Remuneration Management System for Directors and Senior Management (Revised in April 2026)
Zhejiang Stell Pharmaceutical Co., Ltd.
Remuneration Management System for Directors and Senior Management
Chapter 1 General Provisions
Article 1 In order to further improve Zhejiang Stell Pharmaceutical Co., Ltd. (hereinafter referred to as This system is formulated in accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Code of Corporate Governance for Listed Companies, the Stock Listing Rules of the Shanghai Stock Exchange and other laws and administrative regulations, as well as the relevant provisions of the Articles of Association of Zhejiang Starry Pharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association").
Article 2 This system applies to the following personnel:
(1) Directors (including independent directors);
(2) Senior managers as stipulated in the Articles of Association.
Article 3 The remuneration of the company’s directors and senior managers shall be consistent with market development, match the company’s operating performance and personal performance, and coordinate with the company’s sustainable development. The remuneration management of company directors and senior managers should follow the following principles:
(1) The principle of fairness, the salary level matches the company's business scale, profitability and job responsibilities, while taking into account the regional economic development status and industry salary levels;
(2) The principle of unity of responsibilities and rights, and the salary level matches the value of the position, responsibilities and obligations;
(3) The principle of long-term development, and the salary level is consistent with the company's mid- and long-term development goals;
(4) Pay equal attention to the principle of incentives and constraints, link salary payment with assessment and incentive mechanisms, and establish and improve salary stop payment, recourse and deferred payment mechanisms.
Chapter 2 Remuneration Management Organization
Article 4 The Remuneration and Assessment Committee of the Board of Directors is responsible for formulating and conducting assessment standards for the company’s directors and senior managers, formulating and reviewing the remuneration policies and plans for the company’s directors and senior managers, and making recommendations to the board of directors on the following matters:
(1) Remuneration of directors and senior managers;
(2) Formulate or change equity incentive plans and employee stock ownership plans, and ensure that incentive objects are granted rights and the conditions for exercising their rights are met;
(3) Directors and senior managers arrange shareholding plans for the subsidiaries to be spun off;
(4) Other matters stipulated in laws, administrative regulations, provisions of the China Securities Regulatory Commission and the Articles of Association.
Article 5 Directors’ remuneration matters shall be decided by the shareholders’ meeting. 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 remuneration distribution plan for senior management personnel must be approved by the board of directors, explained to the shareholders' meeting, and fully disclosed.
Article 6 The company’s human resources department, securities department and other relevant departments shall cooperate with the remuneration and assessment committee of the board of directors in the specific implementation of the remuneration plan, including:
(1) The human resources department is responsible for the implementation of salary plans, employee performance appraisal, salary accounting and payment, salary data statistics, etc.;
(2) The Securities Department, under the leadership of the Secretary of the Board of Directors, is responsible for disclosing information on the remuneration of directors and senior managers in accordance with national laws, regulations and relevant provisions of regulatory agencies.
Chapter 3 Salary Standards and Composition
Article 7 The company has established a total salary determination mechanism. Total salary refers to the total labor remuneration paid directly to all employees in the form of currency by the company within a certain period of time, including basic salary, performance pay, medium and long-term incentive income, and various allowances and subsidies.
The company will reasonably determine the total salary based on the company's development strategy and compensation strategy, annual production and operation goals and economic benefits, comprehensively consider the market benchmarking of employee salary levels, and combine it with the salary guidance lines issued by government functional departments.
Article 8 The company shall include the total salary of directors and senior managers into budget management. The remuneration and assessment of the company's directors and senior managers are based on the company's economic benefits and based on the company's annual business plan and the work objectives of the senior managers' work. A comprehensive assessment is conducted. The annual salary distribution of the directors and senior managers is determined based on the assessment results, and timely adjustments are made based on the company's operating conditions, salaries in the same industry, social inflation levels and changes in the company's organizational structure.
Article 9 The company should reasonably determine the salary distribution ratio between directors, senior managers and ordinary employees based on factors such as industry level, development strategy, job value, etc., promote salary distribution to favor the company's key positions, production front lines, and urgently needed high-level, highly skilled talents, and continue to increase the salary level of ordinary employees.
Article 10 The remuneration of the company’s directors and senior managers consists of basic salary, performance salary and medium- and long-term incentive income, among which the proportion of performance salary should in principle be no less than 50% of the total basic salary and performance salary.
Article 11 The determination and payment of performance-based remuneration and medium- and long-term incentive income for company directors and senior managers shall be based on performance evaluation. The company should determine a certain proportion of performance-based remuneration for directors and senior managers to be paid after annual report disclosure and performance evaluation. Performance evaluation should be based on audited financial data.
Article 12 The company may establish a deferred payment mechanism for performance remuneration of directors and senior managers based on industry characteristics, business models and other factors, and clarify the specific circumstances, relevant personnel, deferral ratios and implementation arrangements applicable to the implementation of deferred payment.
Article 13 Based on the nature of the work of directors and the responsibilities, risks, pressures, etc. they bear, the following remuneration standards are determined:
(1) Internal directors: Internal directors who concurrently serve as senior managers of the company shall be paid according to the salary standards for senior managers; other internal directors shall receive remuneration according to the company’s relevant salary management system based on their specific positions in the company; the company will no longer pay separate director allowances to internal directors.
(2) Outside directors: Outside directors who do not hold actual operating and management positions in the company shall receive director's allowances according to the remuneration plan reviewed and approved by the shareholders' meeting.
(3) Independent directors: receive independent director allowances according to the remuneration plan reviewed and approved by the shareholders' meeting.
Article 14 The company's senior managers shall receive remuneration based on their specific positions in the company and the company's relevant remuneration and performance appraisal management regulations, and shall take performance evaluation as an important basis.
(1) The basic salary is determined based on the business management position held by the company, the value of the position, the responsibilities assumed, etc., and is paid on a monthly basis;
(2) Performance compensation is based on the company's business objectives and the completion of individual performance assessment indicators, and is divided into monthly performance and annual performance, and is paid on a monthly/annual basis based on the assessment results;
(3) Medium and long-term incentive income: determined based on the company's equity incentive plan, employee stock ownership plan and other medium- and long-term incentive mechanisms, and cashed out in installments based on the company's long-term operating performance and personal performance, and specifically implemented in accordance with the relevant incentive plans.
Chapter 4 Salary Payment
Article 15 The reasonable expenses for communication, transportation, accommodation and other expenses required by directors and senior managers to perform their duties (such as attending the company's board of directors, shareholders' meetings, etc.) in accordance with the Company Law, the Articles of Association and other relevant provisions shall be borne by the company.
Article 16 The remuneration and allowances of the company's directors and senior managers are all pre-tax amounts. After the company withholds and pays personal income tax, various social insurance fees and other expenses that should be paid by the individual in accordance with relevant national regulations, the remaining portion is paid to the individual.
Article 17 If a company's directors or senior managers leave office due to reasons such as change of term, re-election, resignation during the term, etc., their remuneration will be calculated and paid based on their actual term of office and actual performance; however, if any of the following circumstances occurs, the company may reduce or not pay:
(1) Serious dereliction of duty or abuse of power;
(2) Being publicly reprimanded by the China Securities Regulatory Commission or the Shanghai Stock Exchange due to serious violations of laws and regulations, declared unfit to serve as a relevant candidate for a listed company, or punished by the competent authorities of securities and other departments;
(3) Seriously harming the interests of the company;
(4) Other circumstances in which the company's board of directors determines that the company's relevant regulations have been seriously violated.
Article 18 The company has established a salary stop payment and recourse mechanism. If directors and senior managers violate laws and regulations, seriously violate company rules, cause significant economic losses to the company, etc., the company has the right to stop paying unpaid salaries, bonuses, and incentive income, and, depending on the size of the loss and the severity of the responsibility, impose financial penalties, administrative sanctions, or dismissal from their posts.
Chapter 5 Salary Adjustment
Article 19 The remuneration system should serve the company's strategic goals and be adjusted accordingly as the company's operating conditions continue to change. The remuneration of the company's directors and senior managers should be consistent with market development, match the company's operating performance and personal performance, and coordinate with the company's sustainable development.
Article 20 The basis for adjusting the remuneration of the company’s directors and senior managers is:
(1) The company's profitability.
(2) Personal performance: including but not limited to the performance of directors and senior managers in strategic planning, business management, risk control, team building, etc., as well as the degree of personal contribution to the company's performance.
(3) Inflation level: refer to the inflation level so that the actual purchasing power of the salary does not decrease as the reference basis for the company's salary adjustment.
(4) Adjustment of the company’s development strategy or organizational structure.
(5) Individual adjustments when positions change.
Chapter 6 Supplementary Provisions
Article 21 Matters not covered by this system shall be implemented in accordance with the provisions of relevant laws, administrative regulations, departmental rules, normative documents and the Articles of Association. If this system is inconsistent with the provisions of laws, administrative regulations, departmental rules, normative documents promulgated after this system comes into effect or the revised Articles of Association, the provisions of the relevant national laws, administrative regulations, departmental rules, normative documents and the Articles of Association shall be followed.
Article 22 This system shall be interpreted and revised by the company's board of directors and shall take effect from the date of adoption of the resolution of the shareholders' meeting. The original "Remuneration Management System for Directors and Senior Managers of Zhejiang Starry Pharmaceutical Co., Ltd." shall be abolished at the same time.
Zhejiang Stell Pharmaceutical Co., Ltd.
April 2026