Netflix shareholders voted Thursday to reject the lucrative compensation packages of the company leaders, including co-chief executives Ted Sarandos & Greg Peters. The vote is not binding and the board of directors can overrule it at the next meeting.
The result was noteworthy just days after the Writers Guild of America - which represents writers who are on strike - sent a letter to the shareholders of the streaming giant urging them to reject the compensation plan.
The proposed salary package of Mr. Sarandos for 2023 could be up to 40 million dollars, which would include a base salary, performance bonuses and stock options. Peters, the co-chief executive who took over Reed Hastings' role in January, will receive up to $34.6m. Hastings is expected to earn up to $3 million this year as executive chairman.
Why it matters: Striking writers are particularly critical of Netflix.
As the Guild's strike entered its 5th week, shareholders voted at their annual meeting. The shareholders did not speak at the meeting. Meredith Stiehm wrote to shareholders earlier this week that while investors have been critical of Netflix's executive compensation for some time, it is now even worse in light of the strike.
She said that if Netflix is willing to pay such high salaries to its executives, then it should be willing to do the same for its writers, which she estimated at $68 million per year. (Ms. Stiehm also sent a letter similar to Comcast shareholders who will be meeting next week.
Netflix was largely responsible for the streaming revolution, which has radically changed the entertainment industry and its compensation structure. There has been an increase in TV shows and films in production. However, writers claim that their salaries have stagnated or worsened.
Background: Shareholders voted against executive compensation packages in the past.
Netflix's proxy report states that shareholders rejected the 'Say on Pay" proposal last year. The company then invited 26 shareholders representing 57 percent shareholding to join additional calls for executive compensation. The company already had made some changes to the compensation program of its top executives for 2023. This included a cap on each executive's salary of $3 million and a requirement that at least 50% of their compensation be tied to stock option. It also introduced a performance-based bonus.
Netflix refused to comment when its board will meet to discuss pay packages. Meanwhile, the writers strike continues.