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Terms of Reference
1.0 Definition
| 1.1 |
For the purposes of these terms of references (the Terms):
“Board” means the board of directors of the Company.
“Company Secretary” means the company secretary of the Company.
“Directors” mean the members of the Board.
“Executive Directors” mean the executive directors of the Board.
“Independent Non-Executive Directors” mean the independent non-executive directors of the Board.
“Non-Executive Directors” mean the non-executive directors of the Board.
“Remuneration Committee” means the remuneration committee established by the resolution of the Board in accordance with clause 3 of these Terms.
“Senior Management” means the president, vice president, chief financial officer, company secretary and any other officers of the Company appointed by the Board from time to time; any other officers of the Company whose remuneration package is, or is proposed to be, more favourable than that of any officer appointed by the Board; and any other employees of the Company as determined by the Remuneration Committee.
“Supervisors” mean the members of the supervisory committee of the Company. |
| 1.2 |
The word “remuneration”, as used in these Terms, includes without limitation any salaries, bonuses, allowances, benefits (in cash or in kind), pension arrangements, reimbursements, compensation payments, incentive payments and share options. |
2.0 Constitution
The Board hereby resolves to establish a committee of the Board to be known as the Remuneration Committee.
3.0 Membership
| 3.1 |
The Remuneration Committee shall be appointed by the Board from time to time from amongst the Non-Executive Directors and shall consist of not less than three members, a majority of whom should be Independent Non-Executive Directors. A quorum shall be two members. The chairman of the Remuneration Committee shall be appointed by the Board. |
| 3.2 |
members of the Remuneration Committee shall be identified in the Board’s compensation report (if any) to the shareholders. |
| 3.3 |
Each member of the Remuneration Committee shall disclose to the Remuneration Committee:
| a) |
any personal financial interest (other than as a shareholder) in any matter to be decided by the Committee; or |
| b) |
any potential conflict of interest arising from a cross-directorship.
Any such member shall abstain from voting on resolutions of the Remuneration Committee in relation to which such interest exists and from participating in the discussions concerning such resolutions and (if so required by the Board) shall resign from the Remuneration Committee. |
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4.0 Meetings
| 4.1 |
Meetings shall be held at least once a year. The chairman of the Remuneration Committee shall convene a meeting upon request by any member of the Remuneration Committee. |
| 4.2 |
The Company Secretary shall be the secretary of the Remuneration Committee. |
5.0 Authority
| 5.1 |
The Remuneration Committee is authorised by the Board to discharge its duties within these Terms. It is authorised to seek any remuneration information it requires from the Senior Management who is directed to co-operate with the Remuneration Committee. |
| 5.2 |
The Remuneration Committee is authorised by the Board to obtain outside independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. |
6.0 Duties
| 6.1 |
The duties of the Remuneration Committee shall include:
| 1) |
making recommendations to the Board on the Company’s policy and structure for all remuneration of the Directors, Supervisors and Senior Management and on the establishment of a formal and transparent procedure for developing such remuneration policy; |
| 2) |
being responsible for determining the specific remuneration packages and terms of service contracts for the Senior Management and make recommendations to the shareholders of the Company for their approval in general meeting, on the specific remuneration packages and terms of service contracts for the Directors and Supervisors. The Remuneration Committee should consider factors such as salaries paid by comparable companies, remuneration levels within the Company, time commitment and responsibilities required of the Directors, Supervisors and Senior Management, and desirability of performance-based remuneration packages; |
| 3) |
being aware of all remuneration policies and structures (including any major changes thereof) determined by the Senior Management and advise the Senior Management where necessary; |
| 4) |
reviewing and approving any performance-based remuneration packages operated by the Company by reference to corporate goals and objectives approved by the Board from time to time; |
| 5) |
reviewing the compensation payable to Directors, Supervisors and Senior Management in connection with any loss or termination of their office or appointment to ensure that such compensation is determined in accordance with the relevant contractual terms and that such compensation is otherwise fair and not excessive for the Company; |
| 6) |
reviewing compensation arrangements relating to dismissal or removal of Directors, Supervisors and Senior Management for misconduct to ensure that such arrangements are determined in accordance with relevant contractual terms and that any compensation payment is otherwise reasonable and appropriate; |
| 7) |
ensuring that no Director is involved in deciding his own remuneration and in relation to the remuneration of a Non-Executive Director who is a member of the Remuneration Committee, his remuneration should be determined by the other members of the Remuneration Committee; |
| 8) |
reviewing the Company’s policy on expense reimbursements for the Directors, Supervisors and Senior Management; and |
| 9) |
being exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any external remuneration consultants who advise the Remuneration Committee; |
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| 6.2 |
In carrying out its duties under these terms of reference, the Remuneration Committee should:
| 1) |
provide the packages needed to attract, retain and motivate Executive Directors of the quality required, but should avoid paying more than is necessary for this purpose; |
| 2) |
judge where to position the Company relative to other companies. They should be aware what comparable companies are paying and should take account of relative performance; |
| 3) |
be sensitive to the wider scene, including pay and employment conditions within the Company and elsewhere, especially when determining annual salary increases; |
| 4) |
ensure that the performance-related elements of remuneration form a significant proportion of the total remuneration package of Executive Directors and should be designed to align their interest with those of shareholders and to give these Directors keen incentives to perform at the highest levels; and |
| 5) |
ensure that any share options offered by the Company to its Directors, Supervisors or Senior Management are in accordance with Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. |
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| 6.3 |
Without prejudice to the generality of the terms of reference to the Remuneration Committee set out above, the Remuneration Committee shall:
| 1) |
operate the Company’s share option schemes (if any) or other incentives schemes (if any) as they apply to, and recommend to the general meeting of shareholders grants of options to be made to, Executive Directors, Non-Executive Directors and/or Supervisors. It shall recommend to the Board the total aggregate amount of any grants to employees (with the specific grants to individuals to be at the discretion of the Board) and make amendments to the terms of such schemes (subject to the provisions of the schemes relating to amendment); |
| 2) |
liaise with the trustee of any employee share scheme which is created by the Company for the benefit of employees or Directors; |
| 3) |
review the terms of Executive Directors’ service agreements from time to time; |
| 4) |
advise the Board in relation to the preparation of the Board’s remuneration report (if any) to shareholders; and |
| 5) |
keep the Chairman of the Board fully informed of its actions. |
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7.0 Reporting procedures
The company secretary shall circulate the minutes of meetings and reports of the Remuneration Committee to all members of the Board.
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