Page 201 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Chapter 5. Salary 187

Compensation
(Thousands)
$400
TY/LY

200

$100 $200
Sales Volume (Millions)
Figure 5-10. Sales vs. compensation, same curve

2. If the rate of compensation increases faster than the rate of increase in sales, the curve
rises:
a. Without change in slope, if rate of compensation increase is the same at all levels. For
example, if the average rate of increase in sales is 10 percent and the average increase
in compensation is 15 percent, the $100 million in sales last year is worth $110 mil-
lion this year, but the $200,000 level of pay last year has increased to $230,000.
Similarly, last year’s $91 million division increased to $100 million this year, while
average pay increased from $182,000 to $210,000. Thus, the reading at $100 million
in sales increased from $200,000 to $210,000, as shown in Figure 5-11.

Compensation
(Thousands)
$400
TY
LY

210
200

$100 $200
Sales Volume (Millions)
Figure 5-11. Sales vs. compensation, same slope but TY higher