Lenovo 2014 Annual Report Download - page 80

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78 Lenovo Group Limited 2013/14 Annual Report
COMPENSATION COMMITTEE REPORT
Performance Bonus
The Chairman/CEO and senior management are eligible to receive performance bonuses. The amounts paid under the
plan are based on the performance of the Company, its subsidiaries, relevant performance groups and/or geographies
as appropriate, as well as individual performance.
Long-Term Incentive Program (“LTI Program”)
The Company operates a LTI Program which was adopted 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 two types of equity-based compensation vehicles: (i) share
appreciation rights, and (ii) restricted 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.
The Company reserves the right to pay any awards under the LTI Program in cash or in ordinary shares at its
discretion. The Company has created and funded a trust to pay shares to eligible recipients. In the case of SARs,
awards are due after exercise by the recipient. In the case of RSUs, awards are due after the employee satisfies any
vesting conditions.
The number of units that are awarded under the LTI Program is set and reviewed annually, reflecting competitive market
positioning, market practices, especially those among Lenovo’s competitors, as well as the Company’s performance
and each individual’s actual and expected contribution to the business. In certain circumstances, awards under the LTI
Program may be made to support the attraction of new hires. Award levels and mix may vary by individual and level.
Prior to the adoption of LTI Program in 2005, the Company granted its employees, including directors and senior
management, share options. No further options have been granted since 2004. Details of the Share Option Scheme
are set out on pages 111 to 113 in the Directors’ Report.
Retirement Benefits
The Company operates a number of retirement schemes for its employees, including executive directors and senior
management. These schemes are reviewed regularly and are intended to deliver benefit levels that are consistent with
local market practices. Details of the programs are set out in the Directors’ Report on pages 114 to 117.