Virgo pic is considering introducing a system of EVA and wants its managers to focus on the longer term rather than simply focus on the year-to-year EVA results. The business is seeking your advice as to how a management bonus system could be arranged so as to ensure the longer term is taken into account. The business is also unclear as to how much of the managers' pay should be paid in the form of a bonus and when such bonuses should be paid. Finally, the business is unclear as to where the balance between individual performance and corporate performance should be struck within any bonus system. The Finance Director has recently produced figures that show that if Virgo plc had used EVA over the past three years, the results would have been as follows: Required: 2004 2005 25m (profit) 20m (loss) 2006 10m (profit) Set out your recommendations for a suitable bonus system for the divisional managers of the business.

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