EVA, MVA and CEO Compensation: Further Evidence

The relationship between corporate performance and executive compensation continues to be a highly charged topic, judging by the number of articles in both the popular business press and the academic literature. Agency theory and common sense alike suggest that there should exist a meaningful, objective link between the compensation of a chief executive officer and his or her contribution to the firm's performance. An effective compensation program should promote those actions by management which enhance a firm's performance, however measured. The objective of this study is to analyze the relationship between a company's performance-measured by EVA and/or MVA-and the compensation of its Chief Executive Officer.