Netflix CEO pays for tumultuous year

The video-streaming and DVD company is cutting the annual stock-option allowance for Reed Hastings.

By Kim Peterson Dec 23, 2011 1:13PM
Image: Woman with computer (© Don Mason/Blend Images/Corbis)Netflix (NFLX) wasn't exactly happy with CEO Reed Hastings' performance this year -- and for good reason. As a result, Hastings isn't getting as many presents under the tree.

The company has cut Hastings' annual stock-option allowance by half to $1.5 million, Bloomberg reports. A year ago, he was given $3 million in stock options.

Hastings didn't get a raise, either. His salary of $500,000 will stay the same. Netflix outlined the compensation changes in a regulatory filing.

Looking back over the last year, it's easy to see why Netflix's board isn't feeling too generous. Even Hastings has admitted the company shot itself in the foot over a number of bad decisions.

The worst move was the way Netflix hiked prices for subscribers in July. Customers who had signed up for one DVD out at a time plus online streaming saw prices jump by nearly 60%. Then there was the Qwikster plan to split Netflix's video streaming and by-mail DVDs into two operations. (That plan has since been reversed.)

Then there was a weird glitch where Netflix appeared to be enforcing a rule limiting video streaming to one device at a time. The company later said that was an error. Finally, Netflix lost a valuable contract with Starz, and saw about 1,000 movies disappear as a result.

Not the best year at all. And Netflix shares have taken the beating you would expect, dropping 75% from July highs.

You could argue that many of Netflix's problems this year involved marketing -- or, rather, the absence of good marketing. Perhaps that's why the company's chief marketing officer is getting a pay cut to $575,000 this coming year from $802,111 in 2011, Bloomberg reports.

But the company's chief content officer, Ted Sarandos, is getting a raise to $1 million in salary from $903,000 last year.

Tags: NFLX
Dec 23, 2011 1:27PM
The CEO is an idiot and should have been replaced. Since when can you destroy your stock value by 75% and still get 1.5 million in stock options? Get me that job....
Dec 23, 2011 2:49PM

nice bonus for a poor job..........!


the rest of us would have been FIRED! 

Dec 23, 2011 3:50PM
Now if BOA and the rest of the CEO'S and congress were treated on performance instead of contracts perhaps our economy would grow.  I would like to see a freeze in salary,pay for their own retirement and insurance for all of the congress persons to see what it is like for the 99%.  They did not do their job. 
Dec 23, 2011 3:18PM
Amazing...and they didn't get fired?  Just goes to show how executives don't play by the same rules as everyone else.  Do you think Joe or Cindy Shmoe (or you or I) would have kept our jobs with that kind of performance?  I don't know of any boss - other than the netflix board - who would have tolerated that type of horrible performance.
Dec 24, 2011 4:44AM
Blockbuster abused there customers because they had no where else to go. Then netflix came along and adios blockbuster. Now netflix is making the same greedy stupid decisions that led to blockbusters demise.
Dec 23, 2011 3:31PM
Reed Hastings gets the Idiot CEO of tfe year award and why is this clown still there?
Dec 24, 2011 6:45AM

America the beautiful. Only place in the world you can screw so many people out of so much and still be generously rewarded for doing a good job.

Dec 24, 2011 5:40AM
Poor babies! How can they survive on such small paychecks and bonuses? I am glad I was one that dumped them! What a bad and greedy call at a time when everyone else is pinching pennies. Should fire them.
Dec 24, 2011 6:45AM

Hasting could not understand that his customers would be outraged when hit with a 60% price hike for no added value and now less content with Starz leaving in March 2012. Hasting couldn't foresee that this would create openings for companies like Amazon, Redbox, Apple, etc.


NetFlix board of directors should have fired Hastings. Netflix stock went from $300 in July 2011 to $72 currently. He is an idiot with no vision.

Dec 23, 2011 3:27PM
Poor gReed ... only $2Million for his "leadership." I guess he is going to have to really tighten his belt this year.
Dec 23, 2011 8:41PM
I wish my boss would punish me by giving me only 2 million dollars for destroying the company.
Dec 24, 2011 6:33AM
Spent my $8.00 on food this month. He should have never been a idiot trying to force a 60% rate hike in the bad times we are currently having.
Dec 23, 2011 8:05PM
So pay this idiot 2 million in salary and options. What a punishment!
Dec 23, 2011 7:57PM
LOL.  They gave him 1.5 million?  His **** should have been fired.  The joke's on him though...those million plus stock options won't be worth squat before too much longer.  Hopefully this will be a lesson many greedy corporations will begin to learn now that consumers are getting wise and tired of being mistreated.
Dec 23, 2011 5:38PM
Gee, only $1.5 million and a $500,000 salary. And some wonder why the public is upset.
Dec 23, 2011 5:08PM
Boohoo. Only 1.5 million of stock options! That means he only pays passive tax of 15% when he cashes in! 
Dec 23, 2011 3:29PM
BLAME the board of directors for letting these CEO'S get away w/ MURDER!!!
Dec 23, 2011 7:49PM

NetFlix sucks, their movies suck, and their business model sucks! I can get better movies on VHS! I dumped them immediately after the price hike. Not worth it.


Dec 23, 2011 3:52PM
He didn't get fired, because the board was behind the decisions. I'm pretty sure when the idea was bought to the table the board had to vote on it.  So the board would have to fire themselves. If the wanted more more money the idiots would of did what every other greedy company does. Raise the price inclemently over a short amount of time. Until they reach that point where customers start to realize the service isn't worth it anymore. You know like cable providers do. Everybody is making more money except the middle, the middle has to pay for their pay raises.  Through higher rent , food cost, energy cost, transportation cost, lower saving interest, higher borrowing interest, payroll cuts, no raises. I would go on and on but I think I feel a tear forming in my eye.
Dec 24, 2011 5:57AM


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