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2009/10 Annual Report Lenovo Group Limited
36
CORPORATE GOVERNANCE
COMPENSATION POLICY
Lenovo recognizes the importance of attracting and retaining top-caliber talent and is strongly committed to
effective corporate governance. Consistent with this philosophy, the Company has a formal, transparent and
performance-driven compensation policy covering its directors and senior management.
Lenovo’s compensation policy for its directors and senior management is to ensure that compensation is aligned
to support the Company’s strategy, attract and retain top talent, reinforce the Company’s performance driven
culture, and reflects the market practices of other leading international and IT-focused enterprises, with particular
focus on those who compete in the PC sector.
Non-Executive Directors
To ensure that non-executive directors are appropriately remunerated, in 2009 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
director) 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$80,000
(approximately HK$621,000) 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, 2010 under this scheme are presented
below.
Chairman, Executive Director 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’s business performance and individual performance.
Lenovo’s compensation structure for its employees, including the Chairman of the Board, executive director 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.