This study has several limitations. First, we use data from SOX 404 internal control reports by focusing on firm-years with both CEO and CFO compensation data from ExecuComp, which consists of fairly large firms. Using accelerated filers that disclose control weaknesses limits the generalizability of the results. In addition, CFOs are only included in the ExecuComp data, and this sample, if they are among the top five highest paid executives of the firm. To the extent that CFO pay reflects their importance within a firm, the results may not generalize regarding firms whose CFOs are not among the five highest paid executives. Third, the statistical power of the various tests performed may be low due to the small sample size. Fourth, it is possible that the results are an artifact of unobserved factors that affect the relation between internal control quality and performance-based compensation. Finally, given that audit failures are possible for SOX internal control reporting, to the extent that managers are able to hide weaknesses from the auditors, our measure of internal control quality may not include all firms with ICWs.