# kaal:claim:2097160-025

**Claim.** Replacing stock options with contingent convertible bonds both lowers total executive compensation and disincentivizes short-termism and the executive focus on quarterly stock price performance.

**Type.** mechanism  **Support.** argued

**Holds when.**

- contingent convertible bonds substitute for equity-based compensation rather than adding to it

**Source quote.**

> If stock options are replaced with CCBs, not only would the total compensation for executives be lowered; short-termism and executives' focus on quarterly stock price performance would also be disincentivized.

**From.** Wulf A. Kaal, *Contingent Capital in Executive Compensation* (2012), V.B.2 The Benefits of Early Triggers, page 48

**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.** risk-and-incentives

**Keywords.** income-inequality, short-termism, stock-options, sustainability

**Related claims.**

- extended_by: https://wulfkaal.github.io/claims/2957645-023
- supported_by: https://wulfkaal.github.io/claims/2922176-004

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