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At its annual general meeting (AGM), MultiChoice shareholders expressed their disappointment with the remuneration of the company’s executives and non-executive directors.
Remuneration issues were the most controversial votes at the meeting held on Wednesday, August 28, 2024.
In the vote on the approval of the company’s remuneration policy, 17.89% of the total issued shares abstained, while 6.36% of the remaining shares voted against the policy.
While 6.36% of votes against may not seem like much, it is important to consider this figure in the context of other resolutions presented at the Annual General Meeting.
No other resolution tabled during the meeting recorded abstentions, and the highest percentage of votes against subsequently recorded on a resolution not related to remuneration was 3.4%.
The other resolutions concerning remuneration received even more votes against, although both were approved.
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A resolution to approve the implementation of the remuneration policy received 23.65% of votes against, while 14.1% voted against approving the remuneration of non-executive directors.
MultiChoice’s executive and CEO salaries have recently come under fire, especially after the company’s disappointing financial results.
MultiChoice CEO Calvo Mawela, CFO Tim Jacobs and former chairman Imtiaz Patel received R127 million despite the company reporting its worst financial results since its founding.
The company’s 2024 annual report revealed that Mawela was paid R53 million in the last financial year.
His remuneration package included a base salary of R12.8 million, short-term incentives of R8.1 million and long-term incentives of R25.6 million.
Controversially, Mawela also received R4.7 million in benefits, including medical care, fringe benefits, family benefits, travel benefits, long service benefits and disability benefits.
Jacobs received a compensation package of R28.9 million last year. His benefits amount to R1.2 million and include a “European contract”.
Former MultiChoice non-executive chairman Imtiaz Patel, who stepped down on 23 April 2024, received R45.7 million last year.
MultiChoice said Patel did not receive any director or board compensation. Instead, he received $1 million in annual compensation related to the service and cap agreement. He also received travel reimbursement related to business trips.
“Patel played a leading role in the successful completion of the Showmax deal with Comcast during the 2024 fiscal year,” the company said.
“He started developing the deal during the Covid period, while he was executive chairman, when discussions for a strategic partner began.”
Upon recommendation of MultiChoice’s compensation committee at the time, a bonus of $1.25 million was approved.
Therefore, Patel received $2.509 million in the last financial year, equivalent to approximately R45.7 million.
Following Patel’s departure, MultiChoice’s new chairman, Elias Masilela, said the compensation paid to some board members was under review and would likely be suspended.
“These were legacy contracts that were necessary for the business,” Masilela said.
“We know that when you hire board members, you hire people who are experts in their fields, because it might be quicker to get an answer from them on a technical issue than to get it from outside, which can take longer.”
Matters came to a head recently with MultiChoice’s longest-serving board member, Jim Volkwyn.
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One of MultiChoice’s major shareholders, the Public Investment Corporation (PIC), said it would oppose Volkwyn’s re-election, saying otherwise would be a breach of corporate governance principles.
Among his concerns was that Volkwyn had received more than R10 million in compensation since his deal with the media giant began in 2018. The deal was due to expire in 2028.
“There must be consequences when companies are deaf and create structures that are used to undermine corporate governance principles,” said PIC Chairman and Deputy Finance Minister David Masondo.
The PIC is the investment arm of the South African government and Africa’s largest asset manager. Its clients include the Government Employee Pension Fund.
It holds a 15% stake in MultiChoice.
Following PIC’s public statements on the matter, Volkwyn has decided not to seek re-election to the board and to retire from MultiChoice.
This is not the first time that shareholders have expressed disagreement with MultiChoice’s compensation practices.
Last year, only 2.26% voted against the approval of the remuneration policy, but 15.84% voted against the proposal for the remuneration of non-executive directors.
However, in 2022, 3.65% opposed the policy, 31.7% voted against approving the remuneration implementation report, and 11.17% voted against the proposal for the remuneration of non-executive directors.
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Another notable vote was the re-election of Patel as a director, which was opposed by 29.08% of shareholders. The other directors up for re-election, Elias Masilela and Louisa Stevens, received over 99% of votes in favor.
In 2021, there was a shareholder revolt: 64.23% voted against the company’s remuneration policy and 18% opposed the resolution on the remuneration of non-executive directors.
Similar to the previous year, a vote was held to re-elect some board members. Volkwyn ran for re-election and 34.11% of shareholders voted against.
In 2021, 2022 and 2023 there were very few abstentions.
“We have a broad shareholder base and it is quite normal for shareholders to have different views,” a MultiChoice spokesperson said in response to questions about remuneration votes at the 2024 annual general meeting.
“It is not always possible to please everyone, but we follow a pragmatic approach and try to find as many common ground as possible among shareholders.”
MultiChoice said it was grateful to shareholders for their support of all resolutions.
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“Receiving another high vote of support for our remuneration policy (94%) confirms that we are on the right track,” he said.
“The implementation ratio vote (76%) was above the threshold required by King IV, but was lower than last year primarily because one of our largest local shareholders had a different view on one of the metrics applied to a specific set of historic awards.”
MultiChoice said that since this provision will no longer apply in the future, the problem is not recurring.
“However, we will continue to work to engage shareholders and improve policies and disclosures where applicable.”
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