This is a quantitative research based on secondary sources of data. The study examines the influence of Chief Executive Officer’s (CEO) compensation on a firm's performance. The objectives of the study were to determine if CEO compensation and firm size do significantly influence a firm’s performance. In other to elicit information to examine the relationship between the variables, the convenience sampling technique, with the combination of both the cross-sectional and time-series data (panel data) were used since they provide greater precision and guard against having an illusory sample. 10 banks quoted on the Nigerian Stock Exchange were sampled for easy accessibility of data. The least square regression technique was used to test the hypotheses of the study. Two hypotheses were tested using panel least square (EViews 8) and from the research work, we summarize the following results; there is a significant relationship between CEO compensation and firm performance in the Nigerian banking industry. In addition, firm size does significantly influence firm performance in the Nigerian banking industry. The study recommends that there should be proper compensation review as this will increase the productivity of the executives. Since increased pay is necessary for the efficiency of the workers, it is advised to ensure a considerable pay as this will ensure for efficiency in the organization. In addition, since the core goal of setting up any business is to make a profit, business organisations should sort out ways at maximising profit and this could include cutting down expenses such as cutting down excessive employees’ pay (CEOs pay especially) and setting apposite pay package for employees. Therefore, policymakers (board of directors) should make an effort to align CEO’s paywith the firm’s capability to pay.