Staff Morale Craters: ‘It Hurts to Be Taken Down a Peg’

Netflix employees expect layoffs and a hiring slowdown while some insiders see their stock options take a hit as the streamer’s share price nosedives

For years, Netflix reigned as the undisputed king of streaming, with that feeling extending to employees across the board who benefited from massive spending budgets and envious compensation packages. But on April 19, when Netflix reported that it lost 200,000 subscribers in its latest quarter, employees were confronted with reality. “When you are flying high for so long — an industry leader — of course it hurts to be taken down a peg,” one Netflix staffer says.

Three individuals in different divisions at Netflix tell THR that there has been a noticeable slowdown in recent hiring as teams have had to fight harder to advocate for new hires. (The streamer still has many open listings on its job posting site, however.) “I’ve been told the budget for personnel on my team has to remain flat,” another Netflix insider says. “I don’t know if [top management] actually uses the word ‘hiring freeze.’ I mean, we use it, and we know it’s true. I know other managers have been told the same.”

Sources inside the company also expect layoffs as Netflix continues to outsource some positions — particularly those outside of the U.S. — to third parties to save money. “We underwent a recent round of restructuring and layoffs, and the party line was it was to be more globally focused,” a third Netflix source describes. “We thought that was the end of it [layoffs], and now I’m being told, ‘No, it’s definitely not the end of it.’ ” Netflix’s sharp stock price slide is causing anxiety among some employees. As of April 26, the stock has fallen nearly 47 percent from March, hovering around $200 a share — a price not seen since 2017.

Netflix has an unusual employee stock option program (the company itself calls the perquisite “unique” in its benefit guide) that lets employees choose how much of their compensation they receive in cash and how much they want to receive in Netflix stock options. The benefit is even visible at the CEO level, with co-CEO Reed Hastings opting to receive a $650,000 salary, with another

$33 million or so in stock options, and his co-CEO Ted Sarandos taking a $20 million cash salary and the remainder of his pay in options. When Netflix’s share price was rising, as it did for most of the past decade, employees who took a heavier percentage of their pay in stock reaped the rewards, but the steep decline this year has some staff feeling the heat.

Netflix employees are allowed to choose their option allocations once a year in December and cannot change their allocations until the following year. During a town hall shortly after Netflix unveiled earnings on April 19, some employees had requested that Netflix allow staff to choose their allocations twice a year to help stave off some of the losses. But, sources say, the request was denied given its lack of feasibility.