In a rare instance, retail investors struck down the proposal to re-appoint Zee Entertainment CEO Punit Goenka as a director on the board at the firm’s annual general meeting (AGM) held on Thursday. The move indicates they want a change in leadership, proxy advisory firms said.
Nearly 88% of retail investors who participated in the AGM voted against the resolution to re-appoint Goenka as director, stock market filings show, while 12% voted in favour of the proposal. In contrast, 52% of institutional investors voted in favour of Goenka’s re-appointment while 48% voted against the proposal, data from the exchanges show.
As per data available, 13% of Zee’s retail shareholders cast votes at the AGM, while for institutional investors the figure was 74.36%.
The retail investors held a 33.35% stake in Zee as on September 30. Mutual funds, insurance companies and foreign portfolio investors’ holding stood at 12.39%, 6.39% and 18.52% respectively while the promoter family’s held 3.99%.
“By voting against the re-appointment of Punit Goenka, shareholders, particularly, retail investors, would be signalling that they are seeking a leadership change. While Goenka may be showing skin in the game by giving up the MD position and continuing to be CEO, this is not a desirable outcome for shareholders,” Shriram Subramanian, managing director of proxy advisory firm InGovern, said.
At an overall level, the proposal to re-appoint Goenka was defeated by a margin of 0.91%, with 49.54% voting in favour and 50.45% voting against the resolution. This includes institutional and retail votes, experts tracking the stock markets said.
Subramanian says that retail investors would have weighed in the recent merger failure between Zee and Sony for the move to block Goenka’s reappointment. While Goenka did re-affirm his commitment to achieve the revenue (8-10%) and margin (18-20%) targets set by the board while addressing the AGM, retail investors seemed to have opted for a leadership change, experts said, given the voting pattern.
The shareholder activism, however, may have no real bearing on Goenka’s CEO position, senior corporate lawyers that FE spoke to said.
“Punit Goenka’s decision to continue as CEO has been approved by the board. So, the vote against his re-appointment as director has no real implications. However, the board does become vulnerable to liabilities with the MD position vacant,” HP Ranina, senior corporate lawyer, said.
In a conversation with FE last week, Zee’s chairman R Gopalan said that Goenka needed to focus his attention on the enhanced targets set by the board. These targets include quarterly consolidated revenue and consolidated Ebitda outlook for the next four quarters (commencing Q3FY25) and a payout of 25% of consolidated net profits as dividend to the shareholders of the company.
“These targets are stringent and will be reviewed at the end of the current financial year (FY25). There will be a second review at the end of the first half of the next financial year (FY26). The board was of the view that Punit would need to focus his attention on the business as the competitive landscape is increasingly getting dynamic. MD responsibilities would have taken his attention away from this crucial objective,” Gopalan said.