Netflix Eliminates Supermajority Requirement for Board Changes

Netflix Stocks take an after-hours thrashing on the company’s weaker-than-expected subscriber growth forecast. But investors are getting something else they’ve been asking for: a change in corporate governance.

In the fourth quarter result report On Thursday, Netflix said it is recommending scrapping a supermajority provision that requires two-thirds of the vote to change board members. The proposal will come at the next shareholders’ meeting.

“While our current governance structure has served our shareholders exceptionally well with an ongoing period of significant growth, we have clearly demonstrated our business model,” Netflix said in its letter to shareholders. “As a result, the Netflix Board of Directors has decided to evolve towards a standardized large-cap governance structure and will recommend several changes at our next annual meeting.”

In addition to removing supermajority votes, Netflix said it will allow shareholders to call special meetings and will change the voting standard for its directors in uncontested elections.

Netflix shareholders have been demanding a change to a simple majority for years. Five times since 2013, investors have supported a shareholder meeting proposal to remove the majority majority requirement, but the company has repeatedly opposed it.

Here’s what Netflix said in its Proxy Submission before the last shareholders’ meeting in June:

“We believe that in the current dynamic business environment, the supermajority we have is appropriate to enhance stability in our operations, while still being low enough to allow shareholders to vote on issues where there is strong consensus.” can have voice. We will continue to monitor and evaluate this issue.”

Seven months later, Netflix finally reevaluated. The announcement was made on the same day that the company reported the fourth quarter merits and revenues exceeding estimates. However, shares plunged nearly 20% in after-hours trading as subscriber growth slowed.

— CNBC’s Jordan Novet contributed to this report

CLOCK: Netflix stock was hit hard after the company announced earnings

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