Superstar CIOs See Bigger Paydays
There's no sure formula for measuring the worth of a chief information officer. But we can gawk at what some superstars get paid.
Baseline's 2006 CIO compensation ranking shows that most of the 46 technology executives on the list got fatter wallets last year. Twenty-seven of them saw their total compensation increase in 2005 compared with 2004.
"The market's up and things are more competitive than they were last year," says Paul Groce, a partner at executive recruiting firm Christian & Timbers. "For chief executives and boards to attract world-class CIOs, they need to understand good CIOs are not inexpensive and they're hard to find," adds Groce, who specializes in placing senior technology leaders.
There are probably CIOs out there who make more than the men and women on the 2006 list, but they don't earn enough to be included in their companies' annual corporate proxy statement. The Securities and Exchange Commission requires public companies to report the compensation of their five highest-paid officers. For the past five years, Baseline has studied the proxies of the 1,000 largest U.S. firms to assemble the list of elite CIOs.
The top 10 collectively last year earned $50 million, led by $10.3 million man Randy Mott. Hewlett-Packard lured Mott away from his CIO post at Dell last year to help HP's new chief executive, Mark Hurd, streamline the company to boost profits. (HP declined a request to interview Mott for this story.)
Mott is something of a rock star in technology circles. He spent 22 years at Wal-Mart, leaving as the retailer's CIO in 2000. Then, for five years he was CIO of Dell, which, like Wal-Mart, is known for inventive use of technology to create efficient supply chains. Groce notes that the New York Yankees' Randy Johnson will make more than $15 million this year, "but I daresay Randy Mott will have a greater impact on his respective business in general."
HP is a prime example of an organization "inherently dependent on I.T.," Groce says, meaning the company valuesi.e., paysits CIO accordingly.
A valuable CIO not only sees business opportunities for a companyidentifying new markets or servicesbut can also turn the nuts and bolts of technology to help make it happen, says Bob Best, CIO at UnumProvident, a $10.4 billion insurance company in Chattanooga, Tenn.
Best (No. 18 on the list with $1.2 million in pay) is in the midst of a major project to reinvigorate UnumProvident's $1.6 billion brokerage unit, which caters to small and midsize institutional investorsa growing market. The business goal is to make it easier for these customers to work with UnumProvident, he says, and the information systems tools to get there emphasize "newer technology," such as Microsoft software development tools for building Web applications.
"Really, what you get paid for is enabling business change," Best says.
Most of the time, anyway. Bob Dunst (No. 4, $4.5 million), who led technology at the Albertson's supermarket chain, got a much bigger payout for not being CIO than he got for doing the job. After rival Supervalu completed its acquisition of Albertson's in June 2006, he received cash and stock worth $16.1 million under a change-of-control agreement in his employment contract. Of course, Dunst didn't do as well as Larry Johnston, Albertson's chief executive, who got an estimated $105.5 million in cash and stock. CIOs may now have the CEO's ear, but they don't have the power.
But CIOs are crossing over to other senior management roles as technology insinuates itself into almost every part of a company. Some large companies are now even run by former technology executives, such as Walgreen CEO David Bernauer and Drugstore.com's Dawn Lepore.
And several execs on our list manage not only their company's technology strategy but other operations as well.
Bruce Goodman (No. 20, $1.2 million) is CIO at Humana, and he also manages customer service at the $14 billion health-care company. John Knappenberger (No. 45, $290,000) is vice president of administration, sales, marketing and information technology at Dura Automotive Systems in Rochester Hills, Mich. Roy Wilson (No. 31, $692,544) leads technology and human resources for Allergan, the $2.3 billion pharmaceutical company in Irvine, Calif. And Joe Antonellis, CIO at State Street Corp. in Boston (No. 8, $2.6 million), also runs the global securities operations at the $7.5 billion bank. Combined roles, however, don't always pan out (see "CIO + CFO," below).
At companies that view technology as vital, CIOs will command higher pay, Antonellis says. He calls himself "fortunate" to work for a CEO, Ron Logue, who appreciates technologyLogue, apparently, wrote assembler code back in the day.
Information technology represents 20% to 25% of State Street's operating budget, Antonellis says. In 2005, the bank spent $486 million on information technology and communications. And nothing promotes appreciation more than a big line item.
But even Mott's pay package, while generous, doesn't surpass that of all-time high-ranker Leslie Tortora. As CIO of investment bank Goldman Sachs, she earned $11 million in 2000.
It's OK, Randy. As they say in the major leagues: There's always next year.
With reporting by Todd Spangler