Lenovo 2016 Annual Report Download - page 152

150 Lenovo Group Limited 2015/16 Annual Report
DIRECTORS’ REPORT
RETIREMENT SCHEME ARRANGEMENTS (continued)
Defined Contribution Plans
United States of America (“US”) – Lenovo Savings Plan
U.S. regular, full-time and part-time employees of Lenovo (United States) Inc., including employees of Motorola Mobility
LLC, 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 Motorola Mobility 401(k) Plan merged into the Lenovo Savings Plan
effective December 31, 2015. The Company matches 100% of the employee’s contribution up to the first 6% of the
employee’s 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.
US Lenovo Executive Deferred Compensation Plan
The Company also maintains an unfunded, non-qualified, defined contribution plan, the Lenovo Executive Deferred
Compensation Plan, 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 Stakeholders Plan
UK regular, full-time, part-time and fixed term Lenovo contract 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 than 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% of their compensation (subject to the ceiling under the requirements set out in the Mandatory
Provident Fund legislation). The employer’s contribution will increase from 5% to 7.5% and 10% respectively after
completion of five and ten years of service by the relevant employees.
FACILITY AGREEMENT WITH COVENANT ON CONTROLLING SHAREHOLDER
The Company entered into a facility agreement with a syndicate of banks on February 2, 2011 (the “Facility Agreement”)
for a term loan facility of up to US$500 million (the “Facility”). The final maturity date of the Facility will fall on the date
which is 60 months after February 2, 2011. The Facility Agreement includes, inter alia, terms to the effect that it will
be an event of default if Legend Holdings Corporation (formerly known as Legend Holdings Limited), the controlling
shareholder of the Company: (i) is not or ceases to be the direct or indirect beneficial owner of 20% or more of the
issued share capital of the Company; or (ii) is not or ceases to be the single largest shareholder in the Company. The
Facility was fully repaid on September 29, 2015 and was cancelled with effect from October 9, 2015.