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Picture this: you are offered 2 jobs. One pays €65K a year. The other company only pays €50K a year and they also offer you 1,000 shares. If you’re optimising for money, which one should you choose?

Early stage start-ups cannot compete, salary-wise, with the big players on the market. To make up for the lower pay, they will often give away some shares on top of the salary to attract top talent. That’s why it is very likely you will be offered equity at some point in your career. And you’ll probably have a hard time figuring out how much it is worth in “real money”.

There are a lot of elements to factor in when evaluating a job offer that includes shares. Vesting period, striking price, taxes… let’s dive into it!

An overview of the topics covered in this article

What is equity or "employee shareholding"?

Whether your company is listed or not, equity allows you to become a shareholder. How? By allowing you to purchase shares under preferential conditions.

You will not immediately reap the benefits: it will take several years to generate capital gains allowing you to cash in the money.   

The main advantage of equity

Equity supplements your salary package with deferred, but potentially significant compensation, even more so if you join a company that is just starting up and that takes off later down the line. 

Equity-related gains depend on:

  • The amount of shares the company allocates to you.
  • The kind of company you are joining, its stage of development, and its long-term value.

The younger the company, the more money its equity could end up representing. It makes sense when you think about it: a start-up has fewer resources with which to pay its employees and less insight into its future than a more mature company. For this reason, start-ups tend to be more generous with their equity than companies that are well-established in their market.

How does it work?

Share-based compensation may be open to all employees or be reserved for a subset of employees (e.g., only some or all managers). It allows you to purchase (or receive for free) company shares at a predetermined date and a set price. All of this comes with the following preferential terms:

  • A discount on the share purchase price (rabais)
  • Additional payment from the company (for example, a top-up in the form of free shares)

Over the course of your career, you may come across the following schemes:

  • Stock options
  • BSPCEs
  • Free shares

The other advantages of equity

  • You could make a lot of money which will help you build up financial assets in the long term (you could use these to buy property for example). 
  • There could be significant tax benefits. Depending on the scheme, reinvested capital gains and dividends may be exempt from income tax under certain conditions.
  • As a company shareholder, you may be able to weigh in on certain important decisions as well as gain insight into the company's projects and ambitions for future development.

The main downsides of equity

  • If the company is not doing well, the value of your shares goes down. So, think of equity as a possible additional source of income, but keep in mind that there are no guarantees.
  • Employee shareholding is a type of deferred compensation. This means you will have to be patient and stick with the company long enough to reap the benefits.
"It is important not to confuse salary, which is secure and fixed, and stock-based compensation, whose benefits are hypothetical and in the long term."

- Florent Artaud, Country Manager at SeedLegals

What you need to know to estimate your potential earnings

  • The number of allocated shares.
  • The exercise price (or strike price), i.e., the price quoted for the share.
  • The company's current valuation. 
  • The company's projections which will allow you to estimate the evolution of your shares.

These last two points are essential to assess your potential earnings. Without them you have no way of estimating the current value of the company or of its potential for growth. You should never hesitate to ask your future employer or manager about this. 

What to consider when assessing a company's potential

  • The founder's "pedigree": an entrepreneur who has already been successful is more likely to succeed again because they know the dos and don'ts of entrepreneurship Furthermore, investors are fond of "serial entrepreneurs". It is therefore likely that such companies will receive more funding than others.
  • The company's business and its growth potential: assessing this is slightly more complicated and will require you to do some research (by questioning experts, studying the competition, reading dedicated source materials etc.).
  • The investors' "pedigree" (if a round of financing has already happened).
"On this point, there is no secret: top funds attract top start-ups. If an investor has already provided funds for Instagram, Doctolib, and Weibo, the chances that the team will be successful is high."

- Lucas Mesquita, co-founder of startups Revolte and Caption

In other words, on this front, VCs and candidates are in the same boat. Before you commit, try to assess whether the company has what it takes to achieve its goals and whether it will be worth your while to jump on board the entrepreneurial train.

The main schemes


This scheme is rarely used because it is expensive for the company to set up. What is it?

1/ The company lets you subscribe for a given number of shares whose fixed unit price is lower than the company's share price (this is called the "discount" or rabais).

2/ After a given period (usually 2 to 5 years), you get to buy the shares at the agreed price. If, in the meantime, the share has increased in value, you will realise an initial capital gain, known as the "capital gain on acquisition." You also become the owner of the share and a shareholder in the company.

3/ Afterwards, it is up to you whether to keep the share (in the hope that it will increase in value) or to sell it to pocket a profit (called "capital gain on the sale").

Please note

  • The total number of shares allocated to employees may not exceed 10% of the company's share capital.
  • The discount may not exceed 20% of the average of the 20 trading sessions preceding the date.

Advantages of stock options

  • The discount 
  • The capital gain on acquisition
  • The capital gain on the sale. 

Disadvantages of stock options

  • They are only truly worthwhile if the share value increases significantly. In most cases, you will only receive the resale price minus the exercise price.
  • Their tax advantages are not as advantageous as those of free shares or of BSPCEs because every capital gain is taxed.


The taxation of stock options is very complex because it is based on 3 parameters:

  • the discount
  • the capital gain on acquisition
  • the capital gain on the sale.

In brief, the year you exercise your option, you are taxed on discount surpluses. The year you sell your shares, the capital gain on acquisition is subject to income tax. The same applies to the capital gain realised on the sale of your shares.

To limit the (fairly onerous) taxation of stock options, you can place your shares resulting from the exercise of options in a Company Savings Plan (Plan d’Epargne Entreprise or PEE) provided that you use the savings placed in the PEE to make this purchase. Your shares are then blocked for 5 years, but eventually, your potential capital gains will be exempt from income tax (but not from social security contributions).

BSPCEs (Bons de Souscription de Parts de Créateur d’Entreprise)

 A BSPCE is a warrant granted by a company which gives you the right to buy company shares at a low and fixed price and for a fixed period. You can buy shares at a very low price and then sell them at a higher price if the company's valuation increases during the exercise period.

Which companies are concerned?

BSPCEs are a form of deferred compensation widely used in young companies. In 2021, 1 in 2 employees of start-ups whose annual turnover was between €5 million and €50 million used them.

To be eligible to issue BSPCEs, companies must meet several conditions:

  •  Be a joint stock company (SA, SCA or SAS).
  •  Be less than 15 years old.
  •  Be subject to French corporate tax.
  • Either not be listed or have a market capitalization lower than 150 million euros.
  • Have a minimum of 25% of its capital held by individuals or legal entities, including 75% of share capital held by individuals.

How does it work?

When a company grants you BSPCEs, they ask you to sign two documents:

  • A "letter of allocation" indicating the number of allocated BSPCEs.
  • The "plan rules"

The "plan rules" will indicate:

  • the exercise price (or "strike price") telling you how much you will have to invest to convert your warrants into shares.
  • the "vesting" period, i.e., the period after which you can unlock all your BSPCEs. This is generally 3 or 4 years. Caution: as the objective of BSPCEs is to retain talent, you will acquire them gradually, based on the time spent in the company.
  • the "cliff", i.e., the waiting period during which the BSPCEs cannot be exercised. Generally speaking, a first instalment of BSPCEs can be released after a year (and are awarded at the end of a validated trial period).

Once you have "vested" your warrants, you own them, and you can choose when to convert them into shares.


You receive 1000 BSPCEs with a €10 per unit exercise price, with a vesting period spread over 4 years, after a 1-year cliff period. At the end of the first year, you can't touch them. By the end of the second year, you will have "vested" a quarter of your BSPCEs. If at this point you leave the company, you are allowed to buy back 250 BSPCEs at a unit price of €10, for a total of €2500. However, you must forfeit the remaining 75%. At the end of your third year, you "vest" an additional quarter, and so on until 5 years have passed (1 "cliff" year + 4 "vesting" years).

Once you have acquired the BSPCEs, you are free to sell them whenever you like. If, in the meantime, the company's value increases, you can sell all your shares and receive the associated capital gain.

Good to know

If you leave the company, 98% of start-ups will force you to exercise your BSPCEs within 1 to 3 months. It is your responsibility to plan ahead to ensure that you are able to acquire your BSPCEs within that time frame!

However, given the increasingly competitive nature of the talent hunt, some companies allow you to exercise your BSPCEs over a longer period (1, 2, 3 or even 7 years at Alan, for example). It is very important that you find out this crucial information before committing to a scheme. Otherwise, you might end up feeling like you have no choice but to stay in the company, or you might end up having to give up your BSPCEs despite having contributed to the growth of the company.

Advantages of BSPCEs

  • The warrant is allocated for free.
  • The share price remains stable over time.
  • You only pay tax after you have received the capital gain.

Disadvantages of BSPCEs

First disadvantage: shares acquired through BSPCEs can only be sold in three specific scenarios:

  • If the company is purchased
  • If the company goes public
  • In the event of a direct offering, i.e., the repurchase of your shares by the founders and investors during, for instance, a round of financing, or when you leave the company.

BSPCEs therefore give you the freedom to buy shares, but not to sell them. To get around these restrictions, some companies are implementing a fully-fledged liquidity policy. "This is the case with Ledger, which offers its employees the opportunity to sell their shares twice a year, thus providing them with a regular and tangible salary supplement," says Lucas Mesquita.

"BSPCEs are usually not monetized before 5 to 10 years."

- Florent Artaud, Country Manager France at SeedLegals

Here's another such policy: "companies like Alan, Matera or Payfit allow employees to sell 10 to 15% of their "vested" shares during the company's fund-raising activities. It isn't much but it's better than nothing. However, the investors ultimately get to decide and so there is no guarantee it will pay off" adds the co-founder of Caption, a marketplace to buy and sell start-up shares. If these kinds of liquidity policies are not in place, you will have no choice but to stick with the company and wait for it to be purchased, or for it to go public before you can sell your shares.

"Company buyouts are statistically the most common exit scenario. BSPCEs are usually not monetized before 5 to 10 years. The median is 7 years," says Florent Artaud, Country Manager France at SeedLegals, a legal capital management platform. Therefore, if the company doesn’t have an interesting liquidity policy or if  you’re not in it for the long run, you may question whether BSPCEs are relevant at all for you.

Second disadvantage, in start-ups, BSPCEs are often offered as a way of supplementing a lower salary. But what you end up earning from your BSPCEs is conditional on:

  • The company's success
  • Your longevity in the company
  • The company's liquidity policy

In other words, if the company fails, or if you end up switching companies early on, you will have worked for a salary lower than market rates for nothing! It is therefore up to you to assess the company's potential before negotiating your salary: is the company more likely to make mega bucks or to go bankrupt?

"75% of employees never exercise their BSPCEs. Among the 25% who in theory should be able to benefit from them, most never do either because the company has failed, or because there was no liquidity policy in place," says Lucas Mequita.

"Only 1 in 10 start-ups succeeds. So, there is no guarantee you will make a profit from BSPCEs. You should be as cautious as an investor who is looking to get involved in a new business venture," adds Florent Artaud.

Good to know

Some job offers contain the following misleading statement: "€60K salary + €30K BSPCE." This does not mean you will be receiving an extra €30,000 on top of your salary. The €30K represent the sum you will have to pay to buy shares when you exercise your BSPCEs. 


The tax regime for BSPCEs is very advantageous because you only pay tax after you have received the capital gain. In other words, you only pay tax if you receive the money. So, there is no advance payment and no risk.

Taxation depends on the date the warrants were granted (before or after 1 January 2018), and how long you have been employed in the company. If you have been with the company for more than 3 years, your capital gain is subject to the flat rate of 12.8% for income tax, plus social security deductions of 17.2%. Otherwise, you will be taxed at 47.2%.

Free shares (AGA – Attribution Gratuite d’Actions)

What is it?

The company grants you the right to a certain number of shares, free of charge. This allocation is immediate, but you will not have access to your shares until the end of a vesting period of at least 1 year. At the end of the vesting period, you will have to wait another year to be able to sell your shares if you wish to do so.


  • You get to acquire shares with no initial investment (contrary to stock options and BSPCEs).
  • You suffer no loss if share prices collapse.
  • You have a 100% chance of realising a capital gain when you sell your shares.
  • Taxation applies on the day the free shares are sold

The allocation of free shares is often a sign of growth and good health within a company. It is, of course, the most advantageous equity scheme since you have everything to gain and nothing to lose.

This scheme is generally offered by companies that are no longer eligible for BSPCEs, either because they are over 15 years old (like Blablacar for instance) or because over 25% of their shares are no longer controlled by natural persons.


Now that you know everything there is to know about equity, it is up to you to make the right choice. The widespread BSPCE scheme could allow you to build up significant capital. It is ultimately up to you to optimise the terms with your employer to make sure they keep their promises.

In any case, you now know how to avoid the most common employee mistakes when it comes to equity: don't ignore this potentially lucrative aspect of your compensation package, don't sign an agreement without thoroughly checking it, and make sure you don't leave the company without taking full advantage of it.

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