Yuandong Biotech: Remuneration Management System for Directors and Senior Management
Chengdu Yuandong Biopharmaceutical Co., Ltd.
Remuneration Management System for Directors and Senior Management
Chapter 1 General Provisions
Article 1 In order to further promote Chengdu Yuandong Biopharmaceutical Co., Ltd. (hereinafter referred to as the "Company") to establish an incentive and restraint mechanism that is compatible with the modern enterprise system, effectively mobilize the enthusiasm and creativity of the company's directors and senior managers, and improve the company's operating efficiency and management level, according to the "People's Republic of China" This system is specially formulated based on the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Code of Governance of Listed Companies and other relevant laws, regulations and normative documents, as well as the relevant provisions of the Articles of Association of Chengdu Yuandong Biopharmaceutical Co., Ltd. (hereinafter referred to as the "Articles of Association"), taking into account the actual situation of the company.
Article 2 This system applies to company directors and senior managers, specifically including the following personnel:
(1) Independent directors: refers to directors who do not hold other positions in the company other than directors, and have no direct or indirect interest relationship with the company, its major shareholders and actual controllers, or other relationships that may affect its independent and objective judgment.
(2) Non-independent directors: including internal directors and external directors. Outside directors refer to non-independent directors who do not hold positions other than directors in the company; internal directors refer to non-independent directors who also hold positions other than directors in the company (or subsidiaries within the scope of consolidation), that is, directors who are company employees or company managers who have signed an employment contract or labor contract with the company.
(3) Senior management personnel refer to the general manager, deputy general manager, secretary to the board of directors and financial director appointed by the board of directors and other senior management personnel identified in the Articles of Association.
Article 3 The remuneration levels of directors and senior managers shall be consistent with market development, match the company’s operating performance and personal performance contributions, and coordinate with the company’s sustainable development. The remuneration management of the company’s directors and senior managers should follow the following principles:
(1) Adhere to the principle of distribution according to work and matching responsibilities, rights and interests;
(2) Adhere to the principle of linking remuneration with company performance and work goals;
(3) Adhere to the principle of unifying incentives and constraints;
(4) Adhere to the principle of combining short-term incentives with long-term incentives.
Article 4 The company shall reasonably determine the salary distribution ratio of directors, senior managers and ordinary employees based on factors such as industry level, development strategy, job value, etc., promote the salary distribution to tilt towards key positions, production front lines and urgently needed high-level and highly skilled talents, and promote the improvement of the salary level of ordinary employees.
Chapter 2 Remuneration Management Organization
Article 5 The annual remuneration plan for the company’s directors shall be formulated and reviewed by the Remuneration and Assessment Committee of the Board of Directors. After deliberation and approval by the Board of Directors, it shall be submitted to the shareholders’ meeting for review and approval.
The annual remuneration plan for the company's senior management personnel is formulated and reviewed by the remuneration and assessment committee of the board of directors, reviewed and approved by the board of directors, explained to the shareholders' meeting, and fully disclosed.
The Remuneration and Assessment Committee under the company's board of directors is the management organization for the remuneration and performance assessment of the company's directors and senior managers. It formulates specific remuneration implementation and assessment rules based on the remuneration plan reviewed and approved by the shareholders' meeting and the board of directors, and is responsible for the specific implementation.
When the board of directors or the remuneration and appraisal committee evaluates an individual director or discusses his remuneration, the director shall recuse himself.
Article 6 The company's human resources department and financial department shall cooperate with the remuneration and assessment committee of the board of directors to carry out specific implementation work in accordance with this system, including but not limited to the formulation of annual remuneration plans for directors and senior managers, assisting in organizing the evaluation of the assessed objects, and the payment of remuneration, etc.
Chapter 3 Salary Standards and Management
Article 7 The remuneration standards for directors and senior managers of the company are as follows:
(1) Independent directors
The company provides director's allowances to independent directors, and the allowance standards are paid monthly after being reviewed and approved by the shareholders' meeting; otherwise, they will not enjoy other remuneration, social security benefits, etc. from the company.
Independent directors do not participate in the company's internal performance appraisal related to salary.
(2) Non-independent directors and senior managers
External non-independent directors nominated by investors (if any) do not receive director allowances from the company, nor do they enjoy other remuneration, social security benefits, etc. from the company.
Other external non-independent directors, that is, other external non-independent directors who do not hold positions other than directors in the company and are not nominated by investors, the company will provide them with director allowances. The allowance standard will be paid on a monthly basis after being reviewed and approved by the shareholders' meeting; otherwise, they will not enjoy other remuneration, social security benefits, etc. from the company. Do not participate in the company's internal performance appraisal linked to salary.
Internal directors and senior managers do not receive director allowances, and their remuneration received from the company shall be in accordance with Article 8 of this system.
(3) The company shall bear the travel expenses incurred by directors for attending the company's board of directors and shareholders' meetings, as well as other reasonable expenses required for exercising their powers in accordance with the Articles of Association.
Article 8 The remuneration of internal directors and senior managers consists of basic annual salary, performance remuneration and medium- and long-term incentive income, among which the proportion of annual performance remuneration shall in principle be no less than 50% of the total basic annual salary and annual performance remuneration.
(1) Basic annual salary: reflects personal skills and the intrinsic value of the position, as well as the complexity of the job and the level of responsibility.
(2) Performance remuneration: It is a performance remuneration established by the company to promote internal directors and senior managers to achieve predetermined goals. The company sets assessment targets based on the annual budget, and honors its annual performance remuneration based on the completion of the performance commitment letter, and issues it based on the assessment results of the year. If performance evaluation involves specific financial indicators, it shall be carried out based on audited financial data.
(3) Medium- and long-term incentives: The company may adopt medium- and long-term incentive measures such as stock options, restricted stocks, and employee stock ownership plans based on operating conditions and market changes. The specific plan will be determined separately in accordance with relevant national laws and regulations.
(4) Over-target rewards: In order to encourage the company's internal directors and senior managers to pay attention to corporate operating efficiency and improve management level, and maintain enthusiasm and creativity, over-target rewards are set up. Specific standards are determined by the company each year based on the company's actual operating conditions that year.
The determination and payment of performance-based remuneration and medium- and long-term incentive income for the company's internal directors and senior managers should be based on performance evaluation.
Chapter 4 Salary Payment and Liability and Compensation Mechanism
Article 9 The specific payment of allowances or remuneration to directors and senior managers shall be based on the company’s internal salary payment system.
Article 10 A certain proportion of the performance-based remuneration of the company's internal directors and senior managers shall be paid after the disclosure of the annual report and performance evaluation. The performance evaluation shall be based on audited financial data.
Article 11 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 shall be calculated and paid based on their actual term of office and actual performance.
Article 12 The allowances or salaries of the company's directors and senior managers are pre-tax amounts. The company will deduct the following items from the salary and bonuses in accordance with the relevant regulations of the country and the company, and the remaining part will be paid to the individual. The company's withholding and payment matters include but are not limited to 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.
Article 13 When a company retrospectively restates its financial report due to financial fraud or other misstatements, it shall promptly reassess the performance remuneration of directors and senior managers and recover the excess payment accordingly.
If a company's directors or senior managers violate their obligations 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 excess incentive income according to the severity of the case, and recover all or part of the performance remuneration and excess incentive income that have been paid during the period when the relevant behavior occurred.
Chapter 5 Salary Adjustment
Article 14 The remuneration system of the company's 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 adapt to the company's further development needs.
Article 15 The company may adjust the salary standards from time to time based on operating performance, changes in market salary levels, and the company's business development strategy. It may also adopt medium and long-term incentive measures such as stock options, restricted stocks, and employee stock ownership plans for directors and senior managers. The specific plan will be determined separately in accordance with relevant national laws and regulations.
Article 16 With the approval of the Remuneration and Appraisal Committee of the company's board of directors, special rewards or penalties may be temporarily established for special matters as a supplement to the remuneration of internal directors and senior managers.
Chapter 6 Supplementary Provisions
Article 17 The terms used in this system shall have the same meaning as those used in the Articles of Association, unless the context otherwise requires.
Article 18 Matters not covered by this system shall be implemented in accordance with relevant national laws and regulations, relevant provisions of regulatory agencies, and the Articles of Association. If this system is inconsistent with relevant laws and regulations, relevant provisions of regulatory agencies, and the provisions of the Articles of Association, the laws, regulations, relevant provisions of regulatory agencies, and the Articles of Association shall be followed.
Article 19 This system shall be interpreted and revised by the company's board of directors.
Article 20 This system shall take effect and be implemented from the date of review and approval by the shareholders' meeting, and the same shall apply to modifications.
Chengdu Yuandong Biopharmaceutical Co., Ltd.
April 2026