What is the Minimum Salary for CEO that We Can Set?

Written By Akshaya Ashok, Reviewed By Retheesh R S

Published on 10/04/2025

UAE law does not specify a minimum salary for CEOs, instead, it emphasizes the importance of fair market value and adherence to the arm's length principle. This means that CEO compensation should be determined based on industry standards, market rates, and the company's specific circumstances, rather than a predetermined minimum salary.

What are the Factors to Consider While Setting Up Salary For a CEO?

Industry Standards and Market Rates

When determining CEO compensation, it's essential to consider industry standards and market rates. This involves researching what similar companies in the same industry are paying their CEOs, taking into account factors such as company size, revenue, and profitability.

Company Size, Revenue, and Profitability

The size, revenue, and profitability of the company also play a significant role in determining CEO compensation. Larger companies with higher revenues and profitability typically pay their CEOs more than smaller companies with lower revenues and profitability.

CEO's Qualifications, Experience, and Performance

The CEO's qualifications, experience, and performance are also critical factors to consider when determining their compensation. CEOs with advanced degrees, extensive experience, and a proven track record of success typically command higher salaries and benefits. Additionally, performance-based incentives can be used to motivate CEOs to achieve specific goals and objectives.

Benchmarking

To make sure CEO pay is fair and competitive, it's important to do some benchmarking. That means checking out trusted sources like industry reports and salary surveys to see what other companies are paying their CEOs. By looking at this information, companies can get a clearer picture of what the market rate is and decide on the right salary and benefits for their own CEO.

Conclusion

The salary for a CEO in the UAE can vary based on where the job is, the industry, and how much experience the person has. Right now, the lowest salary for a CEO in Dubai is about AED 44,417 a month, which comes out to around AED 532,000 a year.

In general, CEO salaries in the UAE can go anywhere from AED 49,000 to AED 2 million annually, with average salaries usually between AED 614,451 and AED 676,941 per year. When figuring out a fair minimum salary for a CEO, it’s important to think about all these factors to make sure the pay is competitive. As Reyson Badger would likely advise, it's essential to conduct thorough research and consider multiple sources to determine a suitable salary range.

FAQs

What are the legal implications if a company overpays or underpays its CEO?

Overpaying a CEO can lead to scrutiny from tax authorities, as it may be seen as a way to artificially reduce taxable income. The "arm's length principle" is crucial here; if the CEO salary significantly exceeds fair market value, deductions could be disallowed. Conversely, underpaying a CEO might not have direct legal repercussions from a tax perspective, but it could lead to talent retention issues and potential disputes over contractual obligations. It’s important to stay within reasonable market ranges.

Where can I find the official UAE laws related to CEO compensation?

There isn't a single, specific law dedicated solely to CEO salary. However, relevant regulations can be found within the UAE Commercial Companies Law, the Federal Tax Authority (FTA) guidelines concerning corporate tax, and labor laws related to employment contracts. For publicly listed companies, the Securities and Commodities Authority (SCA) regulations on corporate governance are also pertinent. You can consult the official websites of these authorities for the most up-to-date information.

What kind of documentation should a company keep regarding CEO compensation?

 To ensure transparency and compliance, companies should maintain thorough documentation. This includes:

• Employment contracts detailing the CEO's salary and benefits.
• Performance metrics and records demonstrating the CEO's contributions.
• Board resolutions approving the compensation package.
• Benchmarking data is used to justify the salary.
• Any agreements related to bonuses, stock options, or other incentives.

What are the common pitfalls to avoid when setting CEO compensation?

 Common pitfalls include:

• Overpaying or underpaying the CEO without proper market analysis can affect tax compliance and talent retention.
• Lack of transparency in compensation decisions leads to mistrust and governance issues.
• Failure to regularly review and update compensation policies to reflect changes in the market and the company's growth.
• Failing to do proper research on what an appropriate CEO salary would be.

When should a company seek professional tax or legal advice regarding CEO compensation?

It's advisable to seek professional advice in several situations:

• When structuring complex compensation packages, especially those involving stock options or performance-based incentives.
• When dealing with complex ownership structures or international entities.
• When facing significant regulatory changes or high-value disputes.
• When there is any uncertainty regarding the appropriate level of CEO salary.
• Anytime that there is a question about compliance with the UAE corporate tax law.

Written By

Akshaya Ashok

Akshaya Ashok is a content writer specializing in creating content focused on accounting and auditing. With over two years of experience, she has developed expertise in crafting professional content for the financial sector.