Based on the samples from Chinese listed companies with either financial or non-financial dilemma during 2006-2012,this paper verifies the moderation effects of government subsidy by exploring the relationship among financial dilemma,excess compensation and compensation performance sensitivity.The result shows that government subsidy has positive effect on the relationship among these variables and government subsidy is an important way to get excess compensation for managers,which changes the compensation performance sensitivity for those listed companies with financial dilemma.The study shows that government subsidy will change the inhibition mechanism of financial dilemma on excess compensation,and reduce the incentive effect of the compensation contracts,which will provide new theoretical evidences for further improving compensation contracts and the rational distribution of the government subsidy.