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Stock options, performance-based incentives: How UAE firms retain best talent

Recruiters said the long-term incentives are no longer restricted to C-suite level executives as companies also offer them to other managerial staff

Some companies in the UAE are offering long-term incentives (LTIs) such as stock options and performance-based long-term incentives to employees amid growing competition among firms to retain the best talent.

Recruitment industry executives said some employers are also providing customised packages such as personalised wellness programmes, flexible retirement, and education allowances.

Recruiters also highlighted that these LTIs are no longer restricted to the C-suite level executives, with companies broadening these incentives to other managerial staff as well.

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As reported by Khaleej Times earlier, UAE firms are increasingly focused on allowances and bonuses rather than increasing the basic salaries of the employees to retain the talent.

Jack Khabbaz, managing partner, CEO practice at Cooper Fitch, said long-term incentive plans (LTIPs) are usually for CEOs. According to him, some publicly listed entities may have them for their C-Suite or start-ups, too.

“LTIPs are a combination of cash, equity, or stock options if the company is publicly listed,” he said, adding that these could be anywhere between 1-5 years of annual fixed salary equivalence, depending on the type of organisation and the business life-cycle.

According to a 2024 survey by Cooper Fitch, nearly half – 52 per cent – of CEOs have been awarded long-term incentives.

Deeksha Gandotra, managing director for HR consultancy Très Versatile, said companies are offering LTIs such as flexible work options, summer work from abroad, and positive office cultures to retain the best talent.

She added that companies offering LTIs have increased substantially post Covid-19.

“Some companies provide equity or stock options, especially in startups and tech sectors, to align employee interests with the company's long-term success. Long-term incentives are often tied to performance metrics or company milestones. This can include bonuses based on achieving specific targets or sustained business growth”.

Gandotra added that firms are also providing customised benefit packages which entail tailoring benefits to individual employee needs, such as personalised wellness programmes or flexible retirement plans. Hybrid work and flexibility incentives have recently become a common incentive where companies are incorporating work-from-home stipends or flexible scheduling into long-term reward structures to enhance work-life balance,” she added.

Most popular LTIs

Chandy Philip, chief financial officer, of Tasc Group said that among the most popular strategies are restricted stock units, where employees gain shares in the company after a set vesting period, tying their success to the company's growth.

“Stock options are also widely offered, allowing employees to purchase company shares at a fixed price, which can become highly lucrative as the company prospers. Performance-based LTIs are becoming more common, with rewards tied directly to achieving specific goals,” he said, adding that companies are enhancing their retention efforts with substantial bonuses and promotion opportunities. He underlined that companies are also offering flexible working arrangements, such as the option to work abroad during the summer.

In addition, he added that support for employees' families, such as education allowances, is also central to these retention strategies.

Expanding LTIs

Philip added that stock options and performance-based rewards are no longer limited to C-suite executives and senior management in UAE companies. “While these incentives have traditionally been a critical part of compensation packages for top executives, there is a growing trend of extending LTIs to a broader range of employees. Increasingly, mid-level managers and key talent who play crucial roles in the organisation are also included in LTI programmes.”

Moreover, he added that some companies are implementing broad-based LTI plans encompassing a more comprehensive range of employees, recognising that contributions from all levels are essential for achieving strategic objectives. “By expanding LTIs beyond senior leadership, companies can foster a culture of ownership and long-term thinking, driving overall success and employee engagement.”

Deeksha Gandotra said LTIs are generally provided to C-suite and senior leadership to retain talent, however, some companies extend these incentives to a broader range of employees, including middle management or key specialists, depending on the organisation's policies, size, and industry.

Do LTIs really help to retain talent?

Gandotra confirmed that long-term incentives (LTIs) are effective in helping UAE employers retain top talent. “By aligning employees' interests with the company’s long-term success, LTIs encourage commitment and reduce turnover, particularly among key executives and senior managers.”

Jack Khabbaz revealed that technology start-ups would usually have more aggressive LTIPs and more conservative fixed annual salaries. He said long-term incentives are “critical in ensuring leaders are driving not only the development but the successful implementation of strategies are aligned with corporate objectives signed off by the company’s board.”

Chandy Philip said LTIs can be more attractive than immediate salary increases, as employees see the potential for substantial rewards if they stay with the company and contribute to its success. “Additionally, LTIs are often paired with clear career development pathways, which makes employees more likely to stay with a company that invests in their growth and provides opportunities for advancement. In a competitive market like the UAE, companies that offer attractive LTIs gain a strategic advantage in attracting and retaining top talent, fostering loyalty, and driving long-term success,” he added.

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