One CEO Who Gets It

Reed Hastings of Netflix turns public outrage to his advantage

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The jury’s still out on whether there’s a modest CEO in the land. But there’s at least one very clever CEO: Reed Hastings of Netflix.

In a New York Times op-ed,  Hastings argues that President Obama’s proposal to limit certain CEO pay is “a terrible idea.” Most CEOs probably agree. But instead of the usual bromides about how CEOs are geniuses who deserve every penny they earn, Hastings proposes an alternative: Tax anybody who earns over $1 million – which includes most Fortune 500 CEOs – at 50 percent. Including him.

You can already hear them moaning at the country club. Here’s how Hastings answers the well-endowed doubters: “Some will tell you that would reduce the incentive to earn but I don’t see that as likely. Besides, half of a giant compensation package is still pretty huge, and most of our motivation is the sheer challenge of the job anyway.”

[See 15 companies that might not survive 2009.]

I don’t know if Hastings is right – or what office he’s running for. But I do know that taking this public stance is an imaginative and shrewd business move. Netflix’s customer base may include a few upper-crusters who rush to their keyboards to close their accounts. But Hastings’s online video-rental company caters mostly to ordinary middle-class Americans. Hastings is a media darling who has been featured in dozens of articles, and it’s easy to see why: His populist preaching hits the right tone, for the right audience, at the right time.

Hastings knows something that a lot of CEOs – especially those on Wall Street – still haven’t figured out: These days, it’s more important than ever to form an emotional bond with your customer. That was true before Wall Street cratered, because the Internet has enhanced accountability and knocked down barriers between the people at the top of the food chain and the people at the bottom. It’s even more true now, as titans like Citigroup and General Motors and Bernie Madoff topple and the little guy gets revenge. Or at least a hearing.

[See how Wall Street continues to doom itself.]

The Wall Street fatcats probably thought they were communing with their customers – out at the Hamptons and down in St. Barts. They need to take a broader view and cater to the riffraff every now and then. It’s good for business.

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  • Rick Newman

    Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at rnewman@usnews.com.