Chapter 1 General Principles
Article 1
To further improve the compensation management system for directors and senior management of Xinning Electric Co., Ltd. (hereinafter referred to as "the Company"), establish a scientific and effective incentive and restraint mechanism, effectively motivate the work enthusiasm of the Company's directors and senior management, enhance the operational management efficiency of the Company, and promote the sustainable and healthy development of the Company, this system is formulated in accordance with the "Company Law of the People's Republic of China," "Code of Corporate Governance for Listed Companies," "Shenzhen Stock Exchange GEM Listing Rules," "Self-Regulatory Guidelines for Listed Companies No. 2 - Standardized Operations of GEM Listed Companies," and other relevant laws, regulations, and normative documents, as well as the provisions of the "Articles of Association of Xinning Electric Co., Ltd." (hereinafter referred to as "the Articles of Association"), combined with the actual situation of the Company.
Article 2
This system applies to the following personnel:
- Directors, including non-independent directors (including employee representative directors) and independent directors;
- Senior management, including the general manager, board secretary, financial director, and other senior management as stipulated in the Articles of Association.
Article 3
The Company's compensation system follows the principles below:
- Principle of openness, fairness, and transparency, determined with reference to current income levels, which should strengthen the incentive and restraint mechanism while aligning with the Company's actual situation;
- Principle of unity of responsibility, authority, and interests, reflecting the correspondence between compensation and the value of positions and the extent of responsibilities;
- Principle of long-term development, reflecting the alignment of compensation with the Company's goals for sustainable and healthy development;
- Principle of balancing incentives and constraints, linking compensation distribution with assessments, rewards, and incentive mechanisms.
Article 4
The Company shall disclose the annual compensation of directors and senior management in accordance with the "Guidelines on the Content and Format of Information Disclosure by Companies Issuing Securities No. 2 - Content and Format of Annual Reports," including the decision-making process for compensation, basis for determining compensation, and actual payment conditions. This includes disclosing the total pre-tax compensation received by each current and former director and senior management during the reporting period (including basic salary, bonuses, allowances, subsidies, employee welfare expenses, various insurance premiums, provident fund, annuities, and other forms of compensation received from the Company), assessment basis and completion status, deferred payment arrangements, and circumstances of payment recovery, as well as whether compensation was received from related parties of the Company. The total compensation amount for all directors and senior management shall also be disclosed.
Chapter 2 Compensation Management Organization
Article 5
The Board's Compensation and Assessment Committee is responsible for formulating assessment standards for directors and senior management and conducting assessments, formulating and reviewing compensation policies and plans for directors and senior management, and making recommendations to the Board on the following matters:
- Compensation for directors and senior management;
- Formulation or modification of equity incentive plans and employee stock ownership plans, conditions for the exercise of rights by incentivized individuals;
- Plans for shareholding arrangements for directors and senior management in proposed spin-off subsidiaries;
- Other matters as stipulated by laws, regulations, and the Articles of Association.