Jason Kilar has more than 20 million reasons to stay on as CEO of WarnerMedia for the time being as the company awaits regulatory approval to merge with Discovery.
When Kilar was hired in spring 2020, he was granted more than 1.6 million shares of AT&T stock, set to vest over four years beginning Feb. 15, 2021, according to the agreement, which was filed with the Securities and Exchange Commission. The second tranche of shares (valued at just over $12 million as of June 7) would vest Feb. 15, 2022, if he still works at the company.
In addition, Kilar’s employment agreement includes a dedicated severance payout in the event that WarnerMedia is sold and he is not retained as CEO.
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Critically, there is a step-up in severance benefits at the two-year mark of his hiring, meaning that if he makes it to May 1, 2022, he would be entitled to millions of dollars more in severance benefits.
The value of those benefits at the two-year mark are worth more than $20 million as of June 7 (and could be higher or lower depending on AT&T’s share price at the time), including severance pay of $5 million (which he would not receive at all if he leaves before the two-year mark), and continued salary, bonus and stock vesting for one year (as opposed to six months if he leaves before the two-year mark).
In other words, if his attorneys believe Kilar’s employment agreement is enforceable, his best bet to cash out would be to stick it out as long as he can. Or, as his employment letter says on page three, “If you voluntarily terminate your employment, you are not eligible for severance benefits.”
When Kilar took over as CEO of WarnerMedia last spring, he took an unorthodox approach to his employment agreement. While most other top entertainment CEOs sign fixed-term contracts with the companies they lead, Kilar signed a more flexible “at-will” employment agreement (both Kilar and the company have the ability to terminate the deal, at any time, as long as they give 60 days’ notice) with parent company AT&T.
The news that AT&T and Discovery Inc. struck a deal to merge their entertainment assets placed Kilar’s role at the company under enhanced scrutiny, and Kilar has hired attorney Allen Grubman to negotiate an exit.
By the end of May, however, Kilar was publicly saying he planned to stay with the company into 2022. “My plan and my focus is to remain here in my CEO role at WarnerMedia. I am not thinking right now about post-merger. There will be a time to consider that topic in 2022,” he said during an employee town hall May 27, according to an attendee, adding that he had “unfinished business” at the company.
He would go on to interview Discovery CEO David Zaslav at a WarnerMedia town hall the following week. AT&T CEO John Stankey, asked about Kilar’s future at WarnerMedia, told members of the press May 17 that “David’s got a lot of decisions to make on personnel and how things are structured moving forward during this transition period, and as he works his way through it, I’m sure he’ll be talking with folks about where that’s going.”
This story appeared in the June 9 issue of The Hollywood Reporter magazine. Click here to subscribe.
