# kaal:claim:2097160-013

**Claim.** The early trigger converts only the executives' portion of debt into equity, ahead of investors' contingent convertible bonds and while the entity is still sound on a micro-prudential basis, which is what makes it an early warning system rather than a recapitalization device.

**Type.** definitional  **Support.** argued

**Holds when.**

- entity still sound on a micro-prudential basis at the time of conversion

**Source quote.**

> The early trigger converts only the portion of executives' debt to equity, before investors' contingent convertible bonds are converted, when the entity is still sound on a micro-prudential basis.

**From.** Wulf A. Kaal, *Contingent Capital in Executive Compensation* (2012), V.B.1 Automatic Institution-Specific Early Trigger, page 35

**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

**Topics.** contingent-capital

**Keywords.** early-trigger, early-warning-system, micro-prudential, trigger-design

**Related claims.**

- extended_by: https://wulfkaal.github.io/claims/2273857-056

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