Two distinct mechanisms allow bank executives to personally profit from taking excessive risks: short-termism and convexity. While short-termism stems from time-horizon differences between bank management and shareholders, convexity results from manager-shareholder alignment because bank stock is a highly leveraged optionlike bet on the bank’s assets. Current U.S. policy initiatives intended to reduce risk taking do address short-termism but do not address convexity. I show how increased deferral periods, clawbacks, and penalties against bankers may backfire and increase the incentive to take risk if banks respond by granting even more of the convex stock units to management. Measures that would significantly reduce convexity-driven risk taking include replacing a portion of equity pay with concave instruments such as deferred forfeitable cash or contingent convertibles bonds, or increasing bank capital requirements.