The study investigates the effect of director effort and risk-taking on director compensation. The study divided the compensation from its structure into three types: non-incentive compensation, incentive compensation, and total compensation. Moreover, incentive compensation is considered to strengthen the motivation of supervision, so this study focuses on the director incentive compensation. The director effort is measured by firm performance and earnings quality. The study collected the research samples of listed companies and OTC in Taiwan Stock Exchange from 2008 until 2012. The results show that the amount of director compensation is influenced by the agency problem. If the company has better firm performance and more sever earnings management, it would higher the levels of incentive compensation. When the earnings of a company have a high quality, the levels of incentive compensation would be relatively low. It means the more strong the agency conflicts, the more need to rely on the level of incentive director compensation. In addition, if the firm complexity is higher, company would pay more incentive compensation to directors to oversee management, that can avoid damaging the value of the company. Moreover, shareholders would give higher compensation to motivate directors to make oversight behavior of managements if the company’s financial risk is higher. In addition, the results show earnings conservatism effectively suppress the excess directors compensation, while the company would be willing to give more compensation to directors as an incentive. Then, the study also finds that this negative relationship is larger for firms with higher compensation earnings coefficients. Finally, the more independent and professional of the compensation committee, the more able to effectively inhibit excess directors'' compensation.