kaal:claim:2097160-037

Contrary to Gordon's view that contingent convertible bonds do not address the Fuld Problem, if executive packages do not include a large equity portion, managers have no incentive to block an equity infusion in order to preserve the value of their own equity.

Source quote, verbatim

If executives' compensation packages do not include a large equity portion, managers have no incentive to avoid an equity infusion to preserve the value of their own equity.257

From

Wulf A. Kaal, Contingent Capital in Executive Compensation (2012), VI.B Improving the Creditor-Centered Approach, p. 65
https://ssrn.com/abstract=2097160 · source PDF

Cite as

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

Holds when

a large part of equity-based executive compensation is replaced with contingent convertible bonds

Classification

mechanismsupport: arguedinstitutional-design

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