Charles M. Piluso
About Charles M. Piluso
Chairman and Chief Executive Officer of Data Storage Corporation (DTST), age 71, director since 2008. He holds a bachelor’s degree, MA in Political Science/Public Administration, and MBA from St. John’s University; prior telecom ventures include North American Telecommunication Corporation (Chairman/President) and International Telecommunications Corporation (Chairman/Founder; consolidation went public in 1997 at ~$800M) . DTST’s pay-versus-performance shows TSR value of an initial $100 investment rising from 48 (2022) to 94 (2023) and 138 (2024) alongside net income of $(4.4)M, $0.3M, and $0.5M, respectively . DTST reported $25.4M revenue and $0.513M net income for FY 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| CloudFirst Technologies Corporation | Co-founder | 2001 | Built IBM i/AIX-focused cloud platform with high recurring revenue and >425 clients |
| International Telecommunications Corporation | Chairman & Founder | 1997 | Led consolidation that went public at ~$800M valuation |
| North American Telecommunication Corporation | Chairman & President | — | Facilities-based CLEC licensed in ten states; growth leadership |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Molloy College | Board of Trustees | 2001–2013 | Governance oversight |
| St. John’s University | Board of Governors (Governor Emeritus) | 2001–2016 | University governance and advisory impact |
| Nassau County Police Department Foundation | Board of Advisors | Current | Community advisory role |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary | $225,000 | $250,000 |
| Cash Bonus (Actual) | $175,000 | $200,000 |
| Stock Awards (Grant-date fair value) | $97,834 | $50,000 |
| Option Awards (Grant-date fair value) | $88,670 | $34,907 |
| All Other Compensation | $0 | $17,298 |
| Total Compensation (SCT) | $586,504 | $552,205 |
| Employment Agreement Salary & Bonus Range (reference) | $225,000 salary; bonus range $75,000–$300,000 | $250,000 salary; bonus range $75,000–$300,000 |
Performance Compensation
| Incentive Type | Metric | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Performance Share Units (PSUs) | Market cap triggers | 75,000 PSUs in 3 tranches at $35M, $50M, $75M market cap (≥20 trading days; no vesting before 3/28/2024) | $35M reached by 9/28/2024 | One-third PSUs earned but not granted; Board issued RSUs: 12,500 to Piluso and 12,500 to Schwartz on 6/2/2025 | RSUs vest in full 12 months from grant (6/2/2026) |
| Annual Cash Bonus | Company/CEO performance | Bonus range $75k–$300k per agreement | 2024 actual bonus $200,000 | Cash payout per SCT | Immediate (paid annually) |
| Change-of-Control (Divestiture) Acceleration | Equity acceleration | All outstanding unvested equity awards accelerate at closing | Divestiture determined as a Change of Control | Estimated acceleration value for Piluso: $359,654 | Accelerated at close |
| Pay vs Performance Disclosure | — | — | 2024 CAP to PEO $727,751; TSR 138; Net Income $0.5M | — | — |
Note: DTST disclosed it did not use “financial performance measures” under Item 402(v) to link NEO pay to performance for 2024 .
Outstanding Equity Awards (as of 12/31/2024)
| Grant Date | Instrument | Exercisable | Unexercisable | Strike | Expiration | Unvested RSUs (#) | Market Value of RSUs |
|---|---|---|---|---|---|---|---|
| 03/01/2023 | Stock Options | 9,804 | 19,608 | $1.96 | 02/28/2028 | — | — |
| 03/28/2023 | Stock Options | 9,416 | 18,833 | $1.77 | 03/27/2028 | — | — |
| 01/02/2024 | Stock Options | — | 15,528 | $3.22 | 01/02/2029 | — | — |
| 03/01/2023 | RSUs | — | — | — | — | 19,608 | $82,942 (at $4.23) |
| 04/10/2023 | RSUs | — | — | — | — | 18,833 | $79,664 (at $4.23) |
| 01/02/2024 | RSUs | — | — | — | — | 17,065 | $72,185 (at $4.23) |
RSUs vest 33.33% annually over 3 years; options vest similarly 33.33% per year .
Equity Ownership & Alignment
| Category | Shares | Notes |
|---|---|---|
| Beneficial Ownership (Piluso + affiliates) | 963,904 | 13.29% of 7,207,031 outstanding as of 8/7/2025 |
| Directly owned common | 378,306 | Direct holdings |
| Options exercisable within 60 days | 43,616 | Included in beneficial ownership |
| Piluso Family Associates | 81,750 | Affiliate holdings |
| Lasata 2012 Trust | 230,116 | Beneficiary is spouse; co-trustees include spouse and Lawrence Maglione; shared voting/disposition |
| Bella Vita 2012 Trust | 230,116 | Piluso beneficiary; co-trustees include Piluso and spouse; shared voting/disposition |
| Will vest upon Divestiture (not counted above) | 43,321 options; 55,074 RSUs | Accelerate at closing if approved |
| Support agreements voting block | ~40% | Management/directors agreed to vote in favor of Divestiture |
| Clawback policy | Adopted | Allows recovery of incentive pay upon accounting restatement |
No specific stock ownership guidelines or pledging/hedging disclosures for Piluso are provided in the proxy; security ownership details are shown above .
Employment Terms
| Term | Detail |
|---|---|
| Agreement term | Initial 3-year term from 3/28/2023; auto-renews for 1-year terms |
| Base salary | $250,000 (2024–2025); $225,000 (2023) |
| Annual performance bonus | Eligible range $75,000–$300,000 |
| Annual equity grant | $100,000 value per year, split evenly RSUs and options |
| PSUs | 75,000 PSUs tied to market cap targets ($35M/$50M/$75M) with timing thresholds |
| Severance (no cause/Good Reason) | Base salary for remainder of term; all equity accelerates |
| Change-in-control (within 24 months and terminated) | Base salary for remainder of term; lump sum 2x base salary; plus one-time $100,000 if prior year corporate objectives achieved and bonus not yet paid; all equity accelerates; Divestiture deemed a CoC |
| Benefits eligibility | Standard programs for full-time employees |
| Divestiture-related equity acceleration | Estimated $359,654 for Piluso at assumed $5.00 share price |
Board Governance
- Board service: Chairman and CEO; director since 2008 .
- Committee roles: Piluso is not listed as a member of Audit, Compensation, Nominating, M&A, or Cybersecurity & Risk Committees; committees are chaired/filled by independent directors .
- Independence: Board affirms independent status for a majority; Piluso, Schwartz, Kempster are not independent due to executive roles .
- Leadership: CEO also serves as Chairman; Board has no Lead Independent Director .
- Attendance: Each director attended ≥75% of Board and committee meetings in 2024; Board held 8 meetings; Audit 4; Compensation 7; M&A 1; Nominating 2; Cybersecurity & Risk formed in 2024 .
Director Compensation
- Piluso’s options include awards issued “in consideration for services provided as a member of the Board” with three-year vesting; see Outstanding Equity Awards footnotes .
Related Party Transactions (Alignment Risks)
| Counterparty | Nature | Terms/Amounts |
|---|---|---|
| Systems Trading Inc. (Schwartz-owned) | Equipment leases | $1,566.82/month, 8% interest, expired 3/31/2024; additional leases $7,145/month to 4/1/2025 and $6,667/month to 2/1/2025 at 8% |
| Nexxis Capital LLC (Piluso and Schwartz-owned) | Funds received by DTST | $31,352 (2024) and $39,172 (2023) for equipment financing to Nexxis customers |
Risk Indicators & Red Flags
- CEO + Chairman dual role and no Lead Independent Director may raise independence concerns; committees are independent but oversight concentration persists .
- Divestiture accelerates unvested equity for executives/directors, potentially increasing near-term selling pressure; estimated acceleration value for Piluso $359,654 .
- Support agreements concentrate ~40% voting power among insiders in favor of Divestiture .
- Related party leases and financing arrangements with entities owned by executives (Schwartz; Piluso/Schwartz) introduce conflict-of-interest risk; reviewed by Audit Committee per policy .
- Divestiture is Change of Control with sizable severance multiples and full acceleration (pay-outs can be perceived as golden parachutes), though no tax gross-up disclosures are indicated .
Compensation Structure Analysis
- Mix: Increasing cash bonus relative to equity in 2024 vs 2023 ($200k bonus; $84,907 equity grant-date value), with equity still present; SCT totals modestly lower in 2024 vs 2023 .
- Shift to RSUs: Board replaced earned PSUs for the $35M market cap threshold with time-based RSUs, reducing performance risk and increasing certainty of payout upon time vest .
- Performance linkage: Company disclosed no formal Item 402(v) “financial performance measures” used to link pay for 2024; market-cap PSUs exist by agreement but were partially substituted with RSUs .
- Change-of-control economics: Double-trigger severance at 2x salary plus prior-year $100k bonus if applicable, with full equity acceleration; Divestiture qualifies as CoC .
Equity Ownership & Alignment Signals
- Significant skin-in-the-game: 13.29% beneficial ownership via direct holdings, trusts, and near-term exercisable options .
- Additional acceleration at Divestiture will vest supplemental equity (not counted in ownership table), improving liquidity and potentially alignment if retained, but may create selling overhang .
- Clawback policy in place for incentive compensation tied to restatements .
Investment Implications
- Insider alignment is high (Piluso 13.29%; combined insider support agreements ~40%), but CoC acceleration and dual-role governance reduce perceived independence and may signal near-term liquidity events post-transaction .
- Pay structure shows reliance on cash bonus with market-cap PSUs; the 2024 PSU-to-RSU substitution reduces performance contingency, implying desire for certainty amid strategic transition (Divestiture/tender) .
- Divestiture triggers full equity acceleration and substantial severance; monitor Form 4 filings post-close for potential selling pressure and post-tender float dynamics .
- Related party transactions exist but are governed by Audit Committee policy; keep watch for incremental related-party exposure as DTST pivots strategy and capital allocation post-divestiture .