Michael Carrosino

About Michael Carrosino

Michael Carrosino, age 64, is Executive Vice President of Finance and Chief Financial Officer of Heritage Distilling Holding Company, Inc. He became Acting CFO in June 2023 and was appointed CFO on November 25, 2024. A veteran finance and operations executive with 40+ years’ experience, his background spans public and private companies (accounting, FP&A, HR, operations) with extensive capital markets and transaction execution (IPO, SEC reporting, M&A, restructurings). Education: B.A. Humanities (1980) and B.A. Business Administration—Accounting (1981), Seattle University; CPA-inactive (WA). The proxy materials do not disclose TSR, revenue growth, or EBITDA growth attributable to his tenure.

Past Roles

External Roles

Fixed Compensation

Multi-year compensation (NEO table):

Notes:

• Deferred compensation from 2023–2024, paid in 2025: $107,395 to Carrosino (timing disclosure; not part of 2024 “Total”).

Observations:

• 2024 pay is 100% cash (no bonus, stock, options, or non-equity incentive disclosed for Carrosino).
• No target bonus % disclosed.

Performance Compensation

Plan design context:

• Company’s 2024 Equity Incentive Plan permits options/RSUs/SARs and includes sale‑event acceleration features and clawback provisions, but Carrosino had no outstanding equity awards as of 12/31/2024.

Equity Ownership & Alignment

Beneficial ownership and absence of awards:

Additional alignment and risk indicators:

• Hedging and pledging prohibited for directors, officers, employees (no margin or pledges allowed).
• No disclosure of executive stock ownership guidelines or compliance status.

Implications:

• Meaningful direct ownership (declining % due to share count growth) aligns interests; absence of unvested awards reduces forced vesting-related selling pressure.

Employment Terms

• Appointment/tenure: EVP Finance & Acting CFO (June 2023); CFO (Nov 25, 2024).
• Contracts/severance/CIC: Specific employment agreement, severance multiples, and non-compete terms not disclosed. Company equity plan includes sale‑event treatment (assumption/replacement; double-trigger vesting upon qualifying termination within 24 months) and recoupment/clawback policy; relevant if/when awards are granted.
• Digital asset oversight: Company Bitcoin policy designates CFO responsible for daily implementation and tracking of any bitcoin holdings, custody, and accounting under FASB ASU 2023-08 (fair value). This adds execution and control responsibilities to the finance function.

Performance & Track Record

• Capital markets/SEC: Led SEC Form 10 registration, IPO, and ongoing SEC filings at Cell Therapeutics; broad public company reporting experience at Esterline and other issuers.
• Transaction execution: History of acquisitions/divestitures, fundraisings, restructurings across multiple sectors; VacationSpot CFO through sale to Expedia.
• Operating breadth: Roles across consumer products, tech/online platforms, healthcare, and spirits, including co-founding roles in spirits and tech ventures.

Compensation Structure Analysis

• Mix and risk: For 2024, compensation for Carrosino is fully cash-based with no equity or incentive payouts disclosed, indicating low explicit pay-for-performance alignment at the executive level for that year.
• Equity program posture: Company increased 2024 Plan share pool (first to 5,000,000; later proposed 35,000,000) to support issuance to service providers; plan includes anti-repricing and clawback provisions. This favors long-term equity capacity but does not evidence individual grants to the CFO in 2024.
• Compliance note: All executives and directors filed late Form 3s at IPO effectiveness; subsequently filed.

Risk Indicators & Red Flags

• Dilution risk (contextual): Company pursued significant share authorizations, preferred conversions, warrants, pre-funded warrants, and reverse split authority, implying elevated dilution/structure complexity (not CFO-specific but relevant to equity alignment dynamics).
• Trading/pledging restrictions mitigate misalignment: Prohibition on hedging/pledging for insiders.
• Control and financial reporting: CFO tasked with new controls over bitcoin treasury activities (custody, fair value accounting), elevating operational and audit risk if not executed robustly.

Director/Committee Context (governance backdrop)

• Compensation Committee: Independent directors Dr. Eric S. Trevan (Chair), Dr. Jeffrey P. Wensel, and Matthew J. Swann oversee executive compensation and administer equity plans.
• Technology & Cryptocurrency Committee: Oversees cryptocurrency policy and technology; chaired by Matthew J. Swann.

Investment Implications

• Alignment: Carrosino’s direct ownership is notable (424,937 shares), but his percentage of ownership fell from 3.53% to 2.76% as outstanding shares increased, diluting the ownership signal; absence of 2024 equity grants leaves limited forward-looking incentive leverage.
• Selling pressure: With no scheduled equity vesting and no options, near-term forced selling pressure from vesting events appears low; any selling would be discretionary and subject to trading windows and policy constraints (no hedging/pledging).
• Pay-for-performance: Lack of disclosed KPI-linked incentives or targets for 2024 suggests weaker explicit pay-for-performance alignment in the measured period; investors may seek clarity on future incentive design (metrics, thresholds, vesting) to ensure alignment with revenue/margin/TSR outcomes.
• Execution risk: CFO’s remit now includes implementing bitcoin policy controls (custody, fair value accounting) and broader financing structures; robust control design and auditor comfort will be critical to avoid financial reporting, liquidity, or governance slippage.
• Overall: Seasoned capital-markets operator with deep transaction and reporting experience, but current compensation design shows limited equity-based alignment; future equity awards (if any) and performance metrics will be key to sharpening incentives amid a highly dilutive capital structure evolution.