IIAS asks shareholders to vote against directors of Zee Entertainment

 The proxy firm raises corporate governance concerns over MD's salary

Proxy advisory firm IIAS has raised fresh corporate governance concerns at Zee Entertainment by asking the shareholders not to re-appoint independent directors, Ashok Kurien and Manish Chokhani, on the company's board.

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. The dish was part of the Essel Group and is run by Zee group patriarch Subhash Chandra's brother.

A Zee spokesperson said while IIAS has asked the shareholders to vote against two directors of Zee Entertainment, other proxy advisory firms have supported them. The spokesperson said the IIAS report is not factually correct.

Asking the shareholders to vote against the proposal to re-appoint Ashok Kurien on the Zee Entertainment board, IIAS said he is the founder of the Zee group and while the company has reclassified him as non-promoter, no requisite regulatory filings or shareholder approval was sought for the same, and hence it classifies him as a promoter. "He 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% as on June 30, 2021. "We believe the board must bring in the right mix of professionals that 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.

IIAS said as a member of the NRC, Kurien was also accountable for the manner in which remuneration had been managed in FY21 as MD Punit Goenka’s remuneration increased by 46 per cent (higher than what was approved by shareholders in the 2020 AGM), while employees were given no raise for FY21.