Netflix (NFLX)

Item 5.02 (e) Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Annual Salaries and Equity Compensation for Named Executive Officers

The Board of Directors of the Registrant established the annual salaries and monthly stock option allowances for 2007 for the Registrant’s Named Executive Officers as follows:

Each Named Executive Officer, like all of Registrant’s employees who received stock options as part of his or her compensation package, may request that a portion of their annual salary be awarded in equity, provided however, they are not be able to request more than 50% of their total compensation in equity awards. The number of options to be granted is determined by the following formula: the monthly dollar amount of the stock option allowance / ([Fair Market Value on the date of grant] * 0.25). Each monthly grant shall be made on the first trading day of the month, shall be fully vested upon grant and shall be exercisable at a strike price equal to the Fair Market Value (as defined in the Registrant’s 2002 Stock Plan) on the date of grant. The options will be subject to the terms and conditions of the 2002 Stock Plan and will be administered on a non-discretionary basis without further action by the Registrant’s Board of Directors, provided that only the Board may change the amount or terms of future grants. Stock options granted on or after January 1, 2007 can be exercised up to ten (10) years following grant regardless of employment status. Registrant does not currently provide a program of performance bonuses for its Named Executive Officers.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.