We investigate the compensation plans during China’s split share structure reform, a unique event that affected the whole market and in which investors' opinions over stock values can be measured. We find that anchoring effects and accruals biased investors' valuation. While previous studies have observed investor's biased belief from their irrational trading behavior, our study provides direct evidence of their biases about stock values. In particular, the compensation ratio was lower for stocks with prices closer to the historical high and further from the 52-week high, for stocks with higher accruals, and for stocks with higher misvaluation relative to industry peers. In addition, we find a strong herding effect to the compensation ratios of firms that had already completed the reform. These results are robust to controls for the effects of risk sharing, differences in bargaining power, the price impact from the increased number of tradable shares, and liquidity.