Netflix gives some top executives big raise in salary, citing new tax law

Netflix Inc. said Thursday that it plans to increase the annual salary for a number of its top executives in 2018, and cited the recently passed tax overhaul for the change in its compensation structure.

Most notably, Netflix NFLX, -0.34%  Chief Content Officer Ted Sarandos will earn a $12 million base salary in 2018, after bringing in a salary of just $1 million in each of the past three years, according to a filing with the Securities and Exchange Commission.

The streaming giant cited the recent passage of the U.S. federal tax legislation as the reason for a change from offering conditional bonuses to larger salaries. The company said salaries of more than $1 million for named executives, other than the chief financial officer, were subject to a substantial surcharge. Because of that, Netflix had a performance-based bonus plan for certain executives.

Read: Republican tax bill spells big changes for companies’ approach to executive compensation

“With the recent passage of federal tax reform, the performance bonus plan will no longer eliminate such surcharges,” the company said in the filing. “As such, the compensation committee of the board of directors has determined that all cash compensation for 2018 will be paid as salary.”

In 2017, Sarandos had a $1 million salary and a bonus target of $9 million, up from a $4 million bonus with a $1 million salary in 2016. Like other Netflix execs, Sarandos also receives stock compensation, which is expected to be $14.25 million in 2018 after totals of $11 million, $11.8 million and $9.6 million the past three years, according to a previous Netflix filing. Sarandos will receive $14.3 million in stock options in addition to his $12 million salary.

Netflix Chief Executive Reed Hastings will earn $700,000 in salary in 2018, with $28.7 million in annual stock options, continuing a pattern of decreasing annual salaries and increasing stock awards for the Netflix co-founder. In 2017, Hastings had a salary of $850,000 and a stock allocation of $21.2 million; in 2016, he was paid $900,000 with a stock allocation of $19.05 million, according to the previous filing.

Chief Product Officer Greg Peters will also receive a large raise in his annual salary, earning $6 million in cash, up from $1 million each of the past three years with bonuses of $1.5 million in 2017 and 2016 and $1 million in 2015. Peters also is expected to receive $6.6 million in stock options in 2018, up from a $3.3 million target in 2017.

Chief Financial Officer David Wells will earn $2.8 million in salary, with $2.5 million in stock options, and General Counsel David Hyman will earn $2.5 million in salary, with $3.3 million in stock options.

Shares of Netflix are up nearly 56% year-to-date, while the S&P 500 index SPX, -0.19%   is up 20% and the Dow Jones Industrial Average DJIA, -0.15%   is up more than 25%.

Netflix declined to comment beyond the filing.

MarketWatch staff writer Jeremy C. Owens contributed to this article.

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