CEO bonuses rose dramatically last year, sparking criticism of the seemingly excessive levels of compensation for company leaders, especially when company performance does not increase at the same level. At 100 major U.S. corporations, CEO bonuses rose 46.4% to a median of $1.14 million, the highest level in five years according to Mercer Human Resource Consulting. The Mercer study also found that the median 2004 CEO bonus equaled 141% of annual salary, while clerical and technical-support staff earned an average bonus of 5% of salary.

The average CEO median direct compensation was $4,419,300, about 160 times as much as the average U.S. production worker made last year. While some CEOs excessive compensation increases can be linked to improvements in company performance and bottom line profitability, some CEO bonuses are hard to justify in light of the events that followed. For example, Disney's Michael Eisner received a $7.25 million bonus for a healthy earnings recovery that year, in spite of the shareholder revolt that put him out of his job last March. At Shaw Group, Inc. CEO Jim Bernhard Jr. received a $238,000 bonus for a year in which the company lost $31 million. Carly Fiorina, Hewlett Packard's CEO received a $1 million bonus for the first six months of 2004, and a $567,000 discretionary bonus in mid-December before being dismissed for poor performance two months later.

Boards defend the increase in CEO compensation as a reflection of increased profits and the diminished popularity of stock options as compensation.