Netflix CEO Reed Hastings is taking a $1.5 million cut to his annual stock option allowance, but his base salary will remain the same at $500,000. See here a video report from Newsy:

Embedded Video Source by Newsy.com

Transcript by Newsy

BY ADNAN S. KHAN

Looks like one stocking is going to be a little light this Christmas. Netflix CEO Reed Hastings will be taking a $1.5 million cut in his annual stock-option allowance. MarketWatch has the not so jolly perspective on the cuts…

“Well, let’s be frank, getting $1.5 million in stock options for next year isn’t that bad of a stocking stuffer. But when you compare it to the $3 million that Hastings got this year, it looks like he found himself on Santa’s naughty list.”

And according to some in the media he is on that list for a number of reasons.

The company yelled price ‘PRICE HIKE’ in late summer, which scared off more than a few customers.

On top of that — the company tried to separate the DVD mail-rental service by turning it into something nobody wanted, called Qwikster. Add that to a bad dreal with Starz and you can see why Santa and the shareholders are disappointed in the CEO.

At its peak — Netflix stock hovered around $300. That was in July. Now shares are trading at $73. Thats a steeeep drop. Fox Business says the allowance cut is a fitting punishment.

“It would be difficult justifying a increase in options for the upcoming year as Hastings’ decisions transformed the company from a star on Wall Street to a dud in a matter of weeks. The company lost nearly one million customers, and those reverberations are expected to push Netflix into its first loss in a decade in 2012.”

So what would possess a CEO to make moves like he did? The Chicago Tribune says it was simple.

“Netflix wanted to shift as many customers to streaming, which costs the company less than shipping physical DVDs. Those that still want the DVDs would have to pay more so Netflix doesn’t lose money on the service.”

That plan may have blown up in Hastings’ face, but a writer for The Motley Fool says his punishment may not be a pay cut at all.

“Shares of Netflix have fallen by 58% this year. In other words, $125,000 in granted options next month will give Hastings more shares than he received with $250,000 in grants in January 2011.”

And finally – Bloomberg Businessweek notes – not everyone in the company is getting coal for Christmas.

“The 2012 salary for Neil Hunt, chief product officer, will be unchanged at $1 million and the option allowance will increase to $1.5 million from $900,000 … Ted Sarandos, chief content officer, will receive $1 million in salary and $1.8 million in option allowances, compared with $903,362 and $1.4 million, respectively, last year…”

Regardless of all the flak, Fox Business reports Hastings has remained steadfast on his position that higher prices will be forgotten as the service improves.

Transcript by Newsy.

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Sources: MarketWatch | Fox Business | Chicago Tribune | The Motley Fool | Bloomberg