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.

Subscribe HERE for FREE Daily Newsletter!

“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.

 

Comcast Shareholders Nix Lobbying Transparency

Comcast shareholders June 11 voted against a proposal that would have called for greater disclosure of funding spent by the media company on industry lobbying.

Comcast spent more than $29 million in 2016 and 2017 on federal lobbying activities — fourth highest among U.S. companies, according to shareholder Kate Monahan. Speaking at Comcast’s annual shareholder meeting, Monahan claimed the company fails to reveal how much is spent lobbying at the state and local level.

She called on shareholders to approve her proposal requesting the board disclose all funds spent on lobbying. Monahan also called on Comcast to exit the American Legislative Exchange Council, a non-profit she claimed works against clean energy adoption.

“Investors have no idea how much the company is spending overall and yet the company could easily and inexpensively disclose this information,” Monahan said.

Shareholders, not surprisingly, rejected the proposal, according to preliminary vote tallies.

CEO Brian Roberts, after reiterating company highlights in fiscal year, reminded shareholders that anyone fortunate to buy a lot Comcast stock 46 years ago would be very rich today.

“If you had bought 1,000 shares of our stock with my dad at $7 a share in 1972, you would now have $10 million versus nearly $700,000 if you’ve invested in the S&P 500,” Roberts said.

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.