Zee Entertainment hits 33% after two independent directors resign on investor’s demand

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Zee Entertainment hits 33% after two independent directors resign on investor’s demand
BCCL
  • Two independent directors on the board of Zee Entertainment Enterprises -- Ashok Kurien and Manish Chokhani have resigned on Monday.
  • This comes after proxy advisory firm Institutional Investors Advisory Services (IiAS) raised serious corporate governance concerns in the company by asking shareholders not to vote for re-appointing the duo on the company’s board.
  • Shares of the company have surged 20% as analysts feel this is a positive for the company.
Overnight, two independent directors resigned from Zee Entertainment Enterprises’ board after the broadcaster’s largest shareholder Invesco ⁠— the foreign portfolio investor holds 7.7% stake in the company ⁠— demanded their resignation along with that of the managing director Punit Goenka.

This comes after proxy advisory firm Institutional Investors Advisory Services (IIAS) highlighted concerns over the managing director’s increasing salary and asked shareholders not to vote for re-appointing independent directors Ashok Kurien and Manish Chokhani on the company's board. Reportedly, Punit Goenka’s salary was increased by 46%, higher than what was approved by shareholders in the 2020 annual general meeting. At the same time, employees were not given any raise for FY21.

Zee Entertainment hits 33% after two independent directors resign on investor’s demand
Flourish chart/BSE data

The company had, at the time, refuted the charge of a lapse in corporate governance. “Maybe they resigned because they did not expect to be reappointed with sufficient votes. And I suspect they realised they have lost the confidence of the investors,” Amit Tandon, the founder and managing director at IIAS, told Business Insider on September 14.
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Invesco has called for an extraordinary general meeting seeking to remove Punit Goenka, currently the MD, from the board and two independent directors. It also asked for appointment of six other nominees on the board. This happens ahead of the company’s annual general meeting today.

“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,” IIAS had reportedly said earlier.

The proxy firm held the independent directors’ responsible for significant erosion in the shareholder wealth. Zee Entertainment’s share price had lost over a quarter of its value between June 15 and August 26 before it started crawling back.
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