Zerodha promoters join highest-paid executive club
Zerodha Broking Limited has passed a special resolution approving compensation of up to ₹100 crore per year for three of its directors. Nikhil Kamath, Nithin Kamath and his wife Seema Patil can each take home until ₹100 crore as company compensation.
Speaking to Mint, Zerodha Founder and CEO Nithin Kamath said, “This is an enabling resolution related to co-founder salaries, and the actual salary amount may differ from the upper limit mentioned in the resolution”.
He further explained, “Since we are not looking to sell our stake to increase liquidity (for promoters), the options we have left to increase liquidity include salaries, dividends and buybacks. one of these options, depending on various factors, including tax efficiency considerations. Note that even on wage income, the tax payable will be over 40% “.
The past year has been a spectacular one for brokerage firms as retail investor participation increased on the stock market. Zerodha had reported ₹1,093.64 crore in revenue, and his after-tax profit was ₹442 crore.
If the promoters of Zerodha take home ₹100 crore a year, the trio are said to be among the highest paid executives in the country.
Based on the annual reports of listed companies released so far for fiscal year 2020-21 or FY21, TCS Managing Director and CEO Rajesh Gopinathan received the highest compensation of ₹20.37 crore, according to data from Capitaline.
Other top-paid executives include Suresh Narayanan, President and CEO of Nestlé India, whose compensation was ₹17.19 crore and N Ganapathy Subramaniam, ED and COO, TCS, which was paid ₹16.10 crore.
Kalyan Jewelers’ TK Ramesh, TK Seetharam and TS Kalyanaraman were next with ₹Pay 10.5 crore each.
But the companies that pay the highest salaries to their executives have yet to release their annual reports for the last fiscal year.
In FY20, Sun TV’s Kalanithi Maran and Kavery Kalanithi won ₹87.5 crore each. Pawan Munjal, CMD and CEO of Hero MotoCorp, was the third highest paid executive to win ₹84.59 crore.
The remuneration of the CMD Murali K Divi from Divi Laboratories reached ₹52.36 crore, and the fifth highest paid executive was Mr. Venkatesh, MD and CEO of MRPL, who won ₹49.48 crore.
For all these corporate honchos, compensation is part of their package. If they are not promoters, many of them also benefit from employee stock option plans or Esops, which can greatly increase their total package.
“While investors worry about rising executive salaries in developed countries, Indian investors, especially retail, are not getting involved in such discussions. As long as companies see growth in their business and in stock prices, they accept top management compensation. Said JN Gupta, MD, Stakeholders Empowerment Services, a proxy advisory firm.
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