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?
Please show calculations.
Plug in the numbers to calculate the compensation at given levels if ...
Answers a question on how to calculate the CEO's compensation given fixed and variable compensation components.