A brief insight into pay practices at the world's largest SWF

eFC logo

The world's largest sovereign wealth fund, Abu Dhabi Investment Authority, isn't exactly known for its openness to the media, which makes its 11-page interview with German newspaper Handelsblatt (reproduced in English on its website) all the more surprising.

The interview is, of course, rather polished and sanitized. However, as well as offering some interesting insights into its investment strategy, ADIA's managing director, HH Sheikh Ahmed Bin Zayed Al Nehayan, also reveals a little about the firm's pay practices:

"We believe in rewarding employees based on various factors that may include beating return targets but also their broader contribution to the organisation as a whole.

Our compensation program has always had a smaller variable component than many investment institutions but a greater emphasis on fixed pay and various other benefits.

This keeps us competitive in attracting world class talent, but also encourages our employees to focus on what's best for ADIA over the long-term rather than looking for ways to boost their short-term personal gains."

The quick translation of this would suggest that bonuses at ADIA are relatively diminutive, with base pay making up the lion's share of compensation. This would also imply that the SWF is one step ahead of the trend of the large base pay rates allegedly being handed out at western investment banks in the wake of bonus clampdowns.

It's also a self-imposed version of the recommendations of tying bonuses to the long-term risk profile of the institution outlined in the Financial Services Authority's remuneration report in the UK.

Recent high profile hires at both ADIA and other Abu Dhabi SWFs, also suggest that the institutions have also made an attempt to bring their pay in line with international financial firms in a bid to attract key talent. Previously, they were thought to pay relatively badly.

Still, other SWFs such as the China Investment Corporation, have made similar high profile hires recently. The Wall Street Journal says that its state-owned status means pay and bonuses still remain lower than private firms.

Close
Loading...