2012 Annual Report - ZTE

ZTE CORPORATIONCorporate Governance Structure(II)(III)(IV)(V)(VI)Controlling shareholder and the listed company: The Company’s controlling shareholder is Zhongxingxin.The controlling shareholder exercises its rights as an investor in strict compliance with the law, withoutcompromising the lawful rights and interests of the Company and other shareholders. Candidates for electionas Directors and Supervisors are nominated in strict compliance with laws and regulations and the terms andprocedures as set out in the Articles of Association. The staffing, assets, financial affairs, organisation andbusiness of the controlling shareholder are independent from those of the listed company, with the controllingshareholder and listed company each carrying out independent auditing and assuming its own responsibilitiesand risks. The controlling shareholder has not directly or indirectly interfered with the decision-making andbusiness activities of the Company beyond the general meeting.Directors and the Board: The Company appoints directors in strict compliance with the criteria andprocedures set out its Articles of Association, ensuring that the directors are appointed in an open, fair,just and independent manner. In order to fully reflect the opinions of minority shareholders, a cumulativevoting scheme is adopted for the appointment of directors. The Board of Directors has a reasonable mix ofexpertise and acts in the best interests of the Company in good faith. The Company has formulated a setof rules of procedure for Board of Directors meetings, and board meetings are convened and held in strictcompliance with the Articles of Association and Rules of Procedure of the Board of Directors Meetings. Tooptimise the corporate governance structure, three specialist committees — the Nomination Committee,Audit Committee and Remuneration and Evaluation Committee — have been established by the Board ofDirectors in accordance with the Governance Standards for Listed Companies. The majority of members andthe convenors in each of these committees are Independent Non-executive Directors, providing scientificand professional opinions for reference by the Board of Directors in its decision-making.Supervisors and the Supervisory Committee: The Supervisors possess professional knowledge and workexperience in legal, accounting and other areas and are elected by way of cumulative voting. They monitorthe financial affairs and supervise the lawful and regulatory performance of duties by the Company’s Directors,the Chief Executive Officer and other members of the senior management, and safeguard the legal rightsand interests of the Company and shareholders. The Company has formulated rules of procedure for theSupervisory Committee meetings. Meetings of the Supervisory Committee are convened and held in strictcompliance with the Articles of Association and the Rules of Procedure for Supervisory Committee Meetings.Performance appraisal and incentive mechanism: During the year, the Remuneration and EvaluationCommittee of the Board of Directors linked the salaries of the senior management with the results ofthe Company and personal performance in accordance with the Scheme for the Administration of SeniorManagement’s Remuneration and Performance. Senior management personnel are recruited and appointedin strict compliance with relevant rules, regulations and the Articles of Association. In order to establisha long-term incentive mechanism closely linked with the Company’s business performance and long-termstrategy, so as to help optimise the overall remuneration structure and create a competitive advantage inhuman resources that will contribute to the long-term, sustainable growth of the Company’s operation,the Remuneration and Evaluation Committee of the Board of Directors has formulated the Phase I ShareIncentive Scheme of the Company, which has been completed at December 2012 upon approval by thegeneral meeting of the Company.Stakeholders: The Company respects the legal rights and interests of banks and other stakeholders such ascreditors, employees, consumers, suppliers, and the community, and works actively with these stakeholdersto promote the sustainable and healthy development of the Company.120