There is a substantial body of research aimed at understanding the setting of CEO compensation. The bulk of this work is predicated upon the agent principal framework which suggests that CEO pay is linked to firm performance. In spite of extensive testing, the agency theory pay–performance sensitivity prediction has not been supported. Faced with the realization that purely economic models do not explain CEO compensation decisions, agency theory researchers have begun to integrate other constructs, such as strategy and contingency theories into their efforts. This study examines whether there is an industry effect on the relationship between CEO compensation and its determinants. Three distinct industry cohorts, drawn from the firms listed in the 2005 S&P 500, are examined. Regression analysis reveals inter-industry differences in the relationship between CEO compensation and firm size and CEO compensation and return to shareholders. Net income is not a significant predictor in the pooled sample or any of the individual industry cohorts. The study finds that disaggregating data by industry clarifies the compensation/determinant relationships that are homologized in pooled samples. Significant predictors emerge in pooled samples that are not revealed in individual industry analysis and vice versa. Furthermore, the strength of the variables’ correlation with compensation varies significantly across the industry cohorts. This study contributes to a limited amount of existing research examining the industry effect on compensation decisions and provides empirical support for additional research in this area.