Founders Of This 12-Yr Old Startup Will Get Rs 100 Crore Annual Salary! How Did This Happen?
According to a special resolution passed by the company’s board, the founders of largest stock brokerage firm Zerodha, Nithin and Nikhil Kamath, alongwith Nithin’s wife Seema Patil can take home a salary of up to Rs 100 crore each.
Similar to the previous, but only double the valuation, at $2 billion, a buyback will be run by the company.
Nithin tweeted on Friday about how everyone holds ESOPs & continuously get new options. Zerodha did buyback last year at $1-billion valuation and this year do it at $2 billion. He said that it was the the proudest moment in this journey, even though the valuations are conservative but because business risks are high.
Where many startups are bleeding money, Zerodha, a bootstrapped start-up, made over Rs 1,000 crore in revenue and Rs 442 crore profit in FY20, which makes a feat very rare especially in the startup world.
Kamath Brothers & Seema Patil To Get 100 Crore Each
According to the special resolution passed by the board, the three — Nithin, Nikhil and Seema — will get a basic salary of Rs 4.17 crore per month each, along with allowances, which add up to Rs 300 crore per year.
One of the CEO with highest annual pay package include Infosys CEO Salil Parekh, with an annual pay package of Rs 49.68 crore in 2020-21. He has half the amount coming from exercise of stock options.
Nithin said that Zerodha isn’t looking to go public as neither they want funding nor are they wanting to give an exit to some of the investors.
Focus on Core Competency Than Marketing Spend
Nithin said that Zerodha has not raised funds and they are profitable with zero debt, as they do not spend on marketing and advertising which is one of the main reasons for raising money. Instead of marketing spend, the organization wants to focus on core competency.
He added that one almost pays 250 per cent more as taxes if one takes out money from the business as salary/dividends, as compared to paying capital gains when selling your stake to an investor (fundraising route).
The firm currently competes with stockbroking firms, banks, and companies like Upstox, Groww, Paytm (Money).
Nithin added that the reason behind higher profitability of the firm is that they do not spend money on customer acquisition, as some of the competitors are mostly externally funded and spend a considerable amount of money on advertising and customer acquisition.
The focused duo, who have been praised for their profitable business without external funds credit their success to the underlying stock markets which is doing good right now.
Also the company said in January that in order to fight climate change, it shall invest an amount of $100 million as grants and equity investments, to fight climate change.