The M&A compensation of the target CEO has an important impact on the decision making and merger and acquisition performance of the enterprise. Based on the empirical study of 2952 samples of M&A compensation from 2009 to 2021, the research finds that: when the synergy of M&A is low, the M&A compensation of the target CEO is significantly positively correlated with the M&A premium, which is more reflected in the improvement of the salary contract between the target shareholders and CEO; when the synergy between the two sides is high, the compensation is significantly negatively correlated with the M&A premium. The main mechanism of the existence of the compensation contract perfection hypothesis and the wealth transfer hypothesis is that there are significant differences in the possibility of CEO retention of the target under different synergies, and CEO retention plays an intermediary effect in the influence of M&A compensation on M&A premium. Further research found that the M&A compensation of the target has a significant positive impact on the the M&A performance, which indicates that from the perspective of the whole capital market, the M&A compensation of the target CEO is a kind of salary contract that “take into account the overall situation”.