Netflix sued for allegedly rigging process to give bonuses

A Netflix shareholder is reportedly suing the company’s board of directors, accusing them of rigging the compensation process in the past so that executives would always receive bonuses.

The GOP-crafted tax bill signed into law late last year made it so that companies could no longer deduct performance-based bonuses to managers making more than $1 million. As a result, Netflix reportedly restructured its compensation process so that bonuses would be paid as salary moving forward. 

{mosads}The Hollywood Reporter reported Wednesday that the lawsuit against the company argues that the previous pay structure was essentially a sham designed for Netflix to skirt tax penalties.

While the bonuses were based on performance goals, the lawsuit argues that those goals were nearly always hit. The arrangement violated U.S. tax law, the lawsuit claims.

“By July 2017, Netflix’s top officers had hit their target squarely in seven out of eight quarters, missing by just one percentage point in the other quarter,” the lawsuit states.

Netflix did not respond to The Hollywood Reporter’s request for comment.

Republicans touted the passage of tax reform last year as a win for workers who would see increases in their paychecks.

Democrats, meanwhile, slammed the bill as disproportionately beneficial for big companies and wealthy executives.

Several companies announced employee bonuses after the tax bill was signed into law, including Chipotle and Comcast.