• In today’s CEO Daily: Fortune‘s Claire Zillman digs into just how well retention bonuses work.

• The big leadership story: Paramount wins the war for Warner Bros. Discovery.

• The markets: Mixed globally; Nvidia’s losses dragged down the S&P 500 on Thursday.

• Plus: All the news and watercooler chat from Fortune.

Good morning. When a chief executive succession race narrows to just a few contenders, losing doesn’t always mean losing out. I’ve noticed lately that some high-profile CEO contests have resulted in hefty compensation packages for the executives who came in second.

When Disney earlier this month selected Josh D’Amaro to succeed Bob Iger as CEO, the entertainment giant gave D’Amaro’s reported rival for the job, Dana Walden, a one-time $5.26 million stock grant, plus a recurring annual target compensation of about $27 million. And when Morgan Stanley named Ted Pick as its new CEO in 2023, it paid Pick as well as Andy Saperstein and Dan Simkowitz, reportedly dual runners-up, special bonuses valued at $20 million each. 

The big bucks reflect the big stakes of retaining top talent. A leader who has ascended to the level of CEO contender is likely a high performer with broad institutional knowledge and deep relationships, both inside and outside the firm. Such a star walking out the door can scramble organizational operations, ruin team morale, and dent a company’s bottom line. Top executive turnover typically costs many multiples of the person’s annual salary.

Paying for executives’ loyalty works—to an extent. A recent report from consultancy FW Cook found that the grants have “a strong, but limited, retentive effect—typically lasting approximately two to three years.” That time frame likely reflects the awards’ vesting schedules, says Marco Pizzitola, a consultant at FW Cook and coauthor of its new report. 

FW Cook’s report examined 100 large‑cap U.S. companies and identified 47 that swapped out their CEOs between 2016 and 2020. At roughly a third of those companies, boards rolled out succession-related retention grants to 39 named executive officers who did not become CEO. 

Companies were more than twice as likely to hand out the grants if they hired external CEOs, suggesting “there’s greater concern” about an executive exodus with an outsider chief executive than with an internal promotion, Pizzitola says.

You can read more about this trend—and the second part of the consolation package that Disney awarded Walden—here. 

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top leadership news

Paramount wins Warner Bros. war

Warner Bros. Discovery’s board has officially deemed Paramount Skydance's all-cash offer of roughly $111 billion or $31 per share a "superior proposal" over its existing deal with Netflix. Netflix declined to raise its bid, calling the deal "no longer financially attractive," which clears the path for Paramount CEO David Ellison to assemble a media empire that aims to rival Disney.

Amodei’s focus on culture

Anthropic CEO Dario Amodei says his most important job is maintaining his AI company’s culture, which takes up nearly 40% of his time. “I think we’ve done an extraordinarily good job…making everyone feel the mission,” he said. His comments came even as Anthropic has stepped back from prior AI safety pledges. 

A surprise perk of remote work

As CEOs push return-to-office mandates, a San Francisco Fed study of 25,000 French workers delivers a counterintuitive finding: remote and hybrid employees earn 12% more per hour than fully in-office peers. Even after controlling for demographics, a 6% wage premium persists—suggesting flexibility has become a perk reserved for top talent.

The markets

S&P 500 futures are down 0.31% this morning. The last session closed down 0.54%. The STOXX Europe 600 was up 0.30% in early trading. The U.K.’s FTSE 100 was up 0.41% in early trading. Japan’s Nikkei 225 was up 0.16%. China’s CSI 300 was down 0.34%. Hong Kong’s Hang Seng was up 0.95%. South Korea’s KOSPI was down 1.0%. India’s NIFTY 50 was down 1.25%. Bitcoin was down to $67K.

Around the watercooler

Citadel Securities demolishes viral AI doomsday essay, arguing the real ‘Global Intelligence Crisis’ is ignorance of macro fundamentals by Nick Lichtenberg

Bitcoin fans latch on to ‘ridiculous’ Jane Street conspiracy to explain price slump by Jeff John Roberts

Rolex has just opened a trade school for watchmakers in Texas. Already competition is as fierce as Harvard’s, and students could walk out with $95,000 jobs by Emma Burleigh

After months of quiet, Perplexity’s CEO steps into the OpenClaw moment by Sharon Goldman

CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.