UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  12/15/2011
 
Discovery Communications, Inc.
(Exact name of registrant as specified in its charter)
 
Commission File Number:  001-34177
 
Delaware
  
35-2333914
(State or other jurisdiction of
  
(IRS Employer
incorporation)
  
Identification No.)
 
One Discovery Place
Silver Spring, Maryland 20910
(Address of principal executive offices, including zip code)
 
240-662-2000
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
Item 5.02.    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
On December 15, 2011, Discovery Communications, Inc. ("we", "us", "our" or the "Company") entered into an addendum (the "Addendum") modifying our employment agreement with David Zaslav, our president and chief executive officer.

Pursuant to the Addendum, effective December 31, 2011, Mr. Zaslav will no longer receive the awards under the Discovery Appreciation Plan (the "DAP") which, under his employment agreement, he had been entitled to receive annually in a one-for-one replenishment of DAP units that had vested. Instead, Mr. Zaslav will receive grants of cash-settled stock appreciation awards ("CS-SARs") under the Discovery Communications Inc. 2005 Incentive Plan (the "2005 Plan") on terms similar to those of the DAP awards. These terms include a four-year vesting schedule; a base price based on the average closing stock price of our Series A common stock over the 10 trading days before and including the grant date and the 10 trading days after the grant date; and a payout upon maturity determined using a similar average of the closing stock prices around the applicable vesting date. CS-SAR awards will be made upon vesting of Mr. Zaslav's remaining outstanding DAP units and upon vesting of CS-SARs granted pursuant to the Addendum, but only for annual vesting dates that occur between January 1, 2012 and December 31, 2014, unless Mr. Zaslav's term of employment is extended beyond February 1, 2015.

CS-SAR awards are subject to the same treatment upon termination of employment as the DAP units. If Mr. Zaslav's employment with the Company is terminated without "Cause" or for "Good Reason" (each as defined in his employment agreement), all of his then-outstanding DAP units and all of his then-outstanding CS-SARs granted pursuant to the Addendum will fully vest. If this termination takes place before February 1, 2015, one half of the DAP units and CS-SARs outstanding at the time of termination will be valued as of (and paid within 60 days after) the date of termination and the remaining awards will be valued as of their respective vesting dates (or, if earlier, February 1, 2015) and paid within 60 days after the applicable date.

Pursuant to the Addendum, the Company is obligated to make a contribution in the amount of $1.5 million into the Company's Supplemental Deferred Compensation Plan (the "SRP") in each of January 2013 and 2014 for the benefit of Mr. Zaslav, without regard to whether he remains employed with us, assuming his employment with us has not previously been terminated for "Cause".   These contributions are intended to compensate Mr. Zaslav for the loss of his ability to defer payments under the DAP into the SRP.

Except as modified by the Addendum, the terms of Mr. Zaslav's current employment agreement remain in effect. These terms include customary restrictive covenants, including those relating to non-solicitation, non-interference, non-competition and confidentiality, during the term of Mr. Zaslav's employment and for one or two years thereafter, depending upon the reason his employment with us ends.

 
 
Item 9.01.    Financial Statements and Exhibits
 
10.1 Second Addendum to Employment Agreement dated December 15, 2011 between David Zaslav and Discovery Communications, Inc.

10.2 Form of David Zaslav Cash-Settled Stock Appreciation Award Agreement

 

 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
           
Discovery Communications, Inc.
 
 
Date: December 21, 2011
     
By:
 
/s/    Bruce Campbell
               
Bruce Campbell
               
Chief Development Officer, General Counsel and Secretary
 
 

 

EXHIBIT INDEX
 
Exhibit No.
  
Description
EX-10.1
  
Second Addendum to Employment Agreement dated December 15, 2011 between David Zaslav and Discovery Communications, Inc.
EX-10.2
  
Form of David Zaslav Cash-Settled Stock Appreciation Award Agreement

EXECUTION COPY

SECOND ADDENDUM TO EMPLOYMENT AGREEMENT

This SECOND ADDENDUM TO EMPLOYMENT AGREEMENT (this “Addendum”) is made as of this 15th day of December, 2011 (the “Addendum Effective Date”), by and between Discovery Communications, Inc., a Delaware corporation with its principal place of business at One Discovery Place, Silver Spring, Maryland 20910 (the “Company”) and David M. Zaslav (the “Executive”) (collectively, the “Parties”).

WHEREAS, the Company employs the Executive as President and Chief Executive Officer (“CEO”) under the terms of that certain Employment Agreement, dated November 28, 2006 (the “Employment Agreement”), as amended by the Addendum to Employment Agreement dated as of September 9, 2009 (the “First Addendum”); and

WHEREAS, the Parties desire to amend the Employment Agreement, as amended, in accordance with the terms set forth herein. Capitalized terms used herein without definition shall have the meanings given to such terms in the Employment Agreement or the First Addendum as applicable.

NOW, THEREFORE, the Parties agree as follows:

1.       Compensation . Paragraph 4 of the Employment Agreement (entitled “Compensation”) shall be amended, in relevant part, by replacing subparagraph (c) “(DAP”) to provide as follows and by adding subparagraphs (f) and (g) as set forth further below:
 
  (c)       DAP and Special Cash-Settled SARs . The Executive’s right, upon payment of his “Appreciation Units” (as defined in the Company’s Discovery Appreciation Plan (the “DAP”)) in connection with a “Regular Maturity Date” (as defined in the DAP) to receive an additional grant of Appreciation Units to replenish the number of Appreciation Units canceled in connection with such payment (pursuant to section 3.2(a) of DAP), shall cease to apply to any Regular Maturity Date occurring after December 31, 2011. Such replenishment grants shall instead be provided through special cash-settled stock appreciation rights (“Special CS- SARs”), to be issued under the Discovery Communications, Inc. 2005 Incentive Plan, as amended or replaced from time to time, which Special CS-SARs shall have terms comparable to those in effect for the DAP, to the extent permissible by applicable law, including the principles for valuation of grant and payment.
 
    Replenishments with respect to Appreciation Units and comparable treatment with respect to the Special CS-SARs shall continue while the Executive is a Full-Time Employee, but not apply to a Regular Maturity Date (or, for the Special CS-SARs, “Scheduled Payment Dates” (as defined in the applicable award agreements)) after December 31, 2014, unless the Term of Employment has been extended beyond February 1, 2015 (in which case such replenishment right shall continue to apply). Upon the Executive’s termination of employment without Cause or for Good Reason, pursuant to subparagraph 10(c) below, (x) all of the Executive’s outstanding Appreciation Units and Special CS-SARs shall become fully vested;
 
  and (y) if such termination occurs prior to the expiration of the Term of
 
  Employment, then one-half of the Appreciation Units from each “Grant Effective Date” (as defined in the DAP) and one-half of the Special CS-SARs from each replenishment shall be valued as of the date of termination using the valuation rules applicable to and set forth in your Special CS-SARs and paid within sixty (60) days following the Executive’s termination of employment and one-half of the Appreciation Rights from each Grant Effective Date and one-half of the Special CS-SARs from each replenishment shall be valued, as set forth above, as of the earlier of their Regular Maturity Date or Scheduled Payment Date (as applicable) or the scheduled date for expiration of the Term of Employment and paid within sixty (60) days after such date.
 
  (f)       Supplemental Deferred Compensation Plan . The Company will make two discretionary “Company Contributions” (as defined in the Discovery Communications, LLC Supplemental Deferred Compensation Plan (the “SDCP”)) to the SDCP, pursuant to Section 5.1 of the SDCP, each in the amount of $1.5 million, in January 2013 and January 2014, without regard to whether the Executive remains employed on such contribution dates (provided that no such contributions will be made if the Executive has been previously terminated for Cause as defined in the Employment Agreement). The Executive will have the right to elect distribution timing and method of payment of such amounts in accordance with the terms of the SDCP and applicable law.
 
  (g)       Withholding . The Company will have the right to withhold, from payments otherwise due and owing to the Executive, an amount sufficient to satisfy any federal, state, and/or local income and payroll taxes, any amount required to be deducted under any employee benefit plan in which Executive participates or as required to satisfy any valid lien or court order.
 
4.       Severance Benefits . References in Paragraph 10 of the Employment Agreement to “the vested DAP benefits pursuant to section 7.2 of the DAP” shall be amended to read “the vested DAP benefits pursuant to section 7.2 of the DAP and the vested Special CS-SARs pursuant to the terms of their award agreements.” Clause (y) of Paragraph 10(c) of the Employment Agreement shall be amended to say “(y) accelerated vesting and payment of Executive’s Appreciation Units and Special CS-SARs in accordance with Paragraph 4(c) hereof.”
 
5.       Release . The second sentence of the penultimate paragraph in Paragraph 10 of the Employment Agreement shall be amended to read “On or following the date of termination [of the Executive’s employment pursuant to subparagraph (c), (d) or (g) above, in consideration of the payments to be made to the Executive pursuant to such subparagraph and as a condition to the payment thereof, the Executive agrees to execute a release of any claims against the Company, its employees, officers, directors, members, shareholders, affiliates and subsidiaries arising out of, in connection with or relating to the Executive’s employment with or termination of employment from the Company including any claims under the terms of this Agreement and including a release of claims under the Age Discrimination in Employment Act, in a form to be provided by the Company]. The
 

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  release must become irrevocable within sixty (60) calendar days (or such earlier date as the release provides) after termination. Payment of 409A Compensation (as defined in Section 6(e) of the First Addendum) shall be made as provided in subparagraph (c), (d), or (g), as modified by Section 6(e) of the First Addendum, but, in any event, not before the first business day of the year subsequent to the year in which occurs the date of termination if the sixty (60) calendar day period specified above ends in the calendar year subsequent to such date of termination.” The other sentences of the penultimate paragraph remain as provided in the Employment Agreement.
 
6.       Miscellaneous . Paragraph 14 of the Employment Agreement (entitled “ Miscellaneous ”) shall apply to the First Addendum and this Addendum with equal force, and all references therein to “this Agreement” shall include the First Addendum and this Addendum. The Employment Agreement, the First Addendum, and this Addendum contain the entire understanding of the Parties relating to the subject matter of hereof and supersede all other prior written or oral agreements, understandings or arrangements. This Addendum may be executed in any number of counterparts, each of which shall, when executed, be deemed to be an original and all of which shall be deemed to be one and the same instrument.
 
7.       No Other Changes . Except as expressly modified by this Addendum, the Employment Agreement, as amended by the First Addendum, remains in full force and effect. Any reference to the Employment Agreement in any other document or agreement between or delivered by any of the parties to the Agreement shall be deemed to refer to the Employment Agreement as amended by the First Addendum and this Addendum.
 

      IN WITNESS WHEREOF, this Addendum has been executed and delivered by the Parties as of the first date written above.

  David M. Zaslav

  /s/ David M. Zaslav
December 15, 2011

  DISCOVERY COMMUNICATIONS, INC.

/s/ Adria Alpert Romm By: Adria Alpert Romm

Its: Senior Executive Vice President, Human Resources December 15, 2011

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David M. Zaslav

Dear David,

Congratulations, you have been given a stock appreciation right (or “SAR”) in recognition of your contributions to the success of Discovery Communications, Inc. (the “Company”). A stock appreciation right gives you the right to receive cash based on the increase in value, if any, between the value of the Company’s Series A common stock when we grant the SAR (the base price) and the value when the SAR is exercised, assuming you satisfy the conditions of the Plan and the implementing agreement. We would like you to have an opportunity to share in the continued success of the Company through this stock appreciation rights grant under the Discovery Communications, Inc. 2005 Incentive Plan (As Amended and Restated) (the “Plan”). The following represents a brief description of your grant. Additional details regarding your SAR are provided in the attached SAR Agreement (the “Grant Agreement”) and in the Plan.

SAR Grant Summary:      
 
                                                  Date of Grant     January __, 2012  
                                                  SAR Shares     <Number of SARS Granted>  
                                                  Base Price per Share     <Grant Price> 1  
                                                  Scheduled Payment Dates     Within 60 days following the first  
    anniversary of the Date of Grant  
    for 25% of the SAR and within 60  
    days following each of the next  
    three anniversaries as to an  
    additional 25%  

·       You have been granted a stock appreciation right with respect to shares of Discovery Communications, Inc. Series A Common Stock. The total number of shares under your grant is in the chart above under “SAR Shares” and the base price per share is under “Base Price per Share.”
 
·       The potential value of your SAR increases if the price of the Company’s stock increases, but you also have to continue to work for the Company (except as the Grant Agreement provides) to actually receive such value. Of course, the value of the stock may go up and down over time.
 
·       The SAR will be automatically converted into cash payments in four annual 25% increments beginning on the first anniversary of the Date of Grant, assuming you remain an employee of the Company and subject to the terms in the Grant Agreement, with payment made as provided in the Grant Agreement.
 

1 Determined based on the average closing price of single share of the Company’s Series A common stock for the 10 trading days preceding and including the Date of Grant and the 10 trading days following the Date of Grant, determined based on publication in the Wall Street Journal or comparable successor publication.

D ISCOVERY P ERFORMANCE E QUITY P ROGRAM

Z ASLAV C ASH -S ETTLED S TOCK A PPRECIATION R IGHT A GREEMENT

      Discovery Communications, Inc. (the “ Company ”) has granted you a stock appreciation right (the “ SAR ”) under the Discovery Communications, Inc. 2005 Incentive Plan (As Amended and Restated) (the “ Plan ”). The Company’s general program to offer equity and equity-type awards to eligible employees is referred to as the “ Performance Equity Program ” (or “ PEP ”). The SAR lets you receive a cash amount equivalent to the appreciation in value, if any, at the time of exercise, of a specified number of shares of the Company’s Series A common stock (the “ SAR Shares ”) over a specified measurement price per share (the “ Base Price ”).

      The individualized communication you received (the “ Cover Letter ”) provides the details for your SAR. It specifies the number of SAR Shares, the Base Price, the Date of Grant, and the Scheduled Payment Dates.

      The SAR is subject in all respects to the applicable provisions of the Plan. This Grant Agreement does not cover all of the rules that apply to the SAR under the Plan; please refer to the Plan document. Capitalized terms are defined either further below in this grant agreement (the “ Grant Agreement ”) or in the Plan.

The Plan document is available on the Fidelity website. The Prospectus for the Plan and the Company’s S-8, Annual Report on Form 10-K, and other filings the Company makes with the Securities and Exchange Commission are available for your review on the Company’s web site. You may also obtain paper copies of these documents upon request to the Company’s HR department.

Neither the Company nor anyone else is making any representations or promises regarding the duration of your service, exercisability of the SAR, the value of the Company's stock or of this SAR, or the Company's prospects. The Company is not providing any advice regarding tax consequences to you or regarding your decisions regarding the SAR; you agree to rely only upon your own personal advisors.

N O ONE MAY SELL , TRANSFER , OR DISTRIBUTE THE SAR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO D ISCOVERY C OMMUNICATIONS , I NC . OR OTHER INFORMATION AND REPRESENTATIONS SATISFACTORY TO IT THAT SUCH REGISTRATION IS NOT REQUIRED .

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In addition to the Plan’s terms and restrictions, the following terms and restrictions apply:

SAR     While your SAR remains in effect under the SAR Expiration section, the SAR  
Payment     will be automatically exercised and you will receive the applicable appreciation in  
Terms     value under the timing rules of this section.  
 
    The SAR will be exercised on the schedule provided in the Cover Letter to this  
    Grant Agreement, assuming you remain employed (or serve as a member of the  
    Company’s board of directors) through each Scheduled Payment Date, except as  
    provided in this section. Any fractional shares will be carried forward to the  
    following Scheduled Payment Date, unless the Committee selects a different  
    treatment. For purposes of this Grant Agreement, employment with the  
    Company will include employment with any Subsidiary whose employees are  
    then eligible to receive Awards under the Plan (provided that a later transfer of  
    employment to an ineligible Subsidiary will not terminate employment unless the  
    Committee determines otherwise).  
 
    You will be treated as fully satisfying any employment condition (“vested”) if your  
    employment ends as a result of your resignation for Good Reason or termination  
    without Cause. The conditions for “Good Reason” resignation and the definition  
    of “Cause” are as set forth in your Employment Agreement with the Company, as  
    such agreement may be amended from time to time (the “Employment  
    Agreement”). Payment would then be made within 60 days following the regular  
    Scheduled Payment Dates, except that if your employment ends on a termination  
    without Cause or resignation for Good Reason before February 1, 2015, payment  
    as to one-half of any unpaid portions of the SAR will be valued as of the date of  
    termination or resignation and paid within 60 days thereafter and payment as to  
    the remaining half will be valued as of the earlier of their remaining applicable  
    Scheduled Payment Dates and February 1, 2015 and paid within 60 days after  
    such earlier date.  
 
    If your employment ends as a result of death or “Disability” (as defined in the  
    Employment Agreement), any unvested portions of the SAR will then vest and  
    will be valued as of the date of death or employment termination for Disability  
    and paid within 60 days thereafter.  
 
    If your employment ends on the expiration of the Employment Agreement at  
    February 15, 2015, any unvested portions of the SAR will immediate expire.  
 
    Valuation for purposes of any payment under the SAR will be done based on the  
    average closing price of single share of the Company’s Series A common stock  
    for the 10 trading days preceding and including the date for which valuation is  
    occurring and the 10 trading days following the date for which valuation is  
    occurring, determined based on publication in the Wall Street Journal or  
    comparable successor publication.  
 
    Payments under this SAR will be subject to the Release requirements in the  
    Second Addendum to the Employment Agreement, where applicable in  
    connection with a termination without Cause, resignation for Good Reason, or  
    Disability.  
 
SAR Expiration     The SAR will expire no later than 60 days following the close of business on the  
    last Scheduled Payment Date. Unpaid portions of the SAR expire immediately  
    when you cease to be employed (unless you are concurrently remaining or  
    becoming a member of the Board) except as provided under SAR Payment  

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    Terms . If the Company terminates your employment for Cause, the SAR will  
    immediately expire without regard to whether it is then exercisable.  
 
    The Committee can override the expiration provisions of this Grant Agreement.  
 
Withholding     The Company will reduce the cash to be issued to you in connection with any  
    exercise of the SAR by an amount that would equal all taxes (for example, in the  
    U.S., Federal, state, and local taxes) required to be withheld (at their minimum  
    withholding levels).  
 
Compliance     You will not be paid under the SAR if such payment would violate any applicable  
with Law     Federal or state securities laws or other laws or regulations.  
 
Clawback     If the Company’s Board of Directors or its Compensation Committee (the  
    “ Committee ”) determines, in its sole discretion, that you engaged in fraud or  
    misconduct as a result of which or in connection with which the Company is  
    required to or decides to restate its financials, the Committee may, in its sole  
    discretion, impose any or all of the following:  
 
                        Immediate expiration of the SAR, whether vested or not, if granted within  
                        the first 12 months after issuance or filing of any financial statement that  
                        is being restated (the “ Recovery Measurement Period ”); and  
 
                        As to any exercised portion of the SAR (to the extent, during the  
                        Recovery Measurement Period, the SAR is granted, vests, or is  
                        exercised), prompt payment to the Company of any SAR Gain. For  
                        purposes of this Agreement, the “ SAR Gain ” per share you received on  
                        exercise of SARs is the spread between closing price on the date of  
                        exercise and the Base Price (i.e., the cash you received and the  
                        withholdings paid on your behalf).  
 
    This remedy is in addition to any other remedies that the Company may have  
    available in law or equity.  
 
    Payment is due in cash or cash equivalents within 10 days after the Committee  
    provides notice to you that it is enforcing this clawback. Payment will be  
calculated on a gross basis, without reduction for taxes.
 
 
Additional     The Company may postpone any exercise for so long as the Company  
Conditions     determines to be advisable to satisfy the following:  
to Exercise      
                        its completing or amending any securities registration or its or your  
                        satisfying any exemption from registration under any Federal or state  
                        law, rule, or regulation;  
 
                        its receiving proof it considers satisfactory that a person seeking to  
                        receive payment under the SAR after your death is entitled to do so;  
 
                        your complying with any requests for representations under the Plan;  
                        and  
 
                        your complying with any Federal, state, or local tax withholding  
                        obligations.  

Page 4

No Effect on     Nothing in this Grant Agreement restricts the Company’s rights or those of any of  
Employment     its affiliates to terminate your employment or other relationship at any time and  
or Other     for any or no reason. The termination of employment or other relationship,  
Relationship     whether by the Company or any of its affiliates or otherwise, and regardless of  
    the reason for such termination, has the consequences provided for under the  
    Plan and any applicable employment or severance agreement or plan.  
 
No Effect on     You understand and agree that the existence of the SAR will not affect in any  
Running Business     way the right or power of the Company or its stockholders to make or authorize  
    any adjustments, recapitalizations, reorganizations, or other changes in the  
    Company’s capital structure or its business, or any merger or consolidation of the  
    Company, or any issuance of bonds, debentures, preferred or other stock, with  
    preference ahead of or convertible into, or otherwise affecting the Company’s  
    common stock or the rights thereof, or the dissolution or liquidation of the  
    Company, or any sale or transfer of all or any part of its assets or business, or  
    any other corporate act or proceeding, whether or not of a similar character to  
    those described above.  
 
Governing Law     The laws of the State of Delaware will govern all matters relating to the SAR,  
    without regard to the principles of conflict of laws.  
 
Notices     Any notice you give to the Company must follow the procedures then in effect. If  
    no other procedures apply, you must send your notice in writing by hand or by  
    mail to the office of the Company’s Secretary (or to the Chair of the Committee if  
    you are then serving as the sole Secretary). If mailed, you should address it to  
    the Company’s Secretary (or the Chair of the Committee) at the Company’s then  
    corporate headquarters, unless the Company directs recipients to send notices to  
    another corporate department or to a third party administrator or specifies  
    another method of transmitting notice. The Company and the Committee will  
    address any notices to you using its standard electronic communications  
    methods or at your office or home address as reflected on the Company’s  
    personnel or other business records. You and the Company may change the  
    address for notice by like notice to the other, and the Company can also change  
    the address for notice by general announcements to recipients.  
 
Plan Governs     Wherever a conflict may arise between the terms of this Grant Agreement and  
    the terms of the Plan, the terms of the Plan will control. The Committee may  
    adjust the number of SAR Shares and the Base Price and other terms of the  
    SAR from time to time as the Plan provides.  

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