After Zerodha's decision to compensate its promotors with Rs 100 crores drew criticism on social media, founder Nithin Kamath took to Twitter to justify the company's decision. One such jibe came from Kunal Shah, the founder of the fintech company CRED."I'm surprised by the unwanted noise around this whole salary news of
Nikhil Kamath, Seema (my wife), and me," Nithin wrote in a tweet. "The headlines are misleading. We are a private company and no obligations to clarify, but we thought maybe we should, as there are folks who are misinterpreting this," he added.
Zerodha's board had passed a special resolution approving annual remuneration of up to Rs 100 crore each to Nikhil Kamath and Nithin Kamath. Also eligible for the same fat paycheque is the newly appointed whole-time director and Nithin’s wife Seema Patil.Fintech startup CRED's founder Kunal Shah took a jibe after the decision was made public. "My salary is ₹3L/annum. I should have started a discount stockbroking company to add more zeros to my salary," Shah said in a tweet tagging Nithin.
My salary is ₹3L/annum.
I should have started a discount stock broking company to add more zeros to my salary.
Cc: @Nithin0dha— Kunal Shah (@kunalb11) May 30, 2021
Nithin clarified this is an enabling resolution that allows them as working promoters to draw salaries up to 100 crores in case of liquidity requirements. The Rs 100 crores isn't the actual salary being drawn.
He further said that broking is a riskier business as most revenue comes from active traders with leveraged positions that carry risk. "One black swan event can cause the business large losses. Also due to changing regulations, any of which can potentially impact profitability significantly."
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
The unicorn startup with more than a $100 billion valuation, had earlier announced that it will buy back shares from early employees at a valuation of $2 billion.
Zerodha plans to buy back employee stock option plans (ESOP) worth about $25 million (Rs 150-200 crore) in July-August this year, a move that will benefit 900 out of its total 1000 employees, he told Moneycontrol.
"This de-risking is something that we are enabling for everyone on our team through our ESOP buyback. A portion of the profits allocated for the buyback every year. This year it is ~ Rs 200 crores," Nithin said in a series of tweets.Revealing Zerodha's Rs 1000 crores profit after tax for FY20-21, Nithin concluded by saying that while the actual salary will be lower than the figure reported, it will still be high compared to the norm. "Promoters don't take out profits through salaries as it is tax-inefficient, you end up almost paying 50 percent in taxes. We believe that building sustainable businesses and paying taxes is a great step in contributing to society and the nation," he added.