Netflix Senior Executives See Slight 2022 Compensation Bumps

Netflix ended 2021 the same way it ended 2020: No. 1 across most industry metrics. The company’s shares are trading up almost 15% from the end of 2020 at more than $600 per share. But bottom-line results don’t necessarily translate to a significant increase in personal wealth for Netflix senior executives already accustomed to the 1% income bracket.

Netflix co-CEOs Reed Hastings and Ted Sarandos will realize $34.6 million and $40 million, respectively, in total compensation for the fiscal 2022 year, according to a Dec. 21 regulatory filing. The compensation largely mirrors the executives’ 2020 compensation of $34.6 million each.

Hastings, who co-founded Netflix with Marc Randolph, will receive $650,000 in base salary (which Netflix pays payroll tax on), and $34 million in stock-based compensation (which Netflix does not pay taxes). Sarandos will get a base salary of $20 million, which is identical to his base salary in 2021.

CFO Spencer Neumann will split $7 million in base pay along with an additional $7 million in stock-based compensation. That compares with $6 million and $5.5 million, respectively, in 2021.

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Greg Peters, chief operating officer and chief product officer, will see his base pay soar to $16 million from $12 million, while stock-based compensation increases to $8 million from $6.9 million.

Dave Hyman, chief legal officer, sees his compensation increase to $6 million and $5 million, respectively, compared with $4.7 million in separate base salary and stock options.

Finally, Rachel Whetstone, chief communications officer, makes the filing for the first time, realizing $5.5 million base salary and $1 million in stock options.

Netflix Co-CEOs Give Shout Out to Arizona Video Store Founder

In a Dec. 4 social media post, Netflix co-CEOs Reed Hastings and Ted Sarandos paid tribute to pioneering video rental dealer Dale Mason, whose Arizona Video Cassettes West in Phoenix in the early 1980s was an early regional powerhouse in the then-nascent video rental business.

“Dale was Ted’s break into the video business in 1983. His stores lasted a long time. Thank you, Dale!” Hastings wrote.

Netflix started business in the late 1990s as a pioneering by-mail DVD rental website. Current co-CEO Ted Sarandos joined the company following stints in the video retail business, including in 1983 as a teen clerk at Arizona Video Cassettes West in Phoenix — when consumers primarily rented movies on VHS cassettes.

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Sarandos’ love for movies and insight what consumers might like to rent was apparent early, and store owner Mason soon made his passionate employee a store manager. Sarandos would continue working at the eight-store chain until 1988 when he joined East Texas Distributors, and then later as VP of product and merchandising at Video City/West Coast Video, which operated 500 stores.

In 2000, Sarandos joined Netflix as chief content officer, a position he still holds today. The company, of course, transitioned to subscription streaming video, largely turning its back on packaged media.

Ted Sarandos Said He ‘Screwed Up’ on Transgender Debate

Netflix co-CEO and chief content officer Ted Sarandos says he “screwed up” handling the controversy regarding stand-up comic Dave Chappelle’s new Netflix special The Closer — now streaming on the SVOD platform.

Chappelle, who has a long-term contract with Netflix, drew criticism from LGBTQ groups over comments he made regarding transgender people, remarks some observers — including Netflix’s transgender employees — viewed as hurtful and discriminatory.

The streamer’s trans employee resource group has a planned Oct. 20 virtual walkout in protest.

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In an Oct. 19 media interview, Sarandos said he should have realized that initial comments supporting freedom of speech and “artistic expression” could hurt some people.

“I 100% believe that content on screen can have impact in the real world, positive and negative,” he said. “I should have first and foremost acknowledged in those [company memos] that a group of our employees were in pain, and they were really feeling hurt from a business decision that we made.”

Sarandos said the internal memos, one of which was leaked to the media resulting in the firing of the Netflix employee who leaked it, were clumsily handled. That said, the CCO said there were no plans to pull Chappelle’s special (which ranks No. 3 on the platform), arguing there would always be content on Netflix that would offend some audiences.

“We’re deeply committed to the culture of transparency [within Netflix],” Sarandos said. “It also depends upon a great deal of trust with our employees that we continue to secure, but we don’t plan on changing any of our internal operations around that.”

Ted Sarandos: Netflix Management Wasn’t Sold on ‘Squid Game’ in the Beginning

With South Korean original horror series “Squid Game” setting viewership records for Netflix, it would be easy for co-CEOs Reed Hastings and Ted Sarandos to take credit for a show 142 million Netflix households streamed in the first 28 days following its Sept. 17 debut.

Speaking on the company’s Oct. 19 webcast, Sarandos gave credit to the streamer’s South Korean team that recognized the show’s potential when acquiring the rights two years ago. It was not a sentiment equally shared stateside.

“I can’t say that we had the same eyeball on it that it was going to be the biggest title in our history around the world,” Sarandos said.

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The executive said that the show tracked like a local-language show that mushroomed globally. At the same time, he said predicting the success of a program is unrealistic.

“In 10 years trying to sell [‘Squid Game’], our team recognized something nobody else did. And created an environment for that creator to make a great show,” Sarandos said. “How something can go viral is really hard to predict, but it’s super powerful when it happens.”

The co-CEO said “Squid Game” has been able to “deliver the goods” to be able and attract monster viewership, and have people talk about it in shorthand.

“Sometimes you think you have lightning in a bottle and you’re wrong,” Sarandos said. “And then you have a really great Korean show that happens to be lightning in a bottle for the rest of the world.”

The CFO was quick to point out that Netflix has had similar successes, just not on the same scale as “Squid Game.” Shows such Spain’s “Money Heist,” France’s “Lupin,” Germany’s “Blood Red Sky” and the U.K.’s “Sex Education,” among others.

Sarandos said Netflix’s content team continually focus on the reality that stories of the world increasingly come from all over the world — not just Hollywood. He said non-English-language content viewing has grown three times since Netflix began making original programming in 2008.

“The thing [our content teams are] mostly focused on are a bunch of shows you’ve never heard of, but are hugely impactful in [different] territories, like Denmark, Italy and India,” Sarandos said. “These are all shows that are meant to be hugely impactful and loved in territory, and if they really catch on, they travel a lot.”

Ted Sarandos Defends Comic Dave Chappelle Over Controversial Netflix Special

Netflix co-CEO and chief content officer Ted Sarandos is defending the streamer’s decision to keep “The Closer,” an original new stand-up special featuring comic Dave Chappelle on the platform. The program has drawn protests regarding Chappelle’s comments about the transgender community.

Specifically, Chappelle, in the special, defends “Harry Potter” author J.K. Rowling, who has criticized transgenders and claimed they represent a threat to her own gender identity.

“They canceled J.K. Rowling – my God,” Chappelle says on the program. “Effectually she said gender was a fact, the trans community got mad as [expletive], they started calling her a TERF [“trans exclusionary radical feminist”] … I’m Team TERF. I agree. I agree, man. Gender is a fact.”

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In an Oct. 8 staff memo, Sarandos reportedly said Chappelle is known for controversial comments — and generating lots of viewers. Netflix’s previous Chappelle special (the fifth under a long-term deal), “Sticks & Stones,” was one of the “stickiest” stand-up specials, according to the executive.

“Several of you have asked where we draw the line on hate,” Sarandos wrote. “We don’t allow titles on Netflix that are designed to incite hate or violence, and we don’t believe ‘The Closer’ crosses that line.”

Sarandos said he understands that distinguishing between commentary and harm is difficult, especially with stand-up comedy, which exists to push boundaries.

“Some people find the art of stand-up to be mean-spirited, but our members enjoy it, and it’s an important part of our content offering,” he wrote.

Ted Sarandos: Netflix Streaming Data a ‘Big Black Box’

Ever since Netflix began divulging the number of subscribers and time spent streaming original series and movies, data dumps by the SVOD behemoth would suggest viewership is through the roof.

It just depends how high, and how big, the roof is.

Speaking Sept. 27 at the Code 2021 conference in Beverly Hills, Calif., co-CEO/chief content officer Ted Sarandos presented updated numbers on the streamer’s most popular series and movies.

Shonda Rhimes’ adaptation of Victorian England in the first season of “Bridgerton” was the No. 1 series in terms of both viewership by subscriber households (82 million) and subscriber time (625 million hours). Actioner Extraction, with Chris Hemsworth, was streamed by 99 million households, while Sandra Bullock dystopian thriller Bird Box snared 282 million hours.

While the numbers are huge, Sarandos admitted the data is a bit of “a big black box.” Indeed, Netflix counts a viewer after just 120 seconds of continuous streaming — leaving actual viewership a bit of a guessing game. The streamer ended the most-recent fiscal period (ended June 30) with almost 210 million subscribers worldwide.

Sarandos said that while viewership data was not the lone factor Netflix used determining a show’s lifeline, he added that “for a subscription business, engagement really matters. This is a real indicator of value.”

Indeed, Sarandos said the new Korean horror series, “Squid Game,” is currently the most-streamed series on the platform since its Sept. 17 launch, tracking to become one of the top series ever streamed on Netflix.

“We did not see that coming, in terms of its global popularity,” Sarandos said.

Netflix Acquires Roald Dahl Story Company

Three years after forming a partnership for original animated TV series, Netflix Sept. 22 announced it is purchasing the Roald Dahl Story Company for an undisclosed amount. The prolific British novelist, short-story writer, poet and screenwriter died in 1990 at the age of 74.

Netflix currently has Academy Award winning director Taika Waititi and Oscar nominee Phil Johnston working on a series based on Charlie and the Chocolate Factory. In addition, Netflix  is working with Sony Pictures and Working Title on an adaptation of Matilda The Musical.

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“These projects opened our eyes to a much more ambitious venture — the creation of a unique universe across animated and live-action films and TV, publishing, games, immersive experiences, live theater, consumer products and more,” Ted Sarandos, co-CEO and chief content officer, and Luke Kelly, managing director of RDSC and Dahl’s grandson, wrote in a blog post.

Dahl’s books have been translated into 63 languages and sold more than 300 million copies worldwide, with characters such as Matilda, The BFG, Fantastic Mr. Fox, Willy Wonka and The Twits, among others.

“As we bring these timeless tales to more audiences in new formats, we’re committed to maintaining their unique spirit and their universal themes of surprise and kindness, while also sprinkling some fresh magic into the mix,” Sarandos and Kelly wrote.

Completion of the transaction is subject to regulatory approvals and other customary closing conditions.

Reed Hastings: Linear TV, YouTube Biggest Netflix Competitors — Not Disney+

Following a quarter in which global subscriber growth failed to meet internal and market projections, Netflix executives found themselves on the defensive explaining why 43% fewer subs signed up for the service than expected.

Speaking on the investor webcast, CFO Spencer Neumann said COVID-19 skewed the playing field as the record subscription growth from a year ago could not be replicated — also due in part to production of new content coming to a halt for much of 2020.

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“The combination of those two things does create some noise,” Neumann said, adding that when removing the pandemic from the equation, Netflix sub growth over the past two years has increased more than 20%.

“So, the business remains healthy and that’s because the long-term drivers, this big transition from linear-TV to streaming entertainment, remains as healthy as ever,” he said.

Co-founder/co-CEO Reed Hastings said Netflix’s biggest competitors for viewing time remain linear TV and YouTube — with the latter considerably larger than Netflix in viewing time.

“Disney [viewing time] is considerably smaller,” Hastings said.

He said Netflix remains preoccupied with subscriber satisfaction, retention, and word of mouth, which Hastings said drives sub growth.

The executive said Netflix’s goal remains finding stories subscribers can connect with, improving content selections, the best recommendations, and then ultimately, stories that are incredibly compelling.

“We are just quarter-by-quarter, learning more lessons on each one of those which is what improves the member satisfaction, which is what really drives the growth,” he said.

“We have been competing with Amazon Prime Video for 13 years, with Hulu for 14 years,” he said. “It’s always been very competitive with linear TV, too. So there is no real change that we can detect in the competitive environment. It’s always been high and remains high.”

Separately, COO/CPO Greg Peters said the streamer remains upbeat on video games, which is rolling out with interactive children’s programming and the 2018 original movie Bandersnatch.

“We’re going to continue working in that space for sure,” Peters said. “We’ve actually launched games themselves. It’s part of our licensing and merchandising effort, and we’re happy with what we’ve seen so far. And there is no doubt that games are going to be an important form of entertainment and an important sort of modality to deepen that fan experience. So we’re going to keep going, and we will continue to learn and figure it out as we go.”

Reed Hastings Sells $225 Million in Stock Options; Now 120th Richest Person in the U.S.

Christmas came early to Netflix co-founder/co-CEO Reed Hastings. The executive face of the subscription streaming video pioneer sold $225 million in stock options, according to a Dec. 22 regulatory filing. Hastings, who owns $2.6 billion in Netflix stock, sold $103 million worth of stock options in November. He sold another 83,000 shares on Dec. 8. In 2020, Hastings, who relinquished half of his CEO title to CCO Ted Sarandos, has sold $616 million in stock.

Bloomberg reported that 60-year-old Hastings increased his wealth by $2.2 billion in 2020, to $6.4 billion, making him the 120th richest person in the country. The increase was in part due to a 63% increase in the stock’s price, and the addition of more than 28 million subscribers. Netflix ended its most-recent fiscal period with 195 million subs worldwide.

Interestingly, Roku founder Anthony Wood, a former Netflix executive who helped launch the SVOD market in 2007 with a branded Netflix streaming player, saw his personal wealth reach $7 billion in 2020, due to the company’s stock skyrocketing 165% this year.

Hastings’ sell-off mirrors other Netflix corporate executives looking to exercise stock options before the end of the fiscal year for tax purposes. Interestingly, Sarandos has mostly acquired shares of the streamer in recent months. Netflix has a market capitalization approaching $230 billion.

 

Netflix Bosses Say Series Cancellations on Par With Industry Standards

Netflix has gained a reputation in recent years for pulling the plug on a higher number of original series compared with other streamers and TV networks. Speaking Nov. 11 at the 25th annual Paley Center International Council Summit, Netflix co-CEO Ted Sarandos and Bela Bajaria, head of global TV, called the characterization misleading as the streamer goes to market with full first-seasons compared with pilots at the networks.

Bajaria said Netflix’s original program legacy offering all episodes of series upfront lends itself to determining whether a program has legs to run beyond the first season. Bajaria did not reveal the analysis involved in determining when a show gets cut.

“It’s always painful to cancel a show, and nobody wants to do that,” she said.

The streamer this year decided not to greenlight second seasons of space drama “Away,” “Teenage Bounty Hunters,” “Spinning Out,” “AJ and the Queen,” “Messiah,” “Ashley Garcia: Genius in Love,” “October Faction,” “V Wars,” “I Am Not Okay With This” and “The Society,” among others

Meanwhile, Netflix ordered a second season of “Emily in Paris,” the former Paramount content licensed to Netflix over the summer. It ranks among Netflix’s Top 10 streamed shows, according to Nielsen. It also approved a third season of superhero show “The Umbrella Academy,” and a second second season of “Raising Dion,” about a widowed mom who sets out to solve the mystery surrounding her young son’s emerging superpowers while keeping his extraordinary gift under wraps.

“We actually have a renewal rate of 67%, which is [the] industry standard,” Bajaria said.  “You have to look at ‘The Crown,’ with season four launching now, ‘Grace & Frankie’ and ‘The Ranch,’ we’ve had long-running shows and we’re always going to have a mix that are great to be told in a limited series form and shows that go on for multiple seasons.”

Sarandos contends that Netflix’s high profile results in news being made whenever the streamer cancels a program. The veteran CCO said the old TV business model of hoping a series reached 100 episodes or four seasons to qualify for syndication are over.

“I think many shows can be a success for being exactly what they are and you could tell that story in two seasons or one season or five seasons,” Sarandos said. “I think it gets talked about so much because [we are] measured against the old way of doing things.”