MultiChoice’s longest-serving director steps aside amid shareholder drama – MyBroadband

MultiChoice has announced that long-serving board member John James (Jim) Volkwyn has decided not to stand for re-election to the Board of Directors (Board).

Volkwyn will retire with effect from 28 August 2024, the date of MultiChoice’s annual general meeting.

The announcement follows reports that the Public Investment Corporation (PIC) vowed to oppose Volkwyn’s re-election, saying it would be a breach of corporate governance principles otherwise.

The PIC is the South African government’s investment arm and Africa’s biggest asset manager. It counts the Government Employee Pension Fund among its clients.

It holds a 15% stake in MultiChoice.

Among its concerns was that Volkwyn received over R10 million in fees since his agreement with the media giant started in 2018. The agreement was set to expire in 2028.

“There have to be consequences where corporates are tone deaf and create structures that are used to undermine the principles of corporate governance,” PIC chairperson and deputy finance minister David Masondo said.

According to MultiChoice, these consultancy agreements are necessary when a company needs knowledge and skills in a specialist or niche sector, such as pay-TV. Such agreements are terminated if they become redundant.

Having been a former CEO of Naspers’ video entertainment division when it still owned MultiChoice, the company believed Volkwyn still had much to offer from an advisory position.

MultiChoice said Volkwyn’s expertise in areas such as navigating macroeconomic challenges and changing consumer habits is especially valuable.

“Volkwyn provides advice to the group CEO Calvo Mawela on a regular and extensive basis,” MultiChoice said in a 2022 annual report.

“The scope of his consultancy services is global in nature and involves advising on key group strategies.”

In a statement issued on Tuesday, MultiChoice thanked Volkwyn and said he had served the group with distinction for more than 33 years.

MultiChoice also said it wanted to clarify a few points regarding Volkwyn’s consultancy arrangements.

“The consultancy arrangements were at all times disclosed to shareholders and are lawful in all respects, as was confirmed by external legal advice,” the company said.

“In approving the consultancy arrangements, the board at all times ensured compliance with corporate governance requirements.”

In April, MultiChoice board chair Elias Masilela said the fees paid to certain board members were under review and likely to be stopped.

“These were legacy contracts that were necessary for the company,” said Masilela.

“We know that when you employ board members, you employ people who are experts in their own fields as it may be quicker to get an answer from them on a technical aspect rather than getting that from the outside, which can take longer.”

Members of the board who have been paid these consulting fees include former chair Imtiaz Patel, Kgomotso Moroka, and Jim Volkwyn.

Masilela said this type of contract is not unique to MultiChoice. The company added that it pays its non-executive directors annually, rather than per meeting, to ensure “their ongoing responsibility to ensure effective governance of the group” is recognised.

Moroka’s consultancy agreement was terminated in 2023 after she was paid R1.5 million in fees, and shareholders questioned the reasons behind it.

Patel reportedly earned about R20 million last year for restraint of trade and “provision of various strategic and advisory support services to the group at a global level.”

The last few weeks of his tenure were controversial.

MultiChoice had previously indicated that Patel would step down as chairman on 1 April 2024 and remain in his consultant role until October 2028.

However, on 2 April 2024, MultiChoice announced that Patel’s resignation as chairman had been put on hold to ensure he could preside over the acquisition negotiations with French media giant Groupe Canal+.

The last-minute decision to keep Patel in charge was reportedly controversial within the company, with the Business Times claiming that there were internal complaints about the decision.

The main complaint was that it made Masilela look like he was not competent enough to handle the Canal+ deal.

While Patel had refused to comment — instead referring queries to MultiChoice — Masilela said he supported the decision.

MultiChoice said at the time it was always the plan for Patel to step down after certain milestones in the Canal+ deal were met.