The Compensate Inspiration Mechanism Of Manager Based On Economic Value Added

The principle-agent theory tells us that managers will never contemplate or act in the way that stockholders do so long as the management and ownership of enterprises are separated. It has became the regardful focus to the enterprise owners and theorists that how to select a proper managers' performance measurement indicator and set up the effective compensate incentive mechanism, so as to link up the incentive for managers with their performance, stimulate and restraint managers effectively, and reduce the conflicts between managers and stockholders. And it is the same thing to the enterprise owners.Since the 1980's, the American company, Stern&Stewart, has put forward the concept of EVA and some basic research. The key thought of EVA system is to maximize the shareholder's value on the basis of balanced values, EVA has already helped and become the focus in the theory circle and practice study gradually in recent years, the thought of management of EVA is being accepted and approved by more and more persons.The most advantage of EVA is the managers can enjoy the achievement comes from their hard working. EVA compensate incentive plan means to award the value added part, thus encourages all managers and workers to devote to improve the value of the enterprise. EVA plan makes the managers and staff behavior like the shareholders. Only the shareholders' value is added, EVA will be added, the managers and staff can get award, so the managers and staff can get award from the added shareholder's value, thus the profit of managers and shareholders can be unified and coordinated. And further more EVA plan award the value added part, both the short term and long time term achievement are coordinated, the EVA incentive can get combined effect of not only short term but also long time term.The objective of this paper is to introduce EVA and discuss its application on compensate program of managers. This paper is made up of six chapters:The first part of the paper is introduction that mainly discusses the research background and research content of this paper.The first chapter states the concept of the compensate incentive program of managers, the disadvantage of traditional performance measure indexes and the...