Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18895
Authors: 
Ponssard, Jean-Pierre
Larmande, François
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper 1257
Abstract: 
Incentives theory suggests that compensation schemes should be analyzed along two dimensions: controllability and congruence. Most schemes cannot satisfy both criteria at once. EVA bonus schemes, a major managerial innovation of the 90's, favor the congruence criterion. This paper questions ist properties along the controllability dimension. The question is addressed through an in-depth case study: after three years in operation the actual bonuses paid by the system, as well as qualitative feedback from the managers involved, are analyzed. It is argued that EVA bonus schemes may have a major controllability problem.
Subjects: 
EVA management compensation
controllability-congruence trade-off
compensation standards
JEL: 
M52
J33
D8
Document Type: 
Working Paper

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