Corporate Governance Structure
At Huawei, we advocate "customers as our focus and dedicated employees as our foundation." We will continue to improve our organizational structure, processes, and appraisal systems to achieve effective growth.
Huawei Investment & Holding Co., Ltd. (the "company" or "Huawei") is a private company wholly owned by its employees.
Through the Union, the company implements an Employee Shareholding Scheme (the "Scheme"), which involves 65,596 employees as of December 31, 2011. They are represented by and exercise their rights through the elected representatives (the "Representatives"). The Scheme effectively aligns employee contributions with the company's long-term development, fostering Huawei's continued success.
Board of Directors and Committees
The BOD is the decision-making body for corporate strategy and management. The BOD guides and oversees the overall business operations and makes decisions on significant strategic issues. The BOD established the Executive Committee, which acts as the executive body of the BOD while the BOD is adjourned. The BOD has also established the Human Resources Committee, the Finance Committee, the Strategy & Development Committee, and the Audit Committee to assist the BOD in overseeing the company's operations.
The key roles and responsibilities of the BOD include:
- Deciding on the company's strategic directions; approving its medium-to-long-term business plan; monitoring the execution of the plan.
- Providing advice and guidance to management regarding significant issues, including major risks and market changes.
- Reviewing the company's business operations and organization processes; approving major organizational restructurings, business
transformations, and process transformations.
- Approving the company's major financial policies, financial arrangements, and business transactions.
- Approving the company's operational and financial results; approving the company's financial statements.
- Establishing the company's monitoring mechanisms and overseeing their execution.
- Establishing the company's governance structure and organizing its optimization and deployment.
- Deciding on the selection, appraisal, and compensation of the Chief Executive Officer; approving the appointment and compensation of other members of senior management.
- Approving the corporate-level HR planning and major HR policies.
In 2011, the BOD held 12 meetings, reviewed, and released a series of documents related to the overall corporate governance architecture, operating principles and mechanisms for corporate governance, and the operational regulations of the Executive Committee. Throughout the year, the BOD also reviewed and approved the annual business plan and budget, quarterly operational performance reports, the strategic direction and organizational setup for new businesses, investment and merger & acquisition projects, appointments and compensation policies for senior management, and other major HR and financial policies. The BOD also agreed on a set of resolutions on the company's strategic directions, major investment decisions, and financing arrangements.
The BOD is comprised of 13 members, who were elected by all the Representatives. The members of the BOD are Chairwoman Ms. Sun Yafang, Deputy Chairmen Mr. Guo Ping, Mr. Xu Zhijun, Mr. Hu Houkun, Mr. Ren Zhengfei, Executive Directors Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, Ms. Meng Wanzhou, and Directors Ms. Chen Lifang, Mr. Wan Biao, Mr. Zhang Ping'an, and Mr. Yu Chengdong.
Human Resources Committee
The Human Resources Committee manages and improves organizational capabilities such as organization, talent, and culture. This committee establishes key HR management policies under the authorization of the BOD and oversees the execution of these policies. To support the company's business development, the committee ensures that HR policies reflect the company's HR management philosophy while also considering the business characteristics and management models of regions, BGs, and functional departments.
The key roles and responsibilities of the Human Resources Committee include:
- Managing the succession plans, allocation schemes, and matters related to managerial appointments or removals, performance appraisals, compensation, and incentives for key managers and talent under the authorization of the BOD.
- Managing overall incentive policies, policies related to social security benefits, the compensation structure, and job matching.
- Managing policies for organizational development and optimization; managing the HR budget and headcount planning for each budgetary unit.
- Managing the policies and providing guidance for employee learning and development at all levels.
- Setting policies related to employee compliance with internal regulatory requirements and managing disciplinary actions against major violations.
- Providing routine guidance on policies related to the occupational health and safety of employees.
- Managing the strategic plans and key HR transformation activities.
The Human Resources Committee meets on a monthly basis and convenes special sessions whenever needed. At the request of the committee, business executives and field-specific experts may attend its meetings as non-voting participants. Based on business needs, requests of the BOD, and activities aimed at governance structure optimization and business restructuring, the Human Resources Committee held 14 meetings in 2011. The topics of these meetings included such items as monitoring manager selection and succession plans for key positions, organizational restructuring, optimizing the compensation and incentive structure, developing the governance mechanism for headcount budgeting, improving the overall capability of HR, updating the HR policy framework, setting policies, and supervising policy execution.
The Human Resources Committee is comprised of 19 members, including BOD members, senior business executives, and senior HR experts. The Chairman of the committee is Mr. Hu Houkun. The members include Mr. Guo Ping, Mr. Xu Zhijun, Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, Ms. Meng Wanzhou, Mr. Li Jian, Mr. Zha Jun, Ms. He Tingbo, Mr. Zhang Ping'an, Mr. Yu Chengdong, Mr. Liang Hua, Mr. Peng Zhiping, Mr. Li Yingtao, Mr. Wan Biao, Mr. Tian Feng, Mr. Li Shanlin, and Mr. Peng Bo.
The Finance Committee is positioned as the overall enterprise value Integrator of the company.Under the authorization of the BOD, the Finance Committee exercises macro-control over the company's business operations, investment activities, and enterprise risks to help strike a dynamic balance between opportunities and resources. This facilitates the company in achieving effective growth.
The key roles and responsibilities of the Finance Committee include:
- Aligning resources with business needs based on the company's resources and resource acquisition capabilities.
- Setting financial objectives for the growth and investment projects of the company and responsibility centers; determining the standards, structure, and pace for resource investments.
- Measuring the monetary value of key strategies, conducting forward-looking forecasts and analysis, and submitting proposals to the BOD.
- Reviewing the company's annual budgeting plan, approving the annual budget for each responsibility center, and ensuring closed-loop management of the corporate-level plan, budget, accounting, and performance appraisals.
- Reviewing the capital structure plan; making proposals for major financing activities, the asset structure, and profit distribution.
- Reviewing the company's key financial policies, annual financial statements, and issues related to information disclosure.
- Reviewing capital operations and strategic cooperation projects, submitting proposals to the BOD, and periodically assessing the execution of such projects.
- Reviewing the company's risk management framework, advising on trade compliance issues, and establishing a business continuity management system.
The Finance Committee meets on a monthly basis and convenes special sessions whenever needed. Based on business needs and requests of the BOD, the Finance Committee held 12 meetings in 2011. At the meetings, the committee reviewed such items as the company's medium-to-long-term business plan, annual budgeting plan, operational management, capital operations projects, the capital structure, enterprise risk management, and subsidiary and joint venture management. The Finance Committee discussed and established relevant financial policies and systems, reviewed and decided on relevant activities, and monitored the execution of these activities.
The Finance Committee is comprised of 21 members, including BOD members and financial experts. The Chairman of the committee is Mr. Guo Ping. The members include Mr. Xu Zhijun, Mr. Hu Houkun, Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, Ms. Meng Wanzhou, Mr. Liang Hua, Mr. Wan Biao, Mr. Peng Zhiping, Mr. Tian Feng, Mr. Fang Weiyi, Mr. Song Liuping, Mr. Yao Fuhai, Mr. Jiang Xisheng, Mr. Li Jin'ge, Mr. Peng Qiu'en, Mr. Yi Xiang, Mr. Yang Yuefeng, Mr. Qiao Nengdong, and Ms. Zheng Liying.
Strategy & Development Committee
The Strategy & Development Committee (SDC) considers, sets, and executes the company's strategic directions. The SDC gains insight into major trends concerning the industry, market, and customers; and identifies opportunities and paths for the company's development. Through macro-management of markets, businesses, and technological development, the SDC ensures that the company continues to make concerted efforts to achieve effective growth.
The key roles and responsibilities of the SDC include:
- Managing the company's medium-to-long-term strategic plan, significant annual targets, and the top priorities of the year.
- Managing the company's brand strategy, architecture, and characteristics, as well as the publicity strategy and direction of the company.
- Managing the company's strategy for strategic partnerships and alliances, as well as the selection of strategic partners and allies.
- Managing the company's business portfolios and scope.
- Managing the company's pricing policies, commercial authorization principles, and actual pricing of key strategic products.
- Managing the company's medium-to-long-term technology development plan, standards and patent strategy, and major technology investments.
- Managing the company's medium-to-long-term business transformation strategy, process and management system structure, and quality policies.
- Reviewing the company's business portfolios frequently to ensure investments are made in the strategic domains.
The SDC started to convene officially in 2012. In 2011, the Investment Review Board (IRB) was responsible for the company's strategic planning, product investment decisions, and other related matters. After the SDC is established, the IRB will be dissolved at the corporate level. However, each BG will set up its own IRB, which will be responsible for product investment decisions and lifecycle management within their operational authority.
The company's IRB meets on a monthly basis and convenes special sessions whenever needed. At the request of the IRB, business executives and field-specific experts attended its meetings as non-voting participants. The IRB, which held 12 meetings in 2011 in total, made decisions on product investments based on customer needs and promoted collaboration across Marketing, R&D, Procurement Qualification, Supply Chain, Sales, Service, and other departments to have these decisions implemented under the guidance of the overall strategic direction formulated by the BOD. In addition, the IRB discussed related business strategies, reviewed decisions, oversaw their fulfillment, and released relevant regulations.
The SDC is comprised of 23 members, including BOD members, senior business executives, and field-specific senior experts. The Chairman of the SDC is Mr. Xu Zhijun. The members include Mr. Guo Ping, Mr. Hu Houkun, Mr. Xu Wenwei, Mr. Li Jie, Mr. Ding Yun, Ms. Meng Wanzhou, Mr. Hou Jinlong, Mr. Zhang Ping'an, Mr. Li Yingtao, Mr. HeGang, Mr. Zha Jun, Mr. Tang Qibing, Mr. Zhang Xinyu, Mr. Peng Bo, Mr. Deng Biao, Mr. Yu Chengdong, Mr. Wang Tao, Mr. Liang Hua, Mr. Zheng Yelai, Mr. Wu Qinming, Ms. He Tingbo, and Mr. Peng Zhongyang.
The key roles and responsibilities of the Audit Committee include:
- Reviewing the company's internal audit plan, monitoring its execution, and discussing internal control policies.
- Approving the company's internal control framework and milestone plan, overseeing internal controls across the company, driving closed-loop issue management, and promoting management improvements.
- Monitoring the effectiveness of Huawei's ethics and compliance environment, and driving employees' compliance with Huawei's Business Conduct Guidelines (BCG).
- Selecting the independent auditor along with the BOD, approving related expenses, and reviewing the performance of the independent auditor.
The Audit Committee meets on a quarterly basis and convenes special sessions whenever needed. At the request of the Audit Committee, business executives and field-specific experts may attend its meetings as non-voting participants. The Audit Committee held three meetings in 2011. Focusing on topics such as risk management and internal control frameworks, the Audit Committee reviewed and approved the annual internal audit planning and the three-year roadmap for developing global process controls and reviewed the internal control maturity reports, semi-annual control assessment (SACA) reports, and the control improvement work reports presented by Global Process Owners (GPOs). The Audit Committee also improved employee compliance with the BCG by sharing major audit findings and non-compliance cases. In addition, the Audit Committee discussed the management improvement proposal with the independent auditor.
The Audit Committee is comprised of nine members, including members of the Supervisory Board, BOD members, and field-specific experts. The Chairman of the committee is Mr. Liang Hua. The members include Mr. Peng Zhiping, Mr. Ren Shulu, Mr. Tian Feng, Mr. Li Jie, Mr. Chen Zhaohui, Mr. Peng Zhijun, Mr. Hui Chun, and Mr. Zhou Daiqi.
Pursuant to the requirements of the Company Law of the People's Republic of China, Huawei has established a Supervisory Board. The key roles and responsibilities of the Supervisory Board include overseeing the company's financial and operational performance; monitoring the performance of BOD members, the Chief Executive Officer, and other senior management; and attending BOD meetings as non-voting participants.
In 2011, the Supervisory Board held two meetings and its members attended 12 meetings of the BOD as nonvoting participants. The Supervisory Board reviewed and assessed the financial performance of the company and the performance of senior management. The Supervisory Board also discussed how it could operate more effectively as an important part of the corporate governance structure.
The Supervisory Board is comprised of five members. Each member is elected by all Representatives. The members of the Supervisory Board are Chairman Mr. Liang Hua, and members Mr. Peng Zhiping, Mr. Ren Shulu, Mr. Tian Feng, and Mr. Deng Biao.
Members of the Board of Directors, the Supervisory Board, and the BOD Committees
Members of the Board of Directors
From the left in the first row: Mr. Hu Houkun, Ms. Sun Yafang, Mr. Guo Ping, Ms. Chen Lifang, Mr. Xu Wenwei
From the left in the second row: Mr. Zhang Ping'an, Mr. Yu Chengdong, Mr. Xu Zhijun, Mr. Ren Zhengfei, Mr. Ding Yun, Ms. Meng Wanzhou, Mr. Li Jie, Mr. Wan Biao