Edgar Filing: Discovery Communications, Inc.

2013 Bonus Target

2014 Bonus Target

Rationale

Mr. Zaslav

$6 million

$6.6 million

Mr. Zaslav’s bonus target was increased as one of the terms of his 2014 employment agreement. That agreement kept Mr. Zaslav’s base salary flat for the six-year term and provided for annual increases in the bonus target, consistent with the Committee’s desire to deliver the vast majority of Mr. Zaslav’s pay in the form of performance-based compensation.

Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant x Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨	Preliminary Proxy Statement

¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x	Definitive Proxy Statement

¨	Definitive Additional Materials

¨	Soliciting Material under §240.14a-12

Discovery Communications, Inc.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box):

x	No fee required.

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which the transaction applies:

(2)

Aggregate number of securities to which the transaction applies:

(3)

Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of the transaction:

(5)

Total fee paid:

¨	Fee paid previously with preliminary materials.

¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

LOGO

April 6, 2015

Dear Stockholders,

You are cordially invited to attend our annual meeting of stockholders at 10:00 a.m. on Wednesday, May 20, 2015 at our corporate headquarters at One Discovery Place, Silver Spring, Maryland 20910.

If you hold shares of Series A or Series B common stock or Series A convertible preferred stock, you will be asked to vote on a number of important matters, which are listed in the Notice of Annual Meeting of Stockholders (the “Notice”). The Board of Directors recommends a vote FOR proposals 1, 2 and 3, and AGAINST proposal 4 in this notice.

Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting, please vote as soon as possible to make sure that your shares are represented.

Thank you for your continued support and interest in our company, and I look forward to seeing you at the Annual Meeting.

Sincerely,

LOGO

Robert J. Miron

Chairman of the Board

Discovery Communications, Inc.

LOGO

DISCOVERY COMMUNICATIONS, INC.

a Delaware company

One Discovery Place

Silver Spring, Maryland 20910

(240) 662-2000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Discovery Communications Stockholders:

You are cordially invited to attend, and notice is hereby given of, the 2015 Annual Meeting of Stockholders of Discovery Communications, Inc. to be held at our offices at One Discovery Place, Silver Spring, Maryland, on Wednesday, May 20, 2015 at 10:00 a.m., local time, for the following purposes:

1. To elect five directors, two Class I directors to be voted on by the holders of our Series A common stock and Series B common stock, voting together as a single class, and three preferred stock directors to be voted on by the holders of our Series A preferred stock, voting separately as a class.

2. To vote upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015.

3. To approve the Discovery Communications, Inc. 2005 Non-Employee Director Incentive Plan, as amended.

4. To vote upon a Stockholder proposal requesting the Board of Directors to prepare a report on plans to increase diverse representation on the Board.

The stockholders will also act on any other business that may properly come before the Annual Meeting or adjournments thereof.

The close of business on March 26, 2015 was the record date for determining the holders of shares of our Series A and Series B common stock and Series A convertible preferred stock entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. For a period of at least ten days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the Annual Meeting will be open to the examination of any stockholder during ordinary business hours at our corporate headquarters located at One Discovery Place, Silver Spring, Maryland.

By Order of the Board of Directors,

LOGO

Stephanie D. Marks

Corporate Secretary

April 6, 2015

TABLE OF CONTENTS


Section	Page
Questions and Answers		1
Corporate Governance		5
Corporate Governance Guidelines		5
Director Independence		5
Board Leadership Structure		6
Code of Ethics		6
Committees of the Board of Directors		6
Board Role in Risk Oversight		8
Board Meetings		9
Director Attendance at Board and Annual Meetings		9
Director Nomination Process		9
Stockholder Communication with Directors		10
Board Compensation		11
Proposal 1: Election of Directors		14
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm		18
Description of Fees		18
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm		19
Report of the Audit Committee		20
Proposal 3: Approval of Discovery Communications, Inc. 2005 Non-Employee Director Incentive Plan, as amended		21
Report of the Compensation Committee		29
Compensation Discussion and Analysis		30
Executive Compensation		61
Risk Considerations in our Compensation Programs		92
Prohibition on Derivative Trading		92
Certain Relationships and Related Person Transactions		93
Policy Governing Related Person Transactions		93
Proposal 4: Stockholder Proposal on Diversity		95
Securities Authorized for Issuance Under Equity Compensation Plans		97
Security Ownership Information of Certain Beneficial Owners and Management of Discovery		99
Security Ownership of Certain Beneficial Owners of Discovery		99
Security Ownership of Discovery Management		100
Section 16(a) Beneficial Ownership Reporting Compliance		104
Availability of Annual Report		104
Stockholder Proposals		104
Householding		105
Solicitation by the Board; Expenses of Solicitation		106

LOGO

2015 PROXY STATEMENT

QUESTIONS AND ANSWERS ABOUT

THE 2015 ANNUAL MEETING OF STOCKHOLDERS

Q: Who is soliciting my vote?

A: The Discovery Communications, Inc. Board of Directors is soliciting your vote on proposals being submitted for consideration at our Annual Meeting of Stockholders to be held on May 20, 2015.

Q: What is the Notice of Internet Availability of Proxy Materials?

A: In accordance with the SEC’s proxy delivery rules, we intend to commence distribution on or about April 6, 2015 of a notice (the “Notice of Internet Availability of Proxy Materials”) indicating that this Notice of 2015 Annual Meeting of Stockholders and Proxy Statement, our Annual Report to Stockholders and our Annual Report on Form 10-K will be made available at www.proxyvote.com. This website will also provide holders of our Series A and Series B common stock and Series A convertible preferred stock (“Series A preferred stock”) with instructions on how to vote their shares. The Notice of Internet Availability of Proxy Materials also indicates how to request printed copies of these materials, including, for holders of Series A and Series B common stock and Series A preferred stock, the proxy card or voting instruction card.

Q: What matters will be voted on at the Annual Meeting?

A: The principal business of the meeting will be the following matters:

•

the election of two Class I directors by the holders of our Series A common stock and Series B common stock, voting together as a single class, and the election of three preferred stock directors by the holders of our Series A preferred stock, voting separately as a class;

•

the ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2015;

•

the approval of the 2005 Non-Employee Director Incentive Plan, as amended; and

•

the consideration of a Stockholder proposal requesting the Board of Directors to prepare a report on plans to increase diverse representation on the Board, if properly presented.

We will also transact such other business as may properly be presented at the Annual Meeting or at any postponements or adjournments thereof. However, we are not aware of any other matters to be acted upon at the Annual Meeting.

Q: Who is entitled to vote at the Annual Meeting?

A: The close of business on March 26, 2015 was the record date for determining the holders of our Series A and Series B common stock and Series A preferred stock entitled to notice of, and to vote at, the Annual Meeting and any adjournment thereof. The Notice of Internet Availability of Proxy Materials received by the holders of our Series A and Series B common stock and Series A preferred stock will explain how they may vote their shares. Holders of our non-voting Series C common stock and Series C convertible preferred stock (“Series C preferred stock”) may access and receive this proxy statement and related materials but are not entitled to vote at the Annual Meeting or any adjournment thereof.

Q: How many shares can vote at the Annual Meeting and how many votes does each share have?

A: As of March 26, 2015, we had outstanding 149,128,680 shares of Series A common stock, with each of those shares being entitled to one vote, 6,542,457 shares of Series B common stock, with each of those shares being entitled to ten votes, and 278,088,849 shares of Series C common stock, which are not entitled to vote. We also had outstanding 71,107,312 shares of Series A preferred stock, with each of those shares being entitled to one vote, and 40,231,977 shares of Series C preferred stock, which are not entitled to vote.

Q: How many shares must be present or represented at the Annual Meeting to conduct business at the meeting?

A: With respect to Proposal 1, the presence, in person or by properly executed proxy, of the holders of a majority of the total voting power of the outstanding shares of (a) the Series A common stock and Series B common stock, voting together as a single class, entitled to a separate vote on the election of two Class I directors at the Annual Meeting will constitute a quorum for purposes of this class vote and (b) the Series A preferred stock entitled to a separate class vote on three preferred stock directors at the Annual Meeting will constitute a quorum for purposes of this class vote. The presence, in person or by properly executed proxy, of the holders of a majority in voting power of the Series A common stock, Series B common stock and Series A preferred stock, with the preferred stock considered on an as-converted to common stock basis, voting together as a single class, will constitute a quorum for the combined class votes on Proposals 2, 3 and 4.

If a quorum is not present, the meeting will be adjourned until a quorum is obtained. Abstentions and broker non-votes (where a broker or nominee does not exercise discretionary authority to vote on a proposal) will be treated as present for purposes of determining the presence of a quorum.

Q: What vote is required to elect directors?

A: With respect to Proposal 1, two directors are to be elected by the holders of our Series A common stock and Series B common stock, voting together as a single class, and three directors are to be elected by the holders of our Series A preferred stock, voting separately as a class. In each separate class vote, the directors will be elected if they receive a plurality of the votes cast by the holders of the outstanding shares of Series A common stock and Series B common stock, voting together, or the Series A preferred stock, as applicable, present in person or by proxy and entitled to vote.

•

If you submitted a proxy card on which you indicated that you abstain from voting, it will have no effect on the election of directors; and

•

Broker non-votes will not be counted as votes cast and therefore will have no effect on the election of directors.

Q: What vote is required to ratify the appointment of the independent registered public accounting firm?

A: The affirmative vote of a majority of the votes cast by the holders of the outstanding Series A common stock, Series B common stock and Series A preferred stock, voting as a single class, present in person or by proxy and entitled to vote, is required to ratify Proposal 2.

•

If you submit a proxy card on which you indicate that you abstain from voting, your abstention will not count as a vote “FOR” or “AGAINST” this proposal and will have no effect on the outcome of the ratification of the appointment of the independent registered public accounting firm; and

•

Broker non-votes will not be counted as votes cast and therefore will have no effect on the ratification proposal.

Q: What vote is required to approve the 2005 Non-Employee Director Incentive Plan, as amended?

•

If you submit a proxy card on which you indicate that you abstain from voting, your abstention will not count as a vote “FOR” or “AGAINST” this proposal and will have no effect on the outcome of the approval of the 2005 Non-Employee Director Incentive Plan; and

•

Broker non-votes will not be counted as votes cast and therefore will have no effect on the 2005 Non-Employee Director Incentive Plan proposal.

Q: What vote is required to approve the Stockholder proposal?

A: If properly presented at the Annual Meeting, the affirmative vote of a majority of the votes cast by the holders of the outstanding Series A common stock, Series B common stock and Series A preferred stock, voting as a single class, present in person or by proxy and entitled to vote, is required to approve Proposal 4.

•

Broker non-votes will not be counted as votes cast and therefore will have no effect on the Stockholder proposal.

Q: How can I vote my shares at the Annual Meeting?

A: If you are a holder of Series A or Series B common stock or Series A preferred stock as of the record date, telephone and Internet voting is available 24 hours a day through 11:59 p.m. (Eastern Time) on May 19, 2015. If you are located in the United States or Canada and are a stockholder of record, you can vote your shares by calling toll-free 1-800-690-6903. Whether you are a stockholder of record or a beneficial owner, you can also vote your shares on the Internet at www.proxyvote.com.

Both the telephone and Internet voting systems have easy to follow instructions on how you may vote your shares and allow you to confirm that the system has properly recorded your vote. If you are voting your shares by telephone or Internet, you should have on hand when you call or access the website, as applicable, the Notice of Internet Availability of Proxy Materials, the proxy card or voting instruction card (for those holders who have received, by request, a hard copy of the proxy card or voting instruction card). If you vote by telephone or Internet, you do not need to return your proxy card to us.

If you have received, by request, a hard copy of the proxy card or voting instruction card and wish to submit your proxy by mail, you must complete, sign and date the proxy card or voting instruction card and return it in the envelope provided so that it is received prior to the Annual Meeting.

Properly completed proxies will be voted as you direct. Properly executed proxies that do not contain voting instructions will be voted “FOR” Proposals 1, 2 and 3, and “AGAINST” Proposal 4.

While we encourage holders of Series A and Series B common stock and Series A preferred stock to vote by proxy, you also have the option of voting your shares of Series A and Series B common stock and Series A preferred stock in person at the Annual Meeting. If your shares of Series A or Series B common stock or Series A preferred stock are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect to such shares of stock and you have the right to attend the Annual Meeting and vote in person, subject to compliance with the procedures described below. If your shares of Series A or Series B common stock or Series A preferred stock are held in a brokerage account or by a bank or other nominee, you are

the beneficial owner of such shares. As such, in order to vote in person, you must obtain and present at the time of admission a properly executed proxy from the stockholder of record (i.e., your broker, bank or other nominee) giving you the right to vote the shares of Series A or Series B common stock or Series A preferred stock.

Q: If my Discovery shares are held in “street name” by a broker, bank or other nominee, will the broker, bank or other nominee vote my shares on each of the annual business proposals?

A: If you hold your shares in street name and do not give instructions to your broker, bank or other nominee, the broker, bank or other nominee will be able to vote your shares with respect to “discretionary items” but will not be able to vote your shares with respect to “non-discretionary items” and your shares will be treated as “broker non-votes.” “Broker non-votes” are shares that are held in street name by a bank, broker or other nominee that indicates on its proxy that it does not have discretionary authority to vote on a particular matter. The ratification proposal is a “discretionary item” and the election of directors proposal, the Director Incentive Plan proposal, and the Stockholder proposal are “non-discretionary items.” Accordingly, if you hold your shares in street name and do not provide voting instructions to your broker, bank or other nominee, your shares may, in the discretion of the broker, bank or other nominee, be voted on the ratification proposal. If you hold your shares in street name and do not provide voting instructions to your broker, bank or other nominee, your shares will NOT be voted on the election of directors proposal, the Director Incentive Plan proposal or the Stockholder proposal.

Q: May I change or revoke my vote after returning a proxy card or voting by telephone or over the Internet?

A: Yes. Before your proxy is voted at the Annual Meeting, you may change or revoke your vote on the proposals by telephone or over the Internet (if you originally voted by telephone or over the Internet), by voting in person at the Annual Meeting or by delivering a signed proxy revocation or a new signed proxy with a later date to: Discovery Communications, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

Any signed proxy revocation or new signed proxy must be received before the start of the Annual Meeting. Your attendance at the Annual Meeting will not, by itself, revoke your proxy.

If your shares are held in an account by a broker, bank or other nominee whom you previously contacted with voting instructions, you should contact your broker, bank or other nominee to change your vote.

Q: How do I obtain admission to the Annual Meeting?

A: Stockholders of record on the record date will be admitted to the Annual Meeting with photo identification and proof of stock ownership, such as the Notice of Internet Availability of Proxy Materials. If you hold Discovery stock in street name, you must bring a copy of an account statement reflecting your stock ownership as of the record date. If you plan to attend as the proxy of a stockholder, you must present valid proof of proxy. Cameras, recording devices and other electronic devices are not permitted at the Annual Meeting.

Q: Who will bear the cost of soliciting votes for the Annual Meeting?

A: We will pay the cost of solicitation of proxies, including the preparation, website posting, printing and delivery of the Notice of Internet Availability of Proxy Materials, proxy statement and related materials. We will furnish copies of these materials to banks, brokers, fiduciaries, custodians and other nominees that hold shares on behalf of beneficial owners so that they may forward the materials to beneficial owners.

CORPORATE GOVERNANCE

The corporate governance practices of Discovery Communications, Inc. (“us,” “we,” the “Company” or “Discovery”) are established and monitored by our Board of Directors. The Board regularly assesses Discovery’s governance policies in light of legal requirements and governance best practices.

Corporate Governance Guidelines

Discovery’s corporate governance practices are embodied in a formal document that has been approved by our Board of Directors. These corporate governance guidelines (the “Guidelines”) are posted on our website at www.discoverycommunications.com. These guidelines, which provide a framework for the conduct of the Board’s business, provide that:

•

the Board’s responsibility is to oversee the management of Discovery and to help ensure that the interests of the stockholders are served;

•

a majority of the members of the Board shall be independent directors;

•

the independent directors meet at least twice a year in executive session;

•

directors have unimpeded access to senior management and, as necessary and appropriate, independent advisors;

•

all directors are encouraged to participate in continuing director education on an ongoing basis; and

•

the Board and its committees will conduct self-evaluations to determine whether they are functioning effectively.

The Board periodically reviews the Guidelines and most recently updated them in March 2012. Printed copies of our Guidelines are available to any stockholder upon request to the Corporate Secretary, at the address specified below under “—Stockholder Communication with Directors.”

Director Independence

It is our policy that a majority of the members of our Board of Directors be independent. For a director to be deemed independent, a director must be independent as determined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules and, in the Board of Directors’ judgment, the director must not have a relationship with Discovery that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Nasdaq Marketplace Rules require that, subject to specified exceptions, (i) each member of a listed company’s audit, compensation and nominating and governance committees be independent, (ii) audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (iii) compensation committee members also satisfy independence criteria set forth in Rule 5605(d)(2)(A) of the Nasdaq Marketplace Rules. Discovery’s Board of Directors has determined that S. Decker Anstrom, Robert R. Beck, Robert R. Bennett, Paul A. Gould, John C. Malone, Robert J. Miron, Steven A. Miron, M. LaVoy Robison and J. David Wargo are independent directors.

In order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board of Directors, or any other board committee: (1) accept any consulting, advisory, or other compensatory fee from the listed company, other than for board service; or (2) be an affiliated person of the listed company. Discovery’s Board of Directors has determined that S. Decker Anstrom, M. LaVoy Robison and J. David Wargo are independent for purposes of Rule 10A-3.

In order to be considered to be independent for purposes of Rule 5605(d)(2)(A), a member of a compensation committee of a listed company may not, other than in his or her capacity as a member of the compensation committee, the Board of Directors or any other board committee: (1) accept any consulting, advisory, or other compensatory fee from the listed company, other than for board service; or (2) be an affiliated person of the listed company. Discovery’s Board of Directors has determined that Robert R. Beck, Paul A. Gould and Robert J. Miron are independent for purposes of Rule 5605(d)(2)(A).

Board Leadership Structure

Discovery historically has separated the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. The CEO is responsible for setting Discovery’s strategic direction, providing leadership and driving the performance of the Company, while the Chairman of the Board provides guidance to the CEO, sets the agenda for Board meetings and presides over meetings of the full Board. In light of the industry experience and management expertise of Robert Miron, our Chairman, and the dynamic leadership of David Zaslav, our CEO, the Board feels that this structure is appropriate for Discovery.

Code of Ethics

We have a Code of Ethics (the “Code”) that is applicable to all of our directors, officers and employees. The Board approved the original Code in September 2008 and adopted a revised Code on April 25, 2012. The Code is available, and any amendments or waivers that would be required to be disclosed are posted, on our website at www.discoverycommunications.com. Printed copies of the Code are also available upon request to the Corporate Secretary at the address specified below, under “—Stockholder Communication with Directors.”

Committees of the Board of Directors

Audit Committee

The Board of Directors has established an Audit Committee, whose members are Messrs. Robison (Chair), Anstrom and Wargo. The Board of Directors has determined that M. LaVoy Robison is an “Audit Committee Financial Expert” as defined under SEC rules. The Audit Committee reviews and monitors the corporate financial reporting and the internal and external audits of Discovery. The committee’s functions include, among other things:

•

appointing or replacing our independent registered public accounting firm;

•

reviewing and approving in advance the scope of, and fees for, our annual audit and reviewing the results of our audits with our independent registered public accounting firm;

•

reviewing and approving in advance the scope of, and the fees for, non-audit services of our independent registered public accounting firm;

•

reviewing our audited financial statements with our management and independent registered public accounting firm and making recommendations regarding inclusion of such audited financial statements in certain of our public filings;

•

overseeing the performance of services by our independent registered public accounting firm, including holding quarterly meetings to review the quarterly reports of our independent registered public accounting firm; discussing with our independent registered public accounting firm issues regarding the ability of our independent registered public accounting firm to perform such services; obtaining, annually, a letter from our independent registered public accounting firm addressing internal controls; reviewing with our independent registered public accounting firm any audit-related problems or difficulties and the response of our management; and addressing other general oversight issues;

•

reviewing compliance with, and the adequacy of, our existing major accounting and financial reporting policies;

•

overseeing the implementation and maintenance of an internal audit function; periodically reviewing the results and findings of the internal audit function; and coordinating with management to ensure that the issues associated with such results and findings are addressed;

•

reviewing and overseeing compliance with, and establishing procedures for, the treatment of alleged violations of the Code; and

•

preparing the Audit Committee report required by SEC rules, which is included on page 20 of this proxy statement.

The Board of Directors has adopted a written charter for the Audit Committee, which is available on our website at www.discoverycommunications.com.

Compensation Committee

The Board of Directors has established a Compensation Committee, whose members are Messrs. R. Miron (Chair), Beck and Gould. The committee’s functions include, among other things:

•

reviewing and approving corporate goals and objectives relevant to our CEO’s compensation;

•

evaluating our CEO;

•

determining our CEO’s compensation;

•

reviewing and approving the compensation of our other executive officers and certain other executives;

•

reviewing and making recommendations on stock compensation arrangements for all employees;

•

reviewing and making recommendations to the Board for compensation of non-employee directors for their service on the Board and its committees;

•

overseeing the structure of employee benefit programs and other compensation programs;

•

reviewing and discussing annually with management our “Compensation Discussion and Analysis,” which is included beginning on page 30 of this proxy statement; and

•

preparing the Compensation Committee report required by SEC rules, which is included on page 29 of this proxy statement.

The Compensation Committee reviews all forms of compensation provided to our executive officers and has approved the same, with the exception of some equity awards and awards under the Discovery Communications, Inc. 2005 Incentive Plan (the “2005 Stock Plan”), which prior to 2012 were approved by the Equity Compensation Subcommittee, consisting of Messrs. Beck and Gould.

The Board of Directors has adopted a written charter for the Compensation Committee, which is available on Discovery’s website at www.discoverycommunications.com.

The processes and procedures followed by our Compensation Committee in considering and determining executive compensation, including the use of consultants and other outside advisors, are described below in “Compensation Discussion and Analysis.”

Compensation Committee Interlocks and Insider Participation

No member of Discovery’s Compensation Committee is a current or former officer or, during 2014 was an employee, of Discovery or any of its subsidiaries. None of Discovery’s executive officers has served as a director or member of the compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers served as one of our directors or a member of the Compensation Committee.

Nominating and Corporate Governance Committee

The Discovery Board of Directors has established a Nominating and Corporate Governance Committee, whose members are Messrs. Wargo (Chair), Gould, S. Miron and Robison. In considering whether to recommend any candidate for inclusion in the Board’s slate of recommended director nominees, including candidates recommended by stockholders, the Nominating and Corporate Governance Committee will apply the criteria set forth in our Guidelines. These criteria include the candidate’s integrity, business acumen, experience, commitment, diligence, conflicts of interest, diversity of background and the ability to act in the interests of all stockholders. Our Guidelines specify that the backgrounds and qualifications of the directors considered as a group should provide a significant breadth of experience, knowledge and abilities that will assist the Board in fulfilling its responsibilities. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. The Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity; however, the Board and the Nominating and Corporate Governance Committee believe that it is essential that the Board members represent diverse viewpoints.

The Nominating and Corporate Governance Committee’s primary functions are:

•

to oversee corporate governance matters generally, including reviewing and recommending changes in our Guidelines, and the independence standards and qualifications for Board membership set forth in the Guidelines;

•

to oversee the annual evaluation of the performance of the Board and each of its other committees;

•

to identify individuals qualified to be members of the Board and to recommend Board nominees;

•

to review and make recommendations concerning the independence of Board members;

•

to review and approve related person transactions;

•

to review the membership qualifications of Board members under the Guidelines; and

•

to review and make recommendations concerning membership on Board committees and on committee structure and responsibilities.

Discovery’s Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, which is available on Discovery’s website at www.discoverycommunications.com.

Executive Committee

The primary function of the Executive Committee is to exercise powers of the Board on matters of an urgent nature that arise between regularly scheduled Board meetings, subject to certain limitations. For example, the Executive Committee may not exercise the Board’s powers to approve matters that must be submitted to the stockholders for their approval, appoint directors or officers, amend our Certificate of Incorporation or Bylaws or approve offerings of our capital stock. The members of the Executive Committee are Messrs. R. Miron (Chair), Bennett, Malone and Zaslav.

Other Committees

The Board, by resolution, may from time to time establish certain other committees of the Board, consisting of one or more of the directors of Discovery. Any committee so established will have the powers delegated to it by resolution of the Board, subject to applicable law.

Board Role in Risk Oversight

The Board has an active role, as a whole and at the committee level, in overseeing management of Discovery’s risks. The Board regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. The Company’s Compensation Committee is responsible for overseeing the

management of risks relating to our incentive compensation plans and arrangements. The Audit Committee oversees management of financial reporting risks. The Nominating and Corporate Governance Committee manages risks associated with the independence of the Board of Directors and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports and management presentations to the full Board about such risks.

Board Meetings

During 2014, there were 13 meetings of Discovery’s Board of Directors, 20 meetings of Discovery’s Compensation Committee, four meetings of Discovery’s Audit Committee, three meetings of Discovery’s Nominating and Corporate Governance Committee and no meetings of Discovery’s Executive Committee.

Director Attendance at Board and Annual Meetings

In 2014, each director of Discovery attended at least 75% of the aggregate of the number of Board meetings and the number of meetings held by all committees on which he served, except Robert Bennett, who attended 54% of the Board meetings. Discovery’s Board of Directors encourages all members of the Board to attend each annual meeting of the Company’s stockholders. All directors attended Discovery’s last annual meeting in May 2014, in person.

Director Nomination Process

Under its charter, the Nominating and Corporate Governance Committee is responsible for recommending to the Board the slate of nominees to be proposed for election by the Series A and Series B common stockholders at our annual meeting and for reviewing proposals for nominations from stockholders that are submitted in accordance with the procedures summarized below.

The Nominating and Corporate Governance Committee has the authority to employ a variety of methods for identifying and evaluating potential Board nominees. Candidates for vacancies on the Board may come to the attention of the committee through several different means, including recommendations from Board members, senior management, professional search firms, stockholder nominations and other sources.

The Nominating and Corporate Governance Committee considers all nominations submitted by stockholders that meet the eligibility requirements outlined in our Bylaws. As required by our Bylaws, stockholder nominations of candidates for election as directors must be submitted in writing to the Corporate Secretary, Discovery Communications, Inc., One Discovery Place, Silver Spring, Maryland 20910, no later than the close of business on the 60th day nor earlier than the 90th day prior to the anniversary of the preceding year’s annual meeting. The deadline for stockholder nominations of candidates for election as directors was March 17, 2015. We have not received any stockholder nominations of candidates for election as directors for the Annual Meeting. For information on what must be included in the written notice to nominate a candidate for election at the next annual meeting of stockholders, see “Stockholder Proposals” below.

In considering whether to recommend any particular candidate for inclusion in the Board’s slate of director nominees, the Nominating and Corporate Governance Committee applies the criteria set forth in our Guidelines. Under these criteria, a candidate:

•

should have a reputation for integrity, honesty and adherence to high ethical standards;

•

should have demonstrated business acumen, experience and ability to exercise sound judgment in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the Company;

•

should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board and its committees;

•

should have an understanding of the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and should act in the interests of all stockholders; and

•

shall not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director.

The Guidelines also provide that directors shall be selected on the basis of talent and experience and that diversity of background, including diversity of gender, race, ethnic or geographic origin, age, and experience in business, government and education and in media, entertainment and other areas relevant to the Company’s activities are factors in the selection process.

The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. In selecting candidates for election to the Board, the Board also considers a director’s independence. These independence standards incorporate the independence standards set forth in the Corporate Governance Rules of Nasdaq. Stockholder nominees for election to the Board will be evaluated by the Nominating and Corporate Governance Committee based on the criteria specified above and using the same process as a nominee recommended by the Board or management.

Stockholder Communication with Directors

Discovery’s stockholders may send communications to Discovery’s Board of Directors or to individual directors by mail addressed to the Board of Directors or to an individual director c/o Discovery Communications, Inc., One Discovery Place, Silver Spring, Maryland 20910. All communications from stockholders will be forwarded to Discovery’s directors on a timely basis.

BOARD COMPENSATION

The Compensation Committee reviews compensation for our non-employee directors. The components of our non-employee director compensation are cash fees and equity awards. The Board believes that appropriate compensation levels help attract and retain superior candidates for Board service and that director compensation should be weighted toward equity-based compensation to enhance alignment with the interests of our stockholders.

We do not have any pension or retirement plans for our non-employee directors. Employee directors do not receive any compensation for their Board service.

The following table shows the cash and equity compensation levels that were in effect in 2014.

2014 Discovery Non-Employee Director Compensation Levels


Board Service
Cash Compensation
Annual Retainer	$	80,000
Initial and Annual Equity Compensation
Restricted Stock Units	$	57,500
Stock Options	$	57,500

Committee Service Annual Retainers (cash)
Audit Committee	$	20,000
Compensation Committee	$	27,500
Nominating and Corporate Governance Committee	$	10,000
Audit Committee Chair	$	30,000
Compensation Committee Chair	$	37,500
Nominating and Corporate Governance Committee Chair	$	15,000

On December 10, 2014, the Board approved changes to our non-employee director compensation arrangements to reflect the introduction of an annual retainer for the new non-employee Chairman of the Board position. These changes include the implementation of an annual retainer for the new non-employee Chairman of the Board position, an increase to annual Board retainer and annual equity grant, and an increase in annual retainer for Committee Chairs. The new arrangements, shown in the table below, will be effective on May 20, 2015, except for the implementation of the annual retainer for the new non-employee Chairman of the Board, which was effective as of January 1, 2015.

2015 Discovery Non-Employee Director Compensation Levels


Board Service
Cash Compensation
Annual Retainer	$	90,000
Non-Employee Board Chair Retainer	$	202,500
Initial and Annual Equity Compensation
Restricted Stock Units	$	140,000

Committee Service Annual Retainers (cash)
Audit Committee	$	20,000
Compensation Committee	$	27,500
Nominating and Corporate Governance Committee	$	10,000
Audit Committee Chair	$	33,000
Compensation Committee Chair	$	42,000
Nominating and Corporate Governance Committee Chair	$	17,500

Cash Compensation. Cash compensation for non-employee directors consists solely of the annual retainers described above. Annual retainers are paid in quarterly installments. For the purpose of calculating these retainers and fees, the annual period commences with the election of directors at the annual meeting. The retainer paid to non-employee directors who are elected or appointed after the most recent annual stockholders’ meeting is prorated based on the quarter in which they join the Board.

Equity Compensation. Prior to May 14, 2013, non-employee directors received stock-based compensation under our 2005 Non-Employee Director Incentive Plan. Effective May 14, 2013, non-employee directors receive stock-based compensation under our 2005 Non-Employee Director Incentive Plan, as amended. The Board determined for 2014 that the equity awards to directors should consist equally of stock options and restricted stock units (“RSUs”) of Series A common stock. Annual equity grants are made on the date of the annual meeting. Equity awards for directors who are elected or appointed after the most recent annual stockholders’ meeting are prorated based on when they join the Board. The exercise price of options granted to our non-employee directors is equal to the fair market value of a share of our Series A common stock on the date of the grant. The number of Series A common stock options is calculated by dividing the dollar amount of the award by the Black-Scholes value of options for our Series A common stock on the day before the grant date. This may result in the Black-Scholes value of the grant being slightly different from the target value of the grants. The number of RSUs is calculated by dividing the dollar amount of the award by the fair market value of our Series A common stock on the grant date. Both stock options and RSUs will vest 100% on the one year anniversary of the grant date assuming continued service to such date. Neither the RSUs nor the stock options granted to our directors include the right to receive cash dividends. On May 16, 2014, Discovery’s Board of Directors approved a share dividend (the “2014 Share Dividend”) of one share of the Company’s Series C common stock on each issued and outstanding share of Series A, Series B and Series C common stock. The 2014 Share Dividend took effect on August 6, 2014 for stockholders of record on July 28, 2014. As a result, the non-employee directors’ awards were retroactively adjusted to reflect the dividend.

Board of Directors Stock Ownership Policy. In January 2013, the Board adopted a director stock ownership policy that requires each director to hold a specified amount of our stock, calculated as a multiple of three times the director’s then-current annual retainer for Board service, exclusive of any additional retainer with respect to committee service. Each director is expected to reach the stock holding target within five years from May 15, 2013, the effective date the guidelines were adopted. The Board determined that any shares of our stock beneficially owned by the director, as well as unvested awards of RSUs, would be counted for purposes of meeting the stock holding target. Once a director meets the target, the director is expected to maintain holdings at the target for as long as he or she remains a Board member. The Board may take any appropriate action to support the intent of the guidelines, including requiring a director to retain a percentage of shares pursuant to stock option exercises or vesting events in future years. All directors have reached and maintained the stock holding target.

Deferred Compensation. Discovery has a deferred compensation program that allows non-employee directors to defer the settlement of their RSU grants until their departure from our Board. If a director elects to defer settlement of his RSU grant, he must make his irrevocable election before the end of the year prior to the year in which the grant is made, and must do so for the entire amount of his grant. For example, for the grants made in May 2014, directors made their deferral elections before the end of 2013. Directors do not receive cash dividends on deferred RSUs. Messrs. Anstrom, Beck, Gould, R. Miron, Robison and Wargo elected to defer the settlement of their RSU grants made in 2014.

Expense Reimbursement. Non-employee directors are reimbursed for out-of-pocket costs for attending each meeting of the Board or any Board committee of which they are a member, including airfare, whether by commercial aircraft or private planes.

Director Education. Under the Guidelines, Discovery encourages the participation of all directors in continuing education programs, at Discovery’s expense, that are relevant to the business and affairs of Discovery and the fulfillment of the directors’ responsibilities as members of the Board and any of its committees.

Charitable Contribution Matching Program. Discovery provides a charitable contribution matching program through which we match contributions made by our non-employee directors to eligible charitable organizations up to a maximum of $20,000 for each director within a given fiscal year. The program is designed to match contributions to educational, arts and cultural institutions that have been approved by the Internal Revenue Service as tax-exempt institutions to which contributions are deductible for federal income tax purposes. Certain types of contributions and institutions would not be eligible for matching, such as tuition payments, contributions made to family foundations or other charitable foundations or organizations that are affiliated with a non-employee director, or membership or alumni association dues. In order to be matched, the contribution must be tax-deductible by Discovery Communications, Inc. Matching contributions under this program are included in the following 2014 Non-Employee Director Summary Compensation Table under the “All Other Compensation” column.

The following table summarizes the 2014 compensation provided to all persons who served as non-employee directors during 2014.

2014 Non-Employee Director Summary Compensation Table


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)(1)(2)		Option Awards ($)(1)(2)		All Other Compensation ($)(3)		Total ($)
S. D. Anstrom		100,000		58,313		57,496		0		215,809
R. Beck		107,500		58,313		57,496		15,000		238,309
R. Bennett		80,000		58,313		57,496		0		195,809
P. Gould		117,500		58,313		57,496		0		233,309
J. Malone		80,000		58,313		57,496		0		195,809
R. Miron		117,500		58,313		57,496		0		233,309
S. Miron		90,000		58,313		57,496		17,857		223,666
M. L. Robison		120,000		58,313		57,496		0		235,809
J. D. Wargo		115,000		58,313		57,496		0		230,809

(1)

The aggregate grant date fair value of the RSU awards made to all non-employee directors in 2014 was $524,813, as calculated in accordance with FASB ASC Topic 718 and the grant date fair value of the stock option awards made to all non-employee directors in 2014 as calculated in accordance with FASB ASC Topic 718 was $517,462. At December 31, 2014, the following directors held stock options and RSUs, which include options granted for service as an officer or director of Discovery Holding Company, our predecessor entity:


Name	Series A Common Stock Options		Series C Common Stock Options		Series A Common Unvested or Deferred RSUs		Series C Common Unvested or Deferred RSUs
S. D. Anstrom		9,123		9,123		1,533		1,533
R. Beck		27,968		27,968		5,977		5,977
R. Bennett		33,550		44,714		791		791
P. Gould		40,655		66,029		3,977		3,977
J. Malone		27,968		27,968		2,791		2,791
R. Miron		27,968		27,968		7,042		7,042
S. Miron		27,968		27,968		2,791		2,791
M. L. Robison		40,655		66,029		7,042		7,042
J. D. Wargo		39,994		64,046		5,042		5,042

(2)	As a result of the 2014 Share Dividend, these awards have been retroactively adjusted to reflect the dividend.

(3)	The amounts for Messrs. Beck and S. Miron reflect matching charitable contributions made by Discovery on behalf of each of these directors.

PROPOSAL 1: ELECTION OF DIRECTORS

Nominees for Election

Our Board of Directors consists of seven common stock directors, divided among three classes, and three preferred stock directors. Our Class I directors, who are being nominated for reelection at this annual meeting for a term that will expire in 2018, are Robert R. Beck and J. David Wargo. Our Class II directors, who were reelected at the 2013 annual meeting for a term that will expire in 2016, are Paul A. Gould and M. LaVoy Robison. Our Class III directors, who were reelected at the 2014 annual meeting for a term that will expire in 2017, are Robert R. Bennett, John C. Malone and David M. Zaslav. At each annual meeting, the successors of that class of directors whose terms expire at that meeting shall be elected to hold office for a term expiring at the annual meeting of Discovery stockholders held in the third year following the year of their election. The directors of each class will hold office until their respective death, resignation or removal and until their respective successors are elected and qualified.

Our Board of Directors also includes three preferred stock directors, S. Decker Anstrom, Robert J. Miron and Steven A. Miron, whose terms will expire at the Annual Meeting. Holders of our Series A preferred stock will vote on the election of each of the preferred stock directors, but will not vote on the election of any common stock director. At each annual meeting of stockholders, the successors of the preferred stock directors will be elected to hold office for a term expiring at the following annual meeting of stockholders. The preferred stock directors will hold office until their respective death, resignation or removal and until their respective successors are elected and qualified.

Five director nominees will be voted on at the meeting. The two Class I director nominees will be voted upon and elected by the holders of shares of our Series A common stock and Series B common stock, voting together as a class. The three preferred stock director nominees will be voted upon and elected by the holders of shares of our Series A preferred stock voting separately as a class.

Unless otherwise instructed on the proxy card, the persons named as proxies will vote the shares represented by each properly executed proxy “FOR” the election as directors of the persons named in this proxy statement as nominees. Each of the nominees has consented to serve if elected. However, if any of the persons nominated by the Board of Directors fails to stand for election, or declines to accept election, proxies will be voted by the proxy holders for the election of such other person or persons as the Board of Directors may recommend.

The following tables present information, including age, term of office and business experience, for each person nominated for election as a Discovery director and for those directors whose terms of office will continue after the Annual Meeting. Each member of our Board of Directors and each director nominee possesses skills and experience which make them an important component of the Board as a whole. While consideration of the information presented below regarding each director and director nominee’s specific experience, qualifications, attributes and skills led our Board to the conclusion that he should serve as a director, we also believe that all of our directors and director nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Discovery and our Board.

The Discovery Board of Directors recommends a vote “FOR” the election of the nominated directors.

Director Nominees for Election by Holders of Shares of Series A Common Stock and Series B Common Stock as Class I Directors with Terms Expiring in 2018


Robert R. Beck Born July 2, 1940		A common stock director of Discovery since September 2008. Since 2001, Mr. Beck has served as an independent consultant, advising on complex financial and business matters. Prior to 2001, Mr. Beck served as a Managing Director of Putnam Investments. Mr. Beck applies his expertise in the financial markets to the Board’s deliberations. Mr. Beck’s deep experience in corporate finance is of great value to our Board.

J. David Wargo Born October 1, 1953		A common stock director of Discovery since September 2008. Mr. Wargo served as a director of Discovery Holding Company (“DHC”) from May 2005 to September 2008 when it merged with Discovery Communications, Inc., creating a new public company. Mr. Wargo has served as President of Wargo & Company, Inc., a private investment company specializing in the communications industry, since January 1993. Mr. Wargo is a director of Liberty Global plc (“Liberty Global”), Liberty TripAdvisor Holdings, Inc. (“Liberty TripAdvisor”), Strayer Education, Inc. and Vobile, Inc. Having an extensive career in public company finance, Mr. Wargo brings to the Board significant business development and financial experience related to the business and financial issues facing large corporations. Mr. Wargo’s expertise in public company finance is the result of over 35 years as a securities analyst.

Director Nominees for Election by Holders of Series A Preferred Stock


S. Decker Anstrom Born August 2, 1950		A preferred stock director of Discovery since December 2012. Mr. Anstrom served as President of Landmark Communications and Chairman of The Weather Channel from 2002 until his retirement in 2008. From 2001 to September 2011, he served as a member of the Board of Directors and also as chair of the Governance Committee of Comcast Corporation. Through his experience as a cable television executive, Mr. Anstrom has developed a deep understanding of this industry. Mr. Anstrom’s expertise in the cable television industry makes him a valued presence on our Board.

Robert J. Miron Born July 7, 1937		A preferred stock director of Discovery since September 2008. Mr. Miron has served as Chairman of Discovery since May 2014. Mr. Miron served as Chairman of Advance/Newhouse Communications (“Advance/Newhouse”) and Bright House Networks, LLC (“Bright House”), both communications companies, from July 2002, retiring in December 2010. From July 2002 to May 2008, Mr. Miron served as Chief Executive Officer of Advance/Newhouse and Bright House. Mr. Miron has extensive knowledge of the cable television industry, as evidenced by his professional background. Our Board is benefitted by Mr. Miron’s long experience in management roles within our industry.

Steven A. Miron

Born April 24, 1966

A preferred stock director of Discovery since September 2008. Mr. Miron has served as Chief Executive Officer of Advance/Newhouse and Bright House since May 2008. He also served as President of Advance/Newhouse and Bright House from July 2002 to May 2008.

Through his experience as a cable television executive, Mr. Miron has developed a deep understanding of this industry. Mr. Miron’s expertise in the cable television industry makes him a valued presence on our Board.

Common Stock Directors:

Class II Directors with Terms Expiring in 2016


Paul A. Gould Born September 27, 1945		A common stock director of Discovery since September 2008. Mr. Gould served as a director of DHC from May 2005 to September 2008. Mr. Gould has served at Allen & Company Incorporated, an investment banking services company, since 1972, including as a Managing Director and Executive Vice President for more than the last five years. Mr. Gould has served as a financial advisor to many Fortune 500 corporations and advised on a number of large media company acquisitions. Mr. Gould is a director of Ampco-Pittsburgh Corporation and Liberty Global. In 2010, Mr. Gould resigned as director of DIRECTV and declined to stand for reelection as director of Liberty Interactive Corporation (“Liberty Interactive”). Mr. Gould brings to our Board a wealth of experience in matters relating to public company finance. Mr. Gould’s knowledge of our Company and our industry, combined with his expertise in finance, makes him an important part of our Board.

M. LaVoy Robison Born September 6, 1935		A common stock director of Discovery since September 2008. Mr. Robison served as a director of DHC from May 2005 to September 2008. Mr. Robison has been on the board of The Anschutz Foundation, a private foundation, since January 1998, and was their executive director from 1998 to November 2010. Mr. Robison is now a director of Liberty Interactive. Mr. Robison has extensive knowledge of corporate accounting and audit procedure gained through over 35 years of service with the firm of Peat Marwick Mitchell (now KPMG), including over 25 years as a partner and several years as one of the firm’s SEC reviewing partners. Mr. Robison’s wealth of experience in corporate finance and financial accounting is an important resource for our Board.

Class III Directors with Terms Expiring in 2017

Robert R. Bennett

Born April 19, 1958

A common stock director of Discovery since September 2008. Mr. Bennett served as President of DHC from March 2005 until September 2008 when it merged with Discovery. Mr. Bennett is the former President and Chief Executive Officer of Liberty Media Corporation (“Liberty Media”). He served in those positions from April 1997 until August 2005. He was one of the founding executives of Liberty Media and served as its Principal Financial Officer from its inception in 1991 until 1997. He currently is Managing Director of Hilltop Investments, LLC, a family investment company. Prior to his tenure at Liberty Media, Mr. Bennett worked with Tele-Communications, Inc. in a variety of financial positions and with The Bank of New York. Mr. Bennett was a director of Demand Media, Inc.


		from 2011 until February 2014. He currently serves on the boards of Liberty Media, Sprint Corporation and Hewlett-Packard Company. Mr. Bennett brings both industry knowledge and financial acumen to his role as a member of our Board of Directors. Mr. Bennett has served on the board of directors of multiple public and private companies over the past decade, which, combined with his considerable involvement with media companies, contributes to the knowledge base and oversight of our Board.

John C. Malone Born March 7, 1941		A common stock director of Discovery since September 2008. Mr. Malone served as Chief Executive Officer and Chairman of the Board of DHC from March 2005 to September 2008 and a director of DHC from May 2005 to September 2008. Mr. Malone has served as the Chairman of the Board and a director of Liberty Interactive (including its predecessors) since 1994, as Chairman of the Board of Liberty Media (including its predecessors) since August 2011 and as a director since December 2010, as Chairman of Liberty TripAdvisor since August 2014, and as Chairman of the Board of Liberty Broadband Corporation since November 2014. He also served as Liberty Interactive’s Chief Executive Officer from August 2005 through February 2006. Mr. Malone has served as the Chairman of the Board of Liberty Global since June 2013, having previously served as Chairman of the Board of Liberty Global’s predecessor, Liberty Global, Inc. from June 2005 to June 2013. He has also served as a director of Expedia, Inc. since December 2012, having previously served as director from August 2005 to November 2012. Mr. Malone previously served as: (i) a director of Ascent Capital Group, Inc. from January 2010 to September 2012, (ii) a director of Live Nation Entertainment, Inc. from January 2010 to February 2011, (iii) the Chairman of the Board of DIRECTV from November 2009 to June 2010, and DIRECTV’s predecessor, The DIRECTV Group, Inc. from February 2008 to November 2009, (iv) a director of IAC/InterActiveCorp from May 2006 to June 2010, and (v) a director of Sirius XM Radio Inc. from April 2009 to May 2013. Mr. Malone has played a pivotal role in the cable television industry since its inception and is considered one of the preeminent figures in the media and telecommunications industry. Mr. Malone is well known for his sophisticated problem solving and risk assessment skills. His breadth of industry knowledge and unique perspective on our business make him an invaluable member of our Board.

David M. Zaslav Born January 15, 1960		President, Chief Executive Officer and a common stock director of Discovery since September 2008. Mr. Zaslav has served as President and Chief Executive Officer of Discovery since January 2007. Mr. Zaslav is a member of the board of Univision Communications and Sirius XM Radio Inc. Mr. Zaslav was a member of the board of TiVo Inc. until he declined to stand for reelection in 2010. As CEO, Mr. Zaslav sets our goals and strategies. His ability as director to add his views to the Board’s deliberations is of significant benefit to the Board.

Except for Steven A. Miron being the son of Robert J. Miron, there is no family relationship among any of Discovery’s executive officers or directors, by blood, marriage or adoption.

PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

As provided in its charter, the Audit Committee appoints our independent registered public accounting firm, reviews the scope of the annual audit and pre-approves all audit and non-audit services permitted under applicable law to be performed by the independent registered public accounting firm. The Audit Committee has evaluated the performance of PwC and has appointed them as our independent registered public accounting firm for fiscal 2015. You are requested to ratify the Audit Committee’s appointment of PwC. Representatives of PwC will be present at the Annual Meeting and will be given the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions from stockholders present at the meeting. Unless stockholders specify otherwise in their proxy, proxies solicited by the Board will be voted by the proxy holders at the Annual Meeting to ratify the appointment of PwC as our independent registered public accounting firm for fiscal 2015. A majority of the votes cast at the Annual Meeting on this proposal is required for ratification.

Even if the selection of PwC is ratified, the Audit Committee of Discovery’s Board in its discretion may direct the appointment of a different independent accounting firm at any time during the year if Discovery’s Audit Committee determines that a change would be in the best interests of Discovery and its stockholders. In the event Discovery stockholders fail to ratify the appointment of PwC, the Audit Committee will take this into consideration regarding the selection of another independent registered public accounting firm for the year ending December 31, 2015.

The Discovery Board of Directors recommends a vote “FOR” the ratification of the appointment of PwC as Discovery’s independent registered public accounting firm for the year ending December 31, 2015.

Description of Fees


	2014		2013
Audit fees(1)	$	6,206,900	$	5,064,070
Audit-Related fees(2)		970,960		931,400
Tax fees(3)		1,172,543		1,313,921
Other fees(4)		13,800		—

Total fees	$	8,364,203	$	7,309,391

(1)	Audit fees include fees for the audit of the consolidated financial statements of Discovery and statutory audits for certain of Discovery’s foreign subsidiaries, as well as fees for services provided in connection with securities offerings.

(2)	Audit-related fees include due diligence related to mergers and acquisitions, attest services not required by statute or regulation, and consultations regarding financial accounting standards.

(3)

Tax fees consist of tax compliance and consultations regarding the tax implications of certain transactions. Tax compliance services relate to preparation of tax returns and claims for refunds. Tax consultation services relate to tax planning, as well as assistance with tax audits and tax advice related to acquisitions and structure.

(4)	Other fees consist of advisory support provided in connection with establishing Discovery’s employee stock purchase plan and complying with certain regulatory requirements in foreign jurisdictions.

Discovery’s Audit Committee has considered whether the provision of services by PwC to Discovery other than auditing is compatible with PwC maintaining its independence and believes that the provision of such other services is compatible with PwC maintaining its independence.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Discovery’s Audit Committee has adopted a policy regarding the pre-approval of all audit and permissible non-audit services provided by Discovery’s independent registered public accounting firm. Pursuant to this policy, Discovery’s Audit Committee has approved the engagement of Discovery’s independent registered public accounting firm to provide the following services (all of which are collectively referred to as “pre-approved services”):

•

audit services as specified in the policy, including (i) financial audits of Discovery and its subsidiaries and (ii) services associated with Discovery’s periodic reports, registration statements and other documents filed or issued in connection with a securities offering (including comfort letters and consents);

•

audit-related services as specified in the policy, including (i) due diligence services, (ii) financial audits of employee benefit plans, (iii) attestation services not required by statute or regulation, (iv) certain audits incremental to the audit of Discovery’s consolidated financial statements; (v) closing balance sheet audits related to dispositions; and (vi) consultations with management as to accounting or reporting of transactions; and

•

tax services as specified in the policy, including federal, state, local and international tax planning, compliance and review services and tax due diligence and advice regarding mergers and acquisitions.

Notwithstanding the foregoing general pre-approval, any individual project involving the provision of pre-approved services that is expected to result in fees in excess of $50,000 requires the specific pre-approval of Discovery’s Audit Committee. In addition, any engagement of Discovery’s independent registered public accounting firm for services other than the pre-approved services requires the specific approval of Discovery’s Audit Committee. Discovery’s Audit Committee has delegated the authority for the foregoing approvals to the chairman of the Audit Committee, subject to his subsequent disclosure to the entire Audit Committee of the granting of any such approval. All audit and non-audit services provided by PwC in 2014 were approved by the Audit Committee.

Discovery’s pre-approval policy prohibits the engagement of Discovery’s independent registered public accounting firm to provide any services that are subject to the prohibition imposed by Section 201 of the Sarbanes-Oxley Act.

REPORT OF THE AUDIT COMMITTEE

Each member of the Audit Committee is an independent director as determined by the Board of Directors of Discovery Communications, Inc., based on the rules of the Nasdaq Stock Market and the criteria of director independence adopted by the Board. Each member of the Audit Committee also satisfies the SEC’s independence requirements for members of audit committees.

The Audit Committee reviews Discovery’s financial reporting process on behalf of the Board of Directors. A description of the responsibilities of the Audit Committee is set forth above under the caption “Corporate Governance—Audit Committee.” PwC, Discovery’s registered public accounting firm for 2014, is responsible for expressing opinions on the conformity of Discovery’s audited consolidated financial statements with U.S. generally accepted accounting principles.

The Audit Committee has reviewed and discussed with management and PwC Discovery’s most recent audited consolidated financial statements. The Audit Committee has also discussed with PwC various communications that the Company’s registered public accounting firm is required to provide to the Audit Committee, including matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.

The Audit Committee has received the written disclosures and the letter from PwC required by PCAOB Rule 3526 (Communications with Audit Committees Concerning Independence), and has discussed with PwC their independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors of Discovery that the audited financial statements be included in Discovery’s Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 19, 2015 with the SEC.

This report is respectfully submitted by the members of the Audit Committee of the Board.

M. LaVoy Robison, Chairman

S. Decker Anstrom

J. David Wargo

PROPOSAL 3: APPROVAL OF DISCOVERY COMMUNICATIONS, INC. 2005 NON-EMPLOYEE DIRECTOR INCENTIVE PLAN, AS AMENDED

Our Board of Directors believes that we must continue to offer a competitive equity incentive program if we are to continue to attract and retain the best possible non-employee directors. Accordingly, on February 5, 2015, our Board adopted, subject to stockholder approval, an amendment to our 2005 Non-Employee Director Incentive Plan (the “Director Plan”) to extend the term of the Director Plan to May 20, 2025. We are not requesting any other changes to the terms and provisions of the Director Plan.

As of February 5, 2015, the date our Board approved the extension of the term of the Director Plan, we had 9,270,830 shares of our common stock available for grant under the Director Plan. We consider this pool to be adequate for the foreseeable future and so are not requesting any further shares at this time under this or any other of our plans.

As of March 13, 2015, we had 239,826 outstanding options to purchase shares of Series A common stock under the Director Plan, the weighted average purchase price of all such options was $22.18, and the weighted average remaining term was 3.12 years. As of March 13, 2015, we had 314,626 outstanding options to purchase shares of Series C common stock under the Director Plan, the weighted average purchase price of all such options was $18.22, and the weighted average remaining term was 2.76 years. As of March 13, 2015, under the Director Plan, there were no shares of restricted stock outstanding, and we had 36,986 restricted stock units with respect to Series A common stock and 36,986 restricted stock units with respect to Series C common stock. In addition to these arrangements, as of March 13, 2015, we have our employee stock purchase plans, under which 9,445,569 shares of Series A common stock remained available, and the Discovery Communications, Inc. 2013 Incentive Plan (the “2013 Stock Plan”), under which there were 3,663,126 outstanding options to purchase shares of Series A common stock, 996,091 outstanding options to purchase shares of Series C common stock, 3,834,168 outstanding stock appreciation rights (or SARs) to receive shares (or the cash equivalent) of Series A common stock, 3,734,093 outstanding SARs to receive shares (or the cash equivalent) of Series C common stock, 2,989,939 restricted stock units outstanding with respect to Series A common stock, and 1,706,495 restricted stock units outstanding with respect to Series C common stock. The 2013 Stock Plan had a remaining pool of 68,649,168 shares of our common stock as of March 13, 2015. Until the dividend of Series C common stock that we paid in August 6, 2014, most awards and the reserved shares under the Director Plan had been with respect to Series A common stock. The adjustments for the dividend meant additional shares of Series C common stock were added to the Director Plan. In addition, then-outstanding awards were adjusted so that, in general, they pertained to equal numbers of Series A and Series C stock (with, for the options, a corresponding adjustment to the exercise price). On March 13, 2015, the last reported sales price of our Series A common stock on the NASDAQ Global Select Market was $32.03 and of our Series C common stock was $30.97.

We believe that the Director Plan contains provisions consistent with current best compensation practices. Our Board believes that extending the terms of the Director Plan is in the best interests of Discovery and its stockholders and recommends that you vote “FOR” the proposal to approve the Director Plan as amended.

Why You Should Vote for the Director Plan

Equity Incentive Awards Are an Important Part of Our Compensation Philosophy

Our Board believes that our success depends, in large part, upon our ability to maintain a competitive position in attracting, retaining and motivating non-employee directors and, as discussed in the Board Compensation section of this proxy statement, our equity-based award program is the primary vehicle for offering long-term incentives to our non-employee directors.

We Believe the Director Plan Combines Compensation and Governance Best Practices

We believe the Director Plan includes provisions that are designed to protect our stockholders’ interests and to reflect compensation and governance best practices, including:

•

Repricing is not allowed without stockholder approval. The Director Plan prohibits the repricing or other exchange of underwater stock options and stock appreciation rights without prior stockholder approval.

•

No discount stock options or stock appreciation rights. All stock options and stock appreciation rights will have a purchase or base price equal to at least the fair market value of our common stock on the date the stock option or stock appreciation right is granted.

•

Reasonable share counting provisions. In general, when awards granted under the Director Plan expire or are canceled without having been fully exercised, the shares reserved for those awards will be returned to the share reserve and be available for future awards. However, shares that are tendered by participants or withheld by us to pay the purchase price of an award or, if applicable, to satisfy tax withholding obligations will not be available for future awards. If a stock appreciation right is exercised for stock, we will subtract from the shares available under the Director Plan the full number of shares subject to the stock appreciation right multiplied by the percentage of the stock appreciation right actually exercised, regardless of the number of shares actually used to settle the stock appreciation right upon exercise.

•

No tax gross-ups. The Director Plan does not provide for any tax gross-ups.

Description of the Director Plan

The following is a summary of the Director Plan. This summary is qualified in its entirety by reference to the Director Plan, a copy of which is attached as Appendix A to this proxy statement. You may also obtain a copy of the Director Plan by accessing the proxy statement as filed with the SEC on the Internet at www.sec.gov, by accessing the Investor Relations section of our website at www.discoverycommunications.com, or by contacting our Corporate Secretary.

Effectiveness; Number of Shares Available for Issuance

The Director Plan will be extended to May 20, 2025 effective upon approval of the Director Plan by our stockholders at the 2015 Annual Meeting of Stockholders.

Upon effectiveness of the extension of the Director Plan, the number of shares available for issuance under the Director Plan will be 9,270,830 shares, which number is subject to adjustment in the event of stock splits and other similar events. Shares issued under the Director Plan may consist in whole or in part of authorized but unissued shares or may be issued shares that we have reacquired (provided that open market purchases of shares using the proceeds from the exercise of awards do not increase the number of shares available for future grants).

If an award granted under the Director Plan (other than a Tandem SAR as defined below) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of common stock subject to such award being repurchased by us) or otherwise results in any common stock not being issued, the unused common stock covered by such award will become available for issuance pursuant to a new award under the Director Plan. If we grant a SAR in tandem with an option for the same number of shares of common stock and provide that only one such award may be exercised, which we refer to as a Tandem SAR, only the shares covered by the option and not the Tandem SAR will be counted and the expiration of one in connection with the other’s exercise will not restore shares to the Director Plan. Shares that are tendered or withheld (including through net exercise) to pay the purchase price of an award or, if applicable, to satisfy tax withholding obligations will not be available for issuance pursuant to awards under the Director Plan.

Types of Awards

The Director Plan provides for the grant of nonqualified stock options, stock appreciation rights, restricted stock, and restricted stock units, each of which is described below.

Nonqualified stock options. Optionees receive the right to purchase a specified number of shares of Series A or Series C common stock at a specified purchase price, subject to such other terms and conditions as are specified in connection with the option grant. Options must be granted at a purchase price that will not be less than 100% of the fair market value of the common stock to which the option applies on the date of grant, except in connection with substitute awards relating to acquisitions. The Director Plan permits the following forms of payment of the purchase price of options, as determined by the Board in connection with awards: (i) payment by cash, check or in connection with a “cashless exercise” through a broker, (ii) surrender to us of shares of common stock or attestation of ownership of sufficient shares, (iii) “net exercise” in which a portion of the shares to be issued on exercise are withheld to pay the purchase price, (iv) any other lawful means, or (v) any combination of these forms of payment.

Stock appreciation rights. A stock appreciation right is an award entitling the holder, upon exercise, to receive an amount in Series A or Series C common stock determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of common stock with respect to which the SAR was granted on the date of grant or as determined, consistent with the Director Plan, over an average of prices around the date of grant.

Restricted stock and restricted stock unit awards. Restricted stock awards entitle recipients to acquire shares of Series A or Series C common stock, subject to our right to repurchase or cause the forfeiture of all or part of such shares from the recipient in the event that the conditions specified in the applicable award are not satisfied prior to the end of the applicable restriction period established for such award. Restricted stock unit awards entitle the recipient to receive shares of common stock covered by the Award to be delivered at or after the time such shares vest pursuant to the terms and conditions of the awards, as established by our Board, although our Board may provide that these awards will be settled in cash. The Board may also provide for a supplemental cash payment, subject to such restrictions as the Board designates, to be paid in connection with or after vesting.

Our Board will determine the terms and conditions of each restricted stock or restricted stock unit award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

We have not historically granted restricted stock awards, but the Director Plan and the 2013 Stock Plan permit such grants. Restricted stock will accrue ordinary cash dividends, but, unless otherwise provided in the applicable agreement, participants holding shares of restricted stock will only be entitled to such dividends if and after the restricted stock vests. Any dividend payment will be made no later than the later of the end of the calendar year in which the dividends are paid to stockholders of that series of stock or the 15th day of the third month following the date on which the restricted stock to which the dividends pertain vests, absent a further deferral permitted by the Board that complies with Section 409A of the Code.

To the extent provided by our Board, in its sole discretion, a grant of restricted stock units may provide participants with the right to receive dividend equivalents. Dividend equivalents may be settled in cash and/or shares of common stock and will be subject to the same restrictions on transfer and forfeitability as the restricted stock units with respect to which paid, as determined by our Board in its sole discretion, subject in each case to such terms and conditions as our Board may establish, in each case to be set forth in the applicable award agreement.

Eligibility to Receive Awards

Our non-employee directors are eligible to be granted awards under the Director Plan.

Administration

The Director Plan will be administered by our Board, although the Board may delegate administrative duties to employees. Our Board has the authority to adopt, amend and repeal the administrative rules, guidelines and practices relating to the Director Plan and to interpret the provisions of the Director Plan. Subject to any applicable limitations contained in the Director Plan, our Board selects the recipients of awards and determines the terms of such awards. The Director Plan provides limitations on liability with respect to persons acting on our behalf in connection with the Plan and also provides for indemnifying and holding harmless such persons.

Our Board is required to make appropriate adjustments in connection with the Director Plan and any outstanding awards to reflect stock splits, stock dividends, recapitalizations, spin-offs and other similar changes in capitalization. In addition, if all shares of any series of Common Stock are redeemed, then each outstanding Award under such series shall be adjusted to substitute for the shares of such series of Common Stock subject to the Award the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of shares of such series of Common Stock, with the other terms of the Award remaining constant (including for this purpose the aggregate purchase price or aggregate base price, shall remain constant before and after the substitution (unless otherwise determined by the Board). The Board, in its sole discretion, may provide for a cash payment in connection with any of the foregoing adjustments.

Changes in Control

The Director Plan also contains provisions addressing the consequences of any mergers, certain changes in ownership, and certain changes in the composition of our Board. The description below is of the default rule under the Director Plan, but the Board also imposes double trigger requirements on substantially all Awards to non-employee directors, such that the occurrence of an event without a connected termination of service will not cause vesting unless the Awards are not being assumed or replaced. If an Approved Transaction, Board Change or Control Purchase (each as defined below) occurs, unless the applicable Agreement provides otherwise, any options or stock appreciation rights will immediately become exercisable in full in respect of the aggregate number of shares covered thereby and restricted stock and restricted stock units will vest, as will any unpaid dividends or dividend equivalents, in each case effective upon the Board Change or Control Purchase or immediately prior to consummation of the Approved Transaction. Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Board may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Board, is equitable and appropriate to substitute a new Award for such Award or to assume such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the prior Award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash or other assets into or for which the common stock may be changed, converted or exchanged in connection with the Approved Transaction. Notwithstanding any provision of the Director Plan to the contrary, in the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board shall be authorized, in its discretion, (i) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (ii) to cancel any such Awards and to deliver to the participants cash in an amount that the Board shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of options or stock appreciation rights will be the excess of the fair market value of the applicable series of common stock on such date over the purchase price of the options or the base price of the stock appreciation rights, as applicable.

Under the Director Plan, “Approved Transaction” means any transaction which our Board (or, if approval of our Board is not required as a matter of law, our stockholders) approves (i) any consolidation or merger of us, or binding share exchange, pursuant to which shares of our common stock would be changed or converted into or

exchanged for cash, securities, or other property, other than any such transaction in which our common stockholders immediately prior to such transaction have the same proportionate ownership of the common stock of, and voting power with respect to, the surviving corporation immediately after such transaction, (ii) any merger, consolidation or binding share exchange to which the Company is a party as a result of which the persons who are our common stockholders immediately prior thereto have less than a majority of the combined voting power of our outstanding capital stock ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors immediately following such merger, consolidation or binding share exchange, (iii) the adoption of any plan or proposal for our liquidation or dissolution, or (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of our assets, provided that the “Approved Transaction” will not occur under any of the foregoing until the closing of the described event. “Board Change” means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board of Directors cease for any reason to constitute a majority thereof unless the election, or the nomination for election, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. “Control Purchase” means (i) any transaction (or series of related transactions) in which any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1933), corporation or other entity (other than the Company, any of our subsidiaries or any employee benefit plan sponsored by us or any of our subsidiaries) shall purchase any of our common stock (or securities convertible into our common stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of our Board, or (ii) any person (as such term is so defined), corporation or other entity (other than the Company, any of our subsidiaries, any employee benefit plan sponsored by us or any of our subsidiaries or any exempt person (as defined in the Stock Plan)) or any “Exempt Person” (as defined below) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of our securities representing 30% or more of the combined voting power of our then outstanding securities ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the Company’s securities), other than in a transaction (or series of related transactions) approved by our Board. For purposes of this definition, “Exempt Person” means each of (a) the Chairman of the Board, the President and each of the directors of Discovery Holding Company as of the date Discovery Holding Company ceased to be a wholly-owned subsidiary of Liberty Media Corporation, and (b) the respective family members, estates and heirs of each of the persons referred to in clause (a) above and any trust or other investment vehicle for the primary benefit of any of such persons or their respective family members or heirs. As used with respect to any person, the term “family member” means the spouse, siblings and lineal descendants of such person.

Restrictions on Repricing

Unless our stockholders approve such action (or it is appropriate under a change in capitalization), the Director Plan provides that we may not (1) amend any outstanding option or stock appreciation right granted under the Director Plan to provide a purchase price per share that is lower than the then-current purchase price or base price per share of such outstanding award, (2) cancel any outstanding option or stock appreciation right (whether or not granted under the Director Plan) and grant in substitution therefor new awards under the Director Plan (other than as substitute awards as described above) covering the same or a different number of shares of common stock and having a purchase price or base price per share lower than the then-current purchase price or base price per share of the cancelled award, (3) cancel in exchange for a cash payment any options or stock appreciation rights that have a purchase price per share above the then-current fair market value, or (4) take any other action that constitutes a “repricing” within the meaning of the rules of the NASDAQ Stock Market.

Withholding

The Company’s obligation to deliver shares of common stock in respect of any Award under the Director Plan is not currently subject to federal, state or local tax withholding requirements. If such taxes were imposed in

the future, the Board may permit participants to pay any applicable withholding in shares of the common stock

already owned by the participant (either by delivery or attestation) or through the withholding of shares otherwise issuable to such participant. If the participant does not satisfy the tax withholding through one of those means, the Company may withhold from the same or other compensation.

Transferability of Awards

In general, awards may not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order. During the life of the participant, awards are exercisable only by the participant. However, with our Board’s consent, a participant can transfer an award without payment to an immediate family member, family trust, or certain other related entities (to the extent a Registration Statement on Form S-8 would cover the transferee).

Acceleration

Our Board may at any time provide that any award will become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.

Termination of Service

The Award agreements provide rules with respect to the treatment of Awards when service ends and may overrule the general principles in the Director Plan. If a participant dies or has a “Disability” (as defined in the Director Plan), unless the Award agreement provides otherwise, any options or stock appreciation rights will immediately become exercisable in full in respect of the aggregate number of shares covered thereby and will remain exercisable for a year after death or Disability termination (unless the Award expires earlier) and (ii) restricted stock and restricted stock units will vest, as will any unpaid dividends or dividend equivalents. On a termination for “cause,” as defined in the Director Plan, and unless the Award agreement provides otherwise, all Awards will terminate immediately.

Amendment or Termination

No award may be made under the Director Plan after May 20, 2025 but awards previously granted may extend beyond that date. Our Board may at any time amend, suspend or terminate the Director Plan, provided that such actions may not materially adversely affect a recipient with respect to a previously granted Award without his or her consent, except as required for compliance with Section 409A of the Code.

If our stockholders do not approve the adoption of the Director Plan, the Director Plan will not be extended and we will not grant any awards under the Director Plan after May 2, 2015.

Certain Material U.S. Federal Income Tax Consequences

The following is a summary of certain material United States federal income tax consequences that generally will arise with respect to awards granted under the Director Plan. This summary is based on the federal tax laws in effect as of the date of this proxy statement. In addition, this summary assumes that all awards are exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. Changes to these laws could alter the tax consequences described below.

Nonqualified Stock Options

A participant will not have income upon the grant of a nonqualified stock option. A participant will have compensation income upon the exercise of a nonqualified stock option equal to the value of the stock on the day the participant exercised the option less the purchase price. Upon sale of the stock, the participant will have

capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the stock for more than one year and otherwise will be short-term.

Stock Appreciation Rights

A participant will not have income upon the grant of a stock appreciation right. A participant generally will recognize compensation income upon the exercise of a stock appreciation right equal to the amount of the cash and the fair market value of any stock received. Upon the sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the stock appreciation right was exercised. This capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

Restricted Stock Awards

A participant will not have income upon the grant of restricted stock unless an election under Section 83(b) of the Code is made within 30 days of the date of grant. If a timely Section 83(b) election is made, then a participant will have compensation income equal to the value of the stock less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the date of grant. If the participant does not make a Section 83(b) election, then when the stock vests the participant will have compensation income equal to the value of the stock on the vesting date less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

Restricted Stock Units

A participant will not have income upon the grant of a restricted stock unit. A participant is not permitted to make a Section 83(b) election with respect to a restricted stock unit award. When the stock is distributed with respect to restricted stock unit, the participant will have income in an amount equal to the fair market value of the stock less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock previously taxed. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

Tax Consequences to Us

There will be no tax consequences to us for any awards made under the Director Plan, except that we will be entitled to a deduction when a participant has compensation income. Any such deduction will be subject to the limitations of Section 162(m) of the Code if the director becomes subject to Section 162(m) for the year in which compensation is realized.

New Plan Benefits

As of March 13, 2015, nine persons were eligible to receive awards under the Director Plan. The granting of awards under the Director Plan is discretionary.

We cannot now determine the number or type of awards to be granted in the future to any particular person or group.

Discovery Communications, Inc. 2005 Non-Employee Director Plan, As Amended


Name and Position	Dollar Value ($)^(a)		Number of Cash-Settled SARs
David M. Zaslav		N/A		N/A
President and Chief Executive Officer

Andrew Warren		N/A		N/A
Chief Financial Officer

Bruce L. Campbell		N/A		N/A
Chief Development and Digital Officer, and General Counsel

Jean-Briac Perrette		N/A		N/A
President, Discovery Networks International

Adria Alpert Romm		N/A		N/A
Chief Global Human Resources and Diversity Officer

John S. Hendricks		N/A		N/A
Founder and Former Chairman

Executive Group		N/A		N/A
Non-Executive Director Group		—		—	^(a)
Non-Executive Officer Employee Group		N/A		N/A

(a)	Amount is indeterminable.

Recommendation of the Board of Directors

The Board of Directors recommends that you vote “FOR” the proposal to approve the extension of the term of the Director Plan to May 20, 2025.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, has recommended that the Compensation Discussion and Analysis be included in this proxy statement.

This report is respectfully submitted by the members of the Compensation Committee of the Board.

Robert J. Miron, Chairman

Robert R. Beck

Paul A. Gould

COMPENSATION DISCUSSION AND ANALYSIS

This section analyzes and discusses our compensation programs and provides information about the compensation paid by Discovery to our Named Executive Officers, or “NEOs”:

•

David M. Zaslav, President and Chief Executive Officer (“CEO”);

•

Andrew Warren, Chief Financial Officer (“CFO”);

•

Bruce L. Campbell, Chief Development and Digital Officer and General Counsel;

•

Jean-Briac Perrette, President, Discovery Networks International;

•

Adria Alpert Romm, Chief Global Human Resources and Diversity Officer; and

•

John S. Hendricks, Founder and Chairman (until May 16, 2014).

Mr. Hendricks resigned as an officer and director of Discovery effective upon the close of business on May 16, 2014, the date of our 2014 Annual Meeting of Stockholders.

Highlights

Discovery had strong performance in 2014, despite challenging conditions.

Discovery is a leading global media and entertainment company, with operations that support our mission to empower people to explore their world and satisfy their curiosity. We had a strong year in 2014, reporting increases in revenue and adjusted operating income before depreciation and amortization (“OIBDA”):

•

Revenues increased 13% to $6.265 billion; and

•

Adjusted OIBDA increased 4% to $2.491 billion.

Our free cash flow also increased 2% to $1.198 billion. We repurchased 23.8 million shares of stock for an aggregate purchase price of $1.4 billion, achieved substantial growth internationally, both organically and through new channel launches, and made a number of strategic acquisitions.

Our international division delivered outstanding performance. Revenue at our international networks increased 28%, to $3,157 million, with distribution revenues up 25%, to $1,553 million, and advertising revenues up 28%, to $1,483 million. Changes in foreign currency exchange rates reduced full year international revenue growth by 4% and Adjusted OIBDA growth by 8%.

We acquired the SBS Nordic business in 2013 and successfully integrated that business in 2014. We made other strategic acquisitions in 2014, including increasing our equity stake in the Eurosport business to reach a majority interest. Increased contributions from these and other recent strategic acquisitions helped to drive our international growth.

In the U.S., we saw significant success in growing emerging brands and strengthening existing brands. Investigation Discovery continued to grow, and we successfully launched new network brands, American Heroes Channel and the Discovery Family Channel, in 2014.

Despite strong performance, we faced a challenging U.S. advertising market in 2014, as well as significant foreign currency headwinds, which contributed to a decline in our stock price during the year.

In 2014, our Board declared a special dividend of shares of our Series C common stock. The dividend was payable to holders of record of our Series A, Series B, and Series C common stock as of the close of business on July 28, 2014, the record date for the dividend. As a result of the dividend, each holder of a share of our Series A, Series B, and Series C common stock received one additional share of Series C common stock, on or about

August 6, 2014 (the distribution date for the dividend). The Compensation Committee reviewed each type of outstanding equity and equity-type award held by our employees and directors and determined appropriate adjustments. These adjustments were designed to preserve the intrinsic value of the outstanding awards and to preserve the benefits or potential benefits of the awards, consistent with the relevant stock plan provisions, typically, but not exclusively, resulting in the issuance of options or other awards with respect to Series C common stock, treating each category of award consistently. The number of units or shares expressed in this Compensation Discussion and Analysis reflect the pre-dividend award amounts.

We continue to pay for performance through our executive compensation program design.

We believe that our executive compensation program plays a key role in our operating and financial success. We place great importance on our ability to attract, retain, motivate and reward talented executives who can continue to grow our business and engage audiences around the world. We entered into new, long-term employment agreements in 2014 with each of our NEOs (other than Mr. Hendricks, who retired in May 2014). Each of our NEOs received significant long-term awards in 2014, based in part on the Company’s financial and operational performance, their individual achievements during the prior year, and, for the NEOs other than Mr. Hendricks, to encourage each to enter into long-term employment contracts with us.

Each of our NEOs other than Mr. Hendricks also received an annual cash bonus based on Company and individual performance in 2014. These awards reflect the direct link between financial and operational success and compensation under our executive compensation program. Our short- and long-term incentive compensation programs are structured to:

•

pay for performance by aligning and measurably varying the size of performance-based awards directly with key operational outcomes, as well as the executive’s individual performance;

•

align the interests of management with those of our stockholders through equity and equity-type incentive awards and stock ownership guidelines; and

•

inspire dynamic leadership while not encouraging excessive risk taking.

In general, we seek to design compensation packages for individual executives based on the scope of the executive’s responsibilities, the executive’s proven performance, and a determination of what is competitive compensation in the market for similar roles, if such data is available. We continue to refine our compensation programs to strengthen the link between executive and stockholder interests.

We value long-term contracts with our senior executives and use our executive compensation programs to support extended contract terms.

We believe that entering into fixed term employment contracts with our senior executives provides management stability and helps ensure that we can access their services to drive our strategic objectives. When permitted by local law, these agreements also include customary restrictive covenants that protect our business from unfair competition after an executive separates employment. In January 2014, we entered into a new employment agreement with our CEO with a six-year term, extending his service term to the end of 2019. We then were able to enter into new employment agreements with the remaining NEOs (other than Mr. Hendricks), retaining key personnel who had demonstrated outstanding performance and ensuring continuity in our senior executive team for the long term. The contracts range in length from three years (Mr. Perrette) to six years (Mr. Zaslav) and included long-term incentive awards designed to encourage each NEO to commit to an extended term as well as to align the rewards of the contract to Company performance and shareholder interests. The equity awards made to Mr. Zaslav in 2014 front-loaded a significant portion of the long-term incentive value contemplated during the six-year term in the first year of the agreement, while preserving the multi-year performance and retentive nature of the awards.

Each of the NEOs with whom we entered into a new agreement had demonstrated strong performance in prior years and these multi-year agreements were designed to ensure their continued contributions to the

Company. Equity awards are a significant component under the new employment agreements with our senior executives and we consider a sign-on or enhanced contract renewal grant to be an appropriate element of a new or extended agreement.

In 2014, we entered into a new agreement with our CEO that will allow us to benefit from his leadership through 2019.

Over the course of his tenure as CEO for the last seven years, Mr. Zaslav has done an outstanding job leading Discovery. He has driven our strong financial performance, created significant shareholder value and ultimately transformed the Company into a global leader in pay television.

Mr. Zaslav’s contributions have paved the way for Discovery’s growth. Under his leadership, our market capitalization has risen from $5 billion to $20 billion, our global portfolio of television networks has expanded from reaching approximately 280 million cumulative worldwide subscribers in 2008 to nearly 2.6 billion cumulative worldwide subscribers, and our award-winning content has continued to draw growing audiences around the world. Internationally, Discovery has continued to expand audience in 2014, with the average audience increasing 19% versus the 2013 average. In the U.S., our share of primetime viewers 25-54 has increased from 8% in 2008 to 11% today. Discovery’s revenue also has seen significant growth under Mr. Zaslav’s purview, increasing from $3.4 billion in 2008 to $6.3 billion in 2014 and Adjusted OIBDA grew from $1.3 billion in 2008 to $2.5 billion in 2014.

In January 2014, Discovery’s Board of Directors and Mr. Zaslav reached a new agreement to secure him as the leader of the Company through the end of the decade. The Board had several goals with Mr. Zaslav’s new contract. In addition to recognizing the substantial value he already has created for the Company, this fixed-term contract secured Mr. Zaslav to a long-term agreement that provides Discovery certainty and stability. The contract also allowed the Company to structure an agreement around performance-based long-term equity, ties materially the vast majority of his compensation to increases in shareholder value, requires him to hold the majority of the equity distributed to him beyond the term of his contract (absent an intervening change in control or termination of employment), and, through ownership of a significant number of shares, will further align his interests with those of our stockholders.

Mr. Zaslav’s agreement has a six-year term, with the vast majority of compensation delivered in the form of Discovery equity that directly ties him to Discovery’s long-term performance and shareholder interests. These performance-based grants require Discovery to meet financial targets or increase shareholder value by increasing the share price of Discovery stock in order to pay out. The contract stipulates an annual base salary of $3 million for the entire six-year term with no base salary increase. It also allows for limited increases in yearly cash bonus target amounts, with a target amount that ranges from $6.6 million in the first year of the contract to $9 million in the final two years. These bonus payouts are contingent on achievement of quantitative and qualitative goals set by the Board each year.

The bulk of Mr. Zaslav’s compensation is tied to Discovery’s stock performance, in the form of performance-based restricted stock units and cash- and stock-settled stock appreciation rights. A significant amount of the equity awards are made in the first year, vesting over time, with smaller awards from 2015 to 2018. The contract includes a 60% equity holding requirement to the end of the contract, December 31, 2019. It also requires that Mr. Zaslav use significant portions of the net cash proceeds from the cash-settled SARs to buy and hold Discovery equity through the end of contract.

Given the terms of the contract, Mr. Zaslav’s 2014 compensation reflected in the Summary Compensation Table for 2014 shows a large one-time equity award to drive immediate shareholder alignment and encourage long-term ownership of our stock. This contract rewards Mr. Zaslav for the value he has created and the continued strategic direction he provides and requires sustained performance over time for that award to have value. At the end of his contract, Mr. Zaslav will own a substantial amount of equity of Discovery, which

reinforces his alignment with our shareholders and encourages long-term ownership of our stock. Discovery looks forward to the Company’s continued growth under Mr. Zaslav’s leadership. The terms of Mr. Zaslav’s agreement are discussed in “Executive Compensation—Executive Compensation Arrangements,” below.

Role of the Compensation Committee

Our Compensation Committee (referred to in this Compensation Discussion and Analysis as the “Committee”) operates pursuant to a written charter, a copy of which is posted on the Investor Relations section of our website, www.discoverycommunications.com. The Committee is responsible for developing, implementing, and regularly reviewing adherence to our compensation philosophy. In the course of fulfilling these responsibilities, the Committee:

•

regularly reviews best practices and market trends in executive compensation and modifies our programs to support Discovery’s business goals and strategies;

•

conducts annual risk assessments of our compensation programs;

•

aligns compensation decisions with our corporate objectives and strategies;

•

reviews and approves the amounts and elements of compensation and the terms of new employment agreements or extensions to existing employment agreements for our NEOs, other executive officers, and certain other key employees; and

•

approves the annual quantitative and qualitative goals relevant to the compensation of our NEOs and other executive officers.

The Committee regularly consults with the Board regarding compensation decisions for the CEO and the Chairman, and with the CEO regarding compensation decisions for other NEOs.

Role of the CEO in Compensation Decisions

The CEO plays a significant role in the compensation decisions for the NEOs other than himself (and the Chairman during the time that Mr. Hendricks served in that role). The CEO makes annual recommendations to the Committee regarding base salary, annual cash bonus, and long-term incentive awards for each of his direct reports, including the other NEOs. The CEO also recommends to the Committee proposed terms of new employment agreements or extensions of existing employment agreements for the other NEOs, working closely with Ms. Alpert Romm, our Chief Global Human Resources and Diversity Officer, to develop these recommendations. Ms. Alpert Romm did not, however, participate in formulating the recommendation for the terms of her own contract in 2014. The CEO’s recommendations are based on:

•

his assessment of qualitative and quantitative factors, generally including the executive’s annual and long-term performance;

•

the performance of Discovery, as well as the department or group that the executive leads;

•

the executive’s compensation relative to that of our other executives (internal equity);

•

the executive’s compensation relative to that of executives in similar roles in the companies in our peer group (external competitiveness);

•

our overall approach to compensation for employees for the year;

•

achievement of applicable annual performance goals; and

•

contractual obligations under any applicable employment agreement.

The CEO also provides the Committee with proposed goals for himself, and recommends annual goals for the CFO. The Committee’s assessment of achievement of these goals is used in determining, in part, the annual

bonus of the CEO and of the CFO. The Committee consults with the Board in setting these annual goals for the CEO. The CEO does not participate in the Committee’s deliberations or decisions relating to his performance against annual goals and resulting compensation.

Relationship with and Role of the Compensation Consultant

The Committee has retained an independent compensation consultant, The Croner Company (“Croner”), to advise it on compensation matters generally and specifically on compensation decisions for our executive officers. Croner is retained directly by, and reports to, the Committee. Croner attended 18 of the 20 Committee meetings held in 2014. Croner assisted the Committee by, among other services:

•

assisting in peer group selection and competitive benchmarking for executive officers and other senior executives used in the annual salary review, bonus and long-term incentive decisions;

•

advising the Committee on competitive practices, including executive compensation trends, performance measures, and annual cash bonus and long-term incentive plan designs;

•

advising on employee equity grants, executive employment agreements and other executive compensation matters;

•

assisting the Committee with the periodic review of its charter;

•

providing an evaluation and assessment of risk in compensation program design, policies, and procedures;

•

reviewing the Compensation Discussion and Analysis; and

•

benchmarking compensation for members of the Board.

Prior to being engaged by the Committee, Croner historically had provided compensation survey data to the Company and performed custom surveys on industry compensation practices. In 2011, the Committee adopted a Compensation Consultant Independence Policy to address the ongoing need for this survey work and to determine the process under which work by Croner for the Company would be permitted. The Committee authorized Croner to provide survey services to management of up to $60,000 per year. Non-survey work, or survey work that exceeds $60,000 in the aggregate in a single year, requires pre-approval by the Committee. In 2014, the only services provided by Croner to management were the pre-authorized survey services. Total fees paid to Croner by Discovery in 2014 (other than fees for Croner’s services to the Committee) were less than $14,000.

The Committee annually reviews its relationship with Croner as an independent compensation consultant to determine if Croner has any conflict of interest in its services to the Committee. In the 2014 review, after considering the factors set forth in the applicable securities regulations and stock exchange rules, the Committee concluded that Croner did not have a conflict of interest in its services to the Committee. The Committee’s conclusion was based on the following:

•

Croner reports solely to the Committee. Discovery’s management is not involved in the negotiation of fees charged by Croner or in the determination of the scope of work performed by Croner. The Committee has the sole authority to hire and terminate the independent compensation consultant;

•

there are no business or personal relationships between Croner and any member of the Committee or any executive officer of the Company;

•

the Committee has a Compensation Consultant Independence Policy to address limited survey work performed by Croner for the Company, and any other non-survey services that are proposed to be performed by Croner for the Company;

•

the survey work performed by Croner was very limited, and no non-survey work was performed (other than Croner’s services for the Committee);

•

according to data provided by Croner, revenue from Discovery (other than fees for Croner’s services to the Committee) represented less than 1% of Croner’s total revenue for fiscal year 2013 and continued to be less than 1% in 2014;

•

Croner disclosed its conflicts of interest policy to the Committee. The Committee believes that this policy provides reasonable assurance that conflicts of interest with Croner will not arise; and

•

Croner has represented to the Committee that, per its conflicts of interest policy, neither Croner nor any Croner employee is a stockholder of Discovery.

Compensation Philosophy

Discovery’s compensation philosophy is to pay for performance, to encourage excellence and to reward executives who deliver. Our programs are designed to deliver above-median total direct compensation when our executives deliver above-median performance, as evaluated against both internally set objectives and the peer group companies.

We value fixed-term employment agreements when appropriate. In 2014, each of our NEOs other than Mr. Hendricks entered into a new fixed-term employment agreement and a number of the compensation decisions discussed below either were required by the terms of existing employment agreements, or negotiated as part of the terms of the new agreements, as further described in “Executive Compensation—Executive Compensation Arrangements,” below.

Elements of Compensation

Total direct compensation for each NEO consists of three basic components:


Element of Compensation	Key Features	Purpose
Base Salary	Fixed annual cash amount, generally reviewed annually.	Provide base salaries that are competitive to attract and retain high-performing executive talent. A competitive base salary is an important component of compensation providing a degree of financial stability for executives. Base salaries also form the basis for calculating other compensation opportunities, including, for example, calculating the target amount of each NEO’s annual cash bonus as a percentage of base salary.

Annual Cash Bonus	Each NEO has a target bonus opportunity, set as a percentage of base salary (or in Mr. Zaslav’s case, as a specified dollar value). Actual amount paid/awarded for each year varies based on Company and individual performance.	Deliver a substantial portion of total direct compensation in annual cash bonus awards that are aligned with Company and individual performance to focus our executives on our financial and operational goals. Ensure that our compensation mix remains competitive with our labor market. We generally set bonus targets as a percentage of base salary so that this performance-based element remains a similar proportion to the fixed base salary and the value of the bonus target automatically adjusts as salary adjustments are made.


Element of Compensation	Key Features	Purpose

Long-Term Incentive Awards	Annual equity and equity-type awards, in the form of non-qualified stock options, performance-based restricted stock units (“PRSUs”), and stock appreciation rights (“SARs”). Each type of award instrument generally vests in tranches over multiple years.	Deliver a substantial portion of an executive’s total direct compensation in equity or equity-type awards to align our executives’ interests with those of our stockholders. Use long-term incentive awards as a tool to encourage an executive to enter into a new employment agreement or extend an existing agreement. _____________ Awards of SARs to our CEO align his interests to those of our shareholders by tying the amount paid out (if any) directly to the increase in our stock price (if any) during the measurement period. _____________ PRSUs incent our NEOs to achieve longer-term financial goals that are expected to lead to increased stockholder value. The multi-year service requirements also serve as a retention tool. Both the financial metrics and the longer-term vesting schedules are designed to discourage excessive risk-taking. _____________ Restricted stock units (“RSUs”) also are used in certain contract renewals, and the multi-year service requirements serve as a retention tool. _____________ The Committee has adopted executive stock ownership guidelines (discussed below) and implemented more extensive holding and share purchase requirements for the CEO under his new agreement. These provisions are designed to further align the interests of our NEOs with our stockholders.

Performance-Based Pay

The Committee seeks to deliver the majority of target total direct compensation for each NEO in performance-based pay, with the balance between the annual cash bonus and long-term incentive awards determined by the Committee as appropriate for each role. A significant majority of total direct compensation for each NEO for 2014 was performance-based:


Executive	Percentage of Performance-Based Total Direct Compensation in 2014 (Target)*
Mr. Zaslav		98	%
Mr. Warren		75	%
Mr. Campbell		75	%
Mr. Perrette		62	%
Ms. Alpert Romm		61	%
Mr. Hendricks		86	%

*	Calculated as of March 2014, classifying annual bonus opportunity and the grant date fair value of long-term incentive compensation (and with respect to Mr. Zaslav, the “sign-on” PRSU grant) as performance-based.

As further discussed below, we entered into new employment agreements with Messrs. Warren and Campbell in August and September 2014; these new agreements increased the proportion of total direct compensation that is performance-based:


Executive	Percentage of Performance-Based Total Direct Compensation After New Employment Agreement in 2014 (Target)*
Mr. Warren		85	%
Mr. Campbell		83	%

*	Calculated as of December 31, 2014, classifying annual bonus opportunity and the grant date fair value of long-term incentive as performance-based compensation and using base salary and bonus target amount as of December 31, 2014.

We believe the mix of compensation for our NEOs is both competitive with the compensation practices specific to our industry and appropriately balanced to benefit the Company in both the short- and long-term without taking undue risks. Annual cash bonus awards are more fully described in “—2014 Compensation Decisions—Annual Cash Bonus Awards,” below, and our long-term incentive compensation programs are more fully described in “—2014 Compensation Decisions—Long-Term Incentive Compensation,” below.

Compensation Decisions Framework

The Committee generally makes decisions in the first 90 days of the calendar year regarding annual adjustments to base salary (“Annual Base Salary Review”), the payout amount for annual cash bonus awards with respect to the immediately preceding year (“Annual Bonus Review”), and annual long-term incentive (“LTI”) awards (“Annual LTI Review”) for our executive officers. This annual process includes a review of the following factors, designed to align the compensation actions with our compensation principles and objectives:

•

executive compensation market data from the Company’s peer group (discussed below);

•

relevant employment contract requirements;

•

self-evaluation of each NEO’s annual performance;

•

the CEO’s evaluation of each NEO’s annual performance (other than the CEO and the Chairman);

•

achievement of annual quantitative goals for the Incentive Compensation Plan (“ICP”), the annual cash bonus program that applies to Messrs. Perrette and Campbell and Ms. Alpert Romm;

•

achievement of quantitative and qualitative goals that are set by the Committee each year for the annual bonuses for Messrs. Zaslav and Warren; and

•

Discovery’s Total Shareholder Return (“TSR”) and other comparative financial measures relative to the peer companies, as discussed below.

These factors are considered as a whole, with no specific weight given to a particular factor or factors.

Additional detail about the factors considered in our compensation decisions is below.

Peer Group Analysis and Comparative Financial Review

The Committee annually reviews data from a group of publicly-traded peer companies to support compensation decisions for the NEOs. The peer companies are chosen to best match our Company’s scope of business in terms of revenues, free cash flow, market capitalization and enterprise value, complexity of operations and global scope, and proximity to the sectors of the media and entertainment industry in which we operate. The peer group also represents meaningful competition for us in the executive labor market. The Committee reassesses this list annually and considers the inclusion of new, relevant peers, and the elimination of companies from the peer group that no longer provide a strong basis for comparison. The Committee used the following peer group for 2014 after concluding that the group provided a good mix of companies with a strong focus on content and international reach.

The peer group used in 2014 consisted of:

AMC Networks Inc.

Cablevision Systems Corporation

CBS Corporation

Charter Communications, Inc.

DIRECTV

Netflix, Inc.

Scripps Networks Interactive, Inc.

Viacom Inc.

Yahoo! Inc.

Market data for the peer group was used in the negotiation of new employment agreements with Messrs. Zaslav, Warren, Perrette, and Campbell and Ms. Alpert Romm, and in determining base salary adjustments for Messrs. Warren and Campbell and Ms. Alpert Romm in the March 2014 salary review cycle. With respect to Ms. Alpert Romm, the Committee also considered market data from the Towers Watson Entertainment Survey.

In December 2013, the Committee reviewed comparative TSR and other financial measures for the peer group and determined that the Company had performed well as compared to its peers in the industry. The Committee previously used TSR, but broadened the measures used to evaluate comparative performance to include other measures to provide a deeper review of the Company’s financial and operational performance.

Comparative Financial Measures, FY 2010 – FY 2012


	Revenue Change						Operating Income Change						Enterprise Value Change(3)						Market Cap Change					TSR(1)
	1 Year			3 Year CAGR			1 Year			3 Year CAGR			1 Year			3 Year CAGR			1 Year		3 Year CAGR			1 Year(2)		3 Year(2)
Median (excluding Discovery)		4	%		4	%		3	%		15	%		10	%		9	%		21%		10	%		31%		67	%
Discovery Communications, Inc.		8	%		9	%		3	%		13	%		43	%		20	%		46%		22	%		56%		102	%
Discovery Percentile		59	%		58	%		50	%		37	%		96	%		92	%		max		83	%		max		67	%

(1)	TSR = (Stock Price End Date - Stock Price Start Date + (Dividends / Share)) / (Stock Price Start Date)

(2)	Sources Yahoo! Finance and SEC Filings

(3)	Enterprise Value = Market Capitalization + Long-Term Debt - cash + marketable securities

The Committee used this review as a reference point in determining that it was appropriate to make equity awards in the 2014 Annual LTI Review and in determining whether to adjust downward, in accordance with their terms, the payout amount of PRSU awards made to Mr. Campbell in 2011 that vested in 2014. At the time of the review, full-year data for 2013 were not available.

In late 2014, as part of the process to prepare and review market data for use in the February 2015 Annual Bonus Review, Annual LTI Review, and Annual Base Salary Review, the Committee determined that it would again be appropriate to review a broader set of measures to compare Company performance to the peer group, and reviewed revenue, OIBDA, free cash flow, and enterprise value for the Company (the “Comparative Financial Measures”) as compared to the peer group. Adjusted OIBDA is defined as revenues less costs of revenues and selling, general and administrative expenses excluding: (i) mark-to-market equity-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) restructuring and other charges, (v) certain impairment charges, and (vi) gains and losses on business and asset dispositions. See Note 22 to our Annual Report on Form 10-K for information regarding our Adjusted OIBDA.

Comparative Financial Measures, September 2011 – September 2014


	Revenue Change						OIBDA Change						Free Cash Flow						Enterprise Value Change(3)					TSR(1)
	1 Year			3 Year CAGR			1 Year			3 Year CAGR			1 Year			3 Year CAGR			1 Year		3 Year CAGR			1 Year(2)			3 Year(2)
Median (excluding Discovery)		6	%		7	%		4	%		4	%		11	%		0	%		-2%		16	%		14	%		105	%
Discovery Communications, Inc.		18	%		14	%		12	%		7	%		32	%		3	%		-16%		19	%		-7	%		91	%
Discovery Rank Among Peers		80	%		82	%		88	%		84	%		65	%		75	%		Min		76	%		6	%		21	%

(1)	TSR = (Stock Price End Date - Stock Price Start Date + (Dividends / Share)) / (Stock Price Start Date)

(2)	Three year TSR for Sept 2011 - Sept 2014. Sources Yahoo! Finance and SEC filings

(3)	Enterprise Value = Market Capitalization + Long-Term Debt - cash + marketable securities

In this review, the Committee noted that the Company was lagging peers with respect to TSR, but based on an overall review of the Comparative Financial Measures, concluded that the Company was performing well as compared to its peers. The Committee generally moderated the bonus payout amounts for our NEOs with respect to 2014 in consideration of the Company’s performance against the Comparative Financial Measures.

Target Pay Positioning

The Committee generally targets executive compensation to be between the median and 75^th percentile of the compensation paid by our peer group companies, which are identified above under “—Peer Group Analysis.” The Committee uses the peer group benchmark and survey data as a reference rather than as a strict guide for compensation decisions and retains flexibility in setting individual target total direct compensation.

The Committee reviewed market data for Mr. Zaslav as compared to our peer group in the course of negotiating a new employment agreement with him, which was entered into on January 2, 2014.


NEO	Target Pay Against Peer Group (Before 2014 Compensation Actions)	Target Pay Against Peer Group (After January 2014 Agreement)
Mr. Zaslav	Above the 75^th percentile	Significantly above the 75^th percentile

In February 2014, the Committee reviewed market data for each NEO other than Mr. Zaslav and Mr. Hendricks as compared to our peer group with respect to 2013 total direct compensation, both at target and actual. The Committee undertook the review for Mr. Zaslav and the separate review for the other NEOs in setting total direct compensation for 2014, and at that time, the comparison to our peer group was as follows:


NEO	Target Pay Against Peer Group (Before 2014 Compensation Actions)	Actual Pay Against Peer Group (Before 2014 Compensation Actions and New Employment Agreements)
Mr. Warren	Slightly below median	Above the 75^th percentile
Mr. Campbell	Slightly below median	Between the median and the 75^th percentile
Ms. Alpert Romm	Slightly below median	Between the median and the 75^th percentile

The data reviewed by the Committee with respect to Mr. Perrette related to his 2013 compensation and 2013 role of Chief Digital Officer; Mr. Perrette assumed the position of President of Discovery Networks International and was appointed as an executive officer in early 2014. At the time of the review of 2013 total direct compensation, Mr. Perrette’s target and actual total direct compensation both were between the median and the 75^th percentile.

The Committee again reviewed market data in determining the compensation elements of new employment agreements entered into in 2014 for each of Messrs. Warren, Perrette and Campbell, and Ms. Alpert Romm. For Mr. Perrette, the market data for this contract review was specific to Mr. Perrette’s new role as President, Discovery Networks International. Each of these employment agreements is discussed in “Executive Compensation—Executive Compensation Arrangements,” below.

The Committee used the peer group data as a reference point in determining base salary and long-term incentive awards for Mr. Warren, Mr. Campbell, and Ms. Alpert Romm in February 2014 (as well as the new compensation terms in each executive’s employment agreement entered into later in 2014). The Committee also identified a small group of non-CEO Chairman roles within the peer group, against which the Committee concluded it would be appropriate to compare Mr. Hendricks’ compensation. The Committee used this Chairman data to determine the long-term incentive award for Mr. Hendricks, as further described below.

After the Committee increased the base salaries of and made annual long-term incentive awards to Messrs. Warren and Campbell in the first quarter of 2014, their compensation as compared to the peer group was as follows:


NEO		Actual Pay Against Peer Group (After Annual Salary Increase and 2014 Long- Term Incentive Award)
Mr. Warren		Between the median and the 75^th percentile
Mr. Campbell		Between the median and the 75^th percentile

The Committee further reviewed market data in determining the compensation elements of new employment agreements entered into in 2014 for each of Messrs. Zaslav, Warren, Perrette and Campbell, and Ms. Alpert Romm. For Mr. Perrette, the market data was specific to Mr. Perrette’s new role as President, Discovery Networks International. Each of these employment agreements is discussed in “Executive Compensation—Executive Compensation Arrangements,” below.

Ms. Alpert Romm’s new employment agreement was entered into on March 1, 2014. Based on the timing of the new agreement, the Committee determined to increase Ms. Alpert Romm’s base salary effective March 1, in lieu of a base salary increase in the Annual Base Salary Review. Ms. Alpert Romm received an annual equity award in the normal course of the Annual LTI Review, however. After the contract-related salary increase, and the equity award in the Annual LTI Review, Ms. Alpert Romm’s compensation as compared to the peer group moved to above the 75^th percentile.

With respect to the CEO, CFO, General Counsel, and Chief Global Human Resources and Diversity Officer, the Committee compared each executive’s compensation to that of the corresponding position in the peer group,

with an adjustment to the General Counsel analysis initially to reflect Mr. Campbell’s expanded role as Chief Development Officer and, in his new employment agreement, Chief Digital Officer. The Committee compared Ms. Alpert Romm’s compensation to that of peer group executives classified as most senior Human Resources officers. The Committee compared Mr. Perrette’s compensation to that of peer group executives classified as Division Presidents, although the Committee determined this was not an exact match because of the broad scope of Mr. Perrette’s international responsibilities.

Tally Sheets

The Committee regularly reviews tally sheets prepared for each of the NEOs to allow consideration of both current and historical compensation. The tally sheets allow the Committee to review an integrated snapshot of the individual and aggregated elements of each NEO’s compensation.

Tax Deductibility of Executive Compensation

We consider the tax deductibility of compensation to be paid to the NEOs. Internal Revenue Code Section 162(m) (“Section 162(m)”) generally limits the tax deductibility of compensation paid by a public company to its CEO and certain other highly compensated executive officers to $1 million in the year the compensation becomes taxable to the executive. There is an exception to this limit on deductibility for qualifying performance-based compensation.

Although we do not require all compensation paid to executives to be deductible, the Committee considers the impact of deductibility under Section 162(m) when making decisions about the amount and forms of executive compensation. These considerations were a factor in determining the general long-term incentive program for our senior executives, confirming the terms of new employment agreements, and the use of PRSU and SAR awards for our senior executives.

NEO Responsibilities and Accomplishments

Company performance and/or individual achievements play a strong role in many of the compensation decisions for our NEOs, as further described below. The Committee considered Discovery’s overall strong results as well as each of the NEOs’ responsibilities and 2014 accomplishments, in making compensation decisions. We have summarized each NEO’s overall performance and accomplishments below.

Mr. Zaslav: Mr. Zaslav serves as CEO and reports directly to the Board. In 2014, Mr. Zaslav led the Company in achieving our overall strong performance. In addition to operating performance, other significant accomplishments included managing growth across our networks through continued content investment, leading international investment and expansion, securing affiliate sales growth, developing management succession plans for key roles and attracting and retaining exceptional leadership talent throughout our organization. Mr. Zaslav’s general accomplishments also are discussed above under “—Highlights.”

Mr. Warren: Mr. Warren is our CFO. Mr. Warren made significant contributions in 2014, including leadership in integration of our significant strategic acquisitions, improvement of our capital structure, reduction of our effective tax rate, and enhancement of our Internal Audit function. Mr. Warren significantly increased his internal and external visibility in 2014 via successful presentations to employees, investors, and external conferences, particularly in connection with our international debt offerings. Mr. Warren added our global technology operations function to his portfolio in 2014 and created a strong operations and technology office to support international growth and operational efficiencies.

Mr. Campbell: Mr. Campbell is our Chief Development Officer and General Counsel, and expanded his role to include Chief Digital Officer in 2014. Mr. Campbell reports to the CEO. Mr. Campbell successfully led a number of significant acquisitions and growth-oriented investments in 2014, contributing materially to the outstanding performance of our international division, including acquisition of a controlling interest in Eurosport,

a 50% interest in All3Media, and 100% of the production company RawTV. Mr. Campbell provided outstanding legal support for the Company, including the legal strategy on acquisitions and divestitures and key distribution agreement renewals, as well as leadership of business affairs, production management, and our internal studios, to support our networks globally. After assuming leadership of our Digital Media organization, Mr. Campbell successfully reorganized the Digital Media team to emphasize international growth and the development of a TV Everywhere strategy in the U.S.

Mr. Perrette: Mr. Perrette serves as President of Discovery Networks International and reports to the CEO. Mr. Perrette quickly established himself as the leader of our international division and drove outstanding financial and organizational results in 2014, including record financial results, increases in audience and share, positive affiliate renewals, successful integrations of international acquisitions, and establishment of a strong international leadership team. Mr. Perrette established relationships with key affiliates and partners and worked closely with our network leadership teams to create opportunities for collaboration between the U.S. networks and international division.

Ms. Alpert Romm: Ms. Alpert Romm is our Chief Global Human Resources and Diversity Officer. Ms. Alpert Romm made significant contributions in 2014, including leading the employment-related elements of integration of our significant strategic acquisitions, which involved the harmonization of incentive and benefit plans in highly-complex jurisdictions. Ms. Alpert Romm personally negotiated several key executive employment agreements, recruited key leadership, and led a robust and well-managed organizational talent review process, including direct engagement of our Board on senior executive succession planning. Ms. Alpert Romm’s broad global contributions were reflected in a successful global employee survey in 2014 with outstanding results on employee engagement and other important metrics.

Mr. Hendricks: Until May 2014, Mr. Hendricks was our Chairman and Founder and reported directly to the Board. Mr. Hendricks helped support our strong business results, commitment to nonprofit engagement, and culture of integrity.

2014 Compensation Decisions

The following chart summarizes the compensation decisions for 2014 with respect to each NEO’s base salary, annual cash bonus and long-term incentive awards. Detailed discussion of the decisions made with respect to each element is contained in the discussions immediately below the chart.


Element of Compensation		2014 Compensation Decisions

Base Salary		Maintained base salary for Messrs. Zaslav and Hendricks. Increased base salary for Messrs. Warren, Perrette, and Campbell and Ms. Alpert Romm. These increases included adjustments in the Annual Base Salary Review in March for Messrs. Warren and Campbell as well as off-cycle increases for Messrs. Warren, Perrette, and Campbell and Ms. Alpert Romm associated with each entering into a new long-term employment agreement.

Annual Cash Bonus		Paid annual bonuses to each of the NEOs other than Mr. Hendricks, under a program intended to exempt the bonus from the deduction limits of Section 162(m), in the Annual Bonus Review. The bonus payouts reflected strong Company performance in 2014, as well as the assessment of each NEO’s individual performance. Mr. Hendricks was not eligible to be considered for a bonus for 2014 performance because he retired in May 2014. The Committee increased the target annual bonus amount for each of Messrs. Zaslav, Warren, Perrette, and Campbell, and Ms. Alpert Romm, as a component of entering into a new long-term employment agreement with each of them.


Element of Compensation		2014 Compensation Decisions

Long-Term Incentive Awards		Made equity awards to Mr. Zaslav, in amounts as agreed in the negotiation of his new long-term employment agreement. Awarded stock options and PRSUs to Messrs. Warren, Hendricks, Perrette and Campbell and Ms. Alpert Romm. These included awards in the Annual LTI Review to Messrs. Warren, Hendricks, and Campbell, and awards to Messrs. Warren, Perrette and Campbell as a component of each entering into new long-term employment agreements. The award to Mr. Perrette was made at the same time as the Annual LTI Review, but was determined as a component of entering into a new employment agreement in January 2014. Awarded time-based RSUs to Ms. Alpert Romm as a component of entering into a new employment agreement in March 2014.

Base Salary

Mr. Zaslav: Mr. Zaslav entered into a new employment agreement with the Company on January 2, 2014. Under the terms of that agreement, Mr. Zaslav’s base salary remains flat at $3 million for 2014 and the remainder of the six-year term of the agreement. The employment agreement is further described in “Executive Compensation—Executive Compensation Arrangements,” below.

Mr. Warren: In 2014, Mr. Warren was employed initially pursuant to an employment agreement entered into in 2012 that set his base salary and provided for annual salary reviews. In March 2014, the Committee increased Mr. Warren’s base salary by 4.5%, after consideration of market data and Mr. Warren’s strong performance in 2013. In September 2014, Mr. Warren entered into a new employment agreement with the Company that provided for a further 21% increase in base salary. This additional increase was based on review of market data and the desire to encourage Mr. Warren to sign a new, long-term employment agreement. For more information about Mr. Warren’s employment agreements, please see “Executive Compensation—Executive Compensation Arrangements,” below.

Mr. Campbell: In 2014, Mr. Campbell was employed initially pursuant to an employment agreement entered into in 2010 that set his base salary and provided for annual base salary increases of at least the amount of the Company’s overall merit increase for U.S.-based employees. In March 2014, the Committee increased Mr. Campbell’s base salary by 4.0%, more than the amount required by contract, in consideration of the market data and in recognition of Mr. Campbell’s outstanding performance in 2013. In August 2014, Mr. Campbell entered into a new employment agreement with the Company that provided for a further 34% increase in base salary. This further increase was based on review of market data, recognition of the expansion of Mr. Campbell’s responsibilities to include Digital Media and the desire to encourage Mr. Campbell to sign a new, long-term employment agreement. For more information about Mr. Campbell’s employment agreements, please see “Executive Compensation—Executive Compensation Arrangements,” below.

Mr. Perrette: The Committee increased Mr. Perrette’s base salary from $931,500 to $1,000,000 in early 2014 in conjunction with Mr. Perrette’s accepting the role of President of Discovery Networks International and entering into a new employment agreement with us. The Committee considered market data, Mr. Perrette’s strong performance, and the desire to encourage Mr. Perrette to accept the new role and relocate to our London offices. Under the terms of the employment agreement, Mr. Perrette was not eligible for a further salary increase in the March 2014 salary increase review cycle. The agreement is further described in “Executive Compensation—Executive Compensation Arrangements,” below.

Ms. Alpert Romm: The Committee increased Ms. Alpert Romm’s base salary from $674,700 to $750,000 in March 2014 in conjunction with Ms. Alpert Romm entering into a new employment agreement with us. Under

the terms of the agreement, Ms. Alpert Romm was not eligible for a further salary increase in the Annual Base Salary Review. The agreement is further described in “Executive Compensation—Executive Compensation Arrangements,” below.

Mr. Hendricks: Mr. Hendricks was employed pursuant to a letter agreement entered into in July 2008 (the “Hendricks Letter”). The Hendricks Letter set Mr. Hendricks’ annual base salary at $1 million and Mr. Hendricks’ base salary remained $1 million since 2008. For more information about the Hendricks Letter, please see “Executive Compensation-Executive Compensation Arrangements,” below.

Annual Cash Bonus Awards

We made annual cash bonus awards to each of the NEOs other than Mr. Hendricks with respect to 2014 in the Annual Bonus Review in February 2015. The annual bonus target amount for each NEO other than Mr. Zaslav is set as a percentage of base salary. This percentage generally is set in the negotiation of each executive’s employment agreement and is determined by the Committee based on external market data, internal equity, and, if the executive is leaving other employment to join our Company, an assessment of what level of compensation is needed to encourage the individual to accept our offer of employment.

Mr. Perrette, Mr. Campbell, and Ms. Alpert Romm participate in the ICP, our annual bonus plan that applies broadly to employees around the world. As discussed below, the determination of the actual cash bonus under the ICP is based on achievement of annual financial targets and individual performance, as applied to the target value.

The bonus structure for Messrs. Zaslav and Warren was designed by the Committee to meet specific objectives and is unique to them. As discussed below, the annual bonus for the CEO and CFO is based 50% on achievement of financial targets and 50% on qualitative goals. This design allows the Committee to incentivize and reward appropriate setting of financial targets by these key roles; the Committee adopted this design as a result of its ongoing risk assessment of our executive compensation programs. Unlike the ICP design, the bonus for Messrs. Zaslav and Warren is based 50% on qualitative goals and that portion is determined without reference to the Company’s performance against financial targets. Given the CEO’s and CFO’s roles in setting the annual financial targets used for the ICP, the Committee concluded that it would be appropriate to have a substantial part of their bonus based on separate qualitative measures.

The annual bonus target may be changed in the course of an executive’s employment or in the negotiation of a new or extended employment agreement, as was the case in 2014 with each of the NEOs other than Mr. Hendricks. Each of these NEO’s bonus target was increased for 2014 as part of negotiation of new long-term employment agreements (further described in “Executive Compensation—Executive Compensation Arrangements”), as follows:


NEO	2013 Bonus Target	2014 Bonus Target	Rationale

Mr. Warren	100% of base salary	120% of base salary	Mr. Warren’s bonus target was increased as one of the terms of his 2014 employment agreement. The Committee increased the bonus target as one element to encourage Mr. Warren to enter into a new long-term employment agreement, and in consideration of the market data, Mr. Warren’s history of strong performance, and the Committee’s emphasis on performance-based compensation.

Mr. Campbell	90% of base salary	130% of base salary	Mr. Campbell’s bonus target was increased as one of the terms of his 2014 employment agreement, under which he added responsibility for the Company’s Digital Media division to his portfolio. The Committee increased the bonus target as one element to encourage Mr. Campbell to accept the additional responsibilities and enter into a new long-term employment agreement, and in consideration of the market data and the Committee’s emphasis on performance-based compensation.

Mr. Perrette	85% of base salary	110% of base salary	Mr. Perrette’s bonus target was increased as one of the terms of his 2014 employment agreement, under which he transitioned from leading the Company’s Digital Media division to become the President of Discovery Networks International. The Committee increased the bonus target as one element to encourage Mr. Perrette to accept the new role and enter into a new long-term employment agreement, and in consideration of the market data and the Committee’s emphasis on performance-based compensation.

Ms. Alpert Romm	70% of base salary	80% of base salary	Ms. Alpert Romm’s bonus target was increased as one of the terms of her 2014 employment agreement. The Committee increased the bonus target as one element to encourage Ms. Alpert Romm to enter into a new long-term employment agreement, and in consideration of the market data, Ms. Alpert Romm’s history of strong performance, and the Committee’s emphasis on performance-based compensation.

The following chart summarizes the bonus design and payout for each NEO for 2014, with detailed discussion in the section that follows the chart. Mr. Hendricks was not eligible for and did not receive a bonus payout with respect to 2014.


NEO	2014 Target Amount	2014 Metrics	2014 Bonus Award

David M. Zaslav, CEO	$6.6 million (equivalent of 220% of base salary)	50% qualitative goals 50% quantitative goals	$6,082,359, based on achievement of 96% of the quantitative goals and 94% of the qualitative goals. The aggregate payout amount was 92% of target after application of the Committee’s downward discretion.

Andrew Warren, CFO	$1,119,344 (blended amount, based on 100% of base salary and increase to 120% mid-year)	50% qualitative goals 50% quantitative goals • Individual performance factored into determination of payout percentage with an individual performance based multiplier (“individual multiplier”) and allocation of performance pool	$1,346,425, based on achievement of 96% of quantitative goals and 95% of the qualitative goals. Includes application of Committee’s downward discretion, individual multiplier, and allocation of the performance pool. The aggregate payout amount was 120% of target, reflecting Mr. Warren’s strong individual performance in 2014.

Bruce L. Campbell, Chief Development and Digital Officer and General Counsel	$1,401,456 (blended amount, based on 90% of base salary and increase to 130% mid-year)	100% ICP calculation • 100% of ICP assigned to achievement of Company-wide financial metrics • Individual performance factored into ICP calculation with individual multiplier and allocation of performance pool	$1,957,370, based on calculation of the ICP payout. ICP calculation based on Company performance and an individual multiplier at target. The aggregate payout amount was 140% of target, reflecting Mr. Campbell’s strong individual performance and contributions to international growth and strategic acquisitions in 2014.

Jean-Briac Perrette, President, Discovery Networks International	$1.1 million 110% of base salary	100% ICP calculation • 80% of ICP assigned to achievement of international division financial metrics and 20% to Company-wide financial metrics • Individual performance factored into ICP calculation with individual multiplier and allocation of performance pool	$1,808,500, based on calculation of the ICP payout. ICP calculation based on Company and international division performance, individual multiplier, and allocation of the performance pool. The aggregate payout amount was 164% of target, reflecting the strong performance of Mr. Perrette and the international division in 2014.

Annual bonus compensation for the NEOs is paid under the Discovery Communications, Inc. 2013 Incentive Plan (the “2013 Stock Plan”) and is intended to qualify as performance-based compensation under Section 162(m). At the beginning of 2014, the Committee set a Company performance criterion and a maximum annual bonus amount for each NEO and certain other senior executives as the initial step in structuring the bonus awards as performance-based under Section 162(m). If the performance criterion for the year is met, the actual bonus award for each NEO is subject to the Committee’s negative discretion (“downward discretion”). Mr. Zaslav’s annual bonus opportunity was capped at a maximum of 300% of base salary, and each of the remaining NEOs’ annual bonus opportunity was capped at a maximum of 250% of base salary (using base salary determined as of the first day of the year).

The Committee exercises its downward discretion based on each executive’s individual performance and Company performance, calculated against target bonus amounts for each executive that are expressed as a percentage of salary. With respect to Messrs. Zaslav and Warren, the Committee considered each executive’s achievement of quantitative and qualitative goals set by the Committee. For Mr. Perrette, Mr. Campbell, and Ms. Alpert Romm, the Committee considered the achievement of the applicable financial metrics of the ICP.

For 2014, the Committee set the performance threshold at $1,324 million of Adjusted OIBDA for purposes of determining eligibility to receive payouts of the annual cash bonus opportunity for all NEOs.

In the 2014 Annual Bonus Review, the Committee determined that this performance threshold was met for 2014 and exercised its downward discretion to determine each NEO’s specific bonus payment amount as discussed below.

Annual Cash Bonus Awards for Messrs. Zaslav and Warren

The annual cash bonus for Messrs. Zaslav and Warren is based on achievement of Company financial and individual qualitative goals. The Committee approved goals for each of them in March 2014, with goals based 50% on quantitative financial achievement and 50% on qualitative goals related to individual accomplishments.

The quantitative goals for both were the same and were based on:

•

Net Revenue;

•

Adjusted Free Cash Flow (as defined in the next table); and

•

Further Adjusted OIBDA (as defined in the next table).

The Committee determined that including all three measures was appropriate for the roles of CEO and CFO given the scope of their responsibilities and direct impact on resource allocation decisions.

The Committee annually reviews potential adjustments to the performance against these measures. The principle applied in deriving the adjustments is to ensure that the calculation reflects the impact of operational decisions taken by management, excludes the impact of events over which management has little or no influence, and excludes the impact of items that were not considered at the time the targets were set. Adjustments for currency fluctuations are made to ensure that the results are currency-neutral. The Committee groups adjustments into three categories:

•

unplanned acquisitions (and related expenses);

•

unplanned programming or new business investments; and

•

corporate transactions (including corporate debt transactions and accounting or legal changes that resulted in unforeseen changes).

The table below provides the definition of each of the three financial metrics and describes at a high level the 2014 adjustments:


Financial Metric	Definition	2014 Adjustments
Net Revenue	Revenue from ordinary business operations.	Adjustments in each of the following three areas: acquisitions (and related expenses), based on international and domestic acquisitions in 2014, unplanned new programming or new business investments, adjustments for shortfalls due to Russia/Ukraine geopolitical issues and audience measurement issues in Sweden, unbudgeted new channel launches internationally, and non-renewal of streaming video contracts.

Adjusted Free Cash Flow	Cash provided by operations less acquisitions of property and equipment, adjusted for long-term incentive payments.	Adjustments on the same bases described above, as well as adjustments for the impairment related to a planned live program that was cancelled as a result of the 2014 Mount Everest avalanche, incremental capital investment in technology, costs associated with issuance of a special stock dividend, and legal fees.

Further Adjusted OIBDA	Revenues less costs of revenues and selling, general and administrative expenses excluding: (i) mark-to-market share-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) impairment charges and (vi) gains (losses) on business and asset dispositions.	Adjustments on the same bases described above for Adjusted Free Cash Flow.

The quantitative goals were weighted to reflect equal emphasis on the three measures. The Committee initially approved the targets in early 2014. For 2014, the quantitative targets, weighting and results were:


	Weighting			Threshold		Target		Actual Achievement
*Net Revenue ($ in millions)*		33.3	%	$	5,228	$	6,534	$	6,449
*Adjusted Free Cash Flow ($ in millions)*		33.3	%	$	1,072	$	1,340	$	1,389
*Further Adjusted OIBDA ($ in millions)*		33.3	%	$	2,119	$	2,649	$	2,616

The Committee set the individual qualitative goals for Messrs. Zaslav and Warren related to areas of strategic priority for the Company. The Committee sets new goals each year based on the changing priorities of the Company, and there is significant variation from year to year in annual goals and weighting. For 2014, Mr. Zaslav’s goals, with weighting, were:

•

manage growth across networks through continued content investment, including brand defining content, and strategic allocation of assets for long-term growth (20%);

•

drive revenue through affiliate sales growth and securing advertisers for cable, free-to-air, and digital platforms to outperform peers in domestic and international markets (20%);

•

drive international growth through potential new acquisitions, integrate completed acquisitions and build a strong content presence in local markets (20%);

•

further develop management succession plans for key operational roles (15%);

•

further develop strategies on content and distribution that protect and move our business forward with emerging technologies (15%);

•

continue to attract, retain, differentiate and reward exceptional talent in cable, new media, free-to-air and education, at all levels on a global basis (10%).

The weighting was based on the Committee’s determination of the relative priority of each of these goals and reflects areas of focus for the year. The Committee historically has set Mr. Zaslav’s goals with a significant degree of stretch and has evaluated his achievement against the goals by requiring a significant degree of over-performance to meet the goal.

Mr. Warren’s goals, with weighting, were to:

•

successfully integrate acquisitions (40%);

•

improve our capital structure (40%); and

•

enhance our internal audit function (20%).

The weighting was based on the Committee’s determination of the relative priority of each of these goals, and was consistent with the CEO’s recommendation.

In early 2015, the Committee reviewed the achievement of the goals, considering each executive’s assessment and, with respect to Mr. Zaslav, the input of the Board. The Committee determined that the Company achieved 98.7% of the Net Revenue metric, 103.7% of the Adjusted Free Cash Flow metric, and 98.8% of the Further Adjusted OIBDA metric, for overall performance of 95.8%.

With respect to the qualitative goals, the Committee, in consultation with the Board, determined that Mr. Zaslav had achieved his qualitative goals at the 94% level. This level of achievement reflected the “stretch” quality of the goals and the Committee’s desire to incentivize outstanding performance with goals that require significant over achievement.

The Committee determined that Mr. Warren had achieved his qualitative goals at the 95% level. For 2014, the Committee applied the same “stretch” approach to assessing Mr. Warren’s achievement of goals as applied to Mr. Zaslav, requiring a significant degree of over-performance to meet each goal at the 100% level. This was a change from 2013, when the Committee approved achievement of Mr. Warren’s goals at a level slightly over 100%. The change was based on the Committee’s desire to set robust goals with the expectation of exceptional performance. With respect to Mr. Warren, the Committee also considered the individual multiplier and allocation of a discretionary performance pool amount recommended by Mr. Zaslav, using the same methodology described with respect to Messrs. Perrette and Campbell’s bonus calculations, below.

Based on these assessments, the Committee certified achievement of the performance criteria and exercised its downward discretion from the maximum bonus to determine that bonus payments of $6,082,359 to Mr. Zaslav (92% of the overall target amount, based on achievement of 96% of the quantitative and 94% of the qualitative goals), and $1,346,425 to Mr. Warren (120% of the overall target amount, based on achievement of 96% of the quantitative and 95% of the qualitative goals, application of the individual multiplier, and allocation of the performance pool) were appropriate.

Annual Cash Bonus Payments for Messrs. Perrette and Campbell

The 2014 annual cash bonus for Messrs. Perrette and Campbell was based on the terms of the ICP. The ICP specifies various financial metrics depending on an employee’s role and business alignment. The financial metrics that applied to Mr. Perrette’s bonus were based 80% on the results of the Discovery Networks International line of business and 20% on overall Company results. The financial metrics for Mr. Campbell’s bonus were based on the Company’s overall results. The Committee did not adjust Mr. Campbell’s metrics when his responsibilities were expanded to include the Company’s Digital Media division in August 2014; the Committee determined to continue to apply the corporate metrics and to add a component related to Digital Media for the 2015 bonus year.

The aggregate amount payable to an individual under the ICP is calculated by:

•

first, determining the target bonus of each employee (the pre-established percentage of the employee’s base salary);

•

second, establishing the amount payable due to the achievement of Discovery as a whole and any applicable line of business performance measures, as applied to the target bonus amount;

•

third, multiplying that amount by an individual multiplier (ranging from 0 to 1.5) that reflects individual performance; and

•

fourth, adding to the total payout amount a specific dollar amount that is an allocation of the “performance pool.” The performance pool is a total amount of money that is available to allocate to high performers if the applicable financial metrics are achieved at a level higher than 100% of target.

The calculation of the amount of the ICP award for each of the participating NEOs was as follows:

(Base salary) X (Target bonus percentage) X (percentage based on achievement of applicable financial metrics) X (individual performance multiplier) + (allocation of any available performance pool funds based on individual performance)

2014 ICP, Paid in March 2015

In the first quarter of 2014, the Committee established threshold (20% payout), target (100% payout) and maximum (125% payout) amounts for each of the ICP financial metrics, a ceiling beyond which higher payments would only be made relating to such metric at the Company’s discretion and a scale that determined the amount payable for achievement of results in between the minimum and the over-achievement amounts.

The 2014 ICP performance targets for the Company as a whole are set forth in the following table:


*Discovery Communications*	Weighting			Threshold		Target		Maximum		Actual Achievement
*Net Revenue ($ in millions)*		45	%	$	5,881	$	6,534	$	7,188	$	6,449
*Adjusted Free Cash Flow ($ in millions)*		55	%	$	928	$	1,340	$	1,751	$	1,389

The 2014 ICP performance targets for Discovery Networks International (the metric used for 80% of Mr. Perrette’s 2014 bonus) are set forth in the following table:


*Discovery Networks International*	Weighting			Threshold		Target		Maximum		Actual Achievement
*Net Revenue ($ in millions)*		45	%	$	3,000	$	3,334	$	3,667	$	3,333
*Further Adjusted OIBDA ($ in millions)*		55	%	$	893	$	1,193	$	1,493	$	1,184

The Net Revenue and Adjusted Free Cash Flow measures for the Company-wide metrics are the same measures used with respect to the annual cash bonus for Messrs. Zaslav and Warren, and were subject to the same adjustments discussed above.

The determination as to whether the 2014 financial performance measures were met was made in the Annual Bonus Review during the first quarter of 2015, following review of the full-year 2014 financial statements. Both the international division and overall Company financial metrics were slightly below target, but each exceeded the Adjusted Free Cash Flow measure. Based on the Adjusted Free Cash Flow performance, a “performance pool” was available for allocation for the NEOs covered by the ICP and for Mr. Warren. In the cases of Mr. Perrette, Mr. Campbell, and Ms. Alpert Romm, Mr. Zaslav recommended an individual performance multiplier to be applied to the ICP calculation. Mr. Zaslav also recommended allocation of the performance pool to Messrs. Warren, Perrette, and Campbell, and Ms. Alpert Romm, based on their strong 2014 performance. The Committee reviewed this recommendation, each of these NEOs’ self-assessment of individual performance for 2014, and Mr. Zaslav’s review of each executive’s 2014 performance. The Committee certified achievement of the Section 162(m) performance criterion and exercised its downward discretion from the maximum bonus to determine a bonus payment of $1,808,500 for Mr. Perrette (164% of the target amount), $1,957,370 for Mr. Campbell (140% of the target amount), and $755,132 for Ms. Alpert Romm (129% of target amount).

Please refer to the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column of the Grants of Plan Based Awards Table for more information regarding the range of 2014 payouts available to these NEOs and the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the actual amounts paid to them with respect to their 2014 awards.

Long-Term Incentive Compensation

We believe that delivering a substantial portion of an executive’s total direct compensation in equity or equity-type awards helps to align our executives’ interests with those of our stockholders. In 2014, we made long-term equity or equity-type awards to each of the NEOs, which we believe serve to focus their attention on increasing the Company’s value over time.

Annual LTI Review. The Committee considers annual LTI awards for executive-level employees early each year in the Annual LTI Review. Each of the NEOs other than Mr. Zaslav is eligible for consideration in this annual review. (Mr. Zaslav’s LTI awards for each year are specified in his employment agreement, although the Committee determines financial metrics for each performance-based award at the time the award is made.) As an initial matter, the Committee reviews market data for similar roles in the peer group and determines a target amount for the LTI awards that is expressed as a dollar value. With respect to Messrs. Warren, Perrette, and Campbell and Ms. Alpert Romm, the CEO then reviews the target value approved by the Committee and recommends a dollar value for the award based on each NEO’s individual performance. The Committee approves the overall award value, which is then converted into a number of units.

For 2014, as in prior years, the awards to NEOs in the Annual LTI Review were in the form of stock options and PRSUs (50% of the target value in stock options with respect to the Company’s Series A common stock, 50% in PRSUs (as described under “—Stock Plan,” below)). The approved value is converted into a number of stock options based on the Black-Scholes value of the stock option and PRSUs using the closing price of Discovery Series A common stock on the Nasdaq Global Select Market. In 2014, the Committee continued the practice of using the Black-Scholes valuation of the stock options as of the last trading day of the month prior to the date of grant and the closing price of the PRSUs as of the trading day before the date of grant with respect to these calculations. This administrative practice allows more efficient processing of equity grants and, with respect to stock options, the ability of the Committee to review the actual number of units at the time the grant is made.

Contract LTI Awards. The Committee also considers LTI awards associated with new or extended employment contracts. The Committee assesses market data, the executive’s individual performance, and what the Committee determines is an appropriate amount to encourage the executive to enter into the agreement. The Committee believes it is appropriate to use this type of performance-based compensation to secure an extended agreement. The Committee followed this process in 2014 in determining awards associated with new employment agreements for each of the NEOs other than Mr. Hendricks.

Timing of Awards. The Committee’s intent is to make equity awards annually in late February or early March of each year, with new hire, promotion, and contract grants made throughout the year in the Committee’s regular meetings, generally on or about the 15th of each month. In 2014, this resulted in the practice of holding regularly-scheduled Committee meetings on or about the 15th day of each month and making awards at each meeting, with the exercise price based on the closing price per share of the Company’s Series A common stock on the Nasdaq Global Select Market on the date the awards were granted. On occasion for administrative convenience, we may make a grant with a future effective date, with the grant price set on the future effective date.

Our practice of setting “fixed” equity award grant dates is designed to avoid the possibility that the Company could grant stock awards prior to the release of material, non-public information which is likely to result in an increase in its stock price, or to delay the grant of stock awards until after the release of material, non-public information that is likely to result in a decrease in the Company’s stock price.

Stock Plan. The Committee makes LTI awards under the 2013 Stock Plan, an equity-based long-term incentive plan that was approved by our shareholders in 2013. The prior plan, the 2005 Stock Plan, was the primary vehicle for long-term incentive compensation for Company employees after we became a public company and until the 2013 Stock Plan was approved. The terms of the 2005 and 2013 Stock Plans are generally consistent and equity awards under the two plans have the same vesting schedules and similar terms.

2014 LTI Awards

The following chart summarizes the equity awards made in 2014 to each NEO. Because the awards for Mr. Zaslav were specified in his employment agreement as a number of units rather than an overall target value, we have included the fair market value as of the date of grant for that award in the column that specifies the 2014 target amount for the other NEOs.


NEO	2014 Target Amount or FMV	2014 LTI Awards	Design

David M. Zaslav, CEO	$145 million (fair market value at time of grant)	224,845 Sign-On PRSUs 910,000 PRSUs 3,702,660 SARs	All of Mr. Zaslav’s LTI awards were made in conjunction with entering into a new six-year employment agreement. The awards included a large upfront initial award of cash- and stock-settled SARs (“Special SARs”), a smaller one-time sign-on PRSU grant with a one-year performance period (the “Sign-On PRSU”), and a large upfront PRSU grant with a multi-year performance period.

Andrew Warren, CFO	$2.5 million in Annual LTI Review $2 million in contract grant	57,455 stock options 15,220 PRSUs in Annual LTI Review 55,142 PRSUs in conjunction with new employment agreement	Mr. Warren received awards of stock options and PRSUs in the 2014 Annual LTI Review. The Committee approved a separate award of PRSUs later in the year, in conjunction with Mr. Warren’s entering into a new employment agreement.

Bruce L. Campbell, Chief Development and Digital Officer and General Counsel	$2.3 million in Annual LTI Review $2 million in contract grant	52,858 stock options 14,003 PRSUs in Annual LTI Review 50,429 PRSUs in conjunction with new employment agreement	Mr. Campbell received awards of stock options and PRSUs in the 2014 Annual LTI Review. The Committee approved a separate award of PRSUs later in the year, in conjunction with Mr. Campbell’s entering into a new employment agreement.

Jean-Briac Perrette, President, Discovery Networks International	$500,000 in the Annual LTI Review $1.15 million in contract grant	11,491 stock options 3,044 PRSUs in Annual LTI Review 14,003 PRSUs in conjunction with new employment agreement	Mr. Perrette received awards of stock options and PRSUs in the 2014 Annual LTI Review and a separate award of PRSUs in conjunction with Mr. Perrette’s entering into a new employment agreement.

Stock Options. The stock option awards made in the Annual LTI Review have a four-year vesting schedule, become exercisable (while the holder remains employed) in equal tranches of 25% on the first four anniversaries of the date of grant, expire on the seventh anniversary of the date of grant, assuming continued employment, and are otherwise consistent with the terms of the applicable plan and award agreement.

PRSUs. The PRSU awards made in the Annual LTI Review also have a four-year vesting schedule, but vest in two equal tranches, the first 50% on the third anniversary of the date of grant and the remaining 50% on the fourth anniversary, assuming continued employment, and are otherwise consistent with the terms of the applicable plan and award agreement. Vesting of the PRSU awards is contingent on meeting Company financial performance metrics for Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow, for a three-year performance period. The Committee adopted this design after reviewing market trends and best practices and concluding that a balance of stock options and PRSUs would:

•

provide appropriate incentives;

•

link the interests of our senior executives to our stockholders, focusing our senior executives on longer-term Company financial goals;

•

serve as a retention tool; and

•

allow for tax deductibility of the equity awards as performance-based.

The PRSU awards are intended to qualify as performance-based compensation under Section 162(m) and follow a similar structure to that of the annual bonus design. At the beginning of each year, the Committee sets a Company performance criterion and a maximum number of PRSUs for each NEO and certain other senior executives as the initial step in structuring the awards as performance-based under Section 162(m). If the performance criterion for the three-year performance period is met, the actual number of PRSUs distributed to each NEO is subject to the Committee’s downward discretion. The maximum amount of the PRSU award is the target amount. There is no upside for over-performance, which the Committee determined was appropriate to discourage excessive risk-taking by our senior executives.

Once the Committee determines the performance criterion is met, the Committee exercises its downward discretion based on Company performance against the Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow targets. As part of the Committee’s downward discretion, the awards also provided that the Committee may determine, for awards to NEOs other than Mr. Zaslav, and based on the Company’s performance relative to peers, to (i) reduce the number of vesting shares by up to 25% or (ii) increase the number of vesting shares by up to 25% (but not beyond 100% of the target amount for each PRSU award).

The performance metrics to be used by the Committee in its exercise of downward discretion are based on Net Revenue, Adjusted OIBDA, and Adjusted Free Cash Flow. Over-performance on the Adjusted OIBDA or Adjusted Free Cash Flow measures may offset under-performance by any of the other two metrics, but over-performance on the Net Revenue metric cannot offset under-performance on the other two metrics. The metrics and weighting for the awards of PRSUs made in 2014 are as follows:


				Performance Against Target *($ in millions)*
	Weight			120%		110%		100%		95%		90%		85%		81%		80%
Revenue		20	%		23,819		21,834		19,849		18,857		17,864		16,872		15,979		15,879
Adjusted OIBDA		40	%		9,704		8,896		8,087		7,683		7,278		6,874		6,510		6,470
Adjusted Free Cash Flow		40	%		4,950		4,538		4,125		3,919		3,713		3,506		3,321		3,300

Maximum Vesting					100%		100%		100%		95%		90%		75%		50%		0%

RSUs. The Committee made an award of RSUs to Ms. Alpert Romm in connection with entering into a new employment agreement. The RSU award has a four-year vesting schedule, vests in three substantially equal tranches on the second, third, and fourth anniversaries of date of grant, assuming continued employment, and is otherwise consistent with the terms of the applicable plan and award agreement.

Contract Awards—Warren, Perrette, Campbell, and Alpert Romm

The Committee made special awards of PRSUs to Messrs. Warren, Perrette, and Campbell, and RSUs to Ms. Alpert Romm, in conjunction with each entering into a new employment agreement. The Committee determined to make an award of RSUs rather than PRSUs to Ms. Alpert Romm because she was not, at the time of the award, an NEO, and the Committee applied the same general approach that it uses in contract renewal awards for non-NEOs, which are made in the form of RSUs. The RSU award to Ms. Alpert Romm had the same terms and conditions as those used in general employee awards, including the vesting schedule summarized above.

The PRSU award to Mr. Perrette was made at the same time as the PRSU awards under the Annual LTI Review, and had the same terms, conditions and metrics as those awards, and the same vesting schedule. The awards to Messrs. Warren and Campbell were made later in the year and were based on achievement of performance metrics during the period from July 1, 2014 to December 31, 2016, as set forth below. Mr. Warren’s award vests 50% on September 1, 2017, and 50% on September 1, 2018 (both subject to achievement of the performance metrics and the other terms and conditions of the award). Mr. Campbell’s award vests 50% on July 31, 2017, and 50% on July 31, 2018 (again, both subject to achievement of the performance metrics and the other terms and conditions of the award). The shorter performance period and special vesting dates were designed to align with the effective dates of the new contracts, and to set performance periods that qualified the awards as deductible under Section 162(m):


				Performance Against Target *($ in millions)*
	Weight			120%		110%		100%		95%		90%		85%		81%		80%
Revenue		20	%		19,612		17,978		16,343		15,526		14,709		13,892		13,156		13,075
Adjusted OIBDA		40	%		8,017		7,349		6,681		6,347		6,013		5,679		5,378		5,345
Adjusted Free Cash Flow		40	%		4,079		3,739		3,399		3,229		3,059		2,889		2,736		2,719

Maximum Vesting					100%		100%		100%		95%		90%		75%		50%		0%

Zaslav PRSUs and Special SARs.

The Committee made special awards of PRSUs and Special SARs to Mr. Zaslav in conjunction with entering into his new employment agreement. The agreement provided for the following three awards, each of which was made early in 2014:

•

a “sign-on” award of 224,845 PRSUs, which vests after one year, assuming achievement of one-year performance metrics;

•

a large upfront grant of 910,000 PRSUs, which vests after three years, assuming achievement of three-year performance metrics; and

•

a large upfront grant of 3,702,660 Special SARs.

One-half of the PRSUs will be distributed in the year after the end of the performance period, and the remaining one-half will be distributed in two equal parts in the second and third years after the end of the performance period, unless Mr. Zaslav has validly elected to further defer distribution of the shares.

The Special SARs mature and pay out in four equal tranches, 25% each year, as of the first four anniversaries of the date of grant. The Special SARs are 25% stock-settled and 75% cash-settled. The amount of the payout for the Special SARs, if any, is based on the appreciation in our stock price from the grant date to the applicable anniversary. Both the base price and the exercise price are calculated based on a 20-day average closing price, for the ten trading days preceding and including the date for which valuation is occurring and the ten trading days following the date for which valuation is occurring. These Special SARs are designed to auto-exercise; Mr. Zaslav does not choose the timing of exercise and each tranche exercises automatically on the relevant anniversary grant date. All of the units are exercised by the fourth anniversary of the date of grant.

The design of Mr. Zaslav’s compensation in the new employment agreement emphasizes shareholder alignment through requiring substantial stock holdings. Under the employment agreement, Mr. Zaslav is required to hold at least 60% of the net shares delivered to him under the PRSU awards and the stock-settled portion of the Special SAR award until the end of the term of the agreement. In addition, Mr. Zaslav is required to purchase shares in the Company with 35% of the net cash proceeds of the cash-settled Special SAR award, and similarly to hold the shares purchased until the end of the term of the agreement.

The Committee determined that these awards were appropriate to secure Mr. Zaslav’s services in a long-term agreement, to structure an agreement under which the vast majority of compensation is performance-based compensation, primarily in the form of LTI awards, tie his compensation to increases in shareholder value, and require Mr. Zaslav to hold the majority of the equity distributed to him to the end of the term of the agreement.

Payouts under PRSU Awards for Measurement Period 2012-2014

In February 2015, the Committee reviewed achievement of the performance thresholds for the measurement period that ran from January 1, 2012 through December 31, 2014, with respect to the awards made in 2012 to Messrs. Zaslav, Perrette and Campbell, and Ms. Alpert Romm. For the 2012 PRSU awards, the performance threshold was set at $5.3 billion in Adjusted OIBDA over the three- year performance period. The Committee determined that the Company had met or exceeded the performance threshold for these awards.

As an initial matter, as discussed above, the Committee reviewed the Company’s performance relative to the peer group during the three-year performance and determined that the Company’s performance had been strong relative to its peers. Accordingly, the Committee decided not to exercise discretion to reduce the number of shares for these awards.

The Committee then reviewed the performance against the three financial metrics for the awards to Messrs. Zaslav, Perrette, and Campbell, and Ms. Alpert Romm and concluded that the Company had met or exceeded the Net Revenue and Adjusted OIBDA metrics and achieved 99.6% of the Adjusted Free Cash Flow during the performance period. Under the design of these awards, the overperformance on Adjusted OIBDA offset the underperformance on Free Cash Flow. In accordance with Mr. Zaslav’s previous employment agreement, 100% of the 2012 award vested in 2015 and the Company distributed 73% of the shares (27% will be distributed in future years, in accordance with the terms of the agreement). With respect to the awards to Mr. Perrette, Mr. Campbell, and Ms. Alpert Romm, 50% of the shares vested and were distributed, and 50% will be distributed in 2016 based on each executive’s continued employment and the other terms and conditions of the award. The performance against each of the three metrics was as follows:


	Targets											Performance											Payout Schedule
	Target Weighting			2012		2013		2014		Cumulative		2012		2013		2014		Cumulative		Perfor- mance against Target			CEO			Execu- tives
Revenue ($ in millions)		20	%		4,538		4,741		4,916		14,195		4,487		5,536		6,266		16,289		114.8	%		100	%		100	%
Adjusted OIBDA ($ in millions)		40	%		2,091		2,215		2,312		6,618		2,096		2,425		2,490		7,011		105.9	%		100	%		100	%
Adjusted Free Cash Flow ($ in millions)		40	%		1,084		1,222		1,287		3,593		1,066		1,233		1,279		3,578		99.6	%		100	%		100	%

Retirement Benefits

The NEOs generally participate in the same benefit plans and on the same terms as are offered to other U.S.-based full-time employees. We offer a 401(k) defined contribution plan as well as a non-qualified Supplemental Deferred Compensation Plan (the “SRP”) that is available to U.S.-based senior employees, including all of the NEOs. The NEOs participate in these plans on the same terms and conditions as other eligible employees.

To encourage participation in the 401(k) plan, the Company makes a matching contribution of (i) 100% of the employee’s first 3% of salary contributions to the defined contribution plans and (ii) 50% of the employee’s next 3% of salary contributions, up to a maximum amount of 4.5% of eligible base salary in the form of Company matching contributions, subject to certain limits under applicable tax regulations. We also make a supplemental contribution into the SRP for those employees whose base salary exceeds the IRS compensation limit under the 401(k) regulations. This Company contribution uses the same formula applied for the 401(k) match (4.5%) and that is applied to the base salary in excess of the IRS limit (for 2014, this was $260,000), up to a maximum of $1 million in base salary. In addition to base salary deferrals, participants in the SRP are also permitted to defer portions of payouts under the Discovery Appreciation Plan (“DAP”) and ICP awards into their SRP accounts. These amounts are not included in the calculation of the supplemental Company contribution into the SRP. The 401(k) and SRP accounts offer the same investment options, with the amounts actually invested for the 401(k) plan and with earnings measured hypothetically for the SRP.

We believe the SRP is necessary to allow employees who would otherwise be limited by IRS restrictions on the amount of compensation that may be considered in participation in the Company’s 401(k) plan to:

•

save a proportionate amount for retirement;

•

provide the same Company contribution amount to these employees that they would have received absent the Internal Revenue Code compensation limits in the 401(k) plan; and

•

support the goals of providing competitive compensation packages to our employees.

U.S.-based employees on international assignment, including Mr. Perrette, are not eligible to make new elections to participate in the SRP, or to receive Company contributions, after the commencement of the international assignment.

In 2014, we made a special Company contribution to Mr. Zaslav’s SRP account in the amount of $1.5 million. This was the second of two contributions (the first was made in January 2013) provided for in the 2011 amendment to Mr. Zaslav’s employment agreement and in Mr. Zaslav’s new employment agreement entered into in January 2014. These special contributions were made to compensate Mr. Zaslav for the loss of certain deferral opportunities for DAP awards that were eliminated as part of the 2011 amendment. For details regarding Mr. Zaslav’s employment agreement, please see “Executive Compensation Arrangements—Zaslav Employment Agreement.”

For more information about the SRP, please refer to the Non-Qualified Deferred Compensation Table below.

Health, Welfare and Other Personal Benefits

The NEOs are eligible to participate in the health, welfare and fringe benefits generally made available by the Company to its U.S.-based regular full-time employees, such as basic and supplemental life insurance, short and long-term disability, commuter reimbursement, fitness reimbursement and access to legal resources. Employees at the level of vice president and above, including the NEOs, are also eligible to participate in executive-level long-term disability and long-term care plans.

In addition, we provide the following perquisites and other personal benefits to our NEOs:

Relocation Expenses and International Assignment Benefits; Related Gross-Up. Consistent with our objective to attract and retain a high-performing executive management team for senior roles in our global business, we place top-notch executives on international assignments to fill key roles in the places where we do business. We provide relocation and international assignment benefits consistent with our international long-term assignment policies, including reimbursing relocation costs, providing education and other allowances, and, for some benefits, paying the executive an amount equal to the tax resulting from the reimbursement or allowance (a “gross-up”). Mr. Perrette agreed to become the President of Discovery Networks International in early 2014 and relocated to our London office in May 2014. He is employed pursuant to a U.S. fixed term employment agreement and paid via U.S. payroll, with certain assignment and other benefits and allowances provided locally. We provided Mr. Perrette’s assignment-related benefits and allowances in accordance with and subject to the limitations of our international long-term assignment policy. The relocation and assignment expenses, and related gross-ups, incurred with respect to 2014 are reflected in the Summary Compensation Table.

Aircraft Usage; Related Gross-Up. We lease a dedicated corporate aircraft and also have an agreement with NetJets Inc. pursuant to which we lease the right to a specified amount of travel each calendar year on NetJets’ aircraft. We allow Mr. Zaslav to use a portion of our allotted travel time on our corporate aircraft, or NetJets aircraft, for personal use (and provided the same benefit to Mr. Hendricks until his retirement in May 2014).

Personal use of the aircraft by Mr. Hendricks in 2014 was limited to $157,000 of aggregate incremental cost per calendar year, inclusive of all incremental costs associated with any personal guests that accompanied him on flights. Excluded from this limitation on personal flight time was personal use of the aircraft for which we requested that family members or guests accompany Mr. Hendricks on a business trip.

Mr. Zaslav is permitted to use up to 200 hours of flight time for personal use. The first 100 hours are provided to him by the Company; with respect to the second 100 hours, Mr. Zaslav is required to reimburse the Company at a rate of two times fuel cost, under a time sharing agreement entered into simultaneously with Mr. Zaslav’s employment agreement. For details regarding Mr. Zaslav’s employment agreement, please see “Executive Compensation Arrangements—Zaslav Employment Agreement.”

Family members may accompany Mr. Zaslav (and, until his retirement in May 2014, Mr. Hendricks) on authorized business flights on corporate aircraft or NetJets flights at no aggregate incremental cost to the Company. For 2014, we provided a gross-up to Messrs. Zaslav and Hendricks to cover taxes for imputed income

arising when a family member accompanied the executive on business travel at the request of the Company (e.g., when Mr. Zaslav’s spouse accompanied him to a business event in which attendance by a spouse is customary and serves our business interests).

Mobile Access. We reimburse Mr. Zaslav for limited home office expenses, including Internet access. We reimbursed Mr. Hendricks for certain home office expenses, including telephone service and Internet access.

Car Allowance. We provide Mr. Zaslav with a monthly car allowance as provided in his employment agreement.

Split Dollar Life Insurance. The Company historically had maintained a split dollar life insurance policy for Mr. Hendricks. The premium cost for this policy is reflected in the “All Other Compensation” column of the Summary Compensation table. Upon Mr. Hendricks’ retirement, under the terms of the arrangement, Mr. Hendricks’ trust was able to purchase the policies and did so.

For more information regarding the perquisites provided in 2014 to each NEO, please refer to the “All Other Compensation” column of the Summary Compensation Table.

Executive Stock Ownership Policy

In 2012, the Committee adopted an executive stock ownership policy that applies to the NEOs and certain other senior executives. The policy requires each covered executive to hold a specified amount of our stock, calculated as a multiple of the executive’s base salary, as described in the table below.


Position	Requirement (multiple of base salary)		Timeframe to reach (from later of effective date or becoming covered by policy)
CEO and Chairman		5X		5 years
Covered executive with LTI target grant value > 1X of base salary		2X		5 years
Covered executive with LTI target grant value <1X of base salary		1X		6 years

The Committee determined that any shares of our stock beneficially owned by the covered executive, as well as unvested awards of PRSUs and RSUs, would be counted for purposes of meeting the stock holding target. Once an executive meets the target, the executive is expected to maintain holdings at the target for as long as he or she remains in a role that is identified as a covered executive under the policy.

The Committee may consider failure to meet the requirements of the policy in making compensation decisions for a covered executive and may take any other action appropriate to support the intent of the policy, including requiring an executive to retain a percentage of shares pursuant to stock option exercises or vesting events in future years.

In mid-2014, the Committee reviewed the NEOs’ progress toward meeting the executive stock ownership policy as adopted in 2012. Each of the NEOs other than Mr. Perrette already met the stock holding requirement. The Committee determined that Mr. Perrette had made significant progress in meeting the requirement and was on track to meet it within the five-year time period specified by the policy.

Clawback Policy

All employees are subject to a “clawback” policy, adopted by the Committee in 2010. Under this policy, in addition to any other remedies available to the Company (but subject to applicable law), if the Board, or the Committee, determines that any employee has engaged in fraud or misconduct that resulted in a financial

restatement, the Company may recover, in whole or in part, any bonus or other incentive-based or equity-based compensation, received by the employee from the Company in the 12 months after the filing of the financial statement that was found to be non-compliant. The Committee determined that it was appropriate to adopt the policy to provide a further deterrent to fraudulent activity.

Say on Pay

At the Company’s Annual Meeting of Stockholders held on May 16, 2014, we held an advisory vote on executive compensation. A majority of stockholders voted in favor of the Company’s executive compensation. The Committee considered the results of the vote and determined not to make any changes to our executive compensation programs.

Hedging

Hedging of Company stock is permitted with the prior approval of our General Counsel. However, our Insider Trading policy prohibits short sales and transactions in puts, calls, or other derivative securities on an exchange or in any other organized market. In 2014, none of our NEOs had engaged in any hedging transactions.

EXECUTIVE COMPENSATION

The following tables set forth compensation information for our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers (computed in accordance with the SEC’s rules) who were serving as executive officers as of December 31, 2014. Mr. Hendricks, our former Chairman, would have been one of our three most highly compensated executive officers, but for his retirement in May 2014, and is therefore included as a NEO.

Summary Compensation Table


Name and Principal Position	Year			Salary ($)		Stock Awards ($)(1)		Option Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)			Total ($)
David M. Zaslav		2014			3,000,000		94,555,285		50,504,282		6,082,359		1,935,986	⁽⁵⁾		156,077,912
President and Chief Executive Officer		2013			3,000,000		—		22,538,835		5,799,000		2,011,963			33,349,798
President and Chief Executive Officer		2012			3,000,000		25,326,916		15,843,215		5,329,750		432,986			49,932,867

Andrew Warren		2014			1,011,876		3,303,636		1,250,910		1,346,425		50,474			6,963,321
Chief Financial Officer		2013			925,442		816,866		851,312		1,317,903		483,003			4,394,526
Chief Financial Officer		2012	*		657,692		1,011,439		1,019,729		903,691		186,484			3,779,035

Bruce L. Campbell		2014			1,241,511		3,151,111		1,154,947		1,957,370		112,241	⁽⁶⁾		7,617,180
Chief Development and Digital Officer, and General Counsel		2013			1,066,766		1,174,193		1,223,755		1,563,131		50,228			5,078,073
		2012			1,028,269		499,619		528,562		1,549,960		58,533			3,664,943


Jean-Briac Perrette		2014			992,096		1,420,356		251,078		1,808,500		432,839	⁽⁷⁾		4,904,869
President, Discovery Networks International

Adria Alpert Romm		2014			730,529		355,110		251,078		755,132		40,409			2,132,258
Chief Global Human Resources and Diversity Officer

John S. Hendricks		2014	*		423,077		2,942,029		2,912,452		—		177,906	⁽⁸⁾		6,455,464
Founder and Former Chairman		2013			1,000,000		2,935,371		3,059,351		600,000		243,227			7,837,949
Founder and Former Chairman		2012			1,000,000		—		—		569,247		263,332			1,832,579

*	Partial year.

(1)

The dollar amounts in this column represent the grant date fair value, computed in accordance with FASB ASC Topic 718, of PRSU awards for each of the applicable fiscal years. For each of the PRSU awards, the grant date fair value is calculated using the closing price of our Series A common stock on the grant date as if these awards were fully vested and issued on the grant date. There can be no assurance that these grant date fair values will ever be realized by any NEO. See the “Grants of Plan-Based Awards in 2014” table below for information on PRSU awards made in 2014.

(2)

The dollar amounts in this column reflect the grant date fair value computed in accordance with FASB ASC Topic 718 with respect to the DAP awards, cash- and stock-settled stock appreciation rights and option awards granted to our NEOs for each of the applicable fiscal years. See Note 14 to our Annual Report on Form 10-K for information regarding the assumptions used in determining the value of the option awards. For the DAP awards and cash- and stock-settled stock appreciation rights, we also calculate the grant date fair value using the Black-Scholes model, using the assumptions described in Note 14 to our Annual Report on Form 10-K. These amounts do not reflect actual payments made to our NEOs. There can be no assurance that the full grant date fair value will ever be realized by any NEO.

(3)

These amounts reflect the cash performance awards earned by the applicable NEO under Discovery’s 2013 Incentive Plan for 2014 and 2013 and the 2005 Incentive Plan for 2012, which are more fully described under “Compensation Discussion and Analysis—Compensation Decisions-2014 ICP, Paid Out in March 2015” above. The 2014 award amounts were determined and paid out during the first quarter of 2015, the 2013 award amounts were determined and paid out during the first quarter of 2014 and the 2012 awards were determined and paid out during the first quarter of 2013.

(4)

We offer executives basic life insurance as well as executive level disability and long-term care coverage. We also offer matching contributions to an executive’s 401(k) plan and contributions to the SRP, subject to certain limitations. Below are the payments made on behalf of the NEOs to the foregoing plans in 2014:


	Basic Life ($)		Disability/Long Term Care ($)		Matching Contributions
	Basic Life ($)		Disability/Long Term Care ($)		401(k) ($)		SRP ($)
Mr. Zaslav		780		5,920		11,700		33,300
Mr. Warren		917		4,557		11,700		33,300
Mr. Campbell		780		4,448		11,700		33,300
Mr. Perrette		780		4,100		11,700		5,908
Ms. Alpert Romm		585		7,039		11,700		21,085
Mr. Hendricks		330		0		11,700		5,608

For more information regarding these benefits, please see “Compensation Discussion and Analysis-Retirement Benefits” and “—Health, Welfare and Other Personal Benefits” above.

(5)

This amount includes $1.5 million for the special Company contribution made to Mr. Zaslav’s SRP account. This amount also includes $296,930 for personal use of aircraft (including family travel for which Mr. Zaslav is not provided a tax gross-up) and $50,324 for tax gross-ups for business associate/spouse travel at the request of the Company that is not considered business use. See “Compensation Discussion and Analysis—Health, Welfare and Other Personal Benefits-Aircraft Usage; Related Gross-Up” above for more information regarding our policies for Mr. Zaslav’s use of our allotted travel on our corporate aircraft. The table also includes $16,800 for a car allowance, $3,614 in respect of home office expenses and $16,619 for personal security services.

(6)	This amount includes $30,033 for reimbursement of personal travel expenses for Mr. Campbell’s family to return early from a family vacation due to urgent business needs and $31,980 for related tax gross-ups for the travel expenses.

(7)

This amount includes $141,014 in relocation expenses, $34,056 in cost of living allowance, $176,909 for housing, $20,344 for school fees for Mr. Perrette’s children, $33,518 for home leave benefits, $2,510 in immigration expenses, and $2,000 for tax services, pursuant to the Company’s relocation policy. See “Executive Compensation Arrangements—Perrette Employment Agreement” below for more information on the relocation benefits provided to Mr. Perrette.

(8)

This amount includes $105,470 for personal use of aircraft for which Mr. Hendricks is not provided a tax gross-up. See “Compensation Discussion and Analysis—Health, Welfare and Other Personal Benefits-Aircraft Usage; Related Gross-Up” above for more information regarding our policies regarding Mr. Hendricks’ use of our allotted travel on our corporate aircraft. Also included in the table is $982 in respect of home office expenses and $50,577 for a split-dollar life insurance policy consisting of premium payments and additional imputed income associated with the termination of the agreement on June 30, 2014. See “Compensation Discussion and Analysis—Health, Welfare and Other Personal Benefits-Split Dollar Life Insurance” above for more information on Mr. Hendricks’ life insurance policy. This amount also includes $1,591 for a retirement gift from the Company and $1,649 in related tax gross-ups.

Grants of Plan-Based Awards in 2014⁽¹⁾


Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards					Estimated Future Payouts Under Equity Incentive Plan Awards							All Other Option Awards: Number of Securities Underlying Options (#)			Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards($)
Name	Grant Date	Threshold ($)	Target ($)		Maximum ($)		Threshold (#)			Target (#)			Maximum (#)				Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards($)
David M. Zaslav	⁽²⁾			6,600,000		10,000,000
Series A Common Stock	01/02/2014														3,702,660	⁽³⁾		43.92		25,622,407
	02/28/2014							728,000	⁽⁴⁾		910,000	⁽⁴⁾						—		38,483,900
	02/28/2014							179,876	⁽⁵⁾		224,845	⁽⁵⁾						—		9,508,695
Series C Common Stock	01/02/2014														3,702,660	⁽³⁾		42.60		24,881,875
	02/28/2014							728,000	⁽⁴⁾		910,000	⁽⁴⁾						—		37,337,300
	02/28/2014							179,876	⁽⁵⁾		224,845	⁽⁵⁾						—		9,225,390
Andrew Warren	⁽²⁾			1,119,344		2,937,500
Series A Common Stock	02/28/2014														45,964	⁽⁶⁾		42.30		509,741
	03/27/2014														11,491	⁽⁶⁾		42.30		125,137
	02/28/2014							6,088	⁽⁴⁾		12,176	⁽⁴⁾						—		514,923
	03/27/2014							1,522	⁽⁴⁾		3,044	⁽⁴⁾						—		126,326
	10/03/2014							27,571	⁽⁴⁾		55,142	⁽⁴⁾						—		2,040,254
Series C Common Stock	02/28/2014														45,964	⁽⁶⁾		41.02		494,573
	03/27/2014														11,491	⁽⁶⁾		41.02		121,345
	02/28/2014							6,088	⁽⁴⁾		12,176	⁽⁴⁾						—		499,581
	03/27/2014							1,522	⁽⁴⁾		3,044	⁽⁴⁾						—		122,551
Bruce L. Campbell	⁽²⁾			1,401,456		3,750,000
Series A Common Stock	02/28/2014														52,858	⁽⁶⁾		42.30		586,195
	02/28/2014							7,002	⁽⁴⁾		14,003	⁽⁴⁾						—		592,187
	09/15/2014							25,215	⁽⁴⁾		50,429	⁽⁴⁾						—		1,984,381
Series C Common Stock	02/28/2014														52,858	⁽⁶⁾		41.02		568,752
	02/28/2014							7,002	⁽⁴⁾		14,003	⁽⁴⁾						—		574,543
Jean-Briac Perrette	⁽²⁾			1,100,000		2,500,000
Series A Common Stock	02/28/2014														11,491	⁽⁶⁾		42.30		127,435
	02/28/2014							7,002	⁽⁴⁾		14,003	⁽⁴⁾						—		592,187
	02/28/2014							1,522	⁽⁴⁾		3,044	⁽⁴⁾						—		128,731
Series C Common Stock	02/28/2014														11,491	⁽⁶⁾		41.02		123,643
	02/28/2014							7,002	⁽⁴⁾		14,003	⁽⁴⁾						—		574,543
	02/28/2014							1,522	⁽⁴⁾		3,044	⁽⁴⁾						—		124,895
Adria Alpert Romm	⁽²⁾			586,907		1,875,000
Series A Common Stock	02/28/2014														11,491	⁽⁶⁾		42.30		127,435
	02/28/2014							1,522	⁽⁴⁾		3,044	⁽⁴⁾						—		128,731
	02/28/2014							1,218	⁽⁷⁾		1,218	⁽⁷⁾						—		51,509
Series C Common Stock	02/28/2014														11,491	⁽⁶⁾		41.02		123,643
	02/28/2014							1,522	⁽⁴⁾		3,044	⁽⁴⁾						—		124,895
	02/28/2014							1,218	⁽⁷⁾		1,218	⁽⁷⁾						—		49,975
John S. Hendricks	⁽²⁾			600,000		2,500,000
Series A Common Stock	02/28/2014														133,293	⁽⁸⁾		42.30		1,478,219
	02/28/2014							17,655	⁽⁴⁾		35,310	⁽⁴⁾⁽⁹⁾						—		2,942,029
Series C Common Stock	02/28/2014														133,293	⁽⁸⁾		41.02		1,434,233

(1)	As a result of the 2014 Share Dividend, the awards set forth in this table, other than the PRSU grant made to Mr. Hendricks, which had been forfeited due to his retirement prior to the 2014 Share Dividend, including the exercise prices and grant prices, have been adjusted to reflect the dividend.

(2)

These amounts reflect the possible payouts with respect to awards of annual cash bonus under the 2013 Stock Plan (as defined herein) for performance in 2014. Each NEO is assigned a target bonus amount and is eligible to receive an annual cash bonus award of up to 300% of base salary for Mr. Zaslav and 250% of base salary for all other NEOs, subject in each case to the Committee’s authority to exercise “downward discretion” and the Stock Plan’s $10 million limit. The amounts of annual cash bonus awards actually paid for performance in 2014 are disclosed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. For more information regarding the terms of these annual cash bonus awards and the factors used by the Committee in exercising its downward discretion, please see “Compensation Discussion and Analysis—2014 Compensation Decisions—Annual Cash Bonus Awards.”

(3)	These amounts reflect the number of Special SARs granted. The awards vest 25% on each anniversary of the grant date and are payable in 75% cash and 25% stock in connection with the vesting.

(4)

These amounts represent PRSU awards. The PRSUs vest if Discovery achieves certain three-year performance targets. Of the grant, 50% will be distributed on the third anniversary of the grant date and 25% will be distributed on each of the fourth and fifth anniversaries of the grant date, assuming the achievement of the three-year performance targets. For more information regarding these awards, including the performance targets, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

(5)

These amounts represent Sign-On PRSU awards. The Sign-On PRSUs vest if Mr. Zaslav meets the performance metrics for 2014. Of the grant, 50% will be distributed on the first anniversary of the grant date and 25% will be distributed on the second and third anniversaries of the grant date, assuming the achievement of the one-year performance targets. For more information regarding these awards, including the performance targets, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

(6)	These amounts represent stock options that will vest 25% per year for four years beginning on the anniversary of the grant date and expire on February 28, 2021.

(7)	These amounts represent restricted stock units that will vest 33% on the second and third anniversaries and 34% on the fourth anniversary of the grant date.

(8)	These amounts represent stock options that are fully vested and expire on May 16, 2015.

(9)	This PRSU award was forfeited on Mr. Hendricks’ retirement.

Outstanding Equity Awards at Fiscal Year-End⁽¹⁾


	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Grant Date Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
David M. Zaslav
Series A Common Stock		—		581,711		20.90		⁽²⁾			529,077	⁽⁵⁾⁽⁶⁾		12,856,642
		—		859,177		20.97		⁽³⁾			910,000	⁽⁵⁾⁽⁷⁾		38,488,934
		—		1,386,721		33.07		⁽³⁾			224,845	⁽⁸⁾⁽⁹⁾		9,509,939
		—		3,702,660		43.92		⁽⁴⁾
Series C Common Stock		—		581,711		20.27		⁽²⁾			529,077	⁽⁵⁾⁽⁶⁾		12,470,275
		—		859,177		20.33		⁽³⁾			910,000	⁽⁵⁾⁽⁷⁾		37,332,267
		—		1,386,721		32.08		⁽³⁾			224,845	⁽⁸⁾⁽⁹⁾		9,224,147
		—		3,702,660		42.60		⁽⁴⁾
Andrew Warren
Series A Common Stock		28,887		28,888		26.04		04/12/2019	⁽¹⁰⁾		13,213	⁽¹³⁾		344,017
		8,627		25,881		38.01		03/01/2020	⁽¹¹⁾		10,909	^(14)(15)		414,664
		—		45,964		42.30		02/28/2021	⁽¹²⁾		12,176	^(7)(15)		514,990
		—		11,491		42.30		02/28/2021	⁽¹²⁾		3,044	^(15)(16)		128,748
											55,142	^(15)(17)		2,040,254
Series C Common Stock		28,887		28,888		25.25		04/12/2019	⁽¹⁰⁾		13,213	⁽¹³⁾		333,678
		8,627		25,881		36.87		03/01/2020	⁽¹¹⁾		10,909	^(14)(15)		402,202
		—		45,964		41.02		02/28/2021	⁽¹²⁾		12,176	^(7)(15)		499,514
		—		11,491		41.02		02/28/2021	⁽¹²⁾		3,044	^(15)(16)		124,878
Bruce L. Campbell
Series A Common Stock		—		7,988		19.68		03/16/2018	⁽¹⁸⁾		6,293	^(15)(20)		123,819
		15,731		15,731		24.30		03/15/2019	⁽¹⁹⁾		10,437	^(6)(15)		253,620
		12,401		37,204		38.01		03/01/2020	⁽¹¹⁾		15,681	^(14)(15)		596,053
		—		52,858		42.30		02/28/2021	⁽¹²⁾		14,003	^(7)(15)		592,264
											50,429	^(15)(21)		1,984,381
Series C Common Stock		—		7,988		19.08		03/16/2018	⁽¹⁸⁾		6,293	^(15)(20)		120,098
		15,731		15,731		23.57		03/15/2019	⁽¹⁹⁾		10,437	^(6)(15)		245,999
		12,401		37,204		36.87		03/01/2020	⁽¹¹⁾		15,681	^(14)(15)		578,140
		—		52,858		41.02		02/28/2021	⁽¹²⁾		14,003	^(7)(15)		574,466
Jean-Briac Perrette
Series A Common Stock		19,482		6,494		21.33		11/15/2018	⁽²²⁾		4,175	^(6)(15)		101,453
		6,292		6,293		24.30		03/15/2019	⁽¹⁹⁾		3,068	^(14)(15)		116,618
		2,426		7,280		38.01		03/01/2020	⁽¹¹⁾		14,003	^(7)(15)		592,264
		—		11,491		42.30		02/28/2021	⁽¹²⁾		3,044	^(7)(15)		128,748
Series C Common Stock		19,482		6,494		20.68		11/15/2018	⁽²²⁾		4,175	^(6)(15)		98,404
		6,292		6,293		23.57		03/15/2019	⁽¹⁹⁾		3,068	^(14)(15)		113,114
		2,426		7,280		36.87		03/01/2020	⁽¹¹⁾		14,003	^(7)(15)		574,466
		—		11,491		41.02		02/28/2021	⁽¹²⁾		3,044	^(7)(15)		124,878


	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Grant Date Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Adria Alpert Romm
Series A Common Stock		4,923		3,196		19.68		03/16/2018	⁽¹⁸⁾		2,517	^(15)(20)		49,524
		6,292		6,293		24.30		03/15/2019	⁽¹⁹⁾		815	⁽²³⁾		16,892
		4,960		4,961		38.01		03/01/2020	⁽¹¹⁾		4,175	^(6)(15)		101,452
		2,872		8,619		42.30		02/28/2021	⁽¹²⁾		3,137	^(14)(15)		119,241
											3,044	^(7)(15)		128,748
											1,218	⁽²⁴⁾		51,516
Series C Common Stock		4,923		3,196		19.08		03/16/2018	⁽¹⁸⁾		2,517	^(15)(20)		48,035
		6,292		6,293		23.57		03/15/2019	⁽¹⁹⁾		815	⁽²³⁾		16,384
		4,960		4,961		36.87		03/01/2020	⁽¹¹⁾		4,175	^(6)(15)		98,404
		2,872		8,619		41.02		02/28/2021	⁽¹²⁾		3,137	^(14)(15)		115,658
											3,044	^(7)(15)		124,878
											1,218	⁽²⁴⁾		49,968
John S. Hendricks
Series A Common Stock		1,163,929		—		7.38		10/01/2018	⁽²⁵⁾
		1,244,567		—		14.68		10/01/2018	⁽²⁵⁾
		497,071		—		21.97		10/01/2018	⁽²⁵⁾
		497,071		—		18.65		10/03/2018	⁽²⁵⁾
		124,011		—		38.01		05/16/2015	⁽²⁵⁾
		133,293		—		42.30		05/16/2015	⁽²⁵⁾
Series C Common Stock		1,163,929		—		7.15		10/01/2018	⁽²⁵⁾
		1,244,567		—		14.23		10/01/2018	⁽²⁵⁾
		497,071		—		21.30		10/01/2018	⁽²⁵⁾
		497,071		—		18.08		10/03/2018	⁽²⁵⁾
		124,011		—		36.87		05/16/2015	⁽²⁵⁾
		133,293		—		41.02		05/16/2015	⁽²⁵⁾

(1)	As a result of the 2014 Share Dividend, these awards including the exercise prices and grant prices have been adjusted to reflect the dividend.

(2)	These awards were made under the DAP. Each award vests 25% on each anniversary of its grant date and is payable in cash. DAP awards have no expiration date and payment is made in cash in connection with vesting.

(3)	These awards represent SARs that vest 25% on each anniversary of the grant date and are payable in cash in connection with the vesting.

(4)	These awards represent Special SARs that vest 25% on each anniversary of the grant date and are payable in 75% cash and 25% stock in connection with the vesting.

(5)

These amounts represent PRSUs granted pursuant to the terms of Mr. Zaslav’s employment agreement. The vesting of the PRSUs is subject to the achievement of certain performance metrics. For details regarding vesting and performance criteria for these PRSUs, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

(6)	These PRSU amounts relate to the March 15, 2012 PRSU grant, with a performance period that expired December 31, 2014.

(7)	These PRSU amounts relate to the February 28, 2014 PRSU grant, with a performance period that expires December 31, 2016.

(8)

These amounts represent Sign-On PRSUs granted pursuant to the terms of Mr. Zaslav’s employment agreement. The vesting of the Sign-On PRSUs is subject to the achievement of certain one-year performance metrics. For details regarding vesting and performance criteria for these Sign-On PRSUs, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

(9)	These Sign-On PRSU amounts relate to the February 28, 2014 Sign-On PRSU grant, with a performance period that expires December 31, 2014.

(10)	These stock options vest in four equal installments beginning April 12, 2013.

(11)	These stock options vest in four equal installments beginning March 1, 2014.

(12)	These stock options vest in four equal installments beginning February 28, 2015.

(13)	These restricted stock units vest 33% on the second and third anniversaries and 34% on the fourth anniversary of the April 12, 2012 grant date.

(14)	These PRSU amounts relate to the March 1, 2013 PRSU grant, with a performance period that expires December 31, 2015.

(15)

The PRSU vesting is dependent on the achievement of three year performance metrics. If performance targets are met, the award vests 50% after the third year and 50% after the fourth year. For more information regarding these awards, please see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

(16)	These PRSU amounts relate to the March 27, 2014 PRSU grant, with a performance period that expires December 31, 2016.

(17)	These PRSU amounts relate to the October 3, 2014 PRSU grant, with a performance period that expires December 31, 2016.

(18)	These stock options vest in four equal installments beginning March 16, 2012.

(19)	These stock options vest in four equal installments beginning March 15, 2013.

(20)	These PRSU amounts relate to the March 16, 2011 PRSU grant, with a performance period that expires December 31, 2013.

(21)	These PRSU amounts relate to the September 15, 2014 PRSU grant, with a performance period that expires December 31, 2016.

(22)	These stock options vests in four equal installments beginning November 15, 2012.

(23)	These restricted stock units vest 33% on the second and third anniversaries and 34% on the fourth anniversary of the October 17, 2011 grant date.

(24)	These restricted stock units vest 33% on the second and third anniversary and 34% on the fourth anniversary of the February 28, 2014 grant date.

(25)	These stock options are fully vested as a result of Mr. Hendricks’ retirement effective May 16, 2014.

Discovery Appreciation Plan

Generally. The Discovery Appreciation Plan, or DAP, is a long-term incentive plan that was, before we became a public company, designed to permit our employees to participate in increases in the market value of the Series A common stock of Discovery’s predecessor, DHC. These awards consisted of a number of units which

represented an equivalent number of shares of DHC Series A common stock and a base price which was determined based on the average of the closing stock prices of the DHC Series A common stock on the Nasdaq Global Select Market over the ten trading days immediately preceding and including the grant date and the ten trading days immediately following the grant date. Each award vests as to 25% of the units on each of the four anniversaries of the date of grant.

After we became a public company, we began making awards under the 2013 Stock Plan and no new DAP awards were made to NEOs, except that we continued to make DAP awards to Mr. Zaslav pursuant to the terms of his employment agreement through January 2011. We entered into an amendment to Mr. Zaslav’s employment agreement in December 2011 under which Mr. Zaslav received grants of cash-settled stock appreciation rights awards (“CS-SARs”) under the 2005 Stock Plan and no longer received DAP awards. Accordingly, since January 2011, we have not made any new awards under the DAP. Messrs. Campbell and Hendricks and Ms. Alpert Romm previously received DAP awards, which are now fully vested and paid out. Messrs. Perrette and Warren never received DAP awards.

Award Provisions. The DAP provides that upon termination of employment for cause (as defined in the DAP), a participant’s units, whether vested or unvested, are forfeited. If a participant voluntarily or involuntarily (other than for cause) terminates employment other than for death, disability or retirement, all unvested units are forfeited. In the case of the participant’s voluntary termination of employment other than for retirement, 100% of the value of vested units will be paid if the participant signs a general release that includes a covenant not to compete and abides by such agreements as provided in the DAP, and, if not, only 75% of the value of the vested units will be paid. If a participant is involuntarily terminated other than for cause, the participant would be paid for all vested DAP awards. Vesting of 100% of units generally is accelerated in the event that (1) a participant dies, becomes disabled, or retires, (2) a participant’s employment is terminated other than for cause within twelve months of a change in control (as defined in the DAP), or (3) the DAP is terminated. Under the DAP, a participant may retire and qualify for accelerated vesting, in general, after attainment of age 62 with five years of service.

The DAP’s provisions for vesting or forfeiture of units on termination of employment in various circumstances as described above govern the DAP awards made to Mr. Zaslav unless otherwise provided in his employment or other agreements. Please see “—Executive Compensation Arrangements” and “—Potential Payments Upon Termination or Change in Control” below for a description of this agreement.

Option Exercises and Stock Vested in 2014


	Option Awards					Stock Awards
Name	Number of Shares Acquired on Exercise (#)			Value Realized on Exercise ($)⁽¹⁾		Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)⁽²⁾
David M. Zaslav
Series A Common Stock		1,938,907	⁽³⁾		81,200,769		314,258	⁽⁴⁾		26,023,705
Andrew Warren
Series A Common Stock		—			—		6,507	⁽⁵⁾		505,399
Bruce L. Campbell
Series A Common Stock		18,213	⁽⁶⁾		889,089		19,172	⁽⁷⁾		1,594,343
Jean-Briac Perrette
Series A Common Stock		—			—		—			—
Adria Alpert Romm
Series A Common Stock		8,284	⁽⁸⁾		430,234		5,816	⁽⁹⁾		445,335
Series C Common Stock							790	⁽¹⁰⁾		27,160
John S. Hendricks
Series A Common Stock		400,000	⁽¹¹⁾		27,734,716		—			—

(1)	Represents cash actually received with respect to DAP and SAR units and the spread from stock option exercises listed in the corresponding column of the table

(2)	Represents the value realized upon RSU and PRSU vestings listed in the corresponding column of the table, using the closing market value of the shares on the vesting date.

(3)

Represents the vesting and automatic exercise of (i) 465,369 units of Mr. Zaslav’s January 2, 2010 DAP grant for $25,516,182, (ii) 581,710 units of the January 2, 2011 DAP grant for $26,380,549, (iii) 429,588 units of the January 2, 2012 CS-SAR grant for $19,425,969, and (iv) 462,240 units of the January 2, 2013 CS-SAR grant for $9,878,069.

(4)	Represents the aggregate vesting of Mr. Zaslav’s March 16, 2011 PRSU.

(5)	Represents the aggregate vesting of Mr. Warren’s April 12, 2012 RSU.

(6)	Represents the aggregate exercises of Mr. Campbell’s March 15, 2010 stock option and the March 16, 2011 stock option.

(7)	Represents the aggregate vesting of Mr. Campbell’s March 15, 2010, August 12, 2010 and March 16, 2011 PRSUs.

(8)	Represents the aggregate exercise of Ms. Alpert Romm’s March 15, 2010 stock option and the March 16, 2011 stock option.

(9)	Represents the aggregate vesting of Ms. Alpert Romm’s March 15, 2010 and March 16, 2011 PRSUs and October 17, 2011 RSU.

(10)	Represents the aggregate vesting of Ms. Alpert Romm’s October 17, 2011 RSU, which was adjusted to reflect the 2014 Share Dividend.

(11)	Represents the aggregate exercises of Mr. Hendricks’ October 1, 2008 stock option.

Nonqualified Deferred Compensation⁽¹⁾