What's Behind Netflix's Sky-High Employee Salaries: "It's Like Play Money"

How Netflix's Shocking Salaries Set Fire to Industry's Dealmaking Practices - Illustration by Zohar Lazar-H 2018
Illustration by Zohar Lazar

The streamer pays so well it's been sued by competitors. The downside: Your co-workers can see exactly what you make.

Netflix set fire to the industry's dealmaking practices when it lured Shonda Rhimes and Ryan Murphy away from their studio homes with deals worth hundreds of millions. It hasn't made as many headlines, but the streamer has been employing the same strategy with executives, enticing the studio and network ranks with lucrative offers. Netflix's salaries, say sources, are 25 percent to 50 percent higher than those at legacy media companies (5 percent of compensation typically comes in stock).

"There are fewer good people on the market. You go to hire somebody and they've been snarfed up," laments one competing exec, who says the silver lining is that Netflix often doesn't use contracts. The company's aggressive poaching practice not only set off a legal battle, with 21st Century Fox suing Netflix in 2016 claiming the platform encouraged breach of contract (the trial is set for summer 2019), but it has also driven up market rates. "People really want to go to Netflix, so it's a real mystery why they pay a premium when the demand to enter their workforce is great," says STI Management's Neal Lenarsky, who represents industry execs. "I think they're being played and people are giggling about it."

Instead of the fancy titles traditional outfits hand out, the streaming giant's execs normally fall into three tiers: manager, director and vice president. According to employees, managers make roughly $150,000 to $400,000, directors from $400,000 to $800,000, and vps can easily make $1 million or more, with department heads like Cindy Holland, Lisa Nishimura, Bela Bajaria and Scott Stuber said to be cashing multimillion-dollar paychecks. One top publicity exec, for example, makes a base salary of $1.5 million, per sources, with Bloomberg reporting earlier this year that the streaming service was hiring a movie publicist for $400,000. "It's not comparable to anywhere else," says an insider. "It's like play money." The pay is sweet for entry-level, too. Assistants make between $70,000 and $80,000, with some executive assistants and coordinators pocketing north of $100,000.

More shocking than the salaries is that they're virtually public within the company. As of 2017, anyone director-level or above can see what everyone makes (and their pay history) through an internal system called Workday. "We were all like, 'Fuck, this is crazy,'" says one insider of initial reactions to the transparency.

Netflix declined to comment on pay practices, but sources suggest chief content officer Ted Sarandos implemented the open-salary policy — a strategy that's been tested at a few smaller startups — to help employees discern if they are being fairly compensated. Netflix is said to place a high priority on conversations about pay, from annual compensation reviews that ensure employees are getting "top of personal market" and its "keeper test," in which managers ask themselves which staffers they'd fight to save (if you don't pass, you get a generous severance so that Netflix can replace you with "a star," per its culture deck that went viral).

Whether the open comp approach has empowered employees or just distracted them is debatable. "Everyone is always looking. It's, 'Holy shit, they got a $2 million raise last year? What happened?!'" says one insider. Adds another exec at the company: "Ted brags about it to agents just because he likes watching people's heads explode. They're like, 'How is there not a revolt every day at the office?'"

A version of this story first appeared in the Oct. 10 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.