Hello again, Savio : )

I am a large proponent of EVA-based compensation, as opposed to EPS growth, or stock price growth. Question for you: how as a shareowner do I collect on the delivery of EVA? What is my residual claim on this thing called Economic Value Added? Isn't my only claim to EPS? Or to dividends declared by the board? Isn't EVA interested in the overall success of the entire business, and not just one claimant, shareholders? If I truly managed a business for the benefit of shareholders I would lever the heck out of the balance sheet, use any residual income to buy back shares so that there was only one shareholder who collects all of that subsequent residual. Put another way, how is it that EVA is in accord with shareholder value? What if I only want to hold the stock for 2 months - that is a time horizon that won't witness the next EVA calculation? Managing the business for shareholder value demands that I be treated equally to the person who gets a residual claim on EVA at its next calculation, too.

For me, the way out of this pickle, and implied in your own points, is that business managers must manage the business and in alignment with the life span of the corporation, namely perpetuity. EVA is an appropriate measurer of this philosophy and therefore appropriate for compensating management. But here the focus is not on one claimant, it is on the entirety of the business, and businesses per the income statement, have many claimants.

Again, as always, respectfully yours,

Jason