By Kim S. Nash
Competition in the digital age means boards often view the chief
information officer as a senior leader of the company, one who
increasingly commands the responsibilities, risks and rewards of
corporate power.
Elite CIOs and other senior technology leaders are earning more
money than ever, a sign of demand for people with a proven ability
to bring in new revenue through the use of data or otherwise employ
technology to outrun competitors.
As Rajat Taneja, executive vice president of technology at Visa
Inc., puts it, "Business strategy and technology strategy are
tightly connected. They fly in formation."
Visa paid Mr. Taneja $14 million last year after recruiting him
from Electronic Arts Inc. in 2013. Biogen Inc. paid Adriana
Karaboutis, executive vice president of technology and business
solutions, nearly $8 million.
As demand for technology stars has grown, so has CIO pay--up 30%
to 40% generally since 2012, according to Craig Stephenson,
managing director of the North American CIO practice at executive
recruiter and consulting firm Korn/Ferry International, which
looked at compensation packages for 100 companies in the Fortune
500.
Average compensation for Fortune 500 CIOs in general tops $1.1
million, Mr. Stephenson said. And for some, it is much higher.
Starwood Hotels & Resorts Worldwide Inc., which is exploring
alternatives that include an outright sale, hired CIO Martha
Poulter in June 2014 from General Electric Co.'s GE Capital unit,
paying her $4.6 million last year. Supervalu Inc. paid $2.2 million
last year to CIO Randy Burdick.
In a departure from traditional IT compensation measures, many
corporate technology leaders also are being held to the same
financial metrics as CEOs. That includes return on invested capital
and earnings, a far cry from traditional measures, such as whether
they installed software on time.
If technology is the bedrock of the modern business model, then
tech leaders must be subject to the same business metrics as other
senior executives, according to Phil Schneidermeyer, a partner at
search firm Heidrick & Struggles International Inc.
Boards are willing to pay a lot for top IT talent, but they want
a lot in return.
At Visa, the $14 million package for Mr. Taneja included more
than $8 million in stock to make up for incentives forfeited by
leaving Electronic Arts, where he was chief technology officer.
Visa also gave him a $2 million signing bonus.
"He wasn't a hire," Mr. Schneidermeyer said. "He was an
acquisition." (Heidrick & Struggles wasn't involved in
recruiting Mr. Taneja.)
Visa expects Mr. Taneja to help the company compete in a
changing business. Visa Chief Executive Charles Scharf and the
board pursued Mr. Taneja amid a growing challenge from digital
competitors, which offer apps where people can easily exchange
money and make payments.
Mr. Taneja has worked with Apple Inc., Facebook Inc., Google
Inc. and Square Inc. to ensure Visa gets a piece of mobile
payments, and the company launched Visa Checkout in July 2014 to
compete with PayPal Inc.
Mr. Taneja also opened new innovation labs and a center for
long-term research. His developers built a fraud detection system
for gas stations to identify dubious credit-card transactions at
the pump.
Toward the end of fiscal 2014, the board determined he had "made
substantial progress" in meeting personal goals, according to the
latest proxy statement.
On top of the other incentives and a pro-rated base salary of
$639,447, the committee awarded him a bonus of $185,423.
It allocated an additional $576,871 for helping Visa beat
corporate objectives such as revenue growth, which hit 7.7%. The
minimum threshold was 6.4%.
At biotechnology firm Biogen, CEO George Scangos expects Ms.
Karaboutis, a former Dell Inc. CIO, to improve competitiveness.
"Bringing Andi onto our leadership team represents an important
shift in thinking about the intersection of technology and science
to accomplish business results," Mr. Scangos said in an email.
It's not an easy shift. On July 24 Biogen halved its earnings
outlook for 2015.
Ms. Karaboutis said she is working to develop new assets,
including a collection of 1.6 billion records of genomic data that
can help generate risk reports for groups of patients and perhaps
individuals.
CIO pay is increasingly market-based.
At Western Union Co., the board set 75% of the total pay package
for executive vice president of global operations and CIO David
Thompson "at risk," meaning that it was subject to individual,
group and corporate targets ratified by the board. The remaining
25% was his base salary of $500,000.
For 2014, the board awarded Mr. Thompson $459,000 in incentive
pay, part of a $2.4 million package. The award in part recognized
successful technology projects to improve regulatory and legal
compliance.
But the company failed to meet some corporate metrics. Mr.
Thompson's bonus fell below the maximum possible payout of 150% of
a $450,000 target.
"In some years, full goals are met and full incentives are
paid," he said. "In other years they're not. But aligning it this
way means we're all pulling together. Everyone's got the same
risks."
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(END) Dow Jones Newswires
October 07, 2015 20:05 ET (00:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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