Stock Code: 200771 Stock ID: Hangqilun B Announcement No.: 2021-53
Hangzhou Steam Turbine Co., Ltd.
2021 Restricted Stock Incentive Plan (Draft)
Hangzhou Steam Turbine Co., Ltd.
July 2021
Statement
The members of the Board and the Company acknowledge being responsible for the
truthfulness, accuracy, and completeness of the announcement. Not any false record,
misleading statement or significant omission carried in this announcement.
Special Tips
I. This incentive plan is formulated in accordance with the Company Law of the People's
Republic of China, Securities Law of the People's Republic of China, Administrative
Measures on Equity Incentive of Listed Companies, Order No. 148 of China Securities
Regulatory Commission,Trial Measures for Implementation of Equity Incentive of
State-controlled Listed Companies (Domestic) (GZFFP [2006] No.175), Notice on
Standardizing the Implementation of Equity Incentive System in State-controlled Listed
Companies (GZFFP [2008] No.171), Articles of Association of Hangzhou Steam Turbine
Co., Ltd. (hereinafter referred to as "Hangzhou Turbine" or "the Company" and "Company")
and other relevant laws, regulations and normative documents.
II.The company does not have any of the following situations that may not be implemented
as stipulated in Article 7 of the Administrative Measures on Equity Incentive of Listed
Companies:
1. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the financial and accounting reports in the latest fiscal year;
2. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the internal control of financial reports in the latest fiscal year;
3. In the last 36 months after listing, there have been cases where profits have not been
distributed according to laws and regulations, the Articles of Association and public commitments;
4. Where the provisions of laws and regulations stipulates not to implement equity incentives;
5. Other circumstances identified by the CSRC.
III.The incentive object of this incentive plan does not have the following circumstances that
cannot allowed as stipulated in Article 8 of the Administrative Measures for Equity Incentive
of Listed Companies:
1. He has been identified as an inappropriate candidate by the stock exchange in the last 12
months;
2. He has been identified as an inappropriate candidate by the CSRC and its dispatched
offices in the last 12 months;
3. In the last 12 months, he has been subject to the administrative penalties imposed by
CSRC and its dispatched offices or market ban measures due to major violations of laws and
regulations;
4. He is not allowed to serve as a director or senior manager of the company as stipulated in
the Company Law;
5. Where the laws and regulations stipulate that he is not allowed to participate in the equity
incentives of listed companies;
6. Other circumstances identified by the CSRC.
IV.The incentive tool adopted in this incentive plan is restricted stock. The restricted stock is
the company stock repurchased in the special securities account for repurchase by the
company.
V.The number of restricted stocks to be granted in this incentive plan is 19,551,800,
accounting for 2.59% of the total share capital for 754,010,400 shares of the company at the
time of announcement of this incentive plan. Where, 18.17 million are granted for the first
time, accounting for 2.41% of the company's total share capital; 1,381,800 are reserved,
accounting for 0.18% of the company's total share capital of 754,010,400, and the reserved
portion accounts for 7.07% of the total equity granted this time. The number of restricted
shares granted to any incentive object in the incentive plan does not exceed 1% of the total
share capital of the company before the incentive plan is submitted to the shareholders'
meeting for deliberation.
VI. The grant price of restricted stocks (including reserved stocks) in this
incentive plan is HK$ 6.825 per share.
VII.The incentive objects of this incentive plan shall not exceed 500 people, including:
1.The Company's directors (excluding independent directors and external directors) and
senior management personnel;
2.Other members of the leadership team;
3.Middle management of the Company;
4. Core personnel of the Company.
The incentive objects of this incentive plan do not include independent directors,
external directors, supervisors, shareholders or actual controllers who individually or
collectively hold more than 5% of the Company's shares, and their spouses, parents
and children. Among the above incentive objects, directors and senior management
personnel must be elected by the General Meeting of Shareholders or appointed by
the Board of Directors of the Company. All incentive objects must have labor or
employment relationship with the Company or holding subsidiaries at the time of
award of this incentive plan and during the assessment period.
VIII.The validity period of this incentive plan shall be from the date when the registration of
granting restricted stock is completed to the date when all restricted stocks granted to the
incentive object are released or repurchased, which shall be no more than 60 months.
IX. The restricted stock granted by this incentive plan will be unlocked in three batches
within 24 months to 60 months after the grant is completed. The sales restriction release
period of restricted stocks and the release schedule of each period are shown in the following
table:
Proportion of the
number of sales
Release
restriction that can
arrangement of sales Release time of sales restriction
be lifted to the
restriction
number of
authorized benefits
From the first trading day 24 months after the
The first sales
completion of the grant registration to the last trading
restriction release 33%
day within 36 months after the completion of the grant
period
registration
From the first trading day 36 months after the
The second sales
completion of the grant registration to the last trading
restriction release 33%
day within 48 months after the completion of the grant
period
registration
From the first trading day 48 months after the
The third sales
completion of the grant registration to the last trading
restriction release 34%
day within 60 months after the completion of the grant
period
registration
X.The assessment year for lifting the sales restriction of this incentive plan is three fiscal
years from 2021 to 2023, with one assessment in each fiscal year. The performance
assessment of lifting the restricted stock granted by this plan is shown in the following table:
Sale
restriction Performance assessment conditions
period
Based on the average performance from 2018 to 2020, the growth rate of net profit
The first attributable to ordinary shareholders of the company in 2021 is not lower than [12.0%],
sales which is not lower than the average level of the same industry;
restriction
release The return on net assets in 2021 is not lower than [8.0%], which is not lower than the
period average level of the same industry;
In 2021, the profit of main business accounts for no less than [73%] of the total profit.
Based on the average performance from 2018 to 2020, the growth rate of net profit
The second attributable to ordinary shareholders of the company in 2022 is not lower than [16.0%],
sales which is not lower than the average level of the same industry;
restriction
release The return on net assets in 2022 is not lower than [8.0%], which is not lower than the
period average level of the same industry; In 2022, the profit of main business accounts for no
less than [73%] of the total profit.
Based on the average performance from 2018 to 2020, the growth rate of net profit
The third attributable to ordinary shareholders of the company in 2023 is not lower than [20.0%],
sales which is not lower than the average level of the same industry;
restriction
release The return on net assets in 2023 is not lower than [8.0%], which is not lower than the
period average level of the same industry
In 2023, the profit of main business accounts for no less than [73%] of the total profit.
Note: ① The impact of other comprehensive income-changes in fair value of investment in other
equity instruments on changes in net assets is not considered when calculating the return on net assets.
② When calculating the growth rate of net profit, the net profit attributable to the parent company of
listed company after excluding the influence of share-based payment expenses of this plan is the
accounting standard. ③ Main business profit = total profit - investment income. ④ The specific
accounting standard of performance indicators shall be determined by the Board of Directors
by the General Meeting of Shareholders. ⑤ Within the validity period of the equity incentive plan, if
net assets change due to additional issuance, share allotment, merger and acquisition, etc., Where
assessing the return on net assets index for the year, changes in net assets and net profit changes
caused by this event are excluded. ⑥ The Company is of the "General Equipment Manufacturing
Industry" under the "Manufacturing Industry" category of CSRC, and its peer enterprises in the same
industry are all domestic A-share and B-share listed companies under the "General Equipment
Manufacturing Industry" category of CSRC.
XI.The funds for the incentive objects to subscribe for restricted stocks shall be
raised by individuals themselves. The Company promises not to provide loans,
loan guarantees or any other form of financial assistance for the incentive objects
to obtain restricted stocks according to this plan.
XII.The incentive object promises that if the company does not meet the arrangement of
granting rights or exercising rights due to false records, misleading statements or major
omissions in the information disclosure documents, the incentive object shall return all the
benefits obtained from the equity incentive plan to the company after the relevant
information disclosure documents are confirmed to include false records, misleading
statements or major omissions.
XIII. This incentive plan must be approved by the competent authority of state-owned assets
or the authorized subject, and can only be implemented after being reviewed and approved
by the General Meeting of Shareholders.
XIV.Within 60 days from the date when the incentive plan is reviewed and approved by the
General Meeting of Shareholders of the Company and the granting conditions are achieved,
the Company will convene the Board of Directors to grant the incentive objects according to
relevant regulations, and complete relevant procedures such as registration and
announcement. If the Company fails to complete the above work within 60 days, the
implementation of this incentive plan will be terminated, and the ungranted restricted shares
will become invalid.
XV.The implementation of this incentive plan will not result in the distribution of shares not
meeting the listing requirements.
Contents
Statement
Special Tips
I.Interpretation
II.Purpose and principle of restricted stock incentive plan
III.Management Organization of this Incentive Plan
IV.Determination Basis and Scope of Incentive Object
V.Source, Quantity and Distribution of Restricted stocks
VI.Time Arrangement of this Incentive Plan
VII.Grant price of Restricted Stock and its Determination Method
VIII.Conditions for Granting and Releasing Restricted stocks
IX.Adjustment Methods and Procedures of this incentive plan31
X.Accounting Treatment of Restricted stocks
XI.Implementation Procedures of this incentive Plan
XII.Rights and Obligations of the Company and incentive Objects
XIII.Handling of Changes in Company and Incentive object
XIV.Repurchase Principle of Restrictive Stocks
XV.Other important matters
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Chapter I Interpretation
Unless otherwise specified, the following words have the following meanings
herein:
Hangzhou Turbine, the
Refers to Hangzhou Steam Turbine Co., Ltd.
Company, company
This incentive plan, this Restricted Stock Incentive Plan of Hangzhou Steam Turbine Co.,
Refers to
plan Ltd. in 2021
According to the conditions and prices stipulated in this incentive
plan, the Company grants a certain number of company stocks to
the incentive object, and these stocks have a certain period of
Restricted stocks Refers to
restricted sales. Only when the conditions for lifting the restricted
sales stipulated in this incentive plan are met can the restricted sales
and circulation be lifted
Employees who are eligible to be granted a certain number of
Incentive object Refers to
restricted stock according to the provisions of this incentive plan
The date on which the company grants restricted stock to the
Grant date Refers to
incentive object must be the trading day
The price of each restricted stock granted by the company to the
Grant price Refers to
incentive object
The period from the date when the registration of restricted stock is
Term of validity Refers to completed to the date when all restricted stock granted to the
incentive object are released or repurchased
The period when the conditions for the incentive object to exercise
Sale restriction period Refers to its rights and interests have not been fulfilled, and the restricted
stock may not be transferred, used for guarantee or debt repayment.
The period during which the restricted stocks held by the incentive
Sales restriction release object can be released and listed for circulation after the conditions
Refers to
period for releasing the sales restriction stipulated in this incentive plan are
achieved
The conditions that must be met for the restricted stocks obtained by
Condition of sales
Refers to the incentive object to be released from the sales restriction
restriction release
according to this incentive plan
Company Law Refers to Company Law of the People's Republic of China
10
Securities Law Refers to Securities Law of the People's Republic of China
Trial Measures for the Implementation of Equity
Trial Measures Refers to
Incentive by State-controlled Listed Companies (Domestic)
Notice on Standardizing the Implementation of Equity Incentive
Notice Refers to System in State-controlled Listed Companies (GZFFP [2008]
No.171)
Administrative
Refers to Administrative Measures on Equity Incentive of Listed Companies
Measures
Articles of Association Refers to Articles of Association of Hangzhou Steam Turbine Co., Ltd
CSRC Refers to China Securities Regulatory Commission
Stock Exchange Refers to Shenzhen Stock Exchange
Securities Depository Shenzhen Branch of China Securities Depository and Clearing Co.,
Refers to
and Clearing Company Ltd
Yuan Refers to RMB
Note: 1. The financial data and financial indicators quoted in this draft refer to the financial data of
consolidated statements and financial indicators calculated according to such financial data unless
otherwise specified;
2. Any difference in mantissa between the subtotal and the sum of the split count in the draft
is due to rounding.
11
Chapter II Purpose and Principle of Restricted Stock Incentive Plan
In order to further establish and improve the company's long-term incentive mechanism,
attract and retain outstanding talents, fully mobilize the enthusiasm of the Company's directors
(excluding independent directors and external directors), senior management personnel, other
members of the leadership team, the Company's middle management and the Company's core
personnel, effectively combine the interests of shareholders, the company's interests and the
personal interests of the core team, and make all parties pay attention to the long-term
development of the company and strive for it, based on full protection of shareholders' interests,
this equity incentive plan is formulated in accordance with the Company Law, Securities Law,
Trial Measures, Notice, Administrative Measures and other laws, regulations and normative
documents, as well as the relevant provisions of the Articles of Association, and in combination
with the Company's existing management systems such as salary system and performance
assessment system, this equity incentive plan is formulated.
This incentive plan adheres to the following principles:
(I) Adhere to legal norms, be open and transparent, and follow laws and regulations and the
Articles of Association;
(II) Persist in safeguarding the interests of shareholders and the Company, promote the
preservation and appreciation of state-owned assets, and be conducive to the sustainable
development of the Company;
(III) Adhere to the combination of incentives and constraints, with symmetrical risks and
benefits, and moderately strengthen the incentives for the Company's management;
(IV) Adhere to the reality, standardize the start, step by step, and constantly improve.
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Chapter III Management Organization of this Incentive Plan
I. As the highest authority of the Company, the General Meeting of Shareholders is
responsible for reviewing and approving the implementation, alteration and termination of this
incentive plan.
II. The Board of Directors is the executive management organization of this incentive plan,
and has a Remuneration and assessment Committee, which is responsible for drafting and revising
the incentive plan and submitting it to the Board of Directors for deliberation. After the Board of
Directors approves the incentive plan, it will be submitted to the competent department for
examination and approval and the General Meeting of Shareholders for deliberation. The Board of
Directors may handle the relevant matters of this incentive plan within the scope authorized by the
General Meeting of Shareholders.
III. The Board of Supervisors is the supervisory body of this incentive plan, which is
responsible for reviewing the list of incentive objects and supervising whether the implementation
of this incentive plan complies with relevant laws, administrative regulations, departmental rules
and business rules of stock exchanges.
IV. Independent directors shall express their independent opinions on whether this incentive
plan is conducive to the sustainable development of the Company and whether there is any
obvious damage to the interests of the Company and its all shareholders, and solicit the voting
rights of all shareholders for this incentive plan.
V. If the Company changes the equity incentive plan before the General Meeting of
Shareholders considers and approves it, the independent directors and the board of supervisors
shall express their independent opinions on whether the changed plan is conducive to the
sustainable development of the Company and whether there is any obvious damage to the interests
of the Company and its all shareholders.
VI. Before the Company grants rights and interests to the incentive object, the independent
directors and the board of supervisors shall express their clear opinions on whether the conditions
set by this incentive plan for the incentive object to be granted rights and interests are met. If there
13
is a difference between the Company's granting of rights and interests to the incentive object and
the incentive plan arrangement, the independent directors and the board of supervisors (when the
incentive object changes) shall simultaneously express their clear opinions.
VII. Before the incentive objects exercise their rights and interests, the independent directors
and the board of supervisors shall express their clear opinions on whether the conditions for the
incentive objects to exercise their rights and interests set by the equity incentive plan are met.
14
Chapter IV Determination Basis and Scope of Incentive Object
I. Basis for determining incentive objects
(I) Legal basis for determining incentive objects
The incentive objects of this incentive plan are determined according to the Company Law,
Securities Law, Administrative Measures, Trial Measures, Notice, other relevant laws, regulations,
normative documents and the Articles of Association, in combination with the actual situation of
the Company.
(II) Position basis for determining incentive objects
The incentive objects of this incentive plan include company directors (excluding
independent directors and external directors), senior management personnel, other
leadership members, company middle management and company core personnel.
II. Scope of incentive object
The incentive objects involved in this incentive plan specifically include:
1.The Company's directors (excluding independent directors and external directors) and
senior management personnel;
2. Other members of the leadership team;
3. Middle management of the Company;
4. Core personnel of the Company.
The incentive objects of this incentive plan do not include independent directors, external
directors, supervisors, shareholders or actual controllers who individually or collectively hold
more than 5% of the Company's shares, and their spouses, parents and children. Among the above
incentive objects, directors and senior management personnel must be elected by the General
Meeting of Shareholders or appointed by the Board of Directors of the Company. All incentive
objects must have labor or employment relationship with the Company or holding subsidiaries at
the time of award of this incentive plan and during the assessment period.
15
III. Verification of incentive objects
1. After the incentive plan is reviewed and approved by the Board of Directors, and before
the Company holds the General Meeting of Shareholders, the Company will publicize the names
and positions of the incentive objects internally, and the publicity period shall not be less than 10
days.
2. The Company shall conduct a self-inspection on the trading of the Company's stock and its
derivatives by insiders of inside information within 6 months before the announcement of the draft
plan, and explain whether there is any insider trading behavior. Anyone who knows inside
information and buys or sells company stocks shall not be an incentive object, except those cases
that are not considered as inside trading according to laws, administrative regulations and relevant
judicial interpretations. Insider trading caused by disclosure of insider information shall not be the
incentive object.
3. The Board of Supervisors of the Company will review the list of incentive objects, fully
listen to the public opinions, and disclose the explanation of the review and publicity of the list of
incentive objects by the Board of Supervisors 5 days before the General Meeting of Shareholders
of the Company deliberates this incentive plan. The list of incentive objects adjusted by the Board
of Directors of the Company shall also be verified by the board of supervisors of the Company.
16
Chapter V Source, Quantity and Distribution of Restricted Stocks
I. Source of underlying stocks
The underlying stock is the company stock repurchased in the special securities account for
repurchase by the company.
II. Number of underlying stocks
This plan proposes to grant 19,551,800 B-type restricted stocks, accounting for about 2.59%
of the Company's total share capital of 754,010,400 shares. Where, 18.17 million are granted for
the first time, accounting for 2.41% of the company's total share capital; 1,381,800 are reserved,
accounting for 0.18% of the company's total share capital of 754,010,400, and the reserved portion
accounts for 7.07% of the total equity granted this time.
During the period from the announcement date of this incentive plan to the completion of the
registration of restricted stocks by the incentive object, if the Company has any issues such as
transferring capital reserve into share capital, distributing stock dividends, splitting or reducing
shares, and allotment of shares, the number of restricted stocks granted will be adjusted
accordingly according to Chapter IX of this incentive plan.
III. Restricted stock distribution granted to incentive objects
The distribution of restricted stocks granted by this incentive plan among the
incentive objects is shown in the following table:
Proportion of
Number of share capital
Proportion of
Name Position restricted stocks of the
total grants
('0,000 shares) Company
before grant
Zheng Bin Chairman of the Board 25 1.28% 0.03%
Ye Zhong Director and General Manager 25 1.28% 0.03%
Yang Yongming Vice Chairman 20 1.02% 0.03%
Director and Deputy General
Wang Gang 20 1.02% 0.03%
Manager
Secretary of the Board of
Li Guiwen Directors and Deputy General 20 1.02% 0.03%
Manager
Deputy General Manager and
Kong Jianqiang 20 1.02% 0.0%
Chief Engineer
17
Li Jiansheng Deputy General Manager 20 1.02% 0.03%
Wang
Deputy General Manager 20 1.02% 0.03%
Zhengrong
Deputy General Manager and
Zhao Jiamao 20 1.02% 0.03%
Chief Accountant
Secretary of Committee for
Cai Weijun 20 1.02% 0.03%
Discipline Inspection
Middle management, 95 903 46.19% 1.20%
Core personnel, 352 704 36.01% 0.93%
Reserved 138.18 7.07% 0.18%
Total 1,955.18 100.00% 2.59%
Note: 1. The incentive objects of this incentive plan do not include independent directors, external
directors, supervisors, shareholders or actual controllers who individually or collectively hold more
than 5% of the Company's shares, and their spouses, parents and children;
2. The number of restricted shares granted to any incentive object in the incentive plan does not
exceed 1% of the total share capital of the company before the plan is submitted to the shareholders'
meeting for deliberation.
18
Chapter VI Time Arrangement of this Incentive Plan
I. Validity period of this incentive plan
The validity period of this incentive plan shall be from the date when the registration of
granting restricted stock is completed to the date when all restricted stocks granted to the incentive
object are released or repurchased, which shall be no more than 60 months.
II. Grant date of this incentive plan
The grant date shall be determined by the Board of Directors after the incentive plan is
reviewed and approved by the General Meeting of Shareholders of the Company, and the grant
date must be a trading day. Within 60 days from the date when this plan is reviewed and approved
by the General Meeting of Shareholders of the Company and the granting conditions are achieved,
the Company will convene the Board of Directors to grant the incentive objects of this incentive
plan according to relevant regulations, and complete relevant procedures such as registration and
announcement. If the Company fails to complete the above work within 60 days, the
implementation of this plan will be terminated, and the ungranted restricted shares will become
invalid.
The Company shall not grant restricted stocks to the incentive objects during the following
periods:
1. Within 30 days before the announcement of the Company's periodic report, if the
announcement date of the periodic report is postponed due to special reasons, it shall be counted
from 30 days before the announcement date of the original appointment to 1 day before the
announcement date;
2. Within 10 days before the announcement of the Company's performance forecast and
performance express;
3. From the date of major events that may have a great impact on the trading price of the
Company's stock and its derivatives or the date of entering the decision-making process, to 2
trading days after disclosure according to law;
19
4. Other period stipulated by the CSRC and Shenzhen Stock Exchange.
The period during which the above-mentioned companies may not grant restricted shares is
not included in the 60-day period.
If the directors and senior managers of the Company, as the incentive objects, have reduced
their holdings within 6 months before the granting of restricted stocks, the granting of restricted
stocks will be postponed for 6 months from the date of the last underweight transaction in
accordance with the provisions of the Securities Law.
III. The restricted period of this incentive plan
The sales restriction period of restricted stocks granted by this incentive plan is 24 months,
36 months and 48 months from the date of registration of the granted restricted stocks. During the
sales restriction period, the restricted stocks granted to the incentive object according to this
incentive plan shall be restricted for sale, and shall not be transferred, used to guarantee or repay
debts. Shares such as capital reserve converted into share capital, distribution of stock dividends,
and share splitting obtained by the incentive object due to the granted restricted stocks that have
not been released from the sales restriction are locked according to this incentive plan. If the
Company repurchases restricted stocks that have not been lifted for sales restriction, these stocks
will be repurchased together.
IV. Sales restriction release period of this incentive plan
After 24 months from the date of registration of restricted stocks granted by this incentive
plan, the incentive object will be lifted on sales restriction in three phases in the next 36 months.
The sales restriction release period of restricted stocks and the release schedule of each period are
shown in the following table:
Proportion of the
number of sales
Release arrangeme
restriction that ca
nt of sales restrict Release time of sales restriction
n be lifted to the
ion
number of autho
rized benefits
20
From the first trading day 24 months after the
First
completion of the grant registration to the last trading
Sales restriction 33%
day within 36 months after the completion of the grant
release period
registration
From the first trading day 36 months after the
Second
completion of the grant registration to the last trading
Sales restriction 33%
day within 48 months after the completion of the grant
release period
registration
From the first trading day 48 months after the
Third
completion of the grant registration to the last trading
Sales restriction 34%
day within 60 months after the completion of the grant
release period
registration
Restricted stocks that are not allowed to be released on sales restriction during the sales
restriction release period of the incentive object shall not be deferred to the later year for release,
and such restricted stocks shall be repurchased by the Company according to the granted price.
V. Prohibition of sales in this incentive plan
The sales prohibition of the restricted stock incentive plan shall be implemented in
accordance with the Company Law, Securities Law and other relevant laws, regulations, normative
documents and the Articles of Association, including but not limited to:
(I) If the incentive objects are the directors ，senior management and Other members of the
leadership team of the Company, the shares transferred each year during their tenure shall not
exceed 25% of the total shares of the Company held by them; Within six months after their
resignation, the company's shares held by them shall not be transferred.
(II) In addition to meeting the above conditions for lifting the sales restriction, the incentive
objects who serve as directors and senior management shall extend the sales restriction period for
20% of the total number of restricted stocks until the expiration of their term of office (the term of
office is the term of office for the last release of the sales restriction date), and lift the sales
restriction according to the results of term assessment or economic responsibility audit. Whether
the incentive objects are directors or senior management shall be determined according to the
position of the incentive object in the year when the restricted stock of this incentive plan is
granted.
21
(III) If the incentive objects are directors and senior management of the Company, they will
sell their shares of the Company within 6 months after buying, or buy them again within 6 months
after selling, and the proceeds there from will be owned by the Company, and recovered by the
Board of Directors of the Company.
(IV) During the validity period of this incentive plan, if the Company Law, Securities Law
and other relevant laws and regulations, normative documents and the Articles of Association
change their relevant provisions on the transfer of shares held by Company's directors and senior
management, the transfer of shares held by such incentive objects shall comply with the revised
Company Law, Securities Law and other relevant laws and regulations, normative documents and
the Articles of Association.
If the incentive object is a member of the leadership team other than the company’s directors
and senior managers, the prohibition selling stipulation on the restricted stocks granted to them
shall be implemented in accordance with the prohibition selling stipulationon directors and senior
managers of this restricted stock incentive plan.
22
Chapter VII Grant Price of Restricted Stock and Its Determination Method
I. Grant price of restricted stock
The grant price of the restricted stocks is HK$ 6.825 per share, that is, after the granting
conditions are met, the incentive object can purchase the restricted stocks granted to them from the
company at a price of HK$ 6.825 per share.
During the period from the announcement date of this incentive plan to the completion of the
registration of restricted stocks by the incentive object, if the Company has any issues such as
transferring capital reserve into share capital, distributing stock dividends, splitting or reducing
shares, allotment of shares, and dividend distribution, the price of restricted stocks granted will be
adjusted accordingly according to Chapter IX of this incentive plan.
II. Method for determining grant price of restricted stock
The pricing base date of the grant price of restricted stocks (including reserved grants)
granted by this incentive plan is the announcement date of this incentive plan. The grant price
shall not be less than 50% of the higher of the following prices:
1. The average trading price of the Company's underlying stock in the 1st trading day before
the announced by this incentive plan (total trading volume of the 1st trading day/total trading
volume of the 1st trading day).
2. One of the following prices:
(1) The average trading price of the Company's underlying stocks in the first 20 trading days
announced by this incentive plan (total trading amount of stocks in the first 20 trading days/total
trading amount of stocks in the first 20 trading days).
(2) The average trading price of the Company's underlying stocks in the first 60 trading days
announced by this incentive plan (total trading amount of stocks in the first 60 trading days/total
trading amount of stocks in the first 60 trading days).
(3) The average trading price of the Company's underlying stocks in the first 120 trading days
announced by this incentive plan (total trading amount of stocks in the first 120 trading days/total
23
trading amount of stocks in the first 120 trading days).
24
Chapter VIII Conditions for Granting and Releasing Restricted Stocks
I. Conditions for granting restricted stock
The Company must meet the following conditions at the same time before granting restricted
stocks to the incentive object according to this incentive plan.
(I) None of the following situations occurred in the Company:
1. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the financial and accounting reports in the latest fiscal year;
2. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the internal control of financial reports in the latest fiscal year;
3. In the 36 months after listing, there have been cases where profits have not been
distributed according to laws and regulations, the Articles of Association and public commitments;
4. Where the provisions of laws and regulations stipulates not to implement equity incentives;
5. Other circumstances identified by the CSRC.
(II) None of the following situations occurred in the incentive objects:
1. He has been identified as an inappropriate candidate by the stock exchange in the last 12
months;
2. He has been identified as an inappropriate candidate by the CSRC and its dispatched
offices in the last 12 months;
3. In the last 12 months, he has been subject to the administrative penalties imposed by
CSRC and its dispatched offices or market ban measures due to major violations of laws and
regulations;
4. He is not allowed to serve as a director or senior manager of the company as stipulated in
the Company Law;
5. Where the laws and regulations stipulate that he is not allowed to participate in the equity
incentives of listed companies;
25
6. Other circumstances identified by the CSRC.
(III) The Company's performance evaluation conditions are up to standard, that is, the
following conditions are met:
1. Based on 2019, the Company's net profit growth rate attributable to shareholders of listed
companies in 2020 is not less than 10%, and is not lower than the industry average;
2. The return on net assets in 2020 is not lower than [7.0%], which is not lower than the
average level of the same industry;
3. In 2020, the profit of main business accounts for no less than [70%] of the total profit.
Note: ① The impact of other comprehensive income-changes in fair value of investment in other
equity instruments on changes in net assets is not considered when calculating the return on net assets.
② When calculating the growth rate of net profit, the net profit attributable to the parent company of
the listed company after excluding the influence of share-based payment expenses of this plan is the
accounting standard. ③ Main business profit = total profit - investment income. ④ The specific
accounting standard of performance indicators shall be determined by the Board of Directors
authorized by the General Meeting of Shareholders. ⑤ The Company is of the "General Equipment
Manufacturing Industry" under the "Manufacturing Industry" category of CSRC, and its peer
enterprises in the same industry are all domestic A-share and B-share listed companies under the
"General Equipment Manufacturing Industry" category of CSRC.
II. Conditions for releasing sales restrictions of restricted stocks
The Company must meet the following conditions before releasing the restricted stocks
granted according to this incentive plan:
(I) None of the following situations occurred in the Company:
1. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the financial and accounting reports in the latest fiscal year;
2. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the internal control of financial reports in the latest fiscal year;
3. In the late 36 months after listing, there have been cases where profits have not been
26
distributed according to laws and regulations, the Articles of Association and public commitments;
4. Where the provisions of laws and regulations stipulates not to implement equity incentives;
5. Other circumstances identified by the CSRC.
(II) None of the following situations occurred in the incentive objects:
1. He has been identified as an inappropriate candidate by the stock exchange in the last 12
months;
2. He has been identified as an inappropriate candidate by the CSRC and its dispatched
offices in the last 12 months;
3. In the last 12 months, he has been subject to the administrative penalties imposed by
CSRC and its dispatched offices or market ban measures due to major violations of laws and
regulations;
4. He is not allowed to serve as a director or senior manager of the company as stipulated in
the Company Law;
5. Where the laws and regulations stipulate that he is not allowed to participate in the equity
incentives of listed companies;
6. Other circumstances identified by the CSRC.
In case of any of the circumstances specified in Article (I) above occurred to the Company,
the plan will be terminated, and all restricted stocks that have been granted to the incentive object
according to the incentive plan but have not yet lifted the sales restriction shall be repurchased by
the Company according to regulations; In case of one of the circumstances specified in Article (II)
above occurred to an incentive object, the restricted stocks that have been granted to the incentive
object according to the incentive plan but have not yet lifted the sales restriction shall be
repurchased by the Company according to regulations.
(III) Performance assessment requirements at company level
For restricted stocks granted by this incentive plan, the assessment year for lifting the
27
restricted sales of this incentive plan is three fiscal years from 2021 to 2023, with one assessment
in each fiscal year. The performance assessment of lifting the restricted stock granted by this plan
is shown in the following table:
Sale
restriction Performance assessment conditions
period
Based on the average performance from 2018 to 2020, the growth rate of net profit
attributable to ordinary shareholders of the company in 2021 is not lower than [12.0%],
The first sales which is not lower than the average level of the same industry;
restriction
release period The return on net assets in 2021 is not lower than [8.0%], which is not lower than the
average level of the same industry;
In 2021, the profit of main business accounts for no less than [73%] of the total profit.
Based on the average performance from 2018 to 2020, the growth rate of net profit
The second attributable to ordinary shareholders of the company in 2022 is not lower than [16.0%],
sales which is not lower than the average level of the same industry;
restriction The return on net assets in 2022 is not lower than [8.0%], which is not lower than the
release period average level of the same industry; In 2022, the profit of main business accounts for no
less than [73%] of the total profit.
Based on the average performance from 2018 to 2020, the growth rate of net profit
attributable to ordinary shareholders of the company in 2023 is not lower than [20.0%],
The third sales which is not lower than the average level of the same industry;
restriction
release period The return on net assets in 2023 is not lower than [8.0%], which is not lower than the
average level of the same industry;
In 2023, the profit of main business accounts for no less than [73%] of the total profit.
Note: ① The impact of other comprehensive income-changes in fair value of investment in other
equity instruments on changes in net assets is not considered when calculating the return on net assets.
② When calculating the growth rate of net profit, the net profit attributable to the parent company of
the listed company after excluding the influence of share-based payment expenses of this plan is the
accounting standard. ③ Main business profit = total profit - investment income. ④ The specific
accounting standard of performance indicators shall be determined by the Board of Directors
authorized by the General Meeting of Shareholders. ⑤ Within the validity period of the equity
incentive plan, if the net assets change due to additional issuance, share allotment, merge r and
acquisition, etc., Where assessing the return on net assets index for the year, changes in net assets
and net profit changes caused by this event are excluded. ⑥ The Company is of the "General
Equipment Manufacturing Industry" under the "Manufacturing Industry" category of CSRC, and its
peer enterprises in the same industry are all domestic A-share and B-share listed companies under the
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"General Equipment Manufacturing Industry" category of CSRC.
If the performance assessment target of the restricted stock in a certain period of the sales
restriction release period is not achieved, the restricted stock of all incentive objects in the current
period cannot be lifted, and the Company will repurchase the restricted stock at the granted price.
(IV) Assessment of incentive objects at individual level
Assessment of incentive objects at individual level shall be conducted in accordance with the
Administrative Measures for the Implementation Assessment of Restricted Stock Incentive Plan of
Hangzhou Steam Turbine Co., Ltd. in 2021.
Individual assessment of incentive objects is carried out by years, and performance
assessment results (S) are divided into four grades. The proportion of sales restriction release in
the current year is determined according to the results of individual performance assessment. The
actual sales restriction release amount of the individual in the current year = the coefficient of
sales restriction release × the planned sales restriction release amount of the individual in the
current year. The special circumstances in performance assessment shall be decided by the Board
of Directors. See the following table for details:
Evaluation results
Excellent Good Pass Fail
(s)
Coefficient of sales
1 0.8 0
restriction release
Restricted stocks that cannot be released in the current period due to the results of
performance assessment at individual level shall not be deferred until the sales restriction release
in the next period, and shall be repurchased by the Company at the granted price.
III. Explanation of scientificity and rationality of assessment indicators
The indicators of the Company's restricted stock incentive plan are divided into two levels,
namely, performance assessment at company level and performance assessment at individual
level.
According to the relevant regulations of the state-owned assets supervision department, in
principle, performance indicators shall include comprehensive indicators reflecting shareholders'
29
returns and company value creation, indicators reflecting the sustainable growth ability of the
enterprise and indicators reflecting the operation quality of the enterprise. Based on the above
regulations, the Company's equity incentive plan combines the market practice and the Company's
business characteristics, and selects appropriate performance indicators as the company-level
performance assessment indicators for lifting the restricted stock sales, including net profit growth
rate, return on net assets, and the proportion of main business profits to total profits as the
company-level performance assessment indicators. The above indicators are the core financial and
operational indicators of the Company, which respectively reflect the growth ability, profitability
and profit structure of the Company. Upon reasonable prediction and consideration of the
incentive effect of this plan, the Company set the aforesaid performance assessment objectives for
this plan.
In addition to the performance assessment at the company level, the Company has also set up
a strict performance assessment system for individuals, which can make a more accurate and
comprehensive assessment of the job performance of the incentive objects. According to the
performance assessment results of the incentive object in the previous year, the Company will
determine whether the individual incentive object meets the conditions for lifting the sales
restriction.
To sum up, the company's performance assessment indicators of this incentive plan fully
consider the Company's business environment and future development planning, which is
scientific and reasonable, and the assessment system is comprehensive, comprehensive and
operable. The company's assessment indicators are set reasonably.
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Chapter IX Adjustment Methods and Procedures of this Incentive Plan
I. Adjustment method of restricted stock quantity
If, during the period from the announcement date of this incentive plan to the completion of
the registration of restricted stock by the incentive object, the Company has such matters as
transferring capital reserve into share capital, distributing stock dividends, splitting shares,
allotting or reducing shares, etc., the number of restricted stocks shall be adjusted accordingly.
Adjustment method is as follows:
1. Transfer of capital reserve into share capital, distribution of stock dividends, and
share splitting: Q＝Q0×(1＋n)
Where: Q0 is the number of restricted stocks before adjustment; N is the ratio of capital
reserve to share capital, stock dividend and share splitting per share (that is, the number of shares
increased after capital reserve to share capital, stock dividend and share splitting); Q is the
adjusted number of restricted stocks.
2. Allotment of shares: Q＝Q0×P1×(1＋n) ÷(P 1＋P 2×n)
Where: Q0 is the number of restricted stocks before adjustment; P1 is the closing price of date
of record on that day; P 2 is the allotment price; N is the proportion of allotment (that is, the ratio of
the number of shares allotted to the total share capital of the company before allotment); Q is the
number of restricted stocks after adjustment.
3. Share reduction: Q＝Q0×n
Where: Q0 is the number of restricted stocks before adjustment; N is the share reduction ratio
(that is, one company stock is reduced to N shares); Q is the adjusted number of restricted stocks.
4. Additional shares
The number of restricted stocks will not be adjusted when the company issues additional
shares.
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II. Adjustment method of restricted stock grant price
If, during the period from the announcement date of this incentive plan to the completion of
the registration of restricted stock by the incentive object, the Company has such matters as
transferring capital reserve into share capital, distributing stock dividends, splitting shares,
allotting, reducing shares, or distributing dividend etc., the grant price of restricted stocks shall be
adjusted accordingly. Adjustment method is as follows:
1. Transfer of capital reserve into share capital, distribution of stock dividends, and
share splitting: P＝P0÷(1＋n)
Where: P0 is the grant price before adjustment; N is the ratio of capital reserve to share
capital, stock dividend and share splitting per share; P is the grant price after adjustment.
2. Allotment of shares: P＝P 0×(P 1＋P 2×n) ÷[P1×(1＋n)]
Where: Q0 is the grant price of restricted stocks before adjustment; P1 is the closing price of
date of record on that day; P2 is the allotment price; N is the proportion of allotment (that is, the
ratio of the number of shares allotted to the total share capital of the company before allotment); P
is the grant price after adjustment.
3. Share reduction: P＝P 0÷n
In which: P0 is the grant price before adjustment; N is the share reduction ratio; P is the grant
price after adjustment.
4. Dividend distribution: P＝P0-V
Where: P 0 is the grant price before adjustment; V is the dividend per share; P is the grant
price after adjustment. After dividend adjustment, P must still be greater than 1.
5. Additional shares
The grant price of restricted stocks will not be adjusted when the company issues additional
shares.
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III. Procedures for the adjustment of this incentive plan
The General Meeting of Shareholders of the Company authorizes its Board of Directors to
adjust the number of restricted shares and grant the price when the aforesaid situations occur.
Lawyers shall issue professional opinions on whether the above adjustments comply with the
Administrative Measures, the Articles of Association and the restricted stock plan. After the
adjustment proposal is reviewed and approved by the Board of Directors, the Company shall
timely disclose the announcement of the resolution of the Board of Directors and announce the
opinions of the law firm.
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Chapter X Accounting Treatment of Restricted Stocks
I. Accounting treatment method of restricted stock
According to the Accounting Standards for Business Enterprises No.11-Share-based Payment,
the Company will revise the number of restricted stocks that are expected to be released from the
sales restriction on each balance sheet date of the sales restriction period according to the latest
acquired follow-up information such as changes in the number of people are entitled to sale
restriction release and the completion of performance indicators, and according to the fair value on
the grant date of restricted stock, the services obtained in the current period will be included in
relevant costs or expenses and capital reserves.
1. Grant date
The company repurchases treasury stocks for equity incentives, and there will be no
accounting treatment done on the grant date.
2. Subscription payments from employees received by the company
The company shall include the subscription monies from the employee into the bank deposits
based they paid and meanwhile recognize the liabilities for the repurchase obligations.
3. Each balance sheet date during the restricted sale period
According to the provisions of the Accounting Standards for Business Enterprises, on each
balance sheet date during the restricted sale period, the services provided by the employees will be
included in the cost and expenses, and meanwhile the capital reserve will be recognized.
4. The lifting date of the sales restriction
On the date when the sales restriction is lifted, if the conditions for lifting the sales restriction
are met, the restrictions on sales and repurchase obligations can be lifted. The company resells
according to the cost of treasury stocks corresponding to the unlocked stocks, the amount of
accumulated capital during the waiting period and the book value of liabilities, and where it is a
difference, it shall adjust the capital reserve; if all or part of the stock is not lifted and becomes
invalid or becomes nullify, the company needs to repurchase the stock and it shall deal with it in
34
accordance with the Accounting Standards for Business Enterprises and related regulations.
II. The method for determining the fair value of restricted stocks
According to the Accounting Standards for Business Enterprises No.11-Share-based Payment,
the Company takes the difference between the closing price of shares on the grant date and the
grant price as the share-based payment cost of each restricted stock, and will finally confirm the
share-based payment cost of this incentive plan.
III. Expected affect of the implementation of the restricted stock incentive plan on the
operating performance of each period
Assuming that the grant date of restricted stocks is in early September 2021, the grant price is
HK$ 6.825 per share, the share price is HK$ 13.65 per share on the grant date, the recognized cost
of each restricted stock is HK$ 6.825, and the exchange rate of HK$ to RMB is 0.8336, all
incentive objects can meet the performance assessment index and the turnover rate during the
sales restriction period is 0, the cost amortization estimate of 19,551,800 restricted stocks granted
by the Company to the incentive objects is shown in the following table:
Grant Share-based
2021('0,000 2022('0,000 2023 ('0,000 2024 ('0,000 2025 ('0,000
quantity payment ('0,000
yuan) yuan) yuan) yuan) yuan)
('0,000 yuan)
shares)
1,955.18 11123.64 1334.84 4004.51 3392.71 1761.24 630.34
Note: The above is the preliminary calculation result based on the current information of the
Company, and the specific amount will be calculated by the fair value of restricted stocks on the
actual grant date.
The amortization of share-based payment expenses has an impact on the business
performance of each year within the validity period. If the positive effect of incentive plan on the
35
development of the Company is considered, including the enthusiasm of the management team,
the improvement of operating efficiency and the reduction of agency cost, the improvement of the
Company performance brought by this incentive plan will be higher than the increase of expenses
brought thereby.
36
Chapter XI Implementation Procedures of this Incentive Plan
I. Effective procedure of this incentive plan
(I) The Remuneration and Assessment Committee under the Board of Directors of the
Company is responsible for drafting this incentive plan.
(II) The Board of Directors of the Company shall make a resolution on this incentive plan
according to law. When the Board of Directors deliberates this incentive plan, the directors who
are the incentive objects or the directors who are related to them shall abstain from voting.
(III) Independent directors and the Board of Supervisors shall express their opinions on
whether this incentive plan is conducive to the sustainable development of the Company and
whether there is any obvious damage to the interests of the Company and all shareholders.
(IV) This incentive plan shall be approved by the competent authority of state-owned assets
or the authorized subject, and can only be implemented after being reviewed and approved by the
General Meeting of Shareholders of the Company.
The Company shall publicize the list of incentive objects within the Company through the
Company's website or other means before convening the General Meeting of Shareholders (the
publicity period shall not be less than 10 days). The Board of Supervisors shall review the list of
equity incentives and fully listen to public opinions. The Company shall disclose the explanation
of the Board of Supervisors on the examination and publicity of the incentive list 5 days before the
General Meeting of Shareholders deliberates the plan.
(V) When the General Meeting of Shareholders of the Company votes on the restricted stock
incentive plan, the independent directors shall collect the entrusted voting rights from all
shareholders on the restricted stock incentive plan, and the Company shall provide online voting
when providing on-site voting methods. The General Meeting of Shareholders shall vote on the
contents of the equity incentive plan stipulated in Article 9 of the Administrative Measures, which
shall be approved by more than 2/3 of the voting rights held by the shareholders present at the
meeting, and separately count and disclose the voting conditions of other shareholders except the
Company's directors, supervisors, senior management and shareholders holding more than 5% of
37
the Company's shares individually or collectively.
When the General Meeting of Shareholders of the Company deliberates this incentive plan,
the shareholders who are the incentive objects or have an associated relationship with the
incentive objects shall abstain from voting.
(VI) When this incentive plan is reviewed and approved by the General Meeting of
Shareholders of the Company and the granting conditions stipulated in this incentive plan are met,
the Company will grant restricted shares to the incentive objects within the specified time. After
being authorized by the General Meeting of Shareholders, the Board of Directors shall be
responsible for the granting, shares restriction release and repurchase.
II. Procedures for granting restricted shares
(I) After the General Meeting of Shareholders deliberated and approved the incentive plan,
the Company signed the Restricted Stock Grant Agreement with the incentive object, thereby
stipulating the rights and obligations of the Parties. The Board of Directors of the Company
handles specific restricted stock granting matters according to the authorization of the General
Meeting of Shareholders.
(II) Before the Company grants rights and interests to the incentive object, the Board of
Directors shall review and announce whether the conditions for granting rights and interests to the
incentive object set in this incentive plan are met.
Independent directors and the Board of Supervisors shall express clear opinions at the same
time. The law firm shall issue legal opinions on whether the conditions for granting authorized
benefits to the incentive object are met.
(III) The Board of Supervisors of the Company shall verify the grant date of restricted stocks
and the list of incentive objects and express opinions.
(IV) When there is a difference between the Company's granting of rights and interests to
the incentive object and the arrangement of this incentive plan, the independent directors, the
Board of Supervisors (when the incentive object changes), the law firm and the independent
financial adviser shall simultaneously express their clear opinions.
38
(V) After the incentive plan is reviewed and approved by the General Meeting of
Shareholders, the Company shall grant the restricted stocks to the incentive objects and complete
the announcement and registration within 60 days. The Board of Directors of the Company shall
disclose the announcement of relevant implementation in a timely manner after the registration of
restricted stocks granted.
If the Company fails to complete the above work within 60 days, the implementation of this
incentive plan shall be terminated, and the Board of Directors shall promptly disclose the reasons
for the failure and shall not review and disclose the equity incentive plan again within 3 months
(according to the Administrative Measures, the period during which a listed company shall not
grant restricted stocks is not included in such 60 days). The object of granting reserved rights shall
be specified within 12 months after the plan is reviewed and approved by the General Meeting of
Shareholders. If the incentive object is not specified for more than 12 months, the reserved rights
will be invalid.
(VI) If the senior management of the Company, as the incentive object, has reduced the
Company's shares within 6 months before the granting of restricted stocks, and after verification,
there is no case of using inside information to trade, the Company may defer granting restricted
stocks to 6 months after the last reduction transaction with reference to the provisions of the
Securities Law.
(VII) After the Company applies to the stock exchange and is confirmed by the stock
exchange, the securities depository and clearing institution shall handle the registration and
settlement matters.
(VIII) After the registration of restricted stocks is completed, if the registered capital is
changed, the Company shall go through the registration formalities for the corporate change with
the industrial and commercial registration department.
III. Procedures for releasing sales restrictions of restricted stocks
(I) Before the date of sales restriction release, the Company shall confirm whether the
incentive object meets the conditions for releasing sales restriction. The Board of Directors shall
39
review whether the conditions for releasing sales restrictions set in this incentive plan are met, and
the independent directors and the Board of Supervisors shall also express their clear opinions. The
law firm shall issue legal opinions on whether the conditions for releasing sales restriction of
incentive objects are met. For incentive objects that meet the conditions for releasing sales
restriction, the Company will handle the sales restriction release uniformly, and for incentive
objects that do not meet the conditions, the Company will repurchase the restricted stocks held by
them corresponding to the sales restriction release. The Company shall disclose the announcement
of relevant implementation in a timely manner.
(II) The Company shall apply to the stock exchange before releasing sales restriction on the
restricted stock of the incentive object, and the registration and settlement matters shall be handled
by the securities depository and clearing institution after being confirmed by the stock exchange.
(III) Incentives may transfer restricted stocks that have been released from sales restriction,
but the transfer of shares held by directors and senior management of the Company shall comply
with the provisions of relevant laws, regulations and normative documents.
IV. Change procedure of this incentive plan
(I) If the Company intends to change this incentive plan before the General Meeting of
Shareholders considers this incentive plan, it shall be reviewed and approved by the Board of
Directors.
(II) Where the Company changes this incentive plan after the General Meeting of
Shareholders deliberates and approves it, it shall be deliberated and decided by the General
Meeting of Shareholders, and the following circumstances shall not be included:
1. Circumstances leading to the early release of the sales restriction;
2. Circumstances of lowering the grant price.
(III) Independent directors and the Board of Supervisors shall express their clear opinions on
whether the changed plan is conducive to the sustainable development of listed companies and
whether there is any obvious damage to the interests of listed companies and all shareholders.
40
(IV) The law firm shall give professional opinions on whether the changed scheme complies
with the Administrative Measures and relevant laws and regulations, and whether there is any
obvious damage to the interests of listed companies and all shareholders.
V. Termination procedure of this incentive plan
(I) If the Company intends to terminate the implementation of this incentive plan before the
General Meeting of Shareholders considers this incentive plan, it shall be reviewed and approved
by the Board of Directors.
(II) If the Company terminates the implementation of this incentive plan after the General
Meeting Shareholders deliberates and approves this plan, it shall be deliberated and decided by the
General Meeting Shareholders.
(III) The law firm shall give professional opinions on whether the termination of the
incentive plan of the Company complies with the Administrative Measures and relevant laws and
regulations, and whether there is any obvious damage to the interests of the Company and all
shareholders.
(IV) When the incentive plan is terminated, the Company shall repurchase the restricted
stocks that have not been lifted on sales restriction, and deal with them in accordance with the
provisions of the Company Law.
(V) The Company shall apply to the stock exchange before repurchasing the restricted stock,
and the registration and settlement matters shall be handled by the securities depository and
clearing institution after being confirmed by the stock exchange.
(VI) When the Company needs to repurchase restricted stocks, it shall convene the Board of
Directors in time to review the share repurchase plan, submit the share repurchase plan to the
General Meeting of Shareholders for approval according to law, and make a timely announcement.
41
Chapter XII Rights and Obligations of the Company and Incentive Objects
I. Rights and obligations of the Company
（I)The Company has the right to interpret and execute this incentive plan, and assess the
incentive objects according to the provisions of this incentive plan. If the incentive objects do not
meet the conditions for lifting the restricted sales determined in this incentive plan, the Company
will repurchase the restricted stocks of the incentive objects that have not been lifted according to
the provisions of this incentive plan.
(II) If the incentive object violates the loyalty obligations stipulated in the Company Law, the
Articles of Association, etc., or damages the Company's interests or reputation due to violations of
laws, professional ethics, disclosure of company secrets, dereliction of duty or dereliction of duty,
etc., the restricted stocks that have not been released from the sales restriction will be repurchased
by the Company; If the circumstances are serious, the Board of Directors of the Company has the
right to recover all or part of the proceeds obtained from the lifting of sales restriction.
(III) The Company promises not to provide loans, loan guarantees or any other form of
financial assistance for the incentive objects to obtain restricted stocks according to this incentive
plan.
(IV) The Company shall timely fulfill its obligations of reporting and information disclosure
of restricted stock incentive plan in accordance with relevant regulations.
(V) The Company shall, in accordance with the restricted stock incentive plan and the
relevant provisions of China Securities Regulatory Commission, Shenzhen Stock Exchange,
CSDC, etc., actively cooperate with the incentive objects that meet the conditions for lifting the
sales restrictions on sales restriction release. However, if the incentive object fails to lift the sales
restriction according to his own wishes and causes losses to the incentive object due to the reasons
of China Securities Regulatory Commission, Shenzhen Stock Exchange and securities depository
and clearing institution, the Company will not be liable.
(VI) The Company's determination of the incentive object of the current plan does not mean
that the incentive object is entitled to the right to continue to serve in the Company, nor does it
42
constitute the Company's commitment to the employment period of employees. The employment
relationship between the Company and the incentive object is still in accordance with the labor
contract signed by the Company.
(VII) Other relevant rights and obligations stipulated by laws and regulations.
II. Rights and obligations of incentive objects
(I) Incentive objects shall be diligent and conscientious, abide by professional ethics and
make due contributions to the development of the Company according to the requirements of the
positions employed by the Company.
(II) Incentives shall be in accordance with the provisions of this incentive plan to limit the
sales restriction of restricted stock granted to them. Restricted stocks granted to incentive objects
shall not be transferred or used to guarantee or repay debts before the sales restrictions release.
(III) The source of funds for the incentive object is self-financing.
(IV) The restricted stocks granted to the incentive object shall be entitled to the rights due to
their stocks after being registered and transferred by the securities depository and clearing
institution, including but not limited to the dividend rights and allotment rights of such stocks.
(V) Before the restricted stocks are released from sales restriction, the restricted stocks
granted to the incentive object according to this plan shall not be transferred, used for guarantee or
used to repay debts. Shares such as capital reserve converted into share capital, distribution of
stock dividends, and share splitting obtained by the incentive object due to the granted restricted
stocks that have not been released from the sales restriction are locked according to this incentive
plan.
(VI) The incentive object shall pay personal income tax and other taxes and fees according
to the national tax laws and regulations.
(VII) The incentive object promises that if the company does not meet the arrangement of
granting rights or exercising rights due to false records, misleading statements or major omissions
in the information disclosure documents, the incentive object shall return all the benefits obtained
43
from the equity incentive plan to the company after the relevant information disclosure documents
are confirmed to include false records, misleading statements or major omissions.
(VIII) After the incentive plan is reviewed and approved by the General Meeting of
Shareholders of the Company, the Company will sign a Restricted Stock Grant Agreement with
each incentive object, which clearly stipulates their respective rights and obligations under the
incentive plan and other related matters.
(IX) Other relevant rights and obligations stipulated by laws and regulations.
44
Chapter XIII Handling of Changes in Company and Incentive Objects
I. Handling of company changes
(I) In case of any of the following circumstances, the plan shall be terminated immediately:
1. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the financial and accounting reports in the latest fiscal year;
2. The certified public accountants have issued an audit report with negative opinions or that
cannot express opinions for the internal control of financial reports in the latest fiscal year;
3. In the late 36 months after listing, there have been cases where profits have not been
distributed according to laws and regulations, the Articles of Association and public commitments;
4. Circumstances where the provisions of laws and regulations stipulates not to implement
equity incentives;
5. Other circumstances that need to terminate the incentive plan as determined by the CSRC.
When the Company terminates the plan as mentioned above, the restricted stocks that have
been granted to the incentive object but have not been released from the sales restriction will be
repurchased by the Company at the grant price according to the relevant provisions of the plan.
(II) Under any of the following circumstances, the incentive plan shall be implemented
normally:
1. The control right of the Company has changed;
2. The Company is merged or split.
(III) If the Company does not meet the conditions for granting restricted stocks or lifting the
sales restriction arrangement due to false records, misleading statements or major omissions in the
information disclosure documents, the restricted stocks that have not been lifted from sales
restriction will be repurchased by the Company. If the incentive object has been granted restricted
stocks and the sales restriction has been lifted, all incentive objects shall return the authorized
benefits. If the incentive object who is not responsible for the above matters suffers losses due to
45
the return of rights and interests, it may claim compensation from the Company or the responsible
object according to the relevant arrangements of this incentive plan.
The Board of Directors shall, in accordance with the provisions of the preceding paragraph
and the relevant arrangements of this incentive plan, recover the income of the incentive object.
II. Changes in personal information of the incentive object
(I) If the incentive object has changed its position, but still works in the Company or its
subordinate branches and subsidiaries and is dispatched by the Company, the restricted stocks
granted to it will be carried out in full accordance with the procedures stipulated in this incentive
plan before the job change. When the incentive object becomes an independent director or
supervisor who cannot hold the restricted stock of the Company, the restricted stock that has been
granted to the incentive object according to the plan but has not yet been released from the sales
restriction will be repurchased by the Company according to the grant price plus the bank deposit
interest in the same period.
(II) If the incentive object retires, or cancels or terminates the labor relationship with the
Company due to objective reasons such as job transfer, which is not controlled by individuals, the
incentive object can still release the sales restriction according to the agreed conditions as per the
specific years of service during the performance assessment period. In addition to the foregoing,
the remaining restricted stocks that have not been released from the sales restriction shall not be
released from the sales restriction, and the Company shall repurchase them at the grant price plus
the interest on bank deposits in the same period.
(III) If the incentive object leaves from the Company due to personal reasons such as
resignation, company layoffs, contract expiration, etc., and does not cause the negative impact
mentioned in Paragraph (IV) of Article 2 of Chapter XIII of this plan, the restricted stocks that
have been granted to the incentive object according to this plan but have not yet been released
from the sales restriction will be repurchased by the Company at the grant price.
(IV) In case of any of the following circumstances, the Company has the right to require the
incentive object to return the benefits brought by this equity incentive, and the restricted stocks
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that have been granted but have not yet been released from sales restriction will be repurchased by
the Company. The repurchase price is the lower of the grant price and the market price of the
Company's stock at the time of repurchase (the market price is the average transaction price of the
Company's underlying stock on the 1st trading day before the Board of Directors deliberates the
repurchase matters):
1. The incentive object is found with acts of violating national laws and regulations,
professional ethics, dereliction of duty or malpractice, etc., seriously damaging the interests or
reputation of the Company, causing direct or indirect economic losses or social adverse effects to
the Company;
2. The incentive object is dismissed for violating the Company's rules and regulations,
according to the relevant regulations of the Company's employee reward and punishment
management, and for serious violation of discipline;
3. The Company has sufficient evidence to prove that the incentive object has illegal and
disciplinary behaviors such as accepting bribes, asking for bribes, embezzling, stealing, revealing
business and technical secrets, implementing related party transactions, reputation and having a
significant negative impact on the Company's image, which directly or indirectly damages the
interests of the Company and causes losses or adverse social effects to the Company;
4. The incentive object is investigated for criminal responsibility according to law for
criminal acts;
5. The incentive object has violated relevant laws and regulations or the Articles of
Association, causing undue damage to the Company;
6. The incentive object is personally responsible for the situation in the first paragraph of
Article 18 of the Administrative Measures, or there is a situation in which restricted stocks may
not be granted as stipulated in Article 8 of the Administrative Measures.
(V) When the incentive object cancels or terminates the labor relationship with the Company
due to objective reasons such as death, loss of civil capacity, etc., the restricted stocks that have
been granted but have not yet been released from the sales restriction shall not be released from
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the sales restriction, and the Company shall repurchase them according to the grant price plus the
bank deposit interest in the same period.
(VI) Other unspecified situations shall be identified by the Board of Directors and their
handling methods shall be determined.
III. Settlement of disputes between the Company and incentive objects
Disputes or disputes between the Company and the incentive object arising from the
implementation of this incentive plan and/or the equity incentive agreement signed by the parties
or related to this incentive plan and/or equity incentive agreement shall be resolved through
negotiation and communication by the parties, or through mediation by the Remuneration and
Assessment Committee of the Board of Directors of the Company. If the parties fail to solve the
dispute or dispute through the above methods within 60 days from the date of occurrence of the
controversy or dispute, Either party has the right to submit the matter in dispute to the Hangzhou
Arbitration Commission for arbitration in accordance with the arbitration rules of the Association.
The arbitration award will be the final and it binds on both parties in the dispute.
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Chapter XIV Repurchase Principle of Restrictive Stocks
If the Company repurchases restricted stocks according to the provisions of this incentive
plan, the repurchase price shall be the grant price unless otherwise agreed in this incentive plan.
I. Adjustment method of repurchase quantity
After the stock registration of the restricted stocks granted to the incentive object is
completed, if the Company has any matters that affect the total share capital or the stock price of
the Company, such as transferring capital reserve into share capital, distributing stock dividends,
splitting shares, allotment of shares, reducing shares, etc., the Company shall make corresponding
adjustments to the repurchase quantity of restricted stocks that have not been lifted from sales
restriction. Adjustment method is as follows:
1. Transfer of capital reserve into share capital, distribution of stock dividends, and
share splitting: Q＝Q0×(1＋n)
Where: Q0 is the number of restricted stocks before adjustment; N is the ratio of capital
reserve to share capital, stock dividend and share splitting per share (that is, the number of shares
increased after capital reserve to share capital, stock dividend and share splitting);
Q is the adjusted number of restricted stocks.
2. Allotment of shares: Q＝Q0×P1×(1＋n) ÷(P 1＋P 2×n)
Where: Q0 is the number of restricted stocks before adjustment; P1 is the closing price of date
of record on that day; P 2 is the allotment price; n is the proportion of allotment (that is, the ratio of
the number of shares allotted to the total share capital of the company before allotment); Q is the
number of restricted stocks after adjustment.
3. Share reduction: Q＝Q0×n
Where: Q0 is the number of restricted stocks before adjustment; N is the share
reduction ratio (that is, one company stock is reduced to N shares); Q is the adjusted
number of restricted stocks.
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II. Adjustment method of repurchase price
After the stock registration of the restricted stocks granted to the incentive object is
completed, if the Company has any matters that affect the total share capital or the stock price of
the Company, such as transferring capital reserve into share capital, distributing stock dividends,
splitting shares, allotment of shares or reducing shares, dividend distribution, etc., the Company
shall make corresponding adjustments to the repurchase price of restricted stocks that have not
been lifted from sales restriction. Adjustment method is as follows:
1. Transfer of capital reserve into share capital, distribution of stock dividends, and
share splitting: P＝P0 ÷(1＋n)
Where: P is the adjusted repurchase price of restricted stock per share, and P0 is the grant
price of restricted stock per share; N is the ratio of share capital transfer, stock dividend
distribution and stock splitting (that is, the number of stocks increased after share transfer, share
distribution or stock splitting)
2. Share reduction: P＝P 0 ÷n
Where: P is the adjusted repurchase price of restricted stock per share, and P0 is the grant
price of restricted stock per share; N is the share reduction ratio per share (i.e., 1 share is reduced
to N shares).
3. Allotment of shares: P＝P0×(P1＋P2×n) ÷[P1×(1＋n)]
Where: P is the adjusted repurchase price of restricted stock per share, and P0 is the grant
price of restricted stock per share; P1 is the closing price of date of record on that day; P 2 is the
allotment price; n is the proportion of allotment (that is, the proportion between the number of
shares allotted and the total share capital of the joint-stock company before allotment).
4. Dividend distribution: P＝P0-V
W: P is the adjusted repurchase price of restricted stock per share, and P0 is the grant price of
restricted stock per share; V is the dividend amount distributed per share; After dividend
adjustment, P must still be greater than 1.
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III. Adjustment procedures of repurchase quantity and price
1. The General Meeting of Shareholders authorizes the Board of Directors of the Company to
adjust the repurchase quantity and price of restricted stocks according to the reasons listed above.
After the adjustment by the Board of Directors according to the above regulations, an
announcement shall be made in time.
2. If it is necessary to adjust the quantity and price of restricted stock repurchase for other
reasons, it shall be decided by the Board of Directors and reviewed and approved by the General
Meeting of Shareholders.
IV. Procedures for repurchase
1. In case the Company needs to buy back as stipulated in this incentive plan, the Board of
Directors shall be convened in time to review the share repurchase plan, and the cancellation of
the repurchased shares shall be submitted to the General Meeting of Shareholders for approval and
announced in a timely manner. When the Company implements repurchase, it shall apply to the
stock exchange for lifting the sales restriction of such restricted stocks, and after confirmation by
the stock exchange, the securities depository and clearing institution shall handle the registration
and settlement matters.
2. When the Company implements repurchase according to the provisions of this incentive
plan, it shall be handled in accordance with the relevant provisions of the Company Law and other
laws and regulations.
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Chapter XV Other Important Matters
I. The Company shall not provide loans, loan guarantees or any other form of financial
assistance for the incentive objects to obtain restricted stocks according to this incentive plan.
II. If the relevant clauses in this incentive plan conflict with the relevant national laws,
regulations, administrative rules and normative documents, the relevant national laws, regulations
and administrative rules and regulations shall prevail. Matter uncovered in this incentive plan shall
be subject to relevant national laws, regulations, administrative rules and normative documents.
III. If the incentive object violates the incentive plan, the Articles of Association or relevant
national laws, regulations, administrative rules and normative documents, the proceeds from the
sale of shares obtained according to the incentive plan shall be owned by the Company, which
shall be executed by the Board of Directors of the Company.
IV. This plan shall be approved by the competent authority of state-owned assets or the
authorized subject, and can come into force after being reviewed and approved by the General
Meeting of Shareholders of the Company.
V. The right to interpret this incentive plan belongs to the Board of Directors of the Company.
The Board of Directors of Hangzhou Steam Turbine Co., Ltd.
July 12, 2021
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