EVA for Corporate Incentives

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Adrija Ghosh
Student (MBA), United States

EVA for Corporate Incentives

Is EVA a good metric to determine incentive compensation awards at the corporate level? Why?

  Mehul Doshi
CxO / Board, India
 

EVA as a Metric for Compensation/ Awards

Yes, EVA is a crucial one of the metric for compensation and awards.
EVA is linked to the business goal or target by business.
For example: in next two years the company in a particular segment should own 35 per cent market share with minimal profitability of 700 basis point.
EVA calculation over a two year period is considered where the manager or business head is free to act like a entrepreneur and shared cost are charged on his team. Over the two year, based on the project and innovation curve, the compensation is calculated by the organization. If the short term goals as per shared plan are achieved interim compensation is also reworked. However EVA is just one of the parameters and not the only one. It is added as a KPI in certain organizations.

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