Changes are coming to Netflix‘s executive compensation packages.
In its Q3 earnings letter, Netflix says that it is planning “substantial changes for 2024” to its CEO and executive pay packages. The promise to investors comes after shareholders rejected the company’s 2022 pay packages in a “Say on Pay” vote over the summer.
According to an SEC filing, Netflix shareholders rejected the pay packages by a 3-1 margin, with 241.7 million voting no and only 97.8 million voting yes. The vote was non-binding, but when shareholders reject the pay packages, companies usually respond by adjusting executive compensation plans. In fact, Netflix dealt with this exact issue in 2019, another year when shareholders rejected its CEO pay.
“We recognize we don’t have wide support for our executive compensation model of the last 20 years,” Netflix wrote Wednesday. Now, Netflix says it will shift its pay plans “to a more conventional model.”
Co-CEO Ted Sarandos and former co-CEO Reed Hastings each took home more than $50 million in 2022, with Hastings taking almost all of that in stock, and Sarandos electing to have a $20 million base salary, with the rest in stock. After Greg Peters was elevated to co-CEO and Hastings stepped aside, the company set a salary cap of $3 million on its executives, shifting more risk to stock.
Netflix as a company allows its employees to choose how much of their pay they receive in cash, and how much they receive in stock options. For CEOs, however, many institutional investors prefer a relatively low salary, with executives required to have “skin in the game” via performance-based stock options and bonuses.
The company says that its new executive compensation plan, whatever the details are, “will continue to be built on pay for performance.”
FAQs
In December, Netflix's board approved 2024 target compensation packages for Sarandos and Peters each worth $40 million, including base salaries capped at $3 million.
What is the Netflix pay strategy? ›
Netflix has a different compensation philosophy compared to the other FAANG tech companies, so you will not find an annual performance bonus at Netflix. This is a common incentive at Meta, Google, and other large tech companies, but Netflix has decided to focus primarily on their base salary and stock options.
What is the compensation package for a CEO? ›
CEOs often receive base salaries well over $1 million. In other words, the CEO is rewarded substantially when the company does well. However, the CEO is also rewarded when the company performs poorly. On their own, large base salaries offer little incentive for executives to work harder and make smart decisions.
How much does a VP make at Netflix? ›
How much does a Vice President make at Netflix in the United States? The estimated average pay for Vice President at this company in the United States is $126,518 per year, which is 15% below the national average.
What is Netflix's compensation structure? ›
The data includes base salaries only, not forms of compensation such as stock options or cash bonuses. Netflix offered certain staffers between October 2021 and September 2023 base salaries ranging from $72,000 to $1 million a year for a variety of different roles, according to the data.
What are Netflix's weaknesses? ›
Weaknesses. Content Acquisition Costs: One of the primary weaknesses of Netflix Inc is the high cost associated with content acquisition and production. As the company strives to maintain its competitive edge through original and exclusive content, it faces increasing expenses that impact its profitability.
Does Netflix pay well? ›
Highest paying jobs at Netflix
Engineering manager jobs at Netflix earn an average yearly salary of $206,840, Netflix senior software engineer jobs average $181,690, and Netflix senior engineer jobs average $167,093.
Who is the highest paid employee at Netflix? ›
Netflix employees rate the overall compensation and benefits package 4.6/5 stars. What is the highest salary at Netflix? The highest-paying job at Netflix is a Principal Data Scientist with a salary of $358,055 per year (estimate).
How much does the boss of Netflix get paid? ›
Netflix's board has approved 2024 pay packages of its top execs, with co-CEOs Ted Sarandos and Greg Peters each receiving target compensation worth $40 million.
How much does Netflix pay their directors? ›
The estimated total pay range for a Director at Netflix is $171K–$267K per year, which includes base salary and additional pay. The average Director base salary at Netflix is $214K per year. The average additional pay is $0 per year, which could include cash bonus, stock, commission, profit sharing or tips.
After this donation, Hastings is worth an estimated $4.1 billion, per Forbes, much of which is tied up in his remaining ownership of just under 3 million Netflix shares through his family trust, worth roughly $1.7 billion.
