Netflix eliminates supermajority requirement for board changes
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Reed Hastings is the cofounder and director for Netflix. He delivers a speech at the opening of Netflix France’s new office in Paris, on January 17th 2020.
AFP – Getty Images| AFP | Getty Images
NetflixThe company’s less-than-expected outlook for subscribers growth is causing shares to tumble after hours. However, investors now have what they want: an improvement in corporate governance.
The fourth-quarter of the company’s fiscal year earnings reportNetflix stated Thursday it would recommend the removal of a supermajority requirement that required two-thirds vote to change board member positions. This proposal will be presented at the next shareholder meetings.
Netflix sent a letter to shareholders saying that “While our current governance system has served our shareholders extraordinarily with sustained periods of substantial growth,” it had clearly demonstrated its business model. Netflix Board has made the decision to adopt a larger-cap governance model and will propose several changes to our annual meeting.
Netflix stated that in addition to eliminating supermajority voting, it will permit shareholders to call special meetings. Additionally, Netflix will modify the voting standard of its directors for uncontested elections.
Netflix stockholders have asked for the conversion to simple majority voting for many years. Investors have supported the proposal to eliminate the supermajority requirement five times, but the company continues to oppose it.
Below is the Netflix statement. proxy filingBefore the June shareholder meeting:
“We feel that the supermajority in place in this dynamic business environment is appropriate for increasing stability in our operations while also being low enough so stockholders can have a voice in matters where there’s strong consensus. This issue will be monitored and evaluated.
Netflix’s reevaluation was completed seven months ago. The company also reported its fourth quarter results on the day it received the notice. earningsRevenue that exceeded estimates. After-hours trading saw shares fall almost 20% due to slowing subscriber growth.
— CNBC’s Jordan Novet contributed to this report
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