Economic Value Added

This article in the WSJ reports that more firms are moving away from stock incentives and towards tying pay to "a nonstandard measure reflecting a company's operating earnings and cost of capital. Companies say the measurement, also called residual earnings or 'economic value added,' more closely links employees' incentives to spending and budget decisions they make." Some juicy quotes and two questions follow. I hope that students of Managerial Economics say "Duh" after reading the quotes.

Juicy Quotes

"'Whatever compensation scheme you have, that's exactly what your employees are going to respond to,' says Daniel
Rinkenberger, CFO of Kaiser Aluminum Corp.,which has used economic profit to decide short-term incentives for key
employees since 2006. 'It's driving them to do things our
shareholders want, like not having excess assets in the pool. It drives people to be more efficient in how they have inventory deployed.'

"PepsiCo's new focus on economic profit will lower its capital spending to about 4.5% of sales this year, down from an historical average of about 5.5%, says Mr. Johnston, because employees are making better decisions. The company also has been able to cut the sums of money it has tied up in accounts receivable and inventory, boosting cash flow."

Questions

1. Why does economic profit link employees' incentives more closely to the spending and budget decisions they make?
2. Which gives workers more autonomy, incentives tied to stock prices or those tied to economic value added?