Structuring executive compensation in an SME

The directors of an SME specializing in project management assistance, with sales of €6 million, wanted to reorganize their remuneration in order to reconcile lower taxation, appropriate social protection and retirement planning. They had been receiving a fixed salary directly from the SME for several years, but without any real structuring strategy. The aim of the assignment was, on the one hand, to propose a shareholding restructuring scheme and, on the other, to model several scenarios (salary, dividends, employee savings, deferred compensation) to maximize net disposable income while maintaining a good level of social security coverage and retirement rights.

We began by highlighting the burden of current social security contributions on the remuneration of managers who are subject to the general scheme, and suggested that they contribute their shares to two asset holding companies, to be set up as EURLs. This would enable them to benefit from the social security system for self-employed workers, reducing their social security contributions and increasing their net disposable income. We then carried out a detailed analysis of the managers' current remuneration and simulated 3 alternative scenarios, including: a rebalancing of salary/dividends; the introduction of a PER pension contract. Each scenario was evaluated on the basis of total cost to the company, net income after taxes and contributions, and impact on pension rights and social protection. Arbitration was carried out with the company's management and its financial advisors.