The determination of management compensation has been the subject of extensive research in the strategic management literature, with a focus on the association between company performance and senior management pay (e.g., Buck, Bruce, Main, & Udueni, 2003; Conyon & Leech, 1994; Jensen & Murphy, 1990). However, much of the evidence from empirical research on the determinants of executive pay has failed to document a robust pay–performance link (Barkema & Gomez-Mejia, 1998; Conyon, Gregg, & Machin, 1995). Thus, research efforts have been increasingly directed toward seeking alternative social and political explanations for executive pay (Chhaochharia & Grinstein, 2009; Conyon & Peck, 1998; Finkelstein & Boyd, 1998; Finkelstein & Hambrick, 1989; Firth, Fung, & Rui, 2006; Henderson & Fredrickson, 1996; O’Reilly III, Main, & Crystal, 1988; Sanders & Carpenter, 1998). For example, O’Reilly III et al. (1988) document strong associations between CEO compensation and the compensation level of outside members of the board of directors, especially those who serve on the compensation committee, suggesting that social comparison has an importance influence on CEO compensation levels. Finkelstein and Hambrick (1989) find that CEO pay is linked to several factors such as firm size, operation complexity, financial performance, CEO power, board vigilance, and the CEO’s human capital, indicating that CEO compensation is influenced by a complex web of market and political factors. These studies suggest that it is important to comprehend executive compensation from multiple perspectives, including economic, social, and political perspectives (Finkelstein & Hambrick, 1988). Executives throughout the world have political connections (Boubakri, Cosset, & Saffar, 2008) and have a considerable impact on the operations and performance of firms (Faccio, 2006; Fisman, 2001; Hillman, 2005; Johnson & Mitton, 2003). As such, executive political connections may be an important determinant of executive compensation. However, the relationship between political connections and executive pay has received scant attention. We fill this void in the literature by examining the role of political connections possessed by chief executive officers (CEOs) in influencing firm performance and CEO pay. This study draws on resource-dependence theory, which suggests that CEOs with political connections help a firm to secure resources and better manage a challenging environment (Pfeffer & Salancik, 2003). This perspective enables us to focus on the value of political connections in creating competitive advantages for firms in light of management and economic literature on the implications of political connections. We argue that CEO political connections are strategically important for firms to gain political legitimacy and acquire access to government-controlled resources and should therefore be an important determinant of CEO pay. Using private Chinese firms listed on either the Shenzhen or the Shanghai stock exchange between 2005 and 2012, we find that the political connections of CEOs have a positive impact on both firm performance and CEO pay, and that this effect is stronger in less-developed regions. Further analyses indicate that, for CEOs with local political connections, the positive impact is not affected by regional economic development.