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There’s no fairer remuneration than the one that combines salary, capital and capital income

Frédéric LASNIER
CEO & Chairman (Founding Partner)

When we created Pentalog in 1993, we strongly believed that company development should systematically go hand in hand with regular opening-up of capital. Although this is still valid for me even now, more than 20 years later, I have to admit that the adverb “systematically” might have been a little bit ambitious. We were, after all, only 23 years old at that time. Not everybody can receive capital shares. On the one hand, because the employee does neither want to understand what it means, nor appreciates it at its right value, as the previous shareholders used to appreciate it, and, on the other hand, because he isn’t actively taking part in the adventure implied by the very notion of capital. That’s why not everybody should receive capital shares. The notions of merit and belonging are inextricably linked. We made a lot of errors the first years, but not enough to keep us from seeking to strike a fair employee/shareholder balance.

capital income and salary

For the Group I am in charge of, this policy has never failed us. Several shareholders own today a little fortune in capital shares, which periodically bring them money. In this article, my purpose is not to explain to you how it works or how you can become a Pentalog shareholder employee, but rather to make you understand why this is terribly fair, in fact, fairer than any other merit-based remuneration formula.

How many of us are shareholders?

Between those of us who are already shareholders and those who will shortly become it, we are 40 people or almost 5% of our employees. I admit, though, that I would love that this percentage was almost double. But this figure is rare, especially when it concerns, without distinction, the employees of an international group like ours. And I’m talking here about the executives, but also about the project managers, developers, and administrative employees. We have associates in all the countries Pentalog has offices in or almost in all of them. There have always been 3 main qualities that any Pentalog shareholder should embody: an exceptional loyalty, an exceptional honesty, and an exceptional contribution.

Distributing capital means knowing how to share company strategy

In the long term and especially if I were to analyze the last consequent operation, which took place in 2011 (and another few little ones since then), the impact is eminently positive since out of 15 capital entries, only 2 have left the company. The others reinforced their contribution to reaching the company strategy.

Here’s, once again, the essential word: having a STRATEGY and sharing it. Nobody will be more involved in sharing a strategy than a shareholder, who understands it and who has the chance to discuss it.

Ours is an economic performance strategy superior to the average, and which generates cash flows superior to the sector average while keeping an organic growth pace superior to 20% per year. In 2016, for instance, we’ve had a growth pace of 25-30%. These two objectives ensure for the shareholder employee at least the following 2 privileges:

  • The employee feels fulfilled in a company that us in full expansion and which creates financial opportunities and capacities to satisfy his ambitions. In fact, Pentalog will have created 120 new job positions by the end of this year, 25-30 of which are supervisors or business developers. A new startup studio will be soon created after the first 2 ones have come to a dead end. The first one will be resurrected in the months to come.
  • The shareholder reaches reasonable dividends and capitalizes on a company’s value that is growing and performing at the same time. I think that, contrary to all the dogmatic nonsense uttered by those who regret not being born in California, delivering a dividend is a completely healthy choice, especially when your shareholders are also your employees. Capitalizing on your treasury beyond what your R&D and marketing actions are capable of delivering doesn’t make any sense and your employees’ personal project is not necessarily reflected in an infinite duration or in the highest risk.

What we thus offer to our employees is a Swiss army knife to meet their expectations in a company with no complexes in terms of economic performance. The speech delivered to everyone is the same. If we reach our strategy, we will make real profit and they will nail it. If we register growth and profit, we even might one day sell Pentalog (please don’t fantasize too much about it). There’s also the question of honesty regarding all the parties concerned. I remind you that all the Pentalog software production teams (shareholders and non-shareholders) receive every quarter, besides their monthly salary, individual and collective performance bonuses, and, once a year, if the company reaches its financial objectives, a profit sharing bonus.

Shareholders also benefit from capital remuneration via dividends.

Although we do have ping pong tables at Pentalog, our purpose is not to have champions at this game or be the coolest company in the world. Although we almost are ? Our purpose in terms of HR is to be able to ensure all those who deserve it, that a capital sharing model, in a company distributing dividends, is simply the nearest model to what the paradoxical homo occidentalis has been searching for so long. Gregarious when it comes down to sharing risks, and also gregarious because of his need to communicate, this employee becomes individualistic when he has to dream big, look ahead, position himself in the society, or, in other words, when it comes down to becoming a better version of himself. The employee/capital combination is the only one that can satisfy this multifaceted individual. Also the only combination that in terms of justice and respect ensures to each and every one of those making the financial, intellectual and physical effort of investing in a company a remuneration for this extra work and investment of personal resources.

Get in touch with Frederic here.


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