC.Warner Bros. Discovery, Inc. Stock Incentive Plan
2013 INCENTIVE PLAN
(As Submitted to the Board of Directors on February 22, 2018)
ARTICLEArticle I
PURPOSE AND AMENDMENT OF PLANPurpose of Plan
1.1 Purpose.Purpose. The purpose of the Plan is to promote the success of the Company by providing a method whereby (i) eligible employees of the Company and its Subsidiaries and (ii) independent contractors providing services to the Company and its Subsidiaries may be awarded additional remuneration for services rendered and encouraged to invest in capital stock of the Company, thereby increasing their proprietary interest in the Company’s businesses, encouraging them to remain in the employ or service of the Company or its Subsidiaries, and increasing their personal interest in the continued success and progress of the Company and its Subsidiaries. The Plan is also intended to aid in (i) attracting Persons of exceptional ability to become officers and employees of the Company and its Subsidiaries and (ii) inducing independent contractors to agree to provide services to the Company and its Subsidiaries. 1.2 Adoption of Plan.Plan. The Plan was approved by the Company’s Boardboard of Directorsdirectors of Discovery, Inc., a Delaware corporation, f/k/a Discovery Communications, Inc. (“Discovery”) on January 30, 2013March 1, 2022 and by the stockholders of the CompanyDiscovery on May 14, 2013 (the “Shareholder Approval Date”). It replaces the Company’s 2005 Incentive Plan (the “2005 Plan”) with respect to grants made after the Shareholder Approval Date, and the Company will not make additional grants under the 2005 Plan after such date. The Plan as amended to date was approved by the Company’s Board of Directors on February 22, 2018, subject to approval by the Shareholders.April 8, 2022. ARTICLEArticle II
DEFINITIONSDefinitions
2.1 Certain Defined Terms.Terms. Capitalized terms not defined elsewhere in the Plan shall have the following meanings (whether used in the singular or plural): “Affiliate” of the Company means any corporation, partnership or other business association that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Company. “Agreement” means a stock option agreement, stock appreciation rights agreement, restricted shares agreement, stock units agreement, cash award agreement or an agreement evidencing another type of equity-based Award, or more than one type of Award, as any such Agreement may be supplemented or amended from time to time. “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. “Award” means a grant of Options, SARs, Restricted Shares, Restricted Stock Units, Performance Awards, Cash Awards, or Other Stock-Based Awards. “Board” means the Board of Directors of the Company. “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 leasttwo-thirds of the directors then still in office who were directors at the beginning of the period. “Cash Award” means an Award made pursuant to Section 10.1 of the Plan to a Holder that is paid solely on account of the attainment of one or more Performance Objectives that have been preestablished by the Committee.Holder. “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section. “Committee” means the Compensation Committee (or another committee) of the Board (or a subcommittee of such committee) appointed pursuant to Section 3.1 to administer the Plan. 92 Discovery
Table of Contents Appendix A “Common Stock” means each or any (as the context may require) seriesSeries A common stock of the Company’s common stock.Company. “Company” means Warner Bros. Discovery, Communications, Inc., a Delaware corporation. “Control Purchase” 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))Company) shall become the “beneficial owner” (as such term is defined inRule 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 inRule 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 Chairman 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. “Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. “Distribution Date” means the date on which Discovery Holding Company ceased to be a wholly-owned subsidiary of Liberty Media Corporation, a Delaware corporation.
“Dividend Equivalents” means, with respect to Restricted Stock Units or Other Stock-Based Awards, to the extent specified by the Committee only, an amount equal to all dividends and other distributions (or the economic equivalent thereof) which are payable to stockholders of record during the Restriction Period on a like number and kind of shares of Common Stock. “Domestic Relations Order” means a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. “Effective Date” means the Closing Date (as the term “Closing Date” is defined in that certain Agreement and Plan of Merger, dated as of May 14, 2013,17, 2021, by and among AT&T Inc., a Delaware corporation, Magallanes, Inc. a Delaware corporation, Discovery, Inc., a Delaware corporation, and Drake Subsidiary, Inc., a Delaware corporation). “Exchange” means the dateNasdaq Stock Market or any other exchange or marketplace on which the Plan originally became effective.Company stock is listed or traded. “Equity Security” shall have the meaning ascribed to such term in Section 3(a)(11) of the Exchange Act, and an equity security of an issuer shall have the meaning ascribed thereto inRule 16a-1 promulgated under the Exchange Act, or any successor Rule.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section. “Fair Market Value” of a share of any series of Common Stock on any day means the last sale price (or, if no last sale price is reported, the average of the high bid and low asked prices) for a share of such series of Common Stock on such day (or, if such day is not a trading day, on the next preceding trading day) as reported on the consolidated transaction reporting system for the principal national securities exchange on which shares of such series of Common Stock are listed on such day, or the Committee can, in its sole discretion, use averages or weighted averages either on a daily basis or such longer period as complies with Code Section 409A. If for any day the Fair Market Value of a share of the applicable series of Common Stock is not determinable by any of the foregoing means, then the Fair Market Value for such day shall be determined in good faith by the Committee on the basis of such quotations and other considerations as the Committee deems appropriate. “Free Standing SAR” has the meaning ascribed thereto in Section 7.1.
“Holder” means a person who has received an Award under the Plan that has not been fully satisfied or terminated. “Nonqualified Stock Option” means a stock option granted under Article VI. “Option” means a Nonqualified Stock Option. “Performance Award” means an Award made pursuant to Article X of the Plan to a Holder that is subject to the attainment of one or more Performance Objectives. “Performance Objective” means a standard established by the Committee to determine in whole or in part whether a Performance Award shall be earned. “Person” means an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind. “Plan” means this Warner Bros. Discovery, Inc. Stock Incentive Plan, as may be amended, restated or supplemented from time to time. “Prior Plan” means the Discovery Communications, Inc. 2013 Incentive Plan.Plan, as amended and restated from time to time. “Restricted Shares” means shares of any series of Common Stock awarded pursuant to Article VIII. “Restricted Stock Unit AwardsUnits” has the meaning ascribed thereto in Section 9.1. “Restriction Period” means a period of time beginning on the date of each Award of Restricted Shares or Restricted Stock Units and ending on the Vesting Date with respect to such Award. 2022 Proxy Statement93
Table of Contents Appendix A “SARs” means stock appreciation rights, awarded pursuant to Article VII, with respect to shares of any specified series of Common Stock. “Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Securities Act section shall include any successor section. “Subsidiary” of a Person means any present or future subsidiary (as defined in Section 424(f) of the Code) of such Person or any business entity in which such Person owns, directly or indirectly, 50% or more of the voting, capital or profits interests. An entity shall be deemed a subsidiary of a Person for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained. “Tandem SAR” has the meaning ascribed thereto in Section 7.1 “Unvested Dividends” has the meaning ascribed thereto in Section 8.1.
“Vesting Date,” with respect to any Restricted Shares or Restricted Stock Units awarded hereunder, means the date on which such Restricted Shares or Restricted Stock Units cease to be subject to a risk of forfeiture, as designated in or determined in accordance with the Agreement with respect to such Award of Restricted Shares pursuant to Article VIII or of Restricted Stock Units pursuant to Article IX. If more than one Vesting Date is designated for an Award, reference in the Plan to a Vesting Date in respect of such Award shall be deemed to refer to each part of such Award and the Vesting Date for such part. ARTICLEArticle III
ADMINISTRATIONAdministration
3.1 Committee.Committee. The Plan shall be administered by the Committee. The Committee shall be comprised of not less than two Persons. The Board or committee of the Board may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed, may fill vacancies in the Committee and may remove members of the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a majority of such quorum. Any determination reduced to writing and signed by all of the members shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. 3.2 Powers.Powers. The Committee shall have full power and authority to grant Awards to eligible persons, to determine the terms and conditions (which need not be identical) of all Awards so granted, to interpret the provisions of the Plan and any Agreements relating to Awards granted under the Plan and to supervise the administration of the Plan. The Committee in making an Award may provide for the granting or issuance of additional, replacement or alternative Awards upon the occurrence of specified events, including the exercise of the original Award. The Committee shall have sole authority in the selection of persons to whom Awards may be granted under the Plan and in the determination of the timing, pricing and amount of any such Award, subject only to the express provisions of the Plan. In making determinations hereunder, the Committee may take into account the nature of the services rendered by the respective employees and independent contractors, their present and potential contributions to the success of the Company and its Subsidiaries, and such other factors as the Committee in its discretion deems relevant. 3.3 Interpretation.Interpretation. The Committee is authorized, subject to the provisions of the Plan, to establish, amend and rescind such rules and regulations as it deems necessary or advisable for the proper administration of the Plan and to take such other action in connection with or in relation to the Plan as it deems necessary or advisable. Each action and determination made or taken pursuant to the Plan by the Committee, including any interpretation or construction of the Plan, shall be final and conclusive for all purposes and upon all persons. ARTICLEArticle IV
SHARES SUBJECT TO THE PLANShares Subject to the Plan
4.1 Number of Shares; Award Limits.Limits. Subject to the provisions of this Article IV, the maximum number of shares of Common Stock with respect to which Awards may be granted during the term of the Plan shall be 60the sum of (i) 135 million shares.shares of Common Stock; plus (ii) (B) such additional number of shares of Common Stock as is equal to the sum of (i) the number of shares reserved for issuance under the Prior Plan that remain available for grant under the Prior Plan as of immediately prior to the Effective Date and (ii) the number of shares of Common Stock subject to awards granted under the Prior Plan, that (A) expire, terminate or are annulled for any reason without having been exercised, (B) that is a stock appreciation right under the Prior Plan that is exercised for cash and (C) any award of restricted shares or restricted stock units under the Prior Plan that are forfeited prior to becoming vested (provided that the holder received no benefits of ownership of such restricted shares or restricted stock units other than voting rights and the accumulation of unvested dividends and unpaid dividend equivalents that are likewise forfeited). Shares of Common Stock will be made available from the authorized but unissued shares of the Company or from shares reacquired by the Company, including shares purchased in the open market. The shares of Common Stock subject to (i) any Award granted under the Plan that shall expire, terminate or be annulled for any reason without having been exercised, (or considered to have been exercised as provided in Section 7.2), (ii) any Award of any SARs or Restricted Stock Units granted under the Plan that shall be exercised or settled, as the case may be, for cash, and (iii) any Award of Restricted Shares or Restricted Stock Units that shall be forfeited prior to becoming vested (provided that the Holder received no benefits of ownership of such Restricted Shares or Restricted Stock Units other than voting rights and the accumulation of Unvested Dividends and unpaid Dividend Equivalents that are likewise forfeited) shall again be available for purposes of the Plan. Notwithstanding the foregoing, (i) in the case of the exercise of a SAR for shares, the number of shares counted against the shares available under the Plan shall be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR upon exercise; (ii) shares of Common Stock delivered (either by actual delivery, attestation, or net exercise )exercise) to the Company by a Holder to (I) purchase shares of Common Stock upon the exercise of an Award or (II) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and (iii) shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards. Except for Awards described in Section 4.3 or 11.1, no person may be granted in any calendar year Awards covering more than 1525 million shares of Common Stock (as such amount may be adjusted from time to time as provided in Section 4.2). No person shall be awarded Cash Awards during any calendar year that are designed to pay out in excess of $20,000,000$25,000,000 per calendar year covered by the Cash Award. 94 Discovery
Table of Contents Appendix A 4.2 Adjustments.Adjustments. If the Company subdivides its outstanding shares of any series of Common Stock into a greater number of shares of such series of Common Stock (by stock dividend, stock split, reclassification, or otherwise) or combines its outstanding shares of any series of Common Stock into a smaller number of shares of such series of Common Stock (by reverse stock split, reclassification, or otherwise) or if the Committee determines that any stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization,split-up,spin-off, combination, exchange of shares, warrants or rights offering to purchase such series of Common Stock or other similar corporate event (including mergers or consolidations other than those which constitute Approved Transactions, adjustments with respect to which shall be governed by Section 11.1(b))consolidations) affects any series of Common Stock so that an adjustment is required to preserve the benefits or potential benefits intended to be made available under the Plan, then the Committee, in such manner as the Committee, in its sole discretion, deems equitable and appropriate, shall make such adjustments to any or all of (i) the number and kind of shares of stock which thereafter may be awarded, optioned or otherwise made subject to the benefits contemplated by the Plan, (ii) the number and kind of shares of stock subject to outstanding Awards, and (iii) the purchase, exercise or exercisebase price and the relevant appreciation base with respect to any of the foregoing,provided, however,that the number of shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, if all shares of any series of Common Stock are redeemed, then each outstanding Award shall be adjusted to substitute for the shares of such series of Common Stock subject thereto the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of shares of such series of Common Stock and otherwise the terms of such Award, including, in the case of Options or similar rights, the aggregate exercise price, and, in the case of Free Standing SARs, the aggregate base price, shall remain constant before and after the substitution (unless otherwise determined by the Committee and provided in the applicable Agreement). The Committee may, if deemed appropriate, provide for a cash payment to any Holder of an Award in connection with any adjustment made pursuant to this Section 4.2. 4.3 Substitute Awards.Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4.1. ARTICLEArticle V
ELIGIBILITYEligibility
5.1 General.General. The persons who shall be eligible to participate in the Plan and to receive Awards under the Plan shall, subject to Section 5.2, be such persons who are employees (including officers) of, or independent contractors providing services to, the Company or its Subsidiaries as the Committee shall select. Awards may be made to employees or independent contractors who hold or have held Awards under the Plan or any similar or other awards under any other plan of the Company or any of its Affiliates. 5.2 Ineligibility.Ineligibility. No member of the Committee, while serving as such, shall be eligible to receive an Award. ARTICLEArticle VI
STOCK OPTIONSStock Options
6.1 Grant of Options.Options. Subject to the limitations of the Plan, the Committee shall designate from time to time those eligible persons to be granted Options, the time when each Option shall be granted to such eligible persons, the series and number of shares of Common Stock subject to such Option, and, subject to Section 6.2, the purchaseexercise price of the shares of Common Stock subject to such Option. 6.2 Option Price.Exercise Price. The price at which shares may be purchased upon exercise of an Option shall be fixed by the Committee and may be no less than the Fair Market Value of the shares of the applicable series of Common Stock subject to the Option as of the date the Option is granted. 6.3 Term of Options.Options. Subject to the provisions of the Plan with respect to death, retirement and termination of employment or service, the term of each Option shall be for such period as the Committee shall determine as set forth in the applicable Agreement. 6.4 Exercise of Options.Options. An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and the Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term;provided, however,that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part. 6.5Manner of Exercise.Exercise. | (a) | Form of Payment. An Option shall be exercised by notice to the Company upon such terms and conditions as the Agreement may provide and in accordance with such other procedures for the exercise of Options as the Committee may establish from time to time. The method or methods of payment of the exercise price for the shares to be purchased upon exercise of an Option and of any amounts required by Section 11.9 shall be determined by the Committee and may consist of (i) cash, (ii) check, (iii) whole shares of any series of Common Stock (whether by delivery or attestation), (iv) the withholding of shares of the applicable series of Common Stock issuable upon such exercise of the Option, (v) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the exercise price, or (vi) any combination of the foregoing methods of payment, or such other consideration and method of | | | |
2022 Proxy Statement 95
(a)FormTable of Payment. An Option shall be exercised by notice to the Company upon such terms and conditions as the Agreement may provide and in accordance with such other procedures for the exercise of Options as the Committee may establish from time to time. The method or methods of payment of the purchase price for the shares to be purchased upon exercise of an Option and of any amounts required by Section 11.9 shall be determined by the Committee and may consist of (i) cash, (ii) check, (iii) whole shares of any series of Common Stock (whether by delivery or attestation), (iv) the withholding of shares of the applicable series of
ContentsAppendix A | | payment as may be permitted for the issuance of shares under the Delaware General Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Agreement and may be subject to such conditions as the Committee deems appropriate. | | | | | (b) | Value of Shares. Unless otherwise determined by the Committee and provided in the applicable Agreement, shares of any series of Common Stock delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and shares of any series of Common Stock withheld for such payment, shall be valued for such purpose at their Fair Market Value as of the exercise date. | | | | | (c) | Issuance of Shares. The Company shall effect the transfer of the shares of Common Stock purchased under the Option as soon as practicable after the exercise thereof and payment in full of the exercise price therefor and of any amounts required by Section 11.9, and within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Holder or other person exercising an Option shall have any of the rights of a stockholder of the Company with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment has been made, and (ii) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment. In no event shall any dividends or dividend equivalents be paid on or accrued on Options. |
Common Stock issuable upon such exercise of the Option, (v) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase price, or (vi) any combination of the foregoing methods of payment, or such other consideration and method of payment as may be permitted for the issuance of shares under the Delaware General Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Agreement and may be subject to such conditions as the Committee deems appropriate.
(b) Value of Shares. Unless otherwise determined by the Committee and provided in the applicable Agreement, shares of any series of Common Stock delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and shares of any series of Common Stock withheld for such payment, shall be valued for such purpose at their Fair Market Value as of the exercise date.
(c) Issuance of Shares. The Company shall effect the transfer of the shares of Common Stock purchased under the Option as soon as practicable after the exercise thereof and payment in full of the purchase price therefor and of any amounts required by Section 11.9, and within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Holder or other person exercising an Option shall have any of the rights of a stockholder of the Company with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment has been made, and (ii) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment. In no event shall any dividends be paid on Options.
6.6 Limitation on Repricing.Repricing. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 4.2): (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4.3) covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current Fair Market Value, other than pursuant to Section 11.1(b), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the Nasdaq Stock Market (“Nasdaq”).Exchange. ARTICLEArticle VII
SARSSARs
7.1 Grant of SARs.SARs. Subject to the limitations of the Plan, SARs may be granted by the Committee to such eligible persons in such numbers, with respect to any specified series of Common Stock, and at such times during the term of the Plan as the Committee shall determine. A SAR may be granted to a Holder of an Option (hereinafter called a “related Option”) with respect to all or a portion of the shares of Common Stock subject to the related Option (a “Tandem SAR”) or may be granted separately to an eligible employee (a “Free StandingSAR”). Subject to the limitations of the Plan, SARs shall be exercisable in whole or in part upon notice to the Company upon such terms and conditions as are provided in the Agreement. 7.2 Tandem SARs. A Tandem SAR may be granted either concurrently with the grantExercise of the related Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related Option. Tandem SARs shall be exercisable only at the time and to the extent that the related Option is exercisable (and may be subject to such additional limitations on exercisability as the Agreement may provide) and in no event after the complete termination or full exercise of the related Option. Upon the exercise or termination of the related Option, the Tandem SARs with respect thereto shall be canceled automatically to the extent of the number of shares of Common Stock with respect to which the related Option was so exercised or terminated. Subject to the limitations of the Plan, upon the exercise of a Tandem SAR and unless otherwise determined by the Committee and provided in the applicable Agreement, (i) the Holder thereof shall be entitled to receive from the Company, for each share of the applicable series of Common Stock with respect to which the Tandem SAR is being exercised, consideration (in the form determined as provided in Section 7.4) equal in value to the excess of the Fair Market Value of a share of the applicable series of Common Stock with respect to which the Tandem SAR was granted on the date of exercise over the related Option purchase price per share, and (ii) the related Option with respect thereto shall be canceled automatically to the extent of the number of shares of Common Stock with respect to which the Tandem SAR was so exercised.
7.3 Free Standing SARs. Free Standing SARs shall be exercisable at the time, to the extent and upon the terms and conditions set forth in the applicable Agreement.Agreement; provided, however, that subsequent to the grant of an Award of SARs, the Committee, at any time before complete termination of any such SAR, may accelerate the time or times at which such SARs may be exercised in whole or in part. The base price of a Free Standing SAR may be no less than the Fair Market Value of the applicable series of Common Stock with respect to which the Free Standing SAR was granted as of the date the Free Standing SAR is granted. Subject to the limitations of the Plan, upon the exercise of a Free Standing SAR and unless otherwise determined by the Committee and provided in the applicable Agreement, the Holder thereof shall be entitled to receive from the Company, for each share of the applicable series of Common Stock with respect to which the Free Standing SAR is being exercised, consideration (in the form determined as provided in Section 7.4)7.3) equal in value to the excess of the Fair Market Value of a share of the applicable series of Common Stock with respect to which the Free Standing SAR was granted on the date of exercise over the base price per share of such Free Standing SAR.
7.47.3 Consideration. The consideration to be received upon the exercise of a SAR by the Holder shall be paid in the applicable series of Common Stock with respect to which the SAR was granted (valued at Fair Market Value on the date of exercise of such SAR) or cash equivalent thereto, as determined by the Committee and provided in the applicable Agreement. No fractional shares of Common Stock shall be issuable upon exercise of a SAR, and unless otherwise provided in the applicable Agreement, the Holder will receive cash in lieu of fractional shares. In no event shall any dividends or dividend equivalents be paid on or accrued with respect to a SAR. Unless the Committee shall otherwise determine, to the extent a Free Standing SAR is exercisable, it will be exercised automatically on its expiration date.
7.57.4 Limitations. The applicable Agreement may provide for a limit on the amount payable to a Holder upon exercise of SARs at any time or in the aggregate, for a limit on the time periods during which a Holder may exercise SARs, and for such other limits on the rights of the Holder and such other terms and conditions of the SAR, including a condition that the SAR may be exercised only in accordance with rules and regulations adopted from time to time, as the Committee may determine. Unless otherwise so provided in the applicable Agreement, any such limit relating to a Tandem SAR shall not restrict the exercisability of the related Option. Such rules and regulations may govern the right to exercise SARs granted prior to the adoption or amendment of such rules and regulations as well as SARs granted thereafter.
7.67.5 Exercise. For purposes of this Article VII, the date of exercise of a SAR shall mean the date on which the Company shall have received notice from the Holder of the SAR of the exercise of such SAR (unless otherwise determined by the Committee and provided in the applicable Agreement).
7.77.6 Limitation on Repricing.Repricing. Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 4.2): (1) amend any outstanding SAR granted under the Plan to provide a base price per share that is lower than the then-current base price per share of such outstanding SAR, (2) cancel any outstanding stock appreciation right (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4.3) covering
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Table of Contents Appendix A the same or a different number of shares of Common Stock and having a base price per share lower than the then-current base price per share of the cancelled stock appreciation right, (3) cancel in exchange for a cash payment any outstanding SAR with an exercisea base price per share above the then-current Fair Market Value, other than pursuant to Section 11.1(b), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of Nasdaq. the Exchange.ARTICLEArticle VIII
RESTRICTED SHARESRestricted Shares
8.1 Grant.Grant. Subject to the limitations of the Plan, the Committee shall designate those persons eligible persons to be granted Awards of Restricted Shares, shall determine the time when each such Award shall be granted, and shall designate (or set forth the basis for determining) the Vesting Date or Vesting Dates for each Award of Restricted Shares, and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Shares in addition to those provided in the Plan. The Committee shall determine the price, if any, to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully paid and nonassessable. All determinations made by the Committee pursuant to this Section 8.1 shall be specified in the Agreement. Any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Shares (“Unvested Dividend”Dividend”) shall be paid to the Holder only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of previously Unvested Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that classspecified series of stockCommon Stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock. No interest will be paid on the Unvested Dividends. 8.2 Issuance of Restricted Shares.Shares. When shares of the applicable series of Common Stock are issued at the beginning of the Restriction Period, thebook entry shares or any stock certificate or certificates representing such Restricted Shares shall be registered in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, any certificates representing the Restricted Shares and any securities constituting Unvested Dividends shall bear a restrictive legend to the effect that ownership of the Restricted Shares (and such Unvested Dividend), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the applicable Agreement. SuchAny such certificates shall remain in the custody of the Company or its designee, and the Holder shall deposit with the custodian stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to the Company of all or any portion of the Restricted Shares and any securities constituting Unvested Dividends that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Agreement. 8.3 Restrictions.Restrictions. Restricted Shares issued at the beginning of the Restriction Period shall constitute issued and outstanding shares of the applicable series of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted Shares and to exercise all other rights, powers and privileges of a Holder of shares of the applicable series of Common Stock with respect to such Restricted Shares;except that, , unless otherwise determined by the Committee and provided in the applicable Agreement, (i) the Holder will not be entitled to delivery of theany stock certificate or certificates representing such Restricted Shares or to have the book entry ownership designation changed until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (ii) the Company or its designee will retain custody of theany stock certificate or certificates representing the Restricted Shares during the Restriction Period as provided in Section 8.2; (iii) the Holder may not sell, assign, transfer, pledge, exchange, encumber or dispose of the Restricted Shares or his or her interest in any of them during the Restriction Period; and (iv) a breach of any restrictions, terms or conditions provided in the Plan or established by the Committee with respect to any Restricted Shares will cause a forfeiture of such Restricted Shares with respect thereto. 8.4 Cash Payments.Payments. In connection with any Award of Restricted Shares, an Agreement may provide for the payment of a cash amount to the Holder of such Restricted Shares after such Restricted Shares shall have become vested. Such cash amounts shall be payable in accordance with such additional restrictions, terms and conditions as shall be prescribed by the Committee in the Agreement and shall be in addition to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled or eligible to receive from the Company. 8.5 Completion of Restriction Period.Period. On the Vesting Date with respect to each Award of Restricted Shares and the satisfaction of any other applicable restrictions, terms and conditions, (i) all or the applicable portion of such Restricted Shares shall become vested, (ii) any Unvested Dividends with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested, and (iii) any cash amount to be received by the Holder with respect to such Restricted Shares shall become payable, all in accordance with the terms of the applicable Agreement. Any such Restricted Shares and Unvested Dividends that shall not become vested shall be forfeited to the Company, and the Holder shall not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares and Unvested Dividends that shall have been so forfeited. Notwithstanding the foregoing, subsequent to the grant of an Award of Restricted Shares, the Committee, at any time before complete vesting or forfeiture of any such Restricted Shares, may accelerate the time or times at which such Restricted Shares vest in whole or in part. The Committee may, in its discretion, provide that the delivery of any Restricted Shares and Unvested Dividends that shall have become vested, and payment of any related cash amounts that shall have become payable under this Article VIII, shall be deferred until such date or dates as the recipient may elect. Any election of a recipient pursuant to the preceding sentence shall be filed in writing with the Committee in accordance with such rules and regulations, including any deadline for the making of such an election, as the Committee may provide, and shall be made in compliance with Section 409A of the Code. 2022 Proxy Statement 97
ARTICLETable of Contents
Appendix A Article IX RESTRICTED STOCK UNITSRestricted Stock Units
9.1 Grant.Grant. In addition to granting Awards of Options, SARs and Restricted Shares, the Committee shall, subject to the limitations of the Plan, have authority to grant to eligible persons Awards of Restricted Stock Units which may be in the form of shares of any specified series of Common Stock or units, the value of which is based, in whole or in part, on the Fair Market Value of the shares of any specified series of Common Stock. Subject to the provisions of the Plan, including any rules established pursuant to Section 9.2, Awards of Restricted Stock Units shall be subject to such terms, restrictions, conditions, vesting requirements and payment rules as the Committee may determine in its discretion, which need not be identical for each Award. The terms of each Award need not be identical, and neither the Board nor the Committee need not treat Holders uniformly. The determinations made by the Committee pursuant to this Section 9.1 shall be specified in the applicable Agreement. 9.2 Rules.Rules. The Committee may, in its discretion, establish any or all of the following rules for application to an Award of Restricted Stock Units: | (a) | Any shares of Common Stock which are part of an Award of Restricted Stock Units may not be assigned, sold, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued or, if later, the date provided by the Committee at the time of the Award. | | | | | (b) | Such Awards may provide for the payment of cash consideration by the person to whom such Award is granted or provide that the Award, and any shares of Common Stock to be issued in connection therewith, if applicable, shall be delivered without the payment of cash consideration; provided, however, that the issuance of any shares of Common Stock in connection with an Award of Restricted Stock Units shall be for at least the minimum consideration necessary to permit such shares to be deemed fully paid and nonassessable. | | | | | (c) | Awards of Restricted Stock Units may provide for deferred payment schedules, vesting over a specified period of employment or service, the payment after vesting (on a current or deferred basis) of amounts of Dividend Equivalents with respect to the number of shares of Common Stock covered by the Award, and elections by the employee to defer payment of the Award or the lifting of restrictions on the Award, if any, provided that any such deferrals shall comply with the requirements of Section 409A of the Code. Restricted Stock Units shall not constitute issued and outstanding shares of the applicable series of Common Stock, and the Holder shall not have any of the rights of a stockholder with respect to the shares of Common Stock covered by such an Award of Restricted Stock Units, in each case until Awards have paid out in shares of Common Stock after the end of the Restriction Period. | | | | | (d) | The Awards of Restricted Stock Units may provide Holders with the right to receive Dividend Equivalents. Dividend Equivalents may be settled in cash and/or shares of Common Stock and will be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, as provided in the Agreement with respect to the Restricted Stock Units. No interest will be paid on the Dividend Equivalents. | | | | | (e) | In such circumstances as the Committee may deem advisable, the Committee may waive or otherwise remove, in whole or in part, any restrictions or limitations to which a Restricted Stock Unit Award was made subject at the time of grant. |
(a) Any shares of Common Stock which are part of an Award of Restricted Stock Units may not be assigned, sold, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued or, if later, the date provided by the Committee at the time of the Award.
(b) Such Awards may provide for the payment of cash consideration by the person to whom such Award is granted or provide that the Award, and any shares of Common Stock to be issued in connection therewith, if applicable, shall be delivered without the payment of cash consideration; provided, however,that the issuance of any shares of Common Stock in connection with an Award of Restricted Stock Units shall be for at least the minimum consideration necessary to permit such shares to be deemed fully paid and nonassessable.
(c) Awards of Restricted Stock Units may provide for deferred payment schedules, vesting over a specified period of employment, the payment after vesting (on a current or deferred basis) of dividend equivalent amounts with respect to the number of shares of Common Stock covered by the Award, and elections by the employee to defer payment of the Award or the lifting of restrictions on the Award, if any, provided that any such deferrals shall comply with the requirements of Section 409A of the Code. Restricted Stock Units shall not constitute
issued and outstanding shares of the applicable series of Common Stock, and the Holder shall not have any of the rights of a stockholder with respect to the shares of Common Stock covered by such an Award of Restricted Stock Units, in each case until Awards have paid out in shares of Common Stock after the end of the Restriction Period.
(d) Dividend Equivalents. The Awards of Restricted Stock Units may provide Holders with the right to receive Dividend Equivalents. Dividend Equivalents may be settled in cash and/or shares of Common Stock and will be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, as provided in the Award agreement with respect to the Restricted Stock Units. No interest will be paid on the Dividend Equivalents.
(e) In such circumstances as the Committee may deem advisable, the Committee may waive or otherwise remove, in whole or in part, any restrictions or limitations to which a Restricted Stock Unit Award was made subject at the time of grant.
ARTICLEArticle X
CASH AWARDS, OTHER STOCK-BASED AWARDS, AND PERFORMANCE AWARDSCash Awards, other Stock-Based Awards, and Performance Awards
10.1 Cash Awards.Awards. In addition to granting Options, SARs, Restricted Shares, Restricted Stock Units, or Other Stock-Based Awards, the Committee shall, subject to the limitations of the Plan, have authority to grant to eligible persons Cash Awards. Each Cash Award shall be subject to such terms and conditions, restrictions and contingencies as the Committee shall determine. Restrictions and contingencies limiting the right to receive a cash payment pursuant to a Cash Award shall be based upon the achievement of single or multiple Performance Objectives over a performance period established by the Committee. The determinations made by the Committee pursuant to this Section 10.1 shall be specified in the applicable Agreement. Notwithstanding the foregoing, subsequent to the grant of a Cash Award, the Committee, at any time before complete termination of any such Cash Award, may accelerate the time or times at which such Cash Award vests in whole or in part. 10.2 Other Stock-Based Awards.Awards. Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock, may be granted hereunder to Holders (“Other Stock-Based-Awards”Stock-Based Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Holder is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board or the Committee may determine. Subject to the provisions of the Plan, the Board or the Committee shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto. Other Stock-Based Awards may provide Holders with the right to receive Dividend Equivalents. Dividend Equivalents may be settled in cash and/or shares of Common Stock and will be subject to the same restrictions on transfer and forfeitability as the Other Stock-Based Awards with respect to which paid, as provided in the Agreement with respect to the Other Stock-Based Awards. No interest will be paid on the Dividend Equivalents. Subsequent to the grant of an Other Stock-Based Award, the Committee, at any time before complete termination of any such Other Stock-Based Award, may accelerate the time or times at which such Other Stock-Based Award vests in whole or in part. 98 Discovery
Table of Contents Appendix A 10.3 Designation as a Performance Award.Award. The Committee shall have the right to designate any Award of Options, SARs, Restricted Shares, Restricted Stock Units, or Other Stock-Based Awards or Cash Awards as a Performance Award. All Cash Awards shall be designated as Performance Awards. 10.4 Performance Objectives.Objectives. The grant or vesting of a Performance Award shall be subject to the achievement of Performance Objectives over a performance period established by the Committee based upon one or more of the following business criteria that apply to the Holder, one or more business units, divisions or Subsidiaries of the Company or the applicable sector of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies: increased revenue; net income measures (including income after capital costs and income before or after taxes); stock price measures (including growth measures and total stockholder return); price per share of Common Stock; market share; audience metrics (such as program ratings, web impressions, and subscribers); earnings per share (actual or targeted growth); earnings before interest, taxes, depreciation, and amortization (EBITDA); economic value added; market value added; debt to equity ratio; cash flow measures (including cash flow return on capital, cash flow return on tangible capital, net cash flow and net cash flow before financing activities); return measures (including return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); operating measures (including operating income, adjusted operating income before depreciation and amortization, funds from operations, cash from operations,after-tax operating income; sales volumes, production volumes and production efficiency); expense measures (including overhead cost and general and administrative expense); margins; stockholder value; total stockholder return; proceeds from dispositions; total market value and corporate values measures (including ethics compliance, environmental and safety). or any other business criteria established by the Committee. Unless otherwise stated, such a Performance Objective need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The Committee shall have the authority to determine whether the Performance Objectives and other terms and conditions of the Award are satisfied, and the Committee’s determination as to the achievement of Performance Objectives relating to a Performance Award shall be made in writing. The Committee may specify that such performance measures shall be adjusted to exclude any one or more of(i) non-recurring or unusual gains or losses, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the writedown of any asset, (vi) fluctuation in foreign currency exchange rates, and (vi) charges for restructuring and rationalization programs.programs, and (vii) any other adjustment determined by the Committee. Such performance measures:measures (i) may vary by Holder and may be different for different Awards;Awards and (ii) may be particular to a Holder or the department, branch, line of business, subsidiary or other unit in which the Holder works and may cover such period as may be specified by the Committee; and (iii) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board or the Committee may determine.Committee. 10.5Section 162(m) of the Code. Notwithstanding the foregoing provisions, if the Committee intends for a Performance Award to be granted and administered in a manner designed to preserve the deductibility of the compensation resulting from such Award in accordance with Section 162(m) of the Code, then the Performance Objectives for such particular Performance Award relative to the particular period of service to which the Performance Objectives relate shall be established by the Committee in writing (i) no later than 90 days after the beginning of such period and (ii) prior to the completion of 25% of such period. 10.6 Waiver of Performance Objectives.Objectives. The Committee shall have nothe discretion to modify or waive the Performance Objectives or conditions to the grant or vesting of a Performance Award unless such Award is not intended to qualify as qualified performance-based compensation under Section 162(m) of the Code and the relevant Agreement provides for such discretion.states otherwise.
ARTICLEArticle XI
GENERAL PROVISIONSGeneral Provisions
11.1 Acceleration of Awards.Awards. | (a) | Death or Disability. If a Holder’s employment shall terminate by reason of death or Disability, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Unvested Dividends shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock Units, each such Award of Restricted Stock Units and any unpaid Dividend Equivalents shall become vested in full. | | | | | (b) | Approved Transactions; Board Change; Control Purchase. | | | | | | In the event of any Approved Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each such outstanding Option or SAR granted under the Plan shall become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Unvested Dividends shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock Units, each such Award of Restricted Stock Units and any unpaid Dividend Equivalents shall become vested in full, in each case effective upon the Board Change or Control Purchase or immediately prior to consummation of the Approved Transaction. The effect, if any, on a Cash Award or Other Stock-Based Award of an Approved Transaction, Board Change or Control Purchase shall be prescribed in the applicable Agreement. Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Committee may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and | | | |
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(a) Death or Disability. If a Holder’s employment shall terminate by reasonTable of death or Disability, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each outstanding Option or SAR granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Unvested Dividends shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock Units, each such Award of Restricted Stock Units and any unpaid Dividend Equivalents shall become vested in full.
Contents(b) Approved Transactions; Board Change; Control Purchase.Appendix A
In the event of any Approved Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period, installment period, vesting schedule or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option or SAR, each such outstanding Option or SAR granted under the Plan shall become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares, any related Unvested Dividends and any unpaid Dividend Equivalents shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock Units, each such Award of Restricted Stock Units shall become vested in full, in each case effective upon the Board Change or Control Purchase or immediately prior to consummation of the Approved Transaction. The effect, if any, on a Cash Award or Other Stock-Based Award of an Approved Transaction, Board Change or Control Purchase shall be prescribed in the applicable Agreement. Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Committee may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and appropriate to substitute a new Award for such Award or to assume such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which the applicable series of Common Stock may be changed, converted or exchanged in connection with the Approved Transaction.
Notwithstanding any provision of the Plan to the contrary, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized, in its discretion, (i) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (ii) to cancel any such Awards and to deliver to the Holders cash in an amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value of Common Stock on such date over the purchase price of the Options or the base price of the SARs, as applicable.
| | appropriate to substitute a new Award for such Award or to assume such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which the applicable series of Common Stock may be changed, converted or exchanged in connection with the Approved Transaction. | | | | | | Notwithstanding any provision of the Plan to the contrary, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized, in its discretion, (i) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (ii) to cancel any such Awards and to deliver to the Holders cash in an amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value of Common Stock on such date over the exercise price of the Options or the base price of the SARs, as applicable. |
No action pursuant to this Section 11.1(b) shall be made in a manner that results in noncompliance with the requirements of Section 409A of the Code, to the extent applicable. 11.2Termination of Employment. (a) General. If a Holder’s employment shall terminate prior to an Option’sEmployment or SAR’s becoming exercisable or being exercised (or deemed exercised, as provided in Section 7.2) in full, or during the Restriction Period with respect to any Restricted Shares or prior to the vesting or complete exercise of any Restricted Stock Units, then such Option or SAR shall thereafter become or be exercisable, such Restricted Stock Units to the extent vested shall thereafter be exercisable, and the Holder’s rights to any unvested Restricted Shares, Unvested Dividends, unpaid Dividend Equivalents and related cash amounts and any such unvested Restricted Stock Units shall thereafter vest, in each case solely to the extent provided in the applicable Agreement;provided, however,Servicethat, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Option or SAR may be exercised after the scheduled expiration date thereof; (ii) if the Holder’s employment terminates by reason of death or Disability, the Option or SAR shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option or SAR); and (iii) any termination of the Holder’s employment for “cause” will be treated in accordance with the provisions of.
| (a) | General. If a Holder’s employment or service shall terminate prior to an Option’s or SAR’s becoming exercisable or being exercised in full, or during the Restriction Period with respect to any Restricted Shares or Restricted Stock Units, then such Option or SAR shall thereafter become or be exercisable, the Holder’s rights to any unvested Restricted Shares, Restricted Stock Units, Unvested Dividends, unpaid Dividend Equivalents and related cash amounts shall thereafter vest, in each case solely to the extent provided in the applicable Agreement; provided, however, that, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Option or SAR may be exercised after the scheduled expiration date thereof; (ii) if the Holder’s employment terminates by reason of death or Disability, the Option or SAR shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option or SAR); and (iii) any termination of the Holder’s employment or service for “cause” will be treated in accordance with the provisions of Section 11.2(b). The effect on a Cash Award or Other Stock-Based Award of the termination of a Holder’s employment or service for any reason, other than for “cause,” shall be prescribed in the applicable Agreement. | | | | | (b) | Termination for Cause. If a Holder’s employment or service with the Company or a Subsidiary of the Company shall be terminated by the Company or such Subsidiary for “cause” during the Restriction Period with respect to any Restricted Shares or Restricted Stock Units or prior to any Option or SAR becoming exercisable or being exercised in full or prior to the payment in full of any Cash Award (for these purposes, “cause” shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity), then, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) all Options and SARs and all unvested or unsettled Restricted Stock Units and all unpaid Cash Awards held by such Holder shall immediately terminate, and (ii) such Holder’s rights to all Restricted Shares, Unvested Dividends, any unpaid Dividend Equivalents and any related cash amounts shall be forfeited immediately. The Committee may determine retroactively, within one year after employment or service ends, that the Company or its Subsidiary had “cause” for termination of a Holder who has ceased to be employed or in service and may cause the forfeiture of any still outstanding Awards. | | | | | (c) | Miscellaneous. The Committee may determine whether any given leave of absence constitutes a termination of employment; provided, however, that for purposes of the Plan, (i) a leave of absence, duly authorized in writing by the Company for military service or sickness, or for any other purpose approved by the Company if the period of such leave does not exceed 90 days, and (ii) a leave of absence in excess of 90 days, duly authorized in writing by the Company provided the employee’s right to reemployment is guaranteed either by statute or contract, shall not be deemed a termination of employment. Unless otherwise determined by the Committee and provided in the applicable Agreement, Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Company. For this purpose, “Company” shall mean the Company and any Subsidiary or Affiliate thereof, the services providers of which are eligible to receive Awards under this Plan. |
Section 11.2(b). The effect on a Cash Award or Other Stock-Based Award of the termination of a Holder’s employment for any reason, other than for Cause, shall be prescribed in the applicable Agreement.
(b) Termination for Cause. If a Holder’s employment with the Company or a Subsidiary of the Company shall be terminated by the Company or such Subsidiary for “cause” during the Restriction Period with respect to any Restricted Shares or prior to any Option or SAR becoming exercisable or being exercised in full or prior to the vesting or complete exercise of any Restricted Stock Unit or the payment in full of any Cash Award (for these purposes, “cause” shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity, then, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) all Options and SARs and all unvested or unexercised Restricted Stock Units and all unpaid Cash Awards held by such Holder shall immediately terminate, and (ii) such Holder’s rights to all Restricted Shares, Unvested Dividends, any unpaid Dividend Equivalents and any related cash amounts shall be forfeited immediately. The Committee may determine retroactively, within one year after employment ends, that the Company had “cause” for termination of a Holder who has ceased to be employed and may forfeit any still outstanding Awards.
(c) Miscellaneous. The Committee may determine whether any given leave of absence constitutes a termination of employment;provided, however,that for purposes of the Plan, (i) a leave of absence, duly authorized in writing by the Company for military service or sickness, or for any other purpose approved by the Company if the period of such leave does not exceed 90 days, and (ii) a leave of absence in excess of 90 days, duly authorized in writing by the Company provided the employee’s right to reemployment is guaranteed either by statute or contract, shall not be deemed a termination of employment. Unless otherwise determined by the Committee and provided in the applicable Agreement, Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Company.
11.3 Right of Company to Terminate Employment.Employment or Service. Nothing contained in the Plan or in any Award, and no action of the Company or the Committee with respect thereto, shall confer or be construed to confer on any Holder any right to continue in the employ or service of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any Subsidiary of the Company to terminate the employment or service of the Holder at any time, with or without cause, subject, however, to the provisions of any employment or other service-providing agreement between the Holder and the Company or any Subsidiary of the Company. 11.4Nonalienation of Benefits; Nontransferability of Awards. Except as set forth below, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the Person entitled to such benefits.Awards 100 Discovery
Table of Contents Appendix A benefits. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, and, during the life of the Holder, shall be exercisable only by the Holder; provided, however, that, except with respect to Awards subject to Section 409A of the Code, the Board or the Committee may permit or provide in an Award for the gratuitous transfer of the Award by the Holder to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Holder and/or an immediate family member thereof if the Company would be eligible to use a FormS-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee; provided further, that the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Holder, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 11.4 shall be deemed to restrict a transfer to the Company. 11.5Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Committee shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. Any such documentation may contain (but shall not be required to contain) such provisions as the Committee deems appropriate to ensure that the penalty provisions of Section 4999 of the Code will not apply to any stock or cash received by the Holder from the Company. Any such Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated by Section 11.7(b). 11.6 Designation of Beneficiaries.Beneficiaries. Each person who shall be granted an Award under the Plan may designate a beneficiary or beneficiaries and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on a form to be prescribed by it, provided that no such designation shall be effective unless so filed prior to the death of such person. 11.7 Termination and Amendment.Amendment. | (a) | General. Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Plan may be terminated at any time prior to the tenth anniversary of the Effective Date and may, from time to time, be suspended or discontinued or modified or amended if such action is deemed advisable by the Committee. | | | | | (b) | Modification. No termination, modification or amendment of the Plan may, without the consent of the person to whom any Award shall theretofore have been granted, materially adversely affect the rights of such person with respect to such Award, except as otherwise permitted by Section 11.18. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder, or as otherwise permitted under Section 11.18, and subject to the terms and conditions of the Plan (including Section 11.7(a)), the Committee may amend outstanding Agreements with any Holder, including any amendment which would (i) accelerate the time or times at which the Award may be exercised and/or (ii) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Committee may, but solely with the Holder’s consent, unless otherwise provided in the Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made. Nothing contained in the foregoing provisions of this Section 11.7(b) shall be construed to prevent the Committee from providing in any Agreement that the rights of the Holder with respect to the Award evidenced thereby shall be subject to such rules and regulations as the Committee may, subject to the express provisions of the Plan, adopt from time to time or impair the enforceability of any such provision. |
(a) General. Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Plan may be terminated at any time prior to the tenth anniversary of the Effective Date and may, from time to time, be suspended or discontinued or modified or amended if such action is deemed advisable by the Committee.
(b) Modification. No termination, modification or amendment of the Plan may, without the consent of the person to whom any Award shall theretofore have been granted, materially adversely affect the rights of such person with respect to such Award, except as otherwise permitted by Section 11.18. No modification, extension, renewal or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder, or as otherwise permitted under Section 11.18, and subject to the terms and conditions of the Plan (including Section 11.7(a)), the Committee may amend outstanding Agreements with any Holder, including any amendment which would (i) accelerate the time or times at which the Award may be exercised and/or (ii) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Committee may, but solely with the Holder’s consent unless otherwise provided in the Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made. Nothing contained in the foregoing provisions of this Section 11.7(b) shall be construed to prevent the Committee from providing in any Agreement that the rights of the Holder with respect to the Award evidenced thereby shall be subject to such rules and regulations as the Committee may, subject to the express provisions of the Plan, adopt from time to time or impair the enforceability of any such provision.
11.8 Government and Other Regulations.Regulations. The obligation of the Company with respect to Awards shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including the effectiveness of any registration statement required under the Securities Act, of 1933, and the rules and regulations of any securities exchange or association on which the Common Stock may be listed or quoted. For so long as any series of Common Stock are registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (i) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all shares of the applicable series of Common Stock that may be issued to Holders under the Plan and (ii) to file in a timely manner all reports required to be filed by it under the Exchange Act. 11.9 Withholding.Withholding. The Company’s obligation to deliver shares of Common Stock or pay cash in respect of any Award under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding tax due at the time of an Award, upon the exercise of any Option or SAR or upon the vesting of, or expiration of restrictions with respect to, Restricted Shares or Restricted Stock Units or Other Stock-Based Awards or the satisfaction of the Performance Objectives applicable to a Performance Award, as appropriate, may, in the discretion of the Committee, be paid in shares of the applicable series of Common Stock already owned by the Holder or through the withholding of shares otherwise issuable to such Holder, upon such terms and conditions (including the conditions referenced in Section 6.5) as the Committee shall determine. If the Holder shall fail to pay, or make arrangements satisfactory to the Committee for the payment to the Company of, all such federal, state and local taxes required to be withheld by the Company, then the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to such Holder an amount equal to any federal, state or local taxes of any kind required to be withheld by the Company with respect to such Award. 2022 Proxy Statement101
Table of Contents Appendix A If provided for in an Award or approved by the Board or the Committee in its sole discretion, a Holder may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board or the Committee, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that the Company is able to retain shares of Common Stock having a Fair Market Value (determined by, or in a manner approved by, the Company) that exceeds the statutory minimum applicable withholding tax without financial accounting implications or the Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company may retain such number of shares of Common Stock (up to the number of shares having a Fair Market Value equal to the maximum individual statutory rate of tax (determined by, or in a manner approved by, the Company)) as the Company shall determine in its sole discretion to satisfy the tax liability associated with any Award. Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements. 11.10Nonexclusivity of the Plan.Plan. The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as it may deem desirable, including the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 11.11 Treatment with Respect to Other Benefit Programs.Programs. By acceptance of an Award, unless otherwise provided in the applicable Agreement or required by law, each Holder shall be deemed to have agreed that such Award is special incentive compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining the amount of any payment under any pension, retirement or other employee benefit plan, program or policy of the Company or any Subsidiary of the Company. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of any life insurance coverage, if any, provided by the Company or its Subsidiary on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of the Company or any Subsidiary of the Company. 11.12 Unfunded Plan.Plan. Neither the Company nor any Subsidiary of the Company shall be required to segregate any cash or any shares of Common Stock which may at any time be represented by Awards, and the Plan shall constitute an “unfunded” plan of the Company. Except as provided in Article VIII with respect to Awards of Restricted Shares and except as expressly set forth in an Agreement, no employee or independent contractor shall have voting or other rights with respect to the shares of Common Stock covered by an Award prior to the delivery of such shares. Neither the Company nor any Subsidiary of the Company shall, by any provisions of the Plan, be deemed to be a trustee of any shares of Common Stock or any other property, and the liabilities of the Company and any Subsidiary of the Company to any employee or independent contractor pursuant to the Plan shall be those of a debtor pursuant to such contract obligations as are created by or pursuant to the Plan, and the rights of any employee, former employee, independent contractor, former independent contractor or beneficiary under the Plan shall be limited to those of a general creditor of the Company or the applicable Subsidiary of the Company, as the case may be. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the obligations of the Company under the Plan, provided, however,, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan. 11.13 Governing Law.Law. The Plan and all Awards made hereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware. 11.14 Accounts.Accounts. The delivery of any shares of Common Stock and the payment of any amount in respect of an Award shall be for the account of the Company or the applicable Subsidiary of the Company, as the case may be, and any such delivery or payment shall not be made until the recipient shall have paid or made satisfactory arrangements for the payment of any applicable withholding taxes as provided in Section 11.9. 11.15 Legends.Legends. Each certificate evidencing shares of Common Stock subject to an Award shall bear such legends as the Committee deems necessary or appropriate to reflect or refer to any terms, conditions or restrictions of the Award applicable to such shares, including any to the effect that the shares represented thereby may not be disposed of unless the Company has received an opinion of counsel, acceptable to the Company, that such disposition will not violate any federal or state securities laws. 11.16 Company’s Rights.Rights. The grant of Awards pursuant to the Plan shall not affect in any way the right or power of the Company to make reclassifications, reorganizations or other changes of or to its capital or business structure or to merge, consolidate, liquidate, sell or otherwise dispose of all or any part of its business or assets. 11.17 Interpretation.Interpretation. The words “include,“include,” “includes,“includes,” “included”“included” and “including”“including” to the extent used in the Plan shall be deemed in each case to be followed by the words “without limitation.” 11.18 Compliance with Section 409A of the Code.Code. If and to the extent (i) any portion of any payment, compensation or other benefit provided to a Holder pursuant to the Plan in connection with his or her employment or service termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (ii) the Holder is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company or its Subsidiary in accordance with its procedures, by which determinations, the Holder (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation 102 Discovery
Table of Contents Appendix A or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New“New Payment Date”Date”), except as Section 409A of the Code may then permit. The aggregate of any payments that otherwise would have been paid to the Holder during the period between the date of separation from service and the New Payment Date shall be paid to the Holder in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule. TheNeither the Company nor any of its Subsidiaries makes noany representations or warrantywarranties and shall have no liability to the Holder or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.
11.19Authorization ofSub-Plans (including for Grants tonon-U.S. Employees) Employees and Independent Contractors). The Board or the Committee may from time to time establish one or moresub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board or the Committee shall establish suchsub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s or the Committee’s discretion under the Plan as the Board or the Committee deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board or the Committee shall deem necessary or desirable. All supplements adopted by the Board or the Committee shall be deemed to be part of the Plan, but each supplement shall apply only to Holders within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Holders in any jurisdiction which is not the subject of such supplement. 11.20Clawback Policy. Notwithstanding any other provisions in this Plan, any Award shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company in accordance with SEC regulations or other applicable law, as amended or superseded from time to time. 11.21Stock Ownership Guidelines. Any Award shall be subject to any applicable stock ownership guidelines adopted by the Company, as amended or superseded from time to time. 11.22Limitations on Liability.Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company or its Subsidiary will be liable to any Holder, former Holder, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company.Company or its Subsidiary. The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith. Appendix B
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2022 Proxy Statement 103
Table of Contents
Table of Contents
Table of Contents ![](https://files.docoh.com/DEF 14A/0001206774-22-000691/disca3983581-def14ax109x1.jpg)
DISCOVERY, INC. 230 PARK AVENUE SOUTH NEW YORK, NY 10003 ![](https://files.docoh.com/DEF 14A/0001206774-22-000691/disca3983581-def14ax109x2.jpg)
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery ofNon-GAAP Financial Measures information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. This proxy statement presentsDuring The Meeting - Go to www.virtualshareholdermeeting.com/DISCA2022
You may attend the following important financial measures utilized by Discovery, Inc. (the “Company”, “we,” “us” or “our”)meeting via the Internet and vote during the meeting. Have the information that are not all financial measures defined by generally accepted accounting principles (“GAAP”). The Company usesnon-GAAP financial measures, among other measures, to evaluate the operating performance of our business. Thesenon-GAAP measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Adjusted Operating Income Before Depreciation and Amortization (“OIBDA”) and Adjusted OIBDA Excluding the Impact of Currency Effects
The Company evaluates the operating performance of its segments based on financial measures such as revenues and Adjusted OIBDA. Adjusted OIBDA is defined as operating income excluding:(i) mark-to-market share-based compensation, (ii) depreciation and amortization, (iii) restructuring and other charges, (iv) certain impairment charges, (v) gains and losses on business and asset dispositions, and (vi) certain inter-segment eliminations related to production studios. As of January 1, 2017, the Company no longer excludes amortization of deferred launch incentives in calculating total Adjusted OIBDA as this expense is not material. In addition, beginning with the quarter ended September 30, 2017, Adjusted OIBDA also excludes material incremental third-party transaction costs directly related to the Scripps Networks Interactive, Inc. acquisition (“Scripps Networks Acquisition”) and its planned integration.
The Company uses Adjusted OIBDA to assess the operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance and allocate resources to each segment. The Company believes Adjusted OIBDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses. The Company excludesmark-to-market share-based compensation due to volatility, and excludes restructuring and other charges, certain impairment charges, gains and losses on business and asset dispositions, and Scripps Networks Acquisition and integration costs from the calculation of Adjusted OIBDA due to their impact on comparability between periods. The Company also excludes depreciation of fixed assets and amortization of intangible assets as these amounts do not represent cash paymentsprinted in the current reporting period. Certain corporate expensesbox marked by the arrow available and inter-segment eliminations relatedfollow the instructions.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to production studios are excluded from segment results to enable executive management to evaluate segment performance based upontransmit your voting instructions up until 11:59 p.m. Eastern Time the decisions of segment executives. Refer to our methodology below for calculating growth rates excludingday before the impact of currency effects.meeting date. Have your proxy card in hand when you call and then follow the instructions. Adjusted Net Income, Adjusted Earnings Per Diluted Share (“EPS”), Adjusted Net Income Excluding the Impact of Currency Effects
VOTE BY MAIL Mark, sign and Adjusted EPS Excluding the Impact of Currency Effects Adjusted Net Income is typically defined as earnings excluding the impact of amortization of acquisition-related intangible assets. Periodically, we exclude items impacting comparability as specified below. Adjusted EPS is defined as Adjusted Net Income per diluted share. The Company believes Adjusted Net Income and Adjusted EPS are relevant to investors because this metric allows them to evaluate the performance of the Company’s operations exclusive of thenon-cash amortization of acquisition-related intangible assets and meaningfulone-time items that impact the comparability of results from period to period. Refer to our methodology below for calculating growth rates excluding the impact of currency effects.
Free Cash Flow and Free Cash Flow Excluding the Impact of Currency Effects
The Company defines free cash flow as cash provided by operating activities less acquisitions of property and equipment. The Company uses free cash flow as it believes it is an important indicator for management and investors of the Company’s liquidity, including its ability to reduce debt, make strategic investmentsdate your proxy card and return capital to stockholders. Refer to our methodology below for calculating growth rates excluding the impact of currency effects.
Methodology for Calculating Growth Rates Excluding the Impact of Currency Effects
The impact of exchange rates on our business is an important factor in understandingperiod-to-period comparisons of our results. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S dollar strengthens relative to other foreign currencies. We believe the presentation of results on a constant currency basis(“ex-FX”), in addition to results reported in accordance with GAAP, provides useful information about our operating performance because the presentationex-FX excludes the effects of foreign currency volatility and highlights our core operating results. The presentation of results on a constant currency basis should be considered in addition to, but not a substitute for, measures of financial performance reported in accordance with GAAP.
Theex-FX change represents the percentage change on a period-over-period basis adjusted for foreign currency impacts. Theex-FX change is calculated as the difference between the current year amounts translated at a baseline rate (which is based on a spot rate for each of our currencies determined earlyit in the fiscal year as part of our forecasting process) (the “2017 Baseline Rate”) and the prior year amounts translated at the same 2017 Baseline Rate. In addition, consistent with the assumption of a constant currency environment, ourex-FX results exclude the impact of our foreign currency hedging activities as well as realized and unrealized foreign currency transaction gains and losses. Results on a constant currency basis, aspostage-paid envelope we present them, may not be comparablehave provided or return it to similarly titled measures used by other companies.
RECONCILIATIONS
Reconciliation of Net Income to Adjusted OIBDA
(unaudited; in millions)Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
| | | | | | | | | | | | | | | | | | | | | | | Twelve Months Ended December 31, 2017 | | | | U.S. Networks | | | International Networks | | | Education and Other | | | Corporate and Inter- Segment Eliminations | | | Total | | Net (loss) income available to Discovery Communications, Inc. | | | | | | | | | | | | | | | | | | $ | (337 | ) | Net income attributable to redeemable noncontrolling interests | | | | | | | | | | | | | | | | | | | 24 | | Net income attributable to noncontrolling interests | | | | | | | | | | | | | | | | | | | — | | Income tax expense | | | | | | | | | | | | | | | | | | | 176 | | Other expense (income), net | | | | | | | | | | | | | | | | | | | 110 | | Loss from equity investees, net | | | | | | | | | | | | | | | | | | | 211 | | Loss on extinguishment of debt | | | | | | | | | | | | | | | | | | | 54 | | Interest expense | | | | | | | | | | | | | | | | | | | 475 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 1,961 | | | | 106 | | | | 6 | | | | (1,360 | ) | | | 713 | | Inter-segment eliminations | | | 12 | | | | — | | | | (12 | ) | | | — | | | | — | | Loss (gain) on disposition | | | — | | | | — | | | | 4 | | | | — | | | | 4 | | Restructuring and other charges | | | 18 | | | | 42 | | | | 3 | | | | 12 | | | | 75 | | Depreciation and amortization | | | 35 | | | | 222 | | | | 5 | | | | 68 | | | | 330 | | Impairment of goodwill | | | — | | | | 489 | | | | — | | | | 838 | | | | 1,327 | | Mark-to-market share-based compensation | | | — | | | | — | | | | — | | | | 3 | | | | 3 | | Scripps Networks transaction and integration costs | | | — | | | | — | | | | — | | | | 79 | | | | 79 | | | | | | | | | | | | | | | | | | | | | | | Total Adjusted OIBDA | | $ | 2,026 | | | $ | 859 | | | $ | 6 | | | $ | (360 | ) | | $ | 2,531 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Twelve Months Ended December 31, 2016 | | | | U.S. Networks | | | International Networks | | | Education and Other | | | Corporate and Inter- Segment Eliminations | | | Total | | Net income available to Discovery Communications, Inc. | | | | | | | | | | | | | | | | | | $ | 1,194 | | Net income attributable to redeemable noncontrolling interests | | | | | | | | | | | | | | | | | | | 23 | | Net income attributable to noncontrolling interests | | | | | | | | | | | | | | | | | | | 1 | | Income tax expense (benefit) | | | | | | | | | | | | | | | | | | | 453 | | Other expense (income), net | | | | | | | | | | | | | | | | | | | (4 | ) | Loss (gain) from equity investees, net | | | | | | | | | | | | | | | | | | | 38 | | Loss on extinguishment of debt | | | | | | | | | | | | | | | | | | | — | | Interest expense | | | | | | | | | | | | | | | | | | | 353 | | | | | | | | | | | | | | | | | | | | | | | Operating income | | | 1,915 | | | | 597 | | | | (2 | ) | | | (452 | ) | | | 2,058 | | Inter-segment eliminations | | | 14 | | | | 4 | | | | (18 | ) | | | — | | | | — | | Loss (gain) on disposition | | | (50 | ) | | | (13 | ) | | | — | | | | — | | | | (63 | ) | Restructuring and other charges | | | 15 | | | | 26 | | | | 3 | | | | 14 | | | | 58 | | Depreciation and amortization | | | 28 | | | | 221 | | | | 7 | | | | 66 | | | | 322 | | Mark-to-market share-based compensation | | | — | | | | — | | | | — | | | | 38 | | | | 38 | | | | | | | | | | | | | | | | | | | | | | | Total Adjusted OIBDA | | $ | 1,922 | | | $ | 835 | | | $ | (10 | ) | | $ | (334 | ) | | $ | 2,413 | | | | | | | | | | | | | | | | | | | | | | |
Earnings Per Share
| | | | | | | | | | | Twelve Months Ended December 31, | | | | 2017 | | | 2016 | | Numerator: | | | | | | | | | Net income | | $ | (313 | ) | | $ | 1,218 | | | | | Less: | | | | | | | | | Allocation of undistributed income to SeriesA-1 convertible preferred stock | | | 41 | | | | (139 | ) | Net income attributable to noncontrolling interests | | | — | | | | (1 | ) | Net income attributable to redeemable noncontrolling interests | | | (24 | ) | | | (23 | ) | | | | | | | | | | Net income available to Discovery Communications, Inc. Series A, B and C common and SeriesC-1 convertible preferred stockholders for basic net income per share | | $ | (296 | ) | | $ | 1,055 | | | | | | | | | | | Allocation of net income available to Discovery Communications Inc. Series A, B and C common stockholders and SeriesC-1 convertible preferred stockholders for basic net income per share: | | | | | | | | | Series A, B and C common stockholders | | | (225 | ) | | | 789 | | SeriesC-1 convertible preferred stockholders | | | (71 | ) | | | 266 | | | | | | | | | | | Total | | | (296 | ) | | | 1,055 | | | | | Add: | | | | | | | | | Allocation of undistributed income to SeriesA-1 convertible preferred stockholders | | | (41 | ) | | | 139 | | | | | | | | | | | Net income available to Discovery Communications, Inc. Series A, B and C common stockholders for diluted net income per share | | $ | (337 | ) | | $ | 1,194 | | | | | | | | | | | Denominator — weighted average: | | | | | | | | | Series A, B and C common shares outstanding — basic | | | 384 | | | | 401 | | Impact of assumed preferred stock conversion | | | 192 | | | | 206 | | Dilutive effect of share-based awards | | | — | | | | 3 | | | | | | | | | | | Series A, B and C common shares outstanding — diluted | | | 576 | | | | 610 | | | | | | | | | | | SeriesC-1 convertible preferred stock outstanding — basic and diluted | | | 6 | | | | 7 | | | | | | | | | | | | | | Basic net income per share available to Discovery Communications, Inc. Series A, B and C common and SeriesC-1 convertible preferred stockholders: | | | | | | | | | Series A, B and C common stockholders | | $ | (0.59 | ) | | $ | 1.97 | | SeriesC-1 convertible preferred stockholders | | $ | (11.33 | ) | | $ | 28.14 | | | | | Diluted net income per share available to Discovery Communications, Inc. Series A, B and C common and SeriesC-1 convertible preferred stockholders: | | | | | | | | | Series A, B and C common stockholders | | $ | (0.59 | ) | | $ | 1.96 | | SeriesC-1 convertible preferred stockholders | | $ | (11.33 | ) | | $ | 27.99 | |
Calculation of Free Cash Flow
| | | | | | | | | | | | | | | | | | | Twelve Months Ended December 31, | | | | 2017 | | | 2016 | | | Change | | | % Change | | Cash provided by operating activities | | $ | 1,629 | | | $ | 1,380 | | | $ | 249 | | | | 18 | % | Purchases of property and equipment | | | (135 | ) | | | (88 | ) | | | (47 | ) | | | 53 | % | | | | | | | | | | | | | | | | | | Free cash flow | | $ | 1,494 | | | $ | 1,292 | | | $ | 202 | | | | 16 | % | | | | | | | | | | | | | | | | | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-099577/g560962pca1.jpg)
DISCOVERY, INC.
ONE DISCOVERY PLACE
SILVER SPRING, MD 20910 D70690-P68542-P69079 | KEEP THIS PORTION FOR YOUR RECORDS | | VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. DETACH AND RETURN THIS PORTION ONLY |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E43279-P05378 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | DISCOVERY, INC. | For All | Withhold All | | For | | Withhold | | For All | | | Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | | | | | | | | | All | | All | | Except | | | | | | | | | | | | | | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2 AND 3, AND “AGAINST” PROPOSAL 4. | 3. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote On Directors | | | o | o | o | | | | | | | | 1. | ELECTION OF DIRECTORS | | | | | | | | | | | | | | | | | | | | | | | | | 1. ELECTION OF DIRECTORS
| | | | ☐ | | ☐ | | ☐ | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | Nominees:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01) Robert R. Beck
02) Susan M. Swain
03) J. David Wargo
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote On Proposals | | | | For | | Against | | Abstain | | | | | 01) | Paul A. Gould | | | | | | | | | | | | | | | 02) | Kenneth W. Lowe | | | | | | | | | | | | | | 03) | Daniel E. Sanchez | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote On Proposals | | | For | Against | Abstain | | | | | | | | | | | | | | | 2. | Ratification of the appointment of PricewaterhouseCoopers LLP as Discovery, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2018.2022. | o | ☐o | | ☐ | | ☐ | o | | | 3. | | | 3. To approve certain amendments to the Warner Bros. Discovery, Communications, Inc. 2013Stock Incentive Plan adopted by the Board of Directors on February 22, 2018. Plan. | o | ☐o | | ☐ | | ☐ | o | | | 4. | | | 4. To vote on a stockholder proposal requesting the Board of Directors to adopt a policy that the initial list of candidates from which new management-supported director nominees are chosen shall include qualified women and minority candidates.
| | ☐ | | ☐ | | ☐ | | | | | | | 5. By the proxy holders, in their discretion, upon such other matters that may properly come before the meeting or any adjournment or adjournments thereof.
| | | | | | | | | | | | | | | | | | | | | | The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned Stockholder(s).Ifnodirection is made, this proxy will be voted “FOR” proposals 1, 2 and 3.made,thisproxywillbevoted“FOR”proposals1,2and3,and“AGAINST”proposal4.If any other matters properly come before the meeting, the persons named in this proxy will vote in their discretion. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized officer. | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX]
| | Date
| | | | | | Signature (Joint Owners)
| | Date
| | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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E43280-P05378
| | | DISCOVERY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2018
The stockholder(s) hereby appoint(s) Savalle C. Sims and Stephanie D. Marks, or either of them, as proxies, each with the power to appoint her substitute, and hereby authorize(s) each of them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Series A Common Stock or Series B Common Stock of Discovery, Inc. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 a.m., Eastern Time, on May 10, 2018, in the Henry Room at the Lotte Palace Hotel at 455 Madison Avenue, New York, New York 10022, and any adjournment or postponement thereof. Directions to the Annual Meeting are available on our Investor Relations website (http://ir.corporate.discovery.com), by contacting us at investor_relations@discovery.com or at 240-662-2000.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE, “FOR” PROPOSALS 2 AND 3, AND “AGAINST” PROPOSAL 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
| | |
| | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-099577/g560962pca1.jpg)
DISCOVERY, INC.
ONE DISCOVERY PLACE
SILVER SPRING, MD 20910
| | VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E43281-P05378 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | DISCOVERY, INC. | | | | For | | Withhold | | For All | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | | | | Signature (Joint Owners) | Date | | | | | | | | | | | | | | | | | | |
Table of Contents Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on April 8, 2022: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. DISCOVERY, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 2022 ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 2022 The stockholder(s) hereby appoint(s) Savalle C. Sims and Tara L. Smith, or either of them, as proxies, each with the power to appoint her substitute, and hereby authorize(s) each of them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Series A Common Stock and Series B Common Stock of Discovery, Inc. that the stockholder(s) is/are entitled to vote at the 2022 Annual Meeting of Stockholders to be held at 10:00 a.m., Eastern Time, on April 8, 2022, held virtually at www.virtualshareholdermeeting.com/DISCA2022, and any adjournment or postponement thereof. Instructions on how to access the Annual Meeting are available on our Investor Relations website (http://ir.corporate.discovery.com), by contacting us at investor_relations@discovery.com or at 1-877-324-5850. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE AND “FOR” PROPOSALS 2 AND 3. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Table of Contents ![](https://files.docoh.com/DEF 14A/0001206774-22-000691/disca3983581-def14ax109x1.jpg)
DISCOVERY, INC. 230 PARK AVENUE SOUTH NEW YORK, NY 10003 ![](https://files.docoh.com/DEF 14A/0001206774-22-000691/disca3983581-def14ax109x2.jpg)
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/DISCA2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | D70692-P69079 | KEEP THIS PORTION FOR YOUR RECORDS | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | | | | DISCOVERY, INC. | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | | | | | | | | | All | | All | | Except | | | | | | | | | | | | | | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2 AND 3, AND “AGAINST” PROPOSAL 4. | 3. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote On Directors | | | o | o | o | | | | | | | | 1. | ELECTION OF DIRECTORS | | | | | | | | | | | | | | | | | | | | | | | | | 1. ELECTION OF DIRECTORS
| | | | ☐ | | ☐ | | ☐ | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | Nominees:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01) S. Decker Anstrom
02) Robert J. Miron
03) Steven A. Miron
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote On Proposals | | | | For | | Against | | Abstain | | | | | 01) | Robert J. Miron | | | | | | | | | | | | | | | 02) | Steven A. Miron | | | | | | | | | | | | | | 03) | Susan M. Swain | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vote On Proposals | | | For | Against | Abstain | | | | | | | | | | | | | | | 2. | Ratification of the appointment of PricewaterhouseCoopers LLP as Discovery, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2018.2022. | o | ☐o | | ☐ | | ☐ | o | | | 3. | | | 3. To approve certain amendments to the Warner Bros. Discovery, Communications, Inc. 2013Stock Incentive Plan adopted by the Board of Directors on February 22, 2018. Plan. | o | ☐o | | ☐ | | ☐ | o | | | 4. | | | 4. To vote on a stockholder proposal requesting the Board of Directors to adopt a policy that the initial list of candidates from which new management-supported director nominees are chosen shall include qualified women and minority candidates.
| | ☐ | | ☐ | | ☐ | | | | | | | 5. By the proxy holders, in their discretion, upon such other matters that may properly come before the meeting or any adjournment or adjournments thereof.
| | | | | | | | | | | | | | | | | | | | | | The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned Stockholder(s).Ifnodirection is made, this proxy will be voted “FOR” proposals 1, 2 and 3.made,thisproxywillbevoted“FOR”proposals1,2and3,and“AGAINST”proposal4.If any other matters properly come before the meeting, the persons named in this proxy will vote in their discretion. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized officer. | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX]
| | Date
| | | | | | Signature (Joint Owners)
| | Date
| | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
E43282-P05378
| | | DISCOVERY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2018
The stockholder(s) hereby appoint(s) Savalle C. Sims and Stephanie D. Marks, or either of them, as proxies, each with the power to appoint her substitute, and hereby authorize(s) each of them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Series A-1 Preferred Stock of Discovery, Inc. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 a.m., Eastern Time, on May 10, 2018, in the Henry Room at the Lotte Palace Hotel at 455 Madison Avenue, New York, New York 10022, and any adjournment or postponement thereof. Directions to the Annual Meeting are available on our Investor Relations website (http://ir.corporate.discovery.com), by contacting us at investor_relations@discovery.com or at 240-662-2000.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE, “FOR” PROPOSALS 2 AND 3, AND “AGAINST” PROPOSAL 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
| | |
| | | ![LOGO](https://files.docoh.com/DEF 14A/0001193125-18-099577/g560962pca1.jpg)
DISCOVERY, INC.
ONE DISCOVERY PLACE
SILVER SPRING, MD 20910
| | DISCOVERY, INC.
THE ENCLOSED MATERIALS HAVE BEEN SENT TO YOU FOR INFORMATIONAL PURPOSES ONLY
|
E43155-Z72018
| | | | | | | | | | | | | | | | | DISCOVERY, INC. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | THE ENCLOSED MATERIALS HAVE BEEN SENT TO
YOU FOR INFORMATIONAL PURPOSES ONLY
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| | | | | DISCOVERY, INC.
THE ENCLOSED MATERIALS HAVE BEEN SENT TO YOU FOR INFORMATIONAL PURPOSES ONLY
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E43156-Z72017
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Table of Contents Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on April 8, 2022: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. | | | | | THE ENCLOSED MATERIALS HAVE BEEN SENT TO
YOU FOR INFORMATIONAL PURPOSES ONLY D70693-P69079 |
DISCOVERY, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 2022 ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 2022 The stockholder(s) hereby appoint(s) Savalle C. Sims and Tara L. Smith, or either of them, as proxies, each with the power to appoint her substitute, and hereby authorize(s) each of them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Series A-1 Preferred Stock of Discovery, Inc. that the stockholder(s) is/are entitled to vote at the 2022 Annual Meeting of Stockholders to be held at 10:00 a.m., Eastern Time, on April 8, 2022, held virtually at www.virtualshareholdermeeting.com/DISCA2022, and any adjournment or postponement thereof. Instructions on how to access the Annual Meeting are available on our Investor Relations website (http://ir.corporate.discovery.com), by contacting us at investor_relations@discovery.com or at 1-877-324-5850. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE AND “FOR” PROPOSALS 2 AND 3. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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