Friedland exitedthe company as
communications chief after a second instance of his use of a
racial slur was revealed. The ignominious end to his Netflix
career was not exactly swept under the rug by an eye-opening memo
to employees from CEO and founderReed
Hastings, which suggested larger problems in the company’s
wrote that his “privilege” led him to “intellectualize or
otherwise minimize race issues like this.”
the session, shares dropped about 6.5%, closing at $384.48. It was
the stock’s biggest single-day drop since 2016, when its stock
swooned after the company said it would not renew an agreement
with the cable network Epix (and lose popular movies includingThe
Hunger Games). Trading volume came in at twice the normal
level. Media shares overall were in retreat as major stock indices
shed more than 1% each, though the damage was far worse for the
company’s stock has been on a tear in recent months, with
blockbuster quarterly earnings reports stoking unbridled optimism
about the company’s trajectory. Earlier this month, Goldman Sachs
increased its 12-month price target to $490, leading to multiple
record-setting new highs for the stock.
correlation between the events surrounding Friedland’s departure
and the fall of the stock is not certain. Wall Street analysts do
not generally try to interpret how racial or sociological currents
running through organizations and corporate America may affect
share prices. Also, during a year in which Netflix stock has risen
100%, compared with a 7% uptick for the Nasdaq and no gain for the
S&P 500, the down day could be nothing more than
did not respond to a request for comment.
stock collapse comes during a time of heightened sensitivity for
all public companies. Intel shares, for example, have shed nearly
4% since Thursday. That was when the company’s CEO, Brian
Krzanich, resigned suddenly after news surfaced of a consensual
and since-concluded affair with an employee. While the conduct
violated Intel policy, the policy would likely not have existed a
Netflix, Friedland’s comments, made months before his ultimate
dismissal, follow questions raised by major institutional
investors about the composition of Netflix’s board and its lack of
Service Employees International Union and The California State
Teachers’ Retirement System raised the issue in 2017 in a
shareholder proposal that would have amended Netflix’s bylaws to
change how directors are elected.
81% of its peers in the S&P 500, Netflix does not have any
racial or ethnic diversity on its board,” wrote SEIU Chief
Financial Officer Bill Dempsey and CalsTrs Director Anne Sheehan.
“Furthermore, despite Netflix’s global reach, the board does not
have a single member based outside the west coast of the U.S.”
this year, Netflix named its named its first African American
director, former U.S. Ambassador Susan Rice. The 10 other board
members are Caucasian.
California Public Employees’ Retirement System and the New York
City Pension Funds together supported a non-binding proposal this
year that would have opened up the director nominating process.
Together, the funds have $544 billion in assets under management
and are long-term shareholders in Netflix, with some 1.5 million
funds argued, in a letter to other shareholders, that Netflix has
repeatedly resisted such a measure, that would provide greater
accountability in the boardroom.
proposals have received support from a majority of the voting
shares in 2015, 2016 and 2017,” wrote CalPERS Investment Office
Director Simiso Nzima and New York City Comptroller Scott
Stringer. “But the board remains opposed to the request, even
after strong shareholder support for multiple years.”
recently as this March, CEO Reid Hastings said he saw no need to
incorporate “inclusion riders” into contracts, which would result
in more diverse cast and crews.
not so big on doing everything through agreements,” Hastings was
quoted by USA Today as saying during a March press briefing.
“We’re trying to do things creatively.”
has received credit for promoting a diversity of actors, writers
and directors — indeed, it touted that record in a commercial thataired
during the BET Awards. The company reports that African
Americans make up just 4% of staff and leadership; Latinos
comprise 6% of staff and leadership and Asian Americans account