When you’re hot, you’re hot. Netflix shares rose 134.4% in 2015, making it the biggest gainer in the Standard & Poor’s 500. And it paid off for CEO Reed Hastings, whose compensation increased 50.3% to $16.6 million, according to a proxy just filed at the SEC.
Hastings’ package included $1.1 million in salary, $15.5 million in option awards and $16,832 in other compensation (mostly paid medical premiums). He controls 2.9% of Netflix’ stock.
Hastings owns an aircraft that he leases to Netflix for his and other employees’ business travel. The company paid him $344,000 for this last year.
Chief Content Officer Ted Sarandos did almost as well. He made $14 million, up 58.9%.
After making big investments in original programming and overseas expansion, Netflix’s net income dropped 54% to $122.6 million while revenues increased 23.2% to $6.78 billion.
The proxy offers little detail about the benchmarks it used to set the compensation levels. But it urged shareholders to support a non-binding, SEC-mandated say-on-pay resolution. The board says that compensation philosophy is “designed to attract and retain outstanding performers” and is “guided by market rates and tailored to account for the specific needs and responsibilities of the particular position as well as the performance and unique qualifications of the individual employee, rather than by seniority or overall Company performance.”
The annual meeting will be held June 9 at the company headquarters in Los Gatos, Calif.
Shareholders will be able to vote on a proposal that frequently comes up at Netflix to change the rules so that directors would only be elected if they receive a majority of the votes cast, including those that abstain. The current rules theoretically would allow an unchallenged candidate to be elected with a single vote — and make it virtually impossible for shareholders to oust directors they don’t like.
“Over the past 10 years, approximately 90% of the companies in the S&P 500 Index have adopted a majority vote standard,” those favoring the change say.
Netflix opposes the idea, saying the current system “has served the Company well” and assures that the board doesn’t have vacancies.
Another proposal would call for the entire board to be elected annually, replacing the current system where a third of the directors are up each year to serve three-year terms. “Annual election of each director could make directors more accountable, and thereby contribute to improved performance and increased company value,” supporters say.
Here, too, Netflix is opposed. It says that the staggered board is more stable and “reduces vulnerability to potentially abusive takeover tactics by encouraging persons seeking control of Netflix to negotiate with the Board and thereby better positioning the Board to negotiate effectively on behalf of all stockholders.”