Recruiting an executive director: structuring an attractive compensation package

Quick answer. An effective C-level package combines several components: fixed base salary (foundation), variable bonus or profit-sharing (15-30 % of base), equity (BSPCE or AGA), supplementary pension (company PER) and benefits. The mix depends on legal status (SAS salaried vs SARL self-employed), the target employer cost and the company's stage (pre-revenue startup vs established SME). The base salary should stay the majority (50-70 % of the total) so attractiveness does not hinge on variable pay.

The executive talent market has fragmented. Large corporations and well-funded startups offer complex packages (equity, bonuses, flexibility); established SMEs struggle to compete on immediate pay but have other retention levers.

The 2026 tax and social rules frame the trade-off:

• Flat tax on dividends: 31.4 % (a 1.4-point CSG increase) — it weighs on the equity component and on the salary/dividend trade-off.
• PASS 2026 = €48,060 — the reference ceiling for many social-contribution and employee-savings calculations.
• Social status — salaried-equivalent (SAS president) or self-employed (SARL majority manager) determines employer cost: employer contributions vary with the pay level and exemptions (often around 25-45 % of gross), with self-employed status generally somewhat cheaper.
• Article L3312-1 of the Labour Code — profit-sharing is open to salaried-equivalent executives in companies with fewer than 250 employees.

At Hayot Expertise, we observe that SMEs structuring a clear, segmented package attract candidates at a better cost, reduce costly executive turnover and secure long-term succession.

1. Base salary (fixed): security and attraction#

Base pay does three things: secures (social rights, basic pension), attracts (a serious candidate checks the base first) and structures (the basis for profit-sharing, group insurance and benefits).

Ranges observed in 2026 (SME/startup of 10-100 employees, Paris region; market data, to adjust):

• Experienced manager: €45,000-60,000 gross annually.
• Senior operations manager: €60,000-85,000.
• CEO / COO: €85,000-120,000 depending on sector and revenue.
• Series A-B startup CFO / CTO: €60,000-100,000, to combine with equity.

Golden rule: the base should represent 50-70 % of the total target package, to avoid over-reliance on variable pay.

2. Annual variable bonus (15-30 % of base): align with performance#

Three models coexist:

Flat bonus (common in SMEs): "a €10K bonus if target X is met". Simple and predictable, but weakly motivating if the target is generic.

Collective profit-sharing (Art. L3312-1): a formula tied to results (margin, EBITDA). Open to a salaried-equivalent executive in companies with fewer than 250 employees, with an individual ceiling of 75 % of the PASS (about €36K). Exempt from social contributions (except CSG/CRDS 9.7 %) and from the employer levy in companies with fewer than 250 employees. Paid into a PEE or PER, it is exempt from income tax.

Statutory profit-sharing (Art. L3322-1 onward): mandatory above 50 employees, on a legal formula. Less flexible for steering an executive's pay.

For an executive, collective profit-sharing is often more efficient than a discretionary bonus.

3. Equity: BSPCE for startups, AGA for established SMEs#

The long-term retention and exit-alignment lever.

BSPCE (founder share subscription warrants)

Eligibility (Article 163 bis G of the Tax Code): a joint-stock company subject to corporate tax, unlisted (or listed on a growth market), created less than 15 years ago, with capital partly held by individuals. Beneficiaries: executives and employees.

Tax treatment (reformed by the 2025 and 2026 Finance Acts). Since 1 January 2025, Article 163 bis G distinguishes the exercise gain (treated as a salary-type benefit) from the disposal gain. The gain is in principle subject to the flat tax (12.8 % income tax plus social levies), with an option for the progressive scale. Above all, in principle no employer social charge is due at grant under Article 163 bis G — the regime's main advantage. Given the regime's complexity and recent changes, have the structure validated by your adviser before any grant.

Example: a pre-revenue startup grants an executive BSPCE with an exercise price set at the share value during a funding round. The gain materialises only on exercise and then disposal: the candidate's interest aligns with long-term value creation (5 to 7 years).

Limitation: a BSPCE is not salary (no immediate pay). Reserve it for high-growth startups expecting an exit in 5-7 years.

AGA (free share awards)

Conditions (Article L225-197-1 of the Commercial Code): a vesting period of at least 1 year, then a holding period of at least 1 year. Available to salaried executives and employees of joint-stock SMEs.

Tax treatment: the acquisition gain benefits, for the portion up to €300,000, from a specific regime (50 % allowance); any later disposal gain falls under the flat tax. A 20 % employer contribution (Article L137-13 of the Social Security Code) is due from the employer.

BSPCE vs AGA trade-off:

4. Supplementary pension (company PER): optimise the tax deferral#

Supplementary pension is the "invisible" benefit that retains an executive over the long term. Since the PACTE law, the old "article 83" and "Madelin" contracts can no longer be set up: they were replaced by the retirement savings plan (PER), available as a mandatory company PER, a collective company PER and an individual PER.

Mandatory company PER (former article 83): the employer contribution is deductible from profit; for a salaried-equivalent executive it is exempt from social contributions (except CSG/CRDS). The mandatory portion is paid out as an annuity.

Collective company PER (former PERCO) / individual PER: the employer top-up is exempt up to 16 % of the PASS, i.e. €7,689.60 in 2026. Payout is taken as capital or annuity at the holder's choice, with early release possible in certain cases (main-residence purchase, hardship).

Recommendation: for an executive, combine a company PER (pooled for the leadership team) with an individual PER. The latter opens a personal retirement-savings deduction (around 10 % of professional income, capped at 8 PASS) that lowers the executive's income tax. Our executive wealth management service models this trade-off.

5. Benefits and perks#

• Company car: valued under the URSSAF formula, deductible for the employer, subject to contributions. Electric vehicles benefit from a more favourable benefit-in-kind valuation (to verify against the order in force).
• Group health insurance: mandatory since 2016; the employer portion is deductible, exempt from contributions except CSG/CRDS 9.7 %.
• Sustainable mobility allowance: exempt from contributions and income tax within the annual statutory limit (around €600).
• Pre-funded CESU vouchers: fund personal services, exempt within the annual limit set each year.
• Shareholder current account: the executive may lend cash at a deductible interest rate (Article 39 of the Tax Code), capped by the maximum rate set by the authorities (4.55 % for 12-month financial years ending 31 December 2025). Note: in an SARL, for a majority manager, the interest portion exceeding 10 % of capital is subject to self-employed contributions.

SAS with a salaried-equivalent president (most startups)#

A secure general regime (basic pension, protection), dividends outside social contributions (but flat tax 31.4 %), legal clarity. Cost: employer contributions of around 42 % of gross base pay. Sample CTO Series A package: €75K base + €20K profit-sharing + BSPCE (5-7 year horizon) + car + company PER (about €4K/year).

SARL with a self-employed majority manager#

Often lower social costs (around 40-45 %), salary/dividend flexibility. Pitfalls: the dividend portion exceeding 10 % of capital is reintegrated into the self-employed contribution base (Article L131-6 of the Social Security Code); a less favourable basic pension; no unemployment insurance. Sample trading-SME package: €65K self-employed pay + €8K dividends (10 % of capital) + individual PER (about €10K/year) + car.

Pre-revenue startup stage#

Candidates accept reduced fixed pay for a large equity share: minimum wage or €35K + BSPCE, little or no bonus, no supplementary pension. Common pitfall: promising equity without documenting the BSPCE. At Series A, investors demand a formalised vesting schedule and exercise price. Formalise from day one.

1. Combining corporate office and employment contract. A SAS president may combine the office with an employment contract, but under strict conditions (distinct technical duties, genuine subordination, separate pay). This combination is closely scrutinised: secure it before writing it into the package.
2. Set the base against the PASS (€48,060 in 2026). Too low a base caps the executive's pension and protection rights. For a C-level, aim for at least €50-60K.
3. CSG/CRDS on benefits. Health insurance, PER, mobility allowance: exempt from contributions but subject to the 9.7 % CSG/CRDS. Real cost differs from the headline cost.
4. Equity vesting. BSPCE and AGA must include a vesting schedule. Otherwise the tax authorities may recharacterise the grant.
5. Written profit-sharing agreement. Profit-sharing rests on a collective agreement (Art. L3312-1): a unilateral act is not enough. Formalise before applying it.

Recently, a consulting SME of around 35 employees contacted us because it could not retain its COOs and CTOs. It offered €65K base, a modest discretionary bonus, no equity, a car and health insurance, for an employer cost of about €130K. Executive turnover was high, even though gross pay was not low.

We restructured the package: base reduced to €60K, formalised collective profit-sharing (EBIT-based, capped, paid into a PER), AGA over two years and a strengthened company PER. At a near-identical employer cost, the net pay perceived by the executive — once the tax deferral and retirement savings are included — became noticeably higher, and both executives were retained.

What retains is not gross pay, but clear segmentation and optimised deferral.

Hayot Expertise advice. Start from a target employer cost, then arbitrate the components in three tiers: a fixed foundation (50-70 % of the package), a conditional part (profit-sharing, 15-25 %) and a long-term part (equity + pension). Prefer collective profit-sharing over a discretionary bonus, document each device (profit-sharing agreement, BSPCE vesting, PER contract) and present the candidate's net perceived pay rather than a theoretical gross. To model the social and tax impact, rely on our social and payroll advice and our accounting expertise for SMEs.