IiAS raises corporate governance issues at Zee Entertainment

September 10, 2021 4:30 AM

As members of the Nomination and Remuneration Committee (NRC), both Kurien and Chokhani are responsible for the hike in Punit Goenka’s salary in FY21. The salary hike of 46% was higher than what was approved by shareholders in the 2020 AGM, while employees were given no raise.

To secure borrowing from YES Bank, LEL had assigned all its rights under the put option agreement in favour of the bank, IiAS said.To secure borrowing from YES Bank, LEL had assigned all its rights under the put option agreement in favour of the bank, IiAS said.

By Rajesh Kurup

Institutional Investor Advisory Services India (IiAS), a proxy advisory firm, has raised corporate governance issues at Zee Entertainment Enterprises and asked shareholders to vote against resolutions, including the adoption of financial statements.

The advisory firm has asked shareholders not to support resolutions to re-appoint two independent directors. IiAS is holding the independent directors – Zee Group founder Ashok Kurien and former Enam Securities chief executive officer Manish Chokhani – accountable for a 46% pay hike to the company’s managing director Punit Goenka in the pandemic-ravaged FY21.

Asking to vote against the adoption of financial statements for FY21, IiAS said that the company’s wholly-owned subsidiary ATL Media (ATL) had rescinded the renewal of a put option. The company’s auditors were unable to comment on the adjustments required to the consolidated financial statements in respect to the put option.

ATL had entered into a put option agreement in January 2016 (renewed on July 29, 2019, and valid till December 30, 2026), to buy 64.38% shares held by Living Entertainment (another related party of the parent). The exercise price of the put option was $52.50 million (`384.8 crore as of March 31, 2021.

To secure borrowing from YES Bank, LEL had assigned all its rights under the put option agreement in favour of the bank, IiAS said.

Asking shareholders to vote against the re-appoint of Ashok Kurien, IiAS said that the company termed him as a non-promoter and no requisite regulatory filings or shareholder approvals were sought. “…We classify him as a promoter,” it said.

Both Kurien and Chokhani, who was also the former chairperson of TPG Growth in India, were members of the audit committee in FY20 and are accountable for the losses of related party transactions and governance concerns, it added.

As members of the Nomination and Remuneration Committee (NRC), both Kurien and Chokhani are responsible for the hike in Punit Goenka’s salary in FY21. The salary hike of 46% was higher than what was approved by shareholders in the 2020 AGM, while employees were given no raise.

Further, the remuneration hike also contradicts the company’s assertion that Punit Goenka had taken a 20% pay cut (in his fixed pay) from April 2021, it alleged.

The recommendations came ahead of Zee Entertainment’s AGM slated for September 14, even as e-voting for the resolutions opens on Friday.

“The company strongly rebuts proxy advisor’s views. It reiterates that the NRC has finalised the 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 to strengthen the company’s governance standards, and NRC and the board have unanimously recommended re-appointment of the directors to the shareholders,” a spokesperson said.

Earlier several Indian and global proxy advisory firms supported the resolutions.

Early this week, Dish TV said in a stock exchange filing that YES Bank had sent a communication to the company seeking the removal of its managing director Jawahar Goel and other independent directors over lapses in corporate governance. The lender’s notice came ahead of the company’s AGM slated for September 27.

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