Ted Sarandos, co-CEO and the CCO of Netflix, might receive a total payout of $40 million in 2019, which would align with his 2022 compensation plan. Co-CEO and chairman Reed Hastings is scheduled to receive the same salary of $650,000 and stock options worth around $34 million in 2023 as he did in 2022.
With the 2023 compensation packages, Netflix will reinstate incentives for its top executives after having suspended them for a while. Hastings, Sarandos, COO, and chief product officer Greg Peters will also receive new salary restrictions. In a Friday SEC filing, Netflix revealed the compensation plans decided upon by its board’s compensation committee.
The base compensation for Sarandos will decrease from $20 million this year to $3 million in 2023, and he will also be qualified for a new $17 million performance incentive the following year. Once more, he will be granted stock options worth $20 million.
Up to $24 million might be awarded to Peters ($1.5 million in salary, $12 million in stock options, and $10.5 million in projected target bonus). The only difference from 2022 would be that stock and the bonus make up a larger share of his compensation.
The Netflix board’s compensation committee approved the following pay program modifications for Hastings, Sarandos, and Peters for 2023.
According to the SEC filing:
- A performance-based cash bonus scheme
- A salary cap of $3 million for the co-CEOs and $1.5 million for the COO
- A minimum 50% allocation of the officer’s allocatable pay to stock options
Sarandos and Peters will take part in the bonus scheme for 2023. According to the Netflix filing, Hastings won’t work “since his financial pay is below the $3 million wage cap.”
Netflix began offering performance incentives in 2015 but discontinued them with the start of the 2018 fiscal year in response to Trump’s 2017 federal tax-reform law, which abolished bonuses’ ability to be written off as a tax determination.
“We do not use performance-based bonuses,” the board stated in its 2022 proxy statement, “as we believe they tend to incentivize specific, often short-term oriented behavior rather than stimulate long-term stockholder value development.” The approximately 50% decline in Netflix’s stock price year to date was probably a contributing factor in the decision to restart the bonus program.
Will only pay Netflix’s 8-K filing on Friday states, ” Award under the Plan following achievement of defined performance targets.” The plan’s administrator, the Committee, will give each member a target award and performance objective (or goals) for a time period they’ve set. The announcement read, “Any actual amounts that may be given to the are simply estimates and may vary based on factors determined by the Committee in accordance with the Plan.”
The business released Friday specific compensation packages for additional listed senior officers.
Spencer Neumann, the chief financial officer, will receive $14 million in 2023 ($7 million in salary and $7 million in stock options), David Hyman. The chief legal officer will receive $11 million ($4 million in salary and $7 million in stock), and Rachel Whetstone, the chief communications officer, will receive $6.5 million ($5.7 million in salary and $800,000 in stock).