February 29, 2016
Reg Thompson
Netflix, Inc.
rthompson@netflix.com
Re:
Netflix, Inc.
Incoming letter dated February 5, 2016
Dear Mr. Thompson:
This is in response to your letter dated February 5, 2016 concerning the
shareholder proposal submitted to Netflix by Myra K. Young. Copies of all of the
correspondence on which this response is based will be made available on our website at
http://www.sec.gov/divisions/corpfin/cf-noaction/14a-8.shtml. For your reference, a
brief discussion of the Division’s informal procedures regarding shareholder proposals is
also available at the same website address.
Sincerely,
Matt S. McNair
Senior Special Counsel
Enclosure
cc:
John Chevedden
*** FISMA & OMB Memorandum M-07-16 ***
February 29, 2016
Response of the Office of Chief Counsel
Division of Corporation Finance
Re:
Netflix, Inc.
Incoming letter dated February 5, 2016
The proposal requests that the board take the steps necessary so that each voting
requirement in Netflix’s 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 laws.
We are unable to concur in your view that Netflix may exclude the proposal under
rule 14a-8(c). In our view, the proponent has submitted only one proposal. Accordingly,
we do not believe that Netflix may omit the proposal from its proxy materials in reliance
on rule 14a-8(c).
We are unable to concur in your view that Netflix may exclude the proposal under
rule 14a-8(i)(7). Accordingly, we do not believe that Netflix may omit the proposal from
its proxy materials in reliance on rule 14a-8(i)(7).
Sincerely,
Adam F. Turk
Special Counsel
DIVISION OF CORPORATION FINANCE
INFORMAL PROCEDURES REGARDING SHAREHOLDER PROPOSALS
The Division of Corporation Finance believes that its responsibility with respect to
matters arising under Rule 14a-8 [17 CFR 240.14a-8], as with other matter under the proxy
rules, is to aid those who must comply with the rule by offering informal advice and suggestions
and to determine, initially, whether or not it may be appropriate in a particular matter to
recommend enforcement action to the Commission. In connection with a shareholder proposal
under Rule 14a-8, the Division’s staff considers the information furnished to it by the Company
in support of its intention to exclude the proposals from the Company’s proxy materials, as well
as any information furnished by the proponent or the proponent’s representative.
Although Rule 14a-8(k) does not require any communications from shareholders to the
Commission’s staff, the staff will always consider information concerning alleged violations of
the statutes administered by the Commission, including argument as to whether or not activities
proposed to be taken would be violative of the statute or rule involved. The receipt by the staff
of such information, however, should not be construed as changing the staff’s informal
procedures and proxy review into a formal or adversary procedure.
It is important to note that the staff’s and Commission’s no-action responses to
Rule 14a-8(j) submissions reflect only informal views. The determinations reached in these
no-action letters do not and cannot adjudicate the merits of a company’s position with respect to
the proposal. Only a court such as a U.S. District Court can decide whether a company is
obligated to include shareholders proposals in its proxy materials. Accordingly a discretionary
determination not to recommend or take Commission enforcement action, does not preclude a
proponent, or any shareholder of a company, from pursuing any rights he or she may have
against the company in court, should the management omit the proposal from the company’s
proxy material.
NETFLIX
February
5,
2016
Via
E-mail (shareholderpropos
al
s@sec.
gov)
U.S
. Securities and Exchange Commission
Division
of
Corporation Finan
ce
Office
of
Chief Counsel
100 F Street,
NE
Washington,
DC
20549
Re:
Netflix,
Inc
.
Stockholder
Proposals
Submitted
by
Myra
K.
Young
Securities
Exchange
Act
of 1934 -
Rule
14a-8
Ladi
es
and Gentlemen:
I am
writing
to
notify
the
Securities and Exchange Commission {the
"Commission")
that
Netflix,
Inc. (the
"Company"
or
"Netflix")
intends
to
exclude from its proxy materials
for
its 2016 Annual
Meeting
of
Stockholders (the
"2016
Proxy
Materials")
the
precatory stockholder proposals set forth
below {the
"Proposals"),
which were received from Myra
K.
Young (the
"Proponent").
The
Proponent
has
designated John Chevedden
to
receive all correspondence on her behalf regarding the Proposals.
The Proposals request
that
(i)
the
board
of
directors (the
"Board")
take
the
steps necessary
to
replace
provisions in
the
certificate
of
incorporation and bylaws
of
the
Company calling
for
a vote greater than a
simple majority
be
replaced
with
a requirement
for
a majority
of
the
votes cast,
or
simple majority vote,
as
required by law and (ii)
the
Company's Board
commit
to
spend up
to
$10,000 or more on means, such
as
special solicitations,
as
needed in a good faith best
effort
to
obtain t he high vote required
for
passage
as
a binding company proposal.
The Company respectfully requests
that
the
staff
of
the
Division
of
Corporation Finance (the
"Staff')
not recommend
to
the
Commission any enforcement action
if
th
e Company
exc
lud
es
the
Proposals from the 2016 Pro
xy
Materials pursuant
to
Rule 14a-8(i)(7) under the Securities Exchange Act
of
1934,
as
amended (the
"Exchange
Act")
,
on
the
basis
that
the Proposals relate
to
Netflix's ordinary
business operations, and
Rule
14a-8(c) under the Exchange Act, on
the
basis
that
the Proposals
constitute
two
distinct and separate proposals embedded in one resolution.
Copies
of
the
Proposals,
as
well
as
all related correspondence between Netflix and
the
Pr
opone
nt
, are attached hereto
as
E
xh
ibit
A.
In
accordance
with
Rule
14a-8(j) under
the
Exchange Act
and Staff
Legal
Bulletin No. 14D
("SLB
140"),
Netflix h
as
filed this letter and attachments electronically
with
the
Commission not later than 80 calendar days before Netflix expects
to
file its definitive 2016
Proxy Materials
with
the
Commission, and
has
concurrently sent copies
of
this
letter
and attachments
electronically
to
the
designated representative
of
the Proponent.
100 Winchester Circle
I
Los Gat
os
,
CA
950
32
I
Phone 408 540 37
00
I
Fax
408 317
04
62
I
www
.
netflix
.
com
NETFLIX
I.
THE
PROPOSALS
The pertinent part
of
the
Proposals and supporting statement are
as
follows:
RESOLVED,
Shareholders 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 laws.
If
necessary this means
the
closest standard
to
a
majority
of
the votes cast
for
and against such proposals consistent
with
applicable laws. This proposal
includes
that
our board fully support this proposal topic and commit
to
spend up
to
$10,000
or
more on
means, such
as
special
so
licitations,
as
needed in a good faith best
effort
to
obtain
the
super-high vote
required
for
passage
as
a binding company proposal.
Shareowners are willing
to
pay a premium
for
shares
of
corporations
that
have excellent
corporate governance. Supermajority voting requirements have been found
to
be
one
of
six
entrenching
mechanisms
that
are negatively related
to
company performance according
to
"What Matters in
Corporate Governance" by
Lu
cien Bebchuk, Alma Cohen and Allen Ferrell
of
the Harvard
Law
School.
Supermajority requirements are arguably most often used
to
block initiatives supported
by
mo
st
shareowners but opposed by a status quo management.
This proposal topic won from 74%
to
88
% support
at
Weyerhaeuser, Alcoa, Waste Management,
Goldman
Sachs,
FirstEnergy, McGraw-Hill and Macy's. Currently a 1%
-minority
can
frustrate
the
will
of
our 66
%-
sh
areholder majority.
The proposal
is
particularly
important
because Netflix shareholders supported 4 governance
improvement proposals
at
our
2013 annual
meet
i
ng:
73%-vote
for
Independent Board Chairman, sponsored by
the
Comptroller, City
of
New York.
81%-vote
for
a Simple Majority Vote Standard, sponsored by John Chevedden.
81%-vote
for
Majority
Voting
for
Directors, sponsored by
the
California State Teachers'
Retirement System.
88
%-vote
for
Annual Election
of
Each
Director, sponsored by
the
Florida State Board
of
Administration.
Netflix shareholders also supported 3 governance improvement proposals
at
our
2014 annual
meeting:
80%-vote
for
po
ison pill
re
strictions, sponsored by John Chevedden.
82
%-
vote
for
Annual Election
of
Each
Director, sponsored by
the
Florida State Board
of
Administration.
100 W inches
ter
Circle
I
L
os
Ga
tos, CA 95032
I
Phone 408
54
0 3700
I
Fax
408 317 04
62
I
www
.netflix.com
NETFLIX
82%-vote
for
Majority Voting
for
Directors, sponsored by United Brotherhood
of
Carpenters.
Meanwhile 5 Netflix directors each received more than 48%
in
negative votes and 3 shareholder
proposals
each
re
ce
ived
71
%
to
80%
sha
reholder
su
pport at our 2015 annual meeting.
Please
vote
to
protect
sha
reholder value:
II.
EXCLUSION
OF
THE
PROPOSALS
A.
Bases
for
Exclusion
of
the Proposals
As
discussed more fully below, the Company believes
that
it
may properly
omit
th
e Proposals
from its 2016
Pro
xy Materials in reliance on the following paragraphs
of
Rule
14a
-8:
•
Rule
14a-8{i)(7),
as
the Propo
sa
ls
dea
l
with
matters relating
to
the Company's ordinary
business operations; and
•
Rule
14a
-8(
c)
,
as
the
resolution included
in
the Proposals constitutes
two
separate
and
distinct propo
sa
ls,
and despite proper notice, the Proponent
has
failed
to
co
rrect the
procedural deficiency.
B.
The Proposals
May
Be
Excluded in Reliance on Rule 14a-8{i){7),
as
They Deal
With
Matters
Relating
to
Netflix's Ordinary Business Operations
Overview
of
the
"Ordinary Business" Exclusion
A company
is
permitted
to
omit a shareholder proposal from its proxy mater
ia
ls
under
Rule
14a-8{i)(7)
if
the propo
sal
deals
with
a
matter
relating
to
the company's ordinary business operations.
In
Commission
Rel
ease
No.
34-40018 (May
21
, 1998) (the
"
1998
Release"),
the Commission s
tat
ed
that
the
underlying policy
of
the
"o
rdinary business" exception
is
"to
confine the resolution
of
ordinary business
problems
to
management and
th
e board
of
directors, since
it
is impracticable
for
shareholders
to
decide
how
to
solve
such
problems at
an
annual shareholders meeting."
The
Commission further stated
in
the
1998
Release
that
this general policy rests on
two
central considerations. The first
is
that
"[c]ertain
tasks
are
so
fundamental
to
management's ability
to
run a company
on
a day-to-day
basis
that
they could not,
as
a practical matter,
be
subject
to
dir
ec
t shareho
ld
er oversight."
In
this regard,
th
e Commission noted
that
"[e]xamples include the management
of
the workforce,
such
as
the
hiring, promotion, and
termination
of
employees, decisions on production quality and quantity, and the retention
of
suppliers."
The second consideration relates
to
"the
degree
to
which the proposal seeks
to
'micro-manage' the
company by probing too deeply
into
matters
of
a complex nature upon which shareholders,
as
a group,
would not
be
in
a position
to
make
an
informed judgment."
For the reasons set
forth
below, Netflix believes
th
e Propo
sals
are
ex
cludable under
Rule
14a
-8(i)(7) because they impli
ca
t e both con
si
derations referen
ce
d in the 1998
Release
.
1
00
Winches
te
r Circle
I
Los Gatos,
CA
95032
I
Phone
40
8 540 3700
I
Fax
408 317 0462
I
www
.ne
tfli
x.com
NETFLIX
The
Proposals
deal
with fundamental
matters
that
are
not
appropriate for stockholder
oversight
-
decisions regarding
how
the Company spends its corporate funds.
Decisions regarding how the Company should spend its corporate funds are fundamental
to
the
day-to-day operations
of
the Company. The sources and
uses
of
the Company's funds are
determined on a daily
basis
by
management which
has
at
it
s disposal
the
information necessary
for
it
to
make informed decisions on
the
appropriateness
of
its spending in meeting corporate
goals and initiatives.
In
granting no-action relief in
R.
J.
Reynolds Industries
(November 24, 1975),
the
Staff stated
"[the
proposal] deals
with
the
company's finances (specifically management
of
debt), a
matter
that
neces
sa
rily involves
the
ordinary operations
of
the
company." Following
the
logic
of
the
Staff in
R.J
. Reynolds Industries,
statements in
the
Proposals regarding how much
of
the
Company's corporate funds the Board should expend
to
support a binding proposal
to
eliminate supermajority provisions in
the
Company's certificate
of
incorporation and bylaws and
replace
them
with
provisions requiring either a majority
of
votes cast
or
simple majority vote
as
required by applicable laws also necessarily implicates the day-to-day operations
of
the
Company, a
matter
that
should
not
be
within
the
purview
of
the
Company's stockholders.
The
Proposals
do
not
raise significant policy issues
that
transcend the Company's day-to-day
business.
The 1998 Release provides
that
a shareholder proposal may
not
be
excluded pursuant
to
Rule
14a-8(i)(7), despite its interference
with
the ordinary business matters
of
a company, when
it
raises "significant policy issues"
that
"transcend
the
day-to-day business matters"
of
a company. The
Proposals relate
in
part
to
the spending
of
up
to
$10,000
or
more
of
the
Company's corporate funds
on
one
or
more means, such
as
special solicitations,
as
needed in a good faith
be
st
effort
to
obtain
the
high vote required
for
passage
of
a binding proposal
to
eliminate supermajority provisions in the
Company's certificate
of
incorporation and bylaws and replace
them
with
provisions requiring either
a majority
of
votes cast
or
simple majority vote
as
required by applicable laws. This does not raise
significant policy
issues
that
transce
nd
Netflix's day-to-day business
of
providing over
75
million
streaming members in over 190 countries
with
more than 125 million hours
of
TV
shows and movies
per day over the Company's Internet television network.
It
cannot be argued
that
the
Propos
als
involve a social policy
issue
of
the type which
the
Division
of
Corporation Finance focused on in
reversing
the
Cracker Barrel
Old
Country Stores, Inc.
no-action decision (Oct. 13, 1992) in
the
1998
Release, and thus the significant policy exclusion articulated by
the
Staff in
the
1998
Release
should
not
be
applicable
to
the
Proposals.
The
Proposals
seek
to
"micro-manage" decisions
about
complex
matters
upon which
stockholders are
not
in
a position
to
make
an informed judgment.
One
of
the proposals included in
the
Proposals
seeks
to
"micro-manage"
the
Company by
interfering
with
day-to-day ordinary business decisions appropriately
left
to
the
purview
of
management
100 Winchester Circle
I
Lo
s Gatos,
CA
95032
I
Phone 408 540 3700
I
Fax 408 317 0462
I
www
.netflix.com
NETFLIX
and
th
e board
of
direc
tor
s and over which
the
stockholders
of
t he Company
ca
n
not
make an informed
judgme
nt
(i.e.,
ho
w the Company spends its corporate funds). Certain tasks are
so
essential
to
management's ability
to
run a business
that
they
could not,
as
a practical matter, be sub
ject
to
the
direct
oversight
of
s
to
ckholder
s.
When proposa
ls
seek
to
probe
too
deeply
into
complex matters
for
which
shareholders,
as
a group,
would
not
be in a position
to
make
an
informed judgment, the proposals are
micro-managing the company and, therefore, are excludable pursuant
to
Rule 14a-8(i)(7).
Companies have excluded, w
ith
th
e Staff's concurrence, proposals trying
to
"micro
-manage"
portions
of
a company's
ordinary
business operations and spending.
See
Vishay I
ntertechno
log
y,
In
c.
(March 28, 2008) (concurring
that
the
company could exclude a shareholder proposal requesting
that
the
company pay
off
an existing convert ible note);
R.
J.
R
ey
nolds
Industr
ies,
In
c.
(N
ovember 24, 1975).
Because the Proposals seek
to
micro-manage
the
a
mount
(up
to
$10,000
or
more) and
allocation
of
spe
nding
of
corpo
ra
te funds in a specific area
of
the busin
ess,
it
is clear
that
the
Propo
sa
ls
are
of
th
e type
th
at Rule 14a-8(i)(7) permits
th
e Company
to
exclud
e.
The Proposals relate
to
the
spending
of
corporate funds
whi
ch is inherently
part
of
the ordinary business operations
of
the
Company,
better
left
to
the
informed
judgment
of Company's manageme
nt
rather
th
an micro-managed
by shareholders.
As
such, these Propo
sa
ls
should be excluded in
their
entirety
under Rule 14a-8(i)(7).
C.
The Proposals
May
Be
Excluded Under Rule 14a-8(c) Because they Contain Multiple
Proposals, and the Proponent
has
Failed
to
Cure the Procedural Deficiency Despite
Proper Notice
Th
e Proposals may be properly
omitted
from
the
2016 Pro
xy
Materials because
th
ey constitute
mu
l
tiple
propo
sa
ls in violation
of
Rule 14a-8(c). Rule 14a-8(c) provides
th
at "[e]ach shareholder may
sub
mit
no more than one proposal to a company
for
a particular
sha
reholders'
meet
ing
."
If a
s
toc
k
holder
submits
multiple
proposals, causing such submission
to
be procedu
ra
lly deficient,
Rule
14a-8(f)
of
the
Exchange Act requires
the
company
to
notify
the
pro
posing shareholder 14 days
from
the
time
it
receives the
propo
sa
l.
Rule
14a-8(f) also provides
th
at
the
shareholder
proponent
has 14
days
fro
m
the
d
ay
it
receives notice
of
the
procedural defic
ie
ncy
from
the
company
under
Rule 14a-8(f)
to
cure
the
deficiency.
Th
e Company received
the
Pr
op
osa
ls
from
the
Pr
oponent on December
23
, 2015.
On
January
5,
2016,
the
Company
notified
the
Proponent
th
at
th
e Proposals
were
deficie
nt
under Rule 14a-8(c) a
nd
in
forming
the Proponent
that
it
had 14 days
from
its rece
ipt
of
th
e
notic
e
to
cure
the
deficiency. The
Company did
not
receive a revi
sed
propo
sal
from
th
e Proponent curing
th
e deficiency under Rule
14a-8(c) w ithin
suc
h 14-day period
nor
as
of
the
dat
e
of
this le
tt
er. Because
the
Proponent did
not
cu
re
the
de
ficiency within 14 days
of
its receipt
of
th
e deficiency notice
from
the
Company,
th
e Company
requests
that
the S
taff
concur in it s view
that
the
Proposals may properly be
om
itted
from
th
e 2016
Proxy Materials.
100 Winchester C
ir
cle
I
L
os
Ga
tos, CA 95032
I
Ph
one
40
8 5
40
3700
I
Fa
x 408
31
7 0
46
2
I
www
.netflix.com
NETFLIX
A shareholder proposal
with
multiple components constitutes multiple proposals, and therefore
violates Rule 14a-8(c), unless
the
separate components
of
the proposal "are closely related and essenti
al
to
a single well-defined unifying concept" (Commission Release No. 34-12999, November
22
, 1976) (the
"1976 Release").
The Staff
has
granted no-action relief where a proponent sought inclusion
of
proposals
whose elements appeared superficially related
but
were
in
fact distinct. Examples include:
HealthSouth
Corporation
(March 28, 2006) (propos
al
to
grant shareholders
the
power
to
increase the
size
of
the
board and
to
fill any
director
vacancies created by such
an
increased deemed
to
be more than one
proposal);
BostonFed Bancorp,
Inc.
(March
5,
2001) (proposal
to
alter charter and bylaws
to
remove
restrictions relating
to
various shareholder rights was excludable);
Storage
Tech
Corp.
(February
22,
1996) (proposal calling
for
immediate resignation
of
chief executive officer and disclosure
of
his
severance arrangements was excludable);
American Electric Power
(January
2,
2001) (proposal
constituted multiple proposals despite the proponent's argument
that
all
of
the actions were about the
governance
of
AEP);
Duke Energy Corp.
(February
27,
2009) (proposal
to
impose director qualifications,
to
limit
director pay and
to
disclose director conflicts
of
interest despite
the
fact
that
the
proponent
claimed all three elements related
to
director accountability);
PG&E Corp.
(March 11, 2010) (concurring
in
the
exclusion
of
a proposal asking that, pending completion
of
certain studies, the company (i)
mitigate potential risks encompassed by those studies, (ii) defer any request
for
or
expenditure
of
public
or
corporate funds
for
license renewal
at
the site and (iii)
not
increase production
of
certain waste at the
site beyond
the
levels then authorized, despite
the
proponent's argument
that
the steps in
the
proposal
would avoid circumvention
of
state
law
in the operation
of
a specific
power
plant).
Like
the
proposals in
the
prece
dent
discussed above, the Proposals contains multiple elements
requiring separate and distinct actions
that
are
not
essential
to
a well-defined unifying concept. Here,
the
Proposals contains
two
distinct and separate proposals
that
(i)
the
Company take
the
steps
necessary
to
eliminate supermajority provisions in
the
Company's certificate
of
incorporation and
bylaws and replace
them
with
provisions requiring
either
a majority
of
votes cast
or
simple
majority
vote
as
required
by
applicable laws and (ii)
the
Company's Board commit
to
spend up
to
$10,000
or
more on
means, such
as
special solicitations,
as
needed in a good faith best
effort
to
obtain the high vote
required
for
passage
as
a binding company proposal. The first proposal
in
the Proposals consists
of
three
integral components
that
the
Board approve
an
amendment
to
the
Company's Certificate
of
Incorporation and Bylaws
to
eliminate supermajority provisions and replace them
with
provisions
requiring a majority
of
the
votes cast
or
a simple
majority
vote,
to
recommend such amendment
to
the
Certificate
of
Incorporation
to
the
Company's stockholders and include a proposal
to
amend
the
Company's Certificate
of
Incorporation in
the
Company's proxy statement. The second proposal
included in the Proposals consists
of
two
integral components
that
the
Board support
the
amendment
to
the
Company's Certificate
of
Incorporation and second
that
the
Board
commit
to
spend $10,000 or more
on a mean
or
means
to
obtain
the
high vote required
for
the stockholder
to
adopt
such
an
amendment.
The Board
committing
to
spending
of
a certain sum
of
money
to
obtain stockholder approval
of
an
amendment
to
the
Company's Certificate
of
Incorporation
is
a separate and distinct proposal from
the
Company taking actions legally required
to
take the steps necessary
to
eliminate supermajority
provisions in the Company's certificate
of
incorporation and bylaws and replace them
with
provisions
100 Winch
es
ter Cir
cl
e
I
Los
Ga
t
os
, CA 95032
I
Phone 408 540 3700
I
Fax 408 317 0462
I
www.net
flix.com
NETFLIX
requiring either a majority
of
votes cast
or
simple majority vote
as
required by app
li
cable law
s.
It
cannot
be
successfully argued that committing
such
specified sum
of
money
is
"essential"
to
a single
well-defined unifying concept required under the 1976
Rele
ase.
Moreover, the Proponent
has
historically submitted substantially similar proposals
without
the spending component being included
in
the resolution
to
be
adopted by stockholders,
so
it
is
difficult
to
argue
that
the spending request
is
an
essential component
of
the Proposal.
See
for
example the proposals included in the definitive proxy
stateme
nt
s for
Marriott
International, Inc. (filed with
the
Commission on April
4,
2014), Netflix,
In
c.
(filed
with
the Commission on April
27,
2015) and NextEra Energy, Inc. (filed
with
the Commission on
April 4, 2014).
As
such
, due
to
the
fact
that
the Proponent failed
to
remedy the procedural deficiency
in
the Proposals within the time frame contemplated by
Rule
14a-8(f), the Proposals should
be
excluded in
its entirety under
Rule
14a-8(c).
Ill.
CONCLUSION
Based
on the foregoing, the Company respectfully requests
that
the Staff confirm
that
it
will
not
recommend
to
the Commission any enforcement action
if
the Company excludes
the
Proposals
from
the 2016 Proxy Materials.
If
the Staff
ha
s any questions regarding this request
or
requires additional information, please
contact me at (408)-540-3700
or
at rthompson@netflix.com. We also request that, in accordance with
Rule
14a-8(k) and
SLB
14D, the Proponents
co
ncurrently provide the Company
with
any
correspondence submitted
to
the Commission.
cc:
John
Ch
evedden (via e-mail)
David Hyman,
Esq
.
Sincerely,
)
Associate General Counsel
100 Winchester Circle
I
Lo
s Gato
s,
CA
95032
I
Phone 408 540 3700
I
Fax
408 317 0462
I
www
.ne
tf
lix.com
NETFLIX
EXHIBIT A
100 Winchester Circle
I
L
os
Gatos,
CA
95032
I
Phone 408 540 3700
I
F
ax
4
08
317 0462
I
www
.
netflix
.com
Mr
. David Hyman
Corporate Secretary
Netflix, Inc. (NFLX)
100 Winchester Circle
Los Gatos CA 95032
PH: 408 540-3700
Dear Corporate Secretary,
I am pleased to be a shareholder in Netflix, Inc. (NFLX) and appreciate the leadership our
company has shown. However, I also believe Netflix has unrealized potential that can be
unlocked through low
or
no cost corporate governance reform.
I am submitting a shareholder proposal for a vote at the next annual shareholder meeting. The
proposal meets all Rule 14a-8 requirements, including the continuous ownership
of
the required
stock value for over a year and I pledge to continue
to
hold the required amount of stock until
after the date
of
the next shareholder meeting. My submitted format, with the shareholder-
supplied emphasis, is intended to be used for definitive proxy publication.
This letter confirms that I am delegating John Chevedden to act as my agent regarding this Rule
14a-8 proposal, including its submission, negotiations and/or modification, and presentation at
the forthcoming shareholder meeting. Please direct all future communications regarding my rule
14a-8 proposal to John Chevedden
to facilitate prompt communication. Please
identify me as the proponent
of
the proposal exclusively.
Your consideration and the consideration
of
the Board
of
Directors is appreciated in responding
to
this proposal. Please acknowledge receipt
of
my proposal promptly by
Sincerely,
December
21
, 2011
Myra K. Young
Date
cc: Carole Payne <cpayne@netfli
x.
com>
FX: 408-317-0334
Reg Thompson
Lilly Guadarrama
FX: 408-540-3737
cc: John Chevedden
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
[NFLX: Rule 14a-8 Proposal, December 23, 2015]
Proposal
[4]
-Simple
Majority Vote
RESOLVED, Shareholders 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 laws.
If
necessary this
means the closest standard
to
a majority
of
the votes cast for and against such proposals
consistent with applicable laws. This proposal includes that our board fully support this proposal
topic and commit to spend
up
to $10,000 or more on means, such as special solicitations, as
needed in a good faith best effort to obtain the super-high vote required for passage as a binding
company proposal.
Shareowners are willing
to
pay a premium for shares
of
corporations that have excellent
corporate governance. Supermajority voting requirements have been found to be
one
of
six
entrenching mechanisms that are negatively related to company performance according to "What
Matters in Corporate Governance" by Lucien Bebchuk, Alma Cohen and Allen Ferrell
of
the
Harvard Law School. Supermajority requirements are arguably most often used to block
initiatives supported by most shareowners but opposed by a status quo management.
This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management,
Goldman Sachs, FirstEnergy, McGraw-Hill and Macy's. Currently a 1 %-minority can frustrate
the will
of
our 66%-shareholder majority.
The proposal is particularly important because Netflix shareholders supported 4 governance
improvement proposals
at
our 2013 annual meeting:
73%-vote for Independent Board Chairman, sponsored by the Comptroller, City
of
New
York.
81%-vote for a Simple Majority Vote Standard, sponsored by
John
Chevedden.
81
%-vote for Majority Voting for Directors, sponsored by the California State Teachers'
Retirement System.
88%-vote for Annual Election
of
Each Director, sponsored by the Florida State Board
of
Administration.
Netflix shareholders also supported 3 governance improvement proposals at our 2014 annual
meeting:
80%-vote for poison pill restrictions, sponsored by John Chevedden.
82%-vote for Annual Election
of
Each Director, sponsored by the Florida State Board
of
Administration.
82%-vote for Majority Voting for Directors, sponsored by United Brotherhood
of
Carpenters.
Meanwhile 5 Netflix directors each received more than 48% in negative votes and 3 shareholder
proposals each received
71
% to 80% shareholder support
at
our 2015 annual meeting. Please
vote to protect shareholder value:
Simple Majority
Vote-Proposal
[4]
No
tes:
Myra K. Young,
sponsored this proposal.
Please note that the title
of
th
e proposal is part
of
the proposal.
Th
e title is intended for
publication.
If
the company thinks that any pa
rt
of
th
e above proposal, other than the first line in brackets, c
an
be
om
itted from proxy publication based
on
its own discretion,
pl
ease obtain a written agreement
from
th
e proponent.
This proposal is believ
ed
to conform with St
aff
Legal Bulletin No. 14B (CF), September 15,
2004 including (emphasis a
dd
ed):
Accordingly, going forward, we believe that it would not be appropriate for companies to
exclude supporting statement language and/
or
an entire proposal in reliance on
ru
le
14a-8(1)(3)
in
the following circumstances:
• the company objects to factual assertions because they are not supported;
• the company objects to factual assertions that, while not materia
ll
y false or misleading,
may be disputed or countered;
• the company objects to factual assertions because those assertions may be
interpreted by shareholders
in
a manner that is unfavorable to the company, its
directors, or its officers; and/or
• the company objects to statements because they represent the opinion of the
shareholder proponent
or
a referenced source, but the statements are not identified
specifically as such.
We
believe that it is appropriate under rule 14a-8 for companies to address these
objections in their statements
of
opposition.
See also: Sun Microsystems, Inc. (July 21, 2005).
The stock supporting this proposal will be h
eld
until after the annual meeting and the proposal
will be presented at
th
e annual meeting. Please acknowledge this proposal promptly by email
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
~
Ameritrade
NI
l-'(x
7671
Date
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-·
-
-
-----------
---
Myra
K
Young
Re: Your TD Ameritrade Account Ending in
Dear Myra
K
Young,
Pursuant to yo
ur
request, this letter is to confirm that as
of
the date
of
this letter, Myra
K.
Young
held, and had held continuously
for
at least thirteen mont
hs
, 700 shares of Netflix Inc. (NFLX)
common stock in
her
account ending in
at
TD
Ameritrade. The DTC clearinghouse number for
TD Ameritrade
is
0188.
If
we can be
of
any further assistance, please let
us
know.
Ju
st log in to your account and go to the
Message Cent
er
to write us. You can also call Client Services at 800-669-3900. We're available 24
hours a da
y,
seven days a week.
Sincerely,
Willi
am
Walker
Resource Specialist
TD
Ameritrade
This information is furnished
as
part
of
a general information service and
TD
Ameritrade shall
no
t
be
liable for any damages
arising
ou
t
of
any inaccuracy in the information. Because this information
may
differ from your TD Amer
it
rade
mo
nt
hly
statement, you should rely only
on
the
TD
A
me
ritrade monthly statement
as
the official record of your TD Ameritrade
account.
Market volatility, volume, and system availability may delay account access and trade executions.
TD
Ameritrade, Inc., member FINRA/SI
PC
(
www
finra org ,
www
sipc org ).
TD
Ameritrade is a trademark
joi
ntly
owned
by
TD Ameritrade IP Company, Inc. and T
he
Toronto-Dominion Bank.
©
2015
TD
Amer
it
r
ade
IP Company, Inc. All rights
reserved. Used with permission.
200
S.
w~•tc
Ave.
Omaha, NE 68154
www.tdarneritrade.com
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
*** FISMA & OMB Memorandum M-07-16 ***
Januar
y 5,
20
16
Via Electronic Mail
Myra
K.
Young
c/o
J
ohn
Chevedd
en
NETFLIX
Re:
Stockholder Proposals Under Rule
14a-8
Dear
Mr.
Chevedden:
We have recei
ve
d the l
ette
r from Myra
K.
Young
(the
"
Proponent")
d
ate
d December
21,
2011
(the
"Proposal Letter")
and
received by Netflix, Inc. ("we", "us"
or
the
"Company")
on
December 23,
2015
requ
esting
that
we
dir
ect
future
corresponde
nce r
egar
ding
th
e
Proposal Letter to
your
attent
ion.
We note
that
the
Proposal
Letter
co
nt
ained
tw
o
dist
in
ct
prop
osa
ls
embedded
in
one
r
eso
lut
io
n in violati
on
of
Rule
14
a-8(c)
of
the
Exchange Act,
th
e t
ext
of
which
provi
des
"(c)
Question 3: H
ow
many
propo
sa
ls m
ay
I
su
bmit
? Each
sha
reholder
may s
ubmit
no
mor
e
than
one
prop
osal
to
a
company
for a
particular
shareholders'
meeting
."
Th
e first
propo
sal
in the
Propo
sa
l Letter is a
pr
eca
tory
prop
osal that
requests
the
boa
rd
to
take
the
steps
n
ecessary
so
that
eac
h
voting
requir
eme
nt
in
our
cha
rter
and
bylaws
that
calls for a greater
th
an
si
mple
majority
vote be eliminated.
The
second proposal in
th
e Proposal Letter
requ
ests
th
e
board
to s
upport
th
e
propos
al topic and spe
nd
up to
$10,000
or
mor
e
on
mean
s, such
as
spec
ial solicitations,
as
need
ed in a good faith b
est
effort to
obtain
the
supe
r-
high vote r
equ
ired
for
pa
ssage
as a s
ubsequent
binding
company
propo
sa
l.
We
further
bring
to
your
attent
ion
that
th
e
Propos
al L
etter
is dated
mor
e
th
an
four
years
ago. We
assume
this is an
oversight
th
at will be co
rrected
with
the
Proponent's
r
ev
i
se
d
prop
osa
l.
The
text
of
Rule
14
a-8(b) is
attached
h
ereto
for
your
reference.
Pur
s
uant
to Rule
14a-8(f)
of
the
Ex
c
hang
e Act,
th
e
Propone
nt
has
14
days from rece
ipt
of
th
is le
tter
to
r
es
pond
to this l
etter
and
cure
the
deficiencies
described
above.
Las
tly, pl
ease
not
e that th
ese
proposa
ls
were
su
bmitted
vi
a email
and
fax.
The
Staff
of
th
e
Se
c
ur
iti
es
and
Exchange Commission has publish
ed
legal bulletins regarding
proper
s
ubm
ission
of
s
harehold
er
proposals.
As
pro
vided in Sta
ff
Legal Bulletin
No
.
14
:
1
00
Winchester
C
ir
cle
I
Los Gatos. CA
95032
I
Phone
408
540
3700
I
F
ax
4
08
317
0462
I
www
.netflix com
*** FISMA & OMB Memorandum M-07-16 ***
NETFLIX
c.
How
does
a
shareholder
know
where
to
send
his
or
her
proposal?
The proposal
mu
st be received
at
the company's principal executive offices.
Shareholders can
find
this address in the company's proxy statement. If a
shareholder sends a proposal
to
any
other
location, even if it
is
to
an agent
of
the
company
or
to another company location, this would not satisfy the requirement.
The address of Nettli
x,
lnc.'s principal executive office
is
: Netflix,
Inc.,
100
Winchester Circle,
Los
Gatos, California 95032, Attention: Secretary.
While we have accepted your proposals submitted by email and
fax
in the past, and
will again this year, please note that
in
the future, failure to follow the proper procedures
for submitting a stockholder propos
al
may result
in
the proposal being excluded from the
Proxy Statement.
Sincerely,
N etflix,
Inc.
~7Ji;;~/90
Reg
Thompson
As
si
stant Secretary
1
00
W inchester Circle
I
Los
Ga
tos. CA
95
032
I
Ph
one 4
08
540
3700
I
Fax 4
08
317 0 4
62
I
www
.ne
tf
lix.
com
