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Proxy advisory firm Institutional Investors Advisory Services (IIAS) has raised fresh corporate governance concerns at Zee Entertainment Enterprises by asking shareholders not to vote for re-appointing independent directors Ashok Kurien and Manish Chokhani on the company’s board.
Asking shareholders to vote against the proposal to re-appoint Ashok Kurien on Zee Entertainment board, IIAS said Kurien was the founder of the Zee group and while the company has reclassified him as a non-promoter, no requisite regulatory filings or shareholder approval was sought for the same, and hence it classifies him as a promoter.
“Kurien was a member of the audit committee in FY20 and is accountable for the losses on account of related party transactions as well as governance concerns outlined by previous independent directors, which resulted in significant erosion in shareholder wealth,” the IIAS said, adding that the promoter equity declined to 3.99 per cent as on June 30, 2021.
“We believe that the board must bring in the right mix of professionals who have an understanding of the media and the digital business. Further, having the erstwhile promoters on the board may impede the directors’ ability to take hard decisions,” it said.
When contacted, a Zee spokesperson said it has strongly rebutted the views of the proxy advisor on the reappointment of its directors. “The reasons for the rebuttal are mentioned in the report of the proxy advisor. The company reiterates that the NRC has finalised the overall remuneration framework, after a structured evaluation process and has implemented the same with the approval of the Board. During the last few years, the audit committee has introduced various policies and measures in order to further strengthen the company’s governance standards with sharper focus on transparency. The said directors have played an active role in institutionalising the governance standards based on their rich expertise and experience. Accordingly, the NRC and the Board (comprising majority of independent directors) have unanimously recommended re-appointment of the directors to the shareholders. Other credible proxy advisors, including certain reputed international firms, have recommended to vote in support of the appointments,” the spokesperson said.
Early this week, Dish TV announced that YES Bank had sent a communication to the company seeking the removal of the present managing director, Jawahar Goel, and other independent directors over lapses in corporate governance. Dish was part of the Essel group and is run by Zee group patriarch Subhash Chandra’s brother.
IIAS said as a member of the Nomination and Remuneration Committee (NRC) of ZEEL, Kurien was also accountable for the manner in which remuneration had been managed in FY21 as MD Punit Goenka’s pay increased by 46 per cent (higher than what was approved by shareholders in the 2020 AGM), while employees were given no raise for FY21.
On Chokhani, IIAS said after completing his five-year term as an independent director, the Zee Entertainment board seeks to re-appoint him as non-executive non-independent director. Chokhani, IIAS said, was on the audit committee in FY20 and is accountable for the losses against related party transactions, which resulted in significant erosion in shareholder wealth.
Commenting on Goenka’s salary, IIAS said shareholders supported his reappointment and remuneration for five years from January 1, 2020, at the company’s 2020 AGM. IIAS had recommended voting against his reappointment on account of the weak oversight over the business, concerns over related party transactions, and other governance concerns. “While estimating the proposed remuneration for Goenka, Zee’s management had confirmed that he had taken a voluntary pay cut of 20 per cent in his fixed salary from April 2021. Based on this, IIAS had estimated his FY21 remuneration at Rs 5.65 crore against his FY20 remuneration of Rs 6.81 crore. In FY21, Goenka’s remuneration aggregated Rs 1.31 crore, which did not include any variable pay. The board decided to revise Punit Goenka’s remuneration after undertaking a benchmarking exercise by a global consulting company.” Employees, at the same time, did not get any hike, it said.
Shareholders are advised that Goenka’s revised remuneration is higher than the terms approved in the 2020 AGM. Further, the increase in remuneration contradicts the company’s assertion that Goenka had taken a 20 per cent pay cut, IIAS said.
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