We've written about Netflix's corporate culture (unlimited vacation time & more), and now The NY Times wonders if part of the reason Netflix is successful is because of the unique way they compensate their employees:
Part of the success may stem from the uncommon way Netflix rewards its people. Employees eligible for stock options can tailor the mix of salary and equity in their compensation packages. The amount of options used to be restricted, but the cap was lifted last year. Mr. Hastings took only about 9 percent of his $5.5 million pay in cash.
Equally unusual is how Netflix doles out options. They are granted monthly instead of annually, as is typical. Given how Netflix shares swing wildly, this makes sense. About a fifth of them are also on loan to short sellers, who think the company is overvalued or the business model is not sustainable.
This can help smooth volatility and reduce some frustration that might discourage managers. To wit, on Nov. 1, the shares were at about $167. A month later they were up to $200. And they opened 2011 at just over $178. Because of the dollar-cost averaging afforded employees, they can worry less about underwater options and more about how to keep Netflix a step ahead of the competition.