Middle East Sovereign Wealth Funds Adopt Performance-Based Pay Model

Middle Eastern sovereign wealth funds are adopting a Wall Street-style pay model, offering performance-based pay tied to investment gains in the form of carried interest awards. This shift from high salaries and lifestyle perks marks a change in the industry. Job candidates are increasingly asking for carried interest awards, a practice traditionally seen on Wall Street.

Middle Eastern sovereign wealth funds are adopting a Wall Street-style pay model, offering performance-based compensation tied to investment gains in the form of carried interest awards. This shift from traditional high salaries and lifestyle perks marks a significant change in the industry. As the competition for top talent intensifies, job candidates are increasingly asking for carried interest awards, a practice traditionally seen in private equity firms.

Sovereign wealth funds like the Abu Dhabi Investment Authority (ADIA), Saudi Arabia’s Public Investment Fund (PIF), and the Qatar Investment Authority (QIA) have been hiring more talent from well-known Wall Street firms. These funds are seeking to deploy their vast resources and pivot their economies away from oil. To attract and retain top-tier talent, they are introducing carried interest structures, according to sources familiar with the matter [1].

Carried interest, or "carry," is a form of compensation tied to the profits generated by the fund. While traditional carried interest involves giving employees a small stake in the fund, Gulf funds often use "phantom" or "shadow" carry arrangements, where employees receive payments based on investment performance without actual equity stakes. This structure is similar to what is used in private equity firms for junior staffers.

The introduction of carried interest is driven by the realization that there is a limited pool of individuals with the required pedigree who are willing to move to the Middle East. The funds have recognized the need to offer compensation packages that match what private equity firms are providing. For instance, Mubadala Capital and Lunate, both Abu Dhabi-based funds, have successfully used carried interest to lure talent away from established firms like Apollo Global Management Inc. and Carlyle Group Inc. [1].

The Middle East investing giants are facing off with global private equity firms like Brookfield Asset Management Ltd. and Blackstone Inc. for talent. While senior partners at these firms can command salaries in the tens of millions, Gulf funds have historically offered lower paydays. However, the introduction of carried interest has helped level the playing field. For example, a small number of employees at Mubadala Investment Co. have begun receiving compensation tied to their investment performance [1].

The shift towards performance-based pay is not just about attracting talent; it is also about retaining the best employees. Oscar Orellana-Hyder, co-founder of the recruiting firm Cordell Partners, noted that carried interest is often one of the first things candidates ask about when considering a move to the Middle East. Carry offers effectively uncapped earning potential, tied directly to the candidate's own investment returns and ingenuity [1].

The adoption of carried interest structures by Gulf funds is part of a broader trend of adopting Wall Street-style compensation models. This shift is likely to continue as the funds seek to compete for talent and deploy their substantial resources in new industries such as artificial intelligence, sustainable energy, and healthcare.

References:
[1] https://www.bloomberg.com/news/features/2025-08-07/abu-dhabi-wealth-funds-face-pressure-to-offer-carried-interest-awards
[2] https://www.vccircle.com/bluefivecapital-ropes-in-bahrain-s-sovereign-wealth-fund-as-gp