This study employs the quantile regression model to examine the non-monotonic impact of CEO stock-based compensation on firm performance, using the data for U.S. non-financial firms from 1993 to 2005. The results indicate that while the impact of CEO stock-based pay on firm performance is positive for firms in the higher earnings quantile levels, the impact is negative for firms in the lower levels. In addition, the “V-shaped” relationship between CEO stock-based pay and firm performance satisfactorily explains the longstanding disagreement among earlier studies with regard to whether CEO stock-based pay can enhance firm performance.