(FORTUNE Magazine) – And speaking of actors: as head of the Screen Actors Guild, A. Robert Pisano is supposed to protect the thespians who make Hollywood dramas. But these days he's starring in a drama of his own.

Earlier this year the guild began bargaining for a new contract with the Association of Motion Picture and Television Producers (AMPTP). The union wanted AMPTP studio members to give them a bigger share of DVD movie sales. As it stands now, screen actors get only about 15 cents in residuals for every $20 DVD. Yet profits from DVDs have fattened studios' bottom lines and lifted a slew of new businesses, such as Netflix Inc., which with a market capitalization of $1.6 billion ranks as the world's largest online DVD rental firm. As Netflix notes in its 2003 annual report, "DVD is clearly the rocket propelling studio profits and growth."

The actors believe they have a persuasive case, but some SAG members doubt that their chief negotiator Pisano can strike a fair deal. Pisano is SAG's national executive director and chief executive officer. He is also one of seven directors who sits on the board of Netflix. "There's no way he should be in a collective bargaining position," says Scott Wilson, a SAG member. According to Netflix's annual report, one of the biggest risks to its future is "potential labor activism," like SAG's demands for higher DVD residuals. "How does a director of such a company represent a union that uses strikes as its only leverage?" SAG member Tom Bower asks.

SAG brass claim that Netflix is not a party to SAG negotiations and therefore poses no conflict for Pisano. Besides, SAG's board says it reviewed the issue before it hired the former studio executive in 2001. Back then, Pisano disclosed his Netflix seat and revealed that he owned 100,000 options to buy Netflix stock for $3, according to Steve Fried, who sat on SAG's search committee.

By last year Netflix had gone public, and its stock price had climbed to about $50. SAG's board voted to renew Pisano's contract for another three years just as more union members were learning about Netflix. The studios--Columbia, Dreamworks, Paramount, Twentieth Century Fox, Warner, and Universal Studios--not only have a revenue-sharing agreement with the DVD rental firm, they own 6% of its stock.

In February, Pisano sat down to bargain with the AMPTP and negotiated a one-year contract extension. Actors got no increase in DVD residuals. By the time SAG's membership ratified the contract, Pisano had cashed some of his Netflix options and netted $2.4 million--five times his $450,000 union salary. Meanwhile, Wilson and Bower have hired a labor attorney to persuade SAG that Pisano should either step down from the bargaining table or resign from Netflix. The issue may simmer until autumn, when Pisano, SAG, and AMPTP are expected to open contract talks with, what else? A bid for higher DVD payments.

--Kathleen Sharp