MultiChoice | Entertaining ESG

We rank MultiChoice Group's (JSE: MCG) corporate governance as ‘good' with a score of 3.65 out of 5. SA peer rankings: FY '19: VOD: 3.67, TKG: 3.49 and MTN: 3.11. Based on our ESG risk framework, MCG's ESG risk exposure is ‘moderate', with a residual risk rating of 2.6 out of 5.
Following the listing and unbundling of MultiChoice by Naspers in Feb ‘19, MultiChoice's inaugural integrated annual report provides the first analysis of the Group's governance and remuneration practices. A detailed remuneration report shows an alignment of executive directors with shareholders as over 50% of executive remuneration is linked to long-term incentives (LTIs). In addition, LTIs are split 50%:50% between restricted stock units (RSUs) and performance stock units (PSUs) and MultiChoice has a minimum shareholding requirement for the executive committee. MultiChoice operates in 50 African countries. MTN's issues in Nigeria highlight the importance of local knowledge and experience. Accordingly, the Group appointed Christine Sabwa and Fatai Sanusi, who are of Kenyan and Nigerian nationality, respectively. The appointment of representatives from ex-SA countries is important to understand and navigate the risks of operating in Africa. South African representation on MultiChoice's board currently accounts for c.85%. We believe MultiChoice would benefit from further local Rest of Africa experience on the board as the Rest of Africa operations are a core growth area. Due to the changing video landscape, we believe technology/internet experience would also prove invaluable in developing competitive OTT platforms.