CREG Compensation Committee CharterChinaRecycling Energy Corporation COMPENSATION COMMITTEECHARTER
As restated and adopted by the Board of Directors onJune 19, 2014 The Board ofDirectors (the “Board”) of China Recycling Energy Corporation (the “Company”) doeshereby set forth the authority and responsibilities of the CompensationCommittee (the “Committee”) as described below, subject to amendment by theBoard from time to time:
PURPOSE
The Committee’spurpose is (i) to oversee the Company’s efforts to attract, retain and motivatemembers of the Company’s senior management team, (ii) to carry out the Board’soverall responsibility relating to the determination of compensation for allexecutive officers, (iii) to oversee all other aspects of the Company’scompensation policies, and (iv) to oversee the Company’s management resources,succession planning and management development activities.
COMPOSITION
The Committeeshall be comprised of two or more Board members, each of whom must beindependent in accordance with the provisions of Rule 10C-1(b) of the SecuritiesExchange Act of 1934 (the “Exchange Act”) and the independence requirements oftheNASDAQ StockMarket Marketplace Rules (“NASDAQ”).Pursuant to the independence criteria set forth under NASDAQ Listing Rule5605(a)(2), a member of the Committee may not accept, directly or indirectly,any consulting, advisory or other compensatory fees from the Company or any ofthe Company’s subsidiaries; however, a Committee member may receive “permittedfees,” which include fees received for serving on the Committee, the Board, orany other Board committee. In addition, each member of the Committee shall meetthe requirements for a “non-employee director” as defined in Rule 16b-3 underthe Securities Exchange Act of 1934, as amended, and the requirements for an“outside director” for purposes of Section 162(m) of the Internal Revenue Codeof 1986, as amended, and related regulations, in each case as in effect fromtime to time. The members of the Committeeand the Committee chairperson shall be appointed annually by the Board and maybe removed at any time, with or without cause, by the Board. In evaluatingdirectors to serve on the Committee, the Board shall consider a director’saffiliations with the Company, subsidiaries of the Company, and affiliates ofthe Company’s subsidiaries to determine if the affiliation would impair thedirector’s judgment as a member of the Committee.
The Committeeshall have the power to create subcommittees, each consisting of one or more ofits members, with such powers as the Committee shall from time to timeconfer. Each subcommittee shall keepminutes of its meetings and report them to the Committee.
OPERATING PRINCIPLES
In fulfilling itsfunction and responsibilities, the Committee should give due consideration tothe following operating principles and processes:
· Communication – Regular and meaningful contact throughout the yearwith the Chairman of the Board, other committee chairpersons, members of seniormanagement and other key Committee advisors, as applicable, is viewed asimportant for strengthening the Committee’s knowledge of sound compensationpolicies.
· Committee Expectations and InformationNeeds – The Committeeshould communicate to the Chief Executive Officer or his designee theexpectations of the Committee, and the nature, timing and extent of anyspecific information or other supporting materials requested by the Committee,for its meetings and deliberations.
· Resources – The Committee shall be authorized to access, at theCompany’s expense, such internal and external resources, including retaininglegal, financial or other advisors, as the Committee deems necessary orappropriate to fulfill its defined responsibilities. Without limiting the foregoing, the Committeeshall have the authority to select, engage and terminate compensationconsultants, legal counsel or other advisors to assist the Committee indesigning, reviewing and evaluating the Company’s compensation policies andplans, including the sole authority to select, engage and terminate suchcompensation consultants and outside advisors to assist in the evaluation ofChief Executive Officer and senior executive officer compensation. The Committee shall have the sole authorityto approve fees, costs and other terms of engagement of such outside resources.The compensation consultants, outside counsel and any other advisors retainedby the Committee shall be independent as determined in good faith by theCommittee after consideration of the following factors: (i) any other services providedto the Company, (ii) amount of fees paid by the Company, (iii) any policies andprocedures designed to prevent conflicts of interest, (iv) business or personalrelationship between the consultant, counsel or other advisor and any member ofthe Committee, (v) ownership by the consultant, counsel or other advisor of theCompany’s stock and (vi) any business or personal relationship between theconsultant, counsel or other advisor and any executive officer of the Company.
· Meeting Agendas – Committee meeting agendas shall be theresponsibility of the Committee chairperson with input from Committee membersand other members of the Board, with additional input from members of seniormanagement and outside advisors to the extent deemed appropriate by thechairperson.
· Committee Meeting Attendees – The Committee shall be authorized torequest members of senior management, outside counsel and other advisors toparticipate in Committee meetings.
· Reporting to the Board of Directors – The Committee shall maintain minutes ofmeetings and, through the Committee chairperson, shall report all materialactivities of the Committee to the Board from time to time or whenever sorequested by the Board. In addition,minutes from Committee meetings should be distributed to each Board memberprior to the subsequent Board meeting.
MEETINGS
The Committeeshould meet as frequently as considered necessary by the Committee or thechairperson, and shall meet at least two times annually and, to the extentpracticable, in conjunction with regularly scheduled Board meetings. The Committee shall fix its own rules ofprocedure. A majority of regular membersthen serving on the Committee shall constitute a quorum.
AUTHORITY AND RESPONSIBILITY
The primaryCommittee responsibilities are:
Oversight of Executive Compensation Policies
· Overall Compensation Strategy – The Committee shall review and approvethe overall compensation strategy and policies for the Company, includingreviewing and approving the corporate performance goals and objectives relevantto the compensation of the Company’s executive officers. In fulfilling this responsibility, (i) theCommittee shall periodically review reports and data regarding the Company’sexecution of its compensation strategy and the implementation of its policies;and (ii) the Committee shall consider the results of the most recentstockholder advisory report on executive compensation (“Say on Pay Vote”)required by Section 14A of the Exchange Act.
· Compensation and Performance Appraisal ofChief Executive Officer –The Committee shall review and approve, in its sole discretion (with input fromthe other non-executive directors as deemed appropriate but without the needfor further Board approval), the compensation (including salary, long-termincentives, bonuses, equity incentives, perquisites, severance payments, otherbenefits, employment agreements and amendments thereto) and other terms ofemployment of the Company’s Chief Executive Officer and shall review, discussand assess the Chief Executive Officer’s performance in light of relevantcorporate performance goals and objectives. The factors to be considered shall include whether he or she can anddoes provide the skills and expertise appropriate for the Company, as well as themost recent Say on Pay Vote. The purposeof the review is to increase the effectiveness of the Chief Executive Officerand the results shall be provided to him or her for further discussion asappropriate. The Committee should reportto the Board periodically regarding the material components of the compensationand other terms of employment of the Chief Executive Officer approved by theCommittee and the Board.
· Compensation of Other Executive Officers – The Committee shall review and approve,in its sole discretion (without the need for further approval by the Board, butwith input from the Board or other individual Directors as deemed appropriateby the Committee), and upon recommendation of the Chief Executive Officer, thecompensation (including salary, long term incentives, bonuses, equityincentives, perquisites, severance payments, other benefits, employmentagreements and amendments thereto) and other terms of employment of all otherexecutive officers of the Company. TheCommittee shall develop compensation arrangements that are intended to attract,motivate and retain executives and stimulate, reward and provide incentives forcontinuous high levels of executive performance that will create long-terminvestor value, as well as link that compensation with the attainment offinancial, operational and strategic objectives to the extent deemedappropriate. Factors to be consideredshall include whether such executive can and does provide the skills andexpertise appropriate for the Company, as well as the most recent Say on PayVote (if applicable for an executive).
· Performance Appraisals – The Committee shall review and approvecorporate performance goals and objectives of the Company’s executive officersthat are set at or near the beginning of the applicable performance cycle, ifany. The Committee shall review asummary of the attainment of such goals and objectives at the end of theperformance cycle in conjunction with overall performance appraisals.
· Senior Management Assessment – The Committee shall periodically review,discuss and assess the performance of senior management in light of relevantcorporate performance goals and objectives, seeking input from individualmembers of senior management, the full Board and others. The assessment includes an evaluation ofsenior management’s contribution as a whole, as well as evaluation of thecontribution of each individual member of senior management. The factors to be considered shall includewhether senior management, both individually and collectively, can and doprovide the skills and expertise appropriate for the Company. The purpose of the review is to increase theeffectiveness of senior management as a whole and on an individual basis. The results of such reviews shall be providedto senior management and the full Board for further discussion as appropriate.
· Management Discussions and CompensationDisclosures – TheCommittee shall review and discuss with management information related toexecutive compensation and recommend the inclusion of executive compensationdisclosures be included in the Company’s proxy statement or annual report onForm 10-K.
· Risk Management – The Committee shall: (i) review theCompany’s incentive compensation arrangements (if any) to determine whethersuch policies encourage excessive risk taking; (ii) review, and discuss atleast annually, the relationship between risk management policies and practicesand compensation; and (iii) evaluate compensation policies and practices thatcould mitigate any such risk.
· Say on Pay – The Committee shall review and recommend to theBoard for approval the frequency with which the Company will conduct Say on PayVotes, taking into account the results of the most recent stockholder advisoryvote on frequency, and review and approve proposals regarding the Say on PayVote and the frequency of the Say on Pay Vote to be included in the Company’sproxy statement.
· Conflicts of Interest – The Committee shall evaluate whether anyretained compensation consultants have any conflict of interests in accordancewith Item 407(e)(3)(iv) of Regulation S-K.
Oversight of Compensation, Incentive and BenefitPolicies and Plans
· Administration of Incentive Plans – The Committee shall administer, as and tothe extent provided in the plan documents and upon the recommendation of theChief Executive Officer, the Company’s incentive compensation, stock, bonus andother similar plans and programs established by the Board from time to time,including without limitation establishing guidelines, interpreting plandocuments, selecting participants, approving grants and awards and making allother decisions regarding the operation of such plans.
· Executive Compensation and Benefits Plans – The Committee shall review and approve,in its sole discretion (without the need for further approval by the Board, butwith input from the Board or other individual Directors as deemed appropriateby the Committee), and upon recommendation of the Chief Executive Officer, theadoption of, amendment to, or termination of executive compensation and benefitplans as required.
· Non-Executive Compensation and BenefitsPlans – The Committeeshall review and approve the general design and terms of significantnon-executive compensation and benefits plans including, but not limited to:incentive compensation, bonus programs, profit sharing goals and payouts andthe introduction or material modification of health, welfare and retirementplans or other material employeeperquisite plans.
· Succession Planning – The Committee shall annually review theCompany’s organizational structure, succession plans for executive officers andprograms for development of individuals to assume positions of higherresponsibility, and periodically report to the Board regarding such matters.
Other Responsibilities
· Proxy Statement Reports – The Committee shall prepare such reportsregarding matters within the scope of the Committee’s role and responsibilitiesas may be required to be included in the Company’s annual proxy statement orother public filings under applicable rules and regulations.
· Director Compensation – The Committee shall periodically review,in consultation with the Nominating Committee, the compensation paid tonon-employee Directors for their service on the Board and its committees andrecommend any changes to the full Board for its approval. The Committee isresponsible for determining each director's compensation based upon his/herwork load, experience, background and contribution to the Company etc.. The Committee shall recommend its decisionson director compensation to the full Board for approval.
· Committee Self Assessment – The Committee shall review, discuss andassess at least annually its own performance as well as the role andresponsibilities of the Committee, seeking input from senior management, thefull Board and others. Changes in therole and/or responsibilities of the Committee as outlined in this Charter, ifany, shall be recommended to the full Board for approval.
· Other Activities – The Committee shall perform any otheractivities consistent with this Charter, the Company’s bylaws and governinglaw, as the Committee or the Board deems necessary or appropriate.
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