MultiChoice, the troubled SA multinational which owns pay-TV operator DStv, finds itself mired, again, in a self-inflicted controversy ahead of an important shareholders’ meeting.
On Wednesday, shareholders of the group, a takeover target by French multinational Canal+, will hold the AGM. This will be the first meeting chaired by Elias Masilela, formerly Sanlam chair, who replaced Imtiaz Patel, the former CEO and, lately, its chair.
Reluctantly, MultiChoice, which tried to hang onto Patel to see off the transaction, has caved into shareholders’ and governance activists’ pressure to let Patel go with a R20m restraint of trade payout.
This concession came too late and was clumsily handled. MultiChoice tried and failed, to keep Patel and delay Masilela’s elevation. This sparked off an unhelpful sideshow, including accusations that Masilela, formerly the CEO of the Public Investment Corporation (PIC), was treated as Patel’s understudy.
Another governance crisis has been brewing. This relates to questionable consultancy fees paid to non-executive directors. Last year, MultiChoice scrapped modest consultancy fees paid to lawyer Kgomotso Moroka after eyebrows were raised.
Controversially, however, it kept a far more lucrative consultation arrangement with a former executive, the former chair of the board’s remuneration committee and director, Jim Volkwyn. The conflict-of-interest question is obvious: how can Volkwyn be objective and impartial when he oversees the remuneration of the CEO who pays him for his consultancy work?
Despite growing opposition, Volkwyn is up for re-election at Wednesday’s AGM.
Clearly, the company, which is bleeding subscribers to other platforms, sees value in the unspecified services provided by Volkwyn, who has been with it for decades.
Still, two questions arise: first, if he is so valuable, why is the company having its breakfast eaten by competitors; and second, and very embarrassing, if he is so indispensable, why is the company not making the obvious choice of keeping him only as a consultant to the group?
Canal+, which is facing regulatory hurdles to take over the pan-African giant, has been indifferent to these boardroom governance concerns. At 45%, it is the largest single shareholder at MultiChoice. Much of this stock was acquired through the market.
The PIC, an asset manager which manages several social funds including government employees’ pensions and the Unemployment Insurance and Compensation Funds, is a 15% shareholder. This makes it the second-biggest single shareholder of MultiChoice.
Commendably, in an interview with the Sunday Times, this paper’s sister weekly, David Masondo, the deputy finance minister and PIC chair, has questioned the move to re-elect Volkwyn. He has also threatened to use the PIC’s vote to block the re-election.
Though a communist, Masondo has been very pragmatic in his role as chair of the PIC. For example, prioritising the interests of PIC shareholders (mainly pensioners), he has kept an open mind on the Canal+ acquisition bid. This is rare among his colleagues.
Back to Volkwyn. The situation is untenable. He needs to make a call: either he remains a director or he steps down from the board and becomes a consultant to MultiChoice.
After so many years on the board, the benefits of his continued directorship are unclear. Perhaps, a neater arrangement would be for him to serve out his contract or be paid out to leave, as MultiChoice is not about to scrap the fees despite earlier signals by Masilela.
To avoid a spectacle at the AGM, MultiChoice needs to proactively announce its choice ahead of the meeting.
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