Do IT Execs Make Too Much Money?

A Citigroup shareholder vote puts compensation back into the spotlight. Don't run with the "inequality" crowd

Do IT Execs Make Too Much Money? - The contentious issue of executive compensation is back in the news following the vote Tuesday by Citigroup shareholders to oppose the pay packages for its CEO and other top execs. The class warriors at The New York Times seized on the opportunity to editorialize in their news pages about national "income inequality" and "outsized compensation," suggesting that "anger over pay for chief executives has spread from Occupy Wall Street to wealthy institutional investors."

It's highly doubtful that those institutional investors, wealthy or otherwise, are now carrying the mantel of the OWS crowd. But clearly there's a movement afoot to hold executives more accountable and tie their pay more closely to performance. Last year, for instance, Hewlett-Packard shareholders for the first time voted to reject the compensation packages of top company executives, including CEO Leo Apotheker, who was forced to resign later in the year as HP struggled to define its strategy, excite its customers, and boost its profits. In May 2010, Motorola became the first U.S. company to fail to earn majority shareholder support for its proposed executive compensation plan.

Order IT Salary Survey Download IT Salary Survey Summary

Such "say on pay" votes, stipulated by the two-year-old Dodd-Frank financial regulations, are non-binding--but they're a step in the right direction. If you don't like what a CEO or some other muckety muck makes, then buy some shares in the company and make your voice heard.

Last year, only a tiny fraction of U.S. company shareholders voted against executive compensation plans, and even fewer companies followed through with actual pay cuts. And it's worth noting that in cases where shareholders are voting against pay packages, their majorities haven't been overwhelming. Some 45% of Citi shareholders supported the company's compensation plan at Tuesday's meeting; 48% did so at HP last year and 46% at Motorola two years ago.

In the Citigroup case, shareholders appear to have a legitimate beef, but compensation matters rarely are clear cut. Last year, total pay for the bank's CEO, Vikram Pandit, reportedly included a $1.67 million salary and a $5.3 million cash bonus, as well as a $40 million retention package that was to be awarded through 2015. What Citigroup investors rejected yesterday is a pay plan that awarded Pandit $14.9 million last year. (It's unlikely Pandit or the bank's other top execs will have to return pay they've already received.)

Pandit's $14.9 million in compensation is considerably higher than for the CEOs at comparable financial services companies, The New York Times reports, though he had accepted an annual salary of only $1 in 2009 and 2010 amid the financial industry meltdown. Meantime, the bar Citigroup set for executive incentive payments last year "was set ridiculously low," according to a bank analyst, quoted in a Forbes article. And consider that Citigroup's share price declined 44% last year.

This debate about "outsized compensation" wafts into the realm of the IT organization from time to time (I wrote a couple of unpopular columns on the subject a few years ago). For instance, it was reported several years ago that HP's then-CIO, Randy Mott, was awarded a $15 million compensation package, including stock options and bonuses. Without considering what HP got for its $15 million, critics complained that Mott was overpaid, as if IT executive compensation should be dispensed according to a civil service pay grade. Mott's IT consolidation and restructuring efforts ended up saving HP hundreds of millions of dollars while tying projects more closely to business priorities.

Historic IT Job Market Size

Updated with current data
Recent IT Job Market size
For current data go IT Job Market Size to see the historic job market growth trend detail data

IT Employment Data

Adjustments to Prior data by BLS

Janco Associates last year published a list of top IT executive compensation, gleaned from the financial reports of select public companies. Among the execs on its list were Aetna's executive VP of operations and technology, Meg McCarthy ($5.1 million), Boeing CTO John Tracy ($3.6 million), FedEx CIO Rob Carter ($3.2 million), and Home Depot CIO Matt Carey ($2.9 million). In comparison, IT executives at large North American companies earn median compensation of about $161,000, according to InformationWeek's 2012 IT Salary Survey. So does that mean the above CIOs and CTOs are grossly overpaid?

Of course not. You can't judge these things in a vacuum. The fact of the matter is, some executives are worth more than others--and some are worth a lot more. The competitive market decides, not some social justice arbitration committee.

Looking to another industry, Major League Baseball players' "exorbitant" salaries continue to rise because that semi-competitive labor market continues to support those huge raises. Much less so in the NHL, whose economics forced a realignment of player salaries a few years ago. Do baseball players "deserve" to make a lot more money than hockey players? Do they work harder? Are they "better" performers? Such assessments are irrelevant. The forces of supply and demand set the benchmarks, not some litmus test of what's "fair."

I've always found it a bit odd that people take issue with the financial success of others, as if that largesse is coming out of their pockets. But I can understand the angst when it comes to blatant underperformers. I'm no fan of big raises and bonuses for executives at companies that take taxpayer-funded bailouts. And while no one likes the huge severance packages ousted CEOs receive, they're the contractual cost of attracting big name executives, even if they end up feeling like "pay for failure" deals.

If you're a shareholder, employee, or big customer of a company and think its top executives are making way too much money, you have forums to express your dissatisfaction. Use them. Otherwise, such matters are rarely any of your concern.

Order IT Salary Survey Download IT Salary Survey Summary

Salary Survey Standard

  • Median salary data all cities in the survey in the PDF report
  • Single paragraph summary job description of the 73 positions surveyed
  • Full Salary Survey Report
  • Salary data for each city surveyed in the report
  • Update service Available

Salary Survey & Excel Data

  • Median salary data for all cities in the survey in the PDF report
  • Single paragraph summary job description of the 73 positions surveyed
  • Full Salary Survey Report
  • Salary data for each city surveyed in the report plus an Microsoft EXCEL spreadsheet
  • Update service Available

IT Hiring Kit - Standard Edition

  • Latest IT Salary Survey -
  • Salary Survey Job Descriptions (PDF) 
  • Interview and Hiring Guide (WORD and PDF)

IT Hiring Kit - Silver Edition

  • IT Hiring Kit Standard Edition
  • Salary Survey Job Descriptions (Word) The IT job descriptions are provided as 73 individual word files using long file names.

IT Hiring Kit - Gold Edition

  • IT Hiring Kit - Siliver Edition
  • 324 Internet and IT Job Descriptions (MS WORD and ePub)

IT Hiring Kit - Platinum Edition

  • IT Hiring Kit - Gold Edition
  • Internet and IT  Positions Description HandiGuide®(PDF)

Order IT Hiring Kit Download Select Pages