Netflix CEO Reed Hastings Slapped On Wrist With $1.5 Million Stock Option Reduction
Netflix CEO Reed Hastings is largely responsible for the company’s loss of more than 800,000 video subscribers and now he’s being slapped on the wrist for his actions with a $1.5 million reduction in his 2012 stock options, exactly 50% of his $3 million allowance for 2011.
Hastings will continue to receive his $500,000 salary which is being paid at a time when the company’s stock has been pulverized after the company decided to raise subscription prices on DVD and video streaming services by 60% while also losing their contract with Starz after the company demanded exceedingly higher costs to do business with rumors of a tiered pricing system for their service.
During 2012 Hasting’s also attempted to spin off Netflix DVD rentals into a business called Qwikster, a decision that was critically panned and quickly abandoned over fear of consumer confusion and abandonment.
Because of his decisions Netflix will record a net loss in 2012, the first time the company has ever recorded a loss in over a decade of doing business. In 2011 Netflix stock plunged by 75% since mid-July, wiping out $12 billion in shareholder wealth.
Even Hastings was surprised by the company’s turn in fortune, announcing at a shareholder meeting last month that he had suspected the company’s stock would hit $1,000 one day. Netflix stock is now trading at $73.84 (up 4% on Thursday), down from it’s July high of $305.
To his credit Hastings has apologized, taken full responsibility and offered no excuses regarding bad business decisions made by the company throughout 2011.
Not all employees are receiving cuts however, chief content officer Ted Sarandos will see his salary increase from $903,362 to $1 million in 2012 while his stock options will increase from $1.4 million to $1.8 million.
In the meantime while some analysts have suggested that Netflix needs to rescind at least part of their price increases Hastings has so far denied that call to action, instead focusing on new contracts with the likes of Pixar animation and the Discovery Network.
What would Netflix need to do in order to win your business back if you recently left their network over all the fumbles they provided in 2011?