The Research Of Motivation Mechanism To Operator Based On EVA Theory

EVA is abbreviated from Economic Value Added, which is found by deducting all the capital cost (including the cost of equity capital and credit capital) from adjusted accounting profit after tax paid. EVA bonus amount =β×EVA target value +α×(EVA actual value - EVA target value).αandβare proportion coefficient. Andαis less thanβ. Operators can maximum their bonus only after their companies achieve the utmost EVA value and maximum their benefits. We must also work in the system of EVA bonus bank. Operator can only get a portion of its bonus. The balance will be put into bonus bank and returned in installments in the future. When EVA is negative, operator's bonus, as the risk guaranty, will be deducted corresponding proportion from the bank. EVA bonus motivation mechanism is the elastic long lasting one, which pay attention to the company's continuable development. The introduction of EVA evaluation can perfect Chinese company's motivation mechanism. To evaluate the companies by EVA, the companies need adjust their activities of financing, investing and dividend policy, and restrain the "inside control".