Executive incentive contracts are designed to align managers’ decisions with shareholder interests, yet their effectiveness may depend on how firms shape reported outcomes through real activities. Against this backdrop, this study examines whether four common incentive channels, salary, equity, perks, and the external executive pay gap, are associated with corporate performance, and whether real earnings management conditions these relationships. Using panel data for 917 Chinese listed firms from 2012 to 2023, estimate firm and year fixed-effects models and cluster standard errors at the firm level to account for unobserved heterogeneity and within-firm correlation. Corporate performance is regressed on the four incentive measures and real earnings management, with interaction terms to test the moderating role of real earnings management. Robustness checks include alternative performance proxies, additional control structures, and winsorization. Results show that executive salary, executive equity, and the external pay gap are positively related to corporate performance, whereas executive perks are negatively related. Real earnings management is positively associated with performance and significantly moderates the incentive-performance links. Specifically, real earnings management strengthens the positive effects of salary and equity, attenuates the negative association between perks and performance, and weakens the positive association between the external pay gap and performance. These patterns remain stable across robustness tests. The findings indicate that incentive schemes do not operate in isolation: their governance value is closely tied to firms’ reporting behaviour. By documenting how real earnings management reshapes the performance implications of different incentive components, the study offers evidence that helps reconcile competing views on incentives and highlights the importance of considering real activities when evaluating executive pay design.