The revolt of Netflix shareholders takes off: “Stop the maxi bonuses for top managers”

NEW YORK. The shareholders say no. The investment community that controls the majority of Netflix’s capital has voted against approving new compensation packages for the company’s top executives, including those of co-CEOs Ted Sarandos and Greg Peters. Although the vote is not binding and can be overturned by the board of directors, the pronouncement is a powerful signal that sounds like a warning. Even more because it comes just days after the Writers Guild of America, the association that represents Hollywood authors, sent a letter urging shareholders of the streaming giant to reject the new salary packages.

The mobilization that has seen the authors on strike for over four weeks finds support in Netflix’s capital, putting the top management in a corner. Sarandos’ proposed compensation package for 2023 is $40 million in base salary, performance bonuses and stock options. Peters, named co-CEO in January after Reed Hastings stepped down, is expected to bring in up to $34.6 million. While for Hastings himself, who became executive chairman, the compensation was set at three million a year. Shareholders voted at the annual meeting after Meredith Stiehm, a leader of the Writers Guild of America, sent them a letter explaining that “although investors have long contested Netflix’s executive compensation, the compensation structure is still more striking despite the protest mobilization”. The reason for the contention, according to Stiehm, is that if Netflix was willing to pay its executives last year sums totaling more than $166 million, it should be willing to pay its creators sums that reflect the value of their work, i.e. a total amount estimated at 68 million a year. A similar letter was sent by Stiehm to Comcast shareholders, who are meeting next week.

Netflix, one of the pioneers of streaming, has changed the entertainment business a lot, including salary dynamics. The result has been a proliferation of on-demand TV shows and movies benefiting the company’s bottom line. However, the authors say their wages have stagnated and their working conditions have deteriorated. It is not the first time that shareholders have expressed themselves in protest on the compensation of top management. Last year they rejected another proposal asking the company to invite 26 investors, which account for 57% of the outstanding shares, to participate in discussions on executive pay packages. The floor is now up to the Board although no communication has been received on the date of the next meeting. —