Explain the process to adjust the EVA to include “serving the community rather than making money” into the equation
Video – Economic Value Added (EVA)/Measure for Senior Executives Compensation Package
You are a compensation consultant for a human resources company. You are to assign Economic value added (EVA) for the economic performance (profitability) of the merger and acquisition of the newly acquired healthcare organization. EVA is often used to set bonus amounts for senior executives. The main theme is that EVA is linked to owner’s wealth, so an executive compensation system that rewards EVA creation will benefit owners.
Review the following video:
//www.youtube.com/watch?v=_56vCwvdkys (4:37)
Be prepared to explain:
the components used in calculating EVA.
what these components of the EVA imply in creating the economic value.
Consider these questions for discussion:
Does it make sense to tie not-for-profit executive bonuses to economic performance? Defend the response.
Explain the process to adjust the EVA to include “serving the community rather than making money” into the equation.
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