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    Percentage of the CEO's total earnings is tied to profits

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    Suppose compensation is given by W = 450,000 + 220p + 15S, where W = total compensation of the CEO, p = company profits (in millions) = $300, and S = Sales (in millions) = $500. What percentage of the CEO's total earnings is tied to profits of the firm?
    A. 6.0%
    B. 7.9%
    C. 12.6%
    D. 43.4%

    Please show calculations.

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    Plug in the numbers to calculate the compensation at given levels if ...

    Solution Summary

    Answers a question on how to calculate the CEO's compensation given fixed and variable compensation components.