Skills shortages drive rethink of equity incentives in Middle East

Employers across the Middle East are facing widespread skills shortages, with around nine in ten organisations reporting gaps in the talent they need, according to the Hays GCC Salary Guide 2026. As competition for skilled employees intensifies, businesses are rethinking how their reward packages are structured, including how equity incentives can deliver real value for employees. We’ll speak to a share plans expert who advises employers on how these schemes can work effectively in the region.

The Hays research highlights the scale of the challenge facing employers across the Gulf region with businesses continuing to expand hiring while struggling to fill key roles. Against that backdrop many are under increasing pressure to offer competitive reward packages that help attract and retain internationally mobile talent.

Reporting on the Salary Guide, HRME News highlights persistent skills shortages alongside strong hiring plans across the region, while Arabian Business points to rising salary optimism heading into 2026 as employers compete for talent. As a result, some firms are looking beyond traditional cash rewards and exploring equity incentives as part of their long-term reward strategy.

But designing those schemes effectively can be challenging. Employers need to decide which equity structures work best for their organisation, ensure schemes remain simple enough for employees to understand, and consider how employees will ultimately realise value from their shares, particularly where businesses are privately owned and shares may not be easily sold.

So let’s hear more on that. James Sullivan-Tailyour is a share plans expert advising a number of clients in the region and earlier he joined me by video link to discuss it. I began by asking which equity structures are proving most effective in the Middle East.

James Sullivan-Tailyour: “Well, there are a whole variety of structures you can use, from market value options to what are called RSUs, which are effectively free shares that pop out and are delivered to employees when an award vests, potentially also direct ownership in a new class of shares that deliver the growth in value above a starting point. I think the key driver tends to be keeping things as simple as possible whilst delivering the economic incentive that you want particularly because the Middle East, in the main - it's not entirely true, but in the main - there aren't necessarily tax drivers or tax efficiencies to be gained by particular structuring. Often the desire is to keep it as simple as possible, but the exact model that's most suitable is going to be dependent on the organisation and particularly what its plans are. If it isn't a listed business already, what is the exit strategy? Is there a sale in prospect that's going to create liquidity in those shares? Also, is there an exit strategy that you're looking to align the interests of shareholders and employees with? So simplicity is the main driver, but it has to be taken together with what the business's plans are for its existing share capital and how you're going to create value in those shares in order for employees to share in the upside.”

Joe Glavina: “In your experience, James, where do employers most often encounter difficulty when introducing equity plans in the region?”

James Sullivan-Tailyour: “ Well, the main one, as I say, is if there isn't an exit or a liquidity event in the short to medium term. If the liquidity in the shares, particularly for the shareholder, is more than, say, seven, eight, years in the future, an equity-based scheme can be quite challenging because employees might not perceive much value in their right to receive shares if they know that their ability to sell those shares is a long way off. There are ways around that. You can structure equity-based schemes so that there are sort of synthetic liquidity windows, rights to sell your shares back to the employer and so on but, in principle, one of the main difficulties can be where the company shares are quite closely held and are not likely to be sold in the interim. So for example, like a family-owned business, where it’s unlikely there's going to be a sale in the future and in those circumstances if there isn't an appetite to create synthetic liquidity, you may start to think about whether a cash-based scheme might be more appropriate. I think the other difficulty can be that there is always a tension in not designing a scheme that's too complex – the simpler a scheme is for employees and participants to understand the more effective it will be as an incentive mechanism. There can be a danger in designing schemes that are so complicated, and so fiddly, and nuanced, that employees don't really understand them and they don't perceive the value that's inherent in their equity entitlements and then that can create a misalignment between what the board expects an incentive scheme to deliver in terms of its incentivisation effect and its practical effect on the ground. It’s obvious, in a way, but it's worth saying out loud, with an equity based scheme the advantage is that because it doesn't require you to deliver cash, it doesn't have a cash cost, but the economic cost falls on shareholders through dilution and that can be one of the bigger challenges particularly in the Middle East region where, in general terms, the culture has been to keep equity held quite closely, tightly, and not to distribute it particularly widely and so there can be an issue to do with experience and local practice about whether equity would be offered more generally to employees.”

If you’d like help with introducing equity-based incentives into the Middle East, or help extending an existing share plan into the region, please do contact James – his details are there on the screen for you.