Mumbai and Bengaluru: In a surprise development late on Monday, Punit Goenka announced his decision to step down as the managing director of Zee Entertainment Enterprises Ltd (ZEEL), just days before his reappointment to the position was to be ratified by the company’s shareholders at their annual general meeting (AGM).

A media release from the company said he will continue to serve as the chief executive officer (CEO). He will also continue on Zee’s board, provided his appointment is ratified at the upcoming AGM on 28 November.

Goenka attributed his decision to a need for dedicating time and energy to his role as Zee’s CEO. The company’s board backed his decision.

“In the long-term interest of the Company and all its stakeholders, I have approached the Board with a request to attain operational focus as the Chief Executive Officer,” Goenka said in the release.

Incidentally, Goenka’s decision to step down comes at a time when two proxy  advisory firms have recommended that investors reject his reappointment as the company’s MD. The reappointment will come up for voting at Zee’s annual general meeting on 28 November. The company’s Board had given Goenka a fresh five-year tenure as the MD starting 1 January 2025, after his current five-year tenure ends on 31 December.

The opposition from the proxy advisory firms—Institutional Investor Advisory Services (IiAS) and InGovern Research Services—was likely to make it an uphill battle for Goenka to retain the top job at the company that his father Subhash Chandra founded in 1992. The second-generation promoter joined the Zee Board in January 2005 and became CEO in 2008.

The latest move ensures that Goenka continues as the CEO of Zee even if his contention as the managing director of the company is rejected by shareholders at the AGM, as per a corporate governance expert.

“It will reflect badly on the capabilities of the Board if Mr. Punit Goenka is to continue as CEO after shareholders vote against him continuing as a Director and Managing Director,” said Shriram Subramanian, the managing director of proxy advisory firm InGovern.

Why are proxy advisors against Goenka leading Zee?

“The company’s inability to culminate the $10 bn merger with the Sony Group” is among the reasons cited by IiAS in a note dated 16 November. “From R Gopalan's letter received by IiAS in February 2024, we note that the Board had delegated responsibility for the merger to the management. We believe shareholders must hold Punit Goenka accountable for this,” said the note, shared by an investor with Mint who wished to remain anonymous. “The failure of the merger has resulted in a significant loss of opportunity for shareholder wealth creation.”