Netflix shareholders reject sky-high executive pay packages

New York

Netflix shareholders voted Thursday to reject multimillion-dollar pay packages for the company’s top executives, including co-CEOs Ted Sarandos and Greg Peters.

The vote, which is non-binding, comes amid a sharp setback for a company that lost more than half its value in 2022 as people began venturing out after years of pandemic isolation. Last year, consumers turned their backs on price hikes for streaming services like Netflix, and investors began criticizing the company for paying through the nose for content while customers left. But Netflix shares have risen 36% so far this year, as shareholders believe streaming sales may have been exaggerated.

Still, the vote came just days after the Writers Guild of America urged investors to vote down the packages, saying in a letter that a vote would be inappropriate as Hollywood writers enter their fifth week of strikes for better working conditions and bigger contracts.

“While investors have long taken issue with Netflix’s executive pay, the compensation structure is more serious in light of the strike,” WGA West President Meredith Stiehm wrote in the letter to the company’s shareholders.

If Netflix can afford to spend an estimated $166 million on executive compensation, she wrote, it should also be able to pay the estimated $68 million that writers are seeking in their contract negotiations.

The Writers Guild of America has targeted high executive compensation as a central issue in its ongoing bargaining tactics. The union sent a similar letter about pay proposals to NBCUniversal parent Comcast ( CMCSA ), which will hold its annual shareholder meeting next week.

Frederic J. Brown/AFP/Getty Images

Writers on strike march with picket signs on day four of the Writers Guild of America walkout in front of Netflix in Hollywood, California on May 5, 2023. More than 11,000 TV and film writers in Hollywood are on their first strike since 2007, following talks with studios and streamers over wages and working conditions, failed to reach an agreement.

Netflix’s proposed executive pay packages for 2023 included up to $40 million for Sarandos, including base salary, a performance bonus and stock options. Peters could receive up to $34.6 million.

Reed Hastings, who stepped down as Netflix ( NFLX ) CEO in January and now serves as the company’s executive chairman, would take home about $3 million for the year.

Other Netflix executives expect big payouts in 2023. According to the proposal, Netflix CFO Spencer Neumann will receive $14 million, Chief Legal Officer David Hyman will get $11 million and Chief Communications Officer Rachel Whetstone is on track to receive $6.5 million.

The median Netflix employee earned $218,400 in 2022, according to a Securities and Exchange Commission filing. That would make the ratio of CEO pay to median employee pay 234 to 1.

Netflix’s board, meanwhile, is able to disregard the results of this “say on pay” vote and approve executive compensation plans despite shareholders’ wishes. The board has already unanimously recommended voting in favor of the salary packages.

Last year, only 27% of Netflix shareholders approved 2,022 executive compensation packages. The final tally from this year’s meeting has not yet been published.

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