CIO pay tied to overall business success

By Kim S. Nash, CIO |  IT Management

The recession has been a downer. Gone are country-club memberships and family use of the corporate jet, which were two popular perks for CIOs five or six years ago. Today, club membership, if you want it, is on you and the jet is usually reserved for the CEO and sometimes his family, thank you very much.

Discretionary cash bonuses are few and far between these days, too. Just 11 of the 45 CIOs in our study got such gifts last year, compared to 19 of the 52 CIOs listed in proxies in 2006. The drop from 37% to 24% receiving discretionary bonuses reflects a new activist attitude among board compensation committees, Milich says. "The oversight around compensation is more intense, focused on making sure we're getting something for the bonus dollars we're paying out."

Supervalu's Shurts, it must be said, did get some cash in fiscal 2011 that was unrelated to company performance: a $125,000 hiring bonus and a $50,000 discretionary bonus from his CEO.

Meeting financial metrics "is the fun part" of the CIO job, Shurts says. "Anything we do in IT must tangibly affect something that our customers can feel [or] that our P&L sheet can see," he says. "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."

That attitude trickles down to his staff because he uses the financial targets to clarify IT's mission. When project ideas are assessed against corporate goals, it's easy to see what to work on and what to ignore, he says. "The question becomes, How do we not just do what's technically possible or cool, but how do we impact these metrics? It gives your IT effort focus and an agenda."

Fonseca uses a similar clarifying technique for her IT staff. The main way LabCorp makes money is by physicians ordering tests, she says. IT must work fast to get new customers connected to LabCorp and to supply them with the right electronic tools. "It's important they can start turning into revenue," she says. Like Home Depot, LabCorp set three levels of corporate goals--threshold, target and "superior"--and the company surpassed the top end of three out of four of its metrics last year. Fonseca took home $1.2 million.

Eyes on the Price

CIOs who earn multimillion-dollar payouts know that the value of their stock and options grants depends on the price of the company's stock. When it comes to awards of straight-up shares, it's the bigger, the better. Options, meanwhile, are worth the difference between the stock price on the day they're awarded and the day they vest. That means stock price may be the most-watched metric of all, Milich says.


Originally published on CIO |  Click here to read the original story.
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