No pay hike likely for UAE CEOs

UAE Inc.’s corporate heads may not be very happy as pay hikes seem to have taken a hiatus this year, according to a recruitment expert.

“CEO salaries in the UAE are not increasing as a trend. A salary will increase based on personal and company’s performance. Additionally, specific expertise and highly specialised talent can also negotiate on remuneration. However, there is not a trend of increases in general,” Konstantina Sakellariou, Partner, Marketing & Operations Director at Stanton Chase, told Emirates 24|7.

The no-hikes scenario remains in place even as there aren’t many top executives available in the market. Findings of a recent Stanton Chase survey show a large majority (67.7 per cent) of CEOs believe that Middle East economies are definitely facing a shortage in leadership talent, while an additional 30.1 per cent believes that there is indeed some level of leadership talent shortage. Only 2.2 per cent do not indentify this deficiency in the market.

"I would say that we haven’t seen any evidence of a marked increase in CEO salaries recently. Salaries for CEOs vary widely depending on the size and nature of the company, so you are looking at a range of anything from AED 60,000 per month up to significant six-figure monthly salaries for CEOs with the larger organisations," Cliff Single, Commercial Manager at BAC Middle East told this website.

According to Amer Zureikat, VP Sales at Bayt.com, “UAE salary raises across the board  have seen a slight average decrease of 0.5  per cent this year compared to last year’s raise as per [our 2011 Middle East salary survey] and (the average 2011 salary raise is 6.2 per cent compared to 6.7 per cent in 2010).”

With the decrease in renumeration, the CEOs in the region have become touchy about not getting fat hikes in the region.

In 2009, in fact, CEO compensation in the country shrunk owing to an overall economic slowdown and the consequent profitability hit that companies in the country endured. CEO pay is usually divided into two parts. The first part is a reward for their job within the company. The second part of the salary is considered a sweetener – it is used to entice the CEO to stay with that particular company instead of looking for a higher paying offer.

In 2009 and 2010, the second component of CEO compensation recived a hit as corporate compensation committees evaluated the decline in profitability as well as the limited opportunity for even quailty CEOs to switch jobs. At the same time, due to the global economic downturn, there were a lot of senior-level jobs lost elsewhere in the world, and some of that talent became available for local companies to tap, thus altering the supply-demand dynamics that has pushed up executive pay in the preceding few years.

“During 2009, a lot of discussion was made regarding the decrease in the remuneration levels of the senior executives, which, until recently was perceived as the main advantage attracting senior human talent from abroad. It is true that due to the increased supply in senior human talent in the GCC from all over the world, along with the decrease in the number of opportunities as the economies slowed down, the remuneration packages did not increase exponentially as they used to,” the Stanton Chase survey highligts.

“On the contrary, they remained at more ‘normal’ levels, accommodating the needs of the two sides (the companies and the executives), plus the cost of living which, despite the decrease in the accommodation prices, is still high as compared to other parts of the world,” it adds.

Within the UAE, the salary levels of the top brass vary. “It is not easy to give averages, since many things depend on the sector or even the emirate as well. In very general terms one could say that CEO remunerations may start from $250,000 (including allowances) and can go up significantly, based on bonuses on achievement,” noted Sakellariou.

This is also in contrast to what is happening in other economies. According to GovernanceMetrics International, an independent provider of global corporate governance and ESG ratings and research, the median CEO pay jumped 27 per cent in 2010.

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