Early festival for Zerodha staff with Rs 200 crore Esops

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Bengaluru: Zerodha has put in place an employee stock ownership plan (ESOP) worth more than Rs 200 crore for 850 of its employees.

The development comes after the online stock trading startup moved from being a partnership firm to a public limited entity earlier this year.

As a partnership firm, Zerodha had dummy shares for a few executives in its core management team. With the formalisation of a corporate structure, the company has constituted an ESOP pool and has distributed it among a wider network of employees.

“We have historically had very less churn in our employee base, and our core operations and technology teams have remained almost the same since inception. Out of the 1,100 employees, we have allocated shares to 850,” said Nithin Kamath, chief executive officer, Zerodha.

“The allocation of shares has been done on the basis of the employees’ gross earnings through their years of service, plus added shares were allocated based on their performance,” he said.

Kamath did not reveal the exact valuation of the company, but said the calculation of the stock options were made through an internal assessment of the company’s fair value based on financials, cash in hand and market opportunities in future.

“We do not have any immediate listing plans, but maybe over the next four to five years we will set in place plans to get listed, which in turn will also give an option for my employees with ESOPs to exit or vest their shares at market value,” he said.

Instead of a flat, mandatory holding period for three-to-five years, Zerodha is offering an option to vest 33% of the shares after the first year, providing easier liquidity options to staff. The company has created a segregated fund of Rs 30-50 crore to buy back shares next year.

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“We also offer credit to our employees against these shares at an interest rate of 6-7% per annum, in order to cater to their sudden liquidity requirements,” he said.

Zerodha, founded in 2010, is among a handful of profitable fintech startups in the country and offers direct mutual fund investments besides stock trading.

It currently has four registered entities — Zerodha Broking, the stock broking business; Zerodha Securities, where all demat accounts are held; Zerodha Commodities, which houses the commodities trading business, and the RBI-registered non-banking lending arm, Zerodha Capital.

Zerodha has an active investor base of 1.02 million and a total client base of more than 1.6 million. It reported net profit of Rs 350 crore against a revenue of Rs 850 crore in financial year 2019, according to the latest numbers shared by the company.



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