Company: IPST
Filing Date: 2025-05-30
Form Type: PRE 14A
Source: 0001788230-25-000100
Chunk: 54

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-30
Form: PRE 14A
Chunk 54
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 of shares available for issuance under the 2024 Plan shall constitute approximately 34% of the Company’s issued and outstanding shares of common stock as of May 30, 2025 if all Plan Amendment shares were issued and added to our current issued and outstanding shares. The Plan Amendment is intended to provide us with a sufficient number of shares to satisfy our equity grant requirements, based on the current scope and structure of our equity incentive programs and the rate at which we expect to grant stock options, restricted stock, and/or other forms of equity compensation.

| HERITAGE DISTILLING HOLDING COMPANY, INC. |     | 35 |     | 2025 Proxy Statement |

Proposal Seven

When approving the Plan Amendment, the Board considered a number of factors, including those set forth below:

• Alignment with our Stockholders . Achieving superior, long-term results for our stockholders remains one of our primary objectives. We believe that stock ownership enhances the alignment of the long-term economic interests of our employees and our stockholders.

• Attract, Motivate and Retain Key Employees . We compete for employees in a variety of geographic and talent markets and strive to maintain compensation programs that are competitive in order to attract, motivate, and retain key employees. If we are unable to grant equity as part of our total compensation strategy, our ability to attract and retain all levels of talent we need to operate our business successfully would be significantly harmed.

• Balanced Approach to Compensation . We believe that a balanced approach to compensation - using a mix of salaries, performance-based bonus incentives, and long-term equity incentives (including performance based equity) encourages management to make decisions that favor long-term stability and profitability, rather than short-term results.

• Burn Rate and Dilution . When deciding to adopt the Plan Amendment, the Board evaluated our projected need for equity grants over the next year, our expected burn rate of shares under the 2024 Plan, and the dilutive impact of the proposed share allocation.

Burn rate is the rate at which a company is granting equity awards and is typically measured as the gross number of shares awarded as a percentage of our weighted average shares outstanding. We estimate that our projected annual burn rate will be 100%. The Board determined that our projected rate of equity compensation usage is reasonable and that, following the Plan Amendment, the 2024 Plan should not need an additional increase of shares until July 31, 2026.

In addition, the Board considered whether the potential dilutive effect to stockholders is reasonable. Dilution is typically calculated by