Netflix Execs Get Hefty Pay Raises in 201328 Dec, 2012 By: Erik Gruenwedel
Christmas came twice to five senior Netflix executives, including co-founder and CEO Reed Hastings, who sees his annual compensation double to $4 million in cash and stock options in 2013 from $2 million in compensation in 2012.
Los Gatos, Calif.-based Netflix gave no explanation for the raises in the Dec. 28 regulatory filing, other than the bottom line. Chief content officer Ted Sarandos sees his total compensation increase to $4 million from $2.8 million; CFO Todd Wells’ total pay rises to $1.1 million from $1 million, and chief product officer Neil Hunt’s compensation increases to $3 million from $2.5 million.
General counsel David Hyman will receive $1.4 million in total compensation.
Netflix shares have increased 29% since the same period last year when the stock was in a freefall following an ill-advised price hike and aborted spin-off of its by-mail disc rental service.
Fast-forward a year and the SVOD pioneer is basking in a groundbreaking digital distribution deal with The Walt Disney Co., which will see Netflix have exclusive rights to Disney, Pixar and Marvel movies during the pay-TV window beginning in 2016. Netflix currently has access to select ABC/Disney TV programs and archived movies.
While Netflix's board apparently approved of Hastings' performance in 2012, some observers contend the CEO's raise is unwarranted. Specifically, Netflix will miss its projected year-end domestic subscriber growth of 7 million by more than 22%. In addition, the service continues to turn a cold shoulder to by-mail disc rental, despite the fact the segment is slated to generate almost 50% of Netflix's margin through the fourth quarter.
Through the first three quarters (ended Sept. 30), Netflix's gross profit year-over-year was down 15%, operating profit was down 90.3%, and net income was down 95.3%, according to fiscal results. Hastings also is the subject of an SEC investigation regarding possible violation of federal disclosure laws regarding company information (monthly streaming data) the CEO revealed on his Facebook page instead of in a regulatory filing.
"If all of this doesn't tell you what's wrong with Netflix, I don't know what will," trader Bill Maurer wrote Dec. 31 on SeekingAlpha.com. "All I want to know is where I can get a job like that. Apparently, you just have to be the CEO of Netflix."
Maurer does not own or trade Netflix stock.