I'm sorry, but why is that salary out of the question? Assuming he's actually worth his salt, he could make that at Google, probably easily, as an executive. Do you propose replacing him with someone who's worse, simply because they're paid less?
Even without that, the only way you are going to weigh alternative candidates for any chief officer position would be to poach from competing businesses with the same department chair titles. The market is so limited on people who ever get those kinds of jobs anywhere to begin with that it is unreasonable to expect to ever be able to accurately claim if they are or are not "worth it". Success is more about aligning with the overall vision of the business and not causing conflict more than individualized performance. You could be worth a tenth your salary but as long as the other officers like you and the board does too you are set as long as you don't break anything.
Item two: That is a staggering salary. UCSF is a school, not a major technology company. UCSF honestly doesn't _need_ a CIO who's worth half a million dollars a year.
[1] http://www.payscale.com/research/US/Job=Chief_Information_Of...
2. Median pay for the US is a poor proxy. Using your same site, the median pay for Software Engineers is $80K/year. It doesn't reflect market (CA) or expertise (healthcare).
Low risk, public sector jobs shouldn't be paid premium salaries.