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Lenovo CEO distributes $3 million of his bonus to employees. Why don't more tech CEOs do this?

July 21, 2012
lenovo factory


lenovo factory

Lenovo is having a great year. In spite of falling PC shipments worldwide, the Chinese electronics mammoth is about to overtake HP and become the largest PC maker in the world. That would be a momentous event, because it would mark the first time in history when a Chinese company attained the first position in any major industry. Lenovo is not doing so well in the fast-growing tablet market, but in terms of global profits, they are killing it.

As with any other international corporation, great quarters bring great bonuses to Lenovo’s top executives. The company’s CEO, Yang Yuanqing, has made the headlines yesterday, when it was revealed that he distributed $3 million of his own money to 10,000 low-level employees, including factory workers, sales staff, and assistants. Each of the employee has received 2,000 yuan (about $314), which is about the monthly salary of an average worker in one of Lenovo’s factories.

Wow, that’s generous, you might say. Indeed it is, but we must note that Yang has earned $14 million in the last fiscal year. That’s about 47,000 times the salary of a Lenovo junior employee.

Anyway, Yang’s act is an example of generosity that not many corporate bigwigs engage in. Let’s take Foxconn CEO for example. Terry Gou (you know, the guy who said that the iPhone 5 will put the Galaxy S3 to shame) recently said he doesn’t understand what’s wrong with sweatshops. “We sweat and bleed, as long as we comply with the law,” he continued, while speaking at a company event where 126 of Foxconn’s best employees received 5,000 yuan (US$800) bonuses and iPhones, as a reward for their hard work.

Foxconn ceo terry gou

But the bonuses were paid by the company, so it’s not something that Gou deserves credit for. Moreover, many have accused the Taiwanese behemoth of giving the bonuses just to cover up some of the bad publicity it received for the working conditions in its Chinese mega-factories.

Foxconn assembles devices for Apple, Nokia, Motorola, and many other companies, and has over 1 million employees. The company was heavily criticized for the work conditions in its factories, which have reportedly drove many employees to breakdowns and even suicides (enough for Foxconn to install nets on worker’s dormitories to prevent them from jumping to their deaths).

Ok, a comparison between Foxconn’s and Lenovo’s CEOs might not be fair. In spite of the runaway success of the iDevices, Foxconn makes relatively little profit per unit. With labor costs increasing steadily across China, the manufacturer has seen its profits dropping over the last year. Nevertheless, it would be nice to see that Terry Gou and other CEOs follow Yang’s example, at least at a symbolic level.

And don’t get me started on the obscene amount of cash that Apple is raking in from the world’s fascination with iDevices.