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Pay Proposal Vote Revealed at Netflix Annual Shareholder Meeting
During Netflix's annual shareholder meeting on Thursday, shareholders made the decision not to endorse the 2023 pay packages of top executives in a non-binding vote.
Although the "say-on-pay" vote does not have the power to prevent executives from receiving their expected compensation, it represents a rare public criticism of media executives' remuneration at a time when scrutiny is increasing. Even before the strike, Netflix's compensation practices have faced discontent. Last year, only 27% of shareholders supported the 2022 pay plan, leading to several changes being implemented by Netflix.
Netflix stated in its proxy statement ahead of the shareholder meeting that the compensation committee of the board of directors believes these changes align with shareholders' interests and provide incentives for Peters and Sarandos to execute strategies aimed at achieving long-term success. The company also emphasized the importance of retaining top talent to support its growth. However, a filing with the Securities and Exchange Commission (SEC) in April revealed that Sarandos and Hastings received increased compensation in 2022, each earning around $50 million, despite headlines highlighting subscriber erosion and a stock decline in the first half of the year. In January, Netflix underwent an executive leadership restructuring, elevating long-time executive Peters to the role of Co-CEO alongside Sarandos, who held the same title. Hastings transitioned to a board-only role after serving as CEO for 25 years. In 2023, Sarandos and Peters are slated to receive a base salary of $3 million each, with Sarandos eligible for an additional $20 million in stock and a potential bonus of up to $17 million, contingent upon meeting specific targets. Peters could receive a stock award of $17.3 million and a bonus of up to $14.3 million.
Executive compensation has become a contentious issue across the media and tech sectors in recent months, given the workforce reductions and cost-cutting measures being implemented by many companies, compounded by the labor standoff affecting a significant portion of the entertainment industry. Despite underperforming stocks and widespread belt-tightening, top executives continue to receive substantial payouts.
Meredith Stiehm, the President of WGA West, sent a letter to Netflix shareholders earlier this week, urging them to oppose the executive pay proposal. Stiehm highlighted that the compensation structure was particularly problematic amidst the ongoing strike. Netflix sought shareholders' retroactive advisory approval for its reported executive compensation of over $166 million in 2022, while the proposed improvements put forth by the WGA would cost Netflix an estimated $68 million annually.
The WGA is making a similar appeal to Comcast shareholders, who will have the opportunity to voice their opinion on executive compensation during the media giant's upcoming annual meeting.
Aside from the rejection of executive compensation, shareholders also dismissed four other proposals while supporting two others, diverging from the company's recommendations only on the matter of pay. All nominees for the company's board of directors were elected, with the specific vote tallies set to be disclosed in the filing along with the proposal outcomes.
