Netflix Inc.’s newly adopted plan, designed to limit investors from acquiring too much stake in the company, came into action on Nov. 2 after a unanimous vote.
According to a statement released by Netflix, the “Plan” is intended keep Netflix safe from the attempts made by an unnamed source to obtain control of the company.
That unnamed source is activist investor Carl Icahn, according to The Wall Street Journal, who as of Oct. 31 had a 9.98 percent stake.
The plan gives shareholders the right to obtain more stock if any investor acquires more than the 10 percent mark, a plan otherwise known as a “poison pill.” Once a shareholder crosses that mark, all other shareholders would receive the option to buy shares at a discount, according to the NYTimes.com.
“Netflix continuously makes decisions that destroy their company,” said sophomore business major Daniel Levie.
Levie admired Netflix’s services at first, but then they changed their plan.
“I think Netflix failed to realize that Hulu and other websites basically offer the same services for free now,” he said.
Hulu LLC is on Netflix’s top competitor list and, according to The Wall Street Journal, that list is growing.
Netflix’s change of policy can be linked to its decreased business this past year of approximately three-quarters of its value, according to The Wall Street Journal.
“They had such a great working website and then they ruined it by separating rental and online download,” said Levie.
Ultimately the plan will make it more expensive for an investor to gain a large stake of the company.
For institutional shareholders, the limit is 20 percent rather than 10 percent for all other shareholders, according to the NYTimes.com.
According to Icahn, the poison pill is, “an example of poor corporate governance.”
Sophomore business major Jason Langer said that he doesn’t see Netflix staying around for much longer.
Langer said that customers are now doing one of two things, “they’re either going to just use one service which means the customer isn’t happy and Netflix loses money or stop subscribing all together.”
“I just think they’re going to lose the majority of their customers,” Langer said.