Netflix’s Ted Sarandos Could Get up to $40 Million in 2023, Reed Hastings Pay to Remain at $34.7 Million
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Netflix co-CEO and chief content officer Ted Sarandos’ pay package next year will get a total potential payout of $40 million — which would match his 2022 compensation plan. Reed Hastings, co-CEO and chairman, is set to receive the same compensation package next year as he did in 2022, with a salary of $650,000 and stock options worth approximately $34 million.
With the 2023 compensation packages, Netflix is reintroducing bonuses for its top execs, after having suspended them for the last several years, as well as new salary caps for Hastings, Sarandos and COO and chief product officer Greg Peters. Netflix disclosed the pay packages set by its board’s compensation committee in an SEC filing Friday.
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For Sarandos, his base salary will go from $20 million this year to $3 million in 2023; at the same time, he will become eligible for a new $17 million performance bonus next year. He again is set to receive $20 million worth of stock options.
Peters could receive up to $24 million ($1.5 million in salary, $12 million in stock options, and $10.5 million in estimated target bonus). That would be the same as 2022, except that stock and the bonus represent a larger portion of his pay package.
According to the SEC filing, the Netflix board’s compensation committee adopted the following compensation program changes for 2023 for Hastings, Sarandos and Peters: (1) a minimum 50% allocation of the officer’s allocatable compensation to stock options; (2) a salary cap of $3 million in the case of the co-CEOs and $1.5 million in the case of the COO; and (3) an annual performance-based cash bonus program.
For 2023, Sarandos and Peters will participate in the bonus program. Hastings will not “because his cash compensation is less than the $3 million salary cap,” according to the Netflix filing.
Netflix had adopted performance bonuses in 2015 and then dropped them with the 2018 calendar year (instead delivering all cash compensation as salary) because Trump’s 2017 federal tax-reform law eliminated a tax write-off for bonuses.
In its 2022 proxy statement, the board said, “We do not use performance-based bonuses as we believe that they tend to incentivize specific, typically short-term focused behavior rather than encourage long-term stockholder value creation.” Netflix’s stock price is down about 50% year to date, which was likely a factor for the decision to reinstate the bonus program.
“Awards under the Plan will only be paid after achievement of specified performance goals,” Netflix said in Friday’s 8-K filing. “The Committee will be the administrator of the Plan and will assign each participant a target award and performance goal or goals for a performance period set by the Committee.” It added that the estimated target bonus amounts for Sarandos and Peters “are estimates only, and any actual amounts that may be paid to the may differ based on factors adopted by the Committee pursuant to the Plan.”
The company detailed compensation packages for other named executive officers Friday. In 2023, CFO Spencer Neumann will receive $14 million ($7 million in salary and $7 million in stock options), chief legal officer David Hyman will get $11 million ($4 million salary, $7 million in stock) and chief communications officer Rachel Whetstone is to receive $6.5 million ($5.7 million salary, $800,000 in stock).
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