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Corporate Governance Report Huawei Turkey employees rafting on Melen River, Düzce, Turkey 101 Shareholders Corporate 102 The Shareholders' Meeting and the Representatives' Commission Governance 102 Board of Directors and Committees 107 Supervisory Board Report 107 Rotating CEOs 108 Members of the Board of Directors, the Supervisory Board, and the BOD Committees 114 Independent Auditor 114 Business Structure 115 Improving the Management System 117 Improving the Internal Control System By staying customer-centric and inspiring dedication, we have sustained long-term growth by continuously improving our corporate governance structure, organizations, processes, and appraisal systems. Shareholders’ Meeting Board of Directors Independent Auditor Supervisory Board Executive Committee Human Resources Strategy & Finance Committee Development Audit Committee Committee Committee CEO/Rotating CEOs Group Functions Corporate Strategy Cyber Security & Human Resources Finance Quality, BP & IT Development Marketing User Privacy Protection Joint Committee Engineering Ethics & PR & GR Legal Affairs Internal Audit of Regions Inspection Compliance 2012 Laboratories Chief Supply Chain Officer (Supply Chain, Purchase, Products & Carrier Enterprise Consumer Manufacturing) Solutions BG BG BG Huawei University Huawei Internal Service Regional Organizations (Regions and Representative Offices) Shareholders Huawei Investment & Holding Co., Ltd. (the "Company" or "Huawei") is a private company wholly owned by its employees. Huawei's shareholders are the Union of Huawei Investment & Holding Co., Ltd. (the "Union") and Mr. Ren Zhengfei. Through the Union, the company implements an Employee Shareholding Scheme (the "Scheme"), which involved 79,563 employees as of December 31, 2015. The Scheme effectively aligns employee contributions with the company's long-term development, fostering Huawei's continued success. Mr. Ren Zhengfei is the individual shareholder of the Company and also participates in the Scheme. As of December 31, 2015, Mr. Ren's investment accounts for nearly 1.4% of the Company's total share capital. 101 The Shareholders' Meeting and the Board of Directors and Committees Representatives' Commission The Board of Directors (BOD) is the decision-making The Shareholders' Meeting is the highest authority body for corporate strategy and management. The BOD within the Company, and comprises two shareholders: guides and oversees the overall business operations the Union and Mr. Ren Zhengfei. and makes decisions on significant issues regarding strategy and operations. The BOD has established the The Company's major issues, which involve the Human Resources Committee, the Finance Committee, decisions of the Union as a shareholder of the the Strategy & Development Committee, and the Audit Company, shall be primarily reviewed and decided on Committee to assist and support BOD operations. by the Representatives' Commission (the "Commission"). The main responsibilities of the BOD are to: The Commission consists of all representatives of ■ Decide on the company's strategic directions; and shareholding employees ("Representatives") and approve and monitor the execution of the company's exercises rights on behalf of all shareholding employees. medium-to-long-term development plan. In 2015, the Commission held one meeting, at which it approved proposals on annual profit distribution and ■ Provide advice and guidance to management capital increases. regarding significant issues, including major crises and market changes. The Representatives and Alternate Representatives are ■ Review the company's business operations, elected by the active shareholding employees with organization, and processes; and approve a term of five years. In the event that there is a major organizational restructurings, business vacancy in the body of Representatives, the Alternate transformations, and process transformations. Representatives shall take up the vacancy in a ■ Approve the company's major financial policies, predetermined sequence. financial arrangements, and business transactions. ■ Approve the company's operating results, financial At present, current members of the Commission are results, and financial statements. Ms. Sun Yafang, Mr. Guo Ping, Mr. Xu Zhijun, Mr. Hu ■ Establish the company's monitoring mechanisms and Houkun, Mr. Ren Zhengfei, Mr. Xu Wenwei, Mr. Li Jie, oversee their execution. Mr. Ding Yun, Ms. Meng Wanzhou, Ms. Chen Lifang, Mr. Wan Biao, Mr. Zhang Ping'an, Mr. Yu Chengdong, ■ Establish the company's governance structure and Mr. Liang Hua, Mr. Ren Shulu, Mr. Tian Feng, Mr. organize its optimization and deployment. Deng Biao, Mr. Zhou Daiqi, Mr. Cai Liqun, Mr. Jiang ■ Decide on the selection, appraisal, and compensation Xisheng, Mr. Yin Xuquan, Mr. Yao Fuhai, Mr. Zha Jun, of the Chief Executive Officer; and approve the Mr. Li Yingtao, Ms. Ji Ping, Mr. Tao Jingwen, Mr. Zhang appointment and compensation of other members Shunmao, Mr. Ding Shaohua, Mr. Li Jin'ge, Mr. Wang of senior management. Shengli, Mr. Wang Kexiang, Mr. Lv Ke, Mr. Yang Kaijun, ■ Approve the corporate-level HR planning and major Mr. Jiang Yafei, Ms. He Tingbo, Mr. Sun Ming, Mr. Wu HR policies. Kunhong, Mr. Zhao Yong, Ms. Yan Weimin, Mr. Tang Xiaoming, Mr. Wang Jiading, Mr. Wei Chengmin, Mr. In 2015, the BOD held 10 meetings. At the meetings, Xiong Lening, Mr. Li Shanlin, Mr. Xu Chi, Mr. Song the BOD reviewed and approved matters such as the Liuping, Mr. Zhou Hong, Ms. Chen Jun, Mr. Hui Chun, company's medium-to-long-term development plan, Mr. Peng Zhongyang, and Mr. Li Gang. annual business plan and budget, BOD committee members and operations, and compensation and incentives. 102 Currently, the BOD has 17 members, who were elected ■ Set policies for and provide guidance on learning by all Representatives. and development. ■ Set policies for employee discipline and oversee ■ Chairwoman: Ms. Sun Yafang. disciplinary action for major violations. ■ Deputy Chairmen: Mr. Guo Ping, Mr. Xu Zhijun, Mr. ■ Set policies for and provide guidance on health and Hu Houkun, and Mr. Ren Zhengfei. safety. ■ Executive Directors: Mr. Xu Wenwei, Mr. Li Jie, Mr. ■ Manage HR strategic planning and key HR Ding Yun, and Ms. Meng Wanzhou. transformation initiatives. ■ Directors: Ms. Chen Lifang, Mr. Wan Biao, Mr. Zhang The HRC holds monthly meetings. Business executives, Ping'an, Mr. Yu Chengdong, Mr. Li Yingtao, Mr. Li HR executives from different departments, and various Jin'ge, Ms. He Tingbo, and Mr. Wang Shengli. experts are invited to attend as non-voting participants. The BOD has established the Executive Committee, The committee met 12 times in 2015, and achieved its which acts as the executive body of the BOD while it annual objectives in managing HR strategy, developing is adjourned. Members of the Executive Committee major HR policies, making key HR decisions, and include Mr. Guo Ping, Mr. Xu Zhijun, Mr. Hu Houkun, overseeing policy execution. Specific initiatives are as Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, and Ms. Meng follows: Wanzhou. In 2015, the Executive Committee held 12 meetings. ■ Effectively examined internal and external developments in HR management; formulated the Human Resources Committee company's HR Strategy Guide based on the global development needs of multiple business groups, The Human Resources Committee (HRC) manages and which provided effective guidance to all departments optimizes core corporate elements such as organization, on HR strategic planning; and conducted special talent, incentives, and culture. It operates under the BOD research on key strategic issues regarding Huawei's to develop, determine, and oversee the implementation future-oriented HR management. of key policies and transformation initiatives relating ■ Continuously studied and identified key issues that to HR management. The committee aligns HR policies impacted Huawei's organizational operations; began with the company's HR management philosophy and to optimize the operations of relevant organizations; core concepts to ensure policy consistency. These continuously optimized the workforce budget policies also reflect the business characteristics and management mechanism to increase its flexibility; management models of departments at all levels to and explored future-oriented methods of managing support business development. the size of the workforce. The main responsibilities of the HRC are to: ■ Implemented different management initiatives ■ Manage HR initiatives for key managers and for different groups of employees in terms of talent (including succession planning, deployment, Competency & Qualification (C&Q), compensation, appointments/removals, performance appraisals, and incentives to inspire passion across the compensation, and incentives). organization; widened the gap in incentives between different groups of employees to boost passion ■ Set policies for incentives, benefits, the compensation among a larger number of outstanding employees; structure, and job matching. continuously optimized HR policies for hardship ■ Set policies for organizational development and regions to help effectively implement the company's optimization; and manage HR budgets and staffing policy of providing more incentives to dedicated for each budgetary unit. employees. 103 ■ Continuously optimized the internal talent The main responsibilities of the FC are to: management framework and employed different ■ Align resources with business needs based on methods when managing different groups of the company's resources and resource acquisition employees;
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