This study empirically examines how ESG performance is interpreted in capital markets and investigates the moderating role of CEO compensation structure in this process. Drawing on signaling theory, we argue that the capital market effect of ESG performance depends not on the level of ESG scores alone, but on the credibility of the signal conveyed to investors. Specifically, we hypothesize that a higher degree of performance-sensitivity in CEO pay strengthens the credibility of ESG disclosures as a reliable signal of managerial commitment. To test this, we construct a panel dataset of Korean listed firms from 2015 to 2024, combining ESG ratings with CEO compensation disclosures, and employ firm fixed-effects panel models. The results show that ESG performance is, on average, negatively associated with firm value. However, this negative relationship is significantly mitigated in firms where a larger proportion of CEO compensation is performance-based. Sub-component analyses further reveal that the moderating effect is more pronounced for the Social and Governance dimensions of ESG. These findings reinterpret the capital market effect of ESG performance through the lens of conditional signaling, and highlight the importance of managerial incentive structures in determining how ESG disclosures are received by investors.