Remuneration Management System for Directors and Senior Management of Chenxin Pharmaceutical Co., Ltd. (April 2026)
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Chapter 1 General Provisions
Article 1 In order to further improve the salary management of directors and senior managers of Chenxin Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company"), establish a scientific and effective incentive and restraint mechanism, mobilize the enthusiasm and creativity of directors and senior managers, improve corporate operating efficiency and management level, and ensure the realization of the company's development strategic goals, this system is formulated in accordance with national laws, regulations, normative documents and the relevant provisions of the Articles of Association of Chenxin Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association") and in combination with the actual situation of the company.
Article 2 Directors and senior managers to whom this system applies include: company directors, general manager, deputy general manager, financial director, chief engineer, board secretary and other senior managers as stipulated in the Articles of Association.
Article 3 The remuneration of directors and senior managers is based on the company's operation and comprehensive management, and is determined through a comprehensive assessment based on the completion of the business plan, the completion of assigned work responsibilities and work goals, and personal performance and development.
Article 4 The remuneration distribution of the company’s directors and senior managers shall follow the following basic principles:
The principle of distribution according to work and matching responsibilities, rights and benefits;
The principle of linking personal income level with company performance and work goals;
The principle of combining remuneration with the long-term interests of the company;
Pay equal attention to the principle of incentives and constraints, and link salary payment with assessment, reward and punishment, and incentive mechanisms.
Chapter 2 Management Organization
Article 5 The Remuneration and Appraisal Committee of the Company’s Board of Directors (hereinafter referred to as the “Remuneration and Appraisal Committee”) is responsible for formulating and revising the evaluation standards for directors and senior managers and conducting evaluations, formulating and reviewing remuneration policies and plans such as the remuneration decision mechanism, decision-making process, payment and stop-payment recourse arrangements for directors and senior managers, and clarifying the basis and specific composition of remuneration.
Article 6 The director's remuneration plan shall be determined by the shareholders' meeting and shall be disclosed. When the board of directors or the remuneration and appraisal committee evaluates an individual director or discusses his remuneration, the director shall recuse himself.
The senior management remuneration plan is approved by the board of directors, explained to the shareholders' meeting, and fully disclosed.
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Article 7 The responsibilities and authorities of the Remuneration and Appraisal Committee are determined in accordance with the "Working Rules of the Remuneration and Appraisal Committee of the Board of Directors of Chenxin Pharmaceutical Co., Ltd.".
Chapter 3 Salary Structure and Assessment Management
Article 8 The remuneration standards for directors and senior managers are as follows:
1.Independent directors
(1) Independent directors adopt a fixed allowance system. The allowance standard is paid quarterly after being reviewed and approved by the shareholders' meeting. In addition, independent directors do not enjoy other remuneration, social security benefits, etc. from the company.
(2) The company shall bear the travel expenses of independent directors to attend the company's board of directors and shareholders' meetings and other expenses required for exercising their powers in accordance with the Articles of Association.
Independent directors do not participate in the company's internal performance appraisals linked to salary.
The performance evaluation of independent directors is carried out through self-evaluation, mutual evaluation and other methods.
Article 9 Non-independent directors (including employee directors) who hold specific positions in the company (except director positions, the same below) shall be subject to the remuneration and assessment management methods corresponding to their positions and will not receive additional director remuneration. Non-independent directors who do not hold specific positions in the company will be paid non-independent director allowances by the company. In addition, they will not enjoy other remuneration, social security benefits, etc. from the company.
Article 10 The remuneration of directors and senior managers who hold specific positions in the company consists of basic salary, performance salary and medium- and long-term incentive income. In principle, the proportion of performance-based salary should not be less than 50% of the total basic salary and performance-based salary. The medium- and long-term incentive income can be determined based on the company's business development.
Basic remuneration is determined based on industry and regional salary levels, job responsibilities and performance, and is paid on a monthly basis; performance remuneration is linked to the company's operating performance and individual performance, and is coordinated with the company's sustainable development. The specific amount is determined based on the audited annual financial data and the assessment results of the corresponding year, and is paid after the annual report is disclosed and the performance assessment and evaluation of the year are completed; medium and long-term incentive income is linked to the mid- and long-term assessment and evaluation results. It is a reward for mid- and long-term operating performance and contribution, and is paid based on the mid- and long-term assessment and evaluation results.
Article 11 The company shall determine a certain proportion of performance-based remuneration for non-independent directors and senior managers to be paid after the disclosure of the annual report and performance evaluation. The performance evaluation shall be based on audited financial data.
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Article 12 If a company turns from profit to loss or its losses expand compared with the previous fiscal year, and the average performance remuneration of directors and senior managers does not decrease accordingly, the reasons shall be disclosed.
Chapter 4 Salary Management and Stop Payment Recourse
Article 13 If the company's directors and senior managers change their positions due to work needs, the time of appointment and removal shall be based on the time of resignation and replacement, and the remuneration shall be calculated and paid based on their actual term of office and actual performance.
Article 14 Directors and senior managers who hold specific positions in the company shall pay five social insurances and one fund in accordance with the relevant regulations of the company, and individuals shall bear their personal share in accordance with regulations.
Article 15 When a financial report is retrospectively restated due to financial fraud or other misstatements, the performance remuneration and medium- and long-term incentive income of directors and senior managers shall be reassessed in a timely manner and the excess payment shall be recovered accordingly. If a company's directors or senior managers violate their duties of loyalty and diligence and cause losses to the company, or are at fault for financial fraud, misappropriation of funds, illegal guarantees and other illegal activities, the company shall reduce or stop paying unpaid performance remuneration and medium- and long-term incentive income according to the severity of the case, and recover all or part of the performance remuneration and medium- and long-term incentive income that have been paid during the period when the relevant behavior occurred.
Article 16 If any of the following circumstances occurs to directors and senior managers during their term of office, their salary may be reduced or their current and unpaid basic salary/allowances, performance remuneration and medium- and long-term incentive income may not be paid: 1. Those who seriously violate the company's rules and regulations and receive a written warning or above within the company;
Seriously harming the company’s interests or causing significant economic losses to the company;
Violation of 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.
Article 17 The compensation content in the "Company Articles of Association" or relevant contracts involving the early termination of directors and senior managers shall comply with the principle of fairness, shall not damage the company's legitimate rights and interests, and shall not be used to transfer benefits.
Chapter 5 Salary Payment
Article 18 The salary paid by the company is pre-tax. The company will deduct the following items from the salary in accordance with the relevant regulations of the country and the company, and the remaining part will be paid to the individual. Company withholding and payment matters include but are not limited to
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The following:
(1) Withholding and payment of personal income tax;
(2) Various social insurance fees and other portions borne by individuals;
(3) Other amounts stipulated by the state or the company should be borne by the individual.
Chapter 6 Salary Adjustment
Article 19 The remuneration system for directors and senior managers should serve the company's business strategy and make corresponding adjustments as the company's operating conditions continue to change to meet the company's further development needs.
Article 20 The basis for adjusting the remuneration of the company’s directors and senior managers is:
Salary increase level in the same industry: Collect salary data in the same industry through market salary reports or public salary data, and conduct summary analysis as a reference for the company's salary adjustment;
Inflation level: refer to the inflation level to ensure that the actual purchasing power level of salary does not decrease as a reference for the company's salary adjustment;
The company’s profitability;
Adjustment of the company’s organizational structure;
Individual adjustments when positions change.
Chapter 7 Supplementary Provisions
Article 21 Matters not covered by this system shall be implemented in accordance with the relevant provisions of national laws, regulations, normative documents and the Articles of Association. If this system is inconsistent with the relevant provisions of laws, regulations, normative documents and the Articles of Association, the relevant provisions of the relevant laws, regulations, normative documents and the Articles of Association shall prevail.
Article 22 The company’s board of directors is responsible for interpreting this system.
Article 23 This system shall take effect from the date of review and approval by the company's shareholders' meeting.
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Board of Directors of Chenxin Pharmaceutical Co., Ltd.
April 2026
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