Institutional Shareholder Services (ISS), a prominent advisory firm, has recommended that investors back the acquisition of Warner Bros. Discovery (NASDAQ:WBD) by Paramount Skydance (NASDAQ:PSKY), while opposing the proposed golden parachute for executives.

According to the proposal, executives are set to receive a total of $1.35 billion post-acquisition. This includes an “extraordinary golden parachute” valued at $886.8 million for Warner Bros. CEO David Zaslav and $466.2 million for other executives. ISS contends that such a payout is unjustified.

ISS also raised concerns over an estimated “excise tax grossup” of $335 million for Zaslav, which he would receive solely due to the deal’s execution. The future role of Zaslav in the merged entity remains unclear.

Zaslav's golden parachute, among the largest on record, may be reduced depending on when the merger closes. The payout also factors in a 20% extra tax imposed by the IRS on executives earning more than three times their average compensation.

ISS highlighted that the other Warner Bros. executives are not receiving an excise tax. The majority of Zaslav’s parachute payment results from single-trigger benefits, which accelerate vesting based on a single event, such as a change in company ownership.

Zaslav's $600 Million Payout At Stake

This development comes on the heels of a March regulatory filing, stating that Zaslav is set for a massive payday exceeding $600 million following the Warner Bros. and Paramount Skydance acquisition deal. His compensation package included cash severance, vested stock, and a large portion of unvested share awards, along with potential tax reimbursements worth up to $335 million.

Earlier in March, Zaslav also sold 4 million shares worth about $114 million, cashing out part of his stake amid the Paramount deal. The shares were earned as compensation between January 2023 and February 2026.

Warner Bros. said no excise tax would apply to David Zaslav if the deal closes in 2027, but Paramount Skydance, and Warner Bros. aim to complete the merger by September 2026.

ISS Under SEC Review

In December, President Donald Trump ordered the SEC to review proxy advisory firms ISS and Glass Lewis, focusing on their use of ESG and DEI policies. The move is seen as a win for critics, including Elon Musk, who have questioned the firms' influence.

In October, ISS had urged Tesla Inc. (NASDAQ:TSLA) shareholders to reject CEO Elon Musk's nearly $1 trillion pay package, citing concerns over its massive size and structure despite its potential to deliver significant shareholder value. However, Musk’s package was later approved by the shareholders.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.

Image via Shutterstock