# kaal:claim:2097160-006

**Claim.** Analyzing executive compensation as a single contract between an executive agent and a corporate principal fails, because it ignores the informal relational element of the principal agent relationship that often overshadows the legal terms of the agreement.

**Type.** failure  **Support.** argued

**Holds when.**

- executive compensation contracts
- classical contract model or spot contract model

**Source quote.**

> Using a model for the analysis of executive contracts that is based on the single contract between the executive–agent and corporation–principal would ignore the informal relational element of this principal– agent relationship.

**From.** Wulf A. Kaal, *Contingent Capital in Executive Compensation* (2012), IV. Incomplete Contract Theory, page 26

**Cite as.** Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160

**Verify.** sha256 of source PDF `1e1f8aa246bce19f4658dbceb455c7c2a272aa5d63a9e9bdaa46a3a5a87680fc` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202012%20-%20Contingent%20Capital%20in%20Executive%20Compensation.pdf

**Failure mode.** Spot contract blindness to relational elements  (family: research-design-limitation)

**Topics.** ai-and-agents, corporate-governance

**Keywords.** incomplete-contracts, relational-contracts, principal-agent, executive-compensation

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