Working Rules of the Nomination
Air China Limited
Working Rules of the Nomination and Remuneration Committee
of the Board of Directors
Chapter 1
General Principles
Article 1
In order to further develop and improve the review and remuneration management system for the board of directors (the "Board") and senior management members of Air China Limited (the "Company") and to maintain a sound corporate governance structure for the Company, the Nomination and Remuneration Committee of the Board of Directors (the "Committee") is established and these working rules (the "Working Rules") are made in accordance with the Company Law of the People's Republic of China with reference to the Rules for the Governance of Listed Companies issued by China Securities Regulatory Commission, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the articles of association of the Company (the "AOA") and other relevant rules and regulations.
Article 2
As a special operating committee established by the Board in accordance with the shareholders' resolution in a general meeting, the Committee is responsible for studying and making proposals to the Board on the criteria and procedures for selecting candidates for directors and senior management members; searching for such qualified candidates on a comprehensive basis; reviewing and making recommendations on such candidates; studying the criteria for appraising the performance of directors and senior management members, conducting performance review and making recommendations; and studying and examining the Company's remuneration policies and plans for the directors and senior management members, in accordance with the operational needs of the Company.
Chapter 2
Composition
Article 3
The Committee shall consist of three to seven external directors, the majority of whom shall be independent non-executive directors.
Article 4
The members of the Committee shall be appointed by the Board upon nomination by the chairman of the Board, more than half of the independent non-executive directors, or more than one-third of all the directors.
Article 5
The Committee shall have one chairman (the "Chairman"), who shall be an independent non-executive director elected by and among the Committee members. The Chairman shall preside over the work of the Committee.
Article 6
The members of the Committee shall have a term equal to the term of a director of the Company and may be re-elected upon expiration of such term. Any member of the Committee shall automatically lose his or her membership at the Committee if he or she ceases to be a director of the Company. The vacancy shall be filled by the Board in accordance with Articles 4 to 6 herein.
Chapter 3
Powers and Responsibilities
Article 7
The Committee shall have the powers and authorities to:
(1) review the structure, size and composition (including the skills, knowledge and experience) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the Company's corporate strategy;
(2) study and propose to the Board the criteria and procedures for selecting candidates for directors and senior management members;
(3) make recommendations to the Board on the appointment or re-appointment of directors, appointment of senior management members and succession planning for directors, in particular the chairman and the president of the Company;
(4) identify qualified candidates for directors and senior management members on a comprehensive basis and review and make recommendations on director and senior management member candidates;
(5) assess the independence of the independent non-executive directors of the Company;
(6) make recommendations to the Board on the Company's remuneration policy and structure for the directors and senior management members and on the establishment of a formal and transparent procedure for developing remuneration policy, and supervise the implementation of the remuneration policy of the Company;
(7) review and approve the proposals for the management's remuneration with reference to the corporate goals and objectives formulated by the Board;
(8) make recommendations on the remuneration packages of the directors and senior management members (including benefits in kind, pension rights and compensation payable for loss or termination of their office or appointment (if any)) having regards to salaries paid by comparable companies, time commitment and responsibilities, as well as employment conditions of other positions in the Company and its subsidiaries;
(9) review and approve compensation payable to executive directors and senior management for loss or termination of their office or appointment to ensure that it is consistent with contractual terms and is otherwise reasonable and appropriate;
(10) review and approve compensation arrangements relating to dismissal or removal of directors for misconduct to ensure that they are consistent with contractual terms and are otherwise reasonable and appropriate;
(11) review the performance of the directors and senior management members and conduct annual appraisals;
(12) formulate the Company's share incentive plan proposal, verify the compliance of granting and fulfillment of exercise conditions and make recommendations to the Board for its consideration; and
(13) address other matters entrusted to the Committee by the Board.
Article 8
Remuneration packages for directors proposed by the Committee shall be submitted to both the Board and general meeting of shareholders of the Company for approval before they can be implemented. Remuneration packages for senior management members shall be submitted to the Board for approval.
Article 9
The Committee shall report to the Board and resolutions adopted by the Committee shall be submitted to the Board for its consideration. The Board has the right to veto any remuneration plan or proposal that prejudices the interests of the shareholders.
Chapter 4
Procedural Rules
Article 10
The Committee shall convene a meeting if so requested by the Board of Directors. The secretarial department of the Board shall inform all Committee members seven days before the meeting and such notification period may be waived upon agreement of all the Committee members. The meeting shall be chaired by the Chairman, or if the Chairman is unable to attend the meeting, by an independent non-executive director member delegated by the Chairman.
Article 11
The quorum of a meeting shall be two-thirds of the Committee members. Each member present shall have one vote. The resolution of the meeting must be passed by a majority of all the Committee members present before such resolution becomes effective. In the event of a tie, the Chairman shall have the right to an extra vote.
Article 12
Votes at a meeting can be taken by a show of hands or casting of ballots. The meeting of the Committee may also be held by correspondence.
Article 13
The Committee may, if necessary, invite directors, supervisors or senior management members of the Company to attend its meetings.
Article 14
The Committee may, if necessary, engage an agency to provide professional opinions in its decision-making process and any reasonable cost shall be borne by the Company.
Article 15
A Committee member shall refrain from discussing any matter in which he or she has a personal interest in a Committee meeting.
Article 16
The procedures for holding meetings, the methods of voting and any resolution adopted at the meetings by the Committee shall comply with the relevant laws and regulations, the AOA and the Working Rules.
Article 17
The Committee shall prepare minutes of its meetings, which shall be signed by the Committee members who have attended the meeting and shall be kept by the board secretary.
Article 18
The resolutions passed by, and the results of voting at, the Committee meetings shall be reported in writing to the Board.
Article 19
The members attending a Committee meeting shall keep any matter discussed at the meeting confidential and shall not disclose any related information unless authorised.
Chapter 5
Supplementary Provisions
Article 20
The Working Rules are formulated by the Board and shall come into effect upon approval of the Board.
Article 21
Any matter not provided herein shall be dealt with in accordance with the relevant laws and regulations and the AOA. In the event of any inconsistency between the Working Rules and any laws or regulations or the AOA, as duly amended from time to time, such laws or regulations or the AOA shall prevail. In such circumstance, an amendment shall be made to the Working Rules immediately and submitted to the Board for review and approval.
Article 22
The Committee shall make available these terms of reference, explaining its role and the authority delegated to it by the Board by including them on the websites of The Stock Exchange of Hong Kong Limited and the Company.
Article 23
The Board reserves the rights to amend and interpret the Working Rules.
Amended in April, 2012
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