CIOs rake in the big bucks
- 09 October, 2013 15:57
It pays to be CIO -- millions, in some cases. Take Filippo Passerini. He joined Procter & Gamble in 1981 as a systems analyst in Italy and rose through the techie ranks. Today Passerini is CIO and leads the company's global business services organization -- a dual role that netted him $5 million last year.
Or Deb Butler, who joined Norfolk Southern's customer service department in 1978 and currently heads the railway's strategic planning and IT initiatives. Her 2012 pay package is worth $4.6 million.
Passerini and Butler are two of 25 IT chiefs whose pay packages Network World examined. The data comes from proxy statements filed with the U.S. Securities and Exchange Commission. Public companies are only obligated to report compensation for the CEO, CFO and three highest-paid executive officers, so we scoured the proxy statements of the 500 largest U.S. companies to find 25 instances where a CIO or senior IT executive ranks among a company's most highly compensated executive officers.
For CIOs who work at companies with familiar brand names, six-figure salaries are the norm, we discovered. But salaries are just one slice of the compensation pie. The largest U.S. companies are compensating their senior tech leaders with bonuses, stock awards, and executive perks, too. Here are some of the standouts.
Total pay: Highest and lowest
Just three of the 25 IT executives made less than $1 million last year: Laurie Douglas, CIO and senior vice president (SVP) at Publix Super Markets ($717,196); Michael Guggemos, CIO at tech provider Insight Enterprises ($812,445); and Cal Sihilling, CIO and executive vice president (EVP) at wholesale food distributor Nash Finch ($845,028).
The highest paid IT executive on our list is John Hinshaw, EVP of technology and operations at HP. A former CIO at Boeing Company, Hinshaw joined HP in late 2011 and took on a newly created position that spans tech and business. In 2012, he earned $8.2 million.
Salaries are just the beginning
Base salaries ranged from $278,730 on the low end (Darren Miller, former VP of IT and administration at Quanta Services) to $837,500 at the high end (Procter & Gamble's Passerini). Close behind Passerini for the highest base salaries were: FedEx CIO Rob Carter, who received a $762,960 salary; Home Depot CIO and EVP Matt Carey, who earned a $666,192 salary; and Lori Beer, who netted a $638,460 salary as EVP of specialty business and IT at healthcare provider WellPoint. (The full details of each executive's pay can be found in our slideshow.)
Bonuses bulk up pay packages
Cash bonuses are typically tied to corporate performance, and senior IT executives are rewarded when their companies hit internal financial targets. FedEx's Carter took home the largest cash bonus: $2 million. Suren Gupta, EVP of technology and operations at Allstate, earned a $1.2 million bonus.
Planning for the future: equity rewards
Long-term incentives -- stock options, restricted stock, performance shares -- typically vest over time but are calculated according to their value on the grant date. In our roundup, the biggest equity awards went to:
HP's Hinshaw, who was granted stock awards and option awards valued at $5.1 million; SunTrust Banks CIO and corporate EVP Anil Cheriyan, who received equity awards valued at $2.9 million; Meg McCarthy, EVP of operations and technology at Aetna, who received stock awards valued at $2.8 million; Procter & Gamble's Passerini, whose equity awards were valued at $2.7 million; and Home Depot's Carey, who received equity awards valued at $2 million.
Raises and pay cuts
Some tech leaders netted big raises last year. Allstate's Gupta landed a 22% raise, which brought his pay package to $3.5 million. A 20% raise took Procter & Gamble's Passerini up to $5 million. WellPoint's Beer received an 18% raise, which increased her pay package to $3.2 million.
Other CIOs saw their pay slashed in 2012.
Richard Chapman's $1.2 million pay package is down 31% from 2011, when he earned $1.7 million as Kindred Healthcare's chief administrative and information officer. FedEx's Carter saw his compensation drop 18% to $4.8 million, compared to $5.8 million a year earlier. Don Imholz, CIO at healthcare service provider Centene, took a 16% pay cut, which brought his compensation down to $1.5 million.
Welcome to the company
A few newcomers were rewarded with sign-on bonuses. Ron Griffin, CIO and SVP at AutoZone, received a $75,000 sign-on bonus. Allstate's Gupta earned a $400,000 signing bonus, and a $1.5 million signing bonus went to HP's Hinshaw.
Planes, cars, and tax help
Executive perks varied significantly, with some CIOs enjoying private jets and car allowances and other CIOs receiving little or no compensation extras.
At the high end, HP's Hinshaw racked up $375,990 in perks and other compensation. Specifically, he received $124,300 for home security services, $120,326 for relocation expenses, a $54,468 tax gross-up, $50,380 for personal aircraft usage, $10,000 for a 401(k) company match, and $16,516 in miscellaneous extras.
Aetna's McCarthy received $212,232 in perks and other compensation. The bulk of her perks ($196,551) were for personal use of company aircraft.
Hinshaw isn't the only tech exec to receive a tax gross-up, an unpopular perk with investors (a tax gross-up is an extra payment that's intended to cover an individual's personal tax liability due to another given perquisite, such as air travel).
Allstate's Gupta was reimbursed $48,132 for an income tax bill related to his relocation expenses.
Likewise, Juanell Hefner, SVP of customer and technology services at Health Net, received $62,854 for relocation costs plus a $47,277 tax gross-up payment to reimburse her for the income tax liability associated with the relocation benefit. (Hefner also received a $12,000 automobile allowance and $5,000 for financial counseling).
FedEx's Carter received a $364,509 tax reimbursement payment related to his restricted stock awards. (Carter also received $15,562 for security services and equipment, $5,700 for tax preparation services, and $7,500 for financial counseling services.)
Life after CIO
Ascending the corporate ranks to the CIO level is a huge career accomplishment, but it's not the final rung for many IT professionals. A number of the CIOs in our roundup have taken on operations responsibilities as they've continued to climb the corporate ladder.
Lisa Bachmann, for instance, was named CIO of Big Lots in 2005. She still serves as CIO, but she was promoted to EVP and chief operating officer in August of last year. As COO, she added responsibility for store operations to her workload.
Likewise, David Thompson joined Western Union in April 2012 as CIO. Seven months later, he added global operations to his responsibilities. Thompson, who's CIO and EVP of global operations, received a $3.4 million pay package last year.
HP's Hinshaw oversees global IT, sales, procurement, business shared services, real estate, and security. Health Net's Hefner is in charge of IT, customer service, and project and portfolio management.
Aetna's McCarthy, too, oversees a wide range of activities, including clinical innovation, technology and service operations. Responsibility for process improvement, procurement and real estate services also falls under her domain.
*Editor's note: This feature provides details on pay packages for 25 senior IT executives at Fortune 500 companies, but it's not a ranking of the highest paid CIOs and IT executives. A public company is only obligated to report the compensation of its principal executive officer (CEO), principal financial officer (CFO) and three most highly compensated officers. If a senior IT leader ranks among a company's three most highly paid executives, his or her compensation is reported in the organization's proxy statement. A CIO might have earned a multimillion-dollar pay package, but if more than three executives at the company topped that amount, that IT leader's pay is not disclosed. There are undoubtedly higher paid IT chiefs whose compensation is not publicly reported.
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