Warner Bros. Discovery's board of directors ratified the issuance of stock to non-employee directors after determining the grants were potentially defective corporate acts. The company filed a statutory notice with the Delaware Court of Chancery to regularize these awards under Section 204 of the Delaware General Corporation Law.
The board adopted resolutions on October 2, 2026, approving the ratification of awards made under the Warner Bros. Discovery, Inc. 2005 Non-Employee Director Incentive Plan. The plan originally authorized the company to grant restricted stock units to non-employee directors and issue Series A common stock to settle those awards. However, Section 11.6 of the plan specified that no new awards could be made on or after May 20, 2025. Despite this expiration date, the company granted a total of 396,804 restricted stock units to non-employee directors in June 2025 and June 2026.
The board determined that these post-expiration grants and the subsequent stock issuances arose from a failure of authorization because they were not effected in accordance with the plan's terms prior to the expiration date. Consequently, the board classified the actions as potentially defective corporate acts and the resulting shares as putative stock. After determining that ratification was in the best interests of the company and its stockholders, the board approved the grants as of their original dates. The board also declared that all issued stock is considered duly authorized, validly issued, fully paid, and non-assessable as of the time of original issuance.
Following the completion of required service periods, an aggregate of 120,000 shares of common stock were issued to certain non-employee directors in settlement of some of the 2025 awards. The ratification notice states that this process does not require approval from the company's stockholders. Any legal claims that these acts are void or voidable due to failure of authorization must be brought within 120 days from the notice date of October 6, 2026.
The resolutions also reference an Agreement and Plan of Merger dated February 27, 2026, among Warner Bros. Discovery, Paramount Skydance Corporation, and Prince Sub Inc. Under this merger agreement, certain actions regarding the amendment of the plan and the awards may be subject to buyer consent. At the closing of the merger transactions, outstanding awards and issued stock will convert into rights to receive cash payments based on the per-share merger consideration.