Netflix (NFLX) shareholders sent a clear but largely symbolic message to corporate executives at its annual meeting yesterday — don't ask for a raise. The "say on pay" shareholder proposal failed to pass, meaning investors thought the company's roughly $78 million compensation for the top three executives was unjustified.
The Writers Guild of America (WGA), currently on strike for better pay from platforms like Netflix, lobbied shareholders to vote against the pay raise.
"This excessive sum, paid to just a handful of execs, could pay for Netflix’s annual share of all of WGA’s proposed improvements for writers — twice over," the WGA stated in a Twitter thread.
Netflix's proposed pay packages for 2023 included roughly $40 million for its CEO, Ted Sarandos, and $34.6 million for co-CEO, Greg Peters. The executive chairman, Reed Hastings, would receive $3 million.
"Say on pay" proposals rarely fail
Companies are required to solicit these "say on pay" votes each year, and the vast majority receive at least 50% — typically 90% or greater support for proposed executive pay. But Netflix shareholders have mostly rejected the company's say on pay proposals going back to 2019, and only 27% voted in support of last year's proposal.
Netflix's failure to gain shareholder approval for this year's compensation package is a big deal. Such high executive pay both rankles striking writers and shows the company failed to woo investors to its management strategy. Netflix waged an all-out charm offensive after the failed "say on pay" vote in 2022, hosting two listening tours for investors and preparing a detailed explanation for its pay package.
Writers for Netflix note this failure may impact the company's bottom line, especially as it cracks down on password sharing and ups advertising. As Meredith Stiehm, president of the Writers Guild of America West pointed out in a recent letter to Netflix, a "delay in the writing, production, and release of new content may impact Netflix’s ability to attract and retain subscribers and viewers just as the company asks customers to watch advertising and pay more for its content."
What's next
The Netflix board will meet to parse shareholder votes and determine next steps. In the meantime, Stiehm, of the WGA, sent a similar letter to Comcast.
"Comcast is asking shareholders to give retroactive advisory approval of the company’s 2022 reported executive compensation totaling over $130 million," she wrote. "By contrast, the proposed improvements the WGA currently has on the table would cost Comcast an estimated $34 million per year."
