The current Netflix Board of Directors is recommending Netflix shareholders vote “no” on the proposal. They argue the ROI study is unnecessary and that its adoption would not be in the best interests of Netflix or the company’s stockholders.

The statement further argues Netflix already transparently reports on how ESG initiatives align with business objectives through an annual Environmental, Social & Governance Report. And that this additional study would not provide any meaningful additional information and would consume additional resources to produce:

The proposal assumes that all ESG initiatives should be judged only by traditional financial impact metrics. However, many of these initiatives address compliance, risk management, stakeholder expectations, or company business objectives —factors that are important to our long-term success in shareholder value creation that are not always measurable by financial metrics across traditional financial reporting time horizons, and could therefore be impractical and misleading.

A second proposal (proposal #6 on the agenda) asks for Netflix to issue a report on “Politicized Brand Misalignment.” That proposal argues the company has been damaged financially by its alleged focus on various “woke” ideas and character portrayals:

"Netflix has faced significant backlash over its use of gender ideology in children’s programming. Shows such as Dead End: Paranormal Park and films such as Cuties have been widely criticized for promoting highly controversial narratives regarding gender ideology & sexual activity to young audiences. The most recent example, Dead End: Paranormal Park, features a transgender teen protagonist and was rated TV-Y7, indicating suitability for children aged seven and older.

Tesla CEO Elon Musk publicly canceled his Netflix subscription over the show and urged others to do the same, leading to a reported drop in Netflix’s stock price.

The Netflix Board of Directors is recommending shareholders vote “no” on this proposal, stating they have concluded that it is unnecessary and that its adoption would not be in the best interests of Netflix or its stockholders for these reasons:

The proposal is unnecessary in light of existing oversight and disclosure practices. Netflix already maintains processes for identifying, assessing and managing legal, regulatory and reputational risks associated with its business operations, including those arising from branding, marketing and public policy activities. The Company’s governance structure is expressly designed to ensure that the Board, through its committees and regular engagement with management, exercises effective oversight of risk management.

The proposal would inappropriately interfere with management’s day-to-day operations.
The evaluation and management of risks associated with branding, marketing and public policy positions are core functions of management, who possess the requisite expertise and access to real-time information necessary to make informed decisions in these areas. The Board, in its oversight capacity, regularly reviews management’s risk assessments and strategic decisions, ensuring that appropriate controls and mitigation strategies are in place.

Requiring the Board to conduct a separate, duplicative evaluation and issue a public report on these matters would divert time and resources from the Company’s primary business objectives. Moreover, the Company’s branding and marketing strategies, as well as its public policy positions, are integral to its business model and are continuously adapted in response to market conditions, regulatory developments and stakeholder feedback. Mandating a public report on these matters could expose the Company to unnecessary risk and would not provide stockholders with meaningful incremental information beyond what is already disclosed.

The proposal would not meaningfully benefit stockholders.
Netflix’s public disclosures already provide comprehensive information regarding the Company’s approach to risk management and public policy engagement and the Company is committed to transparency and regular engagement with its stockholders. The Board and management routinely solicit and consider stockholder feedback on a wide range of issues, including governance, risk management and strategic priorities. These engagement efforts have contributed to enhancements to the Company’s governance structure and disclosure practices.

It’s unlikely either of these proposals will be approved by shareholders. And it’s worth noting that both of these issues are ones often cited by politically conservative critics who argue the company is too “woke.” Despite Netflix streaming stand-up specials from a number of pro-Trump, politically conservative comedians.

But the identity of the shareholders making these proposals is also worth knowing.

The first proposal comes from the National Center for Public Policy Research, a self-described conservative think tank. The firm has launched a number of similar proposals at other companies, including a 2014 proposal to force Apple to “disclose the costs of its sustainability programs.” That proposal argued Apple’s decision to have all of its power come from green sources would lower shareholders' profits.