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Executive pay for senior IT leaders stable in 2015, amid big changes

As senior IT leaders sought to adapt IT strategies to a rapidly changing, digitally connected marketplace, one thing that didn't change in 2015 was their pay.

Compensation for senior IT leaders -- CIOs, CTOs, CISOs, executive vice presidents and directors of IT -- was stable...

in 2015, showing little or no difference from executive pay trends in 2014. The median total compensation for this group was $153,420, a mere 2.3% change from the median $150,000 in total compensation reported in 2014. That's according to the TechTarget's 2015 Annual IT Salary and Careers Survey of 248 senior IT executives across North America.

The flat trend in IT executive pay, however, belies the tremendous changes associated with this executive-level group, as companies across industries adapt to a digitally-enabled customer and employee base. The digital revolution has forced senior IT leaders to examine how their roles must also adapt. At least among the highest earners in this group -- base salaries ranged from a low of $36,275 to a high of $600,000 -- the adaptation is well under way; their jobs have shifted from a primary focus on delivering reliable IT services to delivering business outcomes, the survey showed.

Executive pay: By the numbers

As noted, most of the executive pay metrics for senior IT leaders aligned closely with 2014 numbers, despite a difference in survey respondent demographics between the two years. (Senior IT execs represented 14% of the total 1,783 IT professionals polled in this year's survey versus 28% in 2014.)

Total compensation (pay plus benefits) rose for 61% of senior IT leaders in 2015 versus 64% last year; 32% reported no change in compensation in 2015, a hair up from the 29% whose compensation was flat in 2014; 7% made less money in 2015, the same as in 2014.

Geography mattered, as might be expected. Total compensation was greater in regions where the cost of living is relatively high. On average, senior IT leaders working in the West earned the most in total compensation ($165,000), followed by the Northeast ($156, 500), the South ($153,420) and the Midwest ($125,000).

In terms of base salaries, senior execs earned a median of $138,000 in 2015, compared with $135,000 in 2014. This year, over half of respondents (53%) received raises and 49% are getting bonuses, very much in line with the 54% and 46% reporting raises and bonuses respectively in 2014.

For those who received raises, the median hike was 3.4% (average was 6.1%), virtually the same as the 3% median raise (average 5.8%) in 2014. Bonuses varied more from year to year: The 2015 median bonus was $20,000 (average $33,219) versus a median $25,000 (average $35,427) for bonus pay in 2014.

The outlook for IT executive pay in 2016 is cheery. Similar to 2014 and 2015, 60% of senior IT leaders expect to make more money next year, according to the survey, but they are more bullish on the particulars: 56% expect a raise in 2016, up from 42% a year ago; 47% look forward to receiving a bonus versus only 27% in 2014.

R-E-S-P-E-C-T

The unchanging compensation metrics give little sense of the changes afoot in the jobs of senior IT leaders. Follow-up interviews with a few of the respondents reveal a strong desire to play a strategic role at their companies, rather than carry out orders from the business or, equally as bad, be viewed simply as a cost center.

And, indeed, many businesses appreciate the value their IT leaders offer, the survey showed. In answer to the question, "What are your top measures for success in your position?" "Helping achieve a business goal or outcome" was the top metric (55%) cited by respondents, just above "Ensuring reliability of IT services" (52%) and "Improving product or service delivery" (42%).

For some IT leaders, like the CIO who recently moved from one coastal financial services company to another and will make $250,000 in total compensation this year, it was the business' unwillingness to treat him as a peer -- not better pay -- that motivated him to seek another job. He requested anonymity so he could speak candidly.

"I had been hired on as their CIO," he said, speaking of his former company, "but I had been reduced to not much more than an order-taker. There was no strategic alignment. It was a total bait and switch."

One of the aggravating factors was the reporting structure. Although the CIO title conferred executive team status, he reported to the president of the company, not the CEO. (In this year's survey, 29% of respondents said they report to the CEO, about the same as in prior years.) 

"I learned very quickly that when you don't report to the CEO, you're left answering to business peers -- who you're trying to help -- many of whom don't understand the strategic possibilities of IT, or even how you can gain efficiencies and economies of scale," he said.

His new job, which he started in June, came with "a slight bump in pay." But the big difference between the two positions is his ability to act as a strategic partner to the business, first by improving IT service delivery and saving money by renegotiating IT contracts. "In the first three months on the job, I had already paid back my salary to the company," he said. He has started to strategize how the company can use cutting-edge technology including IoT as a competitive differentiator. Two recent critical hires -- a chief of information security and an assistant IT manager to oversee day-to-day IT operations -- will help him focus on business technology strategy. It also doesn't hurt that he now reports to the CEO, he added.

Bonus pay, business alignment, CIO role

Anthony Peters, director of information technology at Burr Pilger Mayer (BPM), a San Francisco accounting firm, got a raise and bonus this year, earning above the survey's average $165,798 in total executive pay. Peters' bonus is tied to performance.

"The IT strategy has to specifically align with the overall strategy of the business. The closer we impact that strategy, the more likely I am to get that bonus. This year, we did really well," he said.

He calculates his team has completed 70% of the goals. "Some of them we were not able to meet because either the firm was not quite there or the technology did not quite enable us to do it," he said.

His firm, which is growing again after some belt-tightening during the recession, aims to differentiate itself in the competitive Silicon Valley market by offering specialized accounting services, including IT, ERP and credit card audits. One of IT's big pushes this year has been to improve Burr Pilger Mayer's customer-facing systems, enabling the firm's experts and their clients to do business in real time on a secure, private platform that is connected to all the relevant back-end systems.

Silicon Valley customers expect their client firms to have the same sophisticated technology they use, Peters said. He has been deeply involved in meeting those high standards, but he wants to do more. With the company's support, he is pursuing a second MBA in business analytics. His ambition is to have the same scope of responsibilities as that of a CIO at a large firm (and the title), an ambition he's expressed to his CEO.

"I have the ear of my CEO, and I am able to get things done through him, but I think that for me to be effective, I need to be the one presenting at the table and not going through the CEO," he said. IT needs to be at the table explaining why the firm needs a technology.

"That is not to say the CEO can't do that, but that is not his job. His job is to run the firm. My job is to put the technology in place that enables us to run the firm and execute on the business strategy -- and that includes addressing the board of directors, as well as the management team," Peters said. 

Let us know what you think about the story; email Linda Tucci, executive editor, or find her on Twitter at @LTucci.

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