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Problem Statement
As a part of your company's Executive Development program, you have decided to transfer Joan Shoemaker, the Human Resources Director for your West Coast plant in Portland, Oregon, to be the Human Resources Director for Europe. Joan will be located in Munich, Germany.
Joan was recently promoted to Director, and her current base salary is $255,000/year. She is married to a writer and has 2 children still at home. The Shoemaker's live in a 2,600 sq. ft. home in Gresham, Oregon, a suburb of Portland. However, housing costs are much higher in Munich, and they have agreed to live in a $1,800 sq. ft. townhouse. They have 2 cars worth $70,000, which they drive an average of 25,000 miles a year. The company will lease a suitable car for Joan, but she will make the payments. If her husband needs a car that will be at their cost, although with excellent public transportation in Munich and Europe generally, it may not be necessary. The company will use 20,000 miles for operational costs for Joan's car, although the actual mileage is likely to be much less.
Your company has a policy of keeping employees "whole" when transferring them on an expatriate assignment. What adjustment should be made to Joan's salary for the difference in the cost of living during her assignment?
Instructions
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