Netflix 2021 Proxy Votes

Netflix 2021 Proxy Votes: Political Disclosures

Netflix 2021 annual meeting is June 3, 3 PM Pacific Time. To attend, vote, and submit questions during the Annual Meeting visit here. To participate, you need the 16-digit control number provided on your proxy card or voting instruction form. Of course, I recommend voting in advance. To enhance long-term value. Vote Against all directors, auditors, pay; For Political Disclosures, Simple Majority Vote, Improve Executive Compensation.

Netflix, Inc. provides entertainment services. It offers TV series, documentaries, and feature films across various genres and languages. The company provides members the ability to receive streaming content through a host of Internet-connected devices, including TVs, digital video players, television set-top boxes, and mobile devices. It also provides DVDs-by-mail membership services. Most shareholders do not vote.  Reading through 79+ pages of the proxy takes time but your vote could be crucial. Below, how I voted and why.

If you have read these posts related to my portfolio and proxy proposals for the last 25 years and trust my judgment, skip 7 minutes of reading. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.

I voted with the Board’s recommendations 0% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A).

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.

Netflix 2021: ISS Ratings

Netflix, Inc.’s ISS Governance QualityScore as of April 30, 2021, is 10. The pillar scores are Audit: 2; Board: 10; Shareholder Rights: 10; Compensation: 10.

Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk. We need to pay close attention to Board, Shareholder Rights, and Compensation.
ESG Risk Rating:   Moderate Controversy Level

Netflix 2021: Board Proposals

1. Directors

Egan-Jones Proxy Services recommends against directors who served for longer than 10 years since they are not considered independent.  All those up this year have served less than 10 years. They also recommend voting against members of the compensation committee when voting against pay.Egan-Jones

Several funds, such as Trillium recommend voting against under several conditions. A shareholder proposal received at least 20% shareholder support in the last year. The nominee is a CEO and sits on more than 2 public company boards. The board’s transparency on corporate governance and shareholder engagement does not rise to a meaningful level.

Vote: AGAINST all directors.

2. Ratification of Independent Auditor

I have no reason to believe the auditor engaged in poor accounting practices or has a conflict of interest. Egan-Jones recommends voting against the auditor if they served for seven years. Independence becomes compromised by that time. Deloitte & Touche LLP has served for 13 years. No other issues appear significant


3. Executive Compensation

Netflix Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Reed Hastings at $43.2 M. I’m using Yahoo! Finance to determine market cap ($218.7B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Netflix is a Large-cap company.mylogiq_logo

According to MyLogIQ, the median CEO compensation at large-cap corporations was $12.9M in 2020. CEO Reed Hastings at $43.2M  is above that amount. Netflix shares underperformed the Nasdaq over the most recent one- and two-year time periods but overperformed during the latest five-year time period. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 197 to 1.

Executive Pay is out of line with peers, shares underperformed and was high compared to internal employees.


Shareholder Proposals

4. Political Disclosures

This good corporate governance proposal comes from my wife and was written by me, James McRitchie, so of course, I voted FOR.

Disclosure is in the best interest of the Company and its shareholders. The Supreme Court recognized this in its 2010 Citizens United decision, which said,

[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.

Relying on publicly available data does not provide a complete picture of the Company’s electoral spending. This proposal asks the Company to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organizations, currently hidden, which may be used for electoral purposes. This would bring our Company in line with a growing number of leading companies, including Alexion Pharmaceuticals Inc., Celgene Corporation, and Biogen Inc., which present this information on their websites.

Proposals on this topic at Alliant Energy and Cognizant Technology Solutions passed last year, despite board opposition. This year, shareholders of Centene Corporation, J.B. Hunt Transport Services, and Western Union have also passed similar proposals.

Vote: FOR, our continued political democracy depends on it.

5. Simple Majority Vote

This proposal is similar to many that I routinely file. A vote FOR this proposal is warranted given that elimination of the supermajority vote requirement would enhance shareholders’ rights.

Vote: FOR.

6. Improve Executive Compensation Philosophy

Inclusion of CEO pay ratio and other factors as guiding principles of executive compensation could allow for more informed and contextual assessments.  Investors could better determine if the company’s executive compensation practices are reasonable and fair and aligned with shareholders’ long-term interests.

Vote: FOR.

Proxy Insight reported no votes when I last checked. 

Looking up a few funds in our Shareowner Action Handbook:

Australia’s Local Government Super


Calvert voted similarly but voted Against the Auditor given excessive non-audit fees; For #9 Improve the Executive Compensation Philosophy. CBIS voted the same as Calvert. NYC Pensions voted the same as Australia’s Local Government Super. Norges voted Against Barton, Smith, and #9 Improve the Executive Compensation Philosophy. Trillium voted the same as Calvert.

Calvert’s rationale in voting for #9. Inclusion of CEO pay ratio and other factors as guiding principles of executive compensation could allow for more informed and contextual assessments.  Investors could better determine if the company’s executive compensation practices are reasonable and fair and aligned with shareholders’ long-term interests.

CorpGov Votes:

  1. Directors: AGAINST Barton, Belmer, Smith, Sweeney (all directors).
  2. Auditors: AGAINST.
  3.  Executive Pay: AGAINST.
  4. Political Disclosures: FOR.
  5. Simple Majority Vote: FOR.
  6. Improve Executive Compensation Philosophy: FOR.

Netflix 2021: Issues for Future Proposalsinsightia

Looking at insightia for anti-shareholder provisions:

  • Independent Chair not required.
  • Majority Vote for Uncontested Election not required.
  • Missing Right for Shareholders to call special meeting.
  • Staggered Board.
  • Supermajority Shareholder Vote Required to Amend Certain Provisions.

Netflix 2022: Mark Your Calendar

Stockholder proposals intended for our 2022 Annual Meeting must be received by our Secretary no later than December 24, 2021. Mail proposals to Netflix, Inc., 100 Winchester Circle, Los Gatos, California 95032, Attention: Secretary.

Related Posts

Netflix 2020 Proxy Scorecard

Netflix 2019: Ignore Shareholders Again?

Netflix Approach to Governance: One-Sided


Be sure to vote for each item on the proxy. Any items left blank get automatically voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime). I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group.” Peer groups are often chosen by aspiration. The “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average.” However, corporations live in the real world. All CEOs are above average. Ignoring that fact partly explains why their collective pay spiraling out of control. We need to slow the pace of money going to the 1% or our economy will fail to serve the majority. The rationale for peer group benchmarking is a mythological market for CEOs. For more on the subject, see CEO Pay Machine Destroying America.


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