The Zerodha Broking Limited passed a special resolution approving a remuneration of up to ₹100 crore a year for three of its directors. Nikhil Kamath, Nithin Kamath and his wife Seema Patil each can take home up to ₹100 crore as remuneration from the company.
Talking to Mint, Zerodha's founder and CEO, Nithin Kamath, said: "This is an enabling resolution related to the salaries of co-founders, and the actual amount of salary may differ from the upper limit mentioned in the resolution".
He further explained: "Since we aren't looking at selling our stake to raise liquidity (for promoters), the options that are left for us to raise liquidity include salaries, dividends and buybacks. We may exercise any of these options, depending on various factors, including considerations about tax efficiency. Note that even on salary income, the tax payable will be upwards of 40%".
The previous financial year has been a spectacular one for brokerages as retail investor participation grew in the stock market. Zerodha company had reported ₹1,093.64 crore revenue, and its profit after tax stood at ₹442 crore.
If Zerodha promoters take home ₹100 crore a year, the trio would be among the country's highest paid executives.
Based on the annual reports of listed companies published until now for the financial year 2020-21 or FY21, TCS' MD and CEO Rajesh Gopinathan took the highest remuneration of ₹20.37 crore, according to data from Capitaline.
The other higher-paid executives include Suresh Narayanan, chairman and MD of Nestle India, whose remuneration was ₹17.19 crore and N Ganapathy Subramaniam, ED and COO, TCS, who got paid ₹16.10 crore.
Kalyan Jewellers' T K Ramesh, T K Seetharam and T S Kalyanaraman were next with ₹10.5 crore remuneration each.
But companies that pay the highest salaries to their executives are yet to publish their annual reports for the last financial year.
In FY20, Sun TV's Kalanithi Maran and Kavery Kalanithi took home ₹87.5 crore each. Pawan Munjal, CMD and CEO of Hero MotoCorp, was the third highest-paid executive who took home ₹84.59 crore.
Divi's Laboratories' CMD Murali K Divi's remuneration came to ₹52.36 crore, and the fifth highest-paid executive was Jayadev Galla, vice chairman and MD, Amara Raja Batteries whose remuneration was ₹45.43 crore.
For all these corporate honchos, remuneration is one part of their package. If they are not promoters, many of them also get employee stock option plans or Esops, which can take their total package much higher.
"While investors are concerned about higher executive salaries in the developed countries, Indian investors, especially retail, don't get involved in such discussion. As long as companies are delivering growth in business and stock price, they are fine with remunerations of top management," said J N Gupta, MD, Stakeholders Empowerment Services, a proxy advisory firm.
