Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees | Hacker News Reader

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

dailytech.com

369 pointssharkweek140 comments

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.

Of course it takes considerably less guts if you already have many millions in the bank.

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.

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.

>In buddism, the term for discipline is the same turn used for morality. ( they dont make the distinction )

What's the term?

It'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.

Since you asked: http://www.globalgiving.org/projects/solar-for-salamale/

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.

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.

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.

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.

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.

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).

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.

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).

> 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.

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.

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.

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.

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.

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"

I 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.

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.

I would take 10,000 Nokia staff over Elop any day of the week.

Our numbers are getting out of hand here: Elop doesn't make close to 10,000x a typical engineer at Nokia.

It's a bonus, not salary, the fact that it is > 10,000x a typical bonus speaks volumes.

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.

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.

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.

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.

But that's not the comparison. It's CEO versus all the employees, not a single employee.

I thought the salient point was the relative compensation of the average CEO to the average employee. What insight do you gain by comparing a mass exodus of every employee to a vacation by a single CEO? Isn't it trivially obvious that if every single person in a company takes off at once, that the company is effectively stopped regardless of who you compare it to?

Because he gave his bonus to 10,000 employees, not 1 other random employee.

> That's why the compensation for each role is different.

This is wrong. It's Econ 101. Salaries are the price of labor, and like any other market, the price of labor is the result of equilibrium in the supply and demand in the labor force.

> If you permanently eliminate the CEO position, there is multiple orders of magnitude greater impact to the company.

Has this been actually measured?

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

Oh jeez. Either I should have thought through my last sentence better, or followed my instinct by not participating in this discussion. You are correct on the supply & demand explanation. And no, I am not now nor have I ever been a member of the communist party. :)

I make the point because you're not the first person I've heard use the same argument.

Most recent that comes to mind was a banker interviewed on the BBC. I was listening, critically as I frequently do, and realized that the view he was espousing was flagrantly Marxist.

Amusing, that.

I don't understand the down votes here. Other than the snark, it's right on point.

The snark is also on point :)

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.

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...

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.

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.

>If you permanently eliminate the CEO position, there is multiple orders of magnitude greater impact to the company.

Then why do companies with flat hierarchies exist and operate just fine? You don't need someone at the top because you don't need a top.

See:

* http://mariewiere.com/2012/03/04/a-company-that-manages-with...

* http://agile-commentary.blogspot.co.uk/2009/09/bees-self-org...

The interesting thing about people, and any social, intelligent agents is that they self-organize.

Even bees (intelligent, social agents) do this:

http://www.pnas.org/content/96/22/12611.full

So do ants:

http://en.wikipedia.org/wiki/Patterns_of_self-organization_i...

We can even manage traffic without direction:

http://thecityfix.com/blog/naked-streets-without-traffic-lig...

The biggest myths of our societies are that we need a hierarchy, directions and managers. We're quite capable of leading ourselves and getting everything done. And more efficiently, no less.

When does a CEO get to take 2 weeks off these days? A CEO's job and life are homogeneous and while they do take vacation, I can guarantee you that very very few will disconnect him/herself completely.

10,000 line workers can easily be replaced by another 10,000 people with (likely) little to no education, credentials, etc... CEO on the other hand? Doubt it.

Again, you're conflating supply and demand with contribution.

Contribution as a term here is fluffy. I know what you are getting at but it makes no sense using it for some sort of comparison.

What you need to look at is impact of decisions. If the CEO makes a wrong decision the entire company can go down. If a worker makes a wrong decision it's much less of an issue.

Contribution is a term that can be pinned down (I suggested using a sensitivity analysis above).

I don't see any particular justification for "What you need to look at is impact of decisions." Why is "impact of decisions" a more important criterion than "who does the work."

>If a worker makes a wrong decision it's much less of an issue.

Unless the employee gets his hand caught in a machine, the press jumps all over it and stocks plummet 5%.

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

You're comparing two things which are the same. A 20% jump in efficiency per worker is precisely what CEO's are there to create.

You're missing a level of indirection.

Say you have a median CEO and median line workers. If you got a CEO 20% better than the median, would he be able to motivate the line workers to be 20% more efficient? Highly unlikely. I think you need a 10x median CEO to see something as huge as a 20% jump in the efficiency of line workers.

I agree that we can talk about the median CEO, because that just requires ordering. But how would you talk about a 10x CEO? That needs multiplication on CEOs, which is much harder to define in a way that makes sense.

...oftentimes by applying the "beatings will continue until morale improves" philosophy of firing teams, cutting departments, slashing r&d and expecting unpaid overtime. There, efficiency *= 1.20.

If that works in the long run, it's great for the shareholders.

>If that works in the long run, it's great for the shareholders.

My point is that it does not work in the long run, but shareholders are sometimes interested in the short-term gains (as in improve efficiency by 20%, flip the company, not my problem)

But think of the labor costs. Can you get a 20% better CEO with 3 million dollars? Probably. Can you get 10,000 line workers 20% better with 3 million dollars? Probably not. So even if the line workers are more important, a large CEO bonus may provide better value.

I'm not arguing that the CEO is overpaid. I'm pointing out that the amount the CEO is paid is not determined by value to the company, it's determined by supply and demand in the labor market.

But, and I shouldn't have to say this it's so obvious, there wouldn't be demand in the labor market for CEOs if boards/shareholders didn't think elite CEOs provided value. There has to be a strong correlation there or the inefficient company paying a low value CEO too much will be out-competed by another company with more sense.

This can be refuted by a simple counter example.

Say CEO X provides V units of value to the company. What should CEO X be paid (P)? It has nothing to do with Y, except in the degenerate case where P > V. P is going to be determined by the supply of CEO's with credentials similar to X. P can vary dramatically depending on that supply, but obviously V doesn't change.

More than 1 worker, sure. More than 10,000? Not likely.

So the coach of a football team could win as many games with a bunch of people off the street as he could with a competitive team?

The CEO is just the pointy end of the stick. They're not the singular reason the company is successful.

If anything the job of the CEO is to not screw up more than it is to be amazing. There are too many bad decisions to be made on a daily basis.

I think that's incorrect. It's not like if being a CEO was harder that many technical jobs. In fact, it's usually a whole lot easier.

It is however about the amount, you're right on that. There is 1 CEO and there are 10 000 employees. It's much easier to pay 1 CEO "a lot" than 10 000 employes "a lot". (and to become CEO you have to look good/smart/etc but you don't have to be or work hard. You can however stab people in the back in the name of capitalism all day long. I don't know many "big" CEOs who haven't done that.)

The only thing that really comes with a CEO title is the responsibility for other people's jobs. Large bonuses in that case make sense, but in general, they're already paid so well, that it's peanuts.

Being peanuts, they can afford the luxury of redistributing to employees. Don't get me wrong, I admire the gesture. But if the CEO wasn't paid so much to begin with, and bonuses weren't out of proportion, he wouldn't have done that.

I'm taking for granted the question of whether there really is a supply/demand imbalance justifying high CEO pay. I didn't want to cloud my post with that aspect. You're right though, you can argue that CEO salaries are not the product of an efficient supply/demand equilibrium, but rather other things.

Being a CEO is way way way way way way way harder than individual contributor technical jobs. The breadth of skill and degree of dedication required to do the job well is just insane.

That may be, but there's actually little evidence that compensation relates to it. There are all sorts of studies attempting to link higher CEO pay with better performance, and the data is thin. There's also some evidence that firms with less diffuse ownership structures (i.e. owners more informed and in control) pay CEOs less, which at least weakly hints that high CEO pay isn't rationally chosen by owners who are paying attention.

Now, even "less well paid" CEOs still get paid a lot, so that's not an argument for paying CEOs $100k. But it may be an argument to pay CEOs towards the lower end of the CEO payscale, rather than towards the higher end.

Sure... 2, 3, maybe 4 times harder, but not hundreds or thousands of times. The fact that we have such huge gaps is cultural, and a testament to how well they've been able to sell themselves. The gap hasn't always been this wide, and it's not the same in every country.

Cite? I know CEOs, and I know factory workers. They wouldn't be able to do each other's jobs.

Well, I'd agree with that (in general at least)

The thing is, being CEO is generally way less specialized (and thus easier).

It almost entirely depends on having good employees rather than direct CEO decisions (even thus some are really bad most are OK).

Sure there are exceptional CEOs but it's pretty damn rare. (rare meaning 1 every 100000 not 1 every 10)

I agree. Often overlooked is that not all qualifications directly relate to "running the company": relationships with people who hold high-level positions in other companies, governments, academic institutions, and other organizations also play a role. Executive and director biography pages for large public companies always make entertaining reading.

To take just one random, high-profile example: David Ebersman, Facebook's CFO, while by all accounts a knowledgable and hard-working guy, was also the protégé of one Arthur Levinson, chairman of the board of Apple. This is the kind of thing that may be totally unimportant to Facebook's day-to-day operations, but that could also be very useful at some unknown point in the future (when negotiating to integrate Facebook products into as-yet-unreleased versions of Apple's mobile OS, say).

Investors also pay attention to "who's who" in the executive suite, which is important to many companies.

Hardly.

A captain steers the ship, but it's the rest of the crew that sails the boat. You can steer to your hearts content, but without the right team and culture, you aren't going anywhere.

But with the right team and culture and a drunk dimwit at the helm, you'll still going to crash.

With the right bloke at the time and a team of complete drunken dimwits, well you might just be in the navy.

Generally you get a mutiny - or everyone leaves the boat. Hi Nokia :)

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

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.

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

In fact, it was given only to junior-level employees, not to the biggest executives and top developers.

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.

UK 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.

Unions are evil evil things.

China-based workers make about one third of their U.S. equivalents in those job categories -- so that'd be more like a 1K bonus stateside. Quite substantial.

[1] Source for e.g. receptionists: http://www.worldsalaries.org/hotelreceptionist.shtml

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.

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.

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.

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.

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.

Would 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?

I remain unconvinced that anything would assuage his paranoia, unfortunately.

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.

That's JSUT what they want you to think!

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

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.

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.

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?

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.

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.

I will gladly "deal" with any money my boss needs me to

Let's put it like this: it deserves some praise, but not as much praise as someone donating a kidney, wouldn't you agree? Yet this is newsworthy and earns praise from all over the world, while people who actually do donate a kidney barely make it into local news, if at all.

I'm pretty sure Kidneys sell for less than $3m on the black market.

I 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.

It 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.

Incentive Pay Considered Harmful http://www.joelonsoftware.com/articles/fog0000000070.html

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

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!

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

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.

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.

He 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-la...

That's nice.

I wonder what the tax consequences were.

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

Not 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.

There 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.

"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"

The 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.

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.

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.

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

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.

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!

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-... .

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

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.

He has already done that by motivating his employee :)

Ugh, 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.

If 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.

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

Hey, ease up. It must be terrible to be enslaved to a worldview that has accumulation of wealth as its ultimate goal.

s/accumulation/concentration/ is more like it.

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.

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.

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.

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

[Citation needed].

No. That's the free market exactly. It was his money. He did with it what he wanted, even and especially if you didn't think that was what he should have done.

I'm not allowed to downvote, but I'd like to. There's a huge problem with the conflation of rational principles with ethical principles.

When we say the "law of gravity" it's a way to understand how the world works, not an edict from some moral authority.

Ahh yes. The "testosterone" fueled view of capitalism that thinks optimizing your own wealth and profit must always be associated with a combative, gladiatorial narrative. In this individuals particular situation spreading that money to reward employees is likely the smartest way for him to optimize his own wealth. His employees love him which secures his ongoing wealth accumulation (who fires a popular CEO). I assume he has a significant stack of stock options that continue to increase in value through motivated retained employees.

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