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Independent chair again urged at Netflix

NEW YORK — Netflix has had its share of battles of late, including opposing Comcast’s proposed takeover of Time Warner Cable and pointing fingers at Verizon for some instances of its streaming video service’s being slowed. But the online video titan has also quietly faced restiveness among some of its shareholders.

One matter that Netflix shareholders will vote on at the company’s annual meeting Monday is a proposal by two public pension funds to separate the roles of chairman and chief executive. Both are held by Reed Hastings, Netflix’s cofounder.

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It is one of several corporate governance items on the agenda, with others including a proposal to put all board members up for re-election every year, rather than every three years.

But the request for an independent board chairman is perhaps the most notable. Its backers are CalPERS, the giant California public pension fund, and Scott M. Stringer, New York City’s comptroller and the overseer of the city’s pension funds. And it has received the backing of the two big proxy advisory firms, Institutional Shareholder Services and Glass, Lewis & Co.

The idea has proved popular among shareholders. More than 73 percent of Netflix shares were voted in favor of last year’s iteration, the highest-ever approval level for an independent chairman proposal, according to ISS.

Yet that prompted no policy change from the company.

To press their case this year, Stringer and CalPERS are expected to vote their shares — just over 350,000, though out of an estimated 60 million shares outstanding — against the three directors up for election this year. That group happens to include Hastings.

Despite a vote in favor last year, the company did not change policies.

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Both ISS and Glass, Lewis have recommended that investors withhold their votes for the directors as well.

“A board that ignores its shareholders is a house of cards,” Stringer said in a telephone interview, coyly alluding to the popular original series that has been a big part of Netflix’s recent success.

Separating the two roles has become a popular corporate governance issue, with companies including JPMorgan Chase and the retailer Abercrombie & Fitch facing pressure to do so in recent years. Dividing the two, proponents say, increases the independence of the board and reduces the influence of management.

Netflix has an independent lead director, though that position is not elected only by the company’s other independent board members.

In its report, ISS notes Netflix’s argument for its current governance model: that a “one size fits all” strategy is inappropriate.

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