Zee may have to take fresh call on Goenka salary after he withdraws MD bid, say governance experts

Last week, Goenka lost his bid for directorship in the company as majority shareholders voted against the proposal

Last week’s shareholder vote against Puneet Goenka’s appointment to the board of Zee Entertainment may mean that the compensation committee of ZEE Entertainment Ltd (ZEEL) will have to take a fresh decision on the performance payout promised to him by the board.

Goenka had sought shareholders’ approval for appointment as managing director (MD) and his remuneration of Rs 16.6 crore plus incentives was part of the same resolution.

Now, the Nomination and Remuneration Committee (NRC) of Zee will have to decide what compensation Goenka should be paid in the new capacity as non-director chief executive officer (CEO), experts say.

Originally, Goenka sought to be reappointed as managing director and CEO of the company. However, in the lead-up to the annual general meeting (AGM), Goenka withdrew his nomination for MD’s position and said he would continue as the CEO.

Hence, technically the earlier remuneration promised by the board to Goenka becomes null, governance experts say.

During the AGM, Goenka’s directorship claim was rejected by shareholders with 50.5 percent of the shareholders voting against the resolution. The results were announced on November 28.

While his appointment as MD was part of the same resolution, it became infructuous as Goenka withdrew his bid.

Due to withdrawal of his bid for MD position, Goenka’s salary for now remains undetermined, say experts.

“Goenka’s remuneration remains undetermined for now and the nomination and remuneration committee (NRC) of Zee would have to re-examine the compensation proposals. However, Goenka is no longer a director of the company and is acting just in capacity of a CEO, hence his compensation should be fixed accordingly. Remuneration paid to Goenka has been a concern in the past also,” Ingovern founder Shriram Subramanian said.

An email sent to Zee remained unanswered.

According to Zee Entertainment’s annual report filed in November, it was proposed that Goenka receive Rs 85 lakh a month as basic pay, Rs 30 lakh as house rent allowance and Rs 22.9 lakh as personal allowance. Annually, these add up to around Rs 16.6 crore.

Goenka is also eligible for variable pay based on the performance of the company.

Shareholder approval not needed

Compliance experts say Goenka’s remuneration will no longer need shareholder approval since he is not a director in the company. The board is at liberty to take the call, they say.

“The appointment and remuneration of CEO would be approved by the nomination and remuneration committee and the board of directors. According to the Companies Act and SEBI Listing Regulations, the appointment and remuneration of CEO will be not placed before shareholders for their approval as the appointment is in the capacity of Key Managerial Personnel (KMP) and not of Managing Director or whole-time director,” says Gaurav Pingle, a practicing company secretary.

In FY23, Goenka was paid Rs 35 crore in remuneration, which exceeded the maximum cap permissible under Companies Act. He returned the excess amount paid to him.

According to the annual report, Goenka’s salary is nearly 126 times the median remuneration of Zee employees. In FY 22, Goenka received Rs 41 crore as remuneration while in FY21 the number stood at Rs 13.2 crore, the report data said.