Tiankang Biology: Remuneration and Performance Appraisal Management System for Directors and Senior Management
Directors and senior managers of Tiankang Biological Co., Ltd.
Salary and performance appraisal management system
Chapter 1 General Provisions
Article 1 In order to promote the realization of the strategic goals of Tiankang Biological Co., Ltd. (hereinafter referred to as the "Company"), guide the company's high-quality development, further establish and improve the incentive and restraint mechanism compatible with the modern enterprise system, effectively mobilize the work enthusiasm of the company's senior managers, and improve the company's operation and management efficiency, this system is formulated based on the actual situation of the company.
Article 2 This system applies to directors and senior managers who receive remuneration or allowances from the company, specifically including the following personnel:
(1) Directors: All directors (including independent directors and non-independent directors) elected by the company’s shareholders’ meeting.
(2) Senior management personnel: the general manager, deputy general manager, financial director, secretary of the board of directors and other management personnel appointed by the board of directors.
Article 3 The remuneration management of the company’s directors and senior managers shall follow the following principles:
(1) Adhere to strategic guidance. Focus on the company's mission and vision, strengthen strategic orientation, and build a compensation system to support the effective implementation of strategies to ensure the company's long-term and stable development.
(2) Adhere to goal orientation. Focusing on the company's development goals, the income level is closely integrated with the company's efficiency and consistent with the laws of market value. The overall salary level takes into account the current and future company development, and pays equal attention to incentives and constraints.
(3) Adhere to the principle of combining distribution according to work with responsibilities and rights, based on job value, highlight performance contributions, strengthen goal binding, widen gaps, eliminate egalitarianism, and embody the value concept of sharing profits and risks with the company.
(4) Adhere to the principles of openness, fairness and impartiality, and carry out senior management salary management in accordance with laws and regulations.
Chapter 2 Management Organization
Article 4 The Remuneration and Appraisal Committee of the company's board of directors is the management organization that evaluates the company's directors and senior managers and formulates remuneration plans.
Article 5 The work of the Remuneration and Appraisal Committee includes the following:
(1) Propose plans or revised opinions on the remuneration management of directors and senior managers, and review and determine annual performance appraisal targets for directors and senior managers;
(2) Examine the performance of duties by directors and senior managers and conduct annual performance appraisals;
(3) Responsible for supervising the implementation of the company’s compensation system.
Chapter 3 Composition and payment of remuneration
Article 6 Total salary determination mechanism: The company implements total salary budget management. Focusing on the development strategy every year, the total salary is comprehensively determined based on the company's production and operation goals, economic benefits, industry salary levels and labor cost affordability. Total salary control and dynamic management are implemented, and a reasonable floating mechanism for the total salary to increase or decrease with the company's benefits is established to ensure that salary distribution matches the company's development.
Article 7 The company's independent directors receive fixed allowances, and the allowance standards are implemented in accordance with the resolutions of the shareholders' meeting. Otherwise, no additional remuneration will be paid. Independent directors do not participate in the company's internal annual business goals and performance appraisals linked to salary, and reasonable expenses (such as travel expenses, etc.) required to perform their duties are borne by the company.
Article 8 The remuneration of non-independent directors serving in the company shall be determined based on their specific positions and job responsibilities in the company.
Article 9 The company's senior managers implement an annual salary system, and the salary consists of annual salary and tenure incentives. Among them: annual remuneration consists of three parts: basic annual salary, performance annual salary and excess profit reward.
(1) Basic annual salary: It is the annual basic income of senior managers. It is determined comprehensively with reference to industry salary levels and factors such as corporate assets, business scale, operating development, position value, management difficulty and responsibilities. It is approved once a year and paid monthly. It is not linked to operating performance.
Basic salary standard: The salary coefficient of the chairman/general manager is 1; other senior managers shall be determined at 0.6-0.9 times the annual salary of the chairman/general manager based on factors such as the value of their positions, work intensity, responsibilities and risks, and the average shall not exceed 0.8, so that the gap is reasonably widened.
For senior managers who hold multiple positions (including holding concurrent positions or positions in subsidiaries), their remuneration standards will in principle be implemented in accordance with company standards, and remuneration will not be calculated and paid repeatedly.
(2) Annual performance salary: It is the income associated with the annual assessment and evaluation results. It is based on the company's annual goals and is formulated based on the annual benefits achieved and the completion of the work performance of senior managers. It is reviewed once a year and issued annually. In principle, the annual performance salary accounts for no less than 60% of the annual salary.
The performance-based annual salary coefficient of the chairman/general manager is 1; other senior managers shall be determined based on factors such as the value of their position, market level, business performance completion, annual comprehensive evaluation results and other factors, based on 0.6-0.9 times the annual salary of the chairman/general manager, with an average not exceeding 0.8, while ensuring that the standard deviation is not less than 5%, and the gap is reasonably widened. If the company's operating income and total profit both achieve the target value, the requirement that the deviation be no less than 5% does not need to be implemented.
(3) The annual salary of the company's senior management personnel is paid in accordance with the approved salary plan, of which the basic annual salary is paid in advance on a monthly basis with reference to the basic annual salary of the previous year. The performance-based annual salary will be paid in advance on a monthly basis based on a certain proportion of the previous year's performance-based annual salary based on the assessment results of the previous year, with a maximum of no more than 50%. The overall annual salary will be determined based on the annual comprehensive evaluation, and the excess will be refunded and the less will be supplemented.
(4) Excess profit rewards: Excess profit rewards are one-time rewards for achieving excess profits and are included in the annual remuneration of senior managers for management.
Article 10 Tenure incentives: It is income linked to the results of the tenure assessment and evaluation of senior managers. The performance appraisal term is three years, and the standard is determined by not exceeding 30% of the total annual salary level of senior managers during their term.
(1) The tenure incentive distribution coefficient of the chairman/general manager is 1. The tenure incentives of other senior managers are determined by the company based on the annual distribution coefficient during their term of office, which is 0.6-0.9 times the tenure incentive of the chairman/general manager. The average shall not exceed 0.8. The distribution coefficient must be reasonably widened.
(2) Senior managers whose term of office has not expired due to personal reasons shall not receive tenure incentives; if their term of office has not expired due to no personal reasons, tenure incentives may be issued based on their tenure in the company, assessment results, and contribution size.
(3) Term incentives will be paid based on the results of the term assessment in accordance with the principle of assessment first and then cashing out after the term ends. Term incentives shall not be paid in advance.
Article 11 In principle, the annual remuneration of the company's senior managers for the previous year must be completed by internal audit before the end of June of this year, and the accounting work must be completed before the third quarter.
Article 12 Payment of Remuneration
(1) The remuneration of directors and senior management personnel shall be pre-tax income. Personal income tax should be paid in accordance with the law. The company withholds and pays personal income tax for them in accordance with the law.
(2) The excess profit rewards will be cashed out annually in accordance with the relevant regulations formulated by the board of directors.
Chapter 4 Performance Appraisal and Implementation Procedures
Article 13 Before the start of the business year, directors and senior managers should formulate work plans and goals based on the company's overall business goals, and sign a target responsibility letter with the company.
Article 14 The target responsibility statement shall be proposed by the Remuneration and Assessment Committee based on the company's overall business objectives and the work of directors and senior managers, and shall be reviewed and confirmed by the board of directors and the company's business objectives based on their job responsibilities.
Article 15 The content of the target responsibility letter includes business performance indicators, business focus and rejection indicators. Operating performance indicators: sales revenue, net profit, asset-liability ratio, etc.; key business work indicators refer to key work matters that must be achieved based on the company's development direction; rejection indicators mainly include party building, operational risk prevention, major disciplinary violations, decision-making errors, major quality losses or major safety accidents.
During the operating year, if external conditions such as the operating environment undergo major changes, the Remuneration and Appraisal Committee has the right to adjust the work plans and goals of senior executives.
Article 16 The Remuneration and Assessment Committee shall adjust the remuneration plan based on the company's annual income, profit efficiency and personal performance.
Chapter 5 Coordinate and standardize welfare benefits
Article 17 The senior managers of the company shall participate in basic pension insurance, basic medical insurance and other social insurances as well as contribute to the housing provident fund in accordance with the relevant regulations of the state and the location of the enterprise.
Article 18 If a company's senior managers establish corporate annuities or supplementary medical insurance in accordance with relevant national regulations, their payment ratios shall not exceed the standards uniformly stipulated by the state and the location of the enterprise.
Article 19 A company shall not purchase commercial supplementary pension insurance for senior managers.
Chapter 6 Salary Management and Supervision
Article 20 The annual salary assessment shall be based on the calendar year as the assessment period. The evaluation period for operating performance during the term of office is three years.
Article 21 If the annual comprehensive assessment results are incompetent, the performance annual salary and excess profit incentives will not be honored; if the tenure comprehensive assessment results are incompetent, the tenure incentive income will not be received.
Article 22 Directors and senior managers of a company who work part-time in their wholly-owned, holding or joint-stock enterprises or in other enterprises, public institutions, social groups, intermediary agencies, etc. outside the company shall not receive additional salary, bonuses, allowances or other forms of remuneration from the part-time enterprises (units), and shall not receive multiple remunerations.
Article 23 During the term of office of the company's directors and senior managers, if any of the following circumstances occurs, performance bonuses may be deducted, not paid, or part or all of the performance bonuses paid may be recovered:
(1) Seriously violated the company’s rules and regulations and received severe punishment within the company;
(2) Seriously harming the company’s interests or causing significant economic losses to the company;
(3) Violating laws and regulations or dereliction of duty or dereliction of duty, resulting in major decision-making errors, major safety and liability accidents, serious impact on the company or loss of company assets;
(4) Being administratively punished by the China Securities Regulatory Commission or publicly condemned by the stock exchange or declared as an unsuitable person due to major violations of laws and regulations;
(5) The company retrospectively restates the financial report due to financial fraud and other misstatements;
(6) Causing losses to the company due to breach of obligations, or committing financial fraud, misappropriation of funds, illegal guarantees and other illegal and disciplinary behaviors;
(7) Leaving his/her position or no longer having the qualifications as a director or senior manager, or being unable to perform corresponding duties.
Chapter 7 Supplementary Provisions
Article 24 If matters are not covered in this system or conflict with relevant laws, administrative regulations, departmental rules, normative documents or the Articles of Association, the provisions of the relevant laws, administrative regulations, departmental rules, normative documents and the Articles of Association shall apply.
Article 25 This system shall be interpreted and formulated by the board of directors and shall be implemented after review and approval by the company’s shareholders’ meeting.