Exhibit 99.2
Form 8-K
Viking Systems, Inc.
File No. 000-49636
VIKING SYSTEMS, INC.
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Board of Directors (the "Board") of Viking Systems, Inc. (the
"Company") has constituted and established a Compensation Committee (the
"Committee") with authority, responsibility, and specific duties as
described in this Compensation Committee Charter, subject to and in
accordance with any applicable provisions set forth in the By-Laws of the
Company, which provisions are incorporated by reference herein.
I. Purpose of the Committee
The purpose of the Committee is:
o To discharge the Board's responsibility relating to compensation of
the Corporation's directors and executive officers, including
approving individual executive officer compensation;
o To review and recommend to the Board compensation plans, policies and
benefit programs for employees generally; and
o To prepare the report on executive compensation required to be
included in the Corporation's annual proxy statement.
II. Composition and Term of Office of the Committee
The Committee shall consist of not less than three members. Each member of
the Committee shall be appointed by the Board upon the recommendation of
the Nominating/Corporate Governance Committee and shall satisfy the
independence requirements for members of the Committee of the Company under
NASDAQ rules. Members of the Committee shall also qualify as "non-employee
directors" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, and "outside directors" within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and shall satisfy any other necessary standards of independence
under the federal securities and tax laws. One member shall serve as
Chairman of the Committee.
The members of the Committee shall serve for such terms as may be set by
the Board. Members of the Committee may be removed or replaced by a
majority vote of the Board. Vacancies on the Committee shall be filled by
majority vote of the Board at the next meeting of the Board following the
occurrence of the vacancy.
III. Authority and Responsibilities of the Committee
The Committee's primary responsibility is to assure that the senior
executives of the Company and its subsidiaries are compensated effectively
in a manner consistent with the stated compensation strategy of the
Company, internal equity considerations, competitive practice, and the
requirements of the appropriate regulatory bodies.
The Committee shall also communicate to shareholders the Company's
compensation policies and the reasoning behind such policies as required by
the Securities and Exchange Commission. More specifically, the Committee
shall be responsible for the following:
o Review from time to time and approve the Company's stated compensation
strategy to ensure that management is rewarded appropriately for its
contributions to Company growth and profitability and that the
Company's executive compensation strategy supports organization
objectives and shareholder interests.
o Review annually and determine the individual elements of total
compensation for the Chief Executive Officer consistent with the
Company's compensation strategy and objectives and communicate in the
annual Committee Report to shareholders the factors and criteria on
which the Chief Executive Officer's compensation for the last year was
based, including the relationship of the Company's performance to the
Chief Executive Officer's compensation.
o Review and approve the individual elements of total compensation for
individuals determined by the Board to be executive officers of the
Corporation under Section 16 of the Securities Exchange Act of 1934.
o Communicate in the annual Committee Report to shareholders the
specific relationship of corporate performance to executive
compensation.
o Assure that the Company's annual and long-term bonus and incentive
compensation plans are administered in a manner consistent with the
Company's compensation strategy as to participation, target annual
incentive awards, corporate financial goals, actual awards paid to
senior management, and total funds reserved for payment under the
compensation plans.
o Make recommendations to the Board with respect to incentive
compensation plans and equity-based plans and approve, subject, where
appropriate, to submission to shareholders, all new equity-related
incentive plans for senior management.
o Review and approve all grants of stock options and other equity
awards.
o Review and approve all employment agreements, separation and severance
agreements and similar agreements with executive officers.
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o Review and make recommendations to the Board on matters concerning the
directors' annual retainer, as well as any other compensation programs
for the directors, committee chairpersons and committee members,
consistent with any applicable requirements of the NASDAQ listing
standards.
o If appropriate, hire experts in the field of executive compensation to
assist the Committee with its reviews.
IV. Other Responsibilities of the Committee
o Following each Committee meeting, report at the next meeting of the
full Board all significant items discussed at the Committee meeting.
o Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
o Conduct an annual performance evaluation of the Committee.
o Take such further actions or provide such further advice as the full
Board may from time to time delegate to the committee.
V. Meetings of the Committee and Operating Principles
The members of the Committee shall select a chairman whom will preside at
each meeting of the Committee and, in consultation with the two other
members of the Committee, shall set the frequency and length of each
meeting and the agenda of items to be addressed at each upcoming meeting.
Meetings of the Committee may be called as needed by the Chairman of the
Committee, Chairman of the Board, or the Chief Executive Officer.
The Committee will meet as often as necessary to carry out its
responsibilities, but in any case, at least two times each year. Minutes of
each meeting will be kept and distributed to the entire Committee.
Reports of meetings of the Committee shall be made to the Board of
Directors at its next regularly scheduled meeting following the Committee
meeting accompanied by any recommendations to the Board of Directors
approved by the Committee.
A majority of the members of the Committee present in person or by means of
a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other shall
constitute a quorum.
In addition, at the first meeting of the Committee and at each first
meeting held in each successive year, the chair, in consultation with the
other members of the Committee, shall propose a list of items to be
addressed by the Committee during the coming year.
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The chair shall ensure that the agenda for each upcoming meeting of the
Committee is circulated to each member of the Committee as well as to each
other director in advance of the meeting, and that the list of items to be
addressed by the Committee during the coming year is circulated to each
member of the Committee as well as to each other director not later than
five business days after the first meeting of the Committee each year. The
chair, subject to the approval of a majority of the members of the
Committee, shall have the authority to change the agenda to respond to any
matters that warrant attention.
VI. Evaluation of the Committee
The Committee shall, on an annual basis, evaluate its performance under
this Charter. In conducting this review, the Committee shall evaluate
whether this Charter appropriately addresses the matters that are or should
be within its scope. The Committee shall address all matters that the
Committee considers relevant to its performance, including at least the
following: the adequacy, appropriateness and quality of the information and
recommendations presented by the Committee 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.
VII. Investigations and Studies; Outside Advisers
The Committee may conduct or authorize studies of matters within the
Committee's scope and retain, at the Company's expense, such independent
counsel it deems necessary. The Committee shall have the authority to hire
and to terminate a compensation consultant to assist the Committee in its
responsibilities.
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