Discovery CEO Makes $156 Million

Discovery Communications Inc. (NASDAQ: DISCA) is a relatively small public company. The 2014 compensation of its CEO, David Zaslav, was not. He made $156 million last year, which has to be close to a record for a public corporation of Discovery’s size.

Based on the company’s proxy, Zaslav made $156.007 million. However, only a modest part of this was in base salary, which was $3 million. Stock awards were $94.6 million and options $50.5 million. By contrast the next highest paid Discovery executive was Chief Development and Digital Officer and General Counsel Bruce Campbell, who made $7.6 million last year. CFO Andrew Warren made just a bit less than $7 million.

Granted, Discovery Communications had a good year. Revenue was $6.3 billion, up from $5.5 billion in 2013. Net income rose from $1.077 billion to $1.137 billion. The company’s international business drove virtually all the improvement. Discovery owns the Discovery Channel, TLC and Animal Planet, among other networks.

One of the keys of Zaslav’s success is the support of media company Advance/Newhouse, a privately held company, which holds 100% of the company’s voting shares. Cable baron John Malone also owns a substantial share of the company.

Based on the performance of Discovery’s shares, Zaslav does not deserve such an outsized package. The stock is down 25% over the past year, compared to an S&P rally of 24%. Over the calendar year 2014, the shares did not do much better.

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The Discovery board explained Zaslav’s compensation this way: It “reinforces his alignment with our shareholders and encourages long-term ownership of our stock”. At the end of a new six-year contract that began in 2014, he could hold a huge amount of Discovery’s shares. All in all, that goal has trumped corporate P&L and stock market performance, which makes it an odd way to put shareholder performance on a similar path to Zaslav’s interests.

There are almost no situations where even the most successful CEOs make over $100 million a year. Zaslav got a deal nearly unprecedented in the history of public company compensation.