Sunday, July 22, 2012

Financial IQ: Lenovo CEO shares bonus

TIANJIN/CHINA, 28SEPT08 - Yang Yuanqing (secon...TIANJIN/CHINA, 28SEPT08 - Yang Yuanqing (second from left), Chairman of the Board, Lenovo, speaks From Global Growth Company to Corporate Global Citizen plenary session at the World Economic Forum Annual Meeting of the New Champions in Tianjin, China 28 September 2008. Copyright World Economic Forum (www.weforum.org) (Photo credit: Wikipedia)
Financial IQ Philippines Quick Hit(s):

Lenovo's CEO decided to distribute his bonus to his co-workers.  What a nice way to share blessings to others!!


Bonuses make up a huge part of executive pay in the United States, and though Chinese incentive structures are different, the same is true there. The CEO of Lenovo (LNGVY), a major Chinese computer parts maker, has found a pretty darn nice way to spend his.


Yang Yuanqing took in a $3 million bonus after the company reported a massive 73% jump in profits in the first three months of the year, ending Lenovo's best fiscal year to date.


The company thanked Yang for his performance with an extra $3 million, and he gave it all away to 10,000 lower-ranked employees in Lenovo's offices, call centers, and factories. Each worker received 2000 renminbi,or $314.


This is about the equivalent of a month's salary for many Lenovo workers.


Before you call Yang a selfless working-class hero, keep in mind that the $3 million is only part of the $14 million that he has been awarded in various ways including salary, stock, and other benefits for his work at the company.


Certainly, the employees of other tech companies are hoping that their CEOs follow suit.


According to a study by the Economic Policy Institute, CEO compensation has outpaced the average worker's pay by astonishing margins over the past few decades. CEO compensation grew by a shocking 725% between 1978 and 2011, far outpacing the growth of the stock market. The average worker's pay has only risen by 5.7% in the same period.


Lenovo's rise in the market for PCs has been quite prodigious in the past few years. It blew past Dell (DELL) and it's rapidly closing the gap between itself and Hewlett-Packard (HPQ) in the global market for PCs running Microsoft (MSFT) Windows, according to this chart by IDC. In the global computer market, Apple (AAPL) doesn't make it into the top five, but it is third in US computer sales.


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