Warner Bros. Shareholders Approve $110 Billion Paramount Deal but Reject Executive Pay: The Say-on-Pay Lesson for Every Change-of-Control Transaction

On April 23, 2026, Warner Bros. Discovery shareholders approved the company's $110 billion acquisition by Paramount Skydance with overwhelming support: roughly 1.74 billion shares voted in favor and only 16.3 million shares voted against. In the same meeting, on a separate non-binding vote, a majority of shareholders rejected the compensation packages payable to Chief Executive David Zaslav and other named executive officers in connection with the transaction. The two outcomes, in the same vote, sit at a structural fault line that every change-of-control deal must navigate. The Warner Bros. result deserves attention from any board, founder, or selling shareholder who will face a change-of-control compensation question.

What the Vote Actually Said

The two votes are legally distinct. The merger approval vote is binding under Delaware law and the company's bylaws, and a majority approval is required to consummate the transaction. With more than 99 percent of voted shares supporting the merger, that approval is conclusive. The merger remains subject to regulatory review in the United States and the European Union, but the shareholder leg of the approval process is complete.

The compensation vote, often called a "say-on-pay" vote in the deal context (technically a "say-on-golden-parachute" vote under Section 14A of the Securities Exchange Act), is non-binding. It is required for change-of-control transactions involving public targets and gives shareholders the chance to express a view on the merger-related compensation arrangements. The board is not required to follow the vote, and in the Warner Bros. case the company's compensation committee retains the legal authority to pay the disclosed amounts notwithstanding the rejection. But the vote signals shareholder displeasure and creates reputational and governance pressure that the board must weigh.

Why the Two Votes Diverged

The structural reason for the divergence is that shareholders evaluate a merger and an executive compensation package against different reference points. The merger is evaluated against the alternatives: continued standalone operation, no transaction, or a different transaction. At a $31 per share offer for Warner Bros., the shareholders concluded the deal is materially better than the standalone alternative. That conclusion is what 99 percent approval means.

The executive compensation package is evaluated against a separate reference point: what shareholders consider appropriate compensation for executives in a change-of-control event. The Zaslav package, like many CEO packages in large change-of-control deals, includes accelerated equity vesting, cash severance, continuation of benefits, and other elements that aggregate to substantial dollar amounts. Shareholders can simultaneously believe that selling the company to Paramount is the right decision and believe that the compensation package payable to the executives who negotiated and recommended the deal is excessive.

The split outcome also reflects the structural agency problem in change-of-control deals. The executives negotiating the deal are also the beneficiaries of the change-of-control compensation. A board that has set generous compensation triggers years before the transaction sometimes finds those triggers producing payouts that look disproportionate to shareholders when the eventual deal arrives. The shareholders had no opportunity to negotiate the compensation arrangement in advance, but they retain the say-on-parachute vote as a check on the result.

What Private Company Sellers Should Take From This

Warner Bros. is a public-to-public merger, and the say-on-parachute vote is a public-company governance feature. The lesson, however, applies directly to private company sales where executive compensation in connection with a transaction is a frequent point of negotiation between sellers, buyers, and the executives who will run the post-closing business.

In a private company sale where the founder-CEO is also the controlling shareholder, the compensation question often gets resolved implicitly through the headline purchase price. The founder negotiates the deal, captures most of the value through equity ownership, and any post-closing employment terms are part of the overall package. The agency problem is muted because the controlling shareholder is also the executive.

The compensation question becomes more complicated in private company sales where management is distinct from ownership. A common pattern: a private equity-backed company is being sold by its sponsor to a strategic acquirer. The CEO and senior executives have meaningful equity through a management incentive plan, but the principal beneficiaries of the sale price are the sponsor and any other equity holders. The executives are also negotiating their post-closing employment with the strategic buyer, which may include retention bonuses, new equity grants, or other compensation that influences which buyer is selected and which deal terms are accepted.

The structural risk is that the CEO's incentives in the deal selection process become misaligned with the equity holders' interest in maximizing sale proceeds. A buyer who offers the CEO a richer post-closing package may receive favorable treatment in the process even if the buyer's headline price is lower than competing offers. The mechanism that protects shareholders in the public context (the say-on-parachute vote) does not exist in the private context, but the underlying problem does.

How to Structure the Process to Manage the Conflict

The textbook approach in a private company sale where management compensation could influence deal selection involves several structural protections. First, the negotiation of the transaction value and the negotiation of management's post-closing compensation should be separated in time and in personnel. The board (or the sponsor, in a sponsor-backed deal) should have selected the buyer and agreed on price before management's post-closing arrangements are finalized.

Second, an independent committee or independent advisor should evaluate management's compensation arrangements relative to market norms and the deal context. The advisor should be retained by the board, not by management, and should be charged with assessing whether the proposed arrangements are within an appropriate range for the transaction size and the executive's role going forward.

Third, the management incentive plan should have been structured at the time of the original sponsor investment with clear and pre-agreed treatment in the event of a change of control. Post-hoc renegotiation of management's economics during a deal process creates exactly the conflict that the public-company say-on-parachute vote is designed to surface. A management incentive plan that pays out on agreed terms and is not subject to renegotiation during the process minimizes the conflict.

Fourth, transparency to all equity holders about the executive compensation arrangements and any retention or new-employment economics with the buyer is essential. In closely held companies, full disclosure to other equity holders before they are asked to approve the transaction puts the conflict in the open and gives them a basis to evaluate it.

Lessons for Boards Sitting on Compensation Committees

The Warner Bros. result also has implications for board compensation committees evaluating CEO compensation arrangements during quieter periods. The change-of-control payout terms that look reasonable in the abstract (when no transaction is in view) can produce dollar amounts in an actual transaction that shareholders will resist. Boards should periodically stress-test the compensation arrangements against the range of plausible deal values and ask whether the resulting payouts will be defensible to shareholders if a transaction occurs.

The change-of-control acceleration of equity, the continuation of benefits, the cash severance multiples, and any tax gross-up provisions all multiply against the deal value. A package that seemed modest when the company was worth $20 billion may look excessive when the company is sold for $110 billion. The compensation committee can avoid surprises by sizing the arrangements relative to anticipated deal economics, by capping certain elements, and by including governance triggers (such as committee re-approval at the time of a transaction) that allow recalibration.

Forward Look

The Warner Bros. say-on-parachute rejection will not change the immediate outcome (the executives are likely to receive the disclosed payments) but it will influence proxy advisor recommendations, future compensation committee design, and the negotiation of change-of-control compensation arrangements going forward. Public companies considering similar arrangements now have a market data point to weigh, and shareholders considering similar votes have a precedent to cite. In the private market, the underlying agency problem the vote surfaces will continue to require structural solutions through process design and board governance.