Yahoo Finance Netflix Promises “A More Conventional Model” For CEO Pay Amid Shareholder Discontent
Netflix said it’s working on modifications to CEO pay policies after a majority of shareholders declined to approve top executive compensation in a non-binding vote at the last annual meeting. The company had said as much earlier this year.
“We recognize we don’t have wide support for our executive compensation model of the last 20 years. We are listening to our shareholders and plan on substantial changes for 2024 to a more conventional model. Our executive compensation plan will continue to be built on pay for performance,” the company noted in its annual shareholder letter.
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Netflix has consistently tangled with shareholders over CEO pay.
For 2022, Netflix co-CEOs last year — then Reed Hastings and Ted Sarandos, topped the list of chief executive pay, with about $50 million each, up 25% and 32%, respectively. Hastings segued to executive chairman early this year with Sarandos and Greg Peters now co-CEOs. Netflix has famously allowed executives to choose how they want to be paid, in cash or stock. Sarandos has tended to take cash, and saw a $20 million base salary. (Hastings took almost all of his pay last year in stock options as he usually does.)
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Nudged by shareholders, the company said then it has been reexamining its pay policies. Starting in 2023, it said, it will cap co-CEO base salary at $3 million and require that 50% of allocatable pay be in stock options — although only with a one-year vesting period so not particularly long-term.
Another unusual thing the company has done is to forecast how much its top executives will make in any given year before the year starts. In December, the compensation committee of Netflix’s board of directors said it expected 2023 pay would be in line with 2022. It said Hastings would receive $650,000 in base salary and stock options worth $34 million. Sarandos would get a salary of $3 million, options worth another $20 million and a bonus targeted at $17 million.
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