Analyze The Compensation Incentive System With EVA

Nowadays, multi-agency relationship exists in most enterprises. Due to asymmetric information between of clients and agents in these enterprises there are different interests between them .The most typical one is the owner and operator of the agency. Operators often lead to the pursuit of their own interests at the cost of sacrificing the ones of shareholders. Therefore,it is necessary to establish an effective mechanism of remuneration incentives.This thesis summarize several usual measure criterion of achievement valuation,and analyze operating method and problem of annual compensation system and stock option in our country. On a basis of it,put forward that EVA measure criterion is more suitable for evaluating the enterprise achievement. This thesis makes a comparison between EVA and traditional performance measurement indicators, and demonstrate that EVAis a relatively rational indicator. Meanwhile,this article study systematically the application of EVA to compensation incentive system including the calculation of bonus bank and Vitual stock option. Then, analyze the advantage of EVA in comparison with traditional incentive system and the practice at home and abroad. Finally, I state that some problems that should be paid attention to in Chinese corporation when adoping EVA.This paper is divided into five chapters.The chapter 1 is brief introduction.In this chapter first prove that the traditional performance measurement under the incentive mechanism is plagued with problems,but EVA (Economic Value Added) is proved to be effective abroad ,then introduce performance evaluation on the base of EVA, and analyze the Compensation Incentive System with EVA. Finally Review the situation at home and abroad ,and put forward the argument about the article .Chapter 2 is the theoretical basis of the incentive mechanism, Including the principal-agent theory, the modern enterprise theory, human capital theory, the theory of surplus demand.In chapter 3 the current situation and analysis of Chinese enterprises salay incentives of them is contained . The content of this chapter and Chapter 4 is the key. In this chapter the incentive system in some Chinese enterprise and their adverse aspects are analyzed in detail .Consequently, put forward EVA performance Evaluation in order to develop our enterprise and promote competitive ability and Analyze the Compensation Incentive System with EVA .In Chapter 4 the Compensation Incentive System with EVA is analyzed. It begins with a detailed accounting of the EVA ,then compared traditional performance measurement with EVA (Economic Value Added )and demomstrate some advantages of EVA . Next to the article , EVA as a performance measurement based on the operator's performance appraisal. results of this evaluation and the corresponding salary incentive for the operators, so as to make the two incentive model, EVA bank bonus and EVA virtual stock option.In Chapter 5 it is stated that the problem should paid attention to on the basis of the Compensation Incentive System with EVA...