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Corporate Governance

• Audit Committee
• Remuneration Committee

Terms of Reference

Committee’s Resolutions

A resolution in writing signed by all the members of the Committee shall be as valid and effectual as if it had been passed at a meeting of the Committee and may consist of several documents in like form each signed by one or more of the members of the Committee. Such resolution may be signed and circulated by fax. This provision is without prejudice to any requirement under the Listing Rules for a Board or Committee meeting to be held.

Authorities and Purposes

• The Committee is authorised by the Board to review, assess and make recommendations upon, any issue within these terms of reference.

• The Committee should utilise information achieved internally and externally to satisfy itself that base salaries are competitive with current market conditions and that the total remuneration package/benefits are competitive with other companies of a similar size, business nature and scope as the Company.

• The purpose of the establishment of the Committee is to enable the Company to be more open and objective in the setting of its remuneration in respect of the Chairman and the Executive Directors of the Board.

• The Committee is to review and make recommendations concerning the remuneration packages and benefits of the Chairman, the Executive Directors of the Board of the Company as an independent and impartial committee, who have no personal financial interest in the package and/or benefits recommended and who, in the setting of those remuneration packages, will consider and give due regard to both the performance levels of, and a fair reward for, the Chairman and Executive Directors of the Company and to the interest of all the shareholders of the Company in the light of the financial and commercial circumstances of the Company from time to time. No Director shall be involved in deciding his own remuneration.

• The Committee must ensure that the Chairman and Executive Directors of the Board are fairly rewarded in the light of their contribution to the Company and their performance and that they receive suitable incentives to maintain high standards of performance and to improve their, and the Company’s, performance.

• The Committee is authorised by the Board, and at the reasonable expense of the Company, to obtain outside legal or other independent professional advice and to secure attendance of outsiders with the relevant experience and expertise if it considers this necessary.

• The Committee is to be provided with sufficient resources to discharge its duties.

Duties

The duties of the Committee shall be:

• to assess, review and make recommendations, once a year or as and when required, to the Board in respect of the remuneration packages and overall benefits for the Directors of the Board of the Company;

• to make recommendations to the Board in relation to all consultancy agreements and service contracts, or any variations, renewals or modifications thereof, entered into between the Company and the Directors of the Board or any associate company of any of them;

• to consider what details of the Chairman’s and Executive Directors’ remuneration/benefits should be reported in addition to those required by law in the Company’s annual report and accounts and how those details should be presented;

• to be charged with the responsibility of making recommendations to the Board on the Company’s policy and structure for all remuneration of Directors (including Non-Executive Directors) and on the establishment of a formal and transparent procedure for developing policy on such remuneration and also placing recommendations before the Board concerning the total remuneration and/or benefits granted to the Directors from time to time;

• to have the delegated responsibility to determine the specific remuneration packages of all Executive Directors , including benefits in kind, pension rights and compensation payments, including any compensation payable for loss or termination of their office or appointment, and make recommendations to the Board of the remuneration of Non-Executive Directors. The Committee should consider factors such as salaries paid by comparable companies, time commitment and responsibilities of the Directors and senior management, employment conditions elsewhere in the group and desirability of performance-based remuneration;

• to review and approve performance-based remuneration by reference to corporate goals and objectives resolved by the Board from time to time;

• to review and approve the compensation payable to Executive Directors in connection with any loss or termination of their office or appointment to ensure that such compensation is determined in accordance with relevant contractual terms and that such compensation is otherwise fair and not excessive for the Company;

• to review and approve compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that such arrangements are determined in accordance with relevant contractual terms and that any compensation payment is otherwise reasonable and appropriate;

• to ensure that no Director or any of his associates is involved in deciding his own remuneration;

• to ensure that adequate retirement arrangements are put in place and maintained in respect of the Chairman and Executive Directors of the Board of the Company in the light of their performance during their time with the Company and not merely in regard to the previous one year’s performance;

• to cater for the Company to be in a position to offer and maintain competitive and attractive overall benefits to recruit and maintain high quality personnel at the Board level;

• to do any such things to enable the Committee to discharge its powers and functions conferred on it by the Board; and

• to conform to any requirement, direction, and regulation that may from time to time be prescribed by the Board or contained in the constitution of the Company or imposed by the Listing Rules or applicable law.

Reporting Procedures

The Committee shall report to the Board. At the next meeting of the Board following a meeting/written resolution of the Committee, copy of the minutes/resolution setting out the findings, recommendations and decisions of the Committee shall be submitted to the Board.

Availability and update of the terms of reference

Theses terms of reference shall be updated and revised as and when necessary in light of changes in circumstances and changes in regulatory requirements (e.g. the Listing Rules) in Hong Kong. These terms of reference shall be made available to the public by including the information on the Company’s website.

© Copyright 2007 Haier Co.,Ltd.All rights reserved.