Working paper · Theory · September 2026
Who Must Consent to an Incentive Sale?
Financing and Amendment Rights
Motivating setting
An artist signs a management agreement. A financier supplies the money, a manager is hired to develop the artist’s career, and the artist agrees to share future revenues. Before development begins, the financier offers to buy the manager’s future incentive compensation. The artist’s contractual payment schedule does not change. Why, then, should the artist have any say?
Abstract
The financing value of consent
A financier can buy a developer’s incentive pay, redirecting development while leaving the affected creator’s contractual share unchanged.
Stability against this buyout restricts pledgeable income. The paper prices the creator’s right to veto the sale by comparing optimal organizations. In the explicit region solved in the paper, the unprotected optimum uses work projects to subsidize personal development through a public lottery, while protection combines both activities within one project.
The maximum financeable cost of consent reflects the resulting saving in convex development costs. It falls with creator wealth, rises with cost curvature, and falls with covered income at a fixed development technology. A veto over another party’s compensation can therefore have financing value even when the veto holder’s own share is unchanged.
Core mechanism
Why a sale of someone else’s pay matters to the artist
Incentive exposure
Contingent manager compensation directs development toward opportunities that still require the artist’s later participation.
Incentive sale
A financier can buy that contingent compensation for a fixed payment, making a cheaper work-oriented direction attractive.
Creator externality
The artist’s contractual share is unchanged, but the composition of future income and opportunities changes.
Consent right
Creator consent can preserve the manager’s incentive exposure and relax the financing distortion caused by anticipated buyouts.
Organizational comparison
Without consent
Work projects cross-subsidize personal-development projects through a public lottery.
Organizational comparison
With consent
One project can sustain an interior development direction because the manager’s bonus is protected against buyout.
Applications
Beyond artist management
The same logic can apply when one participant’s incentive stake affects opportunities that require another participant’s continued effort. The paper discusses film and technology as additional settings, alongside artist-management contracts.