Netflix Shareholders Nix Executive Compensation Plan By Nearly 3-To-1 Margin In Non-Binding Vote – Update

UPDATED with vote tally: Netflix shareholders rejected by a nearly 3-to-1 margin a 2023 compensation plan for top executives.

The result of the vote, held at last Thursday’s annual shareholder meeting, was previously known but the exact tally was released Tuesday afternoon in an SEC filing. Netflix said 97.8 million shareholders voted in favor of the plan (roughly 29%) with 241.7 million against. The vote was non-binding, meaning execs will still be able to collect their packages as projected. Even so, the defeat was a symbolic setback for the company after it overhauled its approach to how it pays its top execs in the wake of a similar vote a year ago.

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The vote followed a letter from the WGA urging a “no” vote on the pay plan in light of the guild’s ongoing strike against Netflix and other streamers and studios. A similar vote is expected at Wednesday’s Comcast shareholder meeting.

PREVIOUS, June 1: Netflix shareholders declined to support the 2023 pay packages of top executives during a non-binding vote at the company’s annual shareholder meeting on Thursday.

The pay proposal, one of several put up for a vote during the 15-minute meeting, which was streamed online, pertained to senior-level executives including Co-CEOs Greg Peters and Ted Sarandos and co-founder and board chair Reed Hastings. The exact tally of the vote will be released in a subsequent SEC filing.

The “say-on-pay” vote won’t ultimately prevent execs from collecting as expected, but it is a rare public rebuke of the compensation of media executives at a time of growing scrutiny. The WGA had urged shareholders to give a thumbs-down to the pay scheme, describing it as “inappropriate” in a moment when the guild is at an impasse with Netflix and other AMPTP member companies.

Most shareholder votes on the executive pay proposal had been cast before the guild letter was sent, and Netflix investors had already held strong opinions about compensation long before the strike. Last year, only 27% of shareholders supported the 2022 pay plan. As a result of that vote, Netflix implemented a number of changes to its approach to compensation.

The compensation committee of the board of directors “believes these changes to our compensation structure align with stockholder interests and incentivize [Peters and Sarandos] to execute on strategies aimed at achieving long-term success, while also maintaining aspects of our compensation program that we believe have helped attract and retain top talent to support our growth,” Netflix said in its proxy statement ahead of the shareholder meeting.

In an SEC filing in April, Netflix said Sarandos and Hastings saw a jump in compensation in 2022, each coming in at around $50 million despite the subscriber erosion and stock plunge that made headlines in the first half of the year. The company’s executive leadership structure changed last January, with longtime exec Peters getting elevated to Co-CEO alongside Sarandos. Hastings, who co-founded the company and ran it as CEO for 25 years, segued to a board-only role. In 2023, Sarandos and Peters will each get a salary of $3 million, with Sarandos set to receive $20 million more in stock and a bonus of up to $17 million, depending on whether certain targets are hit. Peters is eligible for a stock award of $17.3 million and a bonus of up to $14.3 million.

Executive compensation has stirred unrest across the media and tech landscape in recent months given the layoffs and cutbacks reshaping many companies, on top of the labor impasse paralyzing much of Hollywood. Top execs are continuing to bring home outsized hauls despite the lagging performance of most stocks and the rampant belt-tightening.

Earlier this week, WGA West President Meredith Stiehm sent a letter to Netflix shareholders urging them to reject a proposal on exec pay. “While investors have long taken issue with Netflix’s executive pay,” Stiehm wrote, “the compensation structure is even more egregious against the backdrop of the strike. In the midst of a disruptive labor dispute, Netflix is asking shareholders to give retroactive advisory approval of the company’s 2022 reported executive compensation totaling over $166 million. By contrast, the proposed improvements the WGA currently has on the table would cost Netflix an estimated $68 million per year.”

The WGA is making a similar request of Comcast shareholders, who will get the chance to weigh in on executive compensation at the media giant’s annual meeting next week.

Along with the “no” vote on executive compensation, shareholders also rejected four other proposals and supported two others, differing from the company’s recommendation only on the one regarding pay. All nominees to the company’s board of directors were elected, with those vote tallies also to be revealed in the filing with the proposal outcomes.

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