How CIOs Reach the Top

By Kim S. Nash Print this article Print

Fewer than 40 technology executives in the entire Fortune 500 are paid enough to be publicly reported. Here's who made the cut.

Every year, senior managers participate in a corporate beauty contest—and few technology executives make the final list.

A Baseline analysis finds that only 37 chief information officers ranked among the highest paid officers of Fortune 500 companies in 2001.

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Though that's 14 more than in 2000, it's still a skimpy lineup—7% of the 500 largest publicly traded companies in the United States. And in general, technology executives who did make the list got paid less last year than the year before.

Baseline's list is culled from proxy statements filed by companies that must inform their shareholders before their annual meeting who their five highest-paid officers are.

The Securities and Exchange Commission requires that disclosure, along with the names and titles of those executives. Chairmen and chief executives always make the proxy. Chief financial officers rarely miss. Who fills the other slots—whether from marketing, sales, technology or other top functions—says a lot about what a company values.

Richard Chapman, CIO at Kindred Healthcare, is the highest paid executive in the Baseline ranking, with $2.5 million in compensation for 2001.

He succeeds Leslie Tortora, the long-time CIO of securities brokerage Goldman Sachs, the highest paid for 2000 with $9.4 million in salary and bonuses. She took herself out of the running by retiring.

Chapman helps Kindred Healthcare run a $2.3 billion national network of hospitals, nursing homes and pharmacies. He must keep track of Medicare and Medicaid reimbursements, which provide 70% of Kindred's revenues.

Kindred, based in Louisville, Ky., entered Chapter 11 bankruptcy protection in 1999 to restructure debt. Kindred came out of bankruptcy in April 2001 and posted $52 million in profits for the year.

San Francisco-based Wells Fargo, which has the No. 2 CIO in Baseline's ranking—C. Webb Edwards, who earned $1.6 million—is a company long regarded as a technology innovator. At No. 3 is Thomas Whiddon, CIO of Lowe's Companies, a $22.1 billion chain of home improvement stores based in Wilkesboro, N.C., that is second only to Home Depot. Whiddon, who has been at Lowe's for six years, received $1.4 million last year.

CIOs in general didn't see the same level of riches in 2001 as in 2000. The lion's share of most multimillion-dollar compensation packages are stock awards tied to company performance. Last year's lackluster economy dragged stock-based bonuses down. Way down.

For example, Fran Dramis, CIO of Atlanta-based telecommunications firm BellSouth, received a bonus of $4.2 million in restricted stock in 2000, but no stock last year. His package dropped from $5.5 million to $1.2 million.

Compensation for the top 10 CIOs as revealed in proxy statements ranged from $1.1 million to $2.5 million in 2001, compared to a range of $1.1 million to $9.4 million the previous year. A few CIOs from last year's list fell off altogether this time around.

Among them, Jean Davis of Wachovia Corp., a banking firm, wasn't there; a shuffling of executives at the bank put several new names in the proxy. Ron Gaston quit Venator Group, the athletic-wear retailer that since has been renamed Foot Locker. Terry Talley replaced Gaston as CIO. Bruce Goodman, of the Humana Inc. health-benefits firm, was displaced by the company's chief financial officer. Bill Seltzer retired as CIO of the office products retailer Office Depot.

This article was originally published on 2002-09-04
Senior Writer
Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
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