Harold J. Schwartz

About Harold J. Schwartz

Harold J. Schwartz, 60, is President and a Director of Data Storage Corporation (DSC) since December 2016; he previously served as Treasurer (2016–2020) and is President of CloudFirst Technologies Corp. with a seat on its board. He co-founded ABC Services, Inc., led Systems Trading, Inc. (CEO/President since 1997), and holds a bachelor’s degree in business from California State University, San Bernardino . Company performance context: DSC reported $25.37M revenue and $0.51M net income in 2024 vs. $24.96M revenue and $0.38M net income in 2023; the Pay vs Performance table shows cumulative TSR value of $138 for 2024 (base $100 at 12/31/2021) .

Past Roles

External Roles

Fixed Compensation

Performance Compensation

• Equity awards were RSUs and stock options; DSC disclosed it did not use “financial performance measures” to link NEO pay to performance for 2024 under Item 402(v) (no company-selected measure provided) .
• Harold Schwartz’s equity grants (fair value at grant): Stock awards $71,177 (2023), $50,000 (2024); Option awards $62,811 (2023), $34,907 (2024) .
• Change-in-control single-trigger acceleration applies to unvested RSUs/options under the 2021 Plan; estimated accelerated equity value for Schwartz upon closing of the Divestiture: $209,160.82 (assumes $5.00 share price) .

Equity Ownership & Alignment

• Beneficial ownership: 872,539 shares (12.08% of outstanding) as of 8/7/2025; includes 858,470 common and 14,069 options exercisable within 60 days; excludes 23,588 options and 37,113 RSUs that will vest upon consummation of the Divestiture .
• Insider group (11 persons) owns 43.83% .

Options detail (selected grants):

• 834 options @ $14.00 expiring 12/22/2025 (exercisable) .
• 9,804 options @ $1.96 expiring 2/28/2028 (unexercisable in table; vesting schedule applies) .
• 16,667 options @ $2.00 expiring 4/9/2028 .
• 15,528 options @ $3.22 expiring 1/2/2029 .
• RSUs outstanding at 12/31/2024: 9,804; 16,667; 17,065 units (by grant line items) .

Employment Terms

• No formal employment agreement with DSC; salary levels determined annually by the Compensation Committee (raised from $171,717 in 2022 to $215,000 in 2023 and $245,000 in 2024) .
• NewCo Offer Letter: Offered to serve as President of NewCo for an initial six-month term effective upon Divestiture closing; “bi-annual base salary of $200,000”; terminable at will by either party; standard benefits .
• Non-compete/Non-solicit: Supporting shareholders (including Schwartz) agreed to restrictive covenants substantially similar to the Purchase Agreement; DSC and CloudFirst agreed to a five-year Restricted Period non-compete post-divestiture with specified Permitted Activities .

Severance/Change-of-Control:

• Harold Schwartz: CIC acceleration of unvested equity under plan; no separate severance multiple disclosed (no formal employment agreement) .

Clawbacks & Policies:

• Clawback policy for performance-based compensation upon Accounting Restatement .
• Insider Trading Policy prohibits hedging/pledging and imposes blackout and trading restrictions .

Board Governance

• Board service: Director since 2016; dual role as President and Director; Board determined Schwartz is not independent (employee) .
• Committee memberships: None—Schwartz is not listed on Audit, Compensation, Nominating, M&A, or Cybersecurity & Risk Committees .
• Board leadership: CEO also serves as Chairman; no Lead Independent Director; independent directors meet in executive session at least twice per year; each director attended ≥75% of meetings in 2024 .
• Director compensation: Non-employee director fees disclosed separately; Schwartz is an employee director and not in the director fee table .

Board committee composition snapshot:

• Audit: Argen (Chair), Stallone, Stein .
• Compensation: Grover (Chair), Correll .
• Nominating & Corporate Governance: Maglione Jr. (Chair), Argen .
• M&A: Maglione Jr. (Chair), Argen, Correll .
• Cybersecurity & Risk: Grover (Chair), Mitchell .

Director-Related Transactions and Independence

• Related party transactions: DSC leases equipment from Systems Trading, Inc. (Schwartz’s company) with monthly payments ($7,145 through 4/1/2025; $6,667 through 2/1/2025; prior $1,566.82 through 3/31/2024) at 8% interest; DSC received $31,352 (2024) and $39,172 (2023) from Nexxis Capital LLC (co-owned by Piluso and Schwartz) .
• Section 16(a) filings: Proxy reports untimely filings for certain insiders including a Form 4 by Harold Schwartz on March 5, 2024 and June 11, 2025 .

Divestiture-Related Incentives and Insider Support Agreements

• Key Employee condition: Closing requires ≥85% of offered employees, including Key Employees such as Schwartz, to accept employment with Purchaser or affiliates .
• Support Agreements: Schwartz and other insiders (≈40% of voting power) agreed to vote for the Divestiture and limit transfers until Expiration Time .
• Management benefits: Indemnification tail coverage for six years; CIC acceleration of all unvested employee/director equity at closing .

Compensation Structure Analysis

• Cash vs equity mix: In 2024, cash compensation $447,368 vs. equity grant fair value $84,907 (options + stock awards); in 2023, cash $369,607 vs. equity $133,988—shift toward higher cash in 2024 .
• Performance metrics: DSC disclosed no use of financial performance measures for 2024 NEO compensation under Item 402(v); discretionary bonus structure implied but not linked to disclosed metrics .
• Equity award vesting norms: Time-based RSUs and options (33.33% annually over three years); CIC single-trigger acceleration—potential near-term selling pressure post-vesting .
• Clawback policy exists; no gross-ups disclosed .

Equity and Option Award Details (Schwartz)

CIC Acceleration Estimate (Divestiture):

• RSUs and in-the-money options value for Schwartz: $209,160.82 at assumed $5.00 share price on closing .

Employment & Retention Risk

• Retention signal: Schwartz is expected to join Purchaser/NewCo as President post-divestiture; initial six-month term suggests transitional continuity but limited guaranteed duration—termination at will .
• Non-compete: Supporting shareholder covenants (including Schwartz) and 5-year corporate non-compete constrain re-entry into Restricted Business, lowering competitive leakage risk .

Investment Implications

• Alignment: High insider ownership (12.08% Schwartz; 43.83% group) coupled with anti-hedging/pledging policy aligns interests; however, single-trigger CIC acceleration plus large tender offer may create near-term selling pressure as RSUs/options vest and liquidity increases .
• Retention/Execution: Closing requires Key Employee acceptance (including Schwartz); his NewCo role supports operational continuity of the divested business; DSC’s post-sale pivot (AI-enabled SaaS/cybersecurity/IoT) reduces reliance on legacy cloud assets, but execution risk is elevated given strategic shift and non-compete constraints .
• Governance: Dual role (President/Director) and non-independence; no committee membership reduces potential compensation oversight conflicts; Board uses independent committees and maintains executive sessions .
• Related Parties: Equipment leases with Schwartz’s Systems Trading and Nexxis Capital flows are monitored under Audit Committee policy; investors should track continued related-party exposure and pricing terms post-divestiture .

Note: DSC’s 2025 proxy indicates no financial performance measures used for 2024 NEO compensation; detailed targets/weights are not disclosed. All CIC-related values are estimates tied to assumed share prices as specified in the proxy .