Analyze The Compensation Incentive System With EVA

Ever since the establishment of modern enterprises system which the ownership and operation separated and explosion of Manager's revolution, including the further acknowledge of sparsity of human resources, urging the modern business enterprises system formation and develop continuously, also make the salary incentive mechanism problem of managers increasingly widespread and important. In modern business enterprises, how to establish effective incentive mechanism and prompt the activity of managers is a very important problem in enterprises reform. Currently, the salary incentive mechanism of managers in china is seriously unreasonable, such as the total quantity is low, the result of encouragement is deficient, the method is simple, the construction is irrationality, and the rate of risk stimulation is low, lacking the long-term stimulation, the salary standard is out of balance, the salary is unrelated with the enterprises achievement, the effect of holding stock is inapparent, even causing the corruption. Therefore, our country needs urgently to establish a kind of much more reasonable and long-term incentive mechanism of managers.This thesis summarize several usual measure criterion of achievement valuation, and analyzing the operating method and problem of annual compensation system and stock optionin our country. On the base of it,I think that EVA measure criterion of achievement valuation is more suitable for evaluating the enterprise achievement. Meanwhile, studied systematically the application of EVA to compensation incentive system, including the calculation of bonus amount, bonus bank and leveraged stock option in combination with EVA bonus. Also, the advantage of EVA copensation incentive system are analyzed in comparison with traditional incentive system and the practice at home and abroad. Finally, I point some difficulty and problem existing in Chinese corporation when pushing inspire and confine system which based on EVA measure criterion of achievement valuation, and put forward some advice and measures to solve them.