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CIO roles and salaries out of sync

CIO roles and salaries out of sync

Despite the prevailing financial climate giving senior information technology executives greater board visibility during the past year, few saw that higher level of strategic importance reflected in their salary packages.

Many chief information officers will remember 2009 as the year their pockets felt the pinch. Analysis by The Australian Financial Review found salary packages for senior IT executives were down as companies responded to tough trading conditions. Metcash information chief Bernard Hale suffered the largest drop, down $514,656 to $1.5 million, or almost 35 per cent off his 2008 packet. Meanwhile Suncorp's Jeff Smith lost 50 per cent of his remuneration package to just over $790,000 and Alesco's Brian O'Connor saw his payout fall by more than 60 per cent to just over $310,000.

But while pay packets have been declining, at the same time CIOs have become more integrated into senior management teams than ever before.

Recruitment experts said the emphasis on technology at the board level is more prevalent now than during previous economic downturns because IT had a crucial role to play in both cutting costs and improving efficiency.

This meant CIOs were involved in a great deal of board level discussions about where technology investment should be continued and where spending could be slowed or even stopped.

EWK International senior partner Marianne Broadbent said information chiefs had been forced to manage projects and discretionary spending very carefully to make sure it had the greatest possible impact.

"The challenge at the start of the financial crisis was for CIOs to show they were able to adapt, are in tune with business needs and can respond quickly," she said.

"They have been spending more time than ever talking to executive colleagues about which areas they can trim, which can be put on hold and which are essential.

"Many executives including CIOs have learned to do things differently. When you force people to do things for 20 or 30 per cent less it's amazing how creative they can become."

Analysis conducted by The Australian Financial Review showed that 30 companies within the S&P/ASX 200 count an executive with information technology responsibility among their most highly paid individuals.

Of those, only six have seen any improvement in their remuneration during the past year. Among the biggest winners was Brian Cohen, chief technology officer for hospital software maker iSoft, whose total annual package jumped more than 60 per cent to top $840,000.

Tatts Group chief information officer Stephen Lawrie saw his total remuneration up 16 per cent to almost $690,000. Wotif.com CIO Mandy Ross also earned a significant increase of 35 per cent to take home more than $290,000 including shares and options.

Ms Broadbent said those cuts had to be put in context because other members of the senior executive ranks had also taken a financial hit during the past year.

The biggest earning senior IT executives were still predominantly in the financial services sector with Commonwealth Bank of Australia's Michael Harte earning $2.8 million, Westpac's Bob McKinnon $2 million and AMP's Lee Barnett $1.6 million.

Telstra chief operations officer Greg Winn was paid more than $5.3 million despite leaving the company and flying back to the United States halfway through the year.

The head of CIO practice at executive recruitment firm Talent2, Paul Rush, said a growing number of CIOs were adopting operational and strategic business obligations that would ultimately reward them with better-structured and larger remuneration packages.

"More often than not now, we're seeing CIOs move to shared services," he said. "As businesses move to shared services models to create efficiencies and bring down cost and focus on core business, your CIO takes on a broader remit."

There were some new faces in the senior technology executive ranks this year as Chris Crozier replaced Ken Mathews at BHP Billiton and John McInerney filled the top IT role at Telstra.

Foster's and Origin Energy both created new CIO positions, filled by Andrew Leyden and Olaf Pietschner respectively, as they work through business transformation projects.

Ms Broadbent said it was not surprising to see some movement in the senior IT ranks during the past year because CIOs had different skill sets.

"Sometimes organisations look for something different because they might not think the current CIO is the right one to take them though the current phase. There needs to be cultural and business consistency," she said.

"Some CIOs are particularly good when businesses are growing, while others are good when costs have to be restrained."

Although conditions had been challenging, Mr Rush said there were signs in recent months that the investment cycle was turning. He predicted significant investment in new IT systems in the next three years.

"One of the big things that has come out of this downturn is the focus on infrastructure," he said. "That includes data centres and business continuity as well as the need to look at green issues.

"Companies are looking at where the big bucks need to be spent to ensure ongoing viability and the best possible efficiencies." ©Fairfax Business Media

Note: Survey data was supplied by Financial Review Business Intelligence, covering remuneration data from Australian listed companies from 2004 to 2009. For more information, please contact Sheila O'Brien at 09 925 9725 or email sobrien@fairfaxbm.co.nz.

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Tags leadershipsalariescio and ceochange managementeconomic crisisCIO role

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