Lenovo 2014 Annual Report Download - page 119

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2013/14 Annual Report Lenovo Group Limited
RETIREMENT SCHEME ARRANGEMENTS (continued)
DEFINED CONTRIBUTION PLANS (continued)
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%
of the employee’s contribution up to the first 6% 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% 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 three-
year vesting. Forfeitures of Company contributions arising from employees who leave before they are fully vested are
used to reduce future Lenovo contributions. For the period April 1, 2013 to March 31, 2014, the amount of forfeitures
accumulated was US$381,719 while an amount of US$83,340 had been used to reduce Company contributions,
leaving US$323,530 at March 31, 2014 to be used to reduce Company 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, 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 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% 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 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.