Netflix (NFLX) shareholders will vote Monday at the company's annual meeting on a proposal to separate the roles of chairman and chief executive, reports the New York Times. Both positions are currently held by Netflix co-founder Reed Hastings. And with the stock up almost 95% in the last year observers may be wondering, why Netflix is a target for this activism.
"I almost feel bad for Reed Hastings," says Yahoo Finance Editor-in-Chief Aaron Task in the video above. "After the Qwikster [rebranding] disaster, he's done a phenomenal job turning around this business, and the share price has done phenomenally well the last year."
More generally-speaking though, Task says he supports efforts to push back on management and he hopes the era where boards rubber stamp anything management says is coming to an end.
There is also the issue of what these votes accomplish. More than 73% of Netflix shares were voted in favor of last year's iteration of the proposal for an independent chairman, yet the company made no changes. Task says while he believes companies are becoming more sensitive to pressure from shareholders, he notes these are non-binding votes that are symbolic more than anything.
The request for an independent board chairman is backed by serious institutional investors: California's public pension fund Calpers and New York City's comptroller Scott Stringer, who oversees the city's pension funds. It's also backed by proxy advisory firms Institutional Shareholder Services and Glass, Lewis & Company. Stringer has said the effort is about principle, noting "an ounce of prevention is worth a pound of cure."
As for why investors need to pay attention to this vote, check out the video to see, as Task draws on an example from JP Morgan (JPM).
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