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CalSTRS, Shareowners Call for Changes in Netflix Board Policies

Growing investor frustrations at the company’s annual meeting suggests change is imminent, but the board’s history makes implementation unlikely.

By Chris Butera

The California State Teachers’ Retirement System (CalSTRS) and other Netflix investors let their voices be heard at the entertainment company’s annual meeting Tuesday, voting against the companies wishes on several proposals.

The proposals in question were in favor of reforming Netflix’s corporate governance policies, including proxy access, annual director elections, and the elimination of supermajority, two-thirds voting requirements. Although Netflix’s board recommended voting against these proposals, shareowners put their proverbial feet down and the majority voted in support of these changes.

Of the shareholders, a large group calling for these changes included CalSTRS, Service Employees International Union (SEIU) Master Trust, the Oregon State Treasurer, Friends Fiduciary Corp., CtW Investment Group, Dominican Sisters of Hope, and Ursuline Sisters of Tildonk, US Province. They reached out to company representatives in April urging the board to adopt the majority supported governance reforms and replace Director Richard Barton through “a robust search process designed to recruit a diverse group of candidates qualified to navigate our company through its next phase of growth.” Whether Netflix’s board chooses to do so remains a mystery.

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“It’s time for the Netflix board to respect the clear message shareholders have sent them year after year,” Aeisha Mastagni, portfolio manager for CalSTRS, said in a news release. “Netflix should adopt a range of corporate governance reforms and take the necessary steps to refresh its board.”

While Netflix has not yet disclosed the official vote totals as of this writing, it should be noted that of the directors up for re-election, only CEO and board chair Reed Hastings attended the meeting in person.

Since 2014, Netflix has not adapted proposals to adopt a majority vote standard for uncontested director elections, despite receiving at least 80% support from shareholders. This year, the company was met with a binding shareholder proposal on the subject. However, Netflix claims that the binding proposal was not approved as it faced a bevy of barriers in order to pass. The company sustains a supermajority vote on its binding shareholder proposals. Two-thirds of all outstanding shares must vote for the proposals in order for them to be approved. Majority backing in favor of ending supermajority votes have occurred on four prior occasions with no implementation by Netflix’s board. While shareholders again voted to end supermajority voting requirements, implementation will remain a mystery as well.

“A binding shareholder proposal is a troubling signal that shareholders have lost faith in the board to act,” said Bill Dempsey, chief financial officer for SEIU in a CalSTRS news release. “This proposal should be a wake-up call for the Netflix board. Their shareholders are not going away and we won’t rest until Netflix is ready for prime time.” Dempsey is also responsible for filing the proposal.

In recent years, Netflix has had a history of frustrations from its investors, refusing to replace directors after significant shareholder opposition. The board has also disregarded 17 majority supported proposals. Shareholders are also concerned that although the company has global entertainment ambitions, the board features no racial or ethnic diversity in addition to being entirely based on the West Coast.

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Home > News > Alternatives > Renewables Trump Conventional Energy for First Time, Says Preqin
Alternatives

Renewables Trump Conventional Energy for First Time, Says Preqin

Funds likely to take more of a mixed approach in energy investments going forward.

By Chris Butera

According to Preqin’s June 2017 report, conventional energy has taken a back seat to renewable funding.

The report notes that 2017 is the first time that renewable energy-focused funding exceeded the capital raised for conventional energy sources. Pointing to the renewable energy’s transition into the corporate mainstream in tandem with the depression in oil prices, Preqin suggests this trend will continue. It is also the first time that there are more channels with a renewable energy focus seeking greater investor capital than conventional energy funds.

Since 2008, conventional energy funds have accounted for 46% of all energy capital raised. However, in recent years, fundraising has been on a steep decline. Conventional energy funding has fallen from a 2015 peak of $35 billion to six funds securing a year-to-date (YTD) total of just $2 billion.

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During this time, renewable fundraising remained level in 2015 and 2016, and nine YTD funds have raised $5 billion total — beating out conventional energy funding for the first time.

There are currently 73 renewable-targeting funds aiming for a $35 billion total. Conventional energy only has 52 funds looking at a $29 billion goal.

Since 52% of conventional energy investors also fancy renewables, while 58% and 61% of renewable energy funds have oil and natural gas focus, respectively, Preqin feels that a shift between the strategies is unlikely, instead prompting more funds to take a mixed approach when it comes to energy investments.

 “Global energy demand will continue to grow in the coming years, particularly as emerging economies enact large-scale projects to enhance living standards and modernize their infrastructure. However, within the energy industry there is a long-term adjustment evident towards renewable energy activity and away from conventional energy sources,” says Tom Carr, Preqin’s head of real assets products. “Public pressure and governmental policy to address climate change has placed constraints on the fossil fuel industry, while the US shale oil boom has depressed oil prices in the mid-term. At the same time, technological breakthroughs have reduced the cost-per-unit of renewable energy sources, making them more attractive to investors.”

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