Scope of Authority and Responsibility

The company's compensation committee meets at least twice a year, with the responsibility to diligently perform the following duties and submit recommendations for discussion by the board of directors. However, recommendations regarding the compensation of supervisors shall be submitted for discussion by the board of directors only if the compensation is specified in the company's articles of association or authorized by a resolution of the shareholders' meeting.
(1) Establish and regularly review the board of directorsand the performance evaluation criteria for managers, annual and long-term performance goals, as well as the policies, systems, standards, and structures of compensation, and disclose the content of the performance evaluation criteria in the annual report.
(2) Regularly assess the achievement of performance goals of directors and managers, and based on the evaluation results obtained from the performance evaluation standards, determine the content and amount of their individual compensation. The annual report should disclose the individual performance evaluation results of directors and managers, as well as the content and amount of individual compensation and the relevance and reasonableness of these in relation to the performance evaluation results, and report at the shareholders' meeting.
(3) Other cases resolved by the board of directors.
The principles followed by the Compensation Committee in exercising its powers are:
(4) The performance evaluation and compensation of directors, supervisors, and managers should refer to the usual standards of the industry and consider the rationality of the relationship with individual performance, company operating performance, and future risks.
(5) Directors and managers should not be guided to engage in behaviors that exceed the company's risk appetite in pursuit of salary and compensation.
(6) The proportion of bonuses for directors and senior executives based on short-term performance and the timing of payment for variable compensation should be determined considering industry characteristics and the nature of the company's business.

Operation situation

The proposed work plan for 2026 is as follows:

2026 operational situation:

The articles of association regulate

The company's Articles of Association Article 22 clearly stipulates
The industry environment in which our company operates is highly variable, and the corporate life cycle is currently in a stable growth phase. Considering the company's future capital expenditure budget and funding needs, and assessing the necessity of using earnings to meet funding requirements, the amount of retained earnings or distribution and the amount of cash dividends to shareholders will be determined. After the annual financial statements, the net profit of the company, after withholding income tax as required by law, should first offset past losses. Then, ten percent of the remaining amount should be allocated as statutory surplus reserves; however, if the statutory surplus reserves have reached the company's paid-in capital, no further allocation is required. If necessary, special surplus reserves may be allocated or reversed in accordance with the law, and the undistributed earnings from the previous year will be added to the accumulated distributable earnings. The board of directors will draft a distribution proposal, which may be distributed within the range of not less than thirty percent of the newly available distributable earnings for the current period and not exceeding eighty percent of the accumulated distributable earnings, considering factors such as financial, business, and operational aspects. If the distribution of dividends and bonuses is partially or wholly in cash, the board of directors is authorized to do so with the attendance of more than two-thirds of the directors and the consent of a majority of the attending directors, and to report to the shareholders' meeting.

If the company has profits for the current year, it should allocate:
1. Five percent (inclusive) or more is for employee compensation, including one percent (inclusive) or more for frontline employee compensation.
2. The remuneration for directors shall not exceed 2%.

Recent annual employee compensation amount (Year: Compensation belonging to the year) Unit: Yuan

Compensation Policy

The company's governance and operational management policy not only focuses on achieving substantial operational results but also intricately combines management-level indicators, departmental work objectives, and individual performance, fully integrating sustainability indicators and taking the practice of corporate social responsibility as its mission. In addition to striving to achieve corporate profitability, it is even more important that the entire company, from top to bottom, must take every step to be environmentally friendly and oriented towards social benefits. To this end, an incentive reward system is designed to reward hardworking colleagues.

Employee compensation policy and implementation status:

Employee compensation

The employee compensation system allows employees to share in the results (with a contribution of 5% or more of the annual profits), effectively motivating colleagues. The performance evaluation of colleagues for the current year's work is assessed, combined with various indicators (such as: digital transformation, green and energy-saving, carbon reduction, quality indicators, certifications, etc.), ensuring that social responsibility continues to be integrated into the company's operations to achieve sustainable management, with a contribution of 10% for employee compensation in 2026.

2. Year-end bonus

Allocate year-end bonuses based on the company's operational conditions (based on 2 months' salary), and use employees' actual attendance rates, etc., as a reference for the distribution of year-end bonuses.

3. Annual Salary Adjustment

Based on the company's operational status, considering factors such as domestic economic growth rate, price index, and salary adjustment conditions in the industry, and then calculating the individual performance score (e.g., work objectives, job competence, teamwork, etc.) with weighted calculations, the annual salary adjustment range is set for the annual salary adjustment operation.

2025 salary adjustment situation of the company:

4. Employee Stock Ownership Trust

In 2018, the "Meilut Industrial Co., Ltd. Employee Stock Ownership Trust Committee" was established to officially launch the employee stock ownership trust plan. The scope of application is for employees of Meilut Industrial Co., Ltd. who are officially on the payroll and meet relevant conditions (e.g., having more than one year of service, with the principle of publicly accepting colleagues' voluntary applications to join, etc.). Employees contribute a fixed amount from their monthly salary, while the company also contributes a company bonus, which is jointly deposited into a trust account to attract talent and reward outstanding individuals, sharing the results of the company's operations.