Compensation for former Lenovo CEO to increase

Lenovo Group Ltd (聯想) said it increased compensation for former chief executive officer William Amelio by 54 percent last fiscal year, after China’s biggest personal-computer maker posted a record annual loss.

“I don’t like it,” said Charles Guo (郭曉), who rates Lenovo shares “underweight” at JPMorgan Chase & Co in Hong Kong.

Executive compensation ought to be linked to a company’s performance, he said.

Amelio, who resigned in February, was paid US$17.6 million in the year ended March, including US$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 US$11.4 million a year earlier, the document showed.

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 Lenovo posted its biggest loss and Taiwan’s Acer Inc (宏碁) overtook it to become the world’s third-biggest PC manufacturer.

Yang Yuanqing (楊元慶), who replaced Amelio as CEO, received US$7.2 million in total pay in the fiscal year ended in March, a 42 percent increase, Lenovo said in the report filed to the Hong Kong stock exchange yesterday. Yang was previously the company’s chairman.

Founder Liu Chuanzhi (柳傳志) returned as chairman in February to focus the company on its home market and emerging countries to revive profit as competition from Hewlett-Packard, Dell and Acer intensified.

Personal-computer shipments at Lenovo 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, researcher IDC said.

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 share declined to 13.6 percent from 13.7 percent, the researcher said.

Lenovo posted a loss of US$226.4 million last fiscal year, compared with a profit of US$484.3 million a year earlier, as sales tumbled in the US and Europe.