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Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees
- mailarchis 14y ago"Yang earned around $14 million last year alone, making $3 million pretty insignificant " - He distributed close to 21% of his annual earnings. That is significant
- dsr_ 14y agoThat's nice. I wonder what the tax consequences were.
- wtvanhest 14y agoThey should have been zero for him and an increase of $314 USD in revenue per employee.
- dsr_ 14y agoNot necessarily. I don't know the tax code in Taiwan at all. In the US, he might have received the $3 million, paid income tax on it, and then gifted it to each employee, who would not have to pay tax on it. Or he could have asked the Board of Directors to not pay him the money at all, in which case he would not pay taxes on it, but each recipient would have to count it as income for tax purposes.
- wtvanhest 14y agoThere is no reason he would have actually taken the $3m, then redistributed it. Sure, you can make that assumption but it is the least likely event happening possible.
- larrys 14y ago"he would have actually taken the $3m" Story implies he received the money. "Rather than stuffing that big bonus away in his own bank account"
- biot 14y agoFortunately, this story was written for average people to read and took liberties in the wording used, resulting in a possibly ambiguous interpretation. Had it been written in the precise language of tax accountants, such ambiguities would not be present and we would have been spared an entire thread of mental masturbation over the tax implications of such a disbursement.
- wtvanhest 14y agoThe story doesn't necessarily reflect reality. It is always safe to assume what you know is probably true rather than trust an author who's job is to write quick and get hits on their site. Like I said, it is extremely unlikely he put the money in his bank account, then sent it to employees.
- juststef 14y agoNo, not at all. At least not if this were in the US (or he was a US citizen). I'm not sure what the tax system is like in Taiwan. If this were the US, he'd still have to pay income tax on the $3 million he received for payment for services, and he'd essentially gift the money over to the 10K employees. Your allowed to give each individual 13K (last time I checked) in gifts each year—but there's a lifetime limit to watch out for. In either case, even if there were issues with gift tax, it would be the gifter that would have to pay the tax, not the recipient. So, it would still be a win for the employees. Good for them, and for him.
- wtvanhest 14y agoI don't know Taiwan's tax laws either, but assuming they are similar to the US it is highly unlikely he structured the transaction that way. It is much more likely that before receiving the money he renegotiated a contract for the period and then had the company distribute the gain to employees rather than himself. That should result in zero tax liability for him.
- uptown 14y agoEquates to about $314, or a month's pay per employee by reported estimates.
- sharkweek 14y agoDefinitely not bad -- I can also really appreciate an even split to all employees -- I know some might view it as unfair that someone who just started might get the same bonus as a long term employee, but for just a windfall, I think it was a good idea to keep it all even.
- cheddarmint 14y agoAgree. It surely would also cost a lot of time (and therefore, money) to determine a 'correct' uneven distribution.
- Timst 14y agoIn fact, it was given only to junior-level employees, not to the biggest executives and top developers.
- keithpeter 14y agoI received the equivalent of a month's wages as a bonus when I met a certain set of criteria for my teaching. It was a nice pat on the back. This feels good.
- bconway 14y agoDepending on your location and level of teaching, how did your union feel about that (if relevant)? Every time we try to reward our best teachers, it gets blocked because it's not "fair" to those who didn't excel. Go figure.
- keithpeter 14y agoUK specific, in Further Education Colleges. A one off bonus payable when teachers met certain criteria: accessible to all teachers in the College, not any form of performance related pay or anything like that. Union were fine with that. There was also a government initiative known as 'the threshold' but that was a permanent uplift in pay, again depending on transparent criteria, and again accessible to all teachers after their 'probationary year' (first year of teaching) was completed.
- prayag 14y agoWow! All the praises aside (which Mr. Yuanqing deserves), it's interesting to see because he has ensured the loyalty of his employees to himself and to the company. It's not just a good personal move but an awesome business move too.
- rekwah 14y agoSmart move. I would presume that a gesture such as this buys him and Lenovo more than $3MM worth of good will/publicity. A nice counter to the "world dominating corporate overlord" impression most people have.
- vtry 14y agoWhen will US based CEOs start giving their workers their 300 million+ bonus?
- yashchandra 14y agoI really hope this sets an example for other CEOs and executives. It is not just about the money but about the gesture that says a lot about how much a company really cares about its employees.
- meninpink 14y agoSilly publicity stunt and unbecoming of the principles of the free market. He could have created a lot more value by investing the money in a high-powered startup; not passing handouts to janitors and secretaries.
- drieddust 14y agoHe has already done that by motivating his employee :)
- archildress 14y agoUgh, enough with the "free market". Are you familiar with the terms human capital? Social capital? Your perspective seems to suggest that any extra profit not invested in mergers and acquisitions is money wasted, but the fact of the matter is that moves like these are a sound investment and signals a commitment to building human capital.
- objclxt 14y agoIf you're so sure the 'value' being created here is so low why not quantify it? I don't see how you can declare 'he could have created a lot more value' when it seems to me the value here (the morale boost to the company, the goodwill engendered, etc) is somewhat unquantifiable.
- mikeash 14y agoPeople doing what they want to do with their own money is "unbecoming of the principles of the free market"? WTF?
- mattgreenrocks 14y agoHey, ease up. It must be terrible to be enslaved to a worldview that has accumulation of wealth as its ultimate goal.
- Flow 14y agos/accumulation/concentration/ is more like it.
- deleted 14y ago[deleted]
- toomuchcoffee 14y agoIt'd be nice -- though it ain't never gonna happen -- if C-level types were not coerced (heavens!), but just expected to tip all of their below-median workers some nominal percentage (like say 15-20 percent) of their annual bonus. For, you know, making it physically possible for them to earn that bonus in the first place.
- kapilkale 14y agoThis is great, but this statement from the author is a pretty terrible assumption: "It's nice to see an executive giving away a huge chunk of money to the employees that had as much to do with Lenovo's successful year as any executive within the company"
- swang720 14y agoI think that's the impression the CEO is trying to give. I think it's a smart move that will improve morale and confidence in the company.
- rayiner 14y agoWhy? Here in the US we have a cultural flaw where we irrationally conflate equilibria in the supply/demand of labor with distribution of credit for a company's success. The CEO gets paid a lot more because there is a much smaller supply of people who have the pedigree/qualifications to be CEO than to be a line worker. There is no chain of logic that can take you from there to the conclusion that he's more important to the success of the company than those 10,000 line workers.
- eliasmacpherson 14y agoI would take 10,000 Nokia staff over Elop any day of the week.
- twoodfin 14y agoOur numbers are getting out of hand here: Elop doesn't make close to 10,000x a typical engineer at Nokia.
- eliasmacpherson 14y agoIt's a bonus, not salary, the fact that it is > 10,000x a typical bonus speaks volumes.
- brazzy 14y ago
- nicholassmith 14y agoThis is good, and I don't think it's the first time it's happened recently. I think Notch did the same if I remember right. It works well for a model, creates long lasting loyalty for employees and good public feeling. Plus I bet the employees have got some smiles that'll take a while to shift, and that's really awesome.
- jakejake 14y agoI don't really think all that much about somebody who is fantastically rich giving away money that they won't miss. Although it's still somewhat cool because other fantastically rich people wouldn't do this and seem more concerned with increasing their own wealth to an obscene amount.
- HeyLaughingBoy 14y agoNow there's a backhanded compliment! Dude, it doesn't matter how rich he is. He gave away his own money to the people who are making him rich as a gesture of thanks and goodwill. WTF would you find anything to belittle that?
- jakejake 14y agoI agree it's a nice gesture & there's nothing negative about it. Just don't expect me to bow when you throw out a few scraps to us peasants. I'd be more impressed by somebody who is living check-to-check donating $10 to a good cause.
- malnourish 14y agoIt is our responsibility to do what we can, some can do more. Do not belittle those that are doing what they can. We must encourage the wealthy to give back, and snide remarks are certainly not encouraging.
- MattSayar 14y agoExactly. He didn't say, "Well, I guess I don't need this. Here, I'll just let my employees deal with it." He made a conscious decision to not increase his wealth for the benefit of others.
- keithpeter 14y agoMark Shuttleworth (Canonical/Ubuntu) is quite good on this idea. Shuttleworth sold Thawte to Verisign for quite a lot of money. He is on record as suggesting that there is only so much you can actually buy. Money should be used to make things happen. Whatever you think of Ubuntu, he has certainly done that.
- Avitas 14y agoThe corporation I work for hasn't bought a Lenovo branded anything. One could argue that the IBM PS/2s of the 80s might count. Heck, a few employees had our department order some PS/2 to USB adapters so they could keep banging away on the 20+-year-old Model M clickers that came with them. I happen to personally own a Lenovo and it's certainly top-notch. Perhaps we should think about getting new desktops from them instead of Dell and DFO. This classy move is another gold star for the CEO of a seemingly top-notch tech company.
- nateburke 14y agoGuts. This guy has guts. Hoarding away a 3m bonus like that has an implicit statement of "I'm afraid for my own fiscal future to the tune of 3m dollars" stamped on it. Instead, he gives it away, telling the world and his employees that he is confident, nay, OPTIMISTIC about the company's future. To contrast, take the typical American CEO: he or she would have taken this money, offshored it, spent another couple of years going to board meetings, and then jumped ship to another gig in some other company's c-suite. You know what I call that person? A COWARD.
- ef4 14y agoOf course it takes considerably less guts if you already have many millions in the bank.
- ralfn 14y agoA bit off topic, but anyway: In buddism, the term for discipline is the same turn used for morality. ( they dont make the distinction ) You, here, interrestingly, suggest that a relationship between morality and guts. Im not agreeing or disagreeing with anything in particular here. Just considered the contrast interesting.
- nateburke 14y agoI think this makes sense, personally. I have often found that it takes courage to follow one's own moral compass. Now does it follow that it takes guts to have discipline or vice-versa? I think so, more in the sense that it takes discipline to have guts. Courage (guts) has a shelf life--it needs to be exercised to be maintained.
- heyitsnick 14y ago>In buddism, the term for discipline is the same turn used for morality. ( they dont make the distinction ) What's the term?
- eswangren 14y agoIt's easy to call people cowards when you're not in their situation and likely never will be. I'd like to see what you would do if you actually made that kind of money.
- woobles 14y agoOne of my old bosses thought that all Lenovos possessed BIOS-level malware that could be activated at a moment's notice by the Chinese government should the US ever got to war with them. He was a weird dude.
- keithpeter 14y agoWould coreboot reassure the gentleman? Or would that be dismissed as an anarchist conspiracy? Seriously: are there any laptops/PCs still manufactured within the national borders of the US?
- woobles 14y agoI remain unconvinced that anything would assuage his paranoia, unfortunately.
- adestefan 14y agoI had a boss that thought the same thing. He shut up when we showed him an IBM branded ThinkPad with a "Made in China" sticker, but the new Lenovo branded ThinkPad had a "Made in Singapore" sticker.
- woobles 14y agoThat's JSUT what they want you to think!
- famousactress 14y agoCynical wondering: Is this real, or a clever way to package company-wide bonuses for PR? Seems like if your company just had a great year and you wanted to boost morale with 300$ bonuses, this is a way to do it and maximize press and positive attention in the process.
- unreal37 14y agoI worked at a smaller company (100 people in the local office) where the executives gave out a one-time $3,000 bonus per person (~ $300,000 total I figure) that came out of the bonuses they got from head office. They took a portion of their bonus and gave it to us. Not sure how much they got above that, but $300,000 is not chump change. Same concept as the Lenovo situation. I'm a cynic about many things, but I do believe that they could have kept the money if they wanted but decided to split it among the team. Earned my respect. I think this kind of thing builds internal loyalty way more than the external PR aspects.
- _delirium 14y agoI agree it's probably for internal loyalty, but I read the question as wondering whether it's this particular manner (give it to the CEO, who then chooses out of his munificence to donate it to the workers) that has extra effect over just changing the compensation structure. After all, if the CEO really thinks, as he says, that this is just giving the workers the share of the company's success they deserve, he is uniquely well situated to propose a change to the bonus structure so that, in the future, that would actually be how bonuses are distributed. But it might be that a $300/yr bonus delivered the normal way (via HR, according to an official bonus policy) wouldn't have the same PR effect as a bonus positioned as a personal donation from the CEO, even if it's the same amount of cash.
- jonnathanson 14y agoSometimes these things are actually accounting issues. Employee bonuses are operating costs. But executive bonuses are a more complex instrument, and are governed by different sets of accounting and fiduciary regulations. This is why, for instance, a firm may decide not to pay out bonuses to employees during a bad year -- but may still reward its top executives with hefty bonuses. The firm may actually be obligated to pay out the bonuses to its executives by way of their contracts, or in some cases, as scheduled advances on their insurance policies. (This latter practice is becoming increasingly common as a tax-deferral strategy).
- firichapo 14y agoWhat are the odds of this behavior becoming a trend between CEOs?
- marknutter 14y agoHow is this any different than, for instance, Steve Jobs taking only $1 per year in CEO salary?
- ww520 14y agoSteve Jobs taking $1 per year would give the benefits to the shareholders, not the employees. It would be the same if Steve Jobs gives his salary millions to the Apple employees.
- ams6110 14y agoWhat Steve did at Apple certainly did benefit employees, they're all still employed after all. And I'd guess many are shareholders as well. Double bonus.
- product50 14y agoHe is not giving away his salary but the bonus. All CEOs of major companies make more money through bonuses and stock options than just salary. This guy gave away his bonus away. Not sure I have seen a lot of that. To contrast see this guy who virtually destroyed Acer and still took away $43M - http://allthingsd.com/20120622/ousted-acer-ceo-gianfranco-lanci-cleaned-up-on-his-way-out/ http://allthingsd.com/20120622/ousted-acer-ceo-gianfranco-la...
- Yaggo 14y agoGreat. But makes $300 per employee. I got better bonus from a company barely making a profit.
- tomflack 14y agoDon't think in terms of USD, its 2000 yuan in a country where I eat a hearty breakfast that includes bottled water (a luxury!) for 3 yuan.
- DigitalSea 14y agoConsidering just how expensive everything has become, maybe the employee's can use that $300 to fill the gas in their tanks all the way up!
- yaix 14y agoThe question is, why does the CEO get 3 Million USD as a bonus in addition to his pay, while the secretary makes only about 300 USD a month? Its a good guesture of the CEO, no question. But it highlights the perverse difference in income between the different levels of employees. http://en.wikipedia.org/wiki/Gini_coefficient http://en.wikipedia.org/wiki/Gini_coefficient
- mathattack 14y agoThe real question is, "How much did he keep?" and "What was announced in advance?" One can look at Lenovo's financial statements to find his compensation plan. On page 66 of http://www.lenovo.com/ww/lenovo/pdf/report/E_099220120531d.pdf http://www.lenovo.com/ww/lenovo/pdf/report/E_099220120531d.p... it looks like his base pay is just over $1 million. Not shabby. He has up to 300% of his base as an incentive. That would give $3 million. Seems like unless they are paying him separately under the table, he really is giving up his full bonus. Just this once I won't be a cynic.
- astrodust 14y agoMaybe it's for tax reasons. Or he's going through a messy divorce and would rather set fire to the money than have to split it. Cynicism never fails me.
- known 14y agoIncentive Pay Considered Harmful http://www.joelonsoftware.com/articles/fog0000000070.html http://www.joelonsoftware.com/articles/fog0000000070.html
- michaelochurch 14y agoI tend to agree with the cynics who think that this a nice way of packaging a $300 bonus. It's not a bad thing to be doing, but I'm unimpressed. Non-Lenovo-specific rant: I know there's a lot of negative attention being given to "bonus" compensation for executives and high-ranking bankers, and I agree. I don't like the bonus model (for non-executives) either because it includes an implicit penalty for leaving a job except at a known time. It's why, if you're in a New York startup, you can't hire anyone from finance in October through December (or from Google in February-March). That said, the real fuck-up in executive bonuses and compensation isn't that good executives get huge bonuses. They should. I would rather have a good CEO getting a ridiculous package than a bad one. $20 million is chump change in comparison to the difference between a large company having a good CEO vs. a bad one. It can be worth 100 times that to have a good leader. The vomit-inducing criminality is that all big-company executives (even the incompetents and assholes) get million-dollar payouts, not for achieving anything necessarily but just for winning the social-climbing contest necessary to get those jobs. CEOs who actually build and maintain great companies, or who turn failing companies into great ones (as I hope Marissa Mayer does with Yahoo) deserve to get filthy rich. Shitty CEOs (most of them, since getting that job in most companies is mostly about social favor-peddling rather than competence) deserve jack shit. The real problem with executive compensation is not a moral issue (if they're excellent, they deserve it, because they're capturing less than 1% of the value they add) but that it seems to have a negative effect on performance: http://michaelochurch.wordpress.com/2010/11/22/pay-more-get-less/ http://michaelochurch.wordpress.com/2010/11/22/pay-more-get-... .
- iworkforthem 14y agoi dun see any GS or JP exec doing such things... could it be that lenovo is being mgmt by a china inc now.. some of the replies & cynics here is just ridiculous!