I'm the Chief Executive Officer of Netflix Incorporated. It's my pleasure to welcome you to the company's 2018 Annual Meeting of Stockholders. We have the following officers in attendance, David Wells and David Hyman, in addition to myself. Also present are Steve Meyer from Ernst and Young, our independent registered public accounting firm and Spencer Wang, Netflix's Vice President of Investor Relations. We'll hold the formal part of the meeting first.
Following the formal part of the meeting, I will answer a few questions if there are any that have been submitted to the shareholder meeting link listed in our proxy. The annual meeting is now called to order. This meeting is being held to consider the proposals listed in the proxy statement previously delivered to you and to conduct such other business as may properly come before the meeting. The The Inspector of Elections, Lou Larsen of Broadridge has confirmed a quorum is present, so the meeting is duly constituted and the polls are now open. We have 3 management proposals on the ballot that will be voted on at this meeting.
1, the election of directors 2, to ratify the appointment of Ernst and Young as our independent auditors and 3, advisory approval of our executive officer compensation. We also have 6 shareholder proposals on the ballot. The sponsors of these proposals wish to make a brief presentation, so we will call on you now. Operator, please open the line for James McRitchie for Proposal 4.
Is the line open?
Your line is now open.
Okay. Proposal number 4 has to do with the right to call special meeting. This proposal simply asks for a shareholder's right to call a special meeting. Special meetings are a way to bring an important matter to the attention of both The 15 The 15% threshold thought still well above the 10% thought by law, which many other companies provide, emergencies do happen, 64% of S and P 500 Companies provide for special meeting. Let me also put this proposal in context.
Last year, a majority of shares were voted in favor of proxy access to declassify the Board for a majority vote for electing directors and to eliminate all super majority voting requirements. As far as I know, none of those proposals were implemented by the Board. In 2016, majority of shares were voted in favor of proxy access, reducing super majority vote requirements and to declassify the Board, no action was taken. In 2015, similar proposals were voted and won. A majority of shareholders also voted against Director Barton, who although he lost is up for reelection again this year.
In 2014, a majority voted to declassify the Board and to require a majority vote to elect directors. I could keep going back in time, but you get the picture. The voice of shareholders is being ignored and has been ignored for many years. Once again, let's send a message to the Board. Please vote in favor of proposal number 4 to provide for special meetings.
Hopefully, the Board will get the message. Shareholders want good governance. Thank you.
Thank you. Operator, please now open the line for Rhonda Brauer for Proposal 5.
Rhonda Brauer, your line is now open.
Thank you. I'm Rhonda Brauer from the office of New York City Controller, Scott Stringer, presenting Proposal 5 on behalf of the city's pension funds to long term Netflix share owners of 790,000 shares. We ask Netflix to adopt a proxy access by law to enable share owners that director candidates on management's proxy card. This is designed to give substantial long term share owners meaningful voice in nominating directors. Empirical studies from respected independent sources stood in our proposal have linked proxy access to increased share owner value.
The case for proxy access at Netflix is especially compelling. The Board has repeatedly ignored majority votes against directors and for share owner proposals that would strengthen director accountability, including our proxy access proposals, which received the support of approximately 70 percent of the votes cast in each of the last 3 years. Contrary to the Board's opposition statement, the proposed by law includes appropriate terms and safeguards to prevent abuse. In fact, the SEC, following extensive analysis and public comment, determined that these terms were most appropriate and provided adequate safeguards. Even if 1 or more proxy access candidates were included on Netflix ballot, it would still be up to all investors to determine which ones to elect.
Netflix is an outlier in opposing proxy access, particularly among larger companies. Over 500 companies now have similar proxy access bylaws, being over 65% of the S and P 500, most without the need for a vote. Often, enactment followed constructive discussions with our office. By contrast, Netflix management and Board have repeatedly used requests for engagement from our office. We thus urge a vote for proposal 5.
Thank you.
Okay. Anne, your line is now open.
Okay. Good afternoon, members of the Board and fellow shareholders. I'm Ann Kao, and I'm here on behalf of the City of Philadelphia Public Employees Retirement System to move Item 6 on the proxy statement. This proposal asks our company to adopt a callback or recoupment policy on executive compensation. Such a policy would empower the Board to recoup compensation paid to executives that in hindsight was unearned.
It would be up to the discretion of the Board of Directors to determine when a recoupment is appropriate. The account scandal at Wells Fargo in 2017 showed that even corporate scandals of front page magnitude do not necessarily result in a financial restatement. Wells Fargo called back a total of $136,000,000 from 2 executives in response to the reputational damage caused to the company. The reason the Wells Fargo Board of Directors was able to recoup that amount is because the company had adopted a comprehensive callback policy a few years prior to the renovation of the account scandal. The request policy would not require Netflix to utilize it.
It would merely provide another tool to the Board to protect shareholder assets by encouraging accountability among senior executives. Any recoupments made should also be publicly disclosed, so investors know whether the policy is being enforced. We are sensitive to the privacy concerns and urge that the revised policy provide for disclosure that does not violate privacy expectations. Finally, in closing, I want to note that the proxy advisor ISS recommends in favor of this proposal. ISS notes the advocacy of a robust callback policy is only as good as shareholders' ability to monitor its administration.
The company's current policy does not include a requirement to disclose the circumstances of any recoupment in cases of misconduct by a senior executive. Therefore, this item warrants support. We therefore urge you to vote for this proposal number 6. Thank you.
Thank you. Operator, please now open the line for John Chibetin for Proposal 7.
Hello. This is John Chevedden. Can you hear me? Can you hear me?
Yes. Yes, we can.
Yes. Okay. Proposal 7, shareholder right to act by written consent. Shareholders request that our Board of Directors take the necessary steps to admit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. This proposal topic won majority shareholders support at 13 major companies in a single year.
The majority votes would have been still higher as small shareholders have the same access to independent corporate governance data as large shareholders. A shareholder right deck by written consent is a way to bring an important matter to the intention of both management and shareholders outside the annual meeting cycle. It is especially important to gain a shareholder right such as written consent to make up for our management taking away an important shareholder right, the right to an in person annual meeting. For decades, shareholders had a once a year opportunity to ask a $100,000,000 a year CEO and directors questions in person. Now our directors can casually flip their phones to mute or do not even hear as far as I can tell during the entire shareholder meeting.
Our management did not even give us the opportunity to vote on whether we wanted to give away this important right. Our management is now free to run a make believe meeting with Investor Relations devising softball questions in advance, while tossing out serious questions. Then a $100,000,000 a year CEO can simply read the scripted Investor Relations to a microphone. No opportunity for audience feedback. Our management is also free to refuse any questions whatsoever at this meeting amid any company status report and adjourn the meeting in 15 minutes flat.
The lack of an in person annual meeting means that a Board of Directors meeting can be scheduled months after the virtual meeting, by which time any possible issues raised by shareholders under these onerous conditions will be long forgotten by the Plus a virtual meeting guarantees there will be no media coverage for the benefit of shareholders and potential shareholders. A virtual meeting has a complacency plan for our directors and top management. Top management has no incentive to avoid making mistakes for 3 60 days out of the year out of concern that there will be an in person accounting at the annual meeting in front of stockholders and media. Shareholders do have the option of voting against the $100,000,000 a year paycheck of CEO who refuses to answer shareholder questions in person. Please vote to give us a shareholder right to help make up for our top management stripping away one of our important rights.
Please vote yes. Throw the right to act by written consent, Proposal 7. Thank you.
Thank you. Operator, please now open the line for Philip LaRue for Proposal 8.
Philip, your line is now open.
Good afternoon. My name is Philip LaRue. I'm an associate portfolio manager with the California State Teachers Retirement System, and I've been authorized by Christopher Adleman, our Chief Investment Officer to present the following proposal. Resolved, shareholders of Netflix Incorporated request that our Board take the steps necessary so that each voting requirement in our charter and bylaws that calls for a greater than simple majority vote be eliminated and replaced by a requirement for a majority of the votes cast for and against applicable proposals or a simple majority in compliance with applicable law. If necessary, this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws.
Under Delaware law, stockholders are entitled to amend the company's bylaws. The company's bylaws contain several provisions that make effective stockholder oversight difficult. These include election of directors by plurality voting as well as super majority voting requirements for stockholders to amend certain portions of the bylaws relating to director elections and qualifications and the removal of directors. In 2017, stockholders voted on a binding proposal to amend the company's bylaws that would have replaced the election of directors by plurality voting with a majority vote standard. While stockholders gave the proposal 64.6 percent support, it failed to reach the super majority vote requirement.
Stockholders have repeatedly asked the company to take the steps necessary to eliminate the super majority voting provisions. Since 2013, stockholders have approved proposals on this topic 4 times. Despite greater than 80% stockholder support for these proposals in 2013, 2015 2016 and 63% support last year, the Board has refused to act on stockholders' clear directive. Under Delaware law, in order to allow stockholders to amend the company's bylaws by majority vote, the Board must take the necessary steps to initiate the process to amend the Netflix charter. We believe that it's important to institute simple majority voting at Netflix in order to enable effective stockholder oversight of our company, and we encourage all shareholders to vote for this proposal.
Thank you.
Thank you. Operator, please now open the line for Brady Gordon for Proposal 9.
Brady, your line is now open.
Good afternoon. This is on behalf of the General Fund of the Service Employees International Union, I move adoption of Proposal 9, which would amend Netflix's bylaws to require directors to be elected by a majority of shares voting at a meeting, except in the case of contested election. The language of the proposal can be found in the proxy. Majority vote for Director elections is a basic premise. The nominee receives majority opposition, he or she should not be elected.
In the recent past, our company has failed to demonstrate responsiveness to low levels of support for directors under the current plurality standard. As was noted before, Director Barton failed to receive majority support in his last election. Directors Mather and Hogue were last elected with under 60% support. By contrast, average support in S and P 500 Director elections was 97% in 2017. The Board election process must ensure that the shareholder vote has meaningful consequences.
The Director nominee cannot gain 50% plus one support in an election where no other candidate is running. How can that nominee be in a position to represent shareholder interests on the Board? Majority vote standard is long overdue at Netflix. Netflix shareholders cast a majority of yesno votes in favor of the majority vote standard in 2013, 2014, 2016 and 2017, yet the Board has not acted. It is time for Netflix to rebuild the trust and confidence of its shareholders by utilizing a majority vote standard for director elections.
We urge shareholders to support proposal 9. Thank you.
Thank you. Reed, that concludes the presentation of proposals.
Thank you. The Board of Directors recommends that the stockholders vote for all directors for proposals 23 and against proposals 4, 5, 6, 7, 8 and 9. We will vote by ballot on the agenda items described in the proxy statement previously sent to you. Any stockholder who hasn't yet voted or wishes to change their vote may do so now by clicking on the Vote Here button on the Shareholder Meeting link and following the instructions there. Stockholders who have sent in proxies or voted via telephone or Internet and do not want to change their vote do not need to take any further action.
We will allow for shareholders who haven't voted to complete their voting now. I'd like to remind you that some of the statements made at this meeting may be considered forward looking and are subject to certain risks and uncertainties that are described in our filings with the SEC, including our annual report on Form 10 ks as amended for the fiscal year ending December 31, 2017. The polls for each matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or revocations will be accepted. Mr.
Larson, will you report on the vote of the matters brought before this meeting?
Based on preliminary results, the Director nominees were duly elected. Stockholders voted in favor of the appointment of Ernst and Young LLP and the named Executive Officer Compensation. Stockholder proposals 69 were not approved and the remaining proposals were approved.
Thank you. We will be reporting final vote results in a Form 8 ks within 4 business days of today's meeting. This concludes the formal portion of our annual stockholders meeting. There being no further business, I declare that the annual meeting of the stockholders is hereby concluded.
Thank you, Reed. We have time for just The first question is, what is the outlook for international markets and the expected development investment costs for these international markets?
We're continuing to invest in our international markets. They are rapidly growing, which encourages us. And we're continuing to make strong progress there.
Thank you. Next question, as an individual shareholder, I am extremely pleased with the company's performance. However, I am curious as to when we can expect a dividend.
The company has no plans to issue dividends for the foreseeable future.
And we have time for one last question, Reed, which is Netflix announced that they are renewing 30 Reasons Why for Season 3. How does the company weigh the decision to renew content that is potentially controversial for a segment of its user base?
13 Reasons Why has been enormously popular and successful. It's engaging content. It is controversial, but nobody has to watch it. We're an on demand service and we feel great about the possibility of season 3 and look forward to supporting the team's work in
that. Great. Thank you, Reed. That now concludes the Q and A session and our 2018 AO meeting. We thank you all for participating.