Title: Unraveling the Enigma: Zerodha's CEO Nithin Kamath Clarifies on Annual Salaries
In a recent revelation from the Ministry of Corporate Affairs (MCA), it was disclosed that Nithin Kamath and Nikhil Kamath, the co-foundersof Zerodha, reported an eye-catching annual salary of Rs.72 crore each for the Financial Year 2023 (FY23). This
revelation has reignited the ongoing debate surrounding the substantial
salaries of executives and top management in startup companies, especially when
juxtaposed against the comparatively modest paychecks of the employees.
As of FY23, the Kamath brothers have secured the top positions for the highest annual salary packages among startup owners. Notably, Ritesh Agarwal, the CEO of OYO, follows closely behind in the second spot with an annual salary of Rs. 12 crore.
Delving into the past, it's interesting to note that two years ago, the reported salaries for Nithin and Nikhil Kamath were a staggering Rs. 100 crore each, as per their company filings. However, Nithin
Kamath was quick to clarify that these figures did not represent their actual
take-home salaries. In a social media post in 2021, Nithin Kamath explained
that the reported figure served as an enabling resolution, allowing the working
promoters to draw salaries up to that amount in case of liquidity requirements.
Addressing the attention garnered by the reported figures, Nithin Kamath emphasized the impact of taxes on their earnings. He clarified that while the reported salary figures were not reflective of their actual take-home pay, the real income would still be relatively high compared to the norm. Kamath highlighted a crucial point—promoters avoid taking out profits through salaries due to tax inefficiency, as it could lead to almost 50% of their income being directed towards taxes.
Putting the focus on Zerodha as a whole, the company's FY23 report revealed that the employee benefit cost amounted to Rs. 623 crore. Out of this, Rs. 380 crore was allocated to salaries, and the remaining funds were utilized in Employee Stock Ownership Plans (ESOPs) settlements.
In conclusion,
the disclosure of high executive salaries, as seen in the case of Zerodha's founders, sparks discussions on the equitable distribution of income within startup organizations. The clarification from Nithin Kamath sheds light on the complexity of executive compensation structures, emphasizing the role of taxes and the need for a nuanced understanding of reported figures. As the startup landscape continues to evolve, these insights provide valuable context for the ongoing debate on executive salaries and their implications for the wider workforce.
Checkout for Investment Opportunity : Click and Read
0 Comments