

Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees - sharkweek
http://www.dailytech.com/Lenovo+CEO+Gives+Part+of+His+3+Million+USD+Bonus+to+10000+Employees/article25227.htm

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nateburke
Guts. 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.

~~~
ralfn
A 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
I 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.

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mathattack
The 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.p...](http://www.lenovo.com/ww/lenovo/pdf/report/E_099220120531d.pdf)
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
Maybe 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.

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famousactress
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.

~~~
larrys
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
> 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.

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Avitas
The 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.

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kapilkale
This 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"

~~~
rayiner
Why?

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.

~~~
brazzy
I'd say it's exactly the other way round: the CEO definitely has to make
decisions that impact the company far more than what 10,000 line workers do,
for better or for worse. The open question is whether the commonly used
pedigree/qualifications that decide who gets to be CEO actually enable people
to make substantially better decisions.

~~~
rayiner
Without the line workers, there is no product. Without a CEO there is no
product. They're both but-for causes (in the legal sense), and in that sense
equally indispensable.

What you need is a sensitivity analysis, of profitability of the company
versus changes in CEO versus line worker performance. I'd imagine you'd find
that a 20% efficiency jump in the line workers would have a much bigger change
on the bottom line than a 20% better CEO.

~~~
delinka
CEO takes two weeks off. What happens to the company?

10,000 "low-level" employees take two weeks off (all at once.) What happens to
the company?

Companies operate without CEOs while boards seek candidates. Companies can't
produce product while it seeks 10,000 replacement workers.

As long as we have the chief executive on one hand and the workers on the
other, that is.

~~~
biot
If you permanently eliminate the position for one line worker, there is
essentially zero impact to the company; it continues along with only a 0.01%
drop of efficiency. If you permanently eliminate the CEO position, there is
multiple orders of magnitude greater impact to the company. That's why the
compensation for each role is different.

~~~
dredmorbius
You've just reiterated the value theory of labor, first expressed by Karl
Marx.

I take it you're a Communist then, and follow Communist thinking in other
economic thought as well.

The classical economic theory of pricing holds that goods (and labor) are
exchanged at a point where the supply and demand curves cross. This, according
to the principles of free markets as expressed first by Adam Smith and
subsequently refined, and has certain prerequisites including low barrier to
entry, equal access to information, fair and open competition (and a lack of
collusion on the part of either buyers and sellers), and a clear understanding
of value.

All of which undoubtedly hold true for the CEO employment market, I trust.

<https://en.wikipedia.org/wiki/Labor_theory_of_value>
<https://en.wikipedia.org/wiki/Free_market>

~~~
eliasmacpherson
From the very interesting first link:

Karl Marx allowed for supply and demand, quoting Adam Smith himself, and I
believe, describing the status quo of the era:

" It suffices to say that if supply and demand equilibrate each other, the
market prices of commodities will correspond with their natural prices, that
is to say, with their values as determined by the respective quantities of
labor required for their production."

I don't think that this disagrees with the classical economic theory you
mention, in any way. Would you to care to explain your point in a little more
detail please? If anything it's one of the refinements that you speak of.

I'm not being dishonest here, I genuinely can't spot the difference. I have
difficulty in spotting what aspect of biot's statement is inherently
communist.

In Marx's own view on how things ought to be, paraphrasing, communism was a
world in which each gave according to their abilities, and received according
to their needs.

In this communist scenario, what each person contributed has no bearing on
their compensation. So by supporting the current status quo, biot is not in my
opinion expressing Marxist views, in fact, quite the opposite.

In fact, I've heard people denounced as communists for wishing for wage caps.

~~~
dredmorbius
My point isn't that Marx was correct (I really haven't studied him more than
topically).

It's that a lot of what's passed off as free-market capitalism is anything
but.

In biot's case, arguing that the _value_ generated by an individual should
serve as the basis for that person's pay. It _isn't_ , but is only one input
(essentially defining the demand curve, and setting a possible upper limit),
but the true market pay scale being one that would also have to take into
consideration supply. As I noted (somewhat snarkily), market conditions for
establishing executive pay fall somewhat short of the free market definition.
For a more popular treatment, Eddie Murphey and Dan Akroyd's "Trading Places"
explores a similar idea. Mark Lewis's writings on the stock market provide
some insight on trader qualifications and pay.

A friend some years ago provided an intriguing argument for why financial
traders' pay was as high as it was. It was less a conventional market pricing
argument than one of creating incentives to minimize incentives for fraud.
Essentially: we're going to pay you so goddamned much money that you'd be
completely mental to try to cheat on us and lose out.

I really cannot speak to the merits of this.

What that, and numerous other arguments for the rich getting ever richer _do_
suggest is that there is a class of people who are very well versed at
rationalizing their income and remuneration rates.

There's also a great deal of very, very, very sloppy thinking,
rationalization, reportage, etc., in economic matters.

I'm also coming to feel that much of economics as it's been taught for the
past 150 years or so simply isn't so. That the conditions described by free
markets are far less common and far more fragile than commonly believed. That
much of macroeconomics is bunkum used, again, to rationalize why them that has
gets more (though, oddly, I'm also coming to understand money, fiscal policy,
and Keynesian theory better than ever before), and that much of the economic
gain is really a _power_ game played for leverage and advantage, rather than
for strict financial gain. A lens which makes the MPAA/RIAA, copyright,
patent, trade and immigration law, etc., far more understandable.

Jonathen Nitzan's _Capital as Power_ seems to have stumbled on this same
insight: [http://www.amazon.com/Capital-Power-Creorder-Political-
Econo...](http://www.amazon.com/Capital-Power-Creorder-Political-
Economy/dp/0415477190)

~~~
eliasmacpherson
A lot of things clicked for me when I tried to wrap my head around the concept
of money as debt. A debt to be paid by the rest of society to the holder, when
he's in credit. Or a debt to be paid to the issuer if the holder's a borrower.
I'm not going to pretend to understand economics in any great depth.

Thanks for your detailed reply, I was thrown by the communist thing, and
missed your point almost entirely.

~~~
dredmorbius
If you haven't read _Debt, the first 5000 years_ , do. I've managed to
misplace my copy -- aha! just found it -- but it's among the most fascinating
books I've found in 25 years on economics. That, Niall Feguson's _Ascent of
Money_ (the guy is in many ways an ass, but this is a pretty good book),
Nassim Taleb, Nouriel Rabini, Paul Krugman, Joseph Stiglitz, _The Ordinary
Business of Life: A History of Economics from the Ancient World to the Twenty-
First Century_ (Roger Backhous) -- hardly a page-turner, but a very good
compendium of 3000 years of economic thought, and Neal Stephenson's
_Cryptonomicon_ and _Baroque Cycle_ have been very helpful to my
understanding.

One of the values in these online discussions isn't the ability to convince
others nearly so much as it is to hone and refine your own arguments. I'm not
sure I'm even partially cogent yet, but I'm starting to stumble in a direction
I like.

------
uptown
Equates to about $314, or a month's pay per employee by reported estimates.

~~~
sharkweek
Definitely 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
Agree. It surely would also cost a lot of time (and therefore, money) to
determine a 'correct' uneven distribution.

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prayag
Wow! 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.

~~~
unreal37
This is about loyalty, definitely. Good luck to the board of Lenovo when they
decide to fire the CEO - he's got considerable admiration from the front line
workers.

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rekwah
Smart 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.

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nicholassmith
This 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.

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woobles
One 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.

~~~
adestefan
I 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
That's JSUT what they want you to think!

------
yaix
The 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>

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michaelochurch
I 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-...](http://michaelochurch.wordpress.com/2010/11/22/pay-more-get-less/) .

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toomuchcoffee
It'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.

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jakejake
I 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
Now 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?

~~~
MattSayar
Exactly. 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
Mark 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.

------
known
Incentive Pay Considered Harmful
<http://www.joelonsoftware.com/articles/fog0000000070.html>

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firichapo
What are the odds of this behavior becoming a trend between CEOs?

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DigitalSea
Considering 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!

------
marknutter
How is this any different than, for instance, Steve Jobs taking only $1 per
year in CEO salary?

~~~
ww520
Steve 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
What 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.

------
dsr_
That's nice.

I wonder what the tax consequences were.

~~~
wtvanhest
They should have been zero for him and an increase of $314 USD in revenue per
employee.

~~~
juststef
No, 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
I 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.

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Yaggo
Great. But makes $300 per employee. I got better bonus from a company barely
making a profit.

~~~
tomflack
Don'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.

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iworkforthem
i 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!

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vtry
When will US based CEOs start giving their workers their 300 million+ bonus?

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meninpink
Silly 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.

~~~
mikeash
People doing what they want to do with their own money is "unbecoming of the
principles of the free market"? WTF?

~~~
grecy
I don't agree with the parent comment above yours, but here is something
interesting to ponder:

What if he'd taken that 3 million, put it in a big pile and burnt it?

The "free market" doesn't want you to do this, because it needs that money to
be back in the market somehow (investing, start up, salaries, purchases,
whatever)

Doing 'whatever you want' with your own money is not exactly what the free
market wants you to do.

As a slight aside, while I'm not burning my income, I'm not a good "market
citizen" in the eyes of the free market. I have no debt, no cell phone, no
car. I grow and hunt my own food, live off grid (no bills) and spend the least
amount of money possible. This, the "free market" does not want. Imagine if
even 25% of people in developed countries did this from now on. Market
collapse.

~~~
mikeash
There is no "free market" apart from the desires and actions of its
participants. If he decided that burning the money was the thing he wanted to
do with it, then that's what the "free market" wanted to do with it too.

~~~
wpietri
Yep. Otherwise it isn't free.

Burning money, by the way, doesn't actually destroy value. It just increases
the value of all the other money in circulation. So in effect it's a gift to
other money-holders.

