This technical note addresses the key issues involved in designing executive compensation systems in accordance with value-based management principles. It focuses on the use of Economic Value Added as a means of aligning managerial and shareholder agendas. The potential advantages of this approach are examined in detailed, as are the potential drawbacks and limitations.
The note is designed as a supplement to courses in corporate finance, financial management, organizational design, or any other course that addresses implementation of value-based management. It can also be used as a supplement to Groupe Schneider: Economic Value Added and the Measurement of Financial Performance by the same author.
- Economic Value Added
- Management Compensation
- Value Creation
