How CIOs Can Negotiate CEO-like Pay

By Renee Oricchio

The average CIO makes about $200,000 a year, depending on the size of the company. At larger enterprises, it's more like $500,000 a year.

And then there's Randy Mott of Hewlett Packard, Jeff Fox from AllTell, Bob Willett from Best Buy, and Larry Kittelberger of Honeywell. Their annual salaries are more like $10 million, $9 million, $8.5 million and $6 million, respectively.

Clearly, there is an emerging elite class of CIOs pulling down major league baseball-like paychecks. According to this year's annual survey of CIO salaries just released by Baseline magazine, it's a club that is growing. There were 39 millionaire CIOs on this year's list, up from 21 the year before. And that list is not all-inclusive, but just the results from surveying 1,000 publicly traded companies.

No doubt many a CIO is wondering how to get on that list.

Laurie Orlov, a principal analyst from Forrester Research, says it's a combination of being in the right place at the right time with a proven track record. "The ideal condition would be for the new CIO placed in the wake of a huge IT failure or just before a major IT deployment," says Orlov.

For those CIOs who want to get serious about making the big bucks, Orlov offers the following:

• Change jobs "Unless there's a merger, no boss is going to negotiate a significant pay package," says Orlov.
• Articulate your value  CIO candidates need to make a substantive case for how they will contribute to the company's bottom line in terms of revenue made, revenue saved, and how their leadership will help retain customers for the business.
• Timing is everything In addition to coming in on the heels of a major failure or just before a major rollout, there are other conditions that would help the incoming CIO get a higher salary. For example, the company is about to go global or experience rapid growth or launch a whole new business that is completely technology-enabled.

How CIOs stack up against other C-level executives
As much as the average CIO would like to make the same salary as the CEO, that's not likely to happen. Even Alex Rodriguez (the New York Yankees slugger, better known as "A-Rod") doesn't make more than his boss. But how are CIOs faring compared to their other high level colleagues?

Eric Sigurdson, CIO Practice Leader at Russell Reynolds Associates, an executive recruitment firm, describes CIOs as actually somewhere in the middle of the pack.

"The average CIO makes more than the head of human resources and perhaps more than the general counsel," says Sigurdson. "On average, however, they make less than the CFO, less than the president of the business, and probably less than the CMO."

Sigurdson points out that it's still a relatively new C-level position in corporate America.

"The first time our company placed a CIO was around 1990, 1991," he says. "The title didn't exist before then. If you go back 10 years before that, the closest thing to a CIO was the director of data processing."

The times they are a-changing
And yet, enterprise-level CIOs are starting to pull in those multi-million dollar packages. Sigurdson profiles the kind of CIOs today who tend to land the megadeals:

• They have a seat at the table Meaning, they are part of C-level management meetings, even perhaps participating in meetings with the board of directors. They also typically report directly to the CEO. "If a CIO reports to the COO or CFO, he's going to make less," says Sigurdson.
• They work in the right industry Financial institutions, for example, tend to be one of the highest paying industries for CIOs. In the Baseline salary survey of the top 20 highest paid CIOs, many are from financial service institutions, such as Wachovia, PNC Financial Services, MasterCard, Capitol One Financial, Ameriprise Financial, US Bancorp and Freddie Mac.
• They have an established track record  "The big salaries aren't determined at the negotiating table," says Sigurdson. "CIOs have to prove themselves long before that. You land a big package based on what you've accomplished elsewhere."

One thing is clear: IT departments have come a long way over the past 25 years, when it was better known as data processing.

"IT now has a huge impact on the company bottom line," says Sigurdson. "It's a big line item expense. Many companies spend more on IT than on their ad budgets or healthcare. For that reason, IT gets a vote, and there will always be a need for world class CIOs."

Renee Oricchio is a freelance writer in Norwalk, Conn. For the past 20 years, she has been writing and producing news segments about technology and business for CNN, MSNBC, Ziff-Davis, CNET, and a variety of Silicon Valley-based local news outlets.