Lenovo 2010 Annual Report Download - page 130

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2009/10 Annual Report Lenovo Group Limited
128
NOTES TO THE FINANCIAL STATEMENTS (continued)
128
29 Share capital (continued)
(a) Long-term incentive program
A performance-related long-term incentive program was approved on May 26, 2005 for the purpose of rewarding
and motivating directors, executives and top-performing employees of the Company and its subsidiaries (the
“Participants”). The long-term incentive program is designed to enable the Company to attract and retain the best
available personnel, and encourage and motivate Participants to work towards enhancing the value of the Company
and its shares by aligning their interests with those of the shareholders of the Company.
The Company also approved a share-based compensation package for non-executive directors.
Under the long-term incentive program, the Company may grant awards, at its discretion, using any of the three
types of equity-based compensation: (i) share appreciation rights, (ii) restricted share units and (iii) performance
share units, which are described below:
(i) Share Appreciation Rights (“SARs”)
An SAR entitles the holder to receive the appreciation in value of the Company’s share price above a
predetermined level.
(ii) Restricted Share Units (“RSUs”)
An RSU is equal to the value of one ordinary share of the Company. Once vested, an RSU is converted to an
ordinary share.
(iii) Performance Share Units (“PSUs”)
Each PSU is assigned a value equal to a number of the Company’s shares based on the Company’s
performance against specified targets over a three-year period. The equivalent number of shares for each PSU
can range from 0 to 2, depending on the Company’s performance.
The PSU plan was discontinued in 2006; however, the Company continues to honor grants previously awarded.
All outstanding awards vested completely on May 1, 2008.
Under all three types of compensation, the Company reserves the right, at its discretion, to pay the award in cash or
ordinary shares of the Company.