Exhibit 10.3


 


Effective January 11, 2021


 


CHARTER
OF THE COMPENSATION COMMITTEE


OF THE
BOARD OF DIRECTORS OF


RED CAT HOLDINGS, INC.


 


The Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of Red Cat Holdings,
Inc. (the “Company”) is responsible for the overall design, approval and implementation of the executive compensation
plans, policies and programs for officers and other key executives of the Company. This Charter outlines the purpose, composition
and responsibilities of the Committee.


 


		I.	PURPOSE



 


The Committee
has been established to: (a) assist the Board in seeing that a proper system of long-term and short-term compensation is in place
to provide performance oriented incentives to attract and retain management, and that compensation plans are appropriate and competitive
and properly reflect the objectives and performance of management and the Company; (b) assist the Board in discharging its responsibilities
relating to compensation of the Company’s executive officers; (c) evaluate the Company’s Chief Executive Officer and
set his or her remuneration package; (d) make recommendations to the Board with respect to incentive- compensation plans and equity-based
plans; and (e) perform such other functions as the Board may from time to time assign to the Committee.


 


		II.	COMPOSITION



 


The Committee
shall be composed of at least three, but not more than five, members (including a Chairperson), all of whom shall be “independent,”
as such term is defined for directors and compensation committee members in the listing standards of the NASDAQ Stock Market LLC
(“NASDAQ”), as determined by the Board. Additionally, members of the Committee shall qualify as “non-employee
directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 and as “outside directors” for
purposes of Section 162(m) of the Internal Revenue Code (“Section 162(m)”). The members of the Committee and
the Chairperson shall be selected annually by the Board and serve at the pleasure of the Board. A Committee member (including the
Chairperson) may be removed at any time, with or without cause, by the Board. The Committee shall have authority to delegate responsibilities
listed herein to subcommittees of the Committee if the Committee determines such delegation would be in the best interest of the
Company.


 


		III.	MEETING REQUIREMENTS



 


The
Committee shall meet as necessary to enable it to fulfill its responsibilities, but at least twice each year. The Committee
shall meet at the call of the Chairperson. The Committee may meet by telephone conference call or by any other means
permitted by law or the Company’s Bylaws. A majority of the members, but not less than two members, shall constitute a
quorum. The Committee shall act on the affirmative vote of a majority of the members present at a meeting at which a quorum
is present. Without a meeting, the Committee may act by unanimous written consent of all members.


 


The Committee
may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee
to attend any meetings and to provide such pertinent information as the Committee may request.


 


The Chairperson
of the Committee shall be responsible for leadership of the Committee, including preparing the agenda, presiding over Committee
meetings, making Committee assignments, reporting on the Committee’s activities to the Board and being the lead liaison between
the Committee and the Company’s management and compensation consultants.


 


		IV.	COMMITTEE RESPONSIBILITIES



 


In carrying
out its oversight responsibilities, the Committee’s policies and procedures should remain flexible to enable the Committee
to react to changes in circumstances. In addition to such other duties as the Board may from time to time assign, the Committee
shall have the following responsibilities:


 


		A.	Compensation Policies



 


		1.	To review and make periodic recommendations
to the Board as to the general compensation and benefits policies and practices of the Company;



 


		2.	To oversee the assessment of the incentives and
risks arising from or related to the Company’s compensation policies and practices, including but not limited to those applicable
to executive officers, and to evaluate whether the incentives and risks are appropriate;



 


		3.	To establish an overall compensation policy
applicable to executive officers and periodically review that policy; and



 


		4.	To assess the results of the Company’s
most recent advisory vote on executive compensation.



 


		B.	Chief Executive Officer Evaluation and Compensation



 


		1.	To (a) review and approve goals and objectives
relevant to the Chief Executive Officer’s compensation package, (b) establish a procedure for evaluating the Chief Executive
Officer’s performance, (c) annually evaluate the performance of the Chief Executive Officer in conjunction with the Nominating
and Governance Committee in light of the goals and objectives established, and (d) review with the Chief Executive Officer the
results of the Committee’s performance evaluation. The Chief Executive Officer may not be present during voting or deliberations
on his or her compensation; and



 


		2.	To review, at least annually, and set the
base salary and annual and long-term incentive compensation of the Chief Executive Officer, after taking into account the annual
evaluation of the Chief Executive Officer.



 


		C.	Other Executive Officers’ Compensation and Evaluations



 


		1.	To (a) review and approve goals and objectives
relevant to the other executive officers’ compensation packages, (b) establish a procedure for evaluating such executive
officers’ performance, (c) annually evaluate such performance in light of the goals and objectives established, and (d) if
requested by the Chief Executive Officer, have the Committee Chairperson review, after completion of the annual evaluation, with
each executive officer the results of the Committee’s evaluation of such executive officer’s performance; and



 


		2.	To review, at least annually, and set the
base salary and annual and long-term incentive compensation of the other executive officers, after taking into account the annual
evaluation of each such executive officer referred to in the preceding paragraph and the input of the Chief Executive Officer.



 


		D.	Incentive-Compensation and Equity-Based Plans



 


		1.	To review and to make periodic recommendations
to the Board as to the Company’s incentive-compensation plans and equity-based plans;



 


		2.	To administer the Company’s equity incentive
plan, share tracking awards plans, employee stock purchase plan, supplemental executive retirement plan, change of control severance
plan and any similar plans in accordance with their respective plan documents;



 


		3.	To review and approve or recommend to the Board,
as applicable, (and for stockholder approval where required by applicable law, the Certificate of Incorporation, Bylaws or other
policies) compensation and benefits policies, plans and programs and amendments thereto, and to determine eligible employees and
the type, amount and timing of such compensation and benefits; and



 


		4.	To oversee the administration of such policies,
plans and programs and, on an ongoing basis, to monitor them to assess whether they remain competitive and within the Board’s
compensation objectives for executive officers and other members of senior management.



 


		E.	Other Duties



 


		1.	To review and discuss with management the Company’s
Compensation Discussion and Analysis section (“CD&A”) and related disclosures that Securities and
Exchange Commission (“SEC”) rules require be included in the Company’s annual report and proxy statement,
recommend to the Board based on the review and discussions whether the CD&A should be included in the annual report and proxy
statement, and oversee the preparation of the compensation committee report required by
SEC rules for inclusion in the Company’s annual report and proxy statement;



 


		2.	To review and recommend employment agreements
and severance arrangements for executive officers, including change-in-control provisions, plans or agreements;



 


		3.	To review and consider recommendations from
the Nominating and Corporate Governance Committee with respect to the compensation and benefits of non- employee directors and
to recommend any changes to the Board that the Committee deems appropriate;



 


		4.	To review the impact of executive compensation
that is not deductible under Section 162(m) and to determine the Company’s policy with respect to the application of Section
162(m); and



 


		5.	To assess, at least annually, whether the work
of compensation consultants involved in determining or recommending executive or director compensation has raised any conflict
of interest that is required to be disclosed in the Company’s annual report and proxy statement.



 


		6.	To annually evaluate and the adequacy of the Committee’s charter.



 


		V.	ADVISORS TO THE COMMITTEE



 


The Committee
shall have the authority, in its sole discretion, to retain or obtain the advice of such outside counsel, experts, and other advisors,
as it deems necessary to carry out its duties, including any compensation consultant used to assist the Committee in the evaluation
of director, Chief Executive Officer or executive compensation. The Committee shall be directly responsible for the appointment,
compensation and oversight of the work of any outside counsel, experts, and other advisors retained by the Committee, and will
receive appropriate funding, as determined by the Committee, from the Company to pay for such advisor’s services. The Committee
shall assess the independence of outside counsel, experts, and other advisors (whether retained by the Committee or management)
that provide advice to the Committee, in accordance with NASDAQ listing standards. The Committee shall comply with the Company’s
then-current level review of contracts and budget procedures.