Lenovo 2010 Annual Report Download - page 39

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2009/10 Annual Report Lenovo Group Limited
37
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.
Long-Term Incentive Program
The Company operates a Long-Term Incentive Program (“LTI Program”) which was approved by the Company
on May 26, 2005. The purpose of the LTI Program is to attract, retain, reward and motivate executive and
non-executive directors, senior management and selected top-performing employees of the Company and its
subsidiaries.
Under the LTI Program, the Company maintains three types of equity-based compensation vehicles: (i) share
appreciation rights, (ii) restricted share units, and (iii) performance-based share units. These vehicles are described
in more detail below.
(i) Share Appreciation Rights (“SARs”)
SARs entitle the holder to receive the appreciation in value of the Company’s share price above a
predetermined level. SARs are typically subject to a vesting schedule of up to four years.
(ii) Restricted Share Units (“RSUs”)
RSUs are equivalent to the value of one ordinary share of the Company. Once vested, RSUs are converted to
an ordinary share, or its cash equivalent. RSUs are typically subject to a vesting schedule of up to four years.
Dividends are typically not paid on RSUs.
(iii) Performance Based Share Units
The Company has three performance based share unit plans, the 2005 Performance Share Unit (PSU) plan,
the 2007 Performance RSU plan and the 2008 Performance RSU. The 2005 PSU plan was discontinued in
2006 however, the Company continues to honor grants previously awarded. All outstanding awards vested
completely on May 1, 2008.
The Performance RSU plans have been discontinued; however, the Company continues to honor grants
previously awarded. All outstanding awards vest completely by June 1, 2012.