Long-Term Incentives for CEOs in the UAE and Saudi Arabia: Key Trends and Impact on Talent Retention
In recent years, both Saudi Arabian and UAE companies have increasingly used long-term incentive plans (LTIPs) to attract and retain top executive talent, particularly in light of the competitive business environment and the drive for transformational leadership. According to a recent report by recruitment consultancy Cooper Fitch, over half of CEOs in Saudi Arabia now receive LTIPs, a marked increase compared to the UAE, where the figure is significantly lower.
Understanding Long-Term Incentive Plans (LTIPs)
Long-Term Incentive Plans are designed to reward executives for their long-term contributions to a company’s success, including growth, market share increase, and value creation. Typically structured over a period of three to five years, LTIPs go beyond annual bonuses and are often tied to the achievement of specific organizational objectives.
These compensation plans may include:
- Cash bonuses
- Shares or equity
- Options or profit-sharing mechanisms
Jack Khabbaz, Managing Partner and Head of the CEO Practice at Cooper Fitch, explains that LTIPs are essential for retaining leaders over the long term. Unlike annual bonuses, which reward short-term performance, LTIPs are intended to ensure that CEOs are incentivized to lead a company through longer-term strategic goals and transformations.
Comparative Analysis: LTIPs in Saudi Arabia vs UAE
The report highlights a significant contrast between the long-term incentive structures in Saudi Arabia and the UAE. As shown in the comparative table below, 56.5% of Saudi Arabian CEOs benefit from LTIPs, while in the UAE, only 35.3% of CEOs receive similar compensation.
| Region | Percentage of CEOs Receiving LTIPs | Percentage Receiving 9-12 Months' Salary as LTIPs | Most Common Bonus Bracket |
|---|---|---|---|
| Saudi Arabia | 56.5% | 18% | 4-6 months' salary |
| UAE | 35.3% | 14% | 1-3 months' salary |
Source: Cooper Fitch 2025 CEO Report (Cooper Fitch)
Factors Influencing the LTIP Gap Between Saudi Arabia and UAE
Several factors contribute to the greater reliance on LTIPs in Saudi Arabia compared to the UAE. According to Khabbaz, many companies in Saudi Arabia are in a phase of restructuring, transformation, or are involved in greenfield and brownfield projects. This means they are looking for transformational leadership to drive their business forward and need to offer more significant long-term incentives to attract the right talent.
In contrast, UAE private sector companies tend to offer lower LTIPs, particularly in comparison to publicly listed companies, which offer between 12 to 24 months' salary in LTIPs. The difference in approach also reflects the stage of business development in the two countries, with Saudi Arabia’s companies being more dynamic in terms of growth and restructuring.
Key Benefits of LTIPs for Gulf Companies
LTIPs serve several critical functions for businesses in both Saudi Arabia and the UAE:
- Attracting Top Talent: High-value LTIPs make executive positions more attractive, especially for individuals with global or regional expertise.
- Driving Long-Term Performance: LTIPs encourage CEOs to focus on long-term goals, ensuring they align their leadership with the company’s vision, particularly during times of transformation.
- Retention of Key Leaders: The structure of LTIPs helps prevent turnover by rewarding executives for their continuous contributions to company success over an extended period.
- Aligning Interests: By tying a portion of the executive’s compensation to the company’s stock or long-term performance goals, businesses ensure that CEOs have a vested interest in driving the organization’s success.
Sector-wide Application of LTIPs
Interestingly, LTIPs are not sector-specific. The Cooper Fitch report shows that globally, more than 90% of publicly listed CEOs and over 60% in the private sector receive LTIPs. This trend is prevalent across various industries, including real estate, energy, consumer goods, and financial services. The use of LTIPs has become a common practice in Gulf corporations across sectors, underlining their importance in executive remuneration packages.
Additional Executive Benefits in the Gulf
Beyond LTIPs, CEOs in the Gulf often enjoy various other performance-related benefits. These can include:
- School allowances for children
- Family flight tickets home twice a year
- VIP medical insurance
- Life insurance
- Other allowances for housing, transport, and living expenses
These benefits are part of the broader compensation package designed to ensure that executives are well taken care of during their tenure.
As the business landscape in Saudi Arabia and the UAE continues to evolve, long-term incentive plans have become a crucial tool for attracting and retaining top talent. The global shift towards LTIPs in the Gulf underscores the importance of rewarding executives for their long-term vision, strategic leadership, and the results they deliver over time.
Whether in Saudi Arabia or the UAE, these compensation structures will play an increasingly vital role in shaping the success and sustainability of businesses in the region. For companies seeking to optimize their executive compensation strategies, seeking expert tax advisory services and insights on corporate governance can provide a significant advantage.
Need Expert Guidance on Executive Compensation Plans?
At Affinitas DMCC, we offer specialized tax advisory and corporate governance services to help companies in the UAE and Saudi Arabia navigate complex executive compensation structures and optimize their business strategies. Whether you're dealing with LTIPs, performance bonuses, or other executive incentives, we provide the expertise needed to structure your plans efficiently.
Contact Affinitas DMCC to learn more about how we can help your company optimize executive compensation strategies and ensure regulatory compliance.
