Management Package in France: The Complete Lawyer's Guide for Executives and Executives

You are a manager, executive or founder and we suggest that you subscribe to a Management package ? You want to understand the mechanisms of capital incentives, anticipate the fiscal consequences of Finance Act 2025 or simply know what these instruments, sometimes called “ManPack”, cover? This guide has been designed to provide you with a complete, technical and accessible vision of this strategic subject.

The management package is at the heart of the relationship between financial investors And the operational managers. It is a powerful lever for aligning interests, retaining talent and sharing the value created. But it is also a subject in constant evolution, profoundly reworked by the fiscal reform of 2025, and whose wealth and contractual issues deserve particular attention.

What is a management package? Definition and fundamental principles

Definition of the management package

The Management package (or “ManPack”) refers to the set of legal and financial mechanisms through which a company — most often as part of a LBO (Leveraged Buy-Out) or a fundraiser — allows its key leaders and executives to access capital and to participate in the creation of value.

Concretely, the aim is to offer managers the possibility of investing in the company (or its holding company) through various financial instruments: ordinary shares, preference shares, stock warrants (BSAs), BSPCE (warrants to subscribe to shares created by entrepreneurs), Stock options, free shares or convertible bonds. The objective is twofold: motivating management teams by associating them financially with the performance of the project, and align their interests with those of the investors.

Why is the management package a strategic tool?

The benefits of the management package are not limited to a simple financial bonus. It fulfills several essential functions in corporate governance:

Attracting and retaining talent A well-structured management package is a strong argument when recruiting a managing director or a financial director. It makes it possible to offer a competitive overall remuneration, even when the fixed salary remains moderate.

Aligning interests. In an LBO context, the financial investor has every interest in the manager being financially “at risk” in the transaction. This personal involvement gives credibility to the business plan and facilitates debt collection.

Sharing the creation of value. The management package organizes the distribution of added value between investors and managers. It is a sharing mechanism that rewards operational performance and managerial discipline.

Concrete example: A company is acquired via an LBO for 100 million euros. The investment fund provides 40 million in equity and borrows 60 million. The management invests 1 million euros in the takeover holding company. If, five years later, the company is sold for 180 million, the debt repayment leaves 120 million in own funds. Thanks to management package mechanisms (ratchet, sweet equity), the management share can represent much more than the 2.5% initially invested.

Management package instruments: BSA, BSPCE, preference shares and sweet equity

Share purchase warrants (BSAs)

Les BSA give their holder the right — but not the obligation — to subscribe to shares in the company to a price fixed in advance (the strike price), for a fixed period of time. Historically, BSAs have been the preferred instrument for management packages in the context of LBOs, because of their flexibility and their low initial cost for the manager.

However, since the 2013 tax reform that excluded BSAs from PEA, and especially since the tightening of the position of the tax administration and the administrative judge, BSAs have lost their attractiveness. The administration has in fact multiplied the adjustments by reclassifying the gains from BSA as salaries and wages rather than in capital gains, when the conditions of award revealed a link with the functions performed.

Business creator share subscription warrants (BSPCE)

Les BSPCE constitute a specific device intended for young innovative companies And to startups. They allow employees and managers to subscribe for shares at a preferential price fixed at the time of award, without initial investment. Their tax regime, which was very favorable for a long time (taxation at a flat tax of 30%), was profoundly overhauled by the Finance Act 2025.

Since January 1, 2025, BSPCE taxation now distinguishes Two wins :

The gain from the exercise (difference between the value of the shares on the day of the financial year and the exercise price of the voucher), taxed at a single flat rate of 30% for beneficiaries with more than 3 years of service.

The gain from the sale (difference between the sale price and the value on the day of the financial year), subject to the ordinary capital gains regime, and which may benefit from a suspension or deferral of taxation in the event of a contribution to a holding company.

In addition, the BSPCE and the securities subscribed during the exercise of these bonds can no longer be registered in a PEA, PEA-PME or PEE since October 10, 2024.

Preference shares and the ratchet mechanism

Les preference shares (ADP) are equity securities endowed with special rights compared to ordinary shares. As part of a management package, they can give the manager a preferential right to dividends or to the liquidation bonus, subject to the achievement of performance criteria (typically a SORTING — internal rate of return — or a investment multiple target).

The Ratchet mechanism thus allows management to increase its share in capital if performance exceeds a certain threshold. It is a direct rerelution tool.

Concrete example: Management holds 5% of the capital via ordinary shares. The pact provides that if the financial investor's IRR exceeds 20%, management's preferred shares are converted into ordinary shares, bringing its stake to 15%. Outperformance is thus directly rewarded.

It should be noted that the practice has been oriented, after the tightening of the position of the tax administration, towards the use ofpreferential actions called “negative” or “supernegative” — shares deprived of certain rights (vote, dividend) for a given period of time — in order to demonstrate the existence of a real financial risk for the manager. This approach aims to secure the qualification in capital gains.

Sweet equity: an indirect feedback mechanism

The Sweet Equity is the other major incentive mechanism in management packages. Unlike ratchet, which is based on specific instruments (BSA, ADP), sweet equity involves a voluntary misalignment in the capital structure between investors and managers.

In practice, the financial investor subscribes to both ordinary shares And convertible bonds (or shareholder loan), while the manager only takes out ordinary shares. The manager is thus overweight in shares compared to the investor, which allows him to capture a proportionally larger part of the added value in the event of success.

Concrete example: A fund invests 40 million euros including 10 million in ordinary shares and 30 million in convertible bonds. Management invests 1 million euros entirely in ordinary shares. Management therefore holds around 9% of the share capital (1 M/11 M), while its investment represents only 2.4% of the total equity injected. This sweet equity structuring has become the dominant practice since the BSA challenges.

Free shares and stock options

Les free shares (AGA) and the Stock options (or share subscription options) remain classic employee shareholding instruments. Their acquisition gains remain subject to their own tax regimes (employer contribution of 30% for AGMs, specific acquisition capital gains regime for stock options).

However, the Finance Act 2025 came to specify that the Gains from transfer of these instruments can now fall under the new tax regime for management packages codified inArticle 163 bis H of the CGI, which creates a complex relationship between the various regimes.

Management package and LBO: how does executive incentive work?

The LBO, natural terrain for the management package

The LBO management package is part of a specific pattern. One holding company A takeover is created to acquire the target company by mobilizing a significant financial leverage effect. Investors provide the equity, the bank finances the supplement with debt, and the target company repays this debt thanks to its profits (increased dividends).

In this arrangement, the management package aims to associate the managers of the target company with the capital of the takeover holding, so that they participate directly in the valuation of the operation. This participation can be made live (the manager owns shares in the holding company) or via a management company (“ManCo”), created specifically to structure the collective investment of managers.

Direct investment versus ManCo

THEdirect investment has the advantage of simplicity: the manager becomes a shareholder in the holding company without any particular formality. On the other hand, it multiplies the number of partners to be convened to meetings and can burden governance.

La ManCo (management company) offers a more structured framework: managers invest in an intermediary company, which in turn has a stake in the takeover holding company. This structure facilitates collective management (a single partner at the holding meeting), allows costs to be shared and offers organizational flexibility between managers. However, it can generate fiscal friction additional during the final transfer.

Calculating the performance multiple and sharing the added value

The management package is based fundamentally on the concept of performance multiple. When the LBO exits (sale to another fund, IPO, industrial sale), the capital gain generated is calculated by comparing the entry valuation and the exit valuation.

Concrete example: A fund acquires a company based on a multiple of 8x EBITDA (operating income before depreciation and amortization), i.e. an enterprise value of 200 million euros for an EBITDA of 25 million. Five years later, EBITDA increased to 35 million and the market multiple increased to 9x, i.e. an enterprise value of 315 million. The fund's investment multiple (excluding leverage) is approximately 1.6x. Thanks to the leverage effect and the management package, managers can capture a significant part of this value creation.

Management package taxation in 2025: the new regime under article 163 bis H of the CGI

The context: from legal uncertainty to the 2025 finance law

For years, taxation of management packages has been a major source oflegal uncertainty. Earnings were in principle taxed as capital gains in securities (at the single flat rate of 30% or at the rate after rebates). But the tax authorities regularly contested this qualification, arguing that the earnings were inseparable from the functions performed and should therefore be taxed as salaries and wages (at a marginal rate of up to 49 per cent).

The administrative judge has gradually clarified the debate by establishing a principle: when earnings result directly from being an employee or manager, they are taxable as a salary. This evolution has caused a shock wave in the universe of private equity And of Venture Capital.

La Finance law for 2025 (law no. 2025-127 of 14 February 2025), via its Section 93 (originally numbered article 25 bis), came to create a specific legal framework codified to the new Article 163 bis H of the General Tax Code. This regime, applicable to transfers made since February 15, 2025, aims to remove uncertainty.

The principle: taxation in salaries and wages

The new regime poses a Principle of taxation of wages. Net gains from the sale of shares acquired or subscribed “in return for the functions of employee or manager” are subject to Progressive income tax schedule, at the exceptional contribution on high-income earners (CEHR, 4%), and to a new specific social wage contribution of 10%.

The overall marginal rate can thus reach 59% (marginal band IR at 45% + CEHR at 4% + wage contribution of 10%).

Important point: no employer social security contributions is not due on these earnings, which is a significant relief for the employer compared to the previous regime.

The exception: the regime of capital gains under the performance threshold

By way of derogation, a Fraction of the gain can benefit from the regime of capital gains from the sale of securities, at an overall marginal rate of the order of 30 to 37.2% (PFU or scale with CEHR and possibly differential contribution on high incomes).

This fraction corresponds to the gain that does not exceed three times the financial performance multiple of society. The calculation formula is as follows:

Threshold = P × 3 × [(VR out/VR in) — 1]

Where:

• P = price paid by the manager for the acquisition or subscription of shares
• VR release = valuation of the company on the date of transfer
• VR entry = valuation of the company at the date of acquisition/subscription

To benefit from this favorable regime, several cumulative conditions must be collected: the titles must have been held during at least two years (except for BSPCE and AGA), the manager must have supported a real risk of loss in capital, and the shares must have been subscribed or acquired At market value.

Numerical example of the new taxation

Let's take a concrete case. A managing director invests 200,000€ in the takeover holding company during an LBO. Five years later, he sold his titles for 2 000 000€, or a net gain of 1,800,000€. The company's financial performance multiple for the period is x4 (the valuation has been multiplied by 4).

The capital gain threshold is calculated as follows: 200,000 × 3 × (4 — 1) = 1,800,000€.

In this example, the entire gain (€1,800,000) falls within the threshold and is taxed in capital gains at a rate of around 30 to 34%, i.e. a tax of the order of 540,000 to 612,000€.

If, on the other hand, the gain had been €3,000,000, the fraction exceeding the threshold (3,000,000 — 1,800,000 = €1,200,000) would have been imposed in wages at a marginal rate of 59%, i.e. an additional tax of approximately 708,000€ on this fraction.

Management package and PEA: the end of a historic advantage

The exclusion of management package titles from the PEA

Before the reform, the inclusion of titles from a management package in a Stock Savings Plan (PEA) allowed you to benefit from a income tax exemption on the capital gains made under the plan (only social security contributions of 17.2% remaining due after five years of ownership).

Since the February 15, 2025, shares subscribed or acquired as part of a management package can no longer be enrolled in a PEA under penalty of immediate closure of the plan (article L. 221-31, II-2° of the Monetary and Financial Code). For shares already registered in PEA before this date, the gain, which is part of the taxable portion in salaries No longer benefits from the exemption specific to PEA.

This measure also applies to BSPCE and to the securities subscribed in exercise of these warrants since October 10, 2024.

Practical consequences for current owners

For managers who held management package titles in a PEA before the law came into force, the situation is delicate. The project of BoFip (BOI-RSA-ES-20-60) published on 23 July 2025 for public consultation does not fully specify the fate of these titles. It simply confirms that the portion of the taxable salary gain does not benefit from the tax advantage of the PEA. The taxable portion of capital gains remains subject to a certain vagueness.

The BoFIP and the administrative comments on the 2025 management package

The BoFIP project of July 23, 2025

The General Directorate of Public Finances has put in public consultation, on July 23, 2025, a BoFIP project (BOI-RSA-ES-20-60) commenting on the new article 163 bis H of the CGI. This draft, which is subject to consultation until October 22, 2025, provides the expected details but leaves many grey areas to remain.

The criteria for the “compensation of functions”

The BoFIP provides information on the central concept of gain obtained.” In return ” of functions performed. The administration uses criteria at the same time Economical and contract workers :

Does the awarding of titles depend onperformance goals to reach?

Is it conditioned by contract terms such as a non-competition clause, loyalty clause, joint exit obligation, or good/bad leaver clause?

Is there a Ratchet mechanism allowing the manager to receive a gain greater than his participation in the capital?

Is the manager's treatment preferential compared to other investors (sweet equity)?

The draft states that the revocation of contractual provisions while in custody does not deprive the administration of the possibility of taking them into account in order to assess the existence of a counterparty. This gives the administration a extended discretion.

Calculating the performance multiple: details and subtleties

The BoFIP provides several important details on the calculation of the fractionation threshold:

Overall calculation and not by security category. The performance multiple is calculated on all the titles held by the manager, which can be favorable. Indeed, the holding of ordinary shares (offering a bet passu gain) makes it possible to “dilute” the outperformance of specific instruments (preferably ratchet shares) and thus to reduce the overall multiple.

Separate calculation by date of acquisition. Where securities were acquired on different dates, the net gain must be calculated separately. However, out of tolerance, the administration admits that the shares acquired on a Close period in the context of the same transaction are deemed to have been acquired simultaneously.

Reference period. The financial performance of the company is assessed between the date of acquisition of the shares and that of their sale. So the multiple is calculated.” LBO by LBO ”, without retroactivity.

Tax suspension and deferral: a partial regime

The BoFIP project confirms that only the Fraction of the gain taxed as capital gains can benefit from the mechanisms of suspension of taxation (article 150-0 B of the CGI) or tax deferral (article 150-0 B ter of the CGI) in the event of a transfer to a holding company. The fraction of the gain taxed in wages is immediately due, even in the absence of cash received by the taxpayer.

This rule can have very serious consequences in practice: in case ofContribution of shares without sale, the manager may find himself confronted with a” dry tax ” on the salary fraction, without having received the funds necessary to pay it. It is therefore recommended to systematically provide a partial transfer generating cash flow upon reinvestment.

In addition, earnings that have already been suspended from taxation before February 15, 2025 are not affected by the new regime.

Donating shares from a management package: beware of the trap

The end of the tax “purge” by donation

Traditionally, the Donation-transfer was a wealth optimization tool making it possible to “purge” the latent capital gain through the revaluation of the value of the shares on the day of the donation. The new regime puts an end to this strategy for management package titles.

In case of donating of shares subject to article 163 bis H of the CGI, all of the net gain remains taxable in the name of the donor, for the year in which the donee dispose of them, sell them, convert them or rent them out.

La Finance law for 2026 (PLF 2026) further tightened this system by providing that the gain is determined and taxed in the name of the donor for the year of the donation itself, thus putting forward the fact giving rise to taxation. This modification applies to donations made after the promulgation of the 2026 Finance Act.

The essential clauses of the management package: good leaver, bad leaver and vesting

Good Leaver and Bad Leaver Clauses

The clauses of Good Leaver and Bad Leaver are fundamental elements of any management package. They take the form of unilateral promises of sale inserted in the shareholders' agreement, by which the manager undertakes to sell his shares in the event of the cessation of his duties.

The good leaver qualifies a departure in circumstances considered legitimate or not at fault: retirement, disability, dismissal without fault, contractual termination, death. In this case, the shares are generally bought back at their market value or under financial conditions that preserve the interests of the manager.

The Bad Leaver refers to departures in unfavorable circumstances: unsupervised resignation, dismissal for misconduct, dismissal for serious or serious misconduct, violation of an essential contractual obligation. The repurchase is then carried out with a Significant discount on the market value, or even at the initial purchase price or at the nominal value.

The medium leaver (or “neutral leaver”) covers intermediate situations, with financial conditions halfway between the previous two.

Notable fact: The 2025 Finance Act, by establishing the principle of taxing management package earnings in salaries, paradoxically allowed the Resurrection of the good and bad leaver clauses in practice. Before the reform, these clauses were considered indicative of the link between the titles and the functions performed, increasing the risk of requalification. Now that the link with the functions is an assumed prerequisite of the regime, the presence of such clauses no longer constitutes an aggravating factor. Practitioners see this as an opportunity to reintroduce these mechanisms for aligning interests.

Vesting: the gradual acquisition of rights

The Vesting refers to the mechanism for the gradual acquisition of the manager's rights to his shares. In practice, the manager only becomes full owner of all his actions after having completed a certain period of presence in the company.

A classical scheme predicts a linear vesting on four to five years, sometimes with a Cliff one year (no rights acquired before the first birthday, then proportionate acquisition).

Concrete example: A sales director is awarded 10,000 shares as part of a management package, with a linear vesting over 4 years and a cliff of one year. After the first year, 2,500 shares were approved. After 30 months, 6,250 shares were approved. If he goes bad leaver after 30 months, the 3,750 unvested shares will be bought back at a discount, while the vested shares will be bought back at the market value reduced by a contractually agreed discount.

Negotiating your management package: the points of vigilance

The negotiation phase is crucial and deserves particular attention. Here are the things you need to be particularly vigilant about:

The precise definition of the cases of good, medium and bad leaver. The circumstances that qualify each category should be carefully listed. Is a dismissal “without real and serious cause” a case of good leaver or bad leaver? The answer depends entirely on how the pact is written.

The valuation formula. The repurchase price of the shares must be determined according to a clear formula: EBITDA multiple, independent expertise, contractual formula price. The lack of clarity on this point is a major source of litigation.

Early exit conditions. What happens if the LBO lasts longer than expected? Does the manager have the right to sell his shares before the liquidity event?

The non-competition clause. The duration, the geographical scope and the financial compensation must be proportionate. A non-competition clause that is too broad without compensation can be contested before the labor courts.

The joint exit clause (tag along/drag along). It guarantees the manager the right to sell his shares under the same conditions as the majority investor in the event of a global sale.

Management fees and management packages: do not confuse

What are management fees?

Les Management Fees refer to the management fees invoiced by a consulting company (often the management company of the investment fund) to the target company or to the takeover holding company. This is a remuneration for strategic, financial and operational consulting services provided by the fund.

These management fees are distinct from the management package. While the management package concerns the incentive of managers in capital and capital gain, management fees pay for the provision of a service, which is generally deductible from the company's taxable income.

The fiscal challenges of management fees

The tax authorities pay particular attention to management fees, which can lead to adjustments when judged. excessive or lacking real compensation. Article 39-1-1° of the CGI in fact conditions the deductibility of expenses on the fact that they correspond to an effective service, in the interests of the company, and that they are not exaggerated.

It is therefore important to ensure that management fee agreements are Documented (precise description of services, activity reports) and that the amounts are in accordance with market practices.

Abuse of law and the management package: the risks you need to know

The procedure for abuse of tax law

The tax administration reserves the right to use the procedure ofabuse of rights (article L. 64 of the Book of Fiscal Procedures) in the event of an artificial arrangement aimed at evading or reducing the tax burdens resulting from the new regime. The BoFIP expressly recalls this possibility, in particular in two hypotheses:

The artificial interposition of a society to avoid qualifying as management package gains.

Receiving the gain in the form of a dividend in order to benefit from taxation that is more favorable than that of salaries and wages.

The penalties for abuse of rights are severe: 80% increase on rights evaded, in addition to late payment interest.

Comparative table of management package instruments after the 2025 finance law

A regulated matter: why call on a lawyer?

The structuring of a management package is a matter of highly technical legal and fiscal matters, at the crossroads of company law, tax law, employment law and financial law. Legislative reforms follow one another at a steady pace, positive law is evolving, and administrative interpretation maintains many grey areas.

He is indispensable to be accompanied by a solicitor for:

Anticipating tax consequences of each instrument according to your personal situation and the profile of the operation.

Negotiate the clauses of the shareholders' agreement (good/bad leaver, vesting, valuation, tag along/drag along) in full knowledge of the facts and while maintaining your interests.

Structuring the assembly in order to optimize the balance between fiscal attractiveness, legal certainty and alignment of interests.

Securing transfer, contribution or donation transactions of shares resulting from a management package under the new tax regime.

Preventing recovery risks linked to the abuse of rights, the requalification of management fees or the artificial interposition of companies.

The support of a legal professional is not an option: it is a necessity for anyone involved in a management package, whether beneficiary, issuer or investor.

FAQ: the most frequently asked questions about the management package

What is the difference between a management package and a BSPCE?

The Management package is a generic term that refers to all the capital incentive mechanisms offered to managers, which may include BSAs, preference shares, sweet equity, stock options, AGMs, and BSPCEs. Les BSPCE are a specific instrument among these tools, reserved for eligible companies (joint stock companies under 15 years old, unlisted or with small capitalization, at least 25% owned by natural persons). BSPCEs benefit from an own tax regime (30% PFU) for the year gain, while the other management package instruments are subject to the new regime of article 163 bis H of the CGI.

How is the taxation of a management package calculated in 2025?

Since February 15, 2025, the gains from management packages are in principle taxed as wages (marginal rate of 59%). As an exception, the fraction of the gain that does not exceed three times the financial performance multiple of the company may be taxed in capital gains (rate of 30 to 37.2%). The calculation of the threshold is based on a formula integrating the acquisition price, the entry valuation and the exit valuation of the company.

Can a management package still be included in a PEA?

No Since February 15, 2025, shares subscribed or acquired as part of a management package can no longer be included in a PEA, PEA-PME or PEE, under penalty of closure of the plan. BSPCEs and their exercise titles have also been excluded since October 10, 2024. For titles already registered before these dates, the fraction of the taxable salary gain no longer benefits from the PEA exemption.

What does BoFiP plan for management packages?

The BoFip (Official Bulletin of Public Finances) published on July 23, 2025 a draft comments (BOI-RSA-ES-20-60) commenting on article 163 bis H of the CGI. This draft specifies the criteria for the “consideration of functions”, the methods for calculating the performance threshold, the rules for suspending and deferring taxation, and the conditions for eligibility for the capital gains regime. Some points remain outstanding, in particular the treatment of shares registered in PEA before the reform and the coordination with international regimes.

What is an LBO management package?

One LBO management package is an incentive mechanism set up as part of a leveraged buy-back transaction (LBO). It allows the managers of the target company to invest in takeover holding and to benefit from a share of the added value realized during the resale of the business. The instruments used typically include sweet equity, shares, preferably with ratchet, and possibly BSAs or convertible bonds.

What is the difference between management fees and management packages?

Les Management Fees are management fees invoiced to the company by a service provider (often the investment fund management company) for strategic and operational consulting services. The Management package is a capital incentive scheme for managers and key executives. The two concepts are distinct: management fees pay for a service, while the management package organizes the sharing of added value.

What are the tax risks associated with a poorly structured management package?

The main risks are: requalification of the total gain in salaries and wages if the conditions of the capital gains regime are not met (absence of risk of loss, subscription price below the market, insufficient holding period); the implementation of the procedure ofabuse of rights with an increase of 80% in the case of artificial assembly;Dry taxation in the event of a contribution without transfer of the wage fraction; and contractual disputes related to poorly written leaver clauses.

Does the 2025 finance law apply to management packages already in place?

Yes. The new tax regime applies to sales gains made as of February 15, 2025, regardless of the date of allocation or acquisition of the instruments. This is one of the most significant — and the most contested — particularities of this reform. On the other hand, earnings already suspended from taxation before this date are not affected by the new system.

What is the impact of the differential contribution on high incomes (CDHR) on management packages?

La CDHR, established by the 2025 Finance Act and extended by the 2026 PLF, ensures a minimum taxation of 20% for households whose reference tax income exceeds €250,000 (single person) or €500,000 (couple). This contribution may raise the effective tax rate on the portion of the gain in capital gains to approximately 37.2% (30% of PFU + social security contributions + CDHR), which reduces the gap with wage taxation and reduces the relative advantage of the capital gains regime.

Article written by Guillaume Leclerc, business lawyer in Paris, 34 Avenue des Champs-Elysées

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