Lenovo CEO Gives His $3M Bonus To 10k Workers 267
ndogg writes "Lenovo CEO Yang Yuanqing has decided to give his $3,000,000USD bonus to his workers instead of keeping it. Those 10,000 employees include receptionists, production line workers, and assistants. That works out to about 2,000 yuan or $300 per employee, which is about a month's worth of salary."
Bloody communists! (Score:5, Funny)
Capitalism FTW! Boycott Lenovo.
Re:Bloody communists! (Score:5, Funny)
Re:Bloody communists! (Score:5, Funny)
FTFY.
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Re:Bloody communists! (Score:4, Funny)
Yeah, how dare they make our decent, god-fearing capitalist CEOs look like money-grubbing scum.
Yeah! Our CEOs can do that perfectly well THEMSELVES, thank you very much!
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It's what happens when you outsource jobs to China. This guy has now significantly undercut the value of compensation while raising expectations for all the honest God-fearing American CEOs!
Re:Bloody communists! (Score:5, Insightful)
JAL CEO did something similar and took a paycut as well. Cold day in hell before any american CEO would do this. Even if one were willing, the others would kill him in the country club locker room and bury his body on the links.
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As I recall, there's a lot of American CEOs with a $1/yr salary. I think Lee Iacocca may have started that trend when he went to work for Chrysler (or at least he popularized it). Granted, these guys are already filthy rich and can live off their assets/investments alone but it's still a nice show of generosity.
Re:Bloody communists! (Score:5, Insightful)
except their fringe benefits and perks might amount to six figures, and stock options give them a net in the millions most of the time. It might be a nice show of generosity, but it's also a nice way to have some PR and tax breaks for the uber rich.
Damned if you do.. (Score:5, Interesting)
And damned if you don't!
Re:Damned if you do.. (Score:5, Funny)
In Capitalist US, false dichotomy flogs you!
Re:Damned if you do.. (Score:4)
I don't typically mod memes, but jeesh this is once I wish I had my expired mod points back!
+1 funny, sir or madam.
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Yeah. The main issue is that in many countries capital gains are taxed at a much lower rate than salary. And while there are a lot of regulations regarding when an executive can sell options that they hold, I've noticed that there isn't usually a lot of scrutiny about when options are granted. What's astounding to me is that the information is all public, so it's easy for anyone to look at. You'll see options granted after large write offs, or you'll see companies over fill their sales channels (creati
Re:Bloody communists! (Score:5, Insightful)
I think that's so they can skip paying income tax, not because of generosity.
Not a tax break. (Score:4, Insightful)
In the absense of triggering some government program that gives more tax reduction than the money given away, it is still a loss. He might not pay taxes on the money he doesn't get (because he had it paid to the workers instead). But that normally will be taxed at less than 100%. So he's still out-of-pocket.
IMHO what this says is that the CEO thinks that the compensation packages the company had set up ended up giving him too much, and the workers too little, for the long-term health of the company. So he fixes it by reorganizing it - and gets a boost in morale and some good press as a bonus.
He probably also ends up ahead long-term because the company does far better in the future than it would have without this action. But he also might be doing it because he really is an idealist and/or does care for his workers.
Either way (if he's not a compensated psychopath who doesn't feel anything much) he gets to feel very good in his eventual retirement.
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Call me gullible, but this makes me more likely to buy Lenovo computers for my staff.
Vote with your dollars and all that.
(Note: It's not like this would be the only criterion. Lenovo offered the only/best 15" laptop with Intel VT-x and numpad and nice keyboard that I was looking for from the laptop from which this is being posted.)
Re:Bloody communists! (Score:5, Insightful)
While they have a $1/yr salary. They still have stock options and other benefits that make up the difference. This is a tax dodge and not a show of generosity.
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That is right. There is a reason why news stories often refer to a CEO's compensation package. There are things more valuable then money, especially when you have plenty of liquid assets already.
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Consider this, if a CEO takes a $1 pay package and receives only company stock as their benefits package that means the company has to do well for them to make money. In addition *you* are free to invest in these companies and "freeload" on their incentive package and earn some income as well.
No, actually it means (Score:5, Interesting)
is that legal? (Score:2)
(reminds me a bit also of the "pump and dump" phrase)
That almost sounds like "insider trading" except by one person rather than two. Is that legal? (assuming you get caught and they can prove it to the court's satisfaction of course, since it doesn't matter if it's legal or not if you don't get "caught")
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Putting aside the tax strategy, it is still better to have a CEO's pay tied to company performance via stock options than a salary.
That depends heavily on the structure of the options package. Unless they vest sufficiently far in the future, the incentive is to take such steps to pump the stock price in the short term (say, 3-5 years), with no regard to the long term consequences (say 10+ years).
Re:Bloody communists! (Score:4, Insightful)
Re:Bloody communists! (Score:4, Insightful)
As I recall, there's a lot of American CEOs with a $1/yr salary. I think Lee Iacocca may have started that trend when he went to work for Chrysler (or at least he popularized it). Granted, these guys are already filthy rich and can live off their assets/investments alone but it's still a nice show of generosity.
I thought this had more to do with tax evasion? Get paid through capital gains rather than salary and pay less taxes.
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For someone living in California, the top tax bracket is 48.3% for salaried income.
Top rate in CA is 9.3% - https://www.ftb.ca.gov/forms/2011_California_Tax_Rates_and_Exemptions.shtml [ca.gov]
Federal rate is 35% - http://www.moneychimp.com/features/tax_brackets.htm [moneychimp.com]
Total is 44.3% Also note that effective tax rate is somewhat lower than that because the 9.3% bracket doesn't kick in until $48k ($96k married). The 35% doesn't kick in until $380k (regardless of status).
Re:Bloody communists! (Score:4, Informative)
You omitted Medicaid (2.9%, uncapped) and SS ( 10.4% up to 110k). So, if the extra 11.44k makes up for the phasing in of the highest rate (not willing to do the math), the highest rate is actulally 47.2%. Which makes GP closer.
Also factor in unemployment/disability, and possible city taxes.
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Also if you earn more than 1 million dollars, the California tax rate is 10.3. The 9.3 bracket is the one between 47,000 and 1 million
Re:Bloody communists! (Score:5, Informative)
They have a $1 salary because salary is taxed at the higher rate reserved for the lower class. The CEO's get all their compensation in the form of stock options, and that is taxed at the lower rate reserved for the gentry and with a good enough accountant and a multinational organization capable of shifting money about, it may not be taxed at all.
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Do note that to pay more in income tax than the 15% long-term capital gains tax rate, you need to make at least $54,575. Other deductions and exemptions will push the threshold income level even higher.
$5,950 tax-free as standard deduction
next $8,700 taxed at 10% ($870)
next $26,650 t
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"Generosity" was not the word I had in mind.
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It's a PR positive move, yes, but it's also a tax-avoidance move.
You see, capital gains are taxed lower than regular income. When these CEOs file tax returns, they pay the tax on that $1 salary, but
Re:Bloody communists! (Score:5, Insightful)
$1/yr salary is simply a tax evasion scheme since wages are taxed much higher than the stock options etc. that they receive instead. These tax dodging assholes that won't pay for police, road maintenance or any thing else that is tax funded, even portrait this scheme as something modest. They make me puke.
Re:Bloody communists! (Score:4, Informative)
Interesting, though, that the CEO, John Hui, was also Chinese
Re:Bloody communists! (Score:5, Interesting)
>>>Cold day in hell before any american CEO would do this
There was an American company I saw profiled by ABC's John Stossel back in 2009. Unfortunately I forget the name, but the CEO decided not to have layoffs. Instead he agreed to take a cut in pay to the same level as the workers' pay, in order to keep everyone employed. I guess hell froze over that day.
Re:Bloody communists! (Score:5, Interesting)
Jokes aside, when Henry Ford gave his workers raises, he was labelled a socialist. Even though his workers were much more efficient, and made Ford rich, when Hank gave even a part of that money back to the workers, he was labelled socialist.
The trick is, Ford new that he needed a work force that was paid well to buy his cars. The payroll that you call an expense is actually the wages that can purchase someone else's product. And then the payroll that goes to those workers can buy someone else's product. All a virtuous cycle. Pardon the car reference, but some times money is like oil in a motor - it only does it's work when it circulates and when it stands still the motor seizes.
Sadly most CEOs now don't have that foresight. We've been taught so much "make it someone else's problem" and "the only people you think of are the stockholders" that we've lost any vision. We're taught that unions are evil. Though they've seriously lost their way, they had use where they forced wages for everyone above some point so that the cycles can continue, and payrolls are squeezed to where we can't afford anything.
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Haha.
People have corrected me when I said the free market is like a pure democracy (people vote with their $'s for the companies they like). They say that democracy is a form of *government* and does not apply to private transactions. Well..... the same applies here with the private transaction between this guy and his colleagues within the corporation. It's not communist. It's not government.
Re:Bloody communists! (Score:5, Insightful)
In theory... it *is* a bit like *communism* (Score:5, Interesting)
Many Americans don't seem to know (or perhaps care about) distinctions between communism (the form of utopia which countries like the Soviet Union supposedly wanted to achieve) and socialism (the system they intended to use in the transitional phase). Oversimplifying a bit... Communism is supposed to be a state where there is such an abundance of resources that everyone can get whatever they need and the motive to work would come not from material goods but from the social status that good workers receive, the idealistic desire to work for the good of mankind and stuff like that. Socialism is the idea that when a government takes control of the means of production and puts them to good use, the results are in some way (be it productivity, philosphical differences or whatever) better than than what capitalistic society can achieve... and if the difference in productivity is great enough, it could some day result in the overabundance of resources needed for communism.
So... When a CEO decides that he wants to give away huge sums of money (for social status and/or idealistic reasons... in a situation where he must have overabundance of resources for himself, because he is able to give away millions) and that the best receiver for the money are the workers that have produced the said wealth, I think that one could argue that it's - in small scale - very similar to how communist utopia was supposed to work.
Naturally this is all just a mixture of being pedantic and some form of thought experiments... but then again, what could you expect in a thread like this.
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Communism is supposed to be a state where there is such an abundance of resources that everyone can get whatever they need
All economic systems are attempts to deal with scarcity of resources; there isn't suddenly an abundance of resources because a certain system was adopted. Furthermore, you're confusing resources with materials. Labor, capital and materials are the three equally needed resources for economic activity.
Re:Bloody communists! (Score:5, Interesting)
You joke but I actually saw arguments along these lines not long after the 2008 economic crash. People worried that if the CEOs of the banks that took government loans didn't get obscene bonuses as usual, it would pressure other banks which weren't bailed out to do the same and that would be un-capitalist government interference.
There's no hope for you guys, sorry.
Re:Bloody communists! (Score:5, Funny)
Re:Bloody communists! (Score:5, Insightful)
Capitalism does not preclude altruism. Charity work has always flourished in capitalistic societies.
Re:Bloody communists! (Score:5, Funny)
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I wish I had a mod point to throw +1 insightful on this. (I'm not sure the funny value is larger than the sad truth value, so insightful it would have to be!)
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You cannot deduct the value of your services given to a qualified organization. What excuse can you give for why that still happens under capitalism?
Charity and philanthropy pre-date the income tax (Score:3)
only because charitable donations are tax-deductible
Not really. Charity and philanthropy in the US pre-dates the income tax.
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only because charitable donations are tax-deductible
So?
It being tax-deductible (for up to 5 years depending on how much you donate) defeats the purpose of charity being shown as a positive effect of capitalism, which was the point that was being made.
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I would high-five this guy. (Score:4, Interesting)
You don't see that often. Very refreshing and restores a little faith in humanity.
Re:I would high-five this guy. (Score:5, Interesting)
Re:I would high-five this guy. (Score:5, Insightful)
Yeah, this guy sounds like a pretty good guy. Except, of course, that his bonus is equal to what about 10,000 employees make in a month. Doesn't really make his company seem that great. I'm not saying it's not common, but it a good example of how messed up the system is. Do you really think that guy benefited the company, over what he was already making in a year, more than what 833 people do in a whole year?
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Re:I would high-five this guy. (Score:5, Insightful)
An even more generous example (Score:5, Interesting)
http://www.thelocal.se/41536/20120619/ [thelocal.se]
Family-run firm Nominit in Värnamo, southern Sweden, will be paying out 114 million kronor ($16.3 million) to their current and former employees in a gesture of goodwill. The company was founded in 1937 and is the two founders and owners have no heirs to their fortune. The company, which currently has about 50 employees, manufactures rivets and has a turnover of about 100 million kronor, of which 60 comes from export.
$16,000,000 to 50 workers.
Well, good for him (Score:3)
Nice to see a "servant-leader" taking a step like this.
Re:Well, good for him (Score:5, Interesting)
Keep in mind, his total earnings for the year were $14 million. At a company where, according to the summary, $300 is an average month's salary. Not to take away from what he did, giving up $3,000,000 is still an amazing thing to do, but it's gotta be easier when you bring in $14 million a year than it is otherwise.
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Keep in mind, his total earnings for the year were $14 million. At a company where, according to the summary, $300 is an average month's salary. Not to take away from what he did, giving up $3,000,000 is still an amazing thing to do, but it's gotta be easier when you bring in $14 million a year than it is otherwise.
Point taken. Like I said, it's a step.
As other posters have said, a raise for all of the employees would be even better. And it sure sounds like the company brass could afford it.
Holy Crap! (Score:5, Insightful)
That guy just earned himself some serious loyalty from the peons. Nothing says "I couldn't have done this without you" like sending a serious bonus down to everybody. The execs won't care, as that won't cover a day of their salary, but the people at the bottom of the ladder will appreciate it. Interesting that that came from a Chinese owner. I'd be curious to see what American CEOs think of that, and what their response would be to the question "Would you ever give you entire yearly bonus to your employees, and why?"
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This wasn't his entire bonus, just a boost to his bonus for having Lenovo's best fiscal year yet. Still a good deed.
"Yang had earned $5.2 million in bonuses for the fiscal year ending in March. His total earnings, including salary, incentives and other benefits, amounted to $14 million, according to the company's annual report."
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Now, bankers on the other hand are probably thinking "meh... pocket change".
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I guess that depends on their current salary, and the size of the bonus...I can give my 150$ bonus to all the employees under me and it wont mean bubkus...
I could also have employees that on average make 75,000 and up per year, and consider that an insult (being they only got THAT bonus...not to be added to the already existing bonus from their company)....300$ is not worth a reply or extra karma points from them, while a months pay to a chinese employee...is a lot!!!
context
Re:Holy Crap! (Score:5, Informative)
I agree that context is important when considering the impact. However, I have to say that if my manager or my CEO distributed their bonus out to all the people underneath them, my respect for them would go up tremendously - even if it would amount to only an extra beer at pub night for me. The important part is that they were willing to forego something that their contract said they were entitled to, and instead chose it to say thank you to their employees in a very direct manner.
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Amen, brother. It's not that 50 cents that I get, but the gesture itself that would rise the guy on a long-lasting mental pedestal.
Re:Holy Crap! (Score:5, Interesting)
At my work, in 2008 we were still profitable, but the downturn was coming and we all knew it. The senior execs all forewent their own bonuses, but they distributed bonuses to all the lower level folks. I tell you that single act bought them a ton of loyalty from myself. We finally got back to profitability last year and the bonuses came back for everyone this year.
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--Absolutely. If I get around to buying a laptop $soon, I will remember this and look closely at Lenovo.
Meanwhile in megacorporation land (Score:3)
My bonuses are fixed. They are written down in plain English in my contract. They even have a fancy name like variable performance pay for them. It has stopped becoming a tool to motivate long ago.
It used to be my bonus was a percentage of my pay grade, but that percentage was adjusted based on my personal performance, and the performance of our local business. Great, motivating and quite clear. Didn't really mind that scheme much since it meant that bonuses weren't really at the whim of some manager who wa
a real human being (Score:2)
Four horses... (Score:3)
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That was just the two guys from ZZ Top and their stunt doubles.
Something similar where I grew up... (Score:5, Interesting)
Kingston technology (memory manufacturer) split $100 million between 500+ employees. They also gave scholarships to all the local schools (mine included) - http://articles.latimes.com/1996-12-15/news/mn-9424_1_million-bonus-employee [latimes.com]
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Whoa I'm biased towards buying Kingston memory now.
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Do note that was 16 years ago when Kingston was the top of the top.. I have a feeling a lot has changed.
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...and that happened 18 years ago. Once.
Not saying it wasn't nice, simply... those were the times.
That's great and all, but... (Score:4, Interesting)
$300 per employee, which is about a month's worth of salary.
If you're only paying your employees a measly $300 a month, how about a raise instead?
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Of course, the Chinese government could end their dollar peg and allow the value of those wages to rise, giving everyone in their country a de facto raise.
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A good example (Score:2)
And it's a good example to his fellow CEO's but I'm not holding my breath waiting for the next to share his bonus.
Send from a much appreciated Thinkpad :)
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You could see it as being 10,000 months of pay, for a single worker. That is 833 years. The $3M is just the CEO's bonus for one year.
Take one of those factory floor workers and make them CEO for a year. Can the company still have a record-setting year for revenues? Would make interesting television but I'm pretty sure I could predict the Vegas odds.
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I'm convinced he would compared to the regular workers still be able to live a life of luxury.
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Take that CEO and let him work for his regular annual pay but without bonus and see what becomes of the company.
I'm convinced he would compared to the regular workers still be able to live a life of luxury.
Of course he would still live better than the factory floor worker, his annual salary is about $1M. I'm not seeing your point.
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Re:A good example (Score:5, Informative)
I would suggest you compare the CEO wages in the U.S. with CEO wages in the east, Japan especially.
IIRC, the average is that CEO wage is 24x the wage of your lower worker. In the U.S. it is in the hundreds of times.
The difference in the east and the U.S.: the CEO is considered important but not necessarily above the other workers. In the U.S. they are in an ivory tower. That's a problem and that's what so much of us have a problem with.
Re:A good example (Score:4, Insightful)
Exactly right and it all started when Reagan dropped the top marginal tax rate from 74% (I think) to 28%. High marginal tax rates encourage high earners to put the money back into the business including pay raises. Higher pay for people with normal incomes means more money to be spent in the consumer economy.
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I don't really care what the market wants. It is not a living being worthy of compassion.
- and that's where you are completely wrong, just totally, fully, utterly, irredeemably wrong.
Market is people. What market wants is what people want, not some people, not some politicians, not some group of people, the entire collection of people. Market economy will always end up beating you over the head, no matter what type of command economy you are trying to set up.
USSR has been beaten over the head, China was in the same boat, all countries that tried printing money out of their trouble and that end
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No, the market is an emergant phenomenon resulting from the actions of some people. (for example, NOT the 99 who ended up out of work, they can't buy anything).
That's not to say the market has no place, it is a fine regulatory mechanism when it s properly managed. Like a hammer, you can use it to build great things or you can smash your thumb.
The USSR's and China's mistake was in trying to completely replace the market rather than guiding it to appropriate outcomes.
The market is not sentient. If allowed to
And the bad news is... (Score:5, Insightful)
1.CEO receiving $3mln bonus, not salary but bonus. On another hand we have:
2.Regular Joe's medium monthly salary of "$300"....
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So i wonder which one is worst, a company with so low medium salary, or a company with so much big CEO salary....
PLEASE, help me decide...
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...and have nothing to do with the company's overall success, right?
That is what infuriates me about current corporate thought.
All of his bonus vs. part of his bonus (Score:2)
Not unique to Lenovo... (Score:2)
I've seen a number of posts talking about how American CEOs would never do such a thing. I'd really like to know where this sort of self-deprecating delusion originates. Common sense alone would dictate that this has had to have happened more than once in US. Searching on Google brings up a wall of spam, linking to the same Lenovo story. But look elsewhere and you'll see plenty of stories of CEOs paying out very generous benefits to all employees, or forgoing on payment of any kind during tough times.
And wh
Nice dupe, ndogg (Score:3)
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Oh hey, I have Lenovo laptop! (Score:2)
Just to play Devils advocate (Score:2)
I love CEO Yang (Score:2)
...for the bonus money.
Capital Gains Taxes (Score:4, Informative)
1. This is a Chinese CEO in Hong Kong, not the U.S.
2. Carter _decreased_ capital gains tax rates, Reagan _increased_ them and Clinton _decreased them (to be fair, Bush Jr. decreased them even more).
3. Capital gains are taxed at a higher rate based on your income (again to be fair, people with a lower income can't take advantage the same way).
Capital gains taxes have a place, the idea is to encourage investment, which is why long term capital gains taxes are lower than income taxes rates but short term capital gains taxes pretty much mirror income tax rates.
http://en.wikipedia.org/wiki/Capital_gains_tax#United_States [wikipedia.org]
http://en.wikipedia.org/wiki/File:Maximum_Federal_Tax_Rate_on_Long_Term_Capital_Gains_(1972_-_2012).jpg [wikipedia.org]
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So there are 300 days in a month now?