Military veterans on the board and executive compensation


Purpose: The purpose of this study is to examine the relationship between independent director military service and monitoring effectiveness, focusing on chief executive officer (CEO) compensation.

Design/methodology/approach: The authors identify independent directors with military experience using BoardEx data. The authors focus on the level of CEO compensation. The methods used include panel data estimation, propensity score matching analysis and instrumental variable analysis.

Findings: The authors find more powerful CEOs are more likely to appoint independent directors with past military service to the board. Boards with a larger proportion of independent directors with military experience tend to award higher levels of CEO compensation. Moreover, the positive relationship between independent directors with military experience and executive compensation is stronger when the CEO is more powerful.

Originality/value: This paper examines a relatively unexplored director background, directors with military experience, and finds this type of independent director is associated with weak monitoring. The authors contribute to the literature examining the effect of executive and board member military experience on corporations. The authors identify weak monitoring of powerful CEOs as a potential weakness of directors with military experience. This drawback should be considered before appointing a director with military experience to the board.


Finance and General Business

Document Type





CEO compensation, Corporate governance, Military executives

Publication Date


Journal Title

International Journal of Managerial Finance