The goal of this research is to present a framework for the understanding of CEO compensation in the U.S. defense and aerospace industry. Previous research utilizing agency theory, contract theory, and governance theory to predict CEO total compensation has been inconclusive, possibly due to the proliferation of stock options and the different research methods and moderating variables used in past research.

In this research no significant relationship was discovered between total CEO compensation and percentage change in stock market return and percentage change in return on equity. This agrees with previous findings. A positive relationship was found between CEO total compensation and proxies for firm size such as sales, assets, and number of employees and agrees with past research. CEO characteristics such as age, tenure in present position, and stock ownership were found to have a slight positive relationship to total CEO compensation and this agrees with past research.

Social comparison theory was examined as an additional influence on CEO total pay. The number of CEOs on the board of directors would serve as a proxy on peer criterion such as social capital and human capital. In the study sample, 47% of the members of the board of directors were either past or present CEOs. A positive correlation between the number of CEOs on the board of directors and CEO total compensation was discovered. This would indicate the number of CEOs on a corporation's board of directors would influence executive compensation, regardless of the CEO's performance in managing the corporation. The social dimensions of past or present CEOs serving as outside directors on the board and their affect on CEO total compensation is unknown and future research is needed in this area.