Lenovo CEO Gives His $3M Bonus To 10k Workers

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Lenovo CEO Gives His $3M Bonus To 10k Workers

Posted by Soulskill on Friday July 20, 2012 @08:09AM from the what's-the-opposite-of-a-golden-parachute dept.

ndogg writes "Lenovo CEO Yang Yuanqing has decided to give his $3,000,000USD bonus to his workers instead of keeping it. Those 10,000 employees include receptionists, production line workers, and assistants. That works out to about 2,000 yuan or $300 per employee, which is about a month's worth of salary."

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Bloody communists! by Anonymous Coward · 2012-07-20 08:12 · Score: 5, Funny

Capitalism FTW! Boycott Lenovo.
1. Re:Bloody communists! by spidercoz · 2012-07-20 08:17 · Score: 5, Funny
  
  Yeah, how dare they make our decent, god-fearing capitalist CEOs look like money-grubbing scum.
  
  --
  "I disapprove of what you say, but I will defend to the death your right to say it." - Evelyn Beatrice Hall, re Voltaire
2. Re:Bloody communists! by DinDaddy · 2012-07-20 08:19 · Score: 5, Insightful
  
  JAL CEO did something similar and took a paycut as well. Cold day in hell before any american CEO would do this. Even if one were willing, the others would kill him in the country club locker room and bury his body on the links.
3. Re:Bloody communists! by GameboyRMH · 2012-07-20 08:23 · Score: 4, Interesting
  
  You joke but I actually saw arguments along these lines not long after the 2008 economic crash. People worried that if the CEOs of the banks that took government loans didn't get obscene bonuses as usual, it would pressure other banks which weren't bailed out to do the same and that would be un-capitalist government interference.
  There's no hope for you guys, sorry.
  
  --
  "When information is power, privacy is freedom" - Jah-Wren Ryel
4. Re:Bloody communists! by tmosley · 2012-07-20 08:25 · Score: 4, Funny
  
  Yeah, how dare they make our decent, self-styled godly fascist CEOs look like money-grubbing scum.
  
  FTFY.
5. Re:Bloody communists! by Anonymous Coward · 2012-07-20 08:25 · Score: 5, Insightful
  
  except their fringe benefits and perks might amount to six figures, and stock options give them a net in the millions most of the time. It might be a nice show of generosity, but it's also a nice way to have some PR and tax breaks for the uber rich.
6. Re:Bloody communists! by randizzle3000 · 2012-07-20 08:25 · Score: 5, Insightful
  
  I think that's so they can skip paying income tax, not because of generosity.
7. Re:Bloody communists! by SScorpio · 2012-07-20 08:27 · Score: 5, Insightful
  
  While they have a $1/yr salary. They still have stock options and other benefits that make up the difference. This is a tax dodge and not a show of generosity.
8. Re:Bloody communists! by spidercoz · 2012-07-20 08:27 · Score: 4, Insightful
  
  You are in fact correct, free market and pure democracy are similar; they both treat everyone the same, and they're both fucking mythological.
  
  --
  "I disapprove of what you say, but I will defend to the death your right to say it." - Evelyn Beatrice Hall, re Voltaire
9. Re:Bloody communists! by organgtool · 2012-07-20 08:27 · Score: 4, Funny
  
  Agreed! How can they expect their country to become successful if they don't proliferate the idea of only rewarding the people at the top? If they keep up this shit, the money will never trickle down!
10. Re:Bloody communists! by Anonymous Coward · 2012-07-20 08:29 · Score: 4, Insightful
  
  As I recall, there's a lot of American CEOs with a $1/yr salary. I think Lee Iacocca may have started that trend when he went to work for Chrysler (or at least he popularized it). Granted, these guys are already filthy rich and can live off their assets/investments alone but it's still a nice show of generosity.
  I thought this had more to do with tax evasion? Get paid through capital gains rather than salary and pay less taxes.
11. Re:Bloody communists! by dAzED1 · 2012-07-20 08:32 · Score: 2
  
  ....generosity? For someone living in California, the top tax bracket is 48.3% for salaried income. Qualified dividends, on the other hand, have ranged from 10-15% in recent history. There was nothing remotely "generous" about the pay he took. The Google founders do the same thing.
12. Re:Bloody communists! by Anonymous Coward · 2012-07-20 08:32 · Score: 2, Informative
  
  That is right. There is a reason why news stories often refer to a CEO's compensation package. There are things more valuable then money, especially when you have plenty of liquid assets already.
13. Re:Bloody communists! by Anonymous Coward · 2012-07-20 08:35 · Score: 4, Funny
  
  Yeah, how dare they make our decent, god-fearing capitalist CEOs look like money-grubbing scum.
  Yeah! Our CEOs can do that perfectly well THEMSELVES, thank you very much!
14. Re:Bloody communists! by neonv · 2012-07-20 08:35 · Score: 4, Insightful
  
  Capitalism does not preclude altruism. Charity work has always flourished in capitalistic societies.
15. Re:Bloody communists! by jdastrup · 2012-07-20 08:39 · Score: 3, Informative
  
  I'm not sure of the temperature in Hell that day, but I believe it was pretty mild in the OC when the eMachines CEO did the same thing in 2004 with his $72 million. http://www.johnhui.com/newsocregister.html
  
  Interesting, though, that the CEO, John Hui, was also Chinese
16. Re:Bloody communists! by Nadaka · 2012-07-20 08:40 · Score: 5, Informative
  
  They have a $1 salary because salary is taxed at the higher rate reserved for the lower class. The CEO's get all their compensation in the form of stock options, and that is taxed at the lower rate reserved for the gentry and with a good enough accountant and a multinational organization capable of shifting money about, it may not be taxed at all.
17. Re:Bloody communists! by cpu6502 · 2012-07-20 08:50 · Score: 4, Interesting
  
  >>>Cold day in hell before any american CEO would do this
  There was an American company I saw profiled by ABC's John Stossel back in 2009. Unfortunately I forget the name, but the CEO decided not to have layoffs. Instead he agreed to take a cut in pay to the same level as the workers' pay, in order to keep everyone employed. I guess hell froze over that day.
  
  --
  My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
18. Re:Bloody communists! by spidercoz · 2012-07-20 08:55 · Score: 5, Funny
  
  only because charitable donations are tax-deductible
  
  --
  "I disapprove of what you say, but I will defend to the death your right to say it." - Evelyn Beatrice Hall, re Voltaire
19. Re:Bloody communists! by 3dr · 2012-07-20 09:08 · Score: 2
  
  "Generosity" was not the word I had in mind.
20. Re:Bloody communists! by DriveDog · 2012-07-20 09:26 · Score: 2
  
  "Flourished" is in the eyes of the beholder. My cynical eyes see otherwise.
21. Re:Bloody communists! by tlhIngan · 2012-07-20 09:59 · Score: 2
  
  As I recall, there's a lot of American CEOs with a $1/yr salary. I think Lee Iacocca may have started that trend when he went to work for Chrysler (or at least he popularized it). Granted, these guys are already filthy rich and can live off their assets/investments alone but it's still a nice show of generosity.
  It's a PR positive move, yes, but it's also a tax-avoidance move.
  You see, capital gains are taxed lower than regular income. When these CEOs file tax returns, they pay the tax on that $1 salary, but pay much less tax on the million(s) they made during the year through stock and other dealings than if they took the entire amount through salary.
  You'll find they always get bonuses paid out in stock as well, for the same reason.
  And the best part of it is the "99%" don't suspect a thing - they see happy fun CEO only makes $1 a year and is so generous, etc. etc. etc.
  It's pretty much the most legal way to pay a lot less tax per dollar than everyone who works under you.
22. Re:Bloody communists! by Peter+H.S. · 2012-07-20 10:08 · Score: 4, Insightful
  
  $1/yr salary is simply a tax evasion scheme since wages are taxed much higher than the stock options etc. that they receive instead. These tax dodging assholes that won't pay for police, road maintenance or any thing else that is tax funded, even portrait this scheme as something modest. They make me puke.
23. Re:Bloody communists! by KhabaLox · 2012-07-20 10:19 · Score: 2
  
  Putting aside the tax strategy, it is still better to have a CEO's pay tied to company performance via stock options than a salary.
  That depends heavily on the structure of the options package. Unless they vest sufficiently far in the future, the incentive is to take such steps to pump the stock price in the short term (say, 3-5 years), with no regard to the long term consequences (say 10+ years).
  
  --
  Ceci n'est pas un sig.
24. Re:Bloody communists! by KhabaLox · 2012-07-20 10:24 · Score: 2
  
  For someone living in California, the top tax bracket is 48.3% for salaried income.
  
  Top rate in CA is 9.3% - https://www.ftb.ca.gov/forms/2011_California_Tax_Rates_and_Exemptions.shtml
  Federal rate is 35% - http://www.moneychimp.com/features/tax_brackets.htm
  Total is 44.3% Also note that effective tax rate is somewhat lower than that because the 9.3% bracket doesn't kick in until $48k ($96k married). The 35% doesn't kick in until $380k (regardless of status).
  
  --
  Ceci n'est pas un sig.
25. Re:Bloody communists! by Actually,+I+do+RTFA · 2012-07-20 12:14 · Score: 3, Informative
  
  Top rate in CA is 9.3% - https://www.ftb.ca.gov/forms/2011_California_Tax_Rates_and_Exemptions.shtml Federal rate is 35% - http://www.moneychimp.com/features/tax_brackets.htm Total is 44.3% Also note that effective tax rate is somewhat lower than that because the 9.3% bracket doesn't kick in until $48k ($96k married). The 35% doesn't kick in until $380k (regardless of status).
  You omitted Medicaid (2.9%, uncapped) and SS ( 10.4% up to 110k). So, if the extra 11.44k makes up for the phasing in of the highest rate (not willing to do the math), the highest rate is actulally 47.2%. Which makes GP closer.
  Also factor in unemployment/disability, and possible city taxes.
  
  --
  Your ad here. Ask me how!
26. Re:Bloody communists! by daremonai · 2012-07-20 12:39 · Score: 3, Insightful
  
  I'd be happy with a company that thought on a 3-5 year time scale. 3-5 months seems more common (only the slightest exaggeration).
27. Re:Bloody communists! by rachit · 2012-07-20 14:09 · Score: 2
  
  Also if you earn more than 1 million dollars, the California tax rate is 10.3. The 9.3 bracket is the one between 47,000 and 1 million
28. Re:Bloody communists! by Solandri · 2012-07-20 16:36 · Score: 2
  
  They have a $1 salary because salary is taxed at the higher rate reserved for the lower class. The CEO's get all their compensation in the form of stock options, and that is taxed at the lower rate reserved for the gentry
  Do note that to pay more in income tax than the 15% long-term capital gains tax rate, you need to make at least $54,575. Other deductions and exemptions will push the threshold income level even higher.
  
  $5,950 tax-free as standard deduction
  next $8,700 taxed at 10% ($870)
  next $26,650 taxed at 15% ($3997.50)
  next $13,275 taxed at 25% ($3318.75)
  = $54,575 in income, $8186.25 in taxes, or 15%
  
  Yes the 15% capital gains tax rate is lower than the higher income tax brackets. But it's still significantly higher than the 12.8% the average taxpayer pays (2009, column T). Based on the IRS stats, the adjusted gross income at which a tax filer pays an average of 15% in income tax is somewhere around $160,000.
  
  Do I think it's right that rich CEOs are only paying 15%? No. But the lower class does not have a "higher rate" reserved for them. They pay substantially less than 15%. Basically, the $1 salary tax dodge takes CEOs from taxation rates meant for people making over about $200k, and puts them at taxation rates meant for people making about $160k. The savings in terms of tax rate is a big deal (about 25% down to 15%), but the savings in terms of tax bracket is not (moving from the 99th or 98th percentile to about the 93rd-95th percentile).
29. Re:Bloody communists! by cant_get_a_good_nick · 2012-07-20 17:26 · Score: 4, Interesting
  
  Jokes aside, when Henry Ford gave his workers raises, he was labelled a socialist. Even though his workers were much more efficient, and made Ford rich, when Hank gave even a part of that money back to the workers, he was labelled socialist.
  The trick is, Ford new that he needed a work force that was paid well to buy his cars. The payroll that you call an expense is actually the wages that can purchase someone else's product. And then the payroll that goes to those workers can buy someone else's product. All a virtuous cycle. Pardon the car reference, but some times money is like oil in a motor - it only does it's work when it circulates and when it stands still the motor seizes.
  Sadly most CEOs now don't have that foresight. We've been taught so much "make it someone else's problem" and "the only people you think of are the stockholders" that we've lost any vision. We're taught that unions are evil. Though they've seriously lost their way, they had use where they forced wages for everyone above some point so that the cycles can continue, and payrolls are squeezed to where we can't afford anything.
30. Re:Bloody communists! by shutdown+-p+now · 2012-07-20 18:43 · Score: 2
  
  It's what happens when you outsource jobs to China. This guy has now significantly undercut the value of compensation while raising expectations for all the honest God-fearing American CEOs!
31. Re:Bloody communists! by wrook · 2012-07-21 01:58 · Score: 2
  
  Yeah. The main issue is that in many countries capital gains are taxed at a much lower rate than salary. And while there are a lot of regulations regarding when an executive can sell options that they hold, I've noticed that there isn't usually a lot of scrutiny about when options are granted. What's astounding to me is that the information is all public, so it's easy for anyone to look at. You'll see options granted after large write offs, or you'll see companies over fill their sales channels (creating a higher than expected profit for a quarter) and then correct it later (creating a lower than expected profit for a quarter) right before they grant options to executives. And nobody calls them on it. It's easy to see if you follow high tech companies regularly (and actually read their reports). Anyway, it makes it relatively easy for companies to pay their executives on the backs of the shareholders while at the same time allowing them to avoid taxes.
I would high-five this guy. by Anonymous Coward · 2012-07-20 08:12 · Score: 4, Interesting

You don't see that often. Very refreshing and restores a little faith in humanity.
1. Re:I would high-five this guy. by pwizard2 · 2012-07-20 08:22 · Score: 4, Interesting
  
  I wish we had more guys like this running companies in the US instead of the greedy sociopathic bastards we have in abundance.
  
  --
  "It is a denial of justice not to stretch out a helping hand to the fallen; that is the common right of humanity."
2. Re:I would high-five this guy. by Anonymous Coward · 2012-07-20 08:30 · Score: 5, Insightful
  
  Yeah, this guy sounds like a pretty good guy. Except, of course, that his bonus is equal to what about 10,000 employees make in a month. Doesn't really make his company seem that great. I'm not saying it's not common, but it a good example of how messed up the system is. Do you really think that guy benefited the company, over what he was already making in a year, more than what 833 people do in a whole year?
3. Re:I would high-five this guy. by thereitis · 2012-07-20 09:25 · Score: 2, Insightful
  
  If he is directly responsible for keeping a company afloat which keeps 10,000 people employed, what is that worth?
4. Re:I would high-five this guy. by DriveDog · 2012-07-20 09:35 · Score: 4, Insightful
  
  And that is exactly the point! CEOs taking 1,000 times more than low-level employees implies that their activities somehow create 1,000 times more profit (or income, or whatever measure you want) than the activities of the lowest-paid and 100 times more than upper-mid-level employees. Or to put it another way, it implies that one individual at, say, $20M/yr is worth more than 10 of the next-best available at $2M/yr. I don't believe it for a minute.
An even more generous example by G3ckoG33k · 2012-07-20 08:16 · Score: 5, Interesting

http://www.thelocal.se/41536/20120619/
Family-run firm Nominit in Värnamo, southern Sweden, will be paying out 114 million kronor ($16.3 million) to their current and former employees in a gesture of goodwill. The company was founded in 1937 and is the two founders and owners have no heirs to their fortune. The company, which currently has about 50 employees, manufactures rivets and has a turnover of about 100 million kronor, of which 60 comes from export.
$16,000,000 to 50 workers.
Well, good for him by ClickOnThis · 2012-07-20 08:17 · Score: 2

Nice to see a "servant-leader" taking a step like this.

--
If it weren't for deadlines, nothing would be late.
1. Re:Well, good for him by MozeeToby · 2012-07-20 08:25 · Score: 4, Interesting
  
  Keep in mind, his total earnings for the year were $14 million. At a company where, according to the summary, $300 is an average month's salary. Not to take away from what he did, giving up $3,000,000 is still an amazing thing to do, but it's gotta be easier when you bring in $14 million a year than it is otherwise.
Holy Crap! by NeutronCowboy · 2012-07-20 08:19 · Score: 5, Insightful

That guy just earned himself some serious loyalty from the peons. Nothing says "I couldn't have done this without you" like sending a serious bonus down to everybody. The execs won't care, as that won't cover a day of their salary, but the people at the bottom of the ladder will appreciate it. Interesting that that came from a Chinese owner. I'd be curious to see what American CEOs think of that, and what their response would be to the question "Would you ever give you entire yearly bonus to your employees, and why?"

--
Those who can, do. Those who can't, sue.
1. Re:Holy Crap! by NeutronCowboy · 2012-07-20 08:34 · Score: 5, Informative
  
  I agree that context is important when considering the impact. However, I have to say that if my manager or my CEO distributed their bonus out to all the people underneath them, my respect for them would go up tremendously - even if it would amount to only an extra beer at pub night for me. The important part is that they were willing to forego something that their contract said they were entitled to, and instead chose it to say thank you to their employees in a very direct manner.
  
  --
  Those who can, do. Those who can't, sue.
2. Re:Holy Crap! by Mike+Buddha · 2012-07-20 10:02 · Score: 4, Interesting
  
  At my work, in 2008 we were still profitable, but the downturn was coming and we all knew it. The senior execs all forewent their own bonuses, but they distributed bonuses to all the lower level folks. I tell you that single act bought them a ton of loyalty from myself. We finally got back to profitability last year and the bonuses came back for everyone this year.
  
  --
  by Mike Buddha -- Someday the mountain might get him, but the law never will.
a real human being by Nolas · 2012-07-20 08:19 · Score: 2

Wow i thought all the CEO's of today's world were all psychopathic assholes. It's really cool to see there is at lest 1 CEO left on this planet that is an actual living, human being with a real beating heart.
Four horses... by gatfirls · 2012-07-20 08:20 · Score: 2

... with some bearded dudes riding them just rode by me, makes sense now.
Something similar where I grew up... by The+Good+Reverend · 2012-07-20 08:20 · Score: 5, Interesting

Kingston technology (memory manufacturer) split $100 million between 500+ employees. They also gave scholarships to all the local schools (mine included) - http://articles.latimes.com/1996-12-15/news/mn-9424_1_million-bonus-employee
That's great and all, but... by JustAnotherIdiot · 2012-07-20 08:20 · Score: 3, Interesting

$300 per employee, which is about a month's worth of salary.
If you're only paying your employees a measly $300 a month, how about a raise instead?

--
What do I know, I'm just an idiot, right?
1. Re:That's great and all, but... by tmosley · 2012-07-20 08:28 · Score: 2
  
  Those will come. A bonus is a half measure when you can't afford to commit to higher wages yet.
  
  Of course, the Chinese government could end their dollar peg and allow the value of those wages to rise, giving everyone in their country a de facto raise.
And the bad news is... by stanlyb · 2012-07-20 08:23 · Score: 5, Insightful

I am on crossroad, from one hand we have:
1.CEO receiving $3mln bonus, not salary but bonus. On another hand we have:
2.Regular Joe's medium monthly salary of "$300"....
---------------
So i wonder which one is worst, a company with so low medium salary, or a company with so much big CEO salary....
PLEASE, help me decide...
All of his bonus vs. part of his bonus by UberEcks · 2012-07-20 08:32 · Score: 2

Not belittling what he did by any means but "Gives his $3M" is different from "Gives $3M from his bonus" is different.
In theory... it *is* a bit like *communism* by F69631 · 2012-07-20 08:57 · Score: 5, Interesting

Many Americans don't seem to know (or perhaps care about) distinctions between communism (the form of utopia which countries like the Soviet Union supposedly wanted to achieve) and socialism (the system they intended to use in the transitional phase). Oversimplifying a bit... Communism is supposed to be a state where there is such an abundance of resources that everyone can get whatever they need and the motive to work would come not from material goods but from the social status that good workers receive, the idealistic desire to work for the good of mankind and stuff like that. Socialism is the idea that when a government takes control of the means of production and puts them to good use, the results are in some way (be it productivity, philosphical differences or whatever) better than than what capitalistic society can achieve... and if the difference in productivity is great enough, it could some day result in the overabundance of resources needed for communism.
So... When a CEO decides that he wants to give away huge sums of money (for social status and/or idealistic reasons... in a situation where he must have overabundance of resources for himself, because he is able to give away millions) and that the best receiver for the money are the workers that have produced the said wealth, I think that one could argue that it's - in small scale - very similar to how communist utopia was supposed to work.
Naturally this is all just a mixture of being pedantic and some form of thought experiments... but then again, what could you expect in a thread like this.
Damned if you do.. by tanveer1979 · 2012-07-20 09:03 · Score: 4, Interesting

And damned if you don't!

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1. Re:Damned if you do.. by Anonymous Coward · 2012-07-20 10:20 · Score: 5, Funny
  
  In Capitalist US, false dichotomy flogs you!
2. Re:Damned if you do.. by QQBoss · 2012-07-20 14:23 · Score: 3
  
  I don't typically mod memes, but jeesh this is once I wish I had my expired mod points back!
  +1 funny, sir or madam.
Re:A good example by MickyTheIdiot · 2012-07-20 09:04 · Score: 4, Informative

I would suggest you compare the CEO wages in the U.S. with CEO wages in the east, Japan especially.
IIRC, the average is that CEO wage is 24x the wage of your lower worker. In the U.S. it is in the hundreds of times.
The difference in the east and the U.S.: the CEO is considered important but not necessarily above the other workers. In the U.S. they are in an ivory tower. That's a problem and that's what so much of us have a problem with.
Nice dupe, ndogg by damn_registrars · 2012-07-20 09:05 · Score: 2

I submitted this as a story 2.5 hours before ndogg did, and he gets the credit for it. Well played, sir.

--
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
No, actually it means by publiclurker · 2012-07-20 09:33 · Score: 5, Interesting

that the CEO has to do something to cause a quick spike in the stock price when he wants to cash in. Generally, this is done by firing a bunch of people. It doesn't matter if this tanks the company, as the CEO's already gotten his cash.
Charity and philanthropy pre-date the income tax by perpenso · 2012-07-20 09:58 · Score: 2

only because charitable donations are tax-deductible
Not really. Charity and philanthropy in the US pre-dates the income tax.
Meanwhile in megacorporation land by thegarbz · 2012-07-20 11:23 · Score: 2

My bonuses are fixed. They are written down in plain English in my contract. They even have a fancy name like variable performance pay for them. It has stopped becoming a tool to motivate long ago.
It used to be my bonus was a percentage of my pay grade, but that percentage was adjusted based on my personal performance, and the performance of our local business. Great, motivating and quite clear. Didn't really mind that scheme much since it meant that bonuses weren't really at the whim of some manager who was in a bad mood.
Now they threw a third category in. Our bonuses are now based on the global performance too. Well that's just great. Now if a US plant goes belly up due to the US market conditions, or a Chinese plant explodes and kills a bunch of people my bonus is scrapped despite there not being a single thing that I can do about it.
Yay motivation. Our new CEO so far has little respect from me.
Melbourne Boss gave out 15million by Anonymous Coward · 2012-07-20 13:22 · Score: 2, Funny

An Aussie boss gave out 15million to his employees when he sold his company, some of his bus drivers got up to $30000 and the average was $8500.
http://www.news.com.au/business/meet-victorias-best-boss-who-gave-his-loyal-staff-a-15m-bonus/story-e6frfm1i-1226258897821
It's not that uncommon, maybe if we start treating this as the norm rather than the greedy CEO image ridiculous CEO bonuses could be better distributed in future.
Capital Gains Taxes by thesandbender · 2012-07-20 14:10 · Score: 3, Informative

I see a lot of comments here about how this is all a dodge to get around income taxes with capital gains taxes.

1. This is a Chinese CEO in Hong Kong, not the U.S.
2. Carter _decreased_ capital gains tax rates, Reagan _increased_ them and Clinton _decreased them (to be fair, Bush Jr. decreased them even more).
3. Capital gains are taxed at a higher rate based on your income (again to be fair, people with a lower income can't take advantage the same way).

Capital gains taxes have a place, the idea is to encourage investment, which is why long term capital gains taxes are lower than income taxes rates but short term capital gains taxes pretty much mirror income tax rates.
http://en.wikipedia.org/wiki/Capital_gains_tax#United_States
http://en.wikipedia.org/wiki/File:Maximum_Federal_Tax_Rate_on_Long_Term_Capital_Gains_(1972_-_2012).jpg
Re:A good example by riverat1 · 2012-07-20 14:41 · Score: 3, Insightful

Exactly right and it all started when Reagan dropped the top marginal tax rate from 74% (I think) to 28%. High marginal tax rates encourage high earners to put the money back into the business including pay raises. Higher pay for people with normal incomes means more money to be spent in the consumer economy.
Not a tax break. by Ungrounded+Lightning · 2012-07-20 15:10 · Score: 3, Insightful

In the absense of triggering some government program that gives more tax reduction than the money given away, it is still a loss. He might not pay taxes on the money he doesn't get (because he had it paid to the workers instead). But that normally will be taxed at less than 100%. So he's still out-of-pocket.
IMHO what this says is that the CEO thinks that the compensation packages the company had set up ended up giving him too much, and the workers too little, for the long-term health of the company. So he fixes it by reorganizing it - and gets a boost in morale and some good press as a bonus.
He probably also ends up ahead long-term because the company does far better in the future than it would have without this action. But he also might be doing it because he really is an idealist and/or does care for his workers.
Either way (if he's not a compensated psychopath who doesn't feel anything much) he gets to feel very good in his eventual retirement.

--
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1. Re:Not a tax break. by Compaqt · 2012-07-20 16:48 · Score: 2
  
  Call me gullible, but this makes me more likely to buy Lenovo computers for my staff.
  Vote with your dollars and all that.
  (Note: It's not like this would be the only criterion. Lenovo offered the only/best 15" laptop with Intel VT-x and numpad and nice keyboard that I was looking for from the laptop from which this is being posted.)
  
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  I'm not a lawyer, but I play one on the Internet. Blog
Re:A good example by roman_mir · 2012-07-21 08:18 · Score: 2

I don't really care what the market wants. It is not a living being worthy of compassion.
- and that's where you are completely wrong, just totally, fully, utterly, irredeemably wrong.
Market is people. What market wants is what people want, not some people, not some politicians, not some group of people, the entire collection of people. Market economy will always end up beating you over the head, no matter what type of command economy you are trying to set up.
USSR has been beaten over the head, China was in the same boat, all countries that tried printing money out of their trouble and that ended in inflation that drove their productivity to 0 and did the same with their purchasing power.
Market wants everybody to exchange something of value, command type economy wants to take from people who produce, raise prices and at the same time give to people who don't produce, whoever they are, be it a military industrial complex and/or the voting block of the poorer population, etc.
Market will always win at the end, the way to have a good economy is not to fight the market, but to let it work. The way to screw up your economy is to pretend you are smarter and more powerful than the collective desire of all people.
Good luck with that notion.
(and by the way, you are still under the completely nonsensical impression that increased productivity must lead to increased wages, this is nonsense. Increased productivity leads to increased purchasing power, which can be either presented as higher wages OR as lower consumer prices or a combination of the two. Instead the gov't creates inflation - printing fake currency, which creates fake demand for consumer goods, so drives prices up eventually, and at the same time it destroys productivity by driving away and destroying savings and thus the investment capital)

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You can't handle the truth.
Re:A good example by sjames · 2012-07-21 10:12 · Score: 2

No, the market is an emergant phenomenon resulting from the actions of some people. (for example, NOT the 99 who ended up out of work, they can't buy anything).
That's not to say the market has no place, it is a fine regulatory mechanism when it s properly managed. Like a hammer, you can use it to build great things or you can smash your thumb.
The USSR's and China's mistake was in trying to completely replace the market rather than guiding it to appropriate outcomes.
The market is not sentient. If allowed to run wild, it will go off a cliff eventually. The best example of a totally free market we have is Somalia. The best example of a tightly regulated market we have is Finland.If I must choose one to call home, It wouldn't be a hard choice.
I am under the impression that if increased productivity doesn't lead to more actual buying power, particularly for necessities, eventually the whold thing collapses in a very un-productive bloody revolution. Even whenm you count cheap stuff from China and cheap clothes from many places, buying power in the U.S. has nowhere near tracked productivity gains. That value didn't just go poof, it went into the pockets of the 1%. (you know, the ones who now own over half of everything). Societies generally prosper when wealth is more evenly (MORE evenly, not perfectly evenly) distributed.
Good wealth distribution is more likely if the market is guided towards higher wages rather than through direct re-distribution by government, but either leads to a better result than we have now.