Chapter 1 General Principles
Article 1
To further improve the governance structure of Zhejiang Bofei Electric Co., Ltd. (hereinafter referred to as "the Company"), establish a reasonable and effective corporate incentive and restraint mechanism, and enhance operational management efficiency, this system is formulated in accordance with the Company Law of the People's Republic of China, the Code of Corporate Governance for Listed Companies, and the Articles of Association of Zhejiang Bofei Electric Co., Ltd. (hereinafter referred to as "the Articles of Association"), as well as relevant national laws, regulations, and normative documents.
Article 2
The Company shall sign contracts with directors to clarify the rights and obligations between the Company and the directors, the term of office, the responsibilities of directors for violating laws, regulations, and the Articles of Association, as well as compensation for early termination of contracts by the Company, obligations after leaving office, and accountability for claims. The Company shall also sign employment contracts with senior management to clarify the rights and obligations of both parties, the responsibilities of senior management for violating laws, regulations, and the Articles of Association, obligations after leaving office, and accountability for claims.
Chapter 2 Scope of Application
Article 3
This system applies to the Company's directors and senior management, specifically including the following personnel:
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All directors of the Company (including non-independent directors and independent directors);
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Senior management (including the general manager, deputy general managers, board secretary, and financial officer).
Chapter 3 Principles
Article 4
The distribution of compensation for the Company's directors and senior management shall follow these principles:
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The principle of linking income levels to company performance and work objectives;
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The principle of equivalence of responsibilities, rights, and benefits, where compensation corresponds to the value of the position and the level of responsibility;
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The principle of balancing incentives and constraints, equal rewards and punishments, and performance-based compensation;
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The principle of aligning with the Company's long-term interests and goals for sustainable and healthy development.
Chapter 4 Management Institutions
Article 5
The compensation plans for the Company's directors and senior management shall be formulated by the Board of Directors' Compensation and Assessment Committee, which shall clarify the basis for determining compensation and its specific components. The compensation plan for directors shall be decided by the shareholders' meeting and disclosed. When the Board of Directors or the Compensation and Assessment Committee evaluates individual directors or discusses their compensation, the concerned director shall abstain from voting. The compensation plan for senior management shall be approved by the Board of Directors, explained to the shareholders' meeting, and fully disclosed.