Purpose <p>This study investigates how firm performance and compensation persistence influence executive pay in listed Indian firms. It further examines heterogeneity in the pay-performance relationship across ownership structure, firm age, and firm size to understand variation in executive compensation practices in the Indian setting.</p> Design/methodology <p>This study employs firm fixed effects estimators, supplemented by a dynamic panel framework estimated using the two-step system generalized method of moments, to analyze the relationship between firm performance and executive compensation in listed Indian firms over the period 2011–2022. The dynamic specification accounts for pay persistence and potential endogeneity between performance and compensation. Robustness checks include the use of Tobin’s Q, the inclusion of industry fixed effects, and the exclusion of crisis periods.</p> Findings <p>The findings show a positive association between firm performance and executive compensation, with both accounting returns and stock returns significantly influencing cash and total pay. Executive compensation also exhibits strong persistence. Furthermore, pay-performance sensitivity is more pronounced in business group-affiliated firms, mature firms, and large firms compared with stand-alone firms, young firms, and small firms.</p> Originality/value <p>This study advances the executive compensation literature by demonstrating that firm performance and its persistence systematically influence pay outcomes, with effects that vary across ownership structure, firm size, and firm age. By treating firm heterogeneity as a conditioning mechanism, the findings offer new evidence from an emerging market context. The institutional features of India, including its regulatory environment and the prevalence of business groups, provide a distinctive setting that extends existing findings beyond developed economies.</p>