Based on the Chinese A share main board listed companies of Shanghai and Shenzhen Stock Exchange during the year of 2008—2014, this paper not only portrays the situation of pending litigation of Chinese listed companies from such dimensions as the frequency of pending litigation, and the amount of money of the pending litigation during this period, but also examines the impact of pending litigation on pay performance sensitivity. The findings of our study are as follows. First, relative to the progress of litigation, the pending litigation can experience more significant reduction in the pay performance sensitivity than the settled ones. Second, the frequency of pending litigation and the amount of money of the pending litigation can lower the pay performance sensitivity. Third, the reduction of the pay performance sensitivity is more pronounced in the non state owned listed companies than in the state owned listed companies.