Why Some CIOs Earn the Big Bucks

How much is a great CIO worth? That question has generated dozens of stories over the years about the most highly paid CIOs, along with some “OMG!”-inspiring lists of multi-million-dollar earners.

But the far more interesting story–the one behind the numbers–is what inspired our cover story this month (“CIO Pay Tied to Overall Business Success”). Senior Editor Kim S. Nash set out to discover exactly what kind of business metrics and financial targets these top CIOs have to hit. What does that seat at the table require in terms of deliverables?

To put together this uniquely revealing, well-researched story, Nash pored over the Fortune 1000’s latest proxy statements–where companies list their top five most highly paid executives, as required by the Securities and Exchange Commission–to find those that included CIOs. Forty-five IT leaders made that cut.

Then she delved into their publicly available compensation plans (set by boards of directors) to find the most illuminating examples of the business metrics used to gauge these CIOs’ performance. Those metrics don’t come from any standard checklist, either. Company profits and sales revenue show up, of course, but CIOs are just as likely to be judged by any of a dozen other measures (see “Measuring CIO Performance: The Rise and Fall of Compensation).

Along the way, Nash also researched the general business conditions facing those companies so she could put each CIO’s performance requirements into a larger context.

One of her exclusive findings in that analysis was that the pay packages of CIOs and other executives can fluctuate by as much as 40 percent year-to-year. In her interviews with these CIOs, many talked about the importance of having companies measure them just like any other C-level executive. “Anything we do in IT must tangibly affect something that our customers can feel [or] that our P&L sheet can see,” says CIO Wayne Shurts of Supervalu, the financially struggling grocery store chain. “Even just five years ago, how much did we talk about IT and the [corporate] revenue line at a company? Very little. Today it’s a big thing.”

Even bigger is what this story tells us about the coming-of-age of the CIO profession, which is one of the youngest in the C-suite, yet has a measurable strategic impact. “For us, it’s not just aligning with the business. IT has to be in the business,” says CIO Lidia Fonseca of Laboratory Corporation of America. “That has been a key driver in being an effective CIO.”