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However, executive remuneration practices and standards across the Gulf are rapidly catching up with global trends, noted the study, which is based on senior executive pay data compiled from 38 insurance, banking and financial services organisations across Western Europe.
Tie-in to business performance targets
The report said the time lag is shortening with regard to executive remuneration awareness in the GCC as compared to Europe and North America. Among the practices that are expected to be more widespread in the GCC in 2011 are deferred bonus plans, more rigorous business performance targets and measures, and incentives linked more to profits than in the past.
"Already we see financial services institutions and other leading firms across the Gulf re-thinking how to pay key executives and high potential talent as economic activity returns to stronger levels," Hannah pointed out.
The biggest trend in the region was for annual incentive programs to be linked more tightly with specific corporate and division/business unit performance measures together with the introduction of long term incentives. "It is important in our view that companies validate these payout structures in light of specific performance achievements and long term business objectives," he said.
The report noted that the median salary increase during 2009 to 2010 across all senior roles in the financial services sector was around 2%, reflecting pay restraints in many sectors of the global economy. However, roles with responsibility for internal control in the financial sector received notably higher pay increases, with chief risk officers receiving 5% pay rises.
Political protests may curb salaries
Similarly, a recent study by GulfTalent.com also predicts that pay rises will be higher in the Gulf in 2011 than last year, but at the same time it warns that ongoing political upheaval in the region could put the brakes on this growth. The study, which was based on a survey of 32,000 professionals and 1,400 companies in the Gulf, said private sector salaries are expected to climb 6.6% across the Gulf this year, up slightly on the 6.1% rise seen in 2010.
The recruiter said the private sector in Qatar was forecast to see the largest rise in salaries this year at 7.2%, followed by Saudi Arabia and Oman at 7%. The UAE, which remains the most attractive destination for professionals, was expected to see a 6.3% increase in private sector salaries, while salaries were forecast to climb 5.9% in Kuwait and 5.1% in Bahrain.
Although much lower than the double-digit increases of 2008, the pay rises were all higher than the rates of inflation in these countries, resulting in improving living standards for many professionals, the study noted.
However, the report also cautioned that the protests in Tunisia, Egypt and neighbouring countries could lead to a mass migration of Arab professionals from these hotspots to the Gulf, putting downward pressure on salaries in the GCC. The report cited the experience of the 2006 conflict in Lebanon, which resulted in a flood of Lebanese professionals to the Gulf.
On the flip side, the intense international media coverage of the protests could make Westerners less inclined to move to the Gulf, thus having an adverse impact on the availability of talent.
Jeff Florian, Senior Reporter
