Compensation Management System for Directors and Senior Management
Chapter 1 General Provisions
Article 1 To further improve the compensation management of directors and senior management of Tianjin Liyuan New Material Co., Ltd. (hereinafter referred to as the "Company" or "this Company"), establish a scientific and effective incentive and restraint mechanism, and effectively mobilize the enthusiasm of directors and senior management, this system is formulated in accordance with the "Company Law of the People's Republic of China," "Corporate Governance Guidelines for Listed Companies," and other relevant laws, regulations, rules, normative documents, and the "Articles of Association of Tianjin Liyuan New Material Co., Ltd." (hereinafter referred to as the "Articles of Association"), combined with the actual situation of the Company.
Article 2 The term "director" as used in this system includes independent directors, non-independent directors (including directors appointed as employee representatives).
The term "senior management" as used in this system refers to the Company's president, vice presidents, board secretary, financial controller, and other personnel identified as senior management by the board of directors.
Article 3 The compensation of directors and senior management of the Company shall adhere to the following principles: (1) Principle of fairness, reflecting that the income level is in line with the Company's scale and performance, and is also consistent with external compensation levels; (2) Principle of unity of responsibility, rights, and benefits, reflecting that compensation is commensurate with the value of the position, and the extent of responsibilities undertaken; (3) Principle of long-term development, reflecting that compensation is aligned with the Company's goals for sustainable and healthy development; (4) Principle of balancing incentives and restraints, reflecting that compensation is linked to performance appraisal results, rewards and punishments, and incentive mechanisms.
Chapter 2 Compensation Management Organization
Article 4 The Compensation and Remuneration Committee of the Board of Directors is the management body responsible for assessing directors and senior management and initially determining compensation (allowances) plans. Under the authorization of the Board of Directors, it is responsible for formulating the compensation standards, distribution mechanisms, and payment and clawback arrangements for directors and senior management; it is responsible for reviewing the performance of directors and senior management and conducting annual performance evaluations; and it is responsible for supervising the implementation of this system.
The performance evaluation of independent directors shall be conducted through self-evaluation, mutual evaluation, and other methods.
The Board of Directors shall report to the Shareholders' Meeting on the performance of directors' duties, performance evaluation results, and their compensation, and disclose such information.
The Human Resources Department and the Finance Center of the Company shall cooperate with the Compensation and Remuneration Committee of the Board of Directors in formulating and implementing the compensation plans for directors and senior management.
Article 5 The compensation (allowance) plan for directors of the Company shall be formulated by the Compensation and Remuneration Committee of the Board of Directors, clarifying the basis and specific composition of compensation determination. After being reviewed by the Board of Directors, it shall be submitted to the Shareholders' Meeting for deliberation and approval, and disclosed. When the Board of Directors or the Compensation and Remuneration Committee evaluates a director's performance or discusses their remuneration, that director shall recuse themselves.