COMPENSATION COMMITTEE CHARTER

IMPERIAL PETROLEUM INC.

 

COMPENSATION COMMITTEE CHARTER

 

I. Purpose
The Compensation Committee of the Board of Directors ("Board") of Imperial Petroleum Inc. is appointed by, and generally acts on behalf of, the Board. The Committee's purposes shall be:

A. To establish and periodically review the Company's compensation philosophy and the adequacy of compensation plans and programs for directors, officers and employees of the Company and others providing services to the Company who are eligible for awards and benefits under such plans and programs;

B. To establish compensation arrangements and incentive goals for directors, officers and to administer compensation plans;

C. To review the performance of directors, officers and employees of the Company and others providing services to the Company who are eligible for awards and benefits under any plan or program and award incentive compensation and adjust compensation arrangements as appropriate based upon performance;

D. To review and monitor management development and succession plans and activities; and

E. To report on compensation arrangements and incentive grants to the Board.

II. Membership


A. The Committee shall be composed of at least two directors, each of whom must be independent. A director shall qualify as independent if the Board has affirmatively determined that the member has met the independence criteria set forth in the Company's Corporate Governance Guidelines, which shall reflect applicable requirements, including those of the Nasdaq Stock Market as in effect from time to time.

B. The members of the Committee shall be nominated by the Nominating and Corporate Governance Committee and appointed by the Board for one-year terms. The Nominating and Corporate Governance Committee shall recommend, and the Board shall designate, one member of the Committee to serve as Chairperson. The members of the Committee shall serve until their resignation, retirement, or removal by the Board or until their successors shall be appointed. No member of the Committee shall be removed except by majority vote of the independent directors of the full Board then in office.

III. Meetings and Procedures
A. The Committee shall meet as often as it may deem necessary and appropriate in its judgment, but in no event less than three times per year. A majority of the members of the Committee shall constitute a quorum.

B. The Chairperson of the Committee or a majority of the members of the Committee may call a special meeting of the Committee.

C. The Committee may delegate authority to one or more members of the Committee where appropriate, but no such delegation shall be permitted if the authority is required by law, regulation, or listing standard to be exercised by the Committee as a whole.

D. The Committee may request that any directors, officers, or employees of the Company, or other persons whose advice and counsel are sought by the Committee, attend any meeting to provide such information as the Committee requests.

E. The Committee shall fix its own rules of procedure, which shall be consistent with the Bylaws of the Company and this Charter.

F. The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company.

G. The Committee shall report to the Board on the matters discussed at each meeting of the Committee, including describing all actions taken by the Committee at the meeting.

IV. Duties and Responsibilities
The Committee shall have the following duties and responsibilities:

A. Resources

  1. Sole authority and necessary funding to retain, set compensation and retention terms for, and terminate any consultants, legal counsel, or other advisors (collectively, the “Compensation Advisors”) that the Committee determines to employ to assist it in the performance of its duties.
  2. Access to internal advisors and all other resources within the Company to assist it in carrying out its duties and responsibilities.

3. Prior to selecting, or receiving advice from, a Compensation Adviser (other than the Company’s in-house legal counsel), the Committee shall conduct an independence assessment based on the following factors:

  • the provision of other services to the Company by the person that employs the Compensation Adviser;
  • the amount of fees received from the Company by the person that employs the Compensation Adviser, as a percentage of the total revenue of that person;
  • the policies and procedures of the person that employs the Compensation Adviser that are designed to prevent conflicts of interest;
  • any business or personal relationship of the Compensation Adviser with a member of the Committee;
  • any stock of the Company owned by the Compensation Adviser;
  • any business or personal relationship of the Compensation Adviser or the person employing the Compensation Adviser with an executive officer of the Company; and
  • any other factors that the Committee deems relevant in assessing the independence of such Compensation Adviser.

Although the Committee shall be required to make such independence assessment before selecting, or receiving advice from, any compensation consultant, legal counsel or other adviser, the Committee shall not be under any obligation to select and receive advice solely from compensation consultants, legal counsel and other advisers who in fact meet the applicable independence standards. Accordingly, the Committee may retain the services of any compensation consultants, legal counsel or other advisors the Committee chooses, including those who are not otherwise independent in accordance with the factors set forth above, but after the Committee has considered those factors in the selection process.  

The independence assessment described above shall not, however, be required if the consultant, legal counsel or adviser’s role is limited to (i) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees, and/or (ii) providing information that either is not customized for a particular issuer or that is customized based on parameters that are not developed by the adviser and about which the adviser does not provide advice. 

The foregoing provisions of this Section IV.A. shall not require the Committee to implement or act consistently with the advice or recommendation of the selected Compensation Adviser or otherwise affect the Committee’s ability to exercise its own judgment in the fulfillment of its duties hereunder.

 

B. Compensation Philosophy, Plans, and Programs

  1. Periodically review, consider, and approve the philosophy for compensation.
  2. Establish compensation plans and programs, including incentive and equity-based plans and programs, any appropriate employment contracts, special retirement benefits, and severance or change in control arrangements.
  3. Annually review the adequacy of such plans and programs, comparing such plans and programs to those of the Company's peer group companies, ensuring appropriate levels of incentive to management, and aligning the goals of directors, officers and employees of the Company and others providing services to the Company with the interests of stockholders, and report the results of, and recommendations resulting from such review to the Board.
  4. Administer the Company's incentive and equity-based plans and programs.

C. Specific Compensation Amounts and Incentives

  1. Establish annual base salary amounts for the Chief Executive Officer and, based upon discussions with the Chief Executive Officer in advance of the commencement of the fiscal year, his or her annual incentive opportunity levels and the financial and any other goals to be met to earn annual and long-term incentive awards, and recommend, where appropriate, Board approval of such salary amounts and incentive levels and goals.
  2. Review and evaluate, at least annually and taking into account the views of the other members of the Board, the performance and leadership of the Chief Executive Officer and determine, and recommend, where appropriate, Board approval of, the amounts of annual and any long-term incentive awards and any adjustments to the annual salary amounts based upon such performance and consistent with the achievement of the established goals.
  3. Review with the Chief Executive Officer his evaluation of the performance of the executive officers and determine with the Chief Executive Officer, and recommend, where appropriate, Board approval of the amounts of annual and any long-term incentive awards and any adjustments to the annual salary amounts based upon such performance and consistent with the achievement of the established goals.
  4. Review annually management's summary report on all other senior executives and key management employee compensation actions.
  5. The Chief Executive Officer may not be present during voting or deliberations of the Committee on his or her compensation.

D. Management Development and Succession

  1. Review and monitor management development plans and activities.
  2. Review annually the process for identifying executive officers of the Company.
  3. Review annually with the Chief Executive Officer the Chief Executive Officer's proposed succession plan for each executive officer and the Chief Executive Officer's evaluation of each executive officer. Meet with each executive officer to review the succession plan for his/her immediate subordinates. Finalize a succession plan for presentation to the Board.
  4. Review with the Board the Company's succession plan for the Chief Executive Officer and other executive officers, including plans for emergency succession in case of the unexpected disability of the Chief Executive Officer.

E. Other Responsibilities

  1. Review and reassess on an annual basis the adequacy of this Charter and recommend any proposed changes to the Board for its approval.
  2. Annually review and assess the performance of the Committee and each Committee member and deliver a report to the Board setting forth the results of the evaluation. In conducting the evaluation, the Committee shall address matters that it considers relevant to its performance, including at a minimum, the adequacy, appropriateness, and quality of the information and recommendations that the Committee presented to the Board, the manner in which they were discussed or debated, and whether the number and length of meetings of the Committee were adequate for the Committee to complete its work in a thorough and thoughtful manner.
  3. Perform any other activities consistent with this Charter, the Company's Bylaws, and governing law as the Committee or the Board deems necessary or appropriate or as may be required by the listing criteria of the Nasdaq Stock Market.