There is considerable variation in the amount CEOs of different companies are paid, and some of it might be explained by differences in company characteristics. Consider the information in Table 12.5.7 on CEO salaries, sales, and return on equity (ROE) for selected northwest companies.
a. What percentage of the variability in salary is explained by company sales and ROE?
b. What is the estimated impact on salary, in additional dollars, of an increase in sales of 100 million dollars, holding ROE constant? Is this statistically significant?
c. What is the estimated impact on salary, in additional dollars, of an increase in ROE of one percentage point, holding sales constant? Is this statistically significant?
d. Identify CEO and company corresponding to the smallest salary, the smallest predicted salary, and the smallest residual of salary (using sales and ROE as explanatory variables). Write a few sentences interpreting these results.

TABLE 12.5.7 CEO Salaries, Sales, and Return on Equity for Selected Northwest Companies Company Alaska Air Group Ambassadors Group effey D. Thomas American Ecology Avista Blue Nile Cardiac Science Cascade Corp. Cascade Microtech Coeur d'Alene Mines Dennis E. Wheeler Coinstar Coldwater Creek Columbia Sportswear Timothy P. Boyle Name Salary Sales (millions) ROE S3,663 98 176 1,677 295 206 534 William S. Ayer $360,000 400,000 275,000 626,308 437,396 376,923 540,000 369,102 587,633 475,000 725,000 804,231 35.5 23.1 8.7 20.3 0.0 17.1 4.2 19.2 6.1 19.6 15.6 Stephen A. Romano Scott L. Morris Diane Irvine John R. Hinson Robert C Wamren, Jr Geoffrey Wild 189 912 1,024 1,318 David W. Cole Dan Griesemer Continued) Sales (millions) Frederk:k R. Hutme 849,231 Dara Khosnowshahi Charles M. Brown Phill ps S. Baket, Ir David M. Camp, Ph.D. lack W. Oehlke Joseph P. Schneide Bruno Guilmart Schmicks Micron Technology Steven R. Appleton 1 SonoSite 10,383 P. Davis