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Cynical 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 boos

Cynical 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 ago
I 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 ago
  I 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 ago
    Sometimes 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).
    - justincormack 14y ago
      If it is an obligation then it is not a bonus. It may be a tax avoidance scheme. Executive pay is in most cases not performance related and is a fairly corrupt scheme alas. Rewards for failure are far too common.
larrys 14y ago
I don't think that it's cynical at all to consider that. I wish people also would stop jumping all over someone just because they raise a particular possibility for consideration and debate (noting you prefaced by saying "cynical wondering" to lessen the ire of anyone who might jump on you for being cynical.) One issue though. I wonder what the tax aspect is of getting a 3 million dollar bonus and giving it away. The story says this: "The CEO of Lenovo, Yang Yuanqing, recently received a fat bonus of $3 million. Rather than stuffing that big bonus away in his own bank account, Yang Yuanqing gave it away." So by "recently received" Yang received the money. So that is a taxable event (assuming US). You can't receive money and not pay taxes on it no matter what you do with it. (Even if you throw it in the trash can it's still taxable). To answer my own question the story might leave out an important detail. That the CEO had the right to the money but said "disburse to the employees instead". That's the same thing but lacks the tax implication as the money was never received. But it would lean more toward your "cynical" view. (Good thinking by the way).
- justin66 14y ago
  > To answer my own question the story might leave out an important detail. That the CEO had the right to the money but said "disburse to the employees instead". That's the same thing but lacks the tax implication as the money was never received. But it would lean more toward your "cynical" view. If it was possible for him to do that, it would have been wise and there's nothing cynical about it at all. Those employees would be on the hook for income taxes regardless, so it's all the same to them. If the CEO gets the money first, the total going to employees is reduced by the fraction represented by the taxes he pays, or he pays the taxes out of pocket. None of the parties involved benefit from that.
- vacri 14y ago
  So by "recently received" Yang received the money. Not at all. It may have been calculated and declared, but the actual funds not transferred yet.
ajross 14y ago
Or more subtly cynical: it's a way to boost net wages without actually increasing salaries. This is a real problem in the PRC, where the enormous trade surplus has left an artificially depressed local currency. Workers are being paid much less than they should/would be in an unrestricted exchange environment. The whole point of the managed exchange rate is to keep salaries low of course (and thus preserve that trade surplus), so there's no doubt pressure on executives from boths sides: underpaid workers and government regulators trying to avoid a wage explosion.
- koide 14y ago
  This one gets my vote. But I honestly don't see what's the problem with such a technique. Of course it would be better for the employees to get a raise. But it would certainly be worse to get nothing at all. If they get something (money) and the company gets something (loyalty), it's a win-win. Could be better for the employees, I agree, but that's a bit unrealistic these days for the reasons you mention.
  - gcb 14y ago
    If you make 80% of your main source of income as a bonus (as i did on my 1st job in a newspaper that did that to avoid paying extra for the daily overtime) then you have very little security and leeway in negotiation. That job had one good thing. It vaccinated me against the lousy startup mentality that you must work overtime Fridays and showup weekend after launches because you have "equity"
numbchuckskills 14y ago
Really? Most ceo's get great performance based bonuses. $300 could be a lot depending on where the employees are located.

unreal37 14y ago

I 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 ago
I 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 ago
  Sometimes 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).
  - justincormack 14y ago
    If it is an obligation then it is not a bonus. It may be a tax avoidance scheme. Executive pay is in most cases not performance related and is a fairly corrupt scheme alas. Rewards for failure are far too common.

larrys 14y ago

I don't think that it's cynical at all to consider that. I wish people also would stop jumping all over someone just because they raise a particular possibility for consideration and debate (noting you prefaced by saying "cynical wondering" to lessen the ire of anyone who might jump on you for being cynical.) One issue though. I wonder what the tax aspect is of getting a 3 million dollar bonus and giving it away. The story says this: "The CEO of Lenovo, Yang Yuanqing, recently received a fat bonus of $3 million. Rather than stuffing that big bonus away in his own bank account, Yang Yuanqing gave it away." So by "recently received" Yang received the money. So that is a taxable event (assuming US). You can't receive money and not pay taxes on it no matter what you do with it. (Even if you throw it in the trash can it's still taxable). To answer my own question the story might leave out an important detail. That the CEO had the right to the money but said "disburse to the employees instead". That's the same thing but lacks the tax implication as the money was never received. But it would lean more toward your "cynical" view. (Good thinking by the way).

justin66 14y ago
> To answer my own question the story might leave out an important detail. That the CEO had the right to the money but said "disburse to the employees instead". That's the same thing but lacks the tax implication as the money was never received. But it would lean more toward your "cynical" view. If it was possible for him to do that, it would have been wise and there's nothing cynical about it at all. Those employees would be on the hook for income taxes regardless, so it's all the same to them. If the CEO gets the money first, the total going to employees is reduced by the fraction represented by the taxes he pays, or he pays the taxes out of pocket. None of the parties involved benefit from that.
vacri 14y ago
So by "recently received" Yang received the money. Not at all. It may have been calculated and declared, but the actual funds not transferred yet.

ajross 14y ago

Or more subtly cynical: it's a way to boost net wages without actually increasing salaries. This is a real problem in the PRC, where the enormous trade surplus has left an artificially depressed local currency. Workers are being paid much less than they should/would be in an unrestricted exchange environment. The whole point of the managed exchange rate is to keep salaries low of course (and thus preserve that trade surplus), so there's no doubt pressure on executives from boths sides: underpaid workers and government regulators trying to avoid a wage explosion.

koide 14y ago
This one gets my vote. But I honestly don't see what's the problem with such a technique. Of course it would be better for the employees to get a raise. But it would certainly be worse to get nothing at all. If they get something (money) and the company gets something (loyalty), it's a win-win. Could be better for the employees, I agree, but that's a bit unrealistic these days for the reasons you mention.
- gcb 14y ago
  If you make 80% of your main source of income as a bonus (as i did on my 1st job in a newspaper that did that to avoid paying extra for the daily overtime) then you have very little security and leeway in negotiation. That job had one good thing. It vaccinated me against the lousy startup mentality that you must work overtime Fridays and showup weekend after launches because you have "equity"

numbchuckskills 14y ago

Really? Most ceo's get great performance based bonuses. $300 could be a lot depending on where the employees are located.