Rosalind Evans
On Thursday, Netflix shareholders voted against the proposal for lavish remuneration packages earmarked for high-ranking executives, including Co-CEOs Ted Sarandos and Greg Peters.
This non-binding voting came amidst a robust rebound for the company, which had previously lost more than half of its market value in 2022 due to customers venturing outside post years of pandemic isolation. The company faced further criticism for steep price hikes in streaming services and extravagant spending on content while witnessing a customer exodus. Nevertheless, Netflix’s stock has seen a 36% resurgence this year, as shareholders theorize that the sell-off of the streaming giant may have been excessive.
The voting was held a few days after the Writers Guild of America urged investors to veto the remuneration packages, arguing the timing inappropriate, given that Hollywood writers are in their fifth week of striking for improved working conditions and higher pay contracts.
WGA West president Meredith Stiehm noted in a letter to the shareholders that if Netflix can allocate a staggering $166 million towards executive compensation, it should be equally capable of meeting the $68 million that writers demand in their contract negotiations.
The Writers Guild of America, which has made extravagant executive compensation a central issue in its bargaining strategy, issued a similar statement regarding pay proposals to NBCUniversal’s parent company, Comcast (CMCSA), which will hold its annual shareholder meeting next week.
Netflix’s proposed 2023 executive remuneration packages included a maximum of $40 million for Sarandos and $34.6 million for Peters, incorporating base salary, performance bonus, and stock options. Reed Hastings, who transitioned from Netflix CEO to executive chairman in January, is set to earn approximately $3 million for the year.
Several other Netflix executives are projected to receive hefty payouts in 2023. The proposed plan shows Netflix CFO Spencer Neumann slated to earn $14 million, chief legal officer David Hyman $11 million, and chief communications officer Rachel Whetstone $6.5 million.
The median salary of a Netflix employee in 2022 was reported to be $218,400, according to a filing with the Securities and Exchange Commission. This places the CEO-to-median-employee pay ratio at 234 to 1.
Despite the outcome of this “say on pay” vote, Netflix’s board retains the power to override shareholder sentiment and ratify the executive compensation plans. The board has already unanimously endorsed the pay packages.
In 2022, only 27% of Netflix shareholders supported the executive compensation packages. The final results from this year’s meeting are still pending.
In a year that has seen Netflix recover from a significant setback, the shareholders’ vote signifies their discontent with the company’s executive compensation structure. As streaming platforms battle for dominance in the entertainment market, the ongoing scrutiny of executive remuneration raises critical questions about the balance between investment in content, executive compensation, and fair pay for other roles within the industry. Amidst ongoing disputes and strikes within the industry, how Netflix and other companies will respond to these challenges remains to be seen.
