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Marathon Oil: Investors Incentives



June 28, 2011 – Comments (0) | RELATED TICKERS: MRO , XOM , CVX

Marathon Oil is one of the largest and most well known oil companies in the world. Many investors are familiar with them, and have probably considered investing with them a couple of times. Well, now might be a good time to consider them again. Their management has created strong incentives for investors, and are working hard to make their investors profit. Dan Dzombakdescribes the incentives in greater detail.


 "Creator Bennett Stewart of EVA Dimensions, who also co-created EVA (economic value added), calls EVA momentum “the only percent metric where more is always better than less. It always increases when managers do things that make economic sense.”

So what does this mean for investors? A positive EVA momentum reading means a company has created more value by increasing its EVA while a negative EVA momentum reading means EVA has decreased, signaling less value creation. EVA momentum is one of the few, if not the only, performance measures with such a clear dividing line between good and bad performance.

The best companies, then, create value in excess of their cost of capital, as reflected by positive EVA momentum. The higher the EVA momentum, the faster management is creating value."


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