This article uses the three-stage least squares method to estimate a simultaneous equation system for the banking industry in Taiwan. The empirical results show that: 1. The CEO compensation is not affected by firm performance, nor is it affected by employee compensation. 2. The higher firm’s performance, the higher employee compensation, and the greater the number of employees in the firm, the higher employee compensation. 3. The higher CEO compensation and employees compensation, the higher firm 's performance.