Using survey data from 1,000 Korean firms, this study investigates the effect of performance-based pay on the employment of older workers. We found that performance-based pay was negatively related with hiring older workers. We found that performance-based pay was negatively related with both the share of older workers and the share of old hires. To recheck the effect of performance-based pay on older workers, we divided performance-based pay into several sub-groups. According to institutionalization theory, early adopted and high coverage among employee implies more genuine type of performance-based pay compared to late adopted and low coverage among employee. We found that only the more genuine type of performance-based pay, that is early adopted and programs with high coverage, was negatively related with hiring older workers. Finally we suggested the implications of our findings and proposed further research questions.