# Executive compensation `kaal:entity:executive-compensation` **Status.** derived This node is assembled mechanically from the 12 claims that carry the concept tag `executive-compensation`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 12 claims across 5 works, 2010 to 2025. **2010** - [1558614-036](https://wulfkaal.github.io/claims/1558614-036) [design/evidenced] -- The German legislature enacted the VorstAG on the premise that managers who emphasize short term parameters lose sight of the corporation's long term benefit and are thereby incentivized to take irresponsible risks, and it accordingly required compensation reduction in a corporate crisis, a D&O deductible, and deferred payout of performance based pay. > "managers who emphasize short-term parameters in manage- ment lose sight of the long-term benefit of the corporation and are 185 incentivized to take irresponsible risks," Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614 **2012** - [2097160-001](https://wulfkaal.github.io/claims/2097160-001) [design/argued] *(failure mode)* -- Early European initiatives to put contingent convertible bonds into executive pay lack governance-improving designs; contingent convertible bonds with an early conversion trigger should be used in executive compensation instead. > Early initiatives by European SIFIs to include contingent convertible bonds in executive compensation packages lack governance-improving designs. This Article suggests the use of contingent convertible bonds with an early conversion trigger in executive compensation. Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-002](https://wulfkaal.github.io/claims/2097160-002) [design/argued] -- The methodological assumptions of incomplete contract theory improve the analysis of executive compensation arrangements relative to the classical and spot contract models normally used. > The methodological assumptions of incomplete contract theory can improve the analysis of executive compensation arrangements. Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-003](https://wulfkaal.github.io/claims/2097160-003) [definitional/argued] -- Contingent convertible bonds placed in executive compensation serve a different purpose than those sold to investors: the point is not capital infusion during a crisis but governance-improving design that optimizes management incentives. > bonds issued to investors, the emphasis for contingent convertible bonds in executive compensation is not on a capital infusion when the Systematically Important Financial Institution (SIFI) is in a crisis,13 but rather on governance-improving designs to help optimize management's incentives.14 Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-006](https://wulfkaal.github.io/claims/2097160-006) [failure/argued] *(failure mode)* -- 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. > 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. Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-009](https://wulfkaal.github.io/claims/2097160-009) [empirical/evidenced] -- Barclays's Contingent Capital Plan uses synthetic CoCos that simply lapse when the Group Core Tier 1 capital ratio falls below seven percent, rather than converting into equity. > Under Barclays's CCP, its "synthetic CoCos" simply lapse when the capital ratio falls below 7%.135 Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-026](https://wulfkaal.github.io/claims/2097160-026) [predictive/argued] *(failure mode)* -- Path dependencies in United States executive compensation culture could make it difficult to lower overall executive pay or to add new design elements such as contingent convertible bonds. > However, it is important to note that path dependencies in the executive compensation culture191 in the United States could make the lowering of overall compensation for executives and the addition of new design elements in executive compensation difficult. Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-027](https://wulfkaal.github.io/claims/2097160-027) [failure/argued] *(failure mode)* -- 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. > 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 Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 - [2097160-029](https://wulfkaal.github.io/claims/2097160-029) [design/argued] -- A mandatory holding period covering all equity securities executives hold in the entity they manage, applied after their contingent convertible bonds convert, would limit abuse of the trigger. > A mandatory holding period for all equity securities held by executives in the entity they manage195 after the conversion of their contingent convertible bonds into equity takes place would help limit possible abuse. Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160 **2013** - [kaal-2013-acomparativeperspectiveo-015](https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-015) [empirical/evidenced] -- The German Federal Court of Justice held in Mannesmann that directors breached their fiduciary duty by awarding a bonus of roughly seventeen million dollars to a chief executive whose tenure had substantially increased shareholder value, whereas Delaware courts imposed no liability for the far larger Ovitz payout in Disney. > decision in Mannesmann28 determined that the directors of the German Mannesmann AG breached their fiduciary duty to the company by awarding a bonus of approximately $17 million to the Mannesmann CEO whose tenure at Mannesmann resulted in a substantial increase of shareholder value. Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013) **2017** - [2957645-023](https://wulfkaal.github.io/claims/2957645-023) [mechanism/argued] -- Where conversion has a negative effect on stock price, management is further incentivized to maintain and manage risk in order to avoid reputational loss and the income reduction caused by losses in stock options. > In situations where conversion had a negative effect on stock price,49 management could be incentivized further to maintain and manage risk to avoid reputational loss and income reduction due to losses in stock Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645 **2025** - [5583610-032](https://wulfkaal.github.io/claims/5583610-032) [condition/argued] -- Using LER to secure say-on-pay support falls within Delaware's business judgment rule, which presumes good faith board decisions absent self-dealing or gross negligence. > LER in executive compensation aligns with Delaware's business judgment rule, which presumes that boards act in good faith unless self-dealing or gross negligence is evident, as upheld in Aronson v. Lewis. Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/executive-compensation.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.