The name “Volkwyn,” derived from Dutch, means “people’s wine” in Afrikaans.
This translation came to mind when I learned that Jim Volkwyn, a non-executive director of MultiChoice, scored a massive payout of R6.5m in consultancy fees, as disclosed in the company's latest annual report.
Although MultiChoice is Africa's largest pay-TV operator, this hefty fee raises questions about corporate governance at the company.
As I went through the annual report, I wondered if the board was drunk on the “people’s wine” when it signed off on new consultancy fees, which had previously raised eyebrows among shareholders.
I contacted MultiChoice to inquire about the controversial consultancy fees, especially those related to Volkwyn, who was expected to step down as a board member at the upcoming AGM.
In an email response, MultiChoice revealed that Volkwyn's consultancy agreement expires in 2028 and will not be renewed.
Against expectations of his exit as a non-executive board member, the AGM notice lists Volkwyn along with James Hart du Preez and Fatai Sanusi as candidates for re-election as directors.
Notably, the notice does not inform shareholders that Volkwyn will be the only director still receiving consultancy fees, a fact also omitted from the company’s annual report.
My attempts to contact Volkwyn directly were unsuccessful.
Why is the board, led by Elias Masilela, allowing Volkwyn to continue benefiting from these controversial consultancy fees until 2028?
In contrast, former board chair Imtiaz Patel, who received $1.1m (R20m) last year for restraint of trade and strategic advisory services, stepped down in April. Patel quit earlier this year, soon after MultiChoice announced he would oversee a takeover bid by French company Canal+.
Patel's latest payment for services was disclosed in the latest annual report, where he received $2.5m (R45m) for his contributions in 2024.
MultiChoice confirmed that Patel was no longer a board member and was bound by a restraint agreement. There is, however, no clarity on whether this restraint of trade will be paid in 2025.
In April this year, Masilela told this publication that these controversial consultancy fees paid to select MultiChoice board members would be reviewed and likely scrapped. “Everything has a sunset clause,” he said at the time.
The company has since terminated the consultancy arrangement with Kgomotso Moroka, who was paid R1.5m in consultancy fees in the year ending March 2023.
Why, then, is Volkwyn’s consultancy agreement still in place?
Besides, it seems his re-election to the MultiChoice board is a foregone conclusion.
A review of the non-executive director's contractual arrangements note in the MultiChoice annual report indicates his re-election at the AGM was merely a formality.
Why is the board, led by Elias Masilela, allowing [Jim] Volkwyn to continue benefiting from these controversial consultancy fees until 2028?
The note states: “The scope of [Volkwyn’s] consultancy services is global in nature and involves advising on key group strategies and projects. “This agreement is complementary to his role as director and involves an annual fee for the significant amount of additional time and effort to provide global strategic input to the group.”
The justification for this arrangement is that his local and international industry insights were deemed superior to those of external consultants who lack insight into the company’s operations.
His nearly 40 years with the group were cited as providing a significant strategic advantage.
The board, after external legal advice, determined that this agreement does not affect his categorisation as an independent non-executive director, and Volkwyn has waived any entitlement to director and committee fees paid to non-executive directors.
Why are MultiChoice’s institutional shareholders — Canal+, Public Investment Corporation, Allan Gray, and M&G Investments — not raising concerns about his arrangement, which will continue for another four years?
Could it be that institutional investors are also drinking the “people’s wine”?
Paying Volkwyn under these circumstances seems flawed. Terminating his contract as a board member and ending his consultancy fees would be a step in the right direction.
It’s also worth noting that he appears to be playing both referee and player in this scenario. As the outgoing chair of MultiChoice’s remuneration committee, did he devise the consultancy fees and sign them off?
Volkwyn may have signed off his fees until 2028 and becoming a board member would likely ensure that his fees were not scrapped or reversed.
If this is the case, corporate governance comes into question.
On April Fools Day, 2024, Volkwyn stepped down as chair of the remuneration committee and Deborah Klein was appointed in his stead.
The pay TV operator has reported a 21% decline in trading profit to R7.9bn in June, which prompts questions about the benefits of Volkwyn’s expertise.
When asked about steps to turn things around, the company asserted its financial soundness, strong cash flow, and strategic initiatives for growth and efficiency.
Despite these reassurances, it remains perplexing that Volkwyn’s consultancy fees have been extended for another four years, even as the company experiences a significant decline in trading profit.
Perhaps it’s time for the board to sober up and reconsider the wisdom of keeping this arrangement in place.
And with that, I’ll go imbibe some “Volkwyn” — the people’s wine.
• Lourie is Editor and Founder of Tech Financials
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