Netflix (NASDAQ: NFLX ) held its annual shareholder meeting on June 7, and it was a stormy affair. Seemingly routine matters like reelecting directors met extremely high levels of shareholder resistance, and four out of five shareholder proposals passed muster despite the board recommending the opposite outcome.
The video king has crossed voting swords with shareholders before, and hasn't always come out on the winning side. But Netflix seems slow to implement these non-binding votes. Will the sheer weight of this year's opposing votes force Netflix to take action?
Check out the final proxy statement to dive into fine detail on what each of the shareholder measures actually means.
The four proposals that met shareholder approval despite Netflix's objections are all designed to increase transparency and corporate governance processes. Corporate governance advisory firm ISS rates Netflix's governance structure a dismal 10, where a score of 1 is excellent and 10 is the worst you can get. The company scores particularly poorly in terms of shareholder rights and audit processes, reflecting the heavy dose of anti-takeover measures Netflix has put in place. Three of the newly approved shareholder actions would make the company an easier target for potentially unwanted buyouts. You can bet your favorite goat that activist investor Carl Icahn voted his nearly 10% holdings in favor of these measures.
The company has failed to act on shareholder votes before, and probably won't implement all of these measures this time. I voted my modest holdings against all of them personally, because I believe in the company's strategic direction and appreciate the need to stave off unwanted takeover proposals. I can think of several oft-rumored buyers that would largely ruin Netflix's global domination strategy due to clashing corporate cultures and long-term goals. And I can't come up with a single buyout idea that makes sense.
Still, I'm in the minority here. I may not agree with your vote, but I'll fight for your right to cast it or the democratic process becomes a moot point. So I'm rooting for Hastings and Co. to take these votes to heart, sooner rather than later. It's the right thing to do if Netflix respects its shareholders at all.
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