The bootstrapped startup has passed a special resolution to increase the annual salaries of Kamath, as Patil who is the spouse of Nithin Kamath, to Rs 100 crore each, according to regulatory disclosures.
This means that the net income of the Kamath household could well be in the range of Rs 300 crore next year. News portal Entrackr was the
first to report the development on Friday.
The new salaries, if cleared, would make the Kamath brothers and Patil among the most well-paid executives in India.
It is widely believed that
’s executive chairman and founder, Kalanithi Maran and his wife, Kavery Kalanithi Maran currently top this list with an annual remuneration of Rs 88 crore each in FY20, according to news reports citing regulatory disclosures.
Other executives with sky-high salaries in FY20 include Pawan Munjal of Hero Motocorp (Rs 85 crore), Rohit Philip of Indigo (Rs 48 crore) and Rajiv Bajaj of Bajaj Auto (Rs 40 crore). Reliance Industries chairman Mukesh Ambani’s annual salary meanwhile has been capped at Rs 15 crore for several years.
Among startups, the salaries of the most senior founders and executives from Paytm, Zomato, and Flipkart executives are all under Rs 6 crore.
Nithin Kamath, however, believes that it is unfair to compare his pay-out with those of senior executives in big corporations, or even founders in India’s startup ecosystem.
As India’s only bootstrapped unicorn – or startups with a valuation of over $ 1 billion – Zerodha’s founders are in a position in which, to encash their success, they need to overly rely on salaries, Kamath said.
Bootstrapped startups are those that are self-sustained — that is, without any external funding.
“We are coming off a very successful and fruitful year,” Kamath told ET. “Unlike other startups we have not diluted our stakes for a valuation premium. We have no intention to sell our stakes in Zerodha, and the only way to encash our success and get some liquidity in our hands is by increasing our salaries,” he said.
Zerodha, with a profit of Rs 440 crore in FY20 and a robust 15% revenue growth to Rs 1,093 crore in this period, is among those rare Indian startups that are profitable while remaining bootstrapped.
“Taking salaries is a very inefficient kind of remuneration structure for promoters as there are huge tax liabilities – to the tune of 50%. In comparison, when a promoter encashes their stake, the tax outgo is much less. To reiterate my point, we have no intention of selling our stake or raising external capital any time soon,” said Kamath.
For Zerodha’s employees too, Christmas has come early. The company is set to announce an employee stock ownership plan (ESOP) in the region of around Rs 150-200 crore, valuing the fintech company at $2 billion, chief executive Nithin Kamath told ET.
This is, in effect, a doubling of its valuation since the firm launched a similar ESOP scheme of Rs 60 crore in 2020, when Zerodha was ascribed a value of around $1 billion. “For me it’s still a conservative valuation of our business. We want to give this option to our employees, as we do every August on our anniversary,” said Kamath. “Even last year we opened the ESOP programme for Rs 60 crore, but this was not fully subscribed as many employees didn’t want to sell their stakes,” Kamath added.
With over 5 million active users, Zerodha is India’s largest retail stockbroking platform, managing around 15% of all trading volume in India. The company saw massive traction on its stock trading platform Kite in 2020, as millions of retail stock traders, drawn by a volatile stock market, opened demat accounts with Zerodha.
“In our business if markets do well, we do well too,” said Kamath. “But the market is overvalued, and we have to be prepared for when the bubble bursts. We, therefore, want to keep our business very simple. Verticals such as lending do not appeal to us. There is no point in overspending. We want to keep our operational costs low,” he added.
Apart from Zerodha, the Kamath brothers also run an investment fund called True Beacon, which they founded in 2019. In 2021, the brothers and Patil also launched Rainmatter Foundation, an NGO supporting climate change action. It has committed $100 million to fund projects across India.