The data on the following page represent the total compensation for 10 randomly selected chief executive ofcers (CEO) and the companys stock performance in 2009.

The data on the following page represent the total compensation for 10 randomly selected chief executive officers (CEO) and the company’s stock performance in 2009.

(a) One would think that a higher stock return would lead to a higher compensation. Based on this, what would likely be the explanatory variable?
(b) Draw a scatter diagram of the data.
(c) Determine the linear correlation coefficient between compensation and stock return.
(d) Does a linear relation exist between compensation and stock return? Does stock performance appear to play a role in determining the compensation of a CEO?

Company Compensation Stock Kraft Foods Sara Lee Boeing Middleby Exelon Northern Trust Abbott Laboratories Archer Daniels Midland McDonald's Baxter International (millions of dollars) 26.35 12.48 19.44 13.37 12.21 11.89 26.21 14.95 17.57 14.36 Return(%) 5.91 30.39 31.72 79.76 8.40 2.69 4.53 10.80 4.01 11.76