Abstract: Based on the theory of tournaments and the theory of social comparison, this paper explores the differential impact of the internal pay disparities on the innovation performance of executives from the perspective of vertical pay disparities and horizontal pay disparities. According to the empirical study of the resume data of executives of listed companies in China from 2007 to 2016, it is found that the pay disparities between CEO executives and VP executives contribute to the improvement of corporate innovation performance. The horizontal pay disparities have a significant inverted U-shaped relationship with corporate innovation performance. This paper deepens the research on the relationship between pay disparities and enterprise innovation, and clarifies the applicability of tournament theory and social comparison theory in explaining the impact of different dimensions of salary gap within the top management team in the context of high power distance in China.