Netflix shares slumped on Friday, because the streaming giant gave a disappointing hint of next quarter’s revenue and profit. But more significant is the departure of co-founder Reed Hastings from the company’s board this coming June. While he had already stepped back from running the company, Hastings remains a symbol of what made Netflix great — and, to those who hope governance and profit go hand in hand, what made it deeply irritating.
In the era of Meta Platforms, Snap, Tesla and Palantir, undemocratic corporate governance is practically the norm. Next to those companies Netflix, founded as a DVD delivery service in 1997, seems positively conventional. It has no elite class of supervoting shares. A generous 10 of its 13 directors are deemed independent. It has conspicuously never shovelled billions of dollars into side projects that never got off the ground, Metaverse style.
Even so, Hastings helped make the $410bn streamer a case study in bad governance. Over the years the board he chairs repeatedly ignored shareholder votes asking to make directors more accountable. It introduced a “poison pill” mechanism to ward off activist Carl Icahn in 2012 without asking shareholders for permission. And when investors last year voted to eject lead director Jay Hoag, the company kept him anyway. Hoag has been on the board for 27 years; five of his “independent” colleagues have served for more than a decade.