Lenovo 2009 Annual Report Download - page 45

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2008/09 Annual Report Lenovo Group Limited
43
Non-Executive Directors
To ensure that non-executive directors are appropriately remunerated, in 2008 the Compensation Committee engaged
an independent international compensation consulting firm who conducted an analysis of the compensation package of
non-executive directors and recommended to the Board to increase the additional cash retainer amounts for the non-
executive directors.
In making its recommendations, which were subsequently approved by the Board (comprising only executive directors)
and shareholders of the Company, the firm also reviewed other relevant factors such as the time commitment,
workload, job requirements and responsibilities of the non-executive directors and compared with those of the peers
companies and general industry.
The compensation of non-executive directors is comprised of an annual cash retainer equal to US$60,000
(approximately HK$468,000) and an annual award of Stock Appreciation Rights (SARs) and Restricted Stock Units
(RSUs) which can be settled in either Lenovo shares or their cash equivalent upon exercise. SARs and RSUs are
subject to a three-year vesting period and are otherwise subject to the same terms and conditions of the SAR and RSU
schemes described below.
The Chairman of the Audit Committee also receives an additional cash retainer equal to US$20,000 (approximately
HK$156,000). The Chairman of the Compensation Committee receives an additional cash retainer of US$10,000
(approximately HK$78,000).
Details of the compensation of the non-executive directors are included in note 11 to the financial statements. SAR and
RSU awards outstanding for non-executive directors as of March 31, 2009 under this scheme are presented below.
Chairman, Executive Directors and Senior Management
To ensure that Lenovo’s compensation reflects the policy principles described above, the Compensation Committee
considers a number of relevant factors including: salaries and total compensation paid by comparable companies, job
responsibilities and scope, employment conditions elsewhere in the Company, location and market practices, Company
business performance and individual performance.
Lenovo’s compensation structure for its employees, including the Chairman of the Board, executive directors and senior
management, is comprised of base salaries and allowances, performance bonus, long-term incentives, retirement
benefits, and benefits in kind. These components are described in more detail below.
Fixed Compensation
Fixed compensation includes base salary, allowances and benefits-in-kind (e.g. medical, dental and life insurance, etc.).
Base salary and allowances are set and reviewed annually for each position, reflecting competitive market positioning
for comparable positions, market practices, as well as the Company’s performance and individual contribution to the
business. Allowances are also provided to facilitate temporary and permanent staff relocations. Benefits-in-kind are
reviewed regularly taking into consideration relevant industry and local market practices.
Performance Bonus
Chairman of the Board and CEO, as well as senior management and selected employees of the Company are eligible to
receive a performance bonus payable in cash. The amounts paid under the plan are based on the performance of the
Company and its subsidiaries, performance groups and/or geographies as appropriate, as well as the performance of
the individual.