This paper, using non-financial listed companies in Shanghai and Shenzhen A-shares from 2008 to 2020 as research subjects, empirically examines the impact of corporate digital transformation on the effectiveness of executive compensation contracts. The results show that corporate digital transformation significantly reduces executive compensation-performance sensitivity and increases executive overpay. The mechanism test finds that digital transformation gives management centralized decision-making autonomy and weakens external monitoring of management behavior, increasing management's ability to use its highly centralized power to influence the design of compensation contracts and obtain more private gains that do not match corporate performance, thereby reducing the effectiveness of executive compensation contracts. Heterogeneity analysis finds that the negative effects of firms undergoing digital transformation on the effectiveness of executive compensation contracts are dampened in firms with higher quality of internal controls or information disclosure. The findings of this paper provide empirical evidence for a comprehensive understanding of the economic consequences of corporate digital transformation, and also provide some reference for the development of executive compensation contracts in firms undergoing digital transformation.