Trans World Entertainment Corp. Shareholders Approve Reverse-Stock Split, Add Paramount Home Entertainment’s Jeff Hastings to Board

Shareholders of Trans World Entertainment, parent to home entertainment retailer f.y.e. (For Your Entertainment) and e-commerce middleman eTailz.com, have approved a 1-for-20 shares reverse stock split to satisfy Nasdaq’s $1-per-share minimum requirement.

The company’s stock, which closed July 1 at less than 27 cents per share, would be worth $5.36 per share following the maneuver.

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Separately, shareholders approved the appointment of Jeff Hastings, VP of sales and forecasting at Paramount Home Entertainment, to its board of directors.

Hastings joins the six-person board, which includes CEO Mike Feurer, Robert Marks, Michael Nahl, W. Michael Reickert and Michael Solow.

Hastings, who was put on the board nominee slate following pressure from TWEC shareholder Mark Higgins (son of late company founder Robert Higgins), previously informed the board that if elected, he could not begin his term on the board until September.

Netflix Now Allowing Shareholders to Nominate Board Members

Netflix has amended its bylaws to enable a stockholder, or group of up to 20 stockholders, owning at least 3% of the company’s common stock continuously for at least three years, to nominate two board directors or 20% of the board.

Netflix’s board consists of 13 directors, including chairman/CEO and co-founder Reed Hastings.

The subscription streaming video pioneer, which initiated the change on March 28, said any nominees would be subject to certain limitations, including that both the stockholders and nominees satisfy requirements specified in the amended bylaws.

Shareholders approved the change – dubbed proxy access – in a vote at the annual meeting in June.

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“By enacting proxy access, Netflix is finally giving investors a meaningful voice in board elections and they are no longer an outlier holding out on their long-term shareowners,” New York City Comptroller Scott Stringer told Reuters.

Netflix had rebuffed previous attempts by shareholders – notably the California Public Employees’ Retirement System (CalPERS), which owns about 689,000 shares – to get a seat on its board.

“The board periodically reviews our corporate governance and determined that adopting proxy access is appropriate at this time,” Netflix said in a statement.

 

MoviePass Parent Board Member Quits, Citing Lack of Financial Disclosures

Helios and Matheson Analytics, parent of ticket subscription service MoviePass, Aug. 30 disclosed that a member of its board of directors has resigned under protest.

Carl Schramm, in an Aug. 25 letter to Ted Farnsworth, CEO of HMNY, said he was resigning as a director, including positions on the audit committee, compensation committee, nominating and corporate governance committee and the pricing committee, citing a failure to receive necessary financial information on the company and subsidiary MoviePass.

Schramm served on the board since Nov. 9, 2016.

“I have sought, often unsuccessfully, information about the company’s financial status and operations, and explanations of company strategy,” Schramm wrote. “I have objected to the manner in which a number of business decisions have been presented to the board by management, without sufficient time for the board to examine complex documents, to review significant transactions, or to discuss how the proposed actions fit into the company’s strategic plan.”

Indeed, HMNY and MoviePass have engaged in numerous strategic moves aimed at buttressing the latter’s business model enabling subscribers daily access to a theatrical screening for $9.95 monthly fee.

With the service losing millions of dollars more per month than it generates, HMNY’s stock valuation has plummeted to 2 cents per share – after a 1-for-250 shares reverse stock split. A subsequent price hike was scuttled, with subscriber restrictions put in place instead.

In response, HMNY said it was unaware of any unanswered requests for information by Schramm. It said the board and committees of which Schramm was a member have met at least 25 times thus far in 2018.

HMNY contends it has kept the board “fully informed” and has provided all information needed for members to exercise their responsibilities.

HMNY said that since acquiring 92% stake in MoviePass, it has experienced unprecedented and unanticipated growth – including issues that have placed significant demands on management and the board, as evidenced by the number of board and committee meetings.

“But the company firmly believes all board and committee meetings have been duly noticed and held, and no material information has been withheld from any board member,” Farnsworth wrote in a filing.

Netflix Brass Receives Compensation Windfall

Life is good for Ted Sarandos, chief content officer at Netflix. The long-time executive saw his 2018 annual salary balloon to $12 million from $1 million in 2017, excluding stock options, according to a regulatory filing.

Chief Product Officer Greg Peters’ salary increased to $6 million from $1 million, while CFO David Wells received a $300,000 pay raise to $2.8 million.

The pay raises (which count as corporate taxable income) reflect changes to executive compensation following passage of President Trump’s tax overhaul.

Netflix’s board scrapped executive bonuses at the end of 2017 and now pays straight salary to executives as bonuses are no longer deductible under the new corporate tax structure.

Notably, general counsel David Hyman and co-founder/CEO Reed Hastings received “pay cuts” to $2.5 million and $700,000, respectively. Hyman and Hastings were paid $3.3 million and $850,000, respectively in 2017, excluding stock options and bonuses.

Shed no tears for Hastings. The billionaire is slated to receive $28.7 million in stock options in 2018, up from $21 million in 2017.

Separately, Netflix’s board is facing a number of shareholder proposals critical of how the board operates.

Specifically, the board suggests shareholders reject proposals that would enable shareholders (with minimum 15% equity stake) to call for special shareholder meetings; adopt a “proxy access” bylaw that would allow shareholders to directly nominate board members; and enact a “claw-back policy” affording shareholders the legal clout to recoup executive incentive pay.

The board is also against a shareholder proposal allowing written consent against board nominees. The proposal argues shareholders should have the right to directly vote against any board nominee getting a high percentage (48%) of negative votes.

Netflix is also against allowing shareholders to vote on proposals by simple majority and amend the company’s bylaws to majority vote from “a plurality of shares voted.” The proposal argues that existing bylaws have enabled Netflix’s board to remain unchanged.

“Half of Netflix’s independent directors have tenures of at least 12 years and the board lacks racial diversity,” read the proposal.

Netflix in late March named Susan E. Rice, a former U.S. National Security Advisor and Ambassador to the United Nations under President Obama, to its board of directors.