This paper examines the moderating effects of product market competition on the relationship between a firm and its CEOs. The predictions of managerial talent hypothesis and risk-differential hypothesis were tested using a sample of publicly traded firms in the high-tech industry in Taiwan. The results indicate that product market competition negatively moderates the relationship between firm performance, R&D activity, investment diversity and the firm's CEO compensation. These results provide evidence for the risk-differential hypothesis, under which executives may consider risk more important than incentives when they are in a highly competitive product market.