Lenovo 2010 Annual Report Download - page 67

2009/10 Annual Report Lenovo Group Limited
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Defined Contribution Plans
United States of America (“US”) – Lenovo Savings Plan
U.S. regular, full-time and part-time employees are eligible to participate in the Lenovo Savings Plan, which is a tax-qualified
defined contribution plan under section 401(k) of the Internal Revenue Code. The Company matches 50 percent of the
employee’s contribution up to the first 6 percent of the employee’s eligible compensation. In addition, for employees who have
also completed one year of service and who do not participate in the Lenovo Pension Plan, the Company provides a profit
sharing contribution of 5 percent of eligible compensation. Employee contributions are voluntary. All contributions, including the
Company match, are made in cash, in accordance with the participants’ investment elections.
The Company match is immediately vested. However the 5% Company profit sharing contribution is subject to 3 years vesting.
Forfeitures of Company contributions arising from employees who leave before they are fully vested in Company contributions
are used to reduce future Lenovo contributions. For the period April 1, 2009 to March 31, 2010, the amount of forfeitures was
US$225,276, none of which had been used to reduce Lenovo contributions, leaving US$453,340 at March 31, 2010 to be used
to reduce Lenovo contributions in the future.
US Lenovo Executive Deferred Compensation Plan
The Company also maintains an unfunded, non-qualified, defined contribution plan, the Lenovo Executive Deferred
Compensation Plan (“EDCP”), which allows eligible executives to defer compensation, and to receive Company matching
contributions, with respect to amounts in excess of Internal Revenue Service limits for tax-qualified plans. Compensation
deferred under the plan, as well as Company matching contributions are recorded as liabilities.
Deferred compensation amounts may be directed by participants into an account that replicates the return that would be
received had the amounts been invested in similar Lenovo Savings Plan investment options. Company matching contributions,
are directed to participant accounts and fluctuate based on changes in the stock prices of the underlying investment portfolio.
United Kingdom (“UK”) – Lenovo Savings Plan
UK regular, full-time and part-time employees are eligible to participate in the Lenovo Stakeholders Plan, which is a tax-
qualified defined contribution “stakeholder” plan. For employees hired after April 30, 2005, the Company contributes 6.7% of an
employee’s eligible salary to the employee’s pension account each year until he/she is 35, and then contributes 8.7% of salary
after that age. The Employer Contributions are dependent on Employee paying no less that 3% of salary to the same fund.
Prior employees of IBM receive Company contributions varying from 6.7% to 30% of eligible compensation depending on their
service and the prior IBM plan they participated in.
Canada – Defined Contribution Pension Plan
Canadian regular, full-time and part-time employees are eligible to participate in the Defined Contribution Pension Plan, which
is a tax-qualified defined contribution plan. The Company contributes 3% to 6% of the employee’s eligible compensation,
depending on years of service. All contributions are made in cash, in accordance with the participants’ investment elections.
Hong Kong – Mandatory Provident Fund
The Group operates a Mandatory Provident Fund Scheme for all qualified employees employed in Hong Kong. They are required
to contribute 5 percent of their compensations (subject to the ceiling under the requirements set out in the Mandatory Provident
Fund legislation). The employer’s contribution will increase from 5 percent to 7.5 percent and 10 percent respectively after
completion of five and ten years of service by the relevant employees. Details of the cost charged to the income statement and
forfeited contributions are set out in note 36.