When a company scores a staggering funding round, an increase in managerial remuneration doesn’t come as a surprise. However, when a round of less than $100 million takes the CEO’s remuneration to the second highest in the entire Indian Startup ecosystem, it’s well worth a look.
We’re talking about none other than this fintech company called InCred – a consumer and SME lending platform. In the latest RoC filings of the company with MCA, the managerial remuneration for Bhupinder Singh, the CEO, and Founder of the company, has been set at Rs 4 crore plus car and driver benefits.
This is the first time Singh has been assigned a salary for his role as the Founder and CEO at the year. Other CXO level personnel in the company raised salaries time and again, but not Singh.
At well over $550,000, it’s a number that compares well with startups not just in India but globally as well.
This makes Singh the second highest paid CEO in the entire Indian startup ecosystem. The highest paid CEO being Pranay Chulet, the CEO and Founder of Quikr, who earned Rs 4.28 crore in FY18 as managerial remuneration.
InCred has reportedly raised a Rs 600 crore round led by Netherlands Development Finance Company (NDFC). Out of this, it has received Rs 427.13 crore from NDFC as well as existing investors such as Alpha Capital, and V Ocean Investments. Obviously, one imagines that the investors are well aware of Bhupinder’s remuneration, and have approved it too.
After receiving the recent Rs 427.13 crore, InCred’s valuation went over $300 million. Obviously leading to a bump up in the value of Singh’s own stake in the firm too, one of the reasons why Singh’s fixed pay for the year becomes a surprising development when we take a look at the remuneration received by some of the Unicorn CEOs.
Ritesh Agarwal (CEO of OYO) takes home Rs 49.7 lakhs, Abhishek Agarwal (CFO of OYO) gets Rs 1.25 crore, Byju Raveendran (CEO of BYJU’s) Rs 72.6 lakhs, Sriharsha Majety and Rahul Jamini (Co-founders of Swiggy) get Rs 1 crore each.
Paytm’s key managerial personnel got around Rs 5.8 crore in both FY17 and FY18. However, Vijay Shekhar Sharma’s (Paytm CEO and Founder) individual salary in FY17 is reportedly Rs 3.47 crore, so it is unsure if the entire Rs 5.86 crore in FY18 went to Sharma or not.
Other CEO’s like Girish Mathrubootham (Freshworks), Dhiraj C Rajaram (Mu Sigma), Sanjiv Bikhchandani (InfoEdge), Deepak Garg (Rivigo) and BookMyShow CEOs earn somewhere between Rs 1 to 2 crores on an annual basis, as per an old TechCircle report.
The remuneration for CEOs in startups is generally low, because the cash burn is generally high, and these people have significant equity in their respective firms.
Moreover, their business expenses are also generally paid by the companies, so remuneration after a point is not chased thanks to the need to conserve cash, set an example, or even because of high taxes.
But InCred differentiates itself from these companies as it had turned profitable in FY18 after converting losses worth Rs 5.33 crore in FY17 into profits worth Rs 9.38 crore in FY18. All of the aforementioned companies, on the other hand, are incurring regular losses on the other hand, and that includes Chulet’s Quikr.
Singh, this way is not just getting the second highest salary in the ecosystem, but also his share in profits and car and driver benefit which makes his actual earnings from InCred much higher than Rs 4 crore. He owns 24,97,925 shares in the company, which accounts for a 6.46% stake.
Given that Singh was the former head of the Corporate Finance division of Deutsche Bank and co-headed the Fixed Income, Equities and Investment Banking divisions for the Asia Pacific region, he must have drawn a substantial annual package there. Probably even more than what he’s getting now.
Finance as segment sees employees and heads getting hefty cheques in general. Case in point the CFO and CEO of OYO. The salaries for CXOs at reputed firms at times range between Rs 10-12 crore p.a. If we look from that perspective, Singh’s salary is half the standard.
These high founder salaries raise a question – just how much is enough? And should experienced founders benchmark their salaries to their last drawn salaries at all?
Investors at seed funding level definitely like to see conservative founder salaries, it seems large VC’s are increasingly more tolerant, as long as the founder is driving up valuations, and the founder’s role is seen as critical in achieving that.
While the Founder and CEO getting his or due returns after investing their blood and sweat in their brainchildren is a good sign, it is important that this benefit of a reward reaches the employees and other stakeholders as well.
Entrackr has sent queries to InCred asking about the factors behind this increase in pay, as well as the latest funding round, and financial performance in FY19. The article will be updated with the response as and when it arrives.