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Remuneration report

Letter from the remuneration committee

Dear shareholder,

Sadly, Jabu Mabuza passed away on 16 June 2021. As chair of the remuneration committee, he was instrumental in the implementation of key and strategic decisions taken during FY21 as detailed in this report. He also ensured that we as the committee delivered on our required responsibilities to the board and shareholders. This report was approved by Jabu prior to his passing and therefore is presented by all committee members. He will be missed.

Regards

The remuneration committee

Shareholder alignment

We are committed to maintaining a strong relationship with our shareholders, built on trust and a clear understanding of our remuneration policy and the practices we have implemented. Our report details the progress we have made in engaging with you, our shareholders, and steps are taken to incorporate your feedback, where practical to do so.

Strategic objectives

In line with our commitment to fair and responsible remuneration, we continuously review our remuneration policies and practices to ensure they remain fit for purpose and align with our strategic objectives. We are satisfied that our total reward offerings balance shareholder interests with the need to reward and retain key and critical skills.

Independent remuneration adviser

We appointed Bowman Gilfillan as independent adviser to the remuneration committee, and we are satisfied that their advice is objective and independent.


In alignment with the requirements of King IV, our remuneration report is divided into three parts:

Part 1:

The background
statement

The background statement provides context around performance and how this influenced our remuneration decisions.

Part 2:

The remuneration
policy

The remuneration policy is a forward-looking section that provides an overview of our remuneration philosophy and policy.

Part 3:

The implementation
report

The implementation report is a backward-looking section that discloses the remuneration and performance outcomes of the executive directors based on the FY21 remuneration policy.

Part 1: The background statement

Factors that influenced our remuneration decisions

The video entertainment industry is encountering an unprecedented change in dynamics from competition, technology and changing customer preferences. As a result, we have expanded our video entertainment ecosystem and revenue prospects by offering new products and services and pursuing new growth opportunities organically and through investments.

We have continued to aggressively manage costs during these tough economic times to ensure we maximise value creation and are adequately prepared for future uncertainties. At the same time, we have focused on the ongoing development of all our employees and incorporated new skills for a changing environment. We strive to make a meaningful impact in the communities where we operate.

COVID-19

Our employees are instrumental to our ability to continue delivering high-quality services to our customers. In response to the impact of COVID-19 and the associated lockdowns during the past year, we supported our employees through several initiatives, including the following:

We continue to monitor the impact of COVID-19 on our workforce and remain committed to supporting our employees.

Aligning incentives with our business strategy

The group has started accelerating on the opportunity to leverage our customer base of 20.9m subscribers (100m individuals) as we expand our offering through an array of new services. The future success of this strategy depends on the careful identification of investment opportunities such as the recently concluded investment in BetKing, which has already delivered in line with expectations.

We have reviewed our remuneration approach to align with the changing environment, specifically focusing on executive incentives and linking these to aggressive performance hurdles. This is to ensure we create a fit-for-purpose remuneration strategy for the type of organisation we are building for the future, while improving alignment with shareholders. The following updates were made:

Awards linked to performance measures

Taking into account feedback from our shareholders, we changed the structure of the executive long-term incentive (LTI) awards to be 100% linked to performance targets (75% in FY21 and 50% in FY20). No further restricted share unit (RSU) awards, without company performance measures, will be made to executive committee members going forward. Further detail is provided on below.

Short-term incentives (STI) and LTI benchmark review

We reviewed our performance incentive policies against the market and found that both STI and LTI on-target and stretch percentages were below the average of MultiChoice Group’s peer group. The STI component was left unchanged and we increased the LTI component as we believe this will ensure alignment to shareholder interests. This was implemented through the change in the annual award, from a multiple approach to a percentage of salary approach, which is a more common remuneration practice. The implementation of this new approach ensured that our blended outcome for both STI and LTI aligns with the market.

Phantom performance share (PPS) plan

Given the importance of successful new investments in driving our future growth strategy, we implemented an LTI plan in the form of a new PPS plan, which is linked to aggressive performance hurdles for new strategic investments.

This plan provides executives with exposure to the growth in shareholder value of the portfolio of strategic investments, such as the recent investment in BetKing, which are intended to have a transformational impact on the nature and value of the group over time. A key feature of the PPS is the particularly stretching performance conditions that were applied, where there is no vesting if portfolio returns are at or below 12.5% per annum (our approximate group cost of capital), and full vesting only occurs at superior returns of 25% per annum (i.e. double our approximate group cost of capital).

The returns are measured on the growth in portfolio value using external valuation inputs where possible. The valuations will be conducted annually and will be based on the following methods (in order of priority):

  1. The latest arm's length share transaction, which has occurred not longer than 24 months preceding the measurement date, for a minimum of 5% of the asset valuation.
  2. 100% current year earnings x earnings multiple plus net cash/less net debt. The earnings metric and multiple are approved by the committee when a relevant portfolio asset is added.
  3. An independent third-party valuation, where no clear transaction value exists, for example in a start-up scenario. This valuation will only be valid for three years, after which methods 1 and 2 would become applicable.

The PPS awards vest over a period of four to five years.

The PPS portion of the LTI will replace the 25% RSUs that previously did not have any performance conditions attached to them. PPS shares will be awarded to executive committee members who qualify to participate in this plan. A maximum of 25% of the annual share allocation can be PPSs with the remainder of the allocation being performance share units (PSUs). This weighting ensures executives are focused on both the new investments as well as the core business.

MultiChoice share appreciation rights (SAR) scheme

We approved the closure of the MultiChoice SAR scheme. The SAR scheme was considered outdated, as it was created in a different context and was no longer meeting the objectives of an LTI scheme for the group. Further detail is provided on part 3

Irdeto RSU scheme

As disclosed in our FY20 remuneration report, the Irdeto RSU scheme was implemented during FY21, while no new awards will be made under the previous Irdeto SAR scheme. Details of the plan are provided on Lti schemes

Shareholder voting and engagement

During FY21, we implemented an engagement process with shareholders due to the remuneration policy and implementation report tabled for shareholder vote at the MultiChoice Group AGM in August 2019 not achieving the targeted 75% support level. This process included extensive engagement before the AGM in August 2020, aimed at determining the reasons for the dissenting votes and working with shareholders towards a mutually agreeable outcome. We held discussions with the following investors who expressed specific interest in engaging with us on these matters:

Investor Type and date of engagement
Public Investment Corporation Meeting on 5 August 2020
Allan Gray Meeting on 5 August 2020
Prudential Portfolio Managers Meeting on 5 August 2020
Schroder Investment Management Meeting on 19 August 2020
Ninety One Meeting on 19 August 2020
Sanlam Investment Management Meeting on 5 August 2020
Stanlib Asset Management Meeting on 5 August 2020
Old Mutual Investment Group Meeting on 5 August 2020
Robeco Asset Management Meeting on 19 August 2020
Aeon Investment Management Meeting on 19 August 2020

This approach helped to drive a significant improvement in the non-binding vote at the 2020 AGM.

AGM resolutions 2020 % 2019 %
Remuneration policy 65.9 50.3
Implementation report 67.6 44.7

However, we fell short of the 75% approval threshold and initiated a further engagement process that included a dedicated email address for shareholders to provide feedback, suggestions and comments. We will be conducting another round of shareholder engagements ahead of the 2021 AGM to discuss the changes implemented since our previous interactions.

This year, we focused our efforts on several key aspects raised by investors. These are listed below with the steps taken to address the concerns raised.

Topic Shareholder feedback Our response

Performance targets and disclosures for LTIs

LTI performance measures are not linked to external benchmarks (they are based on internal budgets).

Our policy does not allow budgets to be changed without approval by the board and we believe the targets to be sufficiently aligned with shareholder value creation. The performance outcomes for the first vesting are disclosed in part 3 of this report.

Our unique geographic spread of operations, across 50 countries, makes the use of external measures linked to economic metrics like inflation and gross domestic product (GDP) growth challenging. Accordingly, we have continued to use internal measures that we believe are more appropriate at this time especially given that our Rest of Africa business is still returning to profitability.

It is not possible to determine whether internal budgets are appropriate ahead of time and there is no visibility on specific performance against targets via a retrospective approach to disclosure.

In respect of PSUs, we disclose the performance outcomes against the PSU targets.

A PPS plan was introduced to the LTI component of remuneration for executives. The value of the PPS plan is linked to the growth in value of the portfolio of new investments and is measured using external valuation inputs where possible. The minimum vesting performance threshold is an increase in valuation of the portfolio at the estimated cost of capital of 12.5% per annum (zero shares vest at the minimum threshold), and 100% vesting at portfolio returns of 25% per annum, with linear interpolation between these levels.

Performance targets for STIs

Personal objectives to be specifically detailed and preferably disclosed in advance.

Due to sensitivity and confidentiality, we cannot disclose forward-looking STI targets for the group and personal performance. The practice of disclosing such targets in arrears and not in advance is common for companies where such targets convey market-sensitive information.

LTIs include RSUs that are not performance linked

The change in the PSU:RSU split to 75:25 in FY21 from 50:50 in FY20 was a step in the right direction, but the PSU portion should ideally be further increased.

We changed our approach so that 100% of awards are subject to performance conditions for all awards made from 31 March 2021.

This is applicable to all executive committee members and not only executive directors.

Discretionary awards

Awards that are 'discretionary' create the impression that they are subjective and can be manipulated or awarded on an ad hoc basis.

The awards are not done on a discretionary basis. The awards are based on specific performance over and above the personal objectives. We have detailed where specific performance objectives were achieved over and above personal objectives, including the rationale for such awards in part 3 of this report.


Key focus areas and decisions taken during the reporting period

The remuneration committee met four times before the financial year-end and is satisfied that it achieved its objectives and complied with its statutory duties. A key focus of this year's activity was to address shareholder concerns around the remuneration policy and the implementation thereof. In addition, the following key decisions were made:

  • Approved the executive committee goals and targets for FY22
  • Approved the FY21 executive committee increases, FY20 bonus as well as share awards
  • Approved the non-executive director fees
  • Approved the salary increases, bonuses and share awards for all employees
  • Approved the closure of the MultiChoice SA SAR scheme
  • Approved the new Irdeto RSU plan and first allocations
  • Approved the new PPS plan and first allocations

Non-binding advisory vote on remuneration policy and implementation report

The remuneration policy and implementation report, as set out in Parts 2 and 3 of this remuneration report, will be tabled for separate non-binding advisory votes at the AGM on 26 August 2021. If 25% or more of the voting rights exercised vote against either the remuneration policy or implementation report or both, the board will take steps, in good faith and with best reasonable effort, to do the following as a minimum:

  • Implement an engagement process to ascertain the reasons for the dissenting votes
  • Address legitimate and reasonable objections and concerns raised appropriately, which may include amending the remuneration policy, or clarifying or adjusting remuneration governance and/or processes
  • Report on the above in the following year's remuneration report

Part 2: The remuneration policy

This report specifically deals with the group's policy as it applies to the executive directors who are the group's only prescribed officers. To provide a more comprehensive view, policies applicable either to different levels of employee and/or different geographic areas are included where appropriate.

Remuneration philosophy

Our remuneration philosophy is underpinned by the group's strategy and enables us to achieve our business objectives. Our commitment to pay for performance aligns with the principle of creating long-term value for our shareholders - it drives our remuneration activities and supports the ownership mentality and spirit of entrepreneurship in our teams around the world. As far as possible, our pay structure is similar across the business and it exceeds the minimum legal requirements in all the jurisdictions in which we operate. We endeavour at all times to balance the need to compete globally for the best talent with the need to pay fairly and responsibly.

When making executive pay decisions, we consider the individual's performance, the business's performance, the complexity of executives' responsibilities, as well as the growth trajectory and lifecycle of the business unit for which he/she is responsible. Our STIs are aimed at rewarding employees for overperformance in a specific year and are typically capped at a percentage of an employee's salary. Our approach to LTIs strives to ensure executives are invested in driving the business' sustainable performance and shareholder value creation over the long term.

Talent and fairness

We aim to be the preferred employer for candidates and current employees in the entertainment and digital platform security sectors and to be recognised as a leading employer in the markets where we operate.

We focus on recruiting experienced talent for critical areas in terms of our product development and service delivery (such as technology, data, digital and content). We also provide opportunities for new, young talent to learn and develop. These, combined with our other internal disciplines, are important to scale our business and deliver our strategic and operational imperatives.

We strive to recruit and retain the best calibre of executive talent to lead the organisation and create value for our stakeholders. Balancing the levels of executive remuneration with the demand to remain competitive in attracting global talent in the video entertainment industry has become challenging. However, our internal talent development practices enable internal leadership promotions to key positions in the business, such as the appointment of the CEO: MultiChoice SA, CEO: General Entertainment and Connected Video and CEO: SuperSport roles.

Our investments and collaboration with leading educational institutions, industry bodies, partners and subject matter experts enable us to recruit and build young talent to drive our business forward. We grow local talent through the MultiChoice Talent Factory which seeds, incubates and nurtures African storytellers. We further develop deep technical TV, film, technology, engineering and data science expertise in partnership with prestigious global institutions like the New York Film Academy, Duke University, Henley Business School and leading local institutions in each country such as the University of Pretoria and Wits in South Africa. The Chairman's Top Leaders Programme partners with Harvard Business School and aims to build executive capability and capacity.

We continuously monitor the level of fair and responsible pay for all our employees. As a starting point, our minimum salary in South Africa is substantially above the minimum wage requirements set by the government and, on average, 7% higher than the median salary in the market for the same role. We are proud of the suite of benefits offered to our employees (detailed below), which we believe is highly competitive in our markets.

Our remuneration structure

Our approach to remuneration focuses on the following strategic principles:

Our remuneration policy and pay decisions are driven by and linked to the following principles:

Element Description Performance condition Eligibility Strategic principle

Guaranteed pay

In South Africa, we follow the local market practice of total cost to company (TCTC) remuneration, which comprises a basic salary plus cash and non-cash benefits. Outside of South Africa, we follow the market practice of base salary plus cash and non-cash benefits. Guaranteed pay is reviewed annually and any increases are typically effective from June each year.

Personal performance is the primary driver for pay increases but also factors in salary movements in the local market and local economic indicators such as inflation to ensure increases are fair, sensible and market competitive.

All employees

Benefits

A suite of competitive employee benefits that vary across countries as per market practice. Examples include:

  • Bursaries for employees and families
  • Wellness benefits such as onsite healthcare and counselling, a gym and a concierge service
  • Work-life balance leave
  • A closed medical aid scheme and retirement scheme with highly competitive benefits
  • An early childhood development allowance and an onsite crčche
  • Discounts on DStv subscriptions for employees and up to three family members

None

All employees

STI

Annual performance-related incentives to align the remuneration of employees with the annual business performance to drive long-term shareholder value creation.

Group and individual performance targets.

All employees subject to eligibility criteria

LTI

Share awards to incentivise executives and senior management on the delivery of long-term strategic goals.

Strategic group targets aligned with shareholder expectations.

Executives, senior management and scarce and critical skills

Benchmarking

We strive to be consistent, offering remuneration structures that help attract and retain the best talent in our market. We consider market practices, business requirements and the calibre of the individual in our recruitment processes.

We benchmark our remuneration using the Old Mutual Remchannel Survey in South Africa and the Mercer Total Remuneration Surveys in the Rest of Africa. For executives, who we sometimes recruit globally, we use the LMO Executive Survey and the Willis Towers Watson Executive Survey. In addition, we use bespoke benchmarking using input from our remuneration adviser when appropriate.

We target our guaranteed salary at the median of the market with exceptions based on performance and critical skills.

Remuneration policy applicable to executive directors

Pay mix

Each element of the total pay mix of executive directors is linked to creating shareholder value over time and to the business performance in a specific year. The ratio of guaranteed versus variable pay differs for each level in the organisation, with the weighting on variable performance-based pay higher at executive and senior levels compared to lower-level employees. The remuneration committee reviews both targets and the on-target values for each element every year, to ensure they remain relevant, competitive, drive the right behaviours and enhance overall shareholder value. The actual pay mix for executive directors is disclosed in the implementation report.

Purpose and description Calculation Performance measures On-target and stretch outcomes

TCTC/base salary

Non-variable remuneration with consideration to specific requirements of the role.

Market conditions, group performance, internal comparability, individual performance and responsibility are taken into consideration and reviewed annually.

N/A

N/A

STI

Motivate executive directors to achieve short-term strategic, financial and non-financial objectives over a one-year performance period.

Targets are set at MultiChoice Group level and at segment/business unit/country level. The individual performance measures for each executive director are tailored to their roles and responsibilities. The incentive plan is agreed annually in advance and based on targets that are verifiable and aligned with the specific business unit's annual business plan. The discreet objectives for individuals are specific to their business units. We combine these with the group targets to ensure that the overall benefit accrues to the group.

All executive directors have an on-target bonus percentage which is used to calculate the bonus.

The calculation to determine the performance outcome is detailed below:

TCTC/base salary
x

On-target bonus %

80%

x

Individual performance %

0% to 110%

x

Company performance %

0% to 120%

For FY22, the company performance measures and weightings are set out below:

Performance measure Weighting
Revenue 25%
Core headline earnings 25%
Free cash flow 25%
Subscriber growth* 25%
* Weighted equally between South Africa, Rest of Africa and Showmax.

Performance below threshold results in a 0% payment for the specific measure. Between threshold and stretch, we apply linear progression of the payment from 80% to 120%.

The outcome of each measure is capped at 120% of the weighting.

The on-target and maximum STI as a percentage of salary are set out in the table below:

FY22
STI
On-target
STI
stretch
CEO 80% 106%
CFO 80% 106%


Purpose and description Calculation Performance measures On-target and stretch outcomes

LTI

Retain and motivate employees who are key to the delivery of the group's long-term strategy.

A robust governance process is in place to ensure that the LTIs are appropriately awarded and administered.

Executive directors participate in the following schemes with 100% of awards being linked to performance targets in line with the vesting rules:

  • MultiChoice Group RSU scheme with performance conditions in the form of PSU (PSU: 75% to 100%)
  • PPS plan (PPS: max 25%)

Detail on each plan is outlined in the table below on LTI Schemes.

Executive director awards are split between the following LTI performance plans:

PSU PPS
CEO 75% 25%
CFO 75% 25%

Awards are normally granted annually. Dividends are not payable on unvested shares.

PSU

For FY22, the group performance measures and weightings are set out below:

Performance measure Weighting
Core headline earnings per share (core HEPS) 25%
Free cash flow (cumulative) 50%
Return on capital employed 25%

Performance below threshold results in a 0% vesting for the specific measure. Between threshold and stretch, we apply linear progression of the vesting from 50% to 100%. The maximum vesting that can take place is 100% of the shares awarded.

PPS plan

The value is linked to the value of the portfolio of new investments and will vest 50% in years four and five respectively. The returns are measured based on the growth in portfolio valuations.

The minimum vesting performance threshold is 12.5% per annum, and 100% vesting is achieved at a growth in the portfolio value of 25% per annum, with linear interpolation between these levels.

The annual LTI award percentages are set out in the table below:

LTI maximum
as % of salary
CEO 215%
CFO 185%

These are determined based on market comparisons as provided by our independent adviser.

The table below sets out the MultiChoice Group LTI schemes:

Current

New

New

MultiChoice RSUs and PSUs

Irdeto RSUs

PPS plan

Detail of award

   

An award of MultiChoice Group shares registered to the participants subject to an employment condition (continued tenure). For the executive committee, achievement of performance conditions applies.

A phantom award of value to the participants is subject to an employment condition (continued tenure). For the Irdeto executive committee, achievement of performance conditions applies. No awards are made to MultiChoice Group executive directors or executive committee members.

A phantom award of value to the participants subject to an employment condition (continued tenure), where the value of the units awarded, at grant and settlement is based on the value of the underlying portfolio of new investments.

Value delivered to the participant

   

Full value delivered to the participant

Full value delivered to the participant

Full value delivered to the participant

Vesting detail

   
  • RSUs vest over four years in two equal tranches in years three and four
  • PSUs vest 100% after three years
  • Executives' awards are 100% RSUs with performance conditions (PSUs)
  • Quantum of PSU vesting is dependent on the achievement of performance conditions
  • Settlement of the awards will take place on the respective vesting date of the awards and at the board's discretion
  • Value determined by the valuation of Irdeto business
  • RSUs vest over four years - awards vest in two equal tranches in years three and four
  • PSUs vest 100% after three years
  • Executives' awards are split 25:75 between RSUs and RSUs with performance conditions (PSUs)
  • Quantum of PSU vesting dependent on achievement of performance conditions
  • Settlement of the awards will take place on the respective vesting date of the awards and at the board's discretion
  • PPS units vest over five years in two equal tranches in years four and five
  • Vested units are settled on exercise by delivery of group shares, up to the tenth anniversary of the award date
  • 100% of awards are linked to performance conditions
  • The returns are measured based on the growth in the portfolio valuation
  • The minimum vesting performance threshold is 12.5% per annum, and 100% vesting at a growth in the portfolio value of 25% per annum, with linear interpolation between these levels
  • The portfolio performance is calculated at the date of vesting in year four and in year five

Changes made

   

For executive committee members, 100% of awards are subject to performance conditions (previously it was 75%)

This is a new scheme

This is a new scheme

  Note: The Irdeto SAR scheme was replaced by the Irdeto RSU scheme and no new awards will be made under the Irdeto SAR scheme. Current awards will vest in line with the original rules.

Malus and clawback

We believe inappropriate conduct should not be rewarded. To protect stakeholders against inappropriate conduct by executives, malus and clawback provisions were introduced on all variable pay (STI and LTI) for executives.

These provisions enable us to recover variable remuneration awards made, based on the occurrence of a trigger event caused by the participant, which led to loss or damage incurred by the group. Trigger events include, but are not limited to:

  • The group or any subsidiary's financial statements having been materially restated
  • The executive having deliberately misled the group or any subsidiary, the market and/or the group's shareholders regarding the financial performance or position of the group
  • The executive's actions brought the group, subsidiary and/or the executive's business unit into significant disrepute
  • The executive's actions amounted to gross misconduct or a material error
  • The subsidiary or the business unit in which the executive works having suffered a material failure of risk management
  • Any other matter which, in the reasonable opinion of the remuneration committee, is required to be taken into account to comply with prevailing legal and/or regulatory requirements

Malus will be applied prior to the vesting and/or payment of any STI or LTI. Clawback will be applicable for up to three years after the vesting and/or payment of any STI or LTI.

LTI termination provisions

Death, ill health, disability or other event approved at the board's discretion

All unvested awards will be accelerated and fully vest on the date of termination of employment. If applicable, the outcomes of PSUs will be reviewed by the remuneration committee on a case-by-case basis.

Redundancy or termination as a result of a business disposition/change of control or jurisdictional issue or retirement

Vesting of the awards will be accelerated on a pro rata basis. However, the pro rata portion will only be applicable to the next upcoming vesting portion. If applicable, the outcomes of PSUs and PPSs will be reviewed by the remuneration committee on a case-by-case basis.

For other causes

All unvested awards will lapse.

Minimum shareholding required (MSR)

To encourage individual shareholding in the group and to align with shareholders' interests, the following minimum shareholding is required for the executive committee:

To allow time for the executives to build up a shareholding in the MultiChoice Group as a newly listed company, these MSR requirements are to be met by FY24 for current executives. The timeframe for new executive committee members is five years from the date of appointment.

MSR as % of salary
CEO 300%
CFO 200%
Executive committee 100%

Service contracts

Executives' service contracts comply with terms and conditions of employment in the jurisdiction where they are employed. Executives' contracts do not contain guaranteed payments on termination. Details of the date of appointment and relevant notice period for executive directors and prescribed officers are set out in the table below:

CP Mawela TN Jacobs
Date of appointment in the current role 1/11/2018 1/11/2018
Notice period 6 months 6 months
Restraint period 12 months 6 months

Recruitment policy

On the appointment of a new executive, his/her package will typically be in line with the principles as outlined on part 2. To facilitate recruitment, it may be necessary to compensate for remuneration forfeited on exiting the previous employer. This will be considered on a case-by-case basis and may comprise cash or shares.

Termination policy

Payments in lieu of notice may be made to executives for the unexpired portion of the notice period. On cessation, there is no automatic entitlement to an annual performance-related incentive (bonus). However, the committee retains the discretion to award a bonus to a leaver during the financial year considering the circumstances of his/her departure.

Remuneration policy applicable to non-executive directors

Terms of appointment

The board has clear procedures for the appointment and orientation of directors, and annual self-evaluations are completed by the board and its committees. The nomination committee periodically assesses the skills and diversity represented on the board and determines whether or not these meet the group's needs. Directors are invited to give their input in identifying potential candidates. Members of the nominations committee propose suitable candidates for consideration by the board. A fit-and-proper evaluation is performed for each candidate before they are considered/appointed.

Retirement and re-election of non-executive directors

All non-executive directors are subject to retirement and re-election by shareholders every three years. Additionally, non-executive directors are subject to election by shareholders at the first suitable opportunity for interim appointments. The names of non-executive directors submitted for election or re-election are accompanied by brief biographical details to enable shareholders to make an informed decision on their election. The reappointment of non-executive directors is not automatic.

Setting non-executive directors' fees

The fee structure for non-executive directors was designed to ensure we attract, retain and appropriately compensate a diverse and experienced board of non-executive directors. Non-executive directors receive an annual fee as opposed to a fee per meeting, which recognises their ongoing responsibility to ensure effective governance of the group. Remuneration is reviewed annually and is not linked to the group's share price or performance.

Non-executive directors do not qualify for share allocations under the group's incentive schemes. A comprehensive benchmarking exercise is performed using PwC's non-executive director surveys and this is tabled annually for consideration by the remuneration committee and the board to determine what the proposed directors and committees' fees should be.

Directors on the MultiChoice Group board have cross-membership on the South African major subsidiary boards: MultiChoice South Africa Holdings Proprietary Limited and MultiChoice South Africa Proprietary Limited.

Non-executive directors with such cross-memberships receive a single fee at a MultiChoice Group level.

Non-binding advisory vote on remuneration policy

The remuneration policy, as set out in Part 2, will be subject to a non-binding advisory vote by shareholders at the AGM on 26 August 2021.

Part 3: The implementation report

This section explains how the remuneration policy was implemented in the reporting year and reflects the resulting payments each executive director received (backward looking). All decisions in relation to executive remuneration were made in line with our remuneration policy for this financial year.

Guaranteed pay (TCTC/base salary) adjustments

In determining any increases for executives, we considered personal performance, business performance, market benchmarks and local economic indicators. These contributions are in line with market norms and constitute a modest portion of the individual's total remuneration.

Below we show the guaranteed remuneration of the executive directors for FY22 as approved by the remuneration committee in June 2021.

CP Mawela1 TN Jacobs
Base salary (US$'000) FY22
increase
(%)
TCTC
(ZAR'000)
FY22
increase
(%)
Guaranteed pay 665 2.5 7 788 3.8
1 Calvo Mawela is paid in US dollar, which is aligned with the MultiChoice Group Dubai-based contracts and considers Dubai's cost of living and typical expatriate benefits for Dubai. This allows Calvo to focus significant time on the Rest of Africa segment and be closer to the management team with more accessible travel into African countries and to international stakeholders.


FY21 STI outcomes

Financial/group goals

In the following tables we outline the actual STI outcomes for each financial performance measure relative to the target set at the beginning of the financial year:

FY21 Weight Threshold
(80%)
Target
(100%)
Stretch
(120%)
Payout
(%)
Revenue (ZAR'bn) 25 2% below target On-target 2% above target 30
Core headline earnings (ZAR'bn) 25 10% below target On-target 10% above target 30
Free cash flow (ZAR'bn) 25 10% below target On-target 10% above target 30
Subscriber growth ('000) 25 5% below target On-target 5% above target 30
Total group outcome 120

Individual goals

Based on a combination of group and individual performance (as detailed in the remuneration policy) the resultant STI awards which were approved for the CEO and CFO are detailed below.

A B C D E =
C x D
F =
A x B x E
G H =
(F + G)/A
Executive director/prescribed officer FY21
TCTC/
base salary
as at
31 March
2021
('000)
On-target
bonus
(%)
Group/
financial
goals
achieved
weighted
outcome
(%)
Personal
goals
achieved
weighted
outcome
(%)
Total
outcome
(%)
FY21
bonus
('000)
FY21
Additional
bonus
('000)
FY21
bonus
as % of
TCTC/
base
salary
C P Mawela (US$) 649 80 120% 98.01 117.6 610 94
T N Jacobs (ZAR) 7 503 80 120% 94.82 113.7 6 824 91
1 Calvo has achieved good outcomes for the business under very difficult Covid-19 conditions - from the safety of our colleagues to galvanising the business into action for increasing local content, renewing rights deals, making strategic investments and overall delivering very positive results.
2 Tim has been instrumental in ensuring we deliver on our cost-saving targets and delivering on key strategic projects.


FY21 LTI vesting outcomes

In FY21, the outcome of the 2019 PSU awards will vest as detailed in the table below.

FY21 Weight Threshold
(50% vesting)
Target
(75% vesting)
Stretch
(100% vesting)
Vesting
(%)
Core HEPS (ZAR) 25 5% below target On-target 5% above target 100
Free cash flow (cumulative ZAR'bn) 50 5% below target On-target 5% above target 100
Return on capital employed (%) 25 5% below target On-target 5% above target 100
Total group outcome 100


Closure of the MultiChoice SAR scheme

As disclosed in prior reports, no new awards have been made under the MultiChoice SAR scheme following the introduction of the MultiChoice RSU scheme in 2019.

During the year, we further considered the appropriateness of the SAR scheme and whether current unvested awards are still fit for purpose for the group. The following key factors were considered:

  1. The scheme was implemented in 2008 when the group was a pure pay-TV business. At the time of listing the MultiChoice Group, the board determined that this scheme was no longer fit for purpose and no new allocations were made.
  2. The valuation formula was prejudicial to participants - three historic years' performance was used while shareholders benefited from current year performance and the expectation of future performance. This value gap was increasing as the group performed strongly in recent years. This created misalignment between shareholders and participants.
  3. The scheme did not take into account strategic long-term value creation for the group for example the value strategy in Rest of Africa, as it was backward looking.
  4. The impact of external factors such as currency depreciation and electricity shortages in the Rest of Africa severely impacted the value of the plan. While we recognise that foreign exchange movements impact shareholders as well as participants, 68% of scheme participants are employed in the South African operations. These employees would have received an additional benefit of 49% per SAR based on the South African segment's standalone performance. Rest of Africa has been reducing losses consistently over the past three years despite sharp currency depreciation and other uncontrollable external factors. The SAR price would have shown an 83% increase on the current price if it were not for currency impacts which were beyond the group and participant's control.
  5. The scheme did not take any account of new investments and products launched outside of the pure pay-TV business, which were key long-term focus areas for management. As a result, the scheme was misaligned with the group's strategy
  6. Given the factors listed above, there was no alignment of executive LTIs and shareholder value creation under this scheme, and employee morale was negatively affected despite outperformance in recent years.

After considering the above, the committee approved the closure and acceleration of the SAR scheme for all participants, including executive directors, in December 2020 in accordance with the rules of the scheme. The acceleration of the scheme included a 12% premium on the current value to recognise the strong unrewarded operational effort over the past six years and a forecast of the FY21 financial performance.

Executive directors' remuneration

Executive director single figure remuneration

Group CEO: Calvo Mawela

  • Calvo’s on-target STI is 80% of his salary. The stretch multiplier is 120% for group targets and 110% for individual targets. No STI is paid should group and/or individual threshold targets be missed.
  • Calvo’s stretch LTI award is 215% of his salary, with PSU on-target performance at 75% and threshold performance at 50% of the stretch award.
  • From March 2021 going forward, LTI awards are 100% subject to performance conditions.
  • No dividends are paid on share awards.
Element FY21 
(US$'000)
FY201
(US$'000)
Base salary 646  571 
Pension 78  67 
Benefits2 181  227 
Short and medium-term incentive3 993  726 
LTI - PSU/RSU4 534  – 
LTI - SAR5 197  – 
Total single figure 2 629  1 591 
1 Calvo Mawela moved to an MCG Dubai-based contract during FY20. The average exchange rate between USD and ZAR has been applied for comparison purposes.
2 Benefits exclude pension and include all benefits not included in TCTC/base salary such as medical benefits, fringe benefits, family benefits, travel, long-service and disability benefits.
3 The STI reflects the bonus paid based on the performance of the relevant financial year. During 2017 the MCSA Remco approved a medium-term incentive scheme. The scheme was designed to incentivise the delivery of key business results in FY18 and FY19, with payments taking place in FY20 and FY21.
4 The LTI RSU and PSU values reflected are for the June 2019 awards with performance period ending in FY21. Calvo's RSU and PSU awards were converted to USD using the year-end (March 2021) exchange rate.
5 The LTI value reflects the value of SARs that were exercised in FY21 and converted to USD using the November 2020 exchange rate.
Name Share plan Offer date Number
of shares
Offer price
(ZAR)
Release date Share price
as at
31 March 2021
(ZAR)
Value of awards
settled during
the financial
year ending
31 March 2021
(ZAR)
Intrinsic value per
award of unvested
shares as at
31 March 2021
(ZAR)
Calvo Mawela MCA 2008 SAR Plan 15 Sep 2015 16 242 113.19 15 Sep 2020 110.00
  01 Sep 2016 13 958 116.30 01 Sep 2020 110.00
  01 Sep 2016 13 958 116.30 23 Nov 2020 110.00
  28 Jun 2017 10 594 94.39 23 Nov 2020 110.00 165 372
  28 Jun 2017 10 594 94.39 23 Nov 2020 110.00 165 372
  28 Jun 2017 10 595 94.39 23 Nov 2020 110.00 165 388
  27 Jun 2018 26 119 77.19 23 Nov 2020 110.00 856 964
  27 Jun 2018 26 119 77.19 23 Nov 2020 110.00 856 964
  27 Jun 2018 26 119 77.19 23 Nov 2020 110.00 856 964
MultiChoice Group RSU1 18 Jun 2019 61 162 18 Jun 2021 128.95 7 886 840
  18 Jun 2019 61 162 18 Jun 2022 128.95 7 886 840
  18 Jun 2019 61 162 18 Jun 2023 128.95 7 886 840
  18 Jun 2019 61 162 18 Jun 2024 128.95 7 886 840
MultiChoice Group RSU2 10 Jun 2020 51 147 10 Jun 2022 128.95 5 474 187
  10 Jun 2020 51 147 10 Jun 2023 128.95 5 474 187
  10 Jun 2020 51 147 10 Jun 2024 128.95 5 474 187
  10 Jun 2020 51 149 10 Jun 2025 128.95 5 474 401
MultiChoice Group RSU2 17 Nov 2020 80 820 17 Nov 2023 128.95 7 764 196
MultiChoice Group RSU3 31 Mar 2021 120 809 31 Mar 2024 128.95 10 281 692
Phantom Performance Share Plan 20214 31 Mar 2021 42 767 31 Mar 2025 121.42 1 869 397
    31 Mar 2021 42 767 31 Mar 2026 121.42 1 869 397
1 50% of RSUs issued are subject to performance conditions.
2 75% of RSUs issued are subject to performance conditions.
3 100% of RSUs issued are subject to performance conditions.
4 100% of PPSs issued are subject to performance conditions.

Group CFO: Tim Jacobs

  • Tim’s on-target STI is 80% of his salary. The stretch multiplier is 120% for group targets and 110% for individual targets. No STI is paid should group and/or individual threshold targets be missed.
  • Tim’s stretch LTI award is 185% of his salary, with PSU on-target performance at 75% and threshold performance at 50% of the stretch award.
  • From March 2021 going forward, LTI awards are 100% subject to performance conditions.
  • No dividends are paid on share awards.
Element FY21 
(ZAR'000)
FY20
(ZAR'000)
TCTC 6 241 5 128 
Pension 979  756 
Benefits1 72  319 
Short-term incentive2 6 825  4 017 
LTI – PSU/RSU3 2 033  – 
LTI – SAR4 14 877  – 
Total single figure 31 026  10 220 
1 Benefits exclude pension and include all benefits not included in TCTC/base salary such as medical benefits, fringe benefits, family benefits, travel, long-service and disability benefits.
2 The STI reflects the bonus paid based on the performance of the relevant financial year.
3 The LTI RSU and PSU values reflected are for the June 2019 awards with the performance period ending in FY21.
4 The LTI value reflects the value of SARs that were exercised in FY21.
Name Share plan Offer date Number
of shares
Offer price
(ZAR)
Release date Share price
as at
31 March 2021
(ZAR)
Value of awards
settled during the
financial year ending
31 March 2021
(ZAR)
Intrinsic value
per award of unvested
shares as at
31 March 2021
(ZAR)
Tim Jacobs MCA 2008 SAR Plan 03 Dec 2018 151 142 77.19 23 Nov 2020 110.00 4 958 969
    03 Dec 2018 151 142 77.19 23 Nov 2020 110.00 4 958 969
    03 Dec 2018 151 143 77.19 23 Nov 2020 110.00 4 959 002
  MultiChoice Group RSU1 18 Jun 2019 15 768 18 Jun 2021 128.95 2 033 284
    18 Jun 2019 15 768 18 Jun 2022 128.95 2 033 284
    18 Jun 2019 15 768 18 Jun 2023 128.95 2 033 284
    18 Jun 2019 15 769 18 Jun 2024 128.95 2 033 413
  MultiChoice Group RSU2 10 Jun 2020 21 207 10 Jun 2022 128.95 2 269 753
    10 Jun 2020 21 207 10 Jun 2023 128.95 2 269 753
    10 Jun 2020 21 207 10 Jun 2024 128.95 2 269 753
    10 Jun 2020 21 207 10 Jun 2025 128.95 2 269 753
  MultiChoice Group RSU2 17 Nov 2020 59 652 17 Nov 2023 128.95 5 730 633
  MultiChoice Group RSU3 31 Mar 2021 80 732 31 Mar 2024 128.95 6 870 858
  Phantom Performance Share Plan 20214 31 Mar 2021 28 579 31 Mar 2025 121.42 1 249 222
    31 Mar 2021 28 580 31 Mar 2026 121.42 1 249 266
1 50% of RSUs issued are subject to performance conditions.
2 75% of RSUs issued are subject to performance conditions.
3 100% of RSUs issued are subject to performance conditions.
4 100% of PPSs issued are subject to performance conditions.

Non-executive directors' fees

The fees paid to non-executive directors by the group are set out below:

2021 Non-executive directors Directors'
remuneration
Directors' fees Committee and
trustees' fees
and other fees
Total
Paid for
services
to the
company
Paid for
services
to other
group
companies
Paid for
services
to the
company
Paid for
services
to other
group
companies
Paid for
services
to the
company
Paid for
services
to other
group
companies
ZAR
(unless
otherwise
stated)
DG Eriksson (resigned 11 June 2020) 135 000 127 863 83 750 759 465 1 106 078
FLN Letele* 3 007 072 678 750 127 863 115 000 137 641 4 066 326
E Masilela 678 750 127 863 335 000 1 141 613
KD Moroka** 1 500 000 678 750 127 863 462 500 275 282 3 044 395
SJZ Pacak 678 750 127 863 806 613
L Stephens 678 750 127 863 770 000 328 000 1 904 613
JJ Volkwyn*** 3 003 687 3 003 687
CM Sabwa 678 750 565 000 1 243 750
JA Mabuza 950 625 127 863 395 000 1 473 488
FA Sanusi 678 750 115 000 793 750
MI Patel**** 3 637 938 3 637 938

Notes

* Final payment related to the previous role as MultiChoice SA executive director.
** Director remuneration based on consultancy agreement for professional advisory services to the company and its subsidiaries.
*** Director remuneration based on agreement whereby Jim Volkwyn provides consultancy services to MultiChoice Group.
**** MI Patel changed from MultiChoice Group executive chair to non-executive chair on 1 October 2020. Disclosure includes payment as an executive and, with effect from 1 October, has a service and restraint agreement with the group. Additionally, the disclosure includes the SARs payment received as a result of the closure of the MultiChoice SA SAR scheme. Amount disclosed is in US dollar.

Termination payments

No termination payments were made to executive and non-executive directors on termination of employment or office in FY21.

Contractual arrangements

Adv Kgomotso Moroka

The consultancy agreement entered into between the group and Kgomotso for professional advisory services to the group and its subsidiaries, is considered immaterial to the wealth of Kgomotso and the board has, after consideration on a balanced and substance-over-form basis, determined that the agreement does not affect her categorisation as an independent non-executive director. The consultancy services agreement was renewed for 12 months effective April 2021.

Jim Volkwyn

The consultancy agreement entered into between the group and Jim for professional advisory services to the chair and CEO, is considered immaterial to Jim's wealth. The consultancy services agreement was renewed for 12 months effective April 2021. Jim accordingly waived any entitlement to director and committee fees paid to non-executive directors.

Imtiaz Patel

The service and restraint agreement entered into between the group and Imtiaz for the provision of various strategic and advisory support services to the group effective 1 October 2020, and the agreement is extended to 30 September 2025. Imtiaz accordingly waived any entitlement to director and committee fees paid to non-executive directors.

Compliance

There were no deviations from the remuneration policy in FY21.

Directors' interest in the MultiChoice Group shares

The directors of the MultiChoice Group (and their associates) had the following beneficial interest in the MultiChoice Group ordinary shares at 31 March 2021:

MultiChoice Group ordinary shares Direct Indirect Total
MI Patel 1 412 1 412
FLN Letele 88 836 88 836
JA Mabuza 9 850 9 850
SZ Pacak(1) 376 635 254 000 630 635
JJ Volkwyn 5 000 5 000
TN Jacobs 2 731 2 731
Total 484 464 254 000 738 464
(1) 37 548 shares of SJZ Pacak's indirect beneficial holding were sold on the market on 7 July 2020.

Non-binding advisory vote on implementation report

The implementation report, as set out in Part 3, will be subject to a non-binding advisory vote by shareholders at the AGM on 26 August 2021.