Lenovo CEO Gives $3M Bonus To Factory Workers. Faith in Humanity: Restored - HotHardware
Lenovo CEO Gives $3M Bonus To Factory Workers. Faith in Humanity: Restored

Lenovo CEO Gives $3M Bonus To Factory Workers. Faith in Humanity: Restored


Lenovo, if you haven't heard, has been having a great year. In late March, the company announced that it had secured the #2 spot in worldwide PC sales, leaping up the charts to land just below HP. This achievement netted the company's CEO, Yang Yuanqing, a nifty $3 million bonus. Rather than pocketing the cash for himself, Yang decided to share it with Lenovo's lower-tier employees in the company's call centers, and production lines.

The report from China indicates that the a third of Leonovo's workers, or about 8500 people, earned a bonus of $314. While that's not a lot by US standards, it's a bit less than a full month's wages for Chinese worker in manufacturing. The math also works out -- $314 given to ~8600 people is a total of $2.64M, which makes sense once you consider the impact of various taxes.



It's a great move from Yang, and one we wish more US CEOs would emulate. Real wages in this country have stagnated while executive pay has skyrocketed -- the six heirs to the Walmart empire have a net worth of $89 billion. The bottom 41.5% of US households (a total of some 48.8 million people) also have a net worth of ~$90 billion. Despite such trends, we rather doubt any US CEO's will be following suit any time soon.

Of course, this is likely at least partly a calculated move to earn the company strong PR, but we doubt that matters to the several thousand workers who now have a greater amount of disposable income. Lenovo's published slides indicate that the company plans to hold on to what it's claimed, with a mixed strategy of attacking in domestic market (where it can leverage its own Chinese production to compete on price) while defending share gained in Europe and America.
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This means that his yearly bonus was the equivalent of over 700 years salary for one of the workers. The fact that that was his bonus in the first place shows what's wrong with CEO pay throughout the world.

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3vi1,

That's not a conclusion I'd automatically draw. True, US CEO pay has gone from 42x worker pay in 1980 to 380x worker pay in 2011. But -- comparing Lenovo's CEO pay to the pay of an average Chinese production worker is a false equivalency. Lenovo builds systems in China because it's cheap to do so, but it competes for its CEOs and other executives in the first-world, industrialized markets.

Look at it this way: Let's say Ford built a car plant in China and paid its workers 3x what a Lenovo worker makes, or $942 a month. That would give a family of four with two working parents a yearly income of $22,608 -- more than twice China's average family income rate.

But at $22,000, our hypothetical family would be making less than half the median family income of a US family -- and the ratio of CEO pay to worker pay would be twice the size.

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I'm not sure how those numbers do anything to justify CEO bonuses being 10x the life earnings of other employees, when the job is not particularly harder than that of the technical workers below them.

It certainly does not pay more due to necessary skills (I'd love to see a CEO perform heart surgery), risks ("golden parachutes away!") or working hours.

...

Psst... buddy.... Now's the part where you're supposed to call me a socialist.  :)

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CEO's get large bonuses primarily because they're essentially the company's partner. Leveraging stocks, stock options, etc. So when the company profits then so do they and that's on top of their agreed upon pay. Mind companies that want to succeed pay to get the best CEOs they can get. Also some CEO's go on to establish their own companies and that ends up creating more jobs.

However, I agree most of them are outrageously over payed, with maybe just a few at most actually really earning those pay outs. The system just has gotten out of control and too corrupted with ever escalating pay outs.

Though that's mostly with western world CEO's, who can easily make far more than 3 million. Like Yahoo is going to give Merissa Mayer, who is already rich from her stay at Google, $100 million over the next 5 years. Even if the company's stock sinks she will still get $1 million each year and then some; if the stock stays level she can still rake in another $45 million over the next five years.

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honestly this stuff actually affects my shopping have you ever seen ceo of costcos action. Kind of old news but he only takes a salary of 350k and average employee makes $17 a hour and have good benefits. Honestly the disparity between rich and poor and it rapidly growing. I consider it a breathe of fresh air when i see acts like this.

You compare charts with communist or dictator ships comparing rich and poor pay increases and decreases and were getting extremely close to being identical. Politician make laws to determine how companys can take money and laws to protect monopoly's. And only the rich can get elected or people who will represent the rich, look at current presidential election 1.5 billion spent and growing. How could a ordinary person compete with that if he was representing interest of the poor. He couldnt they would just outbid him as simple as that.

But honestly I do think there should be caps if over 50% of employees rely on welfare cause you refuse to pay a decent wage you get capped. If over certain % of jobs are overseas to save you money you get capped. And the list goes on but once they meet basic decency their is no longer a cap.

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Pocket Change... But hey better than nothing.

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