Netflix's Cash Bonuses Become Salary Thanks to New Tax Plan
Netflix is scrapping its cash bonuses and will start guaranteeing its payments to top executives with salary.
(Bloomberg) -- Netflix Inc.’s top executives will now get paid in full no matter how the company does, thanks to the Republican tax plan.
The streaming-video provider is scrapping its cash bonuses and will start guaranteeing its payments to top executives with salary. The recently passed tax plan eliminates companies’ ability to deduct performance-based bonuses to managers who are paid more than $1 million, so Netflix just decided to lump all cash payments into executives’ salaries.
Netflix implemented the cash bonus structure in 2015 to take advantage of the tax deductions it could make at the time. In that year and in 2016, executives got either their full target bonus or slightly less. The data for 2017 isn’t yet available.
Next year, Chief Content Officer Ted Sarandos will get a salary of $12 million, more than his salary and cash bonus target combined for 2017. Greg Peters, who was promoted this year to chief product officer, will get $6 million in salary, also bigger than his combined total for 2017.
Netflix’s management team is still getting most of its pay through stock-based incentive compensation. Chief Executive Officer Reed Hastings, Chief Financial Officer David Wells and Sarandos will each get an average increase of about 31 percent in the value of their option grants for 2018, while Peters’s will more than double. There’s a trade-off for Hastings, whose salary will fall to $700,000 from $850,000.
Netflix shares have gained 56 percent this year. Press representatives for the company didn’t immediately respond to requests for comment.
--With assistance from Lucas Shaw
To contact the reporters on this story: Alicia Ritcey in New York at aritcey@bloomberg.net, Jenn Zhao in New York at zzhao66@bloomberg.net.
To contact the editors responsible for this story: Alicia Ritcey at aritcey@bloomberg.net, Crayton Harrison
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