Netflix shareholders reject lavish executive pay plan

In a notable display of shareholder dissent, Netflix investors have voted against multimillion-dollar compensation packages intended for the company's top executives, including co-CEOs, Ted Sarandos and Greg Peters. Although the vote is non-binding, its timing is significant as Netflix makes a remarkable rebound from a steep decline in 2022 caused by pandemic-related restrictions.

The streaming giant had previously faced customer resistance to price hikes and investor criticism for extravagant content spending coupled with subscriber losses. However, the company's stock has since surged by an impressive 36% this year, suggesting an earlier overreaction by the market.

The vote followed a recommendation by the Writers Guild of America (WGA) urging investors to reject the proposed compensation packages. The WGA highlighted the ongoing strike by Hollywood writers who are demanding improved working conditions and higher contracts.

Considering Netflix's ability to allocate approximately $166 million for executive pay, the WGA argued that the company should also be able to address the striking writers' demands, which amount to around $68 million in their contract negotiations.

Executive compensation has become a central point of contention in the WGA's bargaining strategy. The union has also reached out to NBCUniversal parent company Comcast, raising concerns about pay proposals. The upcoming shareholder meeting of Comcast is likely to tackle this issue as well.

For 2023, Netflix had put forth substantial compensation packages, including up to $40 million for Sarandos, up to $34.6 million for Peters, and approximately $3 million for Reed Hastings, the former CEO and current executive chairman. Other top executives at Netflix, such as CFO Spencer Neumann, chief legal officer David Hyman, and chief communications officer Rachel Whetstone, were also set to receive sizable payouts in the range of $6.5 million to $14 million.

According to a Securities and Exchange Commission filing, the median salary for a Netflix employee in 2022 stood at $218,400, leading to a CEO-to-median employee pay ratio of 234 to 1.

While the "say on pay" vote holds no binding authority, Netflix's board retains the power to approve executive compensation plans, irrespective of shareholder sentiment. The board has already unanimously recommended voting in favour of the proposed pay packages. Last year, only 27% of Netflix shareholders approved the 2022 executive compensation packages.


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