ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth certain information concerning the directors,
senior management and members of our board of supervisors (the "Board of
Supervisors") for the year ended December 31, 2003.
Name Age Position
----------------------------------- --- ------------------------------------------
Executive Directors
DU Guosheng 47 Chairman
YANG Qingyu 57 Director and Vice-chairman
XU Hongxing 45 Director and General Manager
Non-executive Directors
WANG Yuying 57 Director
WANG Yongjian 44 Director
WANG Ruihua 56 Director
CUI Guoqi 50 Director
XIANG Hanyin 49 Director
Independent Non-executive Directors
ZHANG Haoruo 72 Independent Non-executive Director
ZHANG Yanning 77 Independent Non-executive Director
LIU Haiyan 62 Independent Non-executive Director
YANG Xuefeng 65 Independent Non-executive Director
Supervisors
SHANG Bo 56 Chairman of the Board of Supervisors
REN Jinxiang 56 Supervisor
WANG Guifen 51 Supervisor
WANG Shulan 49 Supervisor
LIU Changwei 46 Supervisor
RONG Guozhong 46 Supervisor
ZHANG Jianjun 52 Supervisor
GENG Dianming 57 Independent Supervisor
ZHAO Shaohua 64 Independent Supervisor
Other Executive Officers
ZHAO Qichao 43 Deputy General Manager
GUO Hong 40 Chief Financial Officer
ZHOU Quansheng 35 Secretary of the Board
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Executive Directors
DU Guosheng, aged 47, is our Chairman of the Board of Directors. He joined
Yanshan Company in 1982 and became the Chairman and General Manager of Yanshan
Company in 1999. Mr. Du graduated from Fushun Petroleum Institute and received a
master's degree in Engineering Management from Shanghai Tongji University.
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YANG Qingyu, aged 57, is the Vice-chairman of the Board of Directors. He joined
Yanshan Company in 1970 and became Deputy General Manager of Yanshan Company in
1993. Mr. Yang graduated from Tianjin University.
XU Hongxing, aged 45, is our General Manager. He joined Yanshan Company in 1982
and has served various capacities including Deputy Director of the Synthetic
Rubber Unit and Deputy General Manager of Yanshan Company. Mr. Xu graduated from
Tianjin University and has a Master of Business Administration ("MBA") degree
from People's University of China.
Non-executive Directors
WANG Yuying, aged 57, joined Yanshan Company in 1970 and has served in various
capacities including Secretary of the Communist Party Committee and
Vice-chairman of Yanshan Company. Ms. Wang graduated from People's University of
China with a master's degree in administration of industrial enterprises.
WANG Yongjian, aged 44, joined Yanshan Company in 1982 and has served in various
capacities including Director of the Chemical Product Unit and Deputy General
Manager of Yanshan Company. Mr. Wang graduated from the East China Petroleum
Institute and has an MBA degree from Dalian University of Science and
Technology.
WANG Ruihua, aged 56, joined Yanshan Company in 1969 and became Chairman of the
Trade Union and Deputy General Manager of Yanshan Company in 1996 and 1999,
respectively. Mr. Wang graduated from Beijing Junior College of Chemical
Engineering and Beijing Economics Institute.
CUI Guoqi, aged 50, joined Yanshan Company in 1969 and has served in various
capacities including Chairman of the Trade Union of Yanshan Company. Mr. Cui
graduated from the People's University of China with an MBA degree.
XIANG Hanyin, aged 49, joined the Yizheng Chemical Fibre Company in 1982, and
has served in various capacities. In 2000, Mr. Xiang joined the Chemicals
Department of Sinopec as Deputy Director. Mr. Xiang graduated from Nanjing
Chemical Institute.
Independent Non-executive Directors
ZHANG Haoruo, aged 72, has served in various capacities in a number of
government bodies, including Vice Minister of the former Ministry of Foreign
Trade and Economic Cooperation, Governor of Sichuan Province, Minister of the
Ministry of Domestic Trade, Administrative Deputy Director of the former State
Commission for Economic Restructuring, and member of the Standing Committee of
the National People's Congress. Mr. Zhang graduated from Tsinghua University.
ZHANG Yanning, aged 77, has served in various governmental offices, holding
positions such as Vice Minister of the State Economic Commission, Deputy
Director of the Production Committee of the State Council, Deputy Chief of the
Economic and Trade Office of the State Council, member of the Finance and
Economic Affairs Committee of the National People's Congress, and Chairman of
the All China Association of Enterprises. Mr. Zhang graduated from the Dalian
Engineering Institute.
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LIU Haiyan, aged 62, joined Yanshan Company in 1969 and has served in various
capacities including Director of the Oil Refinery Plant and General Manager of
Yanshan Company. Mr. Liu served as the Vice Mayor of the Beijing Municipality
from 1998 to 2003 and the Chairman of the Board of Huaxia Bank since 2003. Mr.
Liu graduated from Xi'an Petroleum Institute and has obtained a master's degree
from Beijing Petroleum Institute.
YANG Xuefeng, aged 65, joined Sinopec in 1984 and has served in various
capacities including Deputy Director of the Department of Production Management
and Deputy Director of the Planning Department. Mr. Yang graduated from the
Beijing Petroleum Institute.
Supervisors
SHANG Bo, aged 56, is the Chairman of our Board of Supervisors. Mr. Shang joined
Yanshan Company in 1969 and has served in various capacities, including Deputy
Secretary of the Communist Party Committee of Yanshan Company. Mr. Shang
graduated from Lanzhou Petroleum Institute and Beijing Municipal Management
Executive Training School.
REN Jinxiang, aged 56, joined Yanshan Company in 1969 and has served in various
capacities including Deputy Chairman of the Trade Union of Yanshan Company. Mr.
Ren graduated from the Self-taught Examinations Program of Beijing Higher
Education and majored in executive management.
WANG Guifen, aged 51, joined Yanshan Company in 1971 and has served in various
capacities including Deputy Secretary of the Disciplinary Inspection Committee
and Director of the Supervision Department of Yanshan Company. Ms. Wang
graduated from the People's University of China.
WANG Shulan, aged 49, joined Yanshan Company in 1971 and has served in various
capacities including Deputy Chief of the Accounting Department of the Company.
Ms. Wang graduated from the People's University of China.
LIU Changwei, aged 46, joined Yanshan Company in 1983 and has served in various
capacities including Chief of the Management Committee of No. 1 Chemical Plant.
Mr. Liu graduated from Fushun Petroleum Institute.
RONG Guozhong, aged 46, joined Yanshan Company in 1976 and has served in various
capacities including Chairman of the Trade Union of the Polypropylene
Department. Mr. Rong graduated from the People's University of China.
ZHANG Jianjun, aged 52, joined Yanshan Company in 1971 and has served in various
capacities including Deputy Secretary of the Disciplinary Inspection Committee
of Yanshan Company and Deputy Director of the Supervision Department of Sinopec
Group. Ms. Zhang graduated from Tianjin University.
GENG Dianming, aged 57, joined Yanshan Company in 1978 and has served
consecutively as Chief Accountant in Beijing Zhongyan Accounting Firm and
Zhonglei Accounting Firm Beijing Office since 1993. Mr. Geng graduated from the
Graduate School of China Academy of Social Sciences.
ZHAO Shaohua, aged 64, joined Yanshan Company in 1970 and has served as Chief
Accountant of Yanshan Company since 1996. Mr. Zhao graduated from Xuzhou
Teachers' College.
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Other Executive Officers
ZHAO Qichao, aged 43, is our Deputy General Manager. He joined Yanshan Company
in 1983 and has previously served as the Manager of our Polypropylene Department
in 1997. Mr. Zhao graduated from the Second Branch of the Beijing Chemical
Institute.
GUO Hong,aged 40, is our Chief Financial Officer. Mr. Guo joined Yanshan Company
in 1982 and has served in various capacities including Deputy Director of the
Financial Department of the Company. Mr. Guo graduated from Wuhan University of
Industry with a master's degree.
ZHOU Quansheng, aged 35, is our Secretary of the Board. Mr. Zhou joined Yanshan
Company in 1990 and has served in various capacities such as Head of the
Secretariat of the Board of Directors. Mr. Zhou graduated from Zhejiang
University and obtained an MBA degree from the Dalian Institute of Technology.
Departure of an Independent Non-executive Director
Mr. Zhang Haoruo, one of our independent non-executive directors, passed away on
March 27, 2004. We currently have no intention of making any arrangement to fill
the resulting vacancy. The remaining three independent non-executive directors
will continue to fulfill their roles as our independent non-executive directors.
We do not expect that there will be any disruption to our operations due to Mr.
Zhang's unfortunate departure.
B. Compensation
The aggregate amount of cash remuneration paid to our directors, the members of
the senior management and the Board of Supervisors during the year ended
December 31, 2003 was RMB 1,233,480. During 2003, we set aside RMB 109,790 in
non-cash remuneration (consisting solely of our contribution to retirement
benefits) with respect to such individuals. In addition, directors who also act
as our officers or employees receive certain other benefits in kind, such as
subsidized or free health care services, housing management and transportation,
customarily provided by enterprises in China to their employees. See
"Employees."
Name Position Annual salary and allowances
------------------------------------------------ --------------- --------------------------------
(RMB) (US$)
Executive Directors
DU Guosheng Chairman 235,609 28,467
YANG Qingyu Director
and Vice-
chairman 209,348 25,294
XU Hongxing Director
and General
Manager 207,625 25,085
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Non-executive Directors
*WANG Yuying Director - -
*WANG Yongjian Director - -
*WANG Ruihua Director - -
*CUI Guoqi Director - -
*XIANG Hanyin Director - -
Independent Non-executive Directors
*ZHANG Haoruo Independent
Non-
executive
Director - -
*ZHANG Yanning Independent
Non-
executive
Director - -
*LIU Haiyan Independent
Non-
executive
Director - -
*YANG Xuefeng Independent
Non-
executive
Director - -
Supervisors
**SHANG Bo Chairman
of the
Board of
Supervisors - -
**REN Jinxiang Supervisor - -
**WANG Guifen Supervisor - -
**WANG Shulan Supervisor - -
LIU Changwei Supervisor 130,362 15,750
RONG Guozhong Supervisor 116,694 14,099
*ZHANG Jianjun Supervisor - -
*GENG Dianming Independent
Supervisor - -
*ZHAO Shaohua Independent
Supervisor - -
Other Executive Officers
ZHAO Qichao Deputy
General
Manager 198,435 23,975
GUO Hong Chief
Financial
Officer 137,520 16,615
ZHOU Quansheng Secretary of
the Board 107,677 13,010
* Such persons did not receive any remuneration from us or the Yanshan
Company in 2003.
** Such persons did not receive any remuneration from us in 2003. But
they were compensated by the Yanshan Company in 2003.
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C. Board Practices
All of our current directors and members of the Board of Supervisors were
elected in June 2003 and will serve terms of three years or until the election
of their respective successors.
Each of the executive directors has entered into a service contract with us for
a term of three years, subject to renewal by agreement for one or more
consecutive terms of three years. Under such contracts each executive director
will receive a salary and a discretionary year-end bonus, at such levels as are
proposed by our Board of Directors and approved by shareholders in the general
meeting. None of the directors are entitled to receive any benefits upon
termination with us.
Board of Supervisors
The Board of Supervisors exists to supervise our directors and our senior
officers to prevent them from abusing their positions and powers or infringing
our rights and interests or those of our shareholders or employees. The Board of
Supervisors has no power over the decisions or actions of our directors or
officers except to compel them to correct any act harmful to our interests. The
Board of Supervisors is currently composed of the nine members listed in Item
6A, each of whom was appointed for a three year term. It has the right to attend
meetings of our Board of Directors, inspect our financial affairs and perform
other supervisory functions. These powers and duties are contained in our
Articles of Association; there is no other written term of reference for our
Board of Supervisors.
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Audit Committee
The Board of Directors established an audit committee in 2002. For the year
ended December 31, 2003, the audit committee was composed of Mr. Zhang Haoruo,
Mr. Zhang Yanning, Mr. Liu Haiyan, and Mr. Yang Xuefeng, who was elected as
Chairman. The audit committee is responsible for the review and supervision of
our financial reporting process and internal controls in order to meet the
requirement of the Appendix 14 of the Listing Rules -the Code of Best Practice
which was promulgated by the Hong Kong Stock Exchange. For the year ended
December 31, 2003, the audit committee held two meetings. The audit committee,
together with our management, has reviewed the accounting policies, principles
and methods adopted by us, and has discussed about the contents of the auditing,
internal controls and the financial statements.
Remuneration Committee
We do not have a remuneration or compensation committee.
D. Employees
The following table shows the approximate number of employees we had at the end
of each of the last three years, organized by the principal business function
they performed:
December 31,
2001 2002 2003
Management and Administrative 1,159 1,032 1,003
Engineers and Technicians 2,147 2,291 2,378
Factory Personnel 5,675 5,373 5,215
Accounting, Marketing and Others 1,783 1,673 1,611
Total 10,764 10,369 10,207
Approximately 35% of our work force graduated from universities or technical
colleges. All members of our work force are employed under employment contracts
which specify the employee's position, responsibilities, remuneration and
grounds for termination.
We have a trade union that protects employees' rights, aims to assist in the
fulfillment of our economic objectives, encourages employee participation in
management decisions and assists in mediating disputes between us and union
members. Each of our operating units has a separate branch of the trade union.
We have not been subjected to any strikes or other labor disturbances which have
interfered with our operations, and we believe that our relations with our
employees are good.
The remuneration package we offer our employees includes wages and bonuses.
Employees and their families also receive certain social welfare benefits and
education and health services through Yanshan Company. These benefits are
subsidized in some cases by Yanshan Company, as required by PRC laws, rules and
regulations. We reimburse Yanshan Company for such subsidies.
According to the housing reform policies of the PRC government, we may be
required to pay a one-time subsidy to employees who joined us before December
31, 1998 and have not been able to buy housing at preferential prices under the
previous scheme or have bought housing at preferential prices but with living
areas less than the standard set by the municipal government. However, as of
December 31, 2001, we had not completed a housing subsidy plan for submission to
the municipal government for approval. Therefore, the amount of the one-time
housing subsidy cannot be determined and no provision has been made in the
financial statements. As detailed in our prospectus for the Combined Offering,
Yanshan Company has undertaken to bear the cost of housing subsidies for our
employees through the end of 1998. Therefore, we believe the implementation of
the new government housing reform policy will not have a material effect on our
financial condition.
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We, together with our employees, participate in a pension plan managed by the
Beijing municipal government, pursuant to which our employees and we each pay an
annual contribution to the plan. The annual contribution we paid in 2002 and
2003 equals 19% and 20% respectively of aggregate annual employee compensation.
Each employee paid in 2002 and 2003 equals 6% and 8% respectively of his or her
salary as an additional contribution. Upon retirement, our employees are
entitled to the payment of pensions from the plan.
We started to implement the new regulations issued by the Beijing Municipal
Government for its employee's basic medical insurance in September 2002. Prior
to the implementation of such regulations, we have been carrying out relevant
State regulations by drawing 14% of the employees' total current wages as
welfare fees to be used as the medical expenditure for employees. The welfare
fees were included in our labor costs specified in the financial statements
included in Item 18. After the implementation of the new regulations, the
medical insurance fees to be paid represented 9% of total wages, and such amount
shall be included in the 14% employee welfare fees to be drawn by us.
All employees who are unable to work due to illness or disability are entitled
to receive certain benefits during the period of their absence from the
workplace.
In 2001, we terminated the employment of approximately 2,320 employees under a
voluntary termination plan. We paid approximately RMB 246.9 million in
connection with the termination of these employees. We did not further reduce
our overall workforce during 2002 and 2003.
E. Share Ownership
None of the directors, supervisors or senior management had, as of December 31,
2003, any interests in any our shares or debentures.
We have no employee share purchase plan, share option plan or other arrangement
to involve our employees in our share capital.
There was no contract of significance to which we were a party existing during
or at the end of the year under review in which a director, supervisor or senior
management had a material interest.