# kaal:claim:1558614-036

**Claim.** The German legislature enacted the VorstAG on the premise that managers who emphasize short term parameters lose sight of the corporation's long term benefit and are thereby incentivized to take irresponsible risks, and it accordingly required compensation reduction in a corporate crisis, a D&O deductible, and deferred payout of performance based pay.

**Type.** design  **Support.** evidenced

**Holds when.**

- German stock corporations subject to the VorstAG of August 2009

**Source quote.**

> "managers who emphasize short-term parameters in manage- ment lose sight of the long-term benefit of the corporation and are 185 incentivized to take irresponsible risks,"

**From.** Painter and Kaal, *Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in* (2010), IV.D. Other Recent Developments, page 43

**Cite as.** Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

**Verify.** sha256 of source PDF `e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Painter%20and%20Kaal%20-%202010%20-%20Initial%20Reflections%20on%20an%20Evolving%20Standard%20Constraints%20on%20Risk%20Taking%20by%20Directors%20and%20Officers%20in.pdf

**Topics.** corporate-governance, risk-and-incentives, law-and-legal-systems

**Keywords.** executive-compensation, vorstag, short-termism, personal-liability, german-regulation

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