The current theories on the impact of compensation incentive on enterprise innovation mainly include tournament theory based on pay gap and principal-agent theory based on management compensation. By using the data of China"s non-financial A-share listed companies, this paper combines the salary gap with the management salary and finds that the internal salary gap is mainly caused by the high external salary premium of the management, and the promotion effect of pay incentive on innovation output is mainly generated through innovation investment. This empirical result is more suitable to be explained by principal-agent theory rather than tournament theory. Whether the widening of internal pay gap is conducive to enterprise innovation still needs more reasonable data and research design to confirm.