This paper examines the impact of accruals quality on the stewardship value of earnings. Christensen, Feltham and Sabac (2005) illustrate that accrual noise, i.e., performance measure noise associated with accrual estimation errors, decreases the sensitivity of compensation to earnings by increasing the noise in earnings, and increases the sensitivity by decreasing the autocorrelation of earnings. Serving as a proxy for accrual noise, accruals quality is defined as the extent to which current accruals map into operating cash flow realizations. This paper presents empirical evidence that higher accruals quality leads to a greater incentive weight on earnings in compensation contracts. This implies that the noise effect dominates the autocorrelation effect in the association between accruals quality and the contracting role of earnings. Furthermore, accounting rigidness is defined as the degree to which the accounting system limits managerial discretion over accruals quality. The evidence indicates that CEO compensation is more sensitive to earnings generated by more rigid accounting systems. Additional analyses suggest that accruals quality and accounting rigidness provide incremental information regarding the pay-earnings sensitivity after controlling for the factors documented in prior studies.