An effective way to align bank managers' interests with shareholders' goal of higher returns is to compensate the managers with fixed salaries without a bonus.

Question

Quizplus · Accepted Answer

Compensating bank managers with fixed salaries without a bonus may not effectively align their interests with shareholders' goals of higher returns. Variable compensation, such as bonuses tied to performance metrics, is more likely to motivate managers to work towards increasing shareholder value.

An Effective Way to Align Bank Managers' Interests with Shareholders