Warner Bros. Discovery has simplified its CEO David Zaslav’s employment contract, allowing it to hold more restricted stock units while tying them to its free cash flow goals. Zaslav is eligible for an Annual Performance-Related Stock (PRSU) with an initial value of $12 million. However, they might double the underlying shares if the company achieves specific goals. He is also eligible for additional PRSU awards worth US$11.5 million annually.

In today’s SEC filing, WBD said it would provide $27 million in PRSU to its chief executive officer and other employees. An article from deadline writes how the company called it an  “an incremental incentive compensation program that is designed to promote and reward achievement of the Company’s initiatives with regard to increasing free cash flow and reducing leverage.”

Free cash flow, the amount of money a company generates after considering all its investments, is a critical metric that enables a company to pay down its debt and reduce its leverage (debt-to-equity ratio). This is a crucial focus for WBD, whose debt in 2016 reached nearly $50 billion.

Zaslav is often among the highest-paid CEOs in media and all sectors. His total compensation last year was $276 million, inflated by his options on his $202 million stock granted when his contract was renewed before Discovery and Warner merged with his media. The option requires the stock to stagger his 7+ years to reach a particular metric before going in-the-money.

Executive compensation is complicated because PRSU is just one element of the overall package. Zaslav’s annual grants are 75% based on “qualitative” KPIs. This varies by company but is less specific and subjective (leadership qualities, dedication, strategic cornerstones), with 25% based on “quantitative” criteria or concrete numbers. New additional grants are known to be based entirely on free cash flow. Details of compensation and goals will be included in the proxy submission.

The expanded grant program comes as WBD laid off employees across its operations and shelved all kinds of content to cut costs since the merger was completed just over a year ago.

Deadline continues to write: “The changes to the Warner Bros. Discovery executive compensation program are designed to further incentivize Company employees, including members of its leadership team and others whose efforts are critical to achieving the key near-term financial objectives of increased free cash flow and reduced leverage,” said WBD board chairman Samuel A. Di Piazza, Jr. “The WBD Board is confident that these additional incentives offer a more competitive package against the backdrop of ongoing industry-wide transformation and economic headwinds and better position the company to advance core drivers of shareholder value.”

The number of annual PRSUs from Zaslav, and additional PRSUs for the 2023 award, will be determined based on WBD’s February 28 closing share price of $15.62.

Zaslav’s amended contract also updates terms for PRSU-related payments in the event of a “dismissal event” or “change of control” between 2023 and 2025, according to the filing. or decide to resign in the event of a “majority change.”