Compensation; Regression Analysis (see Chapter 8); Spreadsheet Application Many people ask, “Are executives worth their very high pay?” As noted in the chapter, this is a difficult question to answer...

Compensation; Regression Analysis (see Chapter 8); Spreadsheet Application Many people ask, “Are executives worth their very high pay?” As noted in the chapter, this is a difficult question to answer because the benefits an effective executive brings to the company are hard to measure. One thing we can do, however, is to see if changes in executive pay are correlated with changes in company performance. If pay increases when company performance increases, and vice versa, then this would be an indication that pay practices are aligned with the interests of shareholders. To study this question, we have data (from The New York Times, May 26, 2017) for 30 of the highest paid chief executive officers (CEOs) in the United States in 2016 (these are not the 30 highest paid CEOs because some have been omitted due to insufficient data):

In the above table, the change in compensation is measured as the percentage change in total compensation from 2015 to 2016; total return (a measure of company performance) is measured by the percentage change in stock price plus dividends.

Required 1. Using Excel, find the correlation between the change in executive pay and company performance. Round your answer to 5 decimal places.  2. Using Excel, conduct regression analysis with company performance as the dependent variable and the change in CEO pay as the independent variable. What is the p-value for the coefficient on the change in CEO pay? Round your answer to 5 decimal places. 3. Comment briefly on the findings. Does it appear that the change in CEO pay is significantly related to the change in company performance?