Netflix Shareholders Decline To Back Executive Compensation Packages After WGA Urged Rejection Of “Inappropriate” Pay During Strike

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 prevent execs from collecting as expected, but it is a rare rebuke of the compensation of media executives at a time of 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 in a standoff with Netflix and other AMPTP member companies. Even before the strike, Netflix compensation hadn’t always gone over well. Last year, only 27% of shareholders supported the 2022 pay plan. As a result of that meager tally, Netflix implemented a number of changes.

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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 2022 pay, to about $50 million each. The company’s executive leadership structure changed a few months ago, with longtime exec Peters getting elevated to Co-CEO alongside Sarandos, who holds the same title. Hastings, who co-founded the company and ran it as CEO for 25 years, segued to a board 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 resentment 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 paydays despite the poor performance of many stocks and the significant degree of 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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