More than 1,500 employees to receive options for 103.2 million ZTE shares; stock option incentive scheme based on clear financial performance objectives

22 July 2013, Shenzhen, China – ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a publicly-listed global provider of telecommunications equipment, network solutions and mobile devices announced today that it will award stock options to more than 1,500 employees in the company’s first stock-option incentive program since 2007.

In a board meeting, ZTE directors approved the plan to award stock options for 103.2 million ZTE shares, equivalent to 3% of the company’s share capital, to 1,531 holders. The stock options will have a validity period of five years, comprising of a two-year waiting period, and a three-year exercise period. When conditions for exercising the options are fulfilled, option holders can exercise them in three tranches, with each tranche accounting for 30%, 30% and 40% of the options respectively. The exercise price of the options will be RMB 13.69 each, which was the closing price of ZTE’s A-shares on the Shenzhen stock exchange on July 12, 2013.

The beneficiaries of the stock option program will be ZTE directors, senior management, and employees involved in core businesses that directly contribute to the company’s operating results and business development. A total of 5.35 million stock options will be granted to 18 directors and executives holding senior management roles, while 97.85 million options will be awarded to core business employees.

“The stock option scheme is a mechanism for correlating employee remuneration with the company’s financial performance and long-term strategic objectives,” said Mr. Hou Weigui, Chairman of ZTE Corp. “The scheme will help the company foster a culture of value creation, and align the interests of shareholders with senior management and core employees. It will enable the company to effectively deploy our human resources, and optimize our employee compensation structure and competitiveness, laying the foundation for the continuing sustainable development of ZTE in the long term.”

Financial Performance Criteria

ZTE’s stock option incentive scheme will be subject to the company meeting the following financial performance criteria: during the validity period of the stock options, ZTE’s annual net profit attributable to shareholders of the listed company, excluding non-recurring items, must not be negative, and be higher than the average level of the three years before the granting of the options. The following table lists the conditions for the exercise of the stock options.

“The age of mobile Internet is transforming society, and generates increased demand for 4G services, bringing a great opportunity for providers of telecommunications equipment, smart devices and enterprise networking solutions,” said Mr. Shi Lirong, President of ZTE. “ZTE will grasp this opportunity to embark on a second wave of entrepreneurial growth, and human resources will be a key part of our journey. The share option incentive scheme will help attract and incentivize our employees to create greater value for the company and shareholders.”

In 2007, ZTE implemented a 5-year stock option incentive scheme, granting options for about 48 million ZTE A-shares. ZTE was the first company with dual A-share and H-share listing to launch a share option scheme after relevant regulations were unveiled by the China Securities Regulatory Commission.