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There are at least two classes of Netflix common stock with different voting rights. The reason why this resolution is non binding is likely because a majority

There are at least two classes of Netflix common stock with different voting rights. The reason why this resolution is non binding is likely because a majority of shares voted in favor but those shares had negligible voting power. Other companies such as Google, Meta and Berkshire Hathaway have similar arrangements.

anigbrowl 3y ago
This arrangement shouldn't be legal. It basically allows the creation of corporate dictatorships and makes a mockery of the 'public company' concept.
- crazygringo 3y ago
  Back around a decade ago, it seemed like everyone on HN loved it when the tech founders could maintain control even when they only had a minority of shares. They could finally unleash innovation without the constraints of dumb Wall Street and institutional investors who just "didn't get it"! They wouldn't be at the supposedly short-term whims of the fickle stock market! I'm happy to see the opinion here finally shifting. It seems people are finally realizing there is something to be said for actual corporate accountability to shareholders.
- deleted 3y ago
  [deleted]
- thegrimmest 3y ago
  Private companies are dictatorships. Every private company starts out as one. The amount of power that the founders abdicate to shareholders via shareholder voting arraignments is entirely up to them. And make no mistake, Netflix is a private company. The "public" means "publicly traded" not "publicly owned" like the Bank of China. Massive corporations are built on providing value to consumers. Netflix and its ilk have unquestionably done so. Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good?
  - anigbrowl 3y ago
    I understand that. If it's publicly traded, then it should be accountable to all the shareholders. Setting up multiple classes of shares with uneven distributions of control is just a means of concentrating power. If you want to run the corporation by fiat, stay private. If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures. Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good? Don't think, just consume product and get excited for next product.
    - thegrimmest 3y ago
      > just a means of concentrating power It's a means of retaining power that was already concentrated in the hands of the founders. You've failed to explain why the are obligated to give it up simply by listing on a public exchange (hint: they're not). "publicly traded" doesn't mean anything besides the fact that shares are available on public exchanges. The fact that they're available on a public exchange is no guarantee that you'll be able to use them to influence the way the company is managed, or that the company owes you any accountability at all beyond what is strictly legally required. > If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures What if you want to trade a share of future profits for capital? Why is that "wrong"? It seems like in your world non-voting shares are immoral. > Don't think Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise?
      - anigbrowl 3y ago
        They're not obligated to give up that control under existing securities laws. I'm saying they should be. It seems like in your world non-voting shares are immoral. Yes. It promotes unaccountable rentier capitalism, and I do not consider market price signals alone a sufficient check on human greed to yield optimal outcomes. The oft-stated benefits of price theory depend on a market in which perfect competition obtains (total transparency, zero cost to entry or exit of the market, completely fungible commodities), and most markets are not that simple. Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise? I don't owe you an answer, especially not with this rude hectoring behavior. Work on your manners. It matters because corporations enjoy great legal protections by being able to operate within a wealthy and highly developed polity, and by accumulating wealth are also able to shape that polity by lobbying for favorable tax, regulatory treatment and so on. So in that sense, executive compensation is a topic of general public interest because executives have an outside impact on social norms and future policy. As far as Netflix is concerned, the company has earned its money but some of that money has been earned on the backs of writers, who have offered a good argument for why they are underpaid relative to historical standards. As a writer and WGA member myself, I'm in favor of Netflix giving writers a better deal rather than merely exploiting their market dominance. And while the shareholder resolution is not binding, apparently a majority of the owners of Netflix also feel that writers' contributions to the firm's success has been undervalued and expressing their opinion on how that wealth should be distributed. As I said earlier, if you don't want to be accountable to a large group of owners, don't become a publicly traded company. Stay private, govern the corporation by fiat, and and do what you want within the law. It might take a little longer to achieve market dominance in your industrial sector, but if the world is truly meritocratic then success is presumably assured.
- adrr 3y ago
  People have a choice not to invest in companies that have multiple classes of shares and you can also buy these types of shares as people divest them.
mdgrech23 3y ago
To me this is a good example of why if I ever became mega rich I'd still probalby just invest in index funds rather than trying to sit on some board and play power games.
- deleted 3y ago
  [deleted]
paulgb 3y ago
In this case it has nothing to do with voting writes; Say on Pay is a Dodd-Frank reform that is always an advisory (non-binding) vote. https://en.wikipedia.org/wiki/Say_on_pay#US_law https://en.wikipedia.org/wiki/Say_on_pay#US_law

anigbrowl 3y ago

This arrangement shouldn't be legal. It basically allows the creation of corporate dictatorships and makes a mockery of the 'public company' concept.

crazygringo 3y ago
Back around a decade ago, it seemed like everyone on HN loved it when the tech founders could maintain control even when they only had a minority of shares. They could finally unleash innovation without the constraints of dumb Wall Street and institutional investors who just "didn't get it"! They wouldn't be at the supposedly short-term whims of the fickle stock market! I'm happy to see the opinion here finally shifting. It seems people are finally realizing there is something to be said for actual corporate accountability to shareholders.
deleted 3y ago
[deleted]
thegrimmest 3y ago
Private companies are dictatorships. Every private company starts out as one. The amount of power that the founders abdicate to shareholders via shareholder voting arraignments is entirely up to them. And make no mistake, Netflix is a private company. The "public" means "publicly traded" not "publicly owned" like the Bank of China. Massive corporations are built on providing value to consumers. Netflix and its ilk have unquestionably done so. Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good?
- anigbrowl 3y ago
  I understand that. If it's publicly traded, then it should be accountable to all the shareholders. Setting up multiple classes of shares with uneven distributions of control is just a means of concentrating power. If you want to run the corporation by fiat, stay private. If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures. Why do we need to dive into the internals of how they work and what they pay their executives? What does it matter? They provide a service that millions (billions?) of people are happy to consume. Isn't that enough of a public good? Don't think, just consume product and get excited for next product.
  - thegrimmest 3y ago
    > just a means of concentrating power It's a means of retaining power that was already concentrated in the hands of the founders. You've failed to explain why the are obligated to give it up simply by listing on a public exchange (hint: they're not). "publicly traded" doesn't mean anything besides the fact that shares are available on public exchanges. The fact that they're available on a public exchange is no guarantee that you'll be able to use them to influence the way the company is managed, or that the company owes you any accountability at all beyond what is strictly legally required. > If you want to trade ownership for access to deeper capital pools, then you have to govern through merit rather than clever structures What if you want to trade a share of future profits for capital? Why is that "wrong"? It seems like in your world non-voting shares are immoral. > Don't think Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise?
    - anigbrowl 3y ago
      They're not obligated to give up that control under existing securities laws. I'm saying they should be. It seems like in your world non-voting shares are immoral. Yes. It promotes unaccountable rentier capitalism, and I do not consider market price signals alone a sufficient check on human greed to yield optimal outcomes. The oft-stated benefits of price theory depend on a market in which perfect competition obtains (total transparency, zero cost to entry or exit of the market, completely fungible commodities), and most markets are not that simple. Laypeople are poorly equipped to speculate about highly specialized work (such as executive management). Dunning Kruger applies here. You didn't actually answer my question though: assuming you're not a Netflix shareholder, why does it matter to you what Netflix pays their executives? Haven't Netflix earned their money? Doesn't that give them the right to distribute it as they see fit? What is the basis for your claim otherwise? I don't owe you an answer, especially not with this rude hectoring behavior. Work on your manners. It matters because corporations enjoy great legal protections by being able to operate within a wealthy and highly developed polity, and by accumulating wealth are also able to shape that polity by lobbying for favorable tax, regulatory treatment and so on. So in that sense, executive compensation is a topic of general public interest because executives have an outside impact on social norms and future policy. As far as Netflix is concerned, the company has earned its money but some of that money has been earned on the backs of writers, who have offered a good argument for why they are underpaid relative to historical standards. As a writer and WGA member myself, I'm in favor of Netflix giving writers a better deal rather than merely exploiting their market dominance. And while the shareholder resolution is not binding, apparently a majority of the owners of Netflix also feel that writers' contributions to the firm's success has been undervalued and expressing their opinion on how that wealth should be distributed. As I said earlier, if you don't want to be accountable to a large group of owners, don't become a publicly traded company. Stay private, govern the corporation by fiat, and and do what you want within the law. It might take a little longer to achieve market dominance in your industrial sector, but if the world is truly meritocratic then success is presumably assured.
adrr 3y ago
People have a choice not to invest in companies that have multiple classes of shares and you can also buy these types of shares as people divest them.

mdgrech23 3y ago

To me this is a good example of why if I ever became mega rich I'd still probalby just invest in index funds rather than trying to sit on some board and play power games.

deleted 3y ago
[deleted]

paulgb 3y ago

In this case it has nothing to do with voting writes; Say on Pay is a Dodd-Frank reform that is always an advisory (non-binding) vote. https://en.wikipedia.org/wiki/Say_on_pay#US_law https://en.wikipedia.org/wiki/Say_on_pay#US_law