2005 CIO Compensation Survey
The New Reality for Customer Engagement
Up. It's a nice way for pay to move, and it's where most of the chief information officers in Baseline's 2005 CIO Compensation Survey saw theirs go.
Thirty of the 51 technology chiefs who made it into their company's latest proxy statement saw compensation increases of an average of 45% last year, compared to their 2003 pay packages. Fat bonuses were the primary catalyst.
To be listed in a proxy statement filed with the Securities and Exchange Commission, you have to be among the top five highest paid officers. Baseline studies the proxies of the 1,000 largest companies in the U.S. to assemble our annual ranking of highly paidand highly influentialCIOs.
The executives who took home more in salary, bonuses and other pay, such as payouts from incentive plans, generally demonstrated needle-sharp business skills because that's what generates raises in this tight market, says Virendra Singh, a senior economist at Economy.com, a research firm in West Chester, Pa.
Still, he says, "raises are rare," because the market for technology professionals is flat and competition from non-U.S. workers is growing.
There are 51 CIOs on this year's list, four more than last year but still not up to 2003's peak of 65. The 2005 group includes several notable newcomers in retail, financial services and even utilitiesan industry not known for sending its top technologists to the bigs. Utility companies typically pay their chief operating officers and group presidents of gas and pipelines better than they do their chief information officers. Those positions are at the heart of the business.
But at companieseven utilitiesthat use information technology to respond to sticky business problems, chief information officers can be stars.
Southwest Gas, for example, serves 1.5 million homes in Arizona, Nevada and California, three red-hot real estate markets. Dudley Sondeno, Southwest's CIO, has launched several projects to help the company get a grip on increasing demand. That includes a project to create more efficient meter-reading routes by mapping gas usage with geographic information systems technology, and one to better manage inspection, maintenance and construction work. Sondeno (rank: No. 40; pay: $527,000) got a 17% raise.
For the first time in four years of tallying the elite CIO list, financial services firms dominated. Of the 51 CIOs ranked, 14 come from banks, brokerages or insurance companies, up from seven of 47 total companies listed last year. Financial firms displaced retailers, which traditionally rule the ranking.
The CIO is critical at financial services companies; money can't move today without technology. But the CIO typically doesn't get paid enough to make it into the proxy statement. Regional bank presidents and heads of investing tend to take home bigger salaries, bonuses and incentive packages because these are the executives closest to core business.
Nine of the 10 highest earners on this year's list are CIOs who also play additional roles. Jon Beyman of Lehman Brothers Holdings, whose $5.9 million pay package puts him in the No. 1 slot this year, also leads operations at the $21.3 billion investment bank. Philip Haan (No. 6, $3.1 million) leads Northwest Airlines' international business, oversees alliances with Continental, KLM and others, and manages information technology.
A handful of retailer steadies made the list again this time around, including Kroger's Mike Heschel (No. 22, $1 million), Amazon's Rick Dalzell (No. 34, $617,000) and CSK Auto's Larry Buresh (No. 49, $350,000). New among retailers is Michael Kobayashi, who was hired to lead technology at off-price department store chain Ross Stores last December. Kobayashi is expected to help Ross Stores expand into deep discounting with its new chain, called DD's Discounts. He is also the highest-placing retail CIO, No. 11 with $2.3 million.
How well Kobayashi and the other Baseline movers and shakers fare next year will depend in part on how they handle critical projects this year. We'll be watching.
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