Reed Hastings and Ted Sarandos, leaders of Netflix
We have a two-fer here. Reed Hastings is the co-founder and executive chairman at Netflix, while Ted Sarandos serves as co-CEO alongside Greg Peters. Over the five years from 2018 to 2022, Reed Hastings received $209 million in compensation while Ted Sarandos received $192 million.
Let’s drill down on one year in particular. According to Variety, Hastings received $51.07 million in 2022, $49.4 million of which was in stock option awards. Sarandos got $50.3 million, which included a $20 million base salary, $28.5 million in stock options and $1.79 million in “other compensation.” That other compensation included $1.43 million in “residential security costs,” which I suppose means Netflix was paying for private guards for his home? Not sure.
Meanwhile, co-CEO Greg Peters took home $28.1 million in 2022; in 2023, he’s expected to bring home $34 million. And remember, there’s always a gaggle of additional execs getting paid like this at the top of these companies. In 2023, Netflix CFO Spencer Neumann is supposed to receive $14 million, chief legal officer David Hyman $11 million and chief communications officer Rachel Whetstone $6.5 million.
Speaking of 2023, the top brass at Netflix actually got some pushback from their shareholders when they proposed their new pay packages. In June, shareholders voted not to approve these packages, reasoning that Netflix had lost subscribers for the first time in years in 2022 and that the writers strike could disrupt business. Why, the shareholders reasoned, should they reward this performance with tens of millions of dollars paid to a small group of executives?
But the vote was non-binding. According to CNN Business, the Netflix board can disregard the wishes of the shareholders and approve the pay packages anyway. As of this June, they’ve unanimously recommended to do just that.
There are 10 people on the board at Netflix. I don’t know the nature of the relationships between each board member and the executives on whose pay they’re voting, but if the board is willing to unanimously recommend approving voluminous pay packages despite the objections of shareholders even when the company is bleeding subscribers, it seems like their function is to rubber-stamp decisions already made by the leaders.
So basically, the top-level executives can decide that they should be paid tens of millions of dollars per year, and then receive that money even if the company is hitting a rough spot or their own shareholders object. Smells like a conflict of interest to me.
I’ll give the final word on Netflix to WGA West president Meredith Stiehm: “While investors have long taken issue with Netflix’s executive pay, the compensation structure is more egregious against the backdrop of the strike,” she wrote in a letter to Netflix shareholders. And to paraphrase, ‘If Netflix can afford to spend an estimated $166 million on executive compensation, it should also be able to pay the estimated $68 million that writers are seeking in their contract negotiations.’