Zerodha steals the headlines: salary news, Rs 1000 Cr profit after tax, Rs 200 Cr ESOP buyback

Good morning,

News late last week around Zerodha board passing a special resolution that would enable its Founder and CEO Nithin Kamath, his brother and Co-founder Nikhil Kamath as well as Nithin’s wife and whole-time director Seema Patil to draw salaries of Rs 100 crore each per annum had netizens in a frenzy.

Expressing surprise at the "unwanted noise" around the salary news and calling the headlines “misleading,” Nithin on Sunday issued a clarification on social media even as he stated there were "no obligations" for a private company like Zerodha to do so.

I’m surprised by the unwanted noise around this whole salary news of @nikhilkamathcio, Seema (my wife), & me. The headlines are misleading. We are a private company & no obligations to clarify, but we thought maybe we should, as there are folks who are misinterpreting this. 1/7
— Nithin Kamath (@Nithin0dha) May 30, 2021

In his clarification, Nithin said the reported figure isn’t the actual salary that is being drawn, and that the resolution was merely an enabling one that allows them as working promoters to draw salaries up to the number in case of liquidity requirements.

“Running a business is like trading, you can be up or down very easily. It is important to take liquidity out when you are “up” to de-risk. We have always done this, ~15% of profits,” Nithin said, as he added that Zerodha’s Profit After Tax for FY21 stood at around Rs 1,000 crore.

“This (de-risking) also helps us in supporting our personal investments in small businesses and social causes,” he said. Earlier this year, the company set up a $100 million Rainmatter Foundation to support grassroots individuals, organisations, and companies working on solutions for climate change.

Nithin Kamath - Rainmatter — Nithin Kamath, Co-founder and CEO, Zerodha

Nithin had earlier spoken about his strategy around de-risking and on building a sustainable, bootstrapped business focused on traditional growth metrics in a fireside chat with YourStory Founder and CEO Shradha Sharma last year.

Zerodha — which last year formally claimed unicorn status — is also enabling the same derisking for its employees too in the form of its Rs 200 crore ESOP buyback programme.

But even before Zerodha entered the coveted $1 billion+ valuation club, it had turned a ‘proficorn’ — a profitable startup with no external funding — by focusing on building a sustainable business model instead of opting for a 'growth-at-any-cost' approach.

Which is why, many netizens, including notable startup ecosystem stakeholders such as Paytm's Vijay Shekhar Sharma, all believe a profitable, bootstrapped business like Zerodha — which prides itself on being the highest tax payer among new-age businesses — should not have to clarify details around its promoters’ rewards and compensation programmes. See the findings of our poll here:

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