Measuring the effectiveness of compensation contracts with pay for performance sensitivity, this study empirically tests the impact of auditor industry specialization on executive pay for performance sensitivity, and examines its influence channel and mechanism. The results found that auditor industry specialization can significantly enhance the sensitivity of executive compensation to performance; the quality of accounting information plays a part of the intermediary role; further analysis found that this effect was more pronounced in companies audited by high reputation auditors, companies which major shareholders’ control rights and cash flow rights are separated, companies heavily invested by institutional investors, and rapid growing companies. This study has enriched the research on factors affecting executive compensation incentives, external audit governance effects, and has practical guiding significance for optimizing executive compensation incentives.