Datang Environment Industry Group Co., Ltd. — Remuneration Information 2016

Nov 13, 2016

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Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司

(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1272)

TERMS OF REFERENCE OF THE REMUNERATION AND EVALUATION COMMITTEE OF THE BOARD OF DIRECTORS

Chapter 1 GENERAL PROVISIONS

• Article 1 Pursuant to the Company Law of the People’s Republic of China, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (hereinafter refer to as the “ Listing Rules ”), including the Code on Corporate Governance Practices as set out in Appendix 14 thereof and applicable regulatory rules, the Articles of Association of Datang Environment Industry Group Co., Ltd. (hereinafter refer to as the “ Articles of Association ”), and the Rules of Procedures of the Board Meetings of Datang Environment Industry Group Co., Ltd., the rules have been laid down to further establish a sound evaluation and remuneration management system for directors and senior management members of Datang Environment Industry Group Co., Ltd. (hereinafter refer to as the “ Company ”) and improve its corporate governance structure.

• Article 2 The Remuneration and Evaluation Committee, established by the board of directors (the “ Board ”) as a special committee, is mainly responsible for setting out the assessment standards for directors and senior management members of the Company and conducting assessment and formulating and reviewing the remuneration policies and proposals of directors and senior management members of the Company and shall be accountable to the Board. In fulfilling its responsibilities, the Remuneration and Evaluation Committee shall abide by the applicable laws, regulations, the Articles of Association and the rules herein. By virtue of legislative requirements, the Remuneration and Evaluation Committee shall be subject to the supervision by the shareholder’s meeting and Supervisory Committee of the Company.

Article 3 The directors herein refer to the chairman and directors who receive remuneration from the Company, the senior management members herein refer to the general manager, deputy general manager, chief financial officer, secretary of the Board and other personnel to be appointed by the Board.

• For identification purpose only.

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Chapter 2 COMPOSITION OF COMMITTEE

• Article 4 The Remuneration and Evaluation Committee comprises three directors with more than half of independent non-executive directors.

• Article 5 The members of the Remuneration and Evaluation Committee are nominated by the chairman, more than half of the independent nonexecutive directors or one-third of all the directors and elected by the Board.

• Article 6 The Remuneration and Evaluation Committee shall have a chairman, who shall be an independent non-executive director. The chairman shall oversee the operation of the Remuneration and Evaluation Committee and perform as the convener of meetings. The chairman elected shall be members of the Remuneration and Evaluation Committee.

• Article 7 The Remuneration and Evaluation Committee shall have the same term of office as the Board. A member of the Remuneration and Evaluation Committee may serve consecutive terms if re-elected upon the expiration of his term. If any member ceases to hold office as a director of the Company during the term, such director shall lose his position as a member of the Remuneration and Evaluation Committee accordingly. The vacancy shall be filled in accordance with the rules.

• Article 8 The human resources department of the Company is the day-to-day working body of the Remuneration and Evaluation Committee. It is responsible for providing information related to human resources as well as individuals to be assessed, preparing for meetings of the Remuneration and Evaluation Committee and implementing relevant resolutions of the Remuneration and Evaluation Committee.

• Article 9 The relevant departments of the Company have the responsibility of coordinating with the Remuneration and Evaluation Committee to carry out its work and providing relevant materials.

CHAPTER 3 DUTIES AND AUTHORITIES

Article 10 The Remuneration and Evaluation Committee shall have the following duties and responsibilities:

• (i) to make recommendations to the Board on the Company’s policy and structure for all directors’ and senior management members remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy;

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• (ii) to review and approve the management’s remuneration proposals with reference to the Board’s corporate goals and objectives;

• (iii) to determine remuneration packages of all the executive directors and senior management members, including but not limited to basic salary, subscription and benefits in kind, pension rights and bonus and compensation payments;

• (iv) to make recommendations to the Board on the remuneration of non-executive directors;

• (v) consider salaries paid by comparable companies, time commitment and responsibilities, employment conditions elsewhere in the Group and to consider if it is necessary to determine remuneration according to performance;

• (vi) to review and approve compensation payable to executive directors and senior management members for any loss or termination of office or appointment to ensure that it is consistent with relevant contractual terms and is otherwise fair and not excessive;

• (vii) to review and approve compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that they are consistent with relevant contractual terms and are otherwise reasonable and appropriate;

• (viii) to ensure that no director or any of his associates is involved in deciding his own remuneration;

• (ix) to assess the performance of the directors and senior management members of the Company and evaluate and assess their performance per annum;

• (x) to research the incentive scheme; and

• (xi) other duties authorized by the Board.

Article 11 The Board shall have the rights to reject any remuneration plan or proposal which is prejudicial to the interests of the shareholders.

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• Article 12 The remuneration plans for directors of the Company proposed by the Remuneration and Evaluation Committee shall be submitted to the Board for approval and shall then be presented to the shareholders at general meetings for consideration and approval before implementation. The remuneration distribution proposal for senior management members of the Company shall also be submitted to the Board for approval.

CHAPTER 4 WORKING PROCEDURES

Article 13 The human resources department of the Company is in charge of the preliminary preparation for the decision-making of the Remuneration and Evaluation Committee and shall provide the following written materials of the Company:

• (i) to provide information on whether and to what extent the Company’s major financial indicators and operational targets have been achieved;

• (ii) to provide information on the scope of work and major job duties and responsibilities assigned to each of the senior management members of the Company;

• (iii) to provide information on the targets stipulated in the performance appraisal system for the Directors’ and senior management members and whether and to what extent these targets have been achieved;

• (iv) to provide information on the operating efficiency resulting from innovation capability in business and profit-making capability of the directors and senior management; and

• (v) to provide information on the calculation basis for the remuneration distribution plans and methods based on the Company’s operating results.

Article 14 The procedures for the Remuneration and Evaluation Committee’s appraisal of directors, supervisors and senior management members are as follows:

• (i) the directors and senior management members of the Company shall submit work report and self-evaluation to the Remuneration and Evaluation Committee;

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• (ii) The Remuneration and Evaluation Committee conducts performance appraisal on the directors and senior management members following the performance review standards and procedures; and

• (iii) The Remuneration and Evaluation Committee comes up with the remuneration and incentive plan for the directors and senior management members based on the relevant performance appraisal results and remuneration allocation policy for voting. Upon approval by the Remuneration and Evaluation Committee, such plan shall be submitted to the Board of the Company for approval.

CHAPTER 5 RULES OF PROCEDURES

• Article 15 The Remuneration and Evaluation Committee shall convene meetings according to the needs of the business development of the Company. Seven days’ notice shall be given to all members of the committee prior to the meeting. The meetings shall be chaired by the chairman, or, where the chairman is unable to be present at the meetings, one of the members (whom shall be an independent non-executive director) as authorized by the chairman. In case of an emergency, the abovementioned time of notice can be exempt under the approval of more than half of all members.

• Article 16 The quorum of the meetings of Remuneration and Evaluation Committee shall be more than two-thirds. Each member shall have one vote and the resolutions of the meetings shall be passed by more than half of all members.

• Article 17 The meetings of Remuneration and Evaluation Committee shall be convened under the principle of onsite meeting. Provided that members may fully express their opinions, meetings may be convened by way of audio-visual, telephone, facsimile transmission or email if necessary. The meetings of the committee can also be convened onsite and other methods simultaneously.

• Article 18 Resolutions at the meetings of Remuneration and Evaluation Committee shall be determined by show of hands, by poll or by communication.

• Article 19 If deemed necessary for the meetings of Remuneration and Evaluation Committee, directors, supervisors, and other senior management members of the Company can be invited to sit in the meetings.

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• Article 20 The Remuneration and Evaluation Committee may engage intermediary agencies to provide professional advice for its decisions making, if necessary, and the expenses incurred shall be borne by the Company.

• Article 21 Where there are connected relationship or conflicts of interests between a member and the matter to be discussed at meetings or in other circumstances that such member shall abstain from voting on such relevant matter, such member shall abstain from such discussion.

• Article 22 The procedures for convening a meeting, the method of voting and the remuneration policies and distribution proposals adopted by a meeting of the Remuneration and Evaluation Committee shall be in conformity to the provisions of the relevant laws, regulations, Articles of Association and these Terms.

• Article 23 The Remuneration and Evaluation Committee shall keep written minutes of its meetings. Members present at a meeting shall sign the minutes of that meeting. The meeting minutes shall be kept by the secretary of the Board.

• Article 24 The Remuneration and Evaluation Committee may delegate the secretary of the Board to handle the following day-to-day affairs:

• (i) to distribute the meeting agenda and relevant supporting materials to members of the Remuneration and Evaluation Committee 7 days prior to the date of the meeting; and

• (ii) to sort out the opinions of members present and prepare a statement of members’ opinions after the meetings and send the same to each of them for signature.

• Article 25 The poll results of the resolutions of the Remuneration and Evaluation Committee at its meetings shall be submitted to the Board in written form.

• Article 26 Members who attend the meetings shall keep confidential all matters discussed in the meetings. Unauthorized disclosure of the relevant information shall be prohibited.

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CHAPTER 6 SUPPLEMENTARY PROVISIONS

• Article 27 In the rules, the meaning of “more than” includes the underlying number, and “day(s)” refers to business day(s). Unless otherwise stated, technical terms used herein shall have the same meanings as they appear in the Articles of Association.

• Article 28 The rules shall come into effect from the date when it is passed by the Board.

• Article 29 For any matters that are not covered in the rules or contravene relevant laws, regulations, regulatory documents and the Articles of Association, the abovementioned laws, regulations, regulatory documents and the Articles of Association shall prevail and the rules shall be amended in a timely manner.

• Article 30 The rules shall be revised and interpreted by the Board of the Company.

Important Note: The English version is for reference only. Should there be any inconsistency between the English and Chinese versions, the latter shall prevail.

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