Lenovo raises payout for former chief after record loss
Updated: 2009-06-27 08:04
(HK Edition)
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HONG KONG: Lenovo Group Ltd said it increased the compensation of former chief executive William Amelio by 54 percent last fiscal year, even after the mainland's biggest personal-computer maker posted a record annual loss.
"I don't like it," said Charles Guo, who rates Lenovo shares "underweight" at JPMorgan Chase & Co. Executive compensation ought to be linked to a company's performance, he said.
Amelio, who resigned in February, was paid $17.6 million in the year ended March, including $3.25 million as compensation for "loss of office as director," Lenovo, maker of Thinkpad laptops, said in its annual report. His total compensation was $11.4 million a year earlier, according to the document.
The executive, recruited by Lenovo from Dell Inc in December 2005, failed to increase the Chinese company's market share against bigger rivals Hewlett-Packard Co and Dell. During his tenure, Taiwan-based Acer Inc overtook Lenovo to become the world's third-biggest PC manufacturer and posted its biggest loss.
Yang Yuanqing, who replaced Amelio as chief executive, received $7.2 million in total pay in the fiscal year ended March, a 42 percent increase, Lenovo said in the report filed to the Hong Kong stock exchange yesterday. Yang was previously the chairman.
Founder Liu Chuanzhi returned as chairman in February to focus the Chinese company on its home market and emerging countries to revive profit as competition from Hewlett-Packard, Dell and Acer intensified.
Lenovo said in January it would eliminate about 2,500 jobs, or 11 percent of its workforce, to save $300 million this fiscal year.
Restructuring costs totaled $116 million, including severance payments related to the layoffs, last quarter, chief financial officer Wong Wai Ming said last month.
Personal computer shipments at Lenovo, which moved its headquarters to the US from Beijing after buying the PC unit of International Business Machines Corp in 2005, fell 8.2 percent last quarter, the company said. Lenovo's share of the global PC market fell to 7 percent in the three months ended March, from 7.2 percent in the previous quarter, according to researcher IDC.
Hewlett-Packard, the world's biggest PC maker, increased its market share to 20.5 percent in the first three months, from 19.6 percent in the previous quarter, IDC said. Dell's declined to 13.6 percent from 13.7 percent.
Lenovo posted a loss of $226.4 million last fiscal year, compared with a profit of $484.3 million a year earlier, as sales tumbled in the US and Europe.
Lenovo shares rose HK$0.04 or 1.37 percent to end at HK$2.95 in Hong Kong on Friday.
Bloomberg News
(HK Edition 06/27/2009 page2)