# kaal:claim:2097160-027

**Claim.** Executives paid in contingent convertible bonds have an opportunistic reason to manipulate the triggering event, because conversion at a depressed price before or during a crisis hands them cheap stock.

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

**Holds when.**

- executives compensated with contingent convertible bond instruments
- payoff from conversion is substantial

**Source quote.**

> If SIFI executives are compensated with contingent convertible bond instruments, opportunism could lead them to manipulate the triggering event to obtain stock upon contingent convertible bonds' conversion at a depressed price before or during a crisis.192

**From.** Wulf A. Kaal, *Contingent Capital in Executive Compensation* (2012), V.C Design Features to Avoid Abuse, 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

**Failure mode.** Trigger manipulation for cheap stock  (family: trigger-design-failure)

**Topics.** contingent-capital, corporate-governance

**Keywords.** trigger-manipulation, opportunism, abuse, executive-compensation

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