Administrative measures for the evaluation of the grant and implementation of the second restricted stock incentive plan (Draft)
December, 2001
China United Network Communications Limited(600050) (hereinafter referred to as the company) in order to further improve the company’s governance structure, improve the company’s incentive and restraint mechanism, enhance the core personnel’s sense of responsibility and mission for realizing the sustainable and healthy development of the company, safeguard the interests of the company and shareholders, and ensure the realization of the company’s development strategy and business objectives, These measures are hereby 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 measures for the administration of equity incentive of listed companies and other relevant laws and regulations, as well as the provisions of the China United Network Communications Limited(600050) articles of association and in combination with the actual situation of the company.
1、 Assessment purpose
Further establish and improve the company’s incentive and restraint mechanism, ensure the smooth implementation of the restricted stock incentive plan, and give full play to the role of restricted stock incentive to the greatest extent, so as to ensure the realization of the company’s development strategy and business objectives.
2、 Assessment principle
The assessment and evaluation must adhere to the principles of openness, impartiality and fairness, and evaluate in strict accordance with these measures and the performance of the assessment objects, so as to realize the close combination of the restricted stock incentive plan with the work performance and contribution of the incentive objects, so as to improve the management performance and maximize the interests of the company and all shareholders.
3、 Assessment scope
These measures are applicable to all incentive objects determined in this restricted stock incentive plan.
4、 Assessment organization
(i) The remuneration and assessment committee of the board of directors is responsible for guiding and reviewing the assessment of incentive objects;
（2） The human resources department, finance department and other relevant departments of the company are responsible for the collection and provision of assessment data.
5、 Performance evaluation indicators and standards
(i) Appraisal conditions at the time of grant
Only when the company and the incentive object meet the following conditions can the company grant restricted shares to the incentive object according to the plan:
1. The company’s performance in 2020 shall meet the following conditions:
(1) The year-on-year growth rate of main business income shall not be less than 3.5%;
(2) The year-on-year increase of total profit shall not be less than 10%;
(3) Return on net assets (ROE) is greater than 3.4%.
2. The company is not under any of the following circumstances:
(1) An audit report with a negative opinion or unable to express an opinion on the financial and accounting report of the most recent fiscal year issued by a certified public accountant;
(2) The internal control of the financial report of the most recent fiscal year is an audit report with a negative opinion or unable to express an opinion issued by a certified public accountant;
(3) Failure to distribute profits in accordance with laws and regulations, articles of association and public commitments in the last 36 months;
(4) Equity incentive is not allowed according to laws and regulations;
(5) Other circumstances where the restricted stock plan cannot be implemented as determined by the SASAC and the CSRC.
3. The incentive object does not have any of the following situations:
(1) The individual performance assessment of the previous performance year is below “competent” (excluding “competent”);
(2) Being identified as inappropriate by the stock exchange within the last 12 months;
(3) It has been identified as an inappropriate candidate by the CSRC and its dispatched offices within the last 12 months;
(4) Being administratively punished by the CSRC and its dispatched offices or taking market entry prohibition measures for major violations of laws and regulations within the last 12 months;
(5) Those who are not allowed to serve as directors or senior managers of the company as stipulated in the company law; (6) Those who are not allowed to participate in the company’s equity incentive according to laws and regulations;
(7) The board of directors of the company determines other serious violations of the company’s regulations;
(8) Other circumstances recognized by SASAC and CSRC.
If the company fails to meet the grant conditions, the company shall not grant any restricted shares in accordance with the plan in the current period; If the incentive object fails to meet the grant conditions, the company shall not grant any restricted shares to the incentive object in accordance with the plan in the current period.
（2） Appraisal conditions when unlocking
Only when the company and the incentive object meet the following conditions can the restricted shares be unlocked according to the unlocking arrangement: 1 Company performance conditions
When the company’s performance meets the following conditions, the restricted shares granted to the incentive object can be unlocked according to the plan:
Unlocking conditions
(1) The main business income in 2022 improved year-on-year; Compared with 2020, the growth rate of main business income shall not be less than 11.82%, and shall not be lower than the average level of enterprises in the same industry.
(2) The total profit in 2022 improved year-on-year; Compared with the total profit in 2020, the growth rate in the first unlocking period shall not be less than 23.20%, and shall not be lower than the average level of enterprises in the same industry.
(3) The return on net assets in 2022 shall not be less than 4.10%, which shall be improved by percentage points compared with that in 2020, and shall not be less than two benchmarking enterprises in the same industry.
(4) Economic value added (EVA) in 2022 improved year-on-year.
(1) The main business income in 2023 improved year-on-year; Compared with 2020, the growth rate of main business income shall not be less than 16.85%, and shall not be lower than the average level of enterprises in the same industry.
(2) The total profit in 2023 improved year-on-year; Compared with the total profit in 2020, the growth rate in the second unlocking period shall not be less than 35.52%, and shall not be lower than the average level of enterprises in the same industry.
(3) The return on net assets in 2023 shall not be less than 4.25%, which shall be improved by percentage points compared with 2020, and shall not be less than two benchmarking enterprises in the same industry.
(4) The economic value added (EVA) in 2023 improved year-on-year.
Unlocking conditions during unlocking period
(1) The main business income in 2024 improved year-on-year; Compared with 2020, the growth rate of main business income shall not be less than 22.10%, and shall not be lower than the average level of enterprises in the same industry.
(2) The total profit in 2024 improved year-on-year; Compared with the total profit in 2020, the growth rate in the third unlocking period shall not be less than 49.07%, and shall not be lower than the average level of enterprises in the same industry.
(3) The return on net assets in 2024 shall not be less than 4.40%, which shall be improved by percentage points compared with 2020, and shall not be less than two benchmarking enterprises in the same industry.
(4) Economic value added (EVA) improved year-on-year in 2024.
Note 1: return on net assets = net profit / [(owner’s equity at the beginning of the period + owner’s equity at the end of the period) / 2]. Note 2: economic value added (EVA) = net operating profit after tax – cost of capital = net operating profit after tax – adjusted capital × Average capital cost ratio, in which, after tax net operating profit = net profit + (interest expense + R & D expense adjustment) × （1-25%）； Adjusted capital = average owner’s equity + average interest bearing liabilities – average construction in progress; Average capital cost rate = debt capital cost rate × Average interest bearing liabilities (/ average interest bearing liabilities + average owner’s equity) × (1-25%) + cost of equity capital ratio (5.5%) × Average owner’s equity / (average interest bearing liabilities + average owner’s equity); Debt capital cost ratio = total interest expenditure / average interest bearing liabilities. Note 3: enterprises in the same industry include China Mobile Co., Ltd. China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) listed companies of three China Telecom Corporation Limited(601728) operators. In case of major changes in the main business of enterprises in the same industry selected during the annual assessment, the board of directors will remove or replace the sample during the assessment. Note 4: when calculating income, profit, return on net assets and economic value added (EVA), the impact caused by national major industrial policy adjustments such as increasing speed and reducing fees shall be excluded, and the specific amount shall be subject to the amount recognized by the board of directors.
2. Personal performance conditions
The matching grade of performance contribution in the year of unlocking is determined according to the business performance of the unit and the value contribution of the incentive object, and the unlocking proportion is determined according to the differentiation.
Actual unlocked shares in the current period = target unlocked shares in the current period × Unlock scale. Among them, the number of target unlocking shares in the current period shall be determined in accordance with the sub unlocking arrangement.
Matching proportion of performance contribution
A100%
B75%
C50%
D25%
E0%
6、 Assessment procedure
The equity incentive working group of the company shall be responsible for the specific assessment work, save the assessment results, form a performance assessment report on this basis and submit it to the remuneration and assessment committee of the board of directors.
The remuneration and assessment committee of the board of directors shall determine the unlocking amount of incentive objects according to the assessment report.
7、 Supplementary Provisions
The measures are formulated and revised by the remuneration and assessment committee of the board of directors, interpreted by the board of directors, and come into force after being deliberated and approved by the general meeting of shareholders of the company.
China United Network Communications Limited(600050) board of directors December 31, 2021
