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<\/a><\/p>\nMultiChoice’s latest annual report revealed that, apart from executives who received shares, not a single director owned shares in the company.<\/p>\n
Its financial statements further revealed that MultiChoice directors have been selling shares, while not a single director has bought shares over the last few years.<\/p>\n
This is concerning as one of the core functions of a board is to ensure the interests of the company’s shareholders are served.<\/p>\n
They should serve as a voice for shareholders and ensure the company’s strategic direction and decision-making align with shareholder interests.<\/p>\n
However, directors are less likely to think like shareholders and act in their best interest if they are not shareholders themselves.<\/p>\n
In such cases, they may align their views with personal gain, such as getting high director fees or ensuring their directorship is safe.<\/p>\n
This is why Warren Buffett, widely regarded as the most successful investor globally, demands that all directors have skin in the game.<\/p>\n
He transformed Berkshire Hathaway from a struggling textile manufacturer into a conglomerate holding company.<\/p>\n
It achieved tremendous success. If you had invested $100 in Berkshire Hathaway in 1978, you would have over $400,000 today.<\/p>\n
Buffett’s success is based on his strong ethical corporate governance, with management teams prioritising the long-term interests of shareholders over short-term gains.<\/p>\n
At the centre of Berkshire Hathaway is the board, chaired by Buffett. What sets this board apart from most other companies is ‘skin in the game’.<\/p>\n
There is not a single board member who does not own a significant interest in Berkshire Hathaway. Even more important \u2014 they used their own money to buy the shares.<\/p>\n
This is not a coincidence. It is by design. Any candidate should own Berkshire stock representing a substantial portion of their investment portfolio for at least three years.<\/p>\n
Berkshire Hathaway also does not pay its directors much. It is a fraction of what South African directors at big companies get paid.<\/p>\n
This policy makes it easy to ensure the directors prioritise the long-term interests of shareholders over short-term gains.<\/p>\n
It also prevents shenanigans such as directors paying themselves exorbitant fees, inflating executives’ salaries, or other strange arrangements.<\/p>\n
MultiChoice has made headlines for reporting huge losses, becoming technically insolvent, and for its questionable director payments.<\/p>\n
The broadcaster’s loss for the year increased from R2.9 billion to R4.1 billion due to losing subscribers.<\/p>\n
It suffered a 9% decline in active subscribers, including a 13% decline in the Rest of Africa business and a 5% decline in South Africa.<\/p>\n
Even more concerning is that MultiChoice became technically insolvent, with negative equity of R1.07 billion.<\/p>\n
This poor performance did not prevent the company from paying its directors handsomely over the past financial year.<\/p>\n
The company’s chief executive, Calvo Mawela, was paid R53 million, and its CFO, Tim Jacobs, received a pay package of R28.9 million.<\/p>\n
The company also paid its non-executive directors a combined R66 million for the year, including R46 million to its chairman.<\/p>\n
Industry players raised questions about Mawela’s pay package and his high living costs on company expenses in Dubai.<\/p>\n
Some stakeholders also questioned paying chairman Imtiaz Patel $2.509 million over the last financial year.<\/p>\n
Business Live reported that the disparities between board member remuneration and consultancy arrangements raised eyebrows.<\/p>\n
One analyst said shareholders need to pay close attention to these board consultancy arrangements as they can potentially erode proper oversight.<\/p>\n
The analyst added that board consultancy arrangements have the potential to plunge the company into a corporate governance crisis.<\/p>\n
“The amounts paid to some board members and the former chair seem exorbitant,” he said.<\/p>\n
It raised questions about whether the MultiChoice board looked after the interests of shareholders or those of directors and executives.<\/p>\n
The tables below show MultiChoice directors’ holdings in the company and whether they bought or sold shares.<\/p>\n
It should be noted that Mawela, Jacobs, and Patel did not buy their shares in MultiChoice. They received them as part of incentive schemes.<\/p>\n