A Netflix stock chart could make one dizzy. Shares were at $300 apiece in July 2011 before tumbling to $58 in October 2012. Then on Friday, they closed at $333.50.
For investors with the stomach to ride the ups and downs, money could be made. But "Netflix's real winners," according to a study out Monday from SNL Financial, are its top three executives, who cashed in for $62.3 million since late 2011.
"Amid all the ups and downs, one thing has been consistent: Netflix's top executives have struck upon a gold mine," says the SNL report.
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SNL says CEO Reed Hastings, CFO David Wells and chief content officer Ted Sarandos have cashed out a combined 385,418 stock options since the third quarter of 2011 with an aggregate value of roughly $75.6 million, a $62.3 million premium to their combined exercise price of $13.2 million.
Hastings, unsurprisingly, scored the heftiest profit, with $38.5 million, followed by $16.9 million for Sarandos and $6.9 million for Wells.
The stop-option cash-ins were fairly well-timed, SNL says. For example, Hastings had a pile of options from Netlix's IPO days at an exercise price of $1.50 that he was selling slowly on a trading plan, though he suspended the plan when the stock plunged in October 2011.
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Hastings and Sarandos both exchanged some stock options for shares between February 2012 and January 2013, but beyond that "none of the three redeemed any stock options between October 2011 and April 2013," says SNL. "Since then, however, all three have aggressively resumed exercising stock options for a major profit."
And the stock options keep coming, naturally. Since July 2011, the three executives have been granted 446,439 options worthy roughly $48.4 million based on their exercise prices.
The volatility that ultimately may hay have worked to the advantage of the executives was caused by a price hike and a short-lived spinoff of the DVD business into something called Qwikster. Both initiatives were roundly criticized by consumers and Wall Street and caused the stock to plunge then come roaring back when Qwikster was dumped.
"Ultimately, the last two years have been good for Netflix executives and, over the long run, good for Netflix itself, despite considerable volatility with the period," the study concludes.
Netflix is set to report its quarterly earnings after the closing bell Monday.
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