Netflix gives top executives a big raise, citing the new tax law as the reason

Netflix Inc. NFLX, +3.47%   said Thursday that it plans to increase the annual salary for a number of its top executives in 2018.

Most notably, Chief Content Officer Ted Sarandos will earn a $12 million base salary in 2018, after bringing in a salary of just $1 million in the last 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 reform as the reason for the change. 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. In 2017, Sarandos had a $1 million salary but a bonus target of $9 million.

“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.”

Netflix Chief Executive Reed Hastings will earn $700,000 in salary, with $28.7 million in annual stock options. Sarandos will receive $14.3 million in stock options in addition to his $12 million salary.

Chief Product Officer Greg Peters will earn a $6 million salary, and $6.6 million in stock options. 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, +0.18%   is up 20% and the Dow Jones Industrial Average DJIA, +0.26%   is up more than 25%.

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