Netflix, Inc. CEO’s Pay Climbed 50% In 2015

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Netflix saw its shares rise by a massive 134.4% in 2015, making it the biggest gainer in the Standard & Poor’s 500. This paid off for the company’s CEO, Reed Hastings, whose compensation for 2015 was reported at $16.6 million, an increase of 50.3%, according to a a proxy statement filed with the SEC.

Netflix stock pushes compensation up

Hastings owns 2.9% of Netflix’s stock, and his package for 2015 included $1.1 million in salary, $15.5 million in option awards and $16,832 in other compensation. Hastings owns an aircraft that he leases out to Netflix for his own and other employees’ business travel. For this, he received $344,000 from the company last year.

Ted Sarandos, Netflix’s Chief Content Officer, did equally well. His compensation last year was $14 million, which was up 58.9% from the previous year. The proxy provided very little information on the benchmarks used for setting compensation levels, but it did urge shareholders to support a non-binding, SEC-mandated say-on-pay resolution.

The board believes the compensation philosophy has been designed to attract and retain outstanding performers and “is guided by market rates and tailored to account for the specific needs and responsibilities of the particular position as well as the performance and unique qualifications of the individual employee, rather than by seniority or overall Company performance.”

The big investments Netflix made in original programming and expenses related to the overseas expansion led to a 54% drop in its net income to $122.6 million, while revenues went up by 23.2% to $6.78 billion.

A critical proposal up for vote in June

On June 9, the streaming firm will hold its annual meeting at its headquarters in Los Gatos, California. At the meeting, the shareholders will get an opportunity to vote on a proposal that frequently comes up at Netflix: to change the rule so that the election of directors will solely be based on the number of votes they receive, including those that abstain.

Theoretically, the current rules allow an unchallenged candidate to be elected with a single vote, and it is virtually impossible for shareholders to oust the directors they dislike. People in favor of the change say that approximately 90% of the companies in the S&P 500 Index have opted for the majority vote standard in the past 10 years.

However, Netflix opposes the idea, saying the current system has served it well, and it also ensures that there are no vacancies on the board. There is also another proposal that calls for the entire board to be elected annually. This would replace the current system, in which a third of the directors are up each year to serve three-year terms.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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