CIO Pay Survey: Pay It Backward

The small club of information- technology executives who are among the five highest-paid officers at their companies has gotten smaller. The shift may indicate that technologists are being regarded more as plumbers than strategists, say the experts.

Just 47 chief information officers made the latest cut, compared to 65 last year, according to Baseline‘s third annual study of proxy statements filed by the 1,000 largest U.S. firms.

Such companies must openly report compensation every year for their five highest-paid officers. Technology executives historically make a meager showing; typically, less than 5% of the Fortune 1,000 include them in proxy filings. Executives in more established roles—finance, operations, human resources—generally slip in ahead of information chiefs on the pay scale. In recent years, titles such as “chief supply chain officer” have also made the list.

Technology executives are still suffering from a backlash against overspending and a poor economy that has forced budget cuts.

“Too many CIOs and too many people who evaluate CIOs are equating productivity with cutting the budget,” says Erik Brynjolfsson, a management professor at the Massachusetts Institute of Technology. “CIOs thought they would change the world and that the whole business depended on I.T. But now the pendulum has swung much too far in the other direction.”

Still, 16 technology executives snared more than $1 million in 2003. And some of the extras are sweet. No. 5 Harvey DeMovick Jr. at Coventry Health Care gets monthly automobile expenses covered. Janet Wejman, who took early retirement from Continental Airlines this year, has lifetime flight benefits. Jeffrey Freimark, at the nursing home company Beverly Enterprises, had a $51,000 loan forgiven last year.

Compensation, of course, should be a reward for making big things happen at a company. But top technologists today are often rewarded more on how slim they keep their departments.

“You cut the I.T. spend and get a good bonus. Where is the value in that?” wonders Tom Pisello, president of Alinean, a technology measurement consultancy in Orlando, Fla.

And because it’s tough to measure the impact of the CIO on company growth, the profession is held back, says Heidi Sinclair, head of the global technology practice at Burson-Marsteller, a consulting firm in New York.

Other titles are gaining ground. This year, several chief supply chain officers were included in proxies where CIOs were not, such as at Bausch & Lomb, Pep Boys, Roundy’s, Timberland, TruServ and Storage Technology.

“The view is, [CIOs are] the plumbers of the business as opposed to leading the strategy,” Sinclair says. “It’s the silicon ceiling.”

Longevity plays a role in who is at the top. Tim Shack of PNC Financial, third on the Baseline list, is serving his 29th year at the bank. King Pouw, No. 4, has been at cereal maker Kellogg for 26 years, including 17 years serving on the lower rungs of the operations group.

But getting to the top can mean more work. Ten of the 16 millionaires do more than a CIO’s job.

AT&T’s Hossein Eslambolchi, whose $4.3 million pay package put him at the top of our list, also plays two other roles. He is chief technology officer as well as president of AT&T’s global network technology services unit, which sells communications services to other companies.

Likewise, No. 2 Bruce Goodman of the health-care firm Humana also oversees customer service. Philip Haan at Northwest Airlines, No. 9, is in charge of sales and international operations.

Such cross-seeding is just what technology executives need to do to bust into the circle of five at the top of the proxy, says Bill Ferguson, executive director of the CIO Institute at Carnegie Mellon University.

“The function as I define it is to grow the organization strategically, not just run efficient I.T.,” he says. “The people who can do that and be recognized for it—there are few of them out there.”

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