If they do take that amount, it would put them among the highest paid promoters/CXOs in India. Among listed companies, in FY20, Sun TV’s promoter Kalanithi Maran took home Rs 87.5 crore, and Hero MotoCorp’s promoter Pawan Munjal received Rs 84.6 crore.
Nithin told TOI that it is only an enabling resolution and does not mean that they will necessarily take that amount. He said the company does not see a reason to sell stakes to raise funds. So one of the ways to create liquidity for the promoters is a salary. Dividends and buybacks are other options.
“We have been setting aside 5%-10% of our profits every year to support our investment philosophy and support causes close to our hearts. We doubled our profits in the 2020-21 financial year to over Rs 1,000 crore. We allocate a part of it towards bonus payouts,” he said.
The Companies Act prescribes a ceiling for salaries in public companies. But Sec 197 of the Act allows a company to pay remuneration higher than the ceiling prescribed subject to approval of members in its general meeting, said Saurabh Agarwal, director at Kennis, a corporate advisory firm.
Zerodha, founded in 2010, disrupted the Indian brokerage business with a flat Rs 20 charge for futures & options and intra-day trade, and nothing for other trades that are longer term, as against the industry norm of charging a percentage of the trade. During the pandemic, its retail base grew from 2 million to over 5 million. This 5 million contributes over 15% of all Indian retail trading volumes.
Nithin and Nikhil’s father worked as a banker and mother is a veena player. Nithin started trading when he was 17 years old. In 2006, he started as a sub-broker in Reliance Money when it had about 1,000 sub-brokers. “In 2008, I was short on the market – which means you make money when the market falls.
The market fell and I made serious money – 800%-900% returns. I then took a break and I suggested to my younger brother Nikhil to take a shot at trading. And later, while he traded, I worked to build a completely-online brokerage business,” he told TOI in an earlier interview. Zerodha went live on August 15, 2010.
Nithin said the company is planning to do an ESOP buyback at a $2 billion valuation this year. “We are looking at a Rs 250 crore buyback that would benefit 850 of our 1,000 people,” he said. Last year, Zerodha bought back Rs 60-65 crore in ESOP buybacks for over 700 employees at a $1 billion valuation.
What does success mean?Everyone holds ESOPs & continuously get new options too. We ran a buyback last year at $1bi… https://t.co/z3DN3CHMqH
— Nithin Kamath (@Nithin0dha) 1622195431000
Zerodha through its fintech incubator Rainmatter has incubated 25 companies that include non-profit climate change initiatives. Rainmatter provides well-equipped workspaces, mentorship, and funding ($100K-$1 million) to startups in the capital markets space in exchange for minority stakes.
Rainmatter Foundation is an initiative supporting grassroots individuals and organisations engaged in afforestation, ecological restoration, fostering distributed and federated green economies and livelihoods.
Asked about making a cryptocurrency foray, Nithin said, “If Sebi allows stock brokers to trade in cryptocurrency, we will offer it.”