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Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

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Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#131

Post by 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... 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.

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#132

Post by gcb »

koide wrote: post #126
ajross wrote: post #106

Earlier quoted context omitted.

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…

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.

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"

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#133

Post by rrrazdan »

delinka wrote: post #49
rayiner wrote: post #41

Earlier quoted context omitted.

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…

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.

Okay , by your argument, so 10,000 employees are more important to the company than a CEO. But one employee?

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#135

Post by justincormack »

jonnathanson wrote: post #104
_delirium wrote: post #76

Earlier quoted context omitted.

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 uni…

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 t…

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.

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#136

Post by justincormack »

grecy wrote: post #74
mikeash wrote: post #27

Earlier quoted context omitted.

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

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 t…

The KLF burned a million pounds and filmed it. Then the played the film in car parks to homeless people.

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#137

Post by 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-... .

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#139

Post by mibbitier »

bconway wrote: post #78
keithpeter wrote: post #9

Earlier quoted context omitted.

I 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.

Depending 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.

Unions are evil evil things.

Re: Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees

#140

Post by eliasmacpherson »

dredmorbius wrote: post #111
biot wrote: post #61

Earlier quoted context omitted.

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.

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 ref…

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.

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