CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
April 3, 2019
I am pleased to invite you to the 2019 Annual Meeting of Stockholders of Carriage Services, Inc. (“Carriage”) will hold its. The Annual Meeting of Stockholders (“Annual Meeting”)will be held at the Conference Center, 3040 Post Oak Boulevard, Lobby Level, Houston, Texas 77056, on Tuesday,Wednesday, May 17, 2016,15, 2019, at 9:00 a.m., Central Daylight Time.
We launched our first five-year timeframe of Carriage’s Good To Great Journey that ended on December 31, 2016 with the annual theme of Carriage Services 2012 - A NEW BEGINNING, a five year timeframe during which Carriage’s share price increased at a compound annual rate of 38.6% from $5.60 per share at January 1, 2012 to vote via the internet or complete, sign and date the accompanying proxy card and return it promptly$28.64 per share on December 31, 2016. The story of our performance in the enclosed envelope. Ifsecond half of 2017 and accelerated in the second and third quarter of 2018 is regretfully captured by our share price peaking at $28.96 on April 25, 2018 before collapsing 50% to a bottom of $14.50 on December 24, 2018, ending the year with a closing price of $15.50.
My shareholder letter explains the nature of what happened during 2017 and 2018 and why our determination to “NEVER GIVE IN” led to “A Year of Renewal” that has led us back to our Good To Great Journey in 2019. All of our leaders have embraced the challenge of making 2019 a historic year of operating and financial performance. We have therefore themed this year as Carriage Services 2019: Back To The Future - A NEW BEGINNING - PART II. We believe this second New Beginning for Carriage will produce great success in the future.
We want all of our investors to understand the value creation opportunities of Carriage and its potential to continue to perform and grow on our Good To Great Journey. We also want investors to understand the philosophy of the Compensation Committee and the link between that philosophy and the High Performance Culture that is hallmark of our company.
I encourage you to read the Notice of Annual Meeting and Proxy Statement, which contains information about the voting options, instructions and descriptions on the proposals for this meeting.
Speaking on behalf of the entire leadership team, we are committed to becoming recognized by institutional investors and those in our industry as a superior Consolidation, Operating and Value Creation Investment Platform by consistently allocating our precious capital, especially our growing Free Cash Flow, with disciplined savviness and flexibility among various investment options so as to maximize the intrinsic value of Carriage per share over the next ten years.
We hope you can join us on May 15th. Whether or not you can attend personally, it is important that your shares are represented at the Annual Meeting and wish to do so, you mayby casting your vote in person regardless of whether you have given your proxy. In any event, a proxy may be revoked at any time before it is exercised.as soon as possible.
Sincerely,
| Melvin C. Payne | |
| Chairman of the Board and Chief Executive Officer | |
CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE & TIME: May 15, 2019 9:00 a.m. Central Time PLACE: Carriage Services, Inc 3040 Post Oak Boulevard, Lobby Level, Houston, Texas 77056 RECORD DATE: March 22, 2019 | Meeting Agenda | |
| 1. | Elect directors; | |
| 2. | Hold an advisory vote to approve Named Executive Officer compensation; and | |
| 3. | Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ended 2019. | |
| YOUR VOTE IS IMPORTANT - YOU CAN VOTE IN ONE OF THREE WAYS: | ||||
VIA THE INTERNET | BY MAIL | IN PERSON | ||
| Visit the website listed on your proxy card | Sign, date and return your proxy card in the enclosed envelope | Attend the Annual Meeting | ||
| CHANGE FOR 2019 ANNUAL MEETING OF STOCKHOLDERS | ||||
| This is the first year that Carriage Services has adopted the Notice & Access method of delivery for its Annual Report, Proxy Statement and other Proxy materials (collectively the “Materials”). The Materials will be available online as described in this Proxy Statement and hard copies will not be delivered, unless expressly requested by a shareholder. | ||||
On or about April 5, 2019, we will begin mailing a Notice of Internet Availability of Proxy Materials detailing how to access the proxy materials electronically and how to submit your proxy via the internet. The Notice of Internet Availability of Proxy Materials also provides instructions on how to request and obtain paper copies of the proxy materials and proxy card or voting instruction form, as applicable. We believe this process provides our stockholders with a convenient way to access the proxy materials and submit their proxies online, while allowing us to reduce our environmental impact as well as the costs of printing and distribution. | ||||
| If your shares are held in a stock brokerage account or by a bank or other record holder, follow the voting instructions on the form that you receive from them. The availability of telephone and internet voting will depend on their voting process. Please note that you will need the control number provided on your Notice of Internet Availability of Proxy Materials in order to submit your proxy online. | ||||
By Orderorder of the Board of Directors,
Viki K. Blinderman | |
Houston, Texas
April 5, 2016
3, 2019
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON The Notice of Annual Meeting of Stockholders, the Proxy Statement and the |
TABLE OF CONTENTS
| Page No. | |
| PROXY STATEMENT | |
| Delivery of Proxy Materials | |
| About Our Annual Meeting | |
| PROPOSAL NO. 1: ELECTION OF CLASS II DIRECTORS | |
| CORPORATE GOVERNANCE | |
| Board Leadership Structure | |
| Risk Oversight of | |
Director Qualification, Experience and Tenure | |
| Director Nomination Process | |
| Organization and Committees of Our Board | |
| Board’s Interaction with Stockholders | |
| Annual Evaluations | |
Corporate Governance Guidelines, Business Conduct and Ethics | |
| Corporate Social Responsibility | |
| DIRECTOR COMPENSATION | |
| General | |
| PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION | |
| EXECUTIVE MANAGEMENT | |
| COMPENSATION DISCUSSION AND ANALYSIS | |
| Compensation Philosophy and Practices | |
| Consideration of Previous Stockholder Advisory Vote | |
| Elements of Compensation | |
| Employment Agreements | |
| Compensation Evaluation Process | |
| CEO Compensation | |
| CEO Pay Ratio | |
| 2018 Base Salaries | |
| 2018 Annual Cash Incentive Bonuses | |
| 2018 Long-Term Equity-Based Incentives | |
| Executive Compensation Policies and Practices as they Relate to Our Risk Management | |
| Tax and Accounting Considerations | |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | |
| COMPENSATION COMMITTEE REPORT | |
| EXECUTIVE COMPENSATION | |
| Summary Compensation Table | |
| Grants of Plan-Based Awards in 2018 | |
| Outstanding Equity Awards at Fiscal Year-End | |
| Option Exercises and Stock Vested During 2018 | |
| Potential Payments Upon Termination or Change-in-Control | |
| Pension Benefits | |
| Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans | |
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| PROPOSAL NO. 3: RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP | |
| Audit | |
| Pre-Approval Policy for Services of Independent Registered Public Accounting Firm | |
| AUDIT COMMITTEE REPORT | |
| SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS | |
| Stock Ownership of Management | |
| Stock Ownership of Certain Beneficial Owners | |
| Section 16(a) Beneficial Ownership Reporting Compliance | |
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | |
| Policies and Procedures for Review and Approval of Related Party Transactions | |
| Related Party Transactions | |
| OTHER BUSINESS | |
| STOCKHOLDER PROPOSALS FOR THE | |
| ADDITIONAL INFORMATION | |
| Annual Report | |
CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
PROXY STATEMENT
This Proxy Statement (this “Proxy Statement”) is being furnished to you by the Board of Directors (our “Board”) of Carriage Services, Inc. (“Carriage Services,” “Carriage,” the “Company,” “we,” “us” or “our”) for use at our 20162019 Annual Meeting of Stockholders (our “Annual Meeting”).
Our Annual Meeting will be held at the Conference Center, 3040 Post Oak Boulevard, Lobby Level, Houston, Texas 77056, on Tuesday,Wednesday, May 17, 2016,15, 2019, at 9:00 a.m., Central Daylight Time.
Delivery of Proxy Materials
Mailing Date and Delivery of Proxy Materials
On or about April 5, 2019, we will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) to our stockholders containing instructions on how to access the proxy materials and submit your proxy online. We have made these proxy materials available to you over the internet or, upon your request, have delivered paper copies of these materials to you by mail, in connection with the solicitation of proxies by the Board for the 2019 Annual Meeting.
Stockholders Sharing an Address
Each stockholder of record will receive one Notice of Internet Availability, regardless of whether you have the same address as another registered stockholder. If your shares are held in “street name” (that is, in the name of a bank, broker or other holder of record), applicable rules permit brokerage firms and the Company, under certain circumstances, to send one Notice of Internet Availability to multiple stockholders who share the same address. This practice is known as “householding.” Householding saves printing and postage costs by reducing duplicate mailings. If you hold your shares through a broker, you may have consented to reducing the number of copies of materials delivered to your address. In the event that you wish to revoke a “householding” consent you previously provided to a broker, you must contact that broker to revoke your consent. If your household is receiving multiple copies of the Notice of Availability and you wish to request delivery of a single copy, you should contact your broker directly.
Questions and Answers About Our Annual Meeting and Voting
Why am I receiving these proxy materials?
Our Board is soliciting your proxy to vote at our Annual Meeting because you owned shares of our common stock (“Common Stock”) at the close of business on March 24, 2016,22, 2019, the record date for our Annual Meeting (the “Record Date”), and are therefore entitled to vote at our Annual Meeting.
This Proxy Statement, along with a proxy card, is beingmade accessible, free of charge to you, via the internet at http://investors.carriageservices.com/annuals-proxies.cfm, or if elected, mailed to our stockholders on or about April 15, 2016. We have also made these materials available to you free of charge on the Internet.5, 2019. This Proxy Statement summarizes the information that you need to know in order to cast your vote at our Annual Meeting. As a stockholder, your vote is very important and our Board strongly encourages you to exercise your right to vote. You do not need to attend our Annual Meeting in person to vote your shares. Whether or not you plan to attend our Annual Meeting, we encourage you to vote your shares by voting via the internet or completing, signing, dating and returning the enclosed proxy card in the envelope provided. See “About Our Annual Meeting – How do I vote my shares?” below.
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What is the purpose of our Annual Meeting?
At our Annual Meeting, as a stockholder, you will be asked:
to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016;2019; and
to transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
Who is entitled to vote at the meeting?
Only our stockholders of record as of the close of business on the Record Date are entitled to receive notice of and to vote at our Annual Meeting. On March 24, 2016,22, 2019, we had 16,601,88018,178,758 shares of Common Stock issued and outstanding and entitled to vote at our Annual Meeting.
How many votes can I cast?
You are entitled to one vote for each share of Common Stock you owned on the Record Date on all matters presented at our Annual Meeting.
Is my vote important?
Your vote is important regardless of how many shares of Common Stock you own. Please take the time to vote. Please read the instructions below, choose the way to vote that is easiest and most convenient to you and cast your vote as soon as possible.
What is the difference between a stockholder of record and a “street name” holder?
Most stockholders hold their shares through a bank, broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned in street name.
Stockholder of Record. If your shares are registered directly in your name with the American Stock Transfer & Trust Company, LLC, our transfer agent, you are considered to be the stockholder of record with respect to those shares, and you have the right to grant your voting proxy directly with the Company or to vote in person at our Annual Meeting.
Street Name Stockholder. If your shares are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name” and your bank, broker or other nominee is the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares and are also invited to attend our Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at our Annual Meeting unless you obtain a legal proxy from the stockholder of record prior to attending our Annual Meeting giving you the right to vote the shares. In order to vote your shares, you will need to follow the directions your bank, broker or other nominee provides to you.
How do I vote my shares?
Stockholders of Record. Stockholders of record may submit a proxy to have their shares voted or vote their shares by one of the following methods:
lnternet. To vote via the internet, go to “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. VoteYou may vote online until 11:59 PM ESTp.m., Central Time the day before the meeting.Annual Meeting.
By Mail. ToIf you requested a copy of this Proxy Statement and proxy card and would like to vote by mail, you should mark, sign, date and mail the enclosedphysical proxy card in the prepaid envelope provided.provided so that we receive the proxy card by mail by May 14, 2019. The shares you own will be voted according to the instructions on the proxy card that you provide. If you return your proxy card but do not mark your voting preference, the individuals named as proxies will vote your shares FOR the electionall of each of the Class II director nominees and FOR the other proposals described in this Proxy Statement.
In Person. If you attend our Annual Meeting, you may vote by delivering your completed proxy card in person or by completing a ballot, which will be available at our Annual Meeting. Attending our Annual Meeting without delivering your completed proxy card or completing a ballot will not count as a vote. Submitting a proxy prior to our Annual Meeting will not prevent you from attending our Annual Meeting and voting in person.
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Street Name Stockholder. Street name stockholders may generally submit a proxy to have their shares voted or vote their shares by one of the following methods:
By Methods Listed on Voting Instruction Form. Please refer to the voting instruction form or other information forwarded by your bank, broker or other nominee to determine whether you may submit a proxy by telephone or electronically on the Internet,internet, following the instructions on the voting instruction form or other information they provided to you.
By Mail. You may indicate your vote by completing, signing and dating your voting instruction card or other information forwarded by your bank, broker or other nominee and returning it to them in the manner specified in their instructions.
In Person with a Proxy from the Record Holder. You may vote in person at our Annual Meeting if you obtain a legal proxy from your bank, broker or other nominee. Please consult the voting instruction form or other information sent to you by the record holder to determine how to obtain a legal proxy in order to vote in person at our Annual Meeting.
Can I revoke my proxy?
Yes, if you are a stockholder of record, you can revoke your proxy at any time before it is voted at the meeting by:
submitting written notice of revocation no later than May 14, 2019 to our home office, which is located at 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, Attn: Corporate Secretary no later than May 16, 2016;Secretary;
timely submitting a proxy with new voting instructions using the internet voting system;
submitting a later dated proxy with new voting instructions by mail that is received at our home office by May 16, 2016;14, 2019; or
attending our Annual Meeting and voting your shares in person.
If you are a street name stockholder and you vote by proxy, you may change your vote by submitting new voting instructions to your bank, broker or other nominee in accordance with such entity’s procedures. Please refer to the materials that your bank, broker or other nominee provided to you.
What is a quorum?
A quorum is the presence at our Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of our Common Stock entitled to vote on a matter at our Annual Meeting. There must be a quorum for our Annual Meeting to be held. If a quorum is not present, our Annual Meeting may be adjourned or postponed until a quorum is reached. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of votes considered to be present at our Annual Meeting.
What are “broker non-votes” and abstentions and how do they affect voting results?
If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee describing how to vote your shares. If you do not instruct your bank, broker or other nominee how to vote your shares, they may vote your shares as they decide as to each matter for which they have discretionary authority under the rules of the New York Stock Exchange (the “NYSE”).
There are also non-discretionary matters for which banks, brokers and other nominees do not have discretionary authority to vote unless they receive timely instructions from you. When a bank, broker or other nominee does not have discretion to vote on a particular matter and you have not given timely instructions on how the bank, broker or other nominee should vote your shares, a “broker non-vote” results. Although any broker non-vote would be counted as present at the meeting for purposes of determining a quorum, it would be treated as not entitled to vote with respect to non-discretionary matters.
If your shares are held in street name and you do not give voting instructions, pursuant to NYSE Rule 452, the record holder will not be permitted to vote your shares with respect to Proposal 1 (Election of the Class II Directors) or, and Proposal 2 (Advisory Vote to Approve Named Executive Officer Compensation), and your shares will be considered “broker non-votes” with respect to these proposals. If your shares are held in street name and you do not give voting instructions, the record holder will nevertheless be entitled to vote your shares with respect to Proposal 3 (Ratification of the Appointment of Grant Thornton LLP) in the discretion of the record holder.
Abstentions occur when stockholders are present at our Annual Meeting in person or by proxy but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholders are voting. Abstentions will have no effect on the election of directors but will have the effect of a vote against the other proposals being considered at the meeting.
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What vote is required to approve each proposal?
| • | Proposal 1 (Election of the Class II Directors): To be elected, each director nominee must receive the affirmative vote of a majority of the votes of the shares of Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. This means that the director nominees with more votes cast in favor of than votes withheld from the election will be elected. Broker non-votes will have no effect on the outcome of the vote for directors.(1) |
Proposal 2 (Advisory Vote to Approve Named Executive Officer Executive Compensation): Approval of this proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. Abstentions will be counted in determining the total number of shares “entitled to vote” on this proposal and will have the same effect as a vote “Against” this proposal. Broker non-votes will have no effect on the outcome of the vote on this proposal. While this vote is required by law, it will neither be binding on us, our Board or our Compensation Committee, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us, our Board or our Compensation Committee. However, our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.
Proposal 3 (Ratification(Ratification of the Appointment of Grant Thornton LLP): Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20162019 requires the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. Abstentions will be counted in determining
the total number of shares “entitled to vote” on this proposal and will have the same effect as a vote “Against” this proposal.
| (1) | On March 6, 2019, our Board of Directors approved an amendment to Section 3.2 Article III of Carriage’s Amended and Restated Bylaws to remove plurality voting of directors in uncontested director elections and provide for majority election of directors in such elections, with a board rejectable resignation should an incumbent director not receive a majority of votes. See Proposal 1: Election of Class II Directors - Failure of a Nominee to Receive a Majority of Votes. |
What is the Board'sBoard’s recommendation for each proposal?
Our Board recommends that you vote:
FOR the election of the two Class II directorDirector nominees;
FOR the approval, on an advisory basis, of our named executive officerNamed Executive Officer compensation; and
FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2019.
Our Board has appointed Melvin C. Payne, our Chief Executive Officer (“CEO”) and Chairman of the Board, and Viki K. Blinderman, our Co-ChiefSenior Vice President, Principal Financial Officer, Chief Accounting Officer and Secretary, as the management proxy holders for our Annual Meeting. For stockholders who have their shares voted by duly submitting a proxy via the internet, by mail, or in person at our Annual Meeting, the management proxy holders will vote all shares represented by such valid proxies as our Board recommends, unless a stockholder appropriately specifies otherwise.
Who will bear the cost of soliciting votes for our Annual Meeting?
We will bear the entire cost of soliciting proxies, including the cost of the preparation, assembly, uploading to and hosting on the internet, and printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to our stockholders in connection with our Annual Meeting. In addition to this solicitation by internet or mail, certain directors, officers and employees may also solicit proxies on our behalf by use of mail, telephone, facsimile, electronic means, in person or otherwise. These persons will not receive any additional compensation for assisting in the solicitation but may be reimbursed for reasonable out-of-pocket expenses in connection with the solicitation. We reimburse banks, brokers, custodians, nominees and fiduciaries for their reasonable charges and expenses to forward our proxy materials to the beneficial owners of our Common Stock.
Where can I find the voting results?
We will report the voting results in a Current Report on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”) within four business days of our Annual Meeting.
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May I propose actions for consideration at next year’s annual meetingAnnual Meeting or nominate individuals to serve as directors?
You may submit proposals for consideration at future annual meetings. See “Stockholder Proposals for the 20172020 Annual Meeting” for information regarding the submission of stockholder proposals for next year’s annual meeting.Annual Meeting.
How do I get directions to the Annual Meeting?
For directions to the Annual Meeting, please contact our Corporate Secretary at (713) 332-8400.
PROPOSAL NO. 1:
ELECTION OF CLASS II DIRECTORS
We currently have six directors on our Board who each serve staggered three-year terms. At our Annual Meeting, the stockholders will re-elect two individuals to serve as our Class II Directors for a new three-year term expiring on the date of the 2022 Annual Meeting and until his successor is duly elected and qualified.
Our Corporate Governance Committee has recommended that we nominate Barry K. Fingerhut and Bryan D. Leibman for re-election at our Annual Meeting to serve as our Class II Directors for a new three-year term. Proxies may be voted for each of the Class II Directors. The biographical description for Mr. Fingerhut and Mr. Leibman are included below.
The following table sets forth the name, age and title of the person who has been nominated for election as Class II Directors and our other current directors.
| Name | Age | Positions and Offices with Carriage, Director Since | ||
| Class II Directors | ||||
| (If re-elected, term expires at 2022 Annual Meeting) | ||||
| Barry K. Fingerhut | 73 | Director, 2012 | ||
| Bryan D. Leibman | 50 | Director, 2015 | ||
| Class I Directors | ||||
| (Term expires at 2021 Annual Meeting) | ||||
| Melvin C. Payne | 76 | Chairman of the Board and Chief Executive Officer, 1991 | ||
| James R. Schenck | 52 | Director, 2016 | ||
| Class III Directors | ||||
| (Term expires at 2020 Annual Meeting) | ||||
| Donald D. Patteson, Jr. | 73 | Director, 2011 | ||
| Douglas B. Meehan | 47 | Director, 2018 | ||
Our Board believes that each of our directors is highly qualified to serve as a member of our Board. In particular, our Board seeks individuals who demonstrate:
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles;
Business and investment savvy, including an owner-oriented attitude and conviction that Carriage has evolved into a high value, superior investment platform; and
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
Our Board unanimously recommends that you vote “FOR” the election of the Class II Director nominees.
You may not cumulate your votes in the election of the Class II Director nominees. You may withhold authority to vote for the nominee for director. If a nominee becomes unable to serve as a director before our Annual Meeting (or decides not to serve), the individuals named as proxies will vote, in accordance with instructions provided, for such other nominee as we may designate as a replacement or substitute, or our Board may reduce the size of the Board to eliminate the vacancy.
Described below are the principal occupations, positions and directorships for at least the past five years of our directors and director nominees, as well as certain information regarding their individual experience, qualifications, attributes and skills that led our Board to conclude that they should serve on our Board. There are no family relationships among any of our directors or executive officers.
Barry K. Fingerhut has been the Chief Executive Officer and majority equity owner of Certification Partners, LLC, a developer and global distributor of vendor neutral IT content and certifications, since the fall of 2010. Prior to 2010, he focused much of his career investing in small capitalization companies in the for-profit education and training industry and financial services industry, as well as many other industries. Currently, he serves on a number of private company and non-profit Boards. Mr. Fingerhut also served on our Board for the period from 1995 through 1999.
Additional Qualifications: Mr. Fingerhut was selected to serve on our Board due to his past experience with Carriage and his extensive investment knowledge.
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Bryan D. Leibman has been the President and Chief Executive Officer of Frosch Travel (“FROSCH”), a privately held global travel management company, since 2000. He is a certified physician who opted to pursue his passion for business and entrepreneurship by joining and leading his family’s successful travel business in 1998.
Additional Qualifications: Mr. Leibman brings experience in entrepreneurial growth and with mergers and acquisitions to our Board. We believe his vision and leadership at FROSCH brings to our Board development of an innovative and forward driving management style and commitment to core values in the services sector.
Melvin C. Payne, co-founder of Carriage, has been our Chief Executive Officer and a director since our inception in 1991, and our Chairman of the Board since December 1996.
Additional Qualifications: Mr. Payne brings to the Board his 28 years of experience as our Chief Executive Officer and proven management skills. Mr. Payne also has prior diverse industry and financial experience coupled with his personal leadership and founder’s vision for Carriage.
James R. Schenck has been the President and Chief Executive Officer of Pentagon Federal Credit Union (“PenFed”), one of the largest credit unions in the country, since 2014. Prior to that, he was the Executive Vice President at PenFed and President of its wholly owned subsidiary, PenFed Realty, since 2011. He also currently serves as Chief Executive Officer of the PenFed Foundation which provides support to military, veterans and their families.
Additional Qualifications: Mr. Schenck brings a passion for entrepreneurial growth and merger and acquisition experience to our Board.
Donald D. Patteson, Jr. was the founder and, prior to its sale in June 2014, the Chairman of the Board of Directors of Sovereign Business Forms, Inc. (“Sovereign”), a consolidator in a segment of the printing industry. He also served as Chief Executive Officer of Sovereign from August 1996 until his retirement in August 2008. Prior to founding Sovereign, he served as Managing Director of Sovereign Capital Partners, an investment firm specializing in leveraged buyouts.
Additional Qualifications: Mr. Patteson brings to the Board his extensive experience as Chief Executive Officer and Chief Financial Officer in various industries, enabling him to provide the Board with executive and financial management expertise, as well as experience with major financial transactions. He also served on the Board of Directors of Rosetta Resources Inc. and Cal Dive International, Inc. until mid-year 2015.
Douglas B. Meehan has served as the Deputy Chief Investment Officer for van Biema Value Partners, LLC, an investment management firm, since 2012. Prior to joining van Biema Value Partners, Mr. Meehan worked as a research analyst at a proprietary securities fund within Sentinel Real Estate Corp., a privately held real estate investment advisor in New York. He also worked with Duma Capital Partners, a multi-strategy hedge fund, as a research analyst.
Additional Qualifications: Mr. Meehan brings to the Board his extensive financial markets and real estate experience, as well as experience with sophisticated transactions.
Failure of a Nominee to Receive a Majority of Votes
On March 6, 2019, we amended our bylaws to provide for “majority voting” in the election of directors in uncontested elections. Our bylaws now provide that in an uncontested election of an incumbent director if the nominee does not receive a majority of the votes cast, the nominee must promptly deliver a written resignation to our Board of Directors and will continue to serve as a holdover director until the effective date of the director’s resignation, which may be no later than 120 days after the date of the election. The remaining directors, by a majority vote, are then required to promptly determine whether to decline to accept the director’s resignation or to accept the resignation of the director. If the remaining directors decline to accept the resignation, the director may continue to serve as long as the director received a plurality of the votes cast. If our Board of Directors accepts the resignation, the directorship will become vacant and the Board of Directors may then fill the vacancy by a majority vote.
In the event of a contested election of directors, our bylaws provide that directors will be elected by the vote of a plurality of the votes of the shares present in person or represented by proxy and entitled to vote in the election of directors.
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CORPORATE GOVERNANCE
Board Leadership Structure and Oversight of Risk
Carriage was founded on ourwith the Mission Statement to be the most professional, ethical and highest quality funeral and cemetery service organization in our industry, which we have shortened for communication purposes to Being The Best, andwhich is achieved by alignment with our Five Guiding Principles:
Honesty, Integrity and Quality in All That We Do
Hard work, Pride of Accomplishment, and Shared Success Through Employee Ownership
Belief in the Power of People Through Individual Initiative and Teamwork
Outstanding Service and Profitability Go Hand-in-Hand
Growth of the Company Is Driven by Decentralization and Partnership
All of our directors, officers and employees must be aligned with these Five Guiding Principles to ensure outstanding execution of our three core models and all other elements and linkages of Carriage’s High Performance Culture Framework. While our commitment is to all Five Guiding Principles equally, there is a reason why the First Guiding Principle is the First “most equal” of the Five: BecauseFive; because it is the foundation and cornerstone Guiding Principle upon which our Mission of Being The Best and other Four Guiding Principles are built upon.
At a high level, commitment to our Mission Statement and alignment with our Five Guiding Principles, together with a relentless focus to execute our Good To Great Concepts such as “First Who, Then What” and “Right People in the Right Seats”, areis what have driven the resulting “Flywheel Effect” ofdrives our accelerated high performance operating results since 2012.results. Our Board understands the importance and uniqueness of these qualitative drivers of Carriage Services’Carriage’s High Performance Culture as being critical towards our ability to execute sustainable, high performance quantitative results consistently over time through outstanding execution of our Standards Operating Model, 4E Leadership Model and Strategic Acquisition Model.three core models. Our Board also fundamentally understands that the biggest continuing risk for the Company is that executive and senior leadership wouldwill not continue the evolution of our unique High Performance Culture ideas and concepts. Our continued success and effective risk management emanates from being highly selective about leadership of the Company and finding leaders thatwho are aligned with our Five Guiding Principles and the idea of Carriage Services as a High Performance Culture Company. We utilize a 4E Leadership Model, initially developed by Jack Welch at General Electric and then tailored and evolved in our unique culture, to select and assess our leaders at all levels of the Company. 4E Leaders have a winning, entrepreneurial, competitive spirit and want to make a difference in Carriage Services’Carriage’s sustainable high performance and reputation over time.
Melvin C. Payne, theour co-founder and largest individual shareholder,stockholder, is our Chief Executive Officer and Chairman of our Board. Our Board currently believes that it is in the best interest of Carriage and its stockholders for Mr. Payne to serve as both our Chief Executive Officer and Chairman of our Board, based upon Mr. Payne'sPayne’s specific expertise, knowledge, passion and long-term vision for the Company. This arrangement provides a clear, unified strategic vision and 4E Leadership for Carriage, ensures partnership and alignment between senior leadership and our Board, and enables the Company to continue its evolution as a High Performance Culture Company that just happens to be in the funeral and cemetery service business. Mr. Payne is also best positioned to lead our Board through reviews of key business and strategic issues and, most importantly, to lead the Board’s understanding of the linkage of Carriage’s unique High Performance Culture to the Company becoming recognized as a superior Consolidation, Operating and Value Creation investment platform.
Our Compensation Committee performs an annual evaluation of our Chief Executive Officer’s performance. As part of our annual evaluations and long-term planning, our Corporate Governance Committee is charged with evaluating the succession of our Chief Executive Officer. Mr. Payne has publicly stated that he has no plans for retirement and that he intends to be involved with the Company as long as his health is good and he is adding value with his energy, passion and vision for Carriage and commitment to mentoring 4E Leaders for the future.future; nevertheless, the Corporate Governance Committee annually considers and discusses CEO succession planning. The Board also periodically reviews our leadership structure to determine if it is still appropriate in light of current corporate governance standards, market practices, the Company’s specific circumstances and needs and any other relevant factors for discussion.
We also have the position of Lead Director, who is required to be qualified as independent and appointed by a majority of the independent directors. The Lead Director’s role is to lead and facilitate the function of our Board independently and to enhance the quality of our Board by facilitating their deeper understanding of all elements and linkages of Carriage’s High Performance Culture Framework. The Lead Director presides at the executive sessions of the independent directors during quarterly Board meetings. Richard W. ScottBryan D. Liebman currently serves as our Lead Director.
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Risk Oversight of the Board
We believe that the oversight function of our Board and its committees combined with its active dialogue with senior leadership about effective risk management relative to continuously assessing for the “Right Who” leaders and the Right Quality of Staff at all levels, provides our Company with the appropriate framework to help ensure effective risk oversight. There is a fundamental Board understanding that the continuing biggest risk area for the Company would beis not having or not hiring the “Right Who” senior leadership in the future, and that hiring the ‘Wrong“Wrong Who” senior leadership, including and especially the CEO in case Mr. Payne was for some reason unable to fulfill his CEO responsibilities, could have a major negative impact on the nature of Carriage’s High Performance Culture. In executing this responsibility, independent directors provide independent oversight, including risk oversight and a significant amount of time is spent by our Board and committees, in conjunction with senior leadership, discussing how we identify, assess and manage our most significant risk exposures with respect to our leadership and people. Our Board also relies on each of its committees to help administer its oversight duties.
Director Nomination ProcessQualification, Experience and Tenure
Our Corporate Governance Committee as a whole, is responsible for reviewing the requisite skills and characteristics of new Board members as well as the composition of our Board with significant input by Carriage’s executive andfrom our senior leadership.leadership team.
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles;
Business and investment savvy, including an owner-oriented attitude and conviction that we have evolved into a superior stockholder value creation investment platform and therefore represents a superior long-term investment opportunity; and
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
As a result, it is difficult to define what the perfect director candidate looks like. For Carriage, diversity of all kinds, including (but not limited to) experience, age, gender, ethnic background, skills, perspective and background are important contributing factors to effective decision making. Thus, the Corporate Governance Committee believes it is in the best interest of Carriage to identify the best candidates for its board, cognizant of diversity in all forms and will continue to find ways to ensure that it is doing so.
While no director may serve on more than five other public company boards or on the audit committee for more than two other public companies, we much prefer candidates that are singularly focused on Carriage'sCarriage’s uniqueness and not on being a “Professional Board Member.” We currently have no established term limits or age restrictions, as we do not wish to risk losing the contribution of directors who have been able to develop an increasing insight and deep understanding into all the elements and linkages of our unique High Performance Culture Framework.
We currently have six directors on our Board who each serve staggered three-year terms. Five directors are independent. The average age of all directors currently serving on our Board is 62 years. The average age of all independent directors is 59 years. The average tenure of all independent directors is 4.6 years.
Director Nomination Process
Our Corporate Governance Committee, with assistance from internal and external resources as the Committee desires, identifies potential candidates for our Board fluidly and collaboratively with our existing senior leadership based upon the criteria set forth above. Once a potential candidate is identified and the individual expresses a willingness to be considered for election to our Board, our Corporate Governance Committee and Mr. Payne will request information from the candidate, review the individual’s qualifications, and conduct one or more interviews with the candidate. When this process has completed,is complete, our Corporate Governance Committee tenders its recommendation to our full Board for consideration.
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Our Corporate Governance Committee also will also consider candidates recommended by stockholders in the same manner. A stockholder may recommend nominees for director by giving our Corporate Secretary a written notice not less than 90 days prior to the anniversary date of the immediately preceding annual meeting.Annual Meeting. For our 20172020 Annual Meeting of Stockholders, the deadline will be February 17, 2017,14, 2020, based upon this year'syear’s meeting occurring on May 17, 2016.15, 2019. The notice must include the name and address of the stockholder giving notice and the number of shares of Common Stock beneficially owned by the stockholder. The notice must also include the nominee’s full name, age, business address, principal occupation or employment, of the nominee, the number of shares of Common Stock that the nominee beneficially owns, any other information about the nominee that must be disclosed in proxy solicitations under Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the nominee’s written consent to the nomination and to serve, if elected.
Organization and Committees of Our Board
During 2015,2018, our Board met five times and acted by unanimous written consent seventhirteen additional times. Each of the directors attended all of the meetings of our Board. During 2015,Board except for Mr. Payne, who was unable to attend one board meeting. Each year we hold the Annual Meeting on the same day as our Board had, and appointedCommittee meetings such that all directors may attend the membersAnnual Meeting. All of our then current directors attended the 2018 Annual Meeting of Stockholders, excluding Mr. Payne. Our director attendance policy for the Annual Meeting states that a quorum must be present in order for directors to thebe elected.
Our Board has a Compensation, Audit and Corporate Governance Committees.Committee. The current members of each committee as of the Record Date are identified in the table below. Each of these committees has its own charter, and a copy of the current version is available free of charge on our website at www.carriageservices.com. The functions of each committee and the number of meetings held during 2015,2018 are described below.
| Director | Compensation | Audit | Corporate Governance | |||
Melvin C. Payne(*) | ||||||
| Barry K. | ||||||
| Chairman | X | X | ||||
Bryan D. | X | X | X | |||
Donald D. Patteson, Jr.(I) | X | Chairman | X | |||
James R. Schenck(I) | X | X | Chairman | |||
Douglas B. Meehan(I) | X | X | X | |||
| (*) | Chairman of |
| (I) | Independent Director. |
Compensation Committee. The purposes of our Compensation Committee are to:
review, evaluate and approve our officer compensation plans, policies and programs;
recommend to our Board non-employee director compensation plans, policies and programs;
produce the Compensation Committee Report on executive compensation for inclusion in our proxy statement for our annual meetingAnnual Meeting of stockholders;Stockholders;
administer, review and approve the compensation of our officers and directors, including grants under our stock incentive plans; and
perform such other functions as our Board may assign from time to time.
Generally, our Board has charged our Compensation Committee with the overall responsibility for establishing, implementing and monitoring the compensation for our Executive Officersexecutive officers and Senior Leadership.senior leadership team. Executive compensation matters are presented to the Compensation Committee in a variety of ways, including: (1) at the request of our Compensation Committee Chairman or two or more members of the Compensation Committee or two members of our Board, (2) in accordance with our Compensation Committee’s agenda, which is reviewed by our Compensation Committee members and other directors on an annual basis, (3) by our Chief Executive Officer or (4) by our Compensation Committee’s outside compensation consultant, if a consultant is engaged by our Compensation Committee.
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To the extent permitted by applicable law, our Compensation Committee may delegate some or all of its authority under its charter to its chairman, any one of its members or any subcommittees it may form when it deems such action appropriate. Mr. Payne, as our Chairman of the Board and Chief Executive Officer, makes recommendations on compensation decisions for those other than himself based on the individual performance of each Executive Officerexecutive officer or Senior Leadersenior leader and the Company'sCompany’s overall performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee to execute its responsibilities; responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for individual Executive Officer and Senior Leadership bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans;
preparing stocklong-term incentive award recommendations for our Compensation Committee’s approval; and
attending our Compensation Committee’s meetings as requested in order to provide additional information, respond to questions and otherwise assist our Compensation Committee.
Our Compensation Committee makes all final decisions regarding executive officer compensation.
Audit Committee. The purposes of our Audit Committee are to:
assist our Board in fulfilling its oversight responsibilities regarding the:
| ◦ | integrity of our financial |
| ◦ | qualifications and independence of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other review or attestation services for Carriage; |
| ◦ | performance of our internal audit function and independent auditors; |
| ◦ | whistleblower hotline and associated reporting procedures; and |
| ◦ | compliance by Carriage with legal and regulatory |
perform such other functions as our Board may assign to our Audit Committee from time to time.
In connection with these purposes, our Audit Committee annually selects, engages and evaluates the performance and ongoing qualifications of, and determines the compensation for, our independent registered public accounting firm and confirms theirits independence. The Audit Committee also reviews our annual and quarterly financial statements and meets with our management and independent registered public accounting firm regarding the adequacy of our financial controls and our compliance with legal, tax and regulatory matters and significant internal policies.
Our Audit Committee met five times during 2015. There were no actions2018 and acted by unanimous written consent during 2015. Each member of our Audit Committee wasthree additional times. All committee members were present at allsuch meetings. All members of our Audit Committee are independent as that term is defined in the NYSE’s listing standards and by Rule 10A-3 promulgated under the Exchange Act. Our Board has determined that each member of our Audit Committee is financially literate and that Mr. Patteson has the necessary accounting and financial expertise to serve as Chairman. Our Board has also determined that Mr. Patteson is an “audit committee financial expert” following a determination that he met the criteria for such designation under the SEC’s rules and regulations. See “Audit Committee Report” below for additional information regarding our Audit Committee.
Corporate Governance Committee. The purposes of our Corporate Governance Committee are to:
assist our Board by identifying individuals qualified to become Board members, and to recommend to our Board the director nominees for the next annual meetingAnnual Meeting of stockholders;Stockholders;
assist our Board with succession planning for our Chief Executive Officer and other members of the senior leadership team;
lead our Board in its annual review of the performance of our Board and its committees and of our senior management;committees; and
perform such other functions as our Board may assign to our Corporate Governance Committee from time to time.
Our Corporate Governance Committee met two times in 2015one time during 2018 and acted by unanimous written consent onethree additional time.times. All committee members were present at such meetings.
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Director Independence
Our Board of Directors affirmatively determined that Messrs. Fingerhut, Leibman, Patteson, Schenck and Meehan do not have a material relationship with Carriage (either directly or as a partner, stockholder or officer of an organization that has a relationship with Carriage) and are “independent” as defined under the annual meeting onNYSE’s listing standards and the same daySEC under Item 407(a) of Regulation S-K.
Mr. Payne is not independent because he is an employee of Carriage and currently serves as our Board and Committee meetings such that all directors may attendChief Executive Officer. He also serves as Chairman of the annual meeting. All of our then current directors, except one, attended the 2015 Annual Meeting of Stockholders.Board.
Board’s Interaction with Stockholders
Our Chief Executive Officer and senior leadership team are responsible for establishing effective communication with our stockholders. Independent directors are not precluded from meeting with stockholders, but where appropriate, our executive and senior leadership team should be present at such meetings.
Stockholders and other interested parties may contact any member of our Board or any of its committees by addressing any correspondence in care of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056; Attn: Corporate Secretary. In the case of communications addressed to the independent directors, our Corporate Secretary will send appropriate stockholder communications to the Lead Director. In the case of communications addressed to a committee of our Board, our Corporate Secretary will send appropriate stockholder communications to the Chairman of such committee.
ELECTION OF CLASS II DIRECTORS
We currently have six directors on our Board who each serve staggered three-year terms. At our Annual EvaluationsMeeting, the stockholders will re-elect two individuals to serve as our Class II Directors for a new three-year term expiring on the date of the 2022 Annual Meeting and until his successor is duly elected and qualified.
Our Corporate Governance Committee has recommended that we nominate Barry K. Fingerhut and Bryan D. Leibman for re-election at our Annual Meeting to serve as our Class II Directors for a new three-year term. Proxies may be voted for each of the Class II Directors. The biographical description for Mr. Fingerhut and Mr. Leibman are included below.
The following table sets forth the name, age and title of the person who has been nominated for election as Class II Directors and our other current directors.
| Name | Age | Positions and Offices with Carriage, Director Since | ||
| Class II Directors | ||||
| (If re-elected, term expires at 2022 Annual Meeting) | ||||
| Barry K. Fingerhut | 73 | Director, 2012 | ||
| Bryan D. Leibman | 50 | Director, 2015 | ||
| Class I Directors | ||||
| (Term expires at 2021 Annual Meeting) | ||||
| Melvin C. Payne | 76 | Chairman of the Board and Chief Executive Officer, 1991 | ||
| James R. Schenck | 52 | Director, 2016 | ||
| Class III Directors | ||||
| (Term expires at 2020 Annual Meeting) | ||||
| Donald D. Patteson, Jr. | 73 | Director, 2011 | ||
| Douglas B. Meehan | 47 | Director, 2018 | ||
Our Board andbelieves that each committee perform annual self-evaluations. These self-evaluations are conducted through written questionnaires circulated prior to the last regularly scheduled meeting of the Board before the Annual Meeting of Stockholders and compiled on a confidential basis by the Assistant Corporate Secretary. At their last regularly scheduled meeting before the Annual Meeting of Stockholders, detailed results of the self-evaluations are provided to the Corporate Governance Committee with summary results presented to our full Board.
A deep, genuine belief, understanding and employees must be alignment withcommitment to ourBeing The Best Mission Statement and Five Guiding Principles;
Business and investment savvy, including an owner-oriented attitude and conviction that Carriage has evolved into a high value, superior investment platform; and
An ability to achievemake a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
Our Board unanimously recommends that you vote “FOR” the election of the Class II Director nominees.
You may not cumulate your votes in the election of the Class II Director nominees. You may withhold authority to vote for the nominee for director. If a nominee becomes unable to serve as a director before our Annual Meeting (or decides not to serve), the individuals named as proxies will vote, in accordance with instructions provided, for such other nominee as we may designate as a replacement or substitute, or our Board may reduce the size of the Board to eliminate the vacancy.
Described below are the principal occupations, positions and directorships for at least the past five years of our directors and director nominees, as well as certain information regarding their individual experience, qualifications, attributes and skills that led our Board to conclude that they should serve on our Board. There are no family relationships among any of our directors or executive officers.
Barry K. Fingerhut has been the Chief Executive Officer and majority equity owner of Certification Partners, LLC, a developer and global distributor of vendor neutral IT content and certifications, since the fall of 2010. Prior to 2010, he focused much of his career investing in small capitalization companies in the for-profit education and training industry and financial services industry, as well as many other industries. Currently, he serves on a number of private company and non-profit Boards. Mr. Fingerhut also served on our Board for the period from 1995 through 1999.
Additional Qualifications: Mr. Fingerhut was selected to serve on our Board due to his past experience with Carriage and his extensive investment knowledge.
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Bryan D. Leibman has been the President and Chief Executive Officer of Frosch Travel (“FROSCH”), a privately held global travel management company, since 2000. He is a certified physician who opted to pursue his passion for business and entrepreneurship by joining and leading his family’s successful travel business in 1998.
Additional Qualifications: Mr. Leibman brings experience in entrepreneurial growth and with mergers and acquisitions to our Board. We believe his vision and leadership at FROSCH brings to our Board development of an innovative and forward driving management style and commitment to core values in the services sector.
Melvin C. Payne, co-founder of Carriage, has been our Chief Executive Officer and a director since our inception in 1991, and our Chairman of the Board since December 1996.
Additional Qualifications: Mr. Payne brings to the Board his 28 years of experience as our Chief Executive Officer and proven management skills. Mr. Payne also has prior diverse industry and financial experience coupled with his personal leadership and founder’s vision for Carriage.
James R. Schenck has been the President and Chief Executive Officer of Pentagon Federal Credit Union (“PenFed”), one of the largest credit unions in the country, since 2014. Prior to that, he was the Executive Vice President at PenFed and President of its wholly owned subsidiary, PenFed Realty, since 2011. He also currently serves as Chief Executive Officer of the PenFed Foundation which provides support to military, veterans and their families.
Additional Qualifications: Mr. Schenck brings a passion for entrepreneurial growth and merger and acquisition experience to our Board.
Donald D. Patteson, Jr. was the founder and, prior to its sale in June 2014, the Chairman of the Board of Directors of Sovereign Business Forms, Inc. (“Sovereign”), a consolidator in a segment of the printing industry. He also served as Chief Executive Officer of Sovereign from August 1996 until his retirement in August 2008. Prior to founding Sovereign, he served as Managing Director of Sovereign Capital Partners, an investment firm specializing in leveraged buyouts.
Additional Qualifications: Mr. Patteson brings to the Board his extensive experience as Chief Executive Officer and Chief Financial Officer in various industries, enabling him to provide the Board with executive and financial management expertise, as well as experience with major financial transactions. He also served on the Board of Directors of Rosetta Resources Inc. and Cal Dive International, Inc. until mid-year 2015.
Douglas B. Meehan has served as the Deputy Chief Investment Officer for van Biema Value Partners, LLC, an investment management firm, since 2012. Prior to joining van Biema Value Partners, Mr. Meehan worked as a research analyst at a proprietary securities fund within Sentinel Real Estate Corp., a privately held real estate investment advisor in New York. He also worked with Duma Capital Partners, a multi-strategy hedge fund, as a research analyst.
Additional Qualifications: Mr. Meehan brings to the Board his extensive financial markets and real estate experience, as well as experience with sophisticated transactions.
Failure of a Nominee to Receive a Majority of Votes
On March 6, 2019, we amended our bylaws to provide for “majority voting” in the election of directors in uncontested elections. Our bylaws now provide that in an uncontested election of an incumbent director if the nominee does not receive a majority of the votes cast, the nominee must promptly deliver a written resignation to our Board of Directors and will continue to serve as a holdover director until the effective date of the director’s resignation, which may be no later than 120 days after the date of the election. The remaining directors, by a majority vote, are then required to promptly determine whether to decline to accept the director’s resignation or to accept the resignation of the director. If the remaining directors decline to accept the resignation, the director may continue to serve as long as the director received a plurality of the votes cast. If our Board of Directors accepts the resignation, the directorship will become vacant and the Board of Directors may then fill the vacancy by a majority vote.
In the event of a contested election of directors, our bylaws provide that directors will be elected by the vote of a plurality of the votes of the shares present in person or represented by proxy and entitled to vote in the election of directors.
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CORPORATE GOVERNANCE
Board Leadership Structure
Carriage was founded with the Mission Statement of being to be the most professional, ethical and highest quality funeral and cemetery service organization in our industry, which we have shortened for communication purposes to Being The Best, which is achieved by alignment with our Five Guiding Principles:
Honesty, Integrity and Quality in All That We Do
Hard work, Pride of Accomplishment, and Shared Success Through Employee Ownership
Belief in the Power of People Through Individual Initiative and Teamwork
Outstanding Service and Profitability Go Hand-in-Hand
Growth of the Company Is Driven by Decentralization and Partnership
All of our directors, officers and employees must be aligned with these Five Guiding Principles to ensure outstanding execution of our three core models and all other elements and linkages of Carriage’s High Performance Culture Framework. While our commitment is to all Five Guiding Principles equally, there is a reason why the First Guiding Principle is the First “most equal” of the Five; because it is the foundation and cornerstone Guiding Principle upon which our Mission of Being The Best and other Four Guiding Principles are built upon.
At a high level, commitment to our Mission Statement and alignment with our Five Guiding Principles, together with a relentless focus to execute our Good To GreatConcepts such as “First Who, Then What” and “Right People in the Right Seats”, is what drives our high performance operating results. Our Board understands the importance and uniqueness of these qualitative drivers of Carriage’s High Performance Culture as being critical towards our ability to execute sustainable, high performance quantitative results consistently over time through outstanding execution of our three core models. Our Board also fundamentally understands that the biggest continuing risk for the Company is that executive and senior leadership will not continue the evolution of our unique High Performance Culture ideas and concepts. Our continued success and effective risk management emanates from being highly selective about leadership of the Company and finding leaders who are aligned with our Five Guiding Principles and the idea of Carriage as a High Performance CultureCompany. We utilize a 4E Leadership Model, initially developed by Jack Welch at General Electric and then tailored and evolved in our unique culture, to select and assess our leaders at all levels of the Company. 4E Leaders have a winning, entrepreneurial, competitive spirit and want to make a difference in Carriage’s sustainable high performance and reputation over time.
Melvin C. Payne, our co-founder and largest individual stockholder, is our Chief Executive Officer and Chairman of our Board. Our Board believes that it is in the best interest of Carriage and its stockholders for Mr. Payne to serve as both our Chief Executive Officer and Chairman of our Board, based upon Mr. Payne’s specific expertise, knowledge, passion and long-term vision for the Company. This arrangement provides a clear, unified strategic vision and 4E Leadership for Carriage, ensures partnership and alignment between senior leadership and our Board, and enables the Company to continue its evolution as a High Performance CultureCompany that just happens to be in the funeral and cemetery industryservice business. Mr. Payne is also best positioned to lead our Board through reviews of key business and strategic issues and, most importantly, to lead the Board’s understanding of the linkage of Carriage’s unique High Performance Culture to the Company becoming recognized as a superior Consolidation, Operating and Value Creation investment platform.
Our Compensation Committee performs an annual evaluation of our Chief Executive Officer’s performance. As part of our annual evaluations and long-term planning, our Corporate Governance Committee is charged with evaluating the succession of our Chief Executive Officer. Mr. Payne has publicly stated that he has no plans for retirement and that he intends to be involved with the Company as long as his health is good and he is adding value with his energy, passion and vision for Carriage and commitment to mentoring 4E Leaders for the future; nevertheless, the Corporate Governance Committee annually considers and discusses CEO succession planning. The Board also periodically reviews our leadership structure to determine if it is still appropriate in light of current corporate governance standards, market practices, the Company’s specific circumstances and needs and any other relevant factors for discussion.
We also have the position of Lead Director, who is required to be qualified as independent and appointed by a majority of the independent directors. The Lead Director’s role is to lead and facilitate the function of our Board independently and to enhance the quality of our Board by facilitating their deeper understanding of Carriage’s High Performance Culture Framework. The Lead Director presides at the executive sessions of the independent directors during quarterly Board meetings. Bryan D. Liebman currently serves as our Lead Director.
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Risk Oversight of the Board
We believe that the oversight function of our Board and its committees combined with active dialogue with senior leadership about effective risk management relative to continuously assessing for the “Right Who” leaders and the Right Quality of Staff at all levels, provides our Company with the appropriate framework to help ensure effective risk oversight. There is a fundamental Board understanding that the continuing biggest risk area for the Company is not having or not hiring the “Right Who” senior leadership in the future, and that hiring the “Wrong Who” senior leadership, including and especially the CEO in case Mr. Payne was for some reason unable to fulfill his CEO responsibilities, could have a major negative impact on the nature of Carriage’s High Performance Culture. In executing this responsibility, independent directors provide independent oversight, including risk oversight and a significant amount of time is spent by our Board and committees, in conjunction with senior leadership, discussing how we identify, assess and manage our most significant risk exposures with respect to our leadership and people. Our Board also relies on each of its committees to help administer its oversight duties.
Director Qualification, Experience and Tenure
Our Corporate Governance Committee is responsible for reviewing the requisite skills and characteristics of new Board members as well as the composition of our Board with significant input from our senior leadership team.
It is the position of our Corporate Governance Committee that, as a company of our size in the specialized field of death care, it is important for our directors to understand, support and align with our culture. Thus, we strive to seek individuals who demonstrate the following characteristics or attributes:
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles;
Business and investment savvy, including an owner-oriented attitude and conviction that we have evolved into a superior stockholder value creation investment platform and therefore represents a superior long-term investment opportunity; and
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
As a result, it is difficult to define what the perfect director candidate looks like. For Carriage, diversity of all kinds, including (but not limited to) experience, age, gender, ethnic background, skills, perspective and background are important contributing factors to effective decision making. Thus, the Corporate Governance Committee believes it is in the best interest of Carriage to identify the best candidates for its board, cognizant of diversity in all forms and will continue to find ways to ensure that it is doing so.
While no director may serve on more than five other public company boards or on the audit committee for more than two other public companies, we much prefer candidates that are singularly focused on Carriage’s uniqueness and not on being a “Professional Board Member.” We currently have no established term limits or age restrictions, as we do not wish to risk losing the contribution of directors who have been able to develop an increasing insight and deep understanding into our unique High Performance Culture Framework.
We currently have six directors on our Board who each serve staggered three-year terms. Five directors are independent. The average age of all directors currently serving on our Board is 62 years. The average age of all independent directors is 59 years. The average tenure of all independent directors is 4.6 years.
Director Nomination Process
Our Corporate Governance Committee, with assistance from internal and external resources as the Committee desires, identifies potential candidates for our Board based upon the criteria set forth above. Once a potential candidate is identified and the individual expresses a willingness to be considered for election to our Board, our Corporate Governance Committee and Mr. Payne will request information from the candidate, review the individual’s qualifications, and conduct one or more interviews with the candidate. When this process is complete, our Corporate Governance Committee tenders its recommendation to our full Board for consideration.
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Our Corporate Governance Committee also will consider candidates recommended by stockholders in the same manner. A completestockholder may recommend nominees for director by giving our Corporate Secretary a written notice not less than 90 days prior to the anniversary date of the immediately preceding Annual Meeting. For our 2020 Annual Meeting of Stockholders, the deadline will be February 14, 2020, based upon this year’s meeting occurring on May 15, 2019. The notice must include the name and address of the stockholder giving notice and the number of shares of Common Stock beneficially owned by the stockholder. The notice must also include the nominee’s full name, age, business address, principal occupation or employment, the number of shares of Common Stock that the nominee beneficially owns, any other information about the nominee that must be disclosed in proxy solicitations under Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the nominee’s written consent to the nomination and to serve, if elected.
Organization and Committees of Our Board
During 2018, our Board met five times and acted by unanimous written consent thirteen additional times. Each of the directors attended all of the meetings of our Board except for Mr. Payne, who was unable to attend one board meeting. Each year we hold the Annual Meeting on the same day as our Board and Committee meetings such that all directors may attend the Annual Meeting. All of our then current directors attended the 2018 Annual Meeting of Stockholders, excluding Mr. Payne. Our director attendance policy for the Annual Meeting states that a quorum must be present in order for directors to be elected.
Our Board has a Compensation, Audit and Corporate Governance Committee. The current members of each committee as of the Record Date are identified in the table below. Each of these committees has its own charter, and a copy of the current version of each of these documents is accessible throughavailable on our website at www.carriageservices.com. The functions of each committee and the number of meetings held during 2018 are described below.
| Director | Compensation | Audit | Corporate Governance | |||
Melvin C. Payne(*) | ||||||
Barry K. Fingerhut(I) | Chairman | X | X | |||
Bryan D. Leibman(I)(L) | X | X | X | |||
Donald D. Patteson, Jr.(I) | X | Chairman | X | |||
James R. Schenck(I) | X | X | Chairman | |||
Douglas B. Meehan(I) | X | X | X | |||
| (*) | Chairman of the Board and Chief Executive Officer. |
| (I) | Independent Director. |
| (L) | Lead Director. |
Compensation Committee. The purposes of our Compensation Committee are to:
review, evaluate and approve our officer compensation plans, policies and programs;
recommend to our Board non-employee director compensation plans, policies and programs;
produce the Compensation Committee Report on executive compensation for inclusion in our proxy statement for our Annual Meeting of Stockholders;
administer, review and approve grants under our stock incentive plans; and
perform such other functions as our Board may assign from time to time.
Generally, our Board has charged our Compensation Committee with the overall responsibility for establishing, implementing and monitoring the compensation for our executive officers and senior leadership team. Executive compensation matters are presented to the Compensation Committee in a variety of ways, including: (1) at the request of our Compensation Committee Chairman or youtwo or more members of the Compensation Committee or two members of our Board, (2) in accordance with our Compensation Committee’s agenda, which is reviewed by our Compensation Committee members and other directors on an annual basis, (3) by our Chief Executive Officer or (4) by our Compensation Committee’s outside compensation consultant, if a consultant is engaged by our Compensation Committee.
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To the extent permitted by applicable law, our Compensation Committee may receive copies freedelegate some or all of chargeits authority under its charter to its chairman, any one of its members or any subcommittees it may form when it deems such action appropriate. Mr. Payne, as our Chairman of the Board and Chief Executive Officer, makes recommendations on compensation decisions for those other than himself based on the individual performance of each executive officer or senior leader and the Company’s overall performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for individual Executive Officer and Senior Leadership bonus plans for consideration by writingour Compensation Committee and reporting to usour Compensation Committee regarding achievement against the bonus plans;
preparing long-term incentive award recommendations for our Compensation Committee’s approval; and
attending our Compensation Committee’s meetings as requested in order to provide additional information, respond to questions and otherwise assist our Compensation Committee.
Our Compensation Committee makes all final decisions regarding executive officer compensation.
Our Compensation Committee met two times during 2018 and acted by unanimous written consent seven additional times. Each member of our Compensation Committee was present at all meetings. Our Board has determined that all of the members of the committee are independent under the listing standards of the NYSE and the rules of the SEC. Each of the members of the committee is considered to be a “non-employee director” under Rule 16b-3 of the Exchange Act, and an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended.
Audit Committee. The purposes of our Audit Committee are to:
assist our Board in fulfilling its oversight responsibilities regarding the:
| ◦ | integrity of our financial statements and financial reporting process, and our systems of internal accounting and financial controls; |
| ◦ | qualifications and independence of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other review or attestation services for Carriage; |
| ◦ | performance of our internal audit function and independent auditors; |
| ◦ | whistleblower hotline and associated reporting procedures; and |
| ◦ | compliance by Carriage with legal and regulatory requirements. |
perform such other functions as our Board may assign to our Audit Committee from time to time.
In connection with these purposes, our Audit Committee annually selects, engages and evaluates the performance and ongoing qualifications of, and determines the compensation for, our independent registered public accounting firm and confirms its independence. The Audit Committee also reviews our annual and quarterly financial statements and meets with our management and independent registered public accounting firm regarding the adequacy of our financial controls and our compliance with legal, tax and regulatory matters and significant internal policies.
Our Audit Committee met five times during 2018 and acted by unanimous written consent three additional times. All committee members were present at such meetings. All members of our Audit Committee are independent as that term is defined in the NYSE’s listing standards and by Rule 10A-3 promulgated under the Exchange Act. Our Board has determined that each member of our Audit Committee is financially literate and that Mr. Patteson has the necessary accounting and financial expertise to serve as Chairman. Our Board has also determined that Mr. Patteson is an “audit committee financial expert” following a determination that he met the criteria for such designation under the SEC’s rules and regulations. See “Audit Committee Report” below for additional information regarding our Audit Committee.
Corporate Governance Committee. The purposes of our Corporate Governance Committee are to:
assist our Board by identifying individuals qualified to become Board members, and to recommend to our Board the director nominees for the next Annual Meeting of Stockholders;
assist our Board with succession planning for our Chief Executive Officer and other members of the senior leadership team;
lead our Board in its annual review of the performance of our Board and its committees; and
perform such other functions as our Board may assign to our Corporate Governance Committee from time to time.
Our Corporate Governance Committee met one time during 2018 and acted by unanimous written consent three additional times. All committee members were present at such meetings.
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Director Independence
Our Board of Directors affirmatively determined that Messrs. Fingerhut, Leibman, Patteson, Schenck and Meehan do not have a material relationship with Carriage (either directly or as a partner, stockholder or officer of an organization that has a relationship with Carriage) and are “independent” as defined under the NYSE’s listing standards and the SEC under Item 407(a) of Regulation S-K.
Mr. Payne is not independent because he is an employee of Carriage and currently serves as our Chief Executive Officer. He also serves as Chairman of the Board.
Board’s Interaction with Stockholders
Our Chief Executive Officer and senior leadership team are responsible for establishing effective communication with our stockholders. Independent directors are not precluded from meeting with stockholders, but where appropriate, our executive and senior leadership team should be present at such meetings.
Stockholders and other interested parties may contact any member of our Board or any of its committees by addressing any correspondence in care of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056,77056; Attn: Investor Relations.
| Annual Cash Retainer | Per Meeting Cash Fee(2) | ||||||||
| Board - Independent Director | $ | 40,000 | (1) | $ | 2,000 | ||||
| Board - Lead Director | $ | 115,000 | (1) (3) | $ | 2,000 | ||||
| Audit Committee | |||||||||
| Chair | $ | 17,500 | (4) | $ | 2,000 | ||||
| Member | $ | — | $ | 2,000 | |||||
| Compensation Committee | |||||||||
| Chair | $ | 15,000 | (4) | $ | 1,600 | ||||
| Member | $ | — | $ | 1,600 | |||||
| Corporate Governance Committee | |||||||||
| Chair | $ | 15,000 | (4) | $ | 1,600 | ||||
| Member | $ | — | $ | 1,600 | |||||
| Name | Fees Earned in Cash | Stock Awards | Total | ||||||||
| Barry K. Fingerhut | $ | 81,400 | $ | 75,000(1) | $ | 156,400 | |||||
| Donald D. Patteson, Jr. | $ | 83,900 | $ | 75,000(1) | $ | 158,900 | |||||
| Richard W. Scott | $ | 196,400 | $ | 75,000(1) | $ | 271,400 | |||||
| Bryan D. Leibman | $ | 14,000 | $ | 100,000(2) | $ | 114,000 | |||||
ELECTION OF CLASS II DIRECTORS
We currently have six directors on our Board who each serve staggered three-year terms. At our Annual Meeting, the stockholders will electre-elect two individuals to serve as our Class II directorsDirectors for a new three-year termsterm expiring on the date of the 2019 annual meeting2022 Annual Meeting and until their successors arehis successor is duly elected and qualified.
Our Corporate Governance Committee has recommended that we nominate Barry K. Fingerhut for re-election and Bryan D. Leibman for electionre-election at our Annual Meeting to serve as our Class II directorsDirectors for a new three-year terms.term. Proxies may be voted for each of the Class II directors.Directors. The biography descriptionsbiographical description for Messrs.Mr. Fingerhut and Mr. Leibman are included below.
The following table sets forth the name, age and title of the personsperson who havehas been nominated for election as Class II directorsDirectors and our other current directors.
| Name | Age | Positions and Offices with Carriage, Director Since | ||
| (If re-elected, term expires at | ||||
| Barry K. Fingerhut | Director, 2012 | |||
Bryan D. Leibman | Director, 2015 | |||
| Class I Directors | ||||
| (Term expires at 2021 Annual Meeting) | ||||
| Melvin C. Payne | 76 | Chairman of the Board and Chief Executive Officer, 1991 | ||
| James R. Schenck | 52 | Director, 2016 | ||
| Class III Directors | ||||
| (Term expires at | ||||
| Donald D. Patteson, Jr. | Director, 2011 | |||
| Douglas B. Meehan | ||||
| Director, | ||||
Our Board believes that each of our directors is highly qualified to serve as a member of our Board. In particular, our Board seeks individuals who demonstrate:
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles,;
Business and investment savvy, including an owner-oriented attitude and conviction that Carriage Services has evolved into a high value, superior investment platform,platform; and
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.Framework.
Our Board unanimously recommends that you vote “FOR” the election of each of the Class II directorDirector nominees.
You may not cumulate your votes in the election of the Class II directors.Director nominees. You may withhold authority to vote for any of the nomineesnominee for director. If a nominee becomes unable to serve as a director before our Annual Meeting (or decides not to serve), the individuals named as proxies will vote, in accordance with instructions provided, for such other nominee as we may designate as a replacement or substitute, or our Board may reduce the size of the Board to eliminate the vacancy.
Described below are the principal occupations, positions and directorships for at least the past five years of our directors and director nominees, as well as certain information regarding their individual experience, qualifications, attributes and skills that led our Board to conclude that they should serve on our Board. There are no family relationships among any of our directors or executive officers.
Barry K. Fingerhut has been the Chief Executive Officer and majority equity owner of Certification Partners, LLC, a developer and global distributor of vendor neutral IT content and certifications, since the fall of 2010. Prior to 2010, he focused much of his career investing in small capitalization companies in the for-profit education and training industry and financial services industry, as well as many other industries. Currently, he serves on a number of private company and non-profit Boards. Mr. Fingerhut also served on our Board for the period from 1995 through 1999.
Additional Qualifications: Mr. Fingerhut was selected to serve on our Board due to his past experience with Carriage and his extensive investment knowledge.
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Bryan D. Leibman has been the President and Chief Executive Officer of Frosch Travel (FROSCH)(“FROSCH”), a privately held global travel management company, since 2000. He is a certified physician who opted to pursue his passion for business and entrepreneurship by joining and leading his family’s successful travel business sincein 1998.
Additional Qualifications: Mr. Leibman brings experience in entrepreneurial growth merger and acquisition experiencewith mergers and acquisitions to our Board. We believe his vision and leadership at FROSCH brings to our Board development of an innovative and forward driving management style and commitment to core values in the services sector.
Additional Qualifications: Mr. DeCarlo was selectedPayne brings to serve onthe Board his 28 years of experience as our Board as a resultChief Executive Officer and proven management skills. Mr. Payne also has prior diverse industry and financial experience coupled with his personal leadership and founder’s vision for Carriage.
James R. Schenck has been the President and Chief Executive Officer of his long historyPentagon Federal Credit Union (“PenFed”), one of the largest credit unions in the deathcare industrycountry, since 2014. Prior to that, he was the Executive Vice President at PenFed and President of its wholly owned subsidiary, PenFed Realty, since 2011. He also currently serves as Chief Executive Officer of the PenFed Foundation which provides support to military, veterans and their families.
Additional Qualifications: Mr. Schenck brings a passion for entrepreneurial growth and merger and acquisition experience in a multitude of executive roles in other industries.to our Board.
Donald D. Patteson, Jr. was the founder and, prior to its sale in June 2014, the Chairman of the Board of Directors of Sovereign Business Forms, Inc. (“Sovereign”), a consolidator in a segment of the printing industry. He also served as Chief Executive Officer of Sovereign from August 1996 until his retirement in August 2008. Mr. PattesonPrior to founding Sovereign, he served on the Boardas Managing Director of Directors of Rosetta Resources Inc. and Cal Dive International, Inc. until mid-year 2015.Sovereign Capital Partners, an investment firm specializing in leveraged buyouts.
Additional Qualifications: Mr. Patteson brings to the Board his extensive experience as Chief Executive Officer and Chief Financial Officer in various industries, enabling him to provide the Board with executive and financial management expertise, as well as experience with major financial transactions. He also served on the Board of Directors of Rosetta Resources Inc. and Cal Dive International, Inc. until mid-year 2015.
Douglas B. Meehan has served as the Deputy Chief Investment Officer for van Biema Value Partners, LLC, an investment management firm, since 2012. Prior to joining van Biema Value Partners, Mr. Meehan worked as a research analyst at a proprietary securities fund within Sentinel Real Estate Corp., a privately held real estate investment advisor in New York. He also worked with Duma Capital Partners, a multi-strategy hedge fund, as a research analyst.
Additional Qualifications: Mr. Meehan brings to the Board his extensive financial markets and real estate experience, as well as experience with sophisticated transactions.
Failure of a Nominee to Receive a Majority of Votes
On March 6, 2019, we amended our bylaws to provide for “majority voting” in the election of directors in uncontested elections. Our bylaws now provide that in an uncontested election of an incumbent director if the nominee does not receive a majority of the votes cast, the nominee must promptly deliver a written resignation to our Board of Directors and will continue to serve as a holdover director until the effective date of the director’s resignation, which may be no later than 120 days after the date of the election. The remaining directors, by a majority vote, are then required to promptly determine whether to decline to accept the director’s resignation or to accept the resignation of the director. If the remaining directors decline to accept the resignation, the director may continue to serve as long as the director received a plurality of the votes cast. If our Board of Directors accepts the resignation, the directorship will become vacant and the Board of Directors may then fill the vacancy by a majority vote.
In the event of a contested election of directors, our bylaws provide that directors will be elected by the vote of a plurality of the votes of the shares present in person or represented by proxy and entitled to vote in the election of directors.
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CORPORATE GOVERNANCE
Board Leadership Structure
Carriage was founded with the Mission Statement to be the most professional, ethical and highest quality funeral and cemetery service organization in our industry, which we have shortened for communication purposes to Being The Best, which is achieved by alignment with our Five Guiding Principles:
Honesty, Integrity and Quality in All That We Do
Hard work, Pride of Accomplishment, and Shared Success Through Employee Ownership
Belief in the Power of People Through Individual Initiative and Teamwork
Outstanding Service and Profitability Go Hand-in-Hand
Growth of the Company Is Driven by Decentralization and Partnership
All of our directors, officers and employees must be aligned with these Five Guiding Principles to ensure outstanding execution of our three core models and all other elements and linkages of Carriage’s High Performance Culture Framework. While our commitment is to all Five Guiding Principles equally, there is a reason why the First Guiding Principle is the First “most equal” of the Five; because it is the foundation and cornerstone Guiding Principle upon which our Mission of Being The Best and other Four Guiding Principles are built upon.
At a high level, commitment to our Mission Statement and alignment with our Five Guiding Principles, together with a relentless focus to execute our Good To GreatConcepts such as “First Who, Then What” and “Right People in the Right Seats”, is what drives our high performance operating results. Our Board understands the importance and uniqueness of these qualitative drivers of Carriage’s High Performance Culture as being critical towards our ability to execute sustainable, high performance quantitative results consistently over time through outstanding execution of our three core models. Our Board also fundamentally understands that the biggest continuing risk for the Company is that executive and senior leadership will not continue the evolution of our unique High Performance Culture ideas and concepts. Our continued success and effective risk management emanates from being highly selective about leadership of the Company and finding leaders who are aligned with our Five Guiding Principles and the idea of Carriage as a High Performance CultureCompany. We utilize a 4E Leadership Model, initially developed by Jack Welch at General Electric and then tailored and evolved in our unique culture, to select and assess our leaders at all levels of the Company. 4E Leaders have a winning, entrepreneurial, competitive spirit and want to make a difference in Carriage’s sustainable high performance and reputation over time.
Melvin C. Payne,, our co-founder of Carriage, has beenand largest individual stockholder, is our Chief Executive Officer and Chairman of our Board. Our Board believes that it is in the best interest of Carriage and its stockholders for Mr. Payne to serve as both our Chief Executive Officer and Chairman of our Board, based upon Mr. Payne’s specific expertise, knowledge, passion and long-term vision for the Company. This arrangement provides a clear, unified strategic vision and 4E Leadership for Carriage, ensures partnership and alignment between senior leadership and our Board, and enables the Company to continue its evolution as a High Performance CultureCompany that just happens to be in the funeral and cemetery service business. Mr. Payne is also best positioned to lead our Board through reviews of key business and strategic issues and, most importantly, to lead the Board’s understanding of the linkage of Carriage’s unique High Performance Culture to the Company becoming recognized as a superior Consolidation, Operating and Value Creation investment platform.
Our Compensation Committee performs an annual evaluation of our Chief Executive Officer’s performance. As part of our annual evaluations and long-term planning, our Corporate Governance Committee is charged with evaluating the succession of our Chief Executive Officer. Mr. Payne has publicly stated that he has no plans for retirement and that he intends to be involved with the Company as long as his health is good and he is adding value with his energy, passion and vision for Carriage and commitment to mentoring 4E Leaders for the future; nevertheless, the Corporate Governance Committee annually considers and discusses CEO succession planning. The Board also periodically reviews our leadership structure to determine if it is still appropriate in light of current corporate governance standards, market practices, the Company’s specific circumstances and needs and any other relevant factors for discussion.
We also have the position of Lead Director, who is required to be qualified as independent and appointed by a majority of the independent directors. The Lead Director’s role is to lead and facilitate the function of our Board independently and to enhance the quality of our Board by facilitating their deeper understanding of Carriage’s High Performance Culture Framework. The Lead Director presides at the executive sessions of the independent directors during quarterly Board meetings. Bryan D. Liebman currently serves as our Lead Director.
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Risk Oversight of the Board
We believe that the oversight function of our Board and its committees combined with active dialogue with senior leadership about effective risk management relative to continuously assessing for the “Right Who” leaders and the Right Quality of Staff at all levels, provides our Company with the appropriate framework to help ensure effective risk oversight. There is a fundamental Board understanding that the continuing biggest risk area for the Company is not having or not hiring the “Right Who” senior leadership in the future, and that hiring the “Wrong Who” senior leadership, including and especially the CEO in case Mr. Payne was for some reason unable to fulfill his CEO responsibilities, could have a major negative impact on the nature of Carriage’s High Performance Culture. In executing this responsibility, independent directors provide independent oversight, including risk oversight and a significant amount of time is spent by our Board and committees, in conjunction with senior leadership, discussing how we identify, assess and manage our most significant risk exposures with respect to our leadership and people. Our Board also relies on each of its committees to help administer its oversight duties.
Director Qualification, Experience and Tenure
Our Corporate Governance Committee is responsible for reviewing the requisite skills and characteristics of new Board members as well as the composition of our Board with significant input from our senior leadership team.
It is the position of our Corporate Governance Committee that, as a company of our size in the specialized field of death care, it is important for our directors to understand, support and align with our culture. Thus, we strive to seek individuals who demonstrate the following characteristics or attributes:
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles;
Business and investment savvy, including an owner-oriented attitude and conviction that we have evolved into a superior stockholder value creation investment platform and therefore represents a superior long-term investment opportunity; and
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
As a result, it is difficult to define what the perfect director sincecandidate looks like. For Carriage, diversity of all kinds, including (but not limited to) experience, age, gender, ethnic background, skills, perspective and background are important contributing factors to effective decision making. Thus, the Corporate Governance Committee believes it is in the best interest of Carriage to identify the best candidates for its board, cognizant of diversity in all forms and will continue to find ways to ensure that it is doing so.
While no director may serve on more than five other public company boards or on the audit committee for more than two other public companies, we much prefer candidates that are singularly focused on Carriage’s uniqueness and not on being a “Professional Board Member.” We currently have no established term limits or age restrictions, as we do not wish to risk losing the contribution of directors who have been able to develop an increasing insight and deep understanding into our inceptionunique High Performance Culture Framework.
We currently have six directors on our Board who each serve staggered three-year terms. Five directors are independent. The average age of all directors currently serving on our Board is 62 years. The average age of all independent directors is 59 years. The average tenure of all independent directors is 4.6 years.
Director Nomination Process
Our Corporate Governance Committee, with assistance from internal and external resources as the Committee desires, identifies potential candidates for our Board based upon the criteria set forth above. Once a potential candidate is identified and the individual expresses a willingness to be considered for election to our Board, our Corporate Governance Committee and Mr. Payne will request information from the candidate, review the individual’s qualifications, and conduct one or more interviews with the candidate. When this process is complete, our Corporate Governance Committee tenders its recommendation to our full Board for consideration.
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Our Corporate Governance Committee also will consider candidates recommended by stockholders in 1991,the same manner. A stockholder may recommend nominees for director by giving our Corporate Secretary a written notice not less than 90 days prior to the anniversary date of the immediately preceding Annual Meeting. For our 2020 Annual Meeting of Stockholders, the deadline will be February 14, 2020, based upon this year’s meeting occurring on May 15, 2019. The notice must include the name and address of the stockholder giving notice and the number of shares of Common Stock beneficially owned by the stockholder. The notice must also include the nominee’s full name, age, business address, principal occupation or employment, the number of shares of Common Stock that the nominee beneficially owns, any other information about the nominee that must be disclosed in proxy solicitations under Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the nominee’s written consent to the nomination and to serve, if elected.
Organization and Committees of Our Board
During 2018, our Board met five times and acted by unanimous written consent thirteen additional times. Each of the directors attended all of the meetings of our Board except for Mr. Payne, who was unable to attend one board meeting. Each year we hold the Annual Meeting on the same day as our Board and Committee meetings such that all directors may attend the Annual Meeting. All of our then current directors attended the 2018 Annual Meeting of Stockholders, excluding Mr. Payne. Our director attendance policy for the Annual Meeting states that a quorum must be present in order for directors to be elected.
Our Board has a Compensation, Audit and Corporate Governance Committee. The current members of each committee as of the Record Date are identified in the table below. Each of these committees has its own charter, and a copy of the current version is available on our website at www.carriageservices.com. The functions of each committee and the number of meetings held during 2018 are described below.
| Director | Compensation | Audit | Corporate Governance | |||
Melvin C. Payne(*) | ||||||
Barry K. Fingerhut(I) | Chairman | X | X | |||
Bryan D. Leibman(I)(L) | X | X | X | |||
Donald D. Patteson, Jr.(I) | X | Chairman | X | |||
James R. Schenck(I) | X | X | Chairman | |||
Douglas B. Meehan(I) | X | X | X | |||
| (*) | Chairman of the Board and Chief Executive Officer. |
| (I) | Independent Director. |
| (L) | Lead Director. |
Compensation Committee. The purposes of our Compensation Committee are to:
review, evaluate and approve our officer compensation plans, policies and programs;
recommend to our Board non-employee director compensation plans, policies and programs;
produce the Compensation Committee Report on executive compensation for inclusion in our proxy statement for our Annual Meeting of Stockholders;
administer, review and approve grants under our stock incentive plans; and
perform such other functions as our Board may assign from time to time.
Generally, our Board has charged our Compensation Committee with the overall responsibility for establishing, implementing and monitoring the compensation for our executive officers and senior leadership team. Executive compensation matters are presented to the Compensation Committee in a variety of ways, including: (1) at the request of our Compensation Committee Chairman or two or more members of the Compensation Committee or two members of our Board, (2) in accordance with our Compensation Committee’s agenda, which is reviewed by our Compensation Committee members and other directors on an annual basis, (3) by our Chief Executive Officer or (4) by our Compensation Committee’s outside compensation consultant, if a consultant is engaged by our Compensation Committee.
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To the extent permitted by applicable law, our Compensation Committee may delegate some or all of its authority under its charter to its chairman, any one of its members or any subcommittees it may form when it deems such action appropriate. Mr. Payne, as our Chairman of the Board since December 1996.and Chief Executive Officer, makes recommendations on compensation decisions for those other than himself based on the individual performance of each executive officer or senior leader and the Company’s overall performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for individual Executive Officer and Senior Leadership bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans;
preparing long-term incentive award recommendations for our Compensation Committee’s approval; and
attending our Compensation Committee’s meetings as requested in order to provide additional information, respond to questions and otherwise assist our Compensation Committee.
Our Compensation Committee makes all final decisions regarding executive officer compensation.
Our Compensation Committee met two times during 2018 and acted by unanimous written consent seven additional times. Each member of our Compensation Committee was present at all meetings. Our Board has determined that all of the members of the committee are independent under the listing standards of the NYSE and the rules of the SEC. Each of the members of the committee is considered to be a “non-employee director” under Rule 16b-3 of the Exchange Act, and an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended.
Audit Committee. The purposes of our Audit Committee are to:
| ◦ | integrity of our financial statements and financial reporting process, and our systems of internal accounting and financial controls; |
| ◦ | qualifications and independence of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other review or attestation services for Carriage; |
| ◦ | performance of our internal audit function and independent auditors; |
| ◦ | whistleblower hotline and associated reporting procedures; and |
| ◦ | compliance by Carriage with legal and regulatory requirements. |
perform such other functions as our Board may assign to our Audit Committee from time to time.
In connection with these purposes, our Audit Committee annually selects, engages and evaluates the performance and ongoing qualifications of, and determines the compensation for, our independent registered public accounting firm and confirms its independence. The Audit Committee also reviews our annual and quarterly financial statements and meets with our management and independent registered public accounting firm regarding the adequacy of our financial controls and our compliance with legal, tax and regulatory matters and significant internal policies.
Our Audit Committee met five times during 2018 and acted by unanimous written consent three additional times. All committee members were present at such meetings. All members of our Audit Committee are independent as that term is defined in the NYSE’s listing standards and by Rule 10A-3 promulgated under the Exchange Act. Our Board has determined that each member of our Audit Committee is financially literate and that Mr. Payne bringsPatteson has the necessary accounting and financial expertise to serve as Chairman. Our Board has also determined that Mr. Patteson is an “audit committee financial expert” following a determination that he met the criteria for such designation under the SEC’s rules and regulations. See “Audit Committee Report” below for additional information regarding our Audit Committee.
Corporate Governance Committee. The purposes of our Corporate Governance Committee are to:
assist our Board his 25 yearsby identifying individuals qualified to become Board members, and to recommend to our Board the director nominees for the next Annual Meeting of experience asStockholders;
assist our Board with succession planning for our Chief Executive Officer and proven management skills. other members of the senior leadership team;
lead our Board in its annual review of the performance of our Board and its committees; and
perform such other functions as our Board may assign to our Corporate Governance Committee from time to time.
Our Corporate Governance Committee met one time during 2018 and acted by unanimous written consent three additional times. All committee members were present at such meetings.
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Director Independence
Our Board of Directors affirmatively determined that Messrs. Fingerhut, Leibman, Patteson, Schenck and Meehan do not have a material relationship with Carriage (either directly or as a partner, stockholder or officer of an organization that has a relationship with Carriage) and are “independent” as defined under the NYSE’s listing standards and the SEC under Item 407(a) of Regulation S-K.
Mr. Payne’sPayne is not independent because he is an employee of Carriage and currently serves as our Chief Executive Officer. He also serves as Chairman of the Board.
Board’s Interaction with Stockholders
Our Chief Executive Officer and senior leadership team are responsible for establishing effective communication with our stockholders. Independent directors are not precluded from meeting with stockholders, but where appropriate, our executive and senior leadership team should be present at such meetings.
Stockholders and other interested parties may contact any member of our Board or any of its committees by addressing any correspondence in care of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056; Attn: Corporate Secretary. In the case of communications addressed to the independent directors, our Corporate Secretary will send appropriate stockholder communications to the Lead Director. In the case of communications addressed to a committee of our Board, our Corporate Secretary will send appropriate stockholder communications to the Chairman of such committee.
Annual Evaluations
Our Board performs annual self-evaluations. These self-evaluations are conducted through written questionnaires circulated typically in January prior to the first regularly scheduled meeting of the Board. At the first regularly scheduled Board meeting before the Annual Meeting of Stockholders, detailed results of the self-evaluations are provided to the Corporate Governance Committee Chairman and discussed at the Board meeting.
Corporate Governance Guidelines, Business Conduct and Ethics
We are committed to integrity, reliability and transparency in our disclosures to the public, all characteristics consistent with our First Guiding Principle, “Honesty, Integrity and Quality in All That We Do”. To evidence this commitment, our Board has prior diverseadopted charters for its committees, Corporate Governance Guidelines and a Code of Business Conduct and Ethics. These documents provide the framework for our corporate governance. Our Code of Business Conduct and Ethics requires that all of our directors, officers and employees must be in alignment with our Five Guiding Principles to achieve our Mission Statement of being the most professional, ethical and highest quality service organization in the funeral and cemetery industry.
A complete copy of the current version of each of these documents is accessible through our website at www.carriageservices.com or you may receive copies free of charge by writing to us at Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, Attn: Investor Relations.
Corporate Social Responsibility
One of our key guiding principles is “Belief in the Power of People Through Individual Initiative and financial experience coupledTeamwork.” This translates to a decentralized and collaborative decision-making style rather than a top-down approach. Employees across the country are encouraged and empowered to engage in a meaningful way with their communities, whether that be through volunteer activities, awareness seminars, veteran outreach or other opportunities. Moreover, we provide health and safety training to a number of our employees in key roles who have the potential to meaningfully impact the health and safety of our employees and others. We also provide educational assistance to our employees in an effort to support ongoing growth and contributions, both professionally and personally.
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DIRECTOR COMPENSATION
General
We compensate our non-employee directors through cash payments or unrestricted shares of Common Stock, as elected by the Board member, including retainers. Our Director Compensation Policy provides for the following:
Annual Retainer(1) | ||||
| Board - Independent Director | $ | 75,000 | ||
| Board - Lead Director | $ | 10,000(2) | ||
| Audit Committee | ||||
| Chair | $ | 10,000 | ||
| Member | $ | — | ||
| Compensation Committee | ||||
| Chair | $ | 5,000 | ||
| Member | $ | — | ||
| Corporate Governance Committee | ||||
| Chair | $ | 5,000 | ||
| Member | $ | — | ||
| (1) | Paid on a quarterly basis in either cash or Common Stock. Retainers are not paid to employee directors. |
| (2) | The Lead Director receives this annual retainer in addition to the retainer paid to other Independent Directors. |
Effective May 16, 2018, our Board revised the Director Compensation Policy such that any director may elect to receive their annual retainer, which is paid in quarterly installments, in unrestricted shares of our Common Stock by providing written notice as set forth in the Director Compensation Policy. The number of shares of such Common Stock shall be determined by dividing the cash amount of the retainer by the closing price of our Common Stock on the date of grant, which shall be the last business day of each quarter. Such Common Stock shall vest immediately upon grant. Any written notice to receive the retainer in Common Stock shall remain in effect until notice otherwise is made in writing.
Our Director Compensation Policy provides that any new independent director will receive a grant of $25,000 (in addition to the independent director annual retainer prorated at the time the new director is admitted to the Board) upon admission to the Board, which can be taken in cash or restricted shares of our Common Stock. The number of shares of such Common Stock will be determined by dividing the cash amount by the closing price of our Common Stock on the date of grant, which will be the date of admission to the Board. On May 16, 2018, our Board also revised the Director Compensation Policy such that the new director grant shall vest immediately. Prior to this change, the stock grant vested 50% immediately and 25% on each of the first and second anniversaries of admission.
On May 16, 2018, our Board elected Douglas B. Meehan to serve as a Class III Director until the 2020 Annual Meeting of shareholders. Mr. Meehan was appointed to serve as a member of the Audit, Compensation and Corporate Governance Committees. Concurrently with his personal leadershipappointment, the Board granted Mr. Meehan 978 shares of our Common Stock under our Director Compensation Policy, which were valued at approximately $25,000 based on the closing price on the grant date and founder’s vision for Carriage.vested immediately. Common stock grants to our independent directors currently are issued under our 2017 Omnibus Incentive Plan (the “2017 Plan”).
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2018 Director Compensation Table
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2018:
| Name | Fees Paid in Cash | Fee Paid in Stock(1) | Stock Awards | Total | ||||||||||||
| Barry K. Fingerhut | $ | 20,023 | $ | 59,977 | $ | — | $ | 80,000 | ||||||||
| Bryan D. Leibman | $ | 85,000 | $ | — | $ | — | $ | 85,000 | ||||||||
| Donald D. Patteson, Jr. | $ | 85,000 | $ | — | $ | — | $ | 85,000 | ||||||||
| James R. Schenck | $ | 60,002 | $ | 19,998 | $ | — | $ | 80,000 | ||||||||
| Douglas B. Meehan | $ | 26 | $ | 46,964 | $ | 24,988 | (2) | $ | 71,978 | |||||||
| (1) | Reflects the aggregate fair value of the unrestricted shares of Common Stock issued as payment for the quarterly retainers. The fair value is based on the closing stock price on the last trading day of the respective period as follows: |
| Barry K. Fingerhut | James R. Schenck | Douglas B. Meehan | ||||||||||
| June 30, 2018 | ||||||||||||
| Number of shares | 814 | — | 386 | |||||||||
| Stock price | $ | 24.55 | $ | — | $ | 24.55 | ||||||
| September 30, 2018 | ||||||||||||
| Number of shares | 928 | 928 | 870 | |||||||||
| Stock price | $ | 21.55 | $ | 21.55 | $ | 21.55 | ||||||
| December 31, 2018 | ||||||||||||
| Number of shares | 1,290 | — | 1,209 | |||||||||
| Stock price | $ | 15.50 | $ | — | $ | 15.50 | ||||||
| (2) | On May 16, 2018, our Board elected Douglas B. Meehan to serve as a Class III Director until the 2020 Annual Meeting of Shareholders. Our Director Compensation Policy provides that any new independent director will receive a grant of $25,000 payable in cash or unrestricted shares of our Common Stock as elected by the Board member. Concurrently with his appointment, the Board issued Mr. Meehan 978 shares of our Common Stock at the closing price on the grant date of $25.55, which vested immediately. |
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PROPOSAL NO. 2:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Section 14A of the Exchange Act, as amended, requires that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
Accordingly, we are asking our stockholders to indicate their support for our Named Executive Officer compensation as described in this Proxy Statement by voting “FOR” the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of Loews Corporation, a diversified holdings company, since 2009Carriage’s Named Executive Officers, as disclosed in the Proxy Statement for the 2019 Annual Meeting of Stockholders of Carriage pursuant to the compensation disclosure rules of the Securities and from 2001Exchange Commission (including, but not limited to, 2008 he was a senior executivethe Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables, notes and narrative).”
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in Insurance Portfolio Management with AIG Investments, a global company engaged in asset management, including service as the Chief Investment Officer-Insurance Operations.
Our Board unanimously recommends that you vote “FOR” the advisory approval of our Named Executive Officer compensation, as disclosed in merger and acquisition transaction analysis, investment management, capital markets strategy and financial performance measurement.this Proxy Statement.
EXECUTIVE MANAGEMENT
The following table sets forth the name, age and title of our named executive officersNamed Executive Officers as of the date of this Proxy Statement. Our named executive officersNamed Executive Officers serve at the discretion of our Board. There are no family relationships between any of our directors and named executive officers.Named Executive Officers. In addition, there are no arrangements or understandings between any of our named executive officersNamed Executive Officers and any other person pursuant to which any person was selected as an executive officer.
The following individuals were our Named Executive Officers for the fiscal year ended December 31, 2015:2018:
| Name | Age | Title | ||
| Melvin C. Payne | Chief Executive Officer and Chairman of the Board | |||
| Paul D. Elliott | Senior Vice President and Regional Partner | |||
Shawn R. Phillips | ||||
| Viki K. Blinderman | ||||
| Carl B. Brink | Senior Vice President, Chief Financial Officer and Treasurer | |||
Mark R. Bruce(1) | 52 | Former Executive Vice President and Chief Operating Officer | ||
| (1) | On |
The biographical information for Messrs.Mr. Payne and DeCarlo is located under “Proposal No. 1: Election of Class II Directors.”
Paul D. Elliott joined Carriage in September 2012 as our Regional Partner-West.Partner – West and was promoted to Senior Vice President in February 2017. Prior to joining Carriage, Mr. Elliott was Managing Director for Service Corporation International (SCI)(“SCI”). From February 1995 to August 2012, Mr. Elliott held various management roles in sales, corporate and operations with SCI. From September 1984 to December 1994, Mr. Elliott was a partner in his family’s funeral home in Kansas. Mr. Elliott is a graduate of the University of Kansas and the Dallas Institute of Funeral Service.
Shawn R. Phillips has been with Carriage since September 2007 and haswas promoted to Senior Vice President, Head of Strategic and Corporate Development in February 2017. He had served as our Regional Partner-CentralPartner – Central since June 2011 and our Regional Partner-WestPartner – West from 2007 to 2011. Prior to joining Carriage, Mr. Phillips served from 1983 to 2007 in various leadership and operational roles with other public funeral and cemetery service companies. From 1979 to 1983, Mr. Phillips worked for an independent funeral operator. Mr. Phillips is a licensed Funeral Director and Embalmer.Embalmer and a graduate of the Mortuary Science Program at Cypress College.
Viki K. Blinderman joined Carriage in May 2002 and was promoted to Senior Vice President and Principal Financial Officer in February 2017. She was appointed as the Secretary of the Company onin May 21, 2015 and Co-Chief Financial Officer onin August 4, 2015. Ms. Blinderman has served as our Chief Accounting Officer since September 2012. Ms. Blinderman also served as our Corporate Controller and held several other positions in the Company. Prior to joining Carriage, Ms. Blinderman served as the Chief Financial Officer of a privately-held litigation support company and practiced in public accounting. Ms. Blinderman is a CPA and possesses a BBA and a MPA in Accounting from the University of Texas at Austin.
Carl B. Brink joined Carriage in January 2009 and was promoted to Senior Vice President and Chief Financial Officer in February 2017. He was appointed Principal Financial Officer onin May 21, 2015 and Co-Chief Financial Officer onin August 4, 2015. Mr. Brink has served as our Treasurer since January 2012. Mr. Brink also served as our Cash Supervisor from January 2009 through January 2012. Prior to joining Carriage, Mr. Brink served as the Cash Manager for International Paper in their Corporate Treasury group from 2006 to 2009. Mr. Brink has a BS in Finance from the University of Tennessee.
Mark R. Bruce served as our Executive Vice President and Chief Operating Officer from February 2017 until his resignation on November 1, 2018. Prior to that he served as our Regional Partner – East since November 2010. Prior to his appointment as Regional Partner – East, Mr. Bruce served as our Director of Sales Support, Director of Support, Director of Training and Development and Regional Partner – Central. Prior to joining Carriage, Mr. Bruce served for 12 years in various sales and operational leadership roles with other public funeral and cemetery service companies. Mr. Bruce has a BA in International Studies from The American University and an MBA from Northern Illinois University.
COMPENSATION DISCUSSION AND ANALYSIS
Our Mission Statement states that we are committed to being the most professional, ethical, and highest quality funeral and cemetery service organization in our industry, or simply stated as Being The Best, and has not changed since its inception in 1991, and neither have our Five Guiding Principles:
Honesty, Integrity and Quality in All That We Do
Hard work, Pride of Accomplishment, and Shared Success Through Employee Ownership
Belief in the Power of People Through Individual Initiative and Teamwork
Outstanding Service and Profitability Go hand-in-HandHand-in-Hand
Growth of the Company Is Driven by Decentralization and Partnership
actions we take. The key is first accepting and understanding that our High Performance Standards Operating modelModel is leadership-based (as opposed to the management focus required in a top-down, budget and control model). Identifying the “Right Who’s” with 4E Leadership characteristics that fit into Carriage Services’ culture is what drives high and sustainable operating and financial performance. A corresponding compensation plan is then tailored to the “Right Who” and commensurate with the performance proven over time.
Much of our success emanates from being highly selective about leadership of the Company at all levels. We cannot stress enough that high performance quantitative results are not sustainable without establishing the qualitative foundation of the High Performance Culture first. We utilize a 4E Leadership Model (Energy, Energizes Others, Edge, Execute), initially developed by Jack Welch at General Electric, but tailored and evolved specifically to Carriage Services’Carriage’s needs and culture, to select and continuously assess our leaders. Our compensation practices support and reinforce our ability to attract, retain and motivate these leaders.
4E Leaders have an entrepreneurial, winning, competitive spirit and want to make a difference in Carriage Services’ high performanceour High Performance Culture and enrich our reputation within the funeral and cemetery industry. 4E Leaders are motivated by the recognition and rewards related to achievement of our Being The Best High Performance Standards. We expect our leaders to produce superior results and maximize long-term returns to our stockholders. Their compensation can vary based on the Company’s results and their contributions.
| Carriage Good To Great Journey | ||||||||||||||||||||||||
| Years Ending December 31 | ||||||||||||||||||||||||
| (in Millions Except Per Share and Percentage Amounts) | CAGR | |||||||||||||||||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | % | |||||||||||||||||||
| Total Revenue | $ | 182.3 | $ | 198.2 | $ | 213.1 | $ | 226.1 | $ | 242.5 | 7.4 | % | ||||||||||||
| Adjusted Consolidated EBITDA | $ | 48.6 | $ | 52.6 | $ | 56.0 | $ | 61.7 | $ | 71.1 | 10.0 | % | ||||||||||||
| Adjusted Consolidated EBITDA Margin | 26.6 | % | 26.5 | % | 26.3 | % | 27.3 | % | 29.3 | % | ||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.64 | $ | 0.80 | $ | 0.98 | $ 1.24(1) | $ | 1.48 | 23.3 | % | |||||||||||||
| Adjusted Free Cash Flow | $ | 29.1 | $ | 22.9 | $ | 36.2 | $ | 38.6 | $ | 43.7 | 10.7 | % | ||||||||||||
| Share Price at December 31 | $ | 5.60 | $ | 11.87 | $ | 19.53 | $ | 20.95 | $ | 24.10 | 44.0 | % | ||||||||||||
| (1) Adjusted for one time tax benefit of 10 cents per share | ||||||||||||||||||||||||
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Compensation Philosophy and Practices
to attract, motivate, and retain exceptional 4E Leadership talent that are also a cultural fitleaders within our High Performance Culture senior leadership team (“First Who”) in order. These leaders are expected to leadimprove on the already industry leading operating performance through attracting and motivating individual business Managing Partners with 4E Leadership characteristics, enhance our best-in-class corporate support functions, and make sound decisions regarding long-term stockholder value creation, strategies such as sustainably increasing revenue, growth and profitability that leads to total shareholder returnsparticularly involving capital allocation (“Then What”);
to outline theprovide transparency between pay, commensurate with individual and team contribution, and our annual and long-term Company performance;
to motivate, reward, retain and reinvest in 4E Leadership that has established a proven record of success over time; and
to align senior leadership interests with what is best for the Company and thus, what is best for our stockholders over time.
stockholders.
In addition, the Philosophy outlines compensation practices (See “What We Do”that provide competitive overall compensation if performance objectives are achieved. Encouraging senior leadership to act as owners in Carriage is a critical concept of the compensation philosophy and “What We Do Not Do” below), specifies compensation elements, definesas such, we have established stock ownership guidelines for our management. The individual’s base salary is multiplied by the purposeappropriate multiple as follows:
5x for Chairman of each elementthe Board/Chief Executive Officer
3x for President
2x for Regional Partners
1x for all other officers
Individual guidelines are based upon the base salary of the participant at the time the individual becomes subject to the guidelines and, expressesas long as the target positioningcovered individual remains in his or her position, the ownership guideline for such individual does not change as a result of compensation levelschanges in his or her base salary or normal fluctuations in the Company’s Common Stock price. However, these Guidelines may be amended at any time, with notification to the participants of changes that we desire to achieve over time.impact their individual ownership guideline.
What We Do
Pay for Performance
A significant portion of 2018 executive compensation, 66% of the compensation paid to our NEOs, is performance-based and is tied to our financial performance and/or the performance of our stock price over the intermediate to long-term period.
Our CEO’s 2018 annual cash incentive was made at the discretion of the Compensation Committee because the CEO sets the long-term 10-year Vision and 5-year Strategy for Carriage and should be judged on the annual progress towards those goals versus short-term performance metrics.
Our 2018 long-term incentive program is discretionary, but takes into consideration long-term operating and financial metrics that we believe will lead to significant stockholder value creation, if achieved.
Mitigate Risk
Carriage Services is principle-based in its unwavering beliefs and every day practices as reflected in our Five Guiding Principles. Our first Guiding Principle of “Honesty, Integrity and Quality in all that we do” requires that we hire and hold all employees, at all levels, accountable to this first Guiding Principle (as well as the other four Guiding Principles) at all times.
We have share ownership and trading guidelines for officers.
We have anti-hedging provisions as part of our insider trading policy, prohibiting our officers from hedging the risk of stock ownership by purchasing, selling or writing options on Company stock.
We have clawback provisions that permit the Board to pursue recovery of incentive payments if the payment would have been lower based on restated financial results.
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Manage Dilution
We regularly evaluate share utilization levels within our long-term incentive plans. By reviewing overhang levelsplans and run rates, we manage the dilutive impact of stock-based compensation to appropriate levels. We estimate that the long-term incentive equity that was granted for fiscal year 2018 was approximately equal to 1.1% of our shares outstanding on a pre-tax, post option exercise basis.
During 2018, we repurchased 1,101,969 shares of our Common Stock with an aggregate cost of $17.7 million.
What We Do Not Do
No supplemental retirement plans.
No repricing of underwater stock options.
No grantsoption exercise prices below 100% of fair market value.value on the date of grant.
No inclusion of long-term incentive awards in cash severance calculations.
No excise tax gross-ups upon change in control.
Consideration of Previous Stockholder Advisory Vote
At our 2018 Annual Meeting of Stockholders, held on May 16, 2018, management’s proposal to ratify our Named Executive Officer compensation programs for 2017 passed, with approximately 96% of all votes cast supporting it. The strong stockholder support has reaffirmed our Compensation Committee’s approach to executive compensation philosophy and programs. Accordingly, for 2018 our Compensation Committee has continued to administer similar reward programs and to demonstrate the same pay philosophies that have been put in place over the last few years.
Although our stockholders support our executive compensation program, we continue to conduct outreach efforts with current and prospective stockholders. Ms. Blinderman and Mr. Brink lead our investor relations function engaging in various investor meetings throughout the year. These meetings are open and transparent to our corporate governance, executive compensation and general investor concerns and issues. Prior to the Annual Meeting, we also contact our top ten shareholders for immediate and pertinent feedback regarding the proposals in the current Proxy, as well as provide clarification to questions on any topics of concern.
While the stockholder vote to ratify our executive compensation is non-binding and advisory, we will continue to strive to understand and respond to stockholder feedback. We also invite and encourage our stockholders to learn more about what makes Carriage and its High Performance Culture so unique and transparent in its culture, practices and operations.
Elements of Compensation
Each element of our executive compensation program for Named Executive Officers has been designed to align with our Philosophy and desire to attract, retain, motivateour goal of growing the intrinsic value of Carriage per share for our long-term stockholders through disciplined and reward leaders consistently withconsistent high level execution of our three core models (Standards Operating, Strategic Acquisition and 4E Leadership Model.Leadership).
The Compensation Committee uses internal data to determine the compensation for positions that are then translated into a consistent high performance way of thinkingunique or difficult to benchmark against market data. Internal data is also considered in establishing compensation for positions considered to be equivalent in responsibilities and ultimately, consistent high performance way of executing thatimportance, especially where precise external data is then assessednot available.
The allocation between cash and measured throughequity compensation and between short-term and long-term incentives, was determined based on the individual and team contribution to the shared success and continuously improving and consistent performancediscretion of the Company over time.
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Compensation designed for our executive officers consisted of:
| Pay Element | Description | Purpose | ||
| Base Salary | Fixed compensation, subject to annual review and changed due to responsibility, performance, and strategic performance. | Provide competitive base pay to hire and retain key talent, the “Right Who’s,” with the desired 4E Leadership qualities. Reflect roles, responsibilities, experience and performance. | ||
| Short-Term Incentives | Annual cash performance payment. For Mr. Payne, this award is made at the discretion of the Compensation Committee. For all other Named Executive Officers, this award varies to the degree we achieve our annual financial, operational and strategic performance and to the extent to which the executive officer contributes to the achievement. | Provide market competitive cash incentive opportunities that will motivate our executives to achieve and exceed Align management and | ||
| Long-Term Incentives | Restricted Stock: Time-based awards vesting over a minimum of three years. Stock Options: The executive only realizes the potential appreciation in our stock price above the exercise price for stock options. Performance Shares: The number of performance shares earned by an executive officer, if any, is based on performance over a multi-year period against specific financial and performance goals. | Provide market competitive equity award opportunities that will align executive interests with our Encourage executive share Encourage retention of executives who enhance our High Performance Cultureconsistent with our Good To Great Journey. Motivate executives to deliver long-term sustained growth and strong total stockholder return. | ||
Retirement and Other Benefits | Group health and welfare benefit programs and tax-qualified retirement plans, except that our Named Executive Officers cannot participate in our Employee Stock Purchase Program. Mr. Payne, our Chief Executive Officer is reimbursed annually for life insurance premiums of up to $25,000. Named Executive Officers are reimbursed for executive physical and club dues. | Provide for current and future needs of the executives and their families. Enhance recruitment and retention. | ||
Post-Termination Compensation | Certain of our Named Executive Officers are party to an employment agreement to which they will be entitled to severance payments upon termination without cause during the term of the agreement or resignation for “good reason” during the twenty-four month period following a “corporate change.” | Enhance retention and attraction of management by providing employment protection. | ||
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Employment Agreements
During 2018, Mr. Payne was a party to an employment agreement (the “Employment Agreement”) with us that generally governed the terms of his employment. The Employment Agreement establishes, among other things, (a) a minimum base salary, (b) target bonus payouts (expressed as a percentage of base salary), and (c) post-termination payments in certain scenarios.
Messrs. Elliot and Phillips are each party to an employment agreement which establishes, among other things, (a) a minimum base salary for each individual and (b) post-termination payments in certain scenarios. For a description of the post-termination benefits provided for under all employment agreements see “Executive Compensation-Potential Payments Upon Termination or Change-in-Control,” further discussed herein.
Ms. Blinderman and Mr. Brink are not party to an employment agreement.
On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. In connection with his resignation, Mr. Bruce and the Company aligns compensationentered into a separation and release agreement (the “Separation Agreement”) which provides for (i) continuation of Mr. Bruce’s base salary for 18 months; and (ii) payment by the Company of continued coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for up to 18 months, to the extent Mr. Bruce makes such an election. The Separation Agreement, which terminates Mr. Bruce’s employment agreement with actualthe Company, contains customary release, confidentiality, non-competition, non-solicitation and team performance contributions while utilizing market competitive levels only as a guideline for each element of compensation.non-disparagement provisions.
Compensation Evaluation Process
Our Compensation Committee has final approval regarding recommendations of executive officer compensation. Mr. Payne’s role as our Chairman of the Board and Chief Executive Officer in determining executive compensation is to make compensation recommendations to the Board for those other than himself based on his assessment of the individual performance of each executive officer in relation to our overall Company performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for individual Executive Officer and Senior Leadership bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans;
preparing long-term incentive award recommendations for our Compensation Committee’s approval; and
attending our Compensation Committee’s meetings as requested in order to provide additional information, respond to questions and otherwise assist our Compensation Committee.
Given our unique organizational culture and the particular sector in which we belong, there are few direct, public company peers or few highly correlated job matches among any potential proxy peers. In the past, it had been our practice toIf necessary, we will review market compensation and direct peer group data annually and to combine the results of the market analysis with our internal review of the roles and responsibilities of each of our executive positions in order to determine competitive pay levels for each Named Executive Officer of the Company.
To further our own learning and understanding of how to better approach a simple and transparent compensation plan that was appropriate and commensurate with our own identity of high performance, we reviewed internal, historical compensation trend data for executive and senior leadership over four full years, from 2012 through 2015, as compared to the performance of the Company in each of these correspondinglast five years. This introspective analysis confirmed that our beliefs in Good To Great concepts such as “First Who, Then What,” “Right People in the Right Seats on the bus,” and the “Flywheel Effect” were being fully and consistently practiced and were evolutionary from 2012 through 2015. The results were that our executive and senior leadership team, known as the Operational Strategic Growth & Leadership Team (OSGLT), became smaller during this time, but improved in its leadership and qualitative effectiveness which we believe had a direct correlation with the Company’s continuously improving quantitative performance results over this same time period.
Our internal analysis and recommendations, along with published executive compensation data from some of our sector peers such as SCI and Matthews International Corporation,recommendation was then presented to the Compensation Committee for review and approval.
The chartcharts below showsdepict the four-year trend between our CEO’s compensation and TSR:
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform Consumer Protection Act, and Item 402(u) of Regulation S-K, the following items are discussed below: (i) the median of the annual total compensation of all employees, excluding Mr. Payne, our CEO; (ii) the annual total compensation of our CEO; and (iii) the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO. This information is intended to provide shareholders with a company-specific metric that can assist in their evaluation of our Company’s executive compensation practices.
To identify the median of the total annual compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
We determined that as of December 31, 2018, our employee population consisted of approximately 2,617 individuals with all of these individuals located in the United States. This population consisted of 1,069 full-time and 1,548 part- time employees. Our part-time employees are an integral part of our business and due to our industry, are dedicated members of our community, but may only work on a very limited, as requested basis. We selected December 31, 2018, which is in the last three months of our most recent fiscal year, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner.
To determine the “median employee” from our employee population, we examined the amount of salary, bonus, wages and other taxable income items of our employees as reported by us to the Internal Revenue Service on Form W-2 for 2018. The “median employee’s” annual total compensation included the Company matching amount provided in our Section 401(k) employee savings plan. In making the determination, we annualized the compensation of approximately 408 employees who were hired in 2018, but did not work for us the entire fiscal year. This population consisted of 176 full-time and 232 part-time employees.
We determined our median employee using this compensation measure, which was consistently applied to all of our employees included in the calculation. Since all of our employees are located in the United States, as is our CEO, we did not make any cost of living adjustments when identifying the “median employee.”
Once we determined our median employee, we combined all of the elements of such employee’s compensation for 2018 in accordance with Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of approximately $12,257.
With respect to the annual compensation of our CEO, we used the amount reported in the “Total $” column of our Summary Compensation Table included in this Proxy Statement.
There has been no major change in our employee population or our employee compensation arrangements since that median employee was identified that we believe would significantly impact our pay ratio disclosure.
For the fiscal year ended December 31, 2018:
The median employee is an Ambassador in the community, working on an as needed or by request basis, proactively participating in civic and community events that create a lasting heritage;
The median annual total compensation of all employees of our Company (other than our CEO) was approximately $12,257; and
The annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement was $2,379,270.
Based on this information, for 2018, the ratio of the annual total compensation of Mr. Payne to the annual total median compensation of all other employees was 194 to 1.
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2018 Base Salaries
The base salary for each of our executive officersNamed Executive Officers is determined on an individual basis, taking into account such factors as the duties, experience and levels of responsibility of the executive. Base salaries for our Named Executive Officers, are evaluated annually and adjustments are approved by our Compensation Committee based on its evaluation of individual performance.
Our Compensation Committee madeapproved the following changes to the annual base salaries of our Named Executive Officers during 2015:Officers:
| Named Executive Officers | 2014 | 2015 | 2017 | 2018 | ||||||||||||
| Melvin C. Payne | $ | 625,000 | $ | 645,000 | $ | 700,000 | $ | 700,000 | ||||||||
| David J. DeCarlo | $ | 545,000 | $ | 560,000 | ||||||||||||
| L. William Heiligbrodt | $ | 545,000 | $ | 560,000 | ||||||||||||
| Mark R. Bruce | $ | 280,000 | $ | 290,000 | ||||||||||||
| Paul D. Elliott | $ | 260,000 | $ | 275,000 | $ | 310,000 | $ | 310,000 | ||||||||
| Shawn R. Phillips | $ | 250,000 | $ | 270,000 | $ | 310,000 | $ | 310,000 | ||||||||
| Viki K. Blinderman | $ | 230,000 | $ | 240,000 | $ | 280,000 | $ | 280,000 | ||||||||
| Carl B. Brink | $ | 150,000 | $ | 170,000 | $ | 280,000 | $ | 280,000 | ||||||||
Mark R. Bruce(1) | $ | 400,000 | $ | 400,000 | ||||||||||||
| (1) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
2018 Annual Cash Incentive Bonuses
| Target Payout (% of Base Salary) | |||||||||
| Threshold | Target | Maximum | |||||||
| Melvin C. Payne | 45 | % | 90 | % | 180 | % | |||
| David J. DeCarlo | 40 | % | 80 | % | 160 | % | |||
| L. William Heiligbrodt | 40 | % | 80 | % | 160 | % | |||
The annual2018 cash incentive bonus for performance during fiscal year 2015 for Messrs. Payne and DeCarlo was based upon previously established quantitative and qualitative performance metrics determined by our Compensation Committee in February 2015. The target quantitative metrics are Adjusted Basic EPS (weighted 40%) of $1.55 per share and Adjusted Consolidated EBITDA Margin (weighted 40%) of 27.8%. The qualitative measures (weighted 20%) include executive team self-assessments regarding team cohesion and collaboration. The actual achieved metric during 2015 was Adjusted Basic EPS of $1.52 per share and Adjusted Consolidated EBITDA Margin of 29.3%. Adjusted EPS and Adjusted EBITDA Margin are non-GAAP financial measures and addressed fully in our Earnings Release reported on February 16, 2016 as filed on Form 8-K.
The CEO sets the long-term 10 year Vision and 5 year Strategy for Carriage and should be judged on the annual progress towards those goals versus short-term performance metrics that Mr. Heiligbrodt wouldact as a budget;
2018 Performance including, but not receive alimited to Revenue growth, Adjusted Consolidated EBITDA Margin expansion and increasing adjusted Consolidated EBITDA;
2018 Performance compared to 2017 Performance and 5 Year Trend;
Strategic goals and execution thereof that could change the course and composition of the Company;
Acquisition activity;
Equity valuation; and
4E Leadership Development.
Other Named Executive Officers
The 2018 cash incentive bonusbonuses for 2015 after review of his Employment Agreement.
The table below sets forth the 2015 base salary for Messrs. Payne, DeCarlo and Heiligbrodt, the threshold, target and maximum and actual incentive bonus payments for each of Messrs. Payne, DeCarlo and Heiligbrodt during 2015.
| Named Executive Officers | Annual Base Salary | Threshold(1) | Target(1) | Maximum(1) | Calculated Bonus(2) | Individual 2015 Bonus Paid(3) | |||||||||||||||||
| Melvin C. Payne | $ | 645,000 | $ | 290,250 | $ | 580,500 | $ | 1,000,000 | $ | 551,162 | $ | 450,000 | |||||||||||
| David J. DeCarlo | $ | 560,000 | $ | 224,000 | $ | 448,000 | $ | 896,000 | $ | 425,358 | $ | 425,000 | |||||||||||
L. William Heiligbrodt(4) | $ | 560,000 | $ | 224,000 | $ | 448,000 | $ | 896,000 | n/a | n/a | |||||||||||||
Individual 2015 Bonus Paid(2) | Individual 2018 Bonus Paid(2) | ||||||||||||||||||||||||||
| Named Executive Officers | Annual Base Salary | Target(1) | Amount Paid | % of Salary | Annual Base Salary | Target(1) | Amount Paid | % of Salary | |||||||||||||||||||
| Mark R. Bruce | $ | 290,000 | 50 | % | $ | 145,000 | 50 | % | |||||||||||||||||||
| Paul D. Elliott | $ | 275,000 | 50 | % | $ | 140,000 | 51 | % | $ | 310,000 | 50% | $ | 100,000 | 32 | % | ||||||||||||
| Shawn R. Phillips | $ | 270,000 | 50 | % | $ | 135,000 | 50 | % | $ | 310,000 | 50% | $ | 100,000 | 32 | % | ||||||||||||
| Viki K. Blinderman | $ | 240,000 | 45 | % | $ | 110,000 | 46 | % | $ | 280,000 | 50% | $ | 140,000 | 50 | % | ||||||||||||
| Carl B. Brink | $ | 170,000 | 35 | % | $ | 80,000 | 47 | % | $ | 280,000 | 50% | $ | 140,000 | 50 | % | ||||||||||||
Mark R. Bruce(3) | $ | 400,000 | 60% | $ | — | — | % | ||||||||||||||||||||
| (1) | Target is based on a percentage of base salary in effect in |
| (2) | Actual cash incentive bonus paid in |
| (3) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company and did not receive a short-term incentive payment. |
24
2018 Long-Term Equity-Based Incentives
We maintain the Carriage Services, Inc. Second Amended and Restated 2006 Long-Term Incentive2017 Plan (the “2006 LTIP”), pursuant to which we have previously granted our Named Executive Officers restricted stock, stock options cash-based performance units and performance-based stock awards.
Annual Long-Term Incentive Grants
Restricted stock, and stock options and performance awards are awarded by our Compensation Committee after consideration of each individual'sindividual’s performance toward our recent goals, as well as expected contributions to our long-term success. Outstanding restricted stock awards to our Named Executive Officers vest at either 331/3% or 25% annually beginning one year after the date the award is granted, as established for each grant by the Compensation Committee. Outstanding stock options to our Named Executive Officers vest in 331/3% increments over a three year period and expire after five to ten years, as established for each grant by the Compensation Committee. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rates; expected dividend yield for each year; expected termination rate; expected lives; and expected volatility. Our Compensation Committee believes that these forms of equity ownership help align the executive’s interests closely with those of our stockholders and incentivize our executives to contribute to the long-term growth and success of Carriage.
For the 2018 grant, all long-term incentive awards granted are tied to the future performance of the Company, support our High Performance Culture and align with long-term value creation interests for our stockholders. The following chart describes the 2018 grant of restricted stock, stock options and performance awards.
On February 24, 2015,14, 2018, our Named Executive Officers were granted stock options under the 2006 LTIP. The stock option awards vest 331/3% over three years on February 24, 2016, February 24, 2017 and February 24, 2018 and have a five-year term. The exercise price of the option awards was the close price on February 24, 2015, which was $22.58. The option value used was
Long-Term Incentive Element | Grant | Vesting Period/Term | Grant/Exercise Price | |||
| Restricted Stock | 25% of Target | 33 1/3% over 3 years | $25.43 | |||
| Stock Options | ||||||
20% over 5 years 10 year term | ||||||
$25.43 | ||||||
These awards will vest (if at all) on December 31, 2022 provided that certain criteria surrounding the 2022 Adjusted Consolidated EBITDA Margin and Adjusted Consolidated EBITDA is achieved and the individual has remained continuously employed by the Company through such date. | ||||||
The Adjusted Consolidated EBITDA Margin performance represents 50% of the award and the Adjusted Consolidated EBITDA performance represents 50% of the award. | Adjusted Consolidated EBITDA: | |||||
| Threshold = 30.3% (50% of shares) Target = 31.1% (100% of shares) Maximum = 32.1% (200% shares) Linear interpolation between threshold to target and target to maximum. | ||||||
*Non-GAAP adjustments can be no greater than 5% of GAAP EBITDA in 2022. | ||||||
Adjusted Consolidated EBITDA: (M=million) Threshold = $115M (50% of shares) Target = $125M (100% of shares) Maximum = $140M (200% shares) Linear interpolation between threshold to target and target to maximum. On both measures, to be eligible to earn an award above Target, the weighted average rate of return for all capital allocation decisions greater than $1M made in 2018 must be greater than or equal to our weighted average cost of capital plus 400 bp at the end of 2022. | ||||||
Our Compensation Committee madebelieves that these elements of our long-term incentive program properly align management’s long-term compensation with the following changesCompany’s compensation philosophy and our mission of maximizing value per share for long-term stockholders. This program allows for more simplicity in structure and the transparency for management to focus on what they can control.
More detailed information regarding the long-term incentive grant is set forth in Note 19, Stockholder’s Equity, to the annual base salaries ofConsolidated Financial Statements in our Named Executive Officers during 2016:2018 Annual Report on Form 10-K.
| Named Executive Officers | 2016 Annual Base Salary | |||
| Melvin C. Payne | $ | 670,000 | ||
| David J. DeCarlo | $ | 580,000 | ||
| Mark R. Bruce | $ | 310,000 | ||
| Paul D. Elliott | $ | 290,000 | ||
| Shawn R. Phillips | $ | 280,000 | ||
| Viki K. Blinderman | $ | 250,000 | ||
| Carl B. Brink | $ | 210,000 | ||
| Named Executive Officers | Annual Base Salary | Threshold(1) | Target(1) | Maximum(1) | ||||||||||||
| Melvin C. Payne | $ | 670,000 | $ | 301,500 | $ | 603,000 | $ | 1,000,000 | ||||||||
| David J. DeCarlo | $ | 580,000 | $ | 232,000 | $ | 464,000 | $ | 928,000 | ||||||||
2016 Annual Base Salary | 2016 Annual Cash Incentive Bonus Target | ||||||||||
| Named Executive Officers | % of base salary | Target amount | |||||||||
| Mark R. Bruce | $ | 310,000 | 50 | % | $ | 155,000 | |||||
| Paul D. Elliott | $ | 290,000 | 50 | % | $ | 145,000 | |||||
| Shawn R. Phillips | $ | 280,000 | 50 | % | $ | 140,000 | |||||
| Viki K. Blinderman | $ | 250,000 | 40 | % | $ | 100,000 | |||||
| Carl B. Brink | $ | 210,000 | 40 | % | $ | 84,000 | |||||
Our Compensation Committee has established 2016 long term2018 long-term incentive targets for our Named Executive Officers, as shown in the table below.below based on the Committee’s judgment and the individual’s contribution to our performance:
2016 Annual Base Salary | 2016 Annual Long-Term Incentive Target | 2018 Annual Base Salary | 2018 Annual Long-Term Incentive Target | |||||||||||||||||||
| Named Executive Officers | % of base salary | Target amount | % of base salary | Target amount | ||||||||||||||||||
| Melvin C. Payne | $ | 670,000 | 110 | % | $ | 737,000 | $ | 700,000 | 200 | % | $ | 1,400,000 | ||||||||||
| David J. DeCarlo | $ | 580,000 | 100 | % | $ | 580,000 | ||||||||||||||||
| Mark R. Bruce | $ | 310,000 | 75 | % | $ | 232,500 | ||||||||||||||||
| Paul D. Elliott | $ | 290,000 | 75 | % | $ | 217,500 | $ | 310,000 | 150 | % | $ | 465,000 | ||||||||||
| Shawn R. Phillips | $ | 280,000 | 75 | % | $ | 210,000 | $ | 310,000 | 150 | % | $ | 465,000 | ||||||||||
| Viki K. Blinderman | $ | 250,000 | 60 | % | $ | 150,000 | $ | 280,000 | 150 | % | $ | 420,000 | ||||||||||
| Carl B. Brink | $ | 210,000 | 60 | % | $ | 126,000 | $ | 280,000 | 150 | % | $ | 420,000 | ||||||||||
Mark R. Bruce(1) | $ | 400,000 | 175 | % | $ | 700,000 | ||||||||||||||||
| (1) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
| Named Executive Officers | Restricted Stock | Stock Options | Performance Awards(1) | ||||||
| Melvin C. Payne | 13,300 | 50,000 | 26,600 | ||||||
| Paul D. Elliott | 4,420 | 16,610 | 8,840 | ||||||
| Shawn R. Phillips | 4,420 | 16,610 | 8,840 | ||||||
| Viki K. Blinderman | 3,990 | 15,000 | 7,980 | ||||||
| Carl B. Brink | 3,990 | 15,000 | 7,980 | ||||||
Mark R. Bruce(2) | 6,650 | 25,000 | 13,300 | ||||||
| (1) | On November 29, 2018, we cancelled all the Performance Award Agreements previously awarded to all individuals in 2016, 2017 and 2018. Prior to such cancellation, each of the Performance Award Agreements provided for contingent compensation, which was payable to such individuals in shares of Common Stock, based on the Company’s performance over a five-year period from the grant date. |
| (2) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. His long-term incentive awards granted in 2018 were cancelled upon his resignation on November 1, 2018 pursuant to the 2017 Plan. |
Executive Compensation Policies and Practices as they relate to our Risk Management
Our Compensation Committee reviews annually the principal components of executive compensation. Our Compensation Committee believes that these cash incentive plans appropriately balance risk, payment for performance and the desire to focus executives on specific financial and leadership measures that promote long-term value creation per share. As a result, our Compensation Committee has made a determination that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
During 2018, Mr. Payne was a party to an employment agreement (the “Employment Agreement”) with us that generally governed the terms of his employment. The Employment Agreement establishes, among other things, (a) a minimum base salary, (b) target bonus payouts (expressed as a percentage of base salary), and Accounting Considerations(c) post-termination payments in certain scenarios.
Messrs. Elliot and Phillips are each party to an employment agreement which establishes, among other things, (a) a minimum base salary for each individual and (b) post-termination payments in certain scenarios. For compensation in excess of $1 million, Section 162(m)a description of the Internal Revenue Codepost-termination benefits provided for under all employment agreements see “Executive Compensation-Potential Payments Upon Termination or Change-in-Control,” further discussed herein.
Ms. Blinderman and Mr. Brink are not party to an employment agreement.
On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of 1986,the Company. In connection with his resignation, Mr. Bruce and the Company entered into a separation and release agreement (the “Separation Agreement”) which provides for (i) continuation of Mr. Bruce’s base salary for 18 months; and (ii) payment by the Company of continued coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for up to 18 months, to the extent Mr. Bruce makes such an election. The Separation Agreement, which terminates Mr. Bruce’s employment agreement with the Company, contains customary release, confidentiality, non-competition, non-solicitation and non-disparagement provisions.
Compensation Evaluation Process
Our Compensation Committee has final approval regarding recommendations of executive officer compensation. Mr. Payne’s role as amended (the “Code”) generally limits our ability to take a federal income tax deduction for compensation paid to ourChairman of the Board and Chief Executive Officer andin determining executive compensation is to make compensation recommendations to the next three most highly compensated executive officersBoard for those other than himself based on his assessment of the individual performance of each executive officer in relation to our principal financial officer, except for qualified performance-based compensation. Ouroverall Company performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee does not believe that compensation decisions should be made solely to maintainexecute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for individual Executive Officer and Senior Leadership bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the deductibility of compensationbonus plans;
preparing long-term incentive award recommendations for federal income tax purposes.our Compensation Committee’s approval; and
Given our unique organizational culture and the particular sector in which we belong, there are few direct, public company peers. If necessary, we will review market compensation and direct peer group data with our internal review of Messrs. Scott, Patteson, Fingerhut or Leibman has at any time been an officer or employeethe roles and responsibilities of each of our company nor had any substantial business dealings with us. None of our named executive officers serve as a memberpositions in order to determine competitive pay levels for each Named Executive Officer of the boardCompany.
During 2018, the Compensation Committee did not engage an independent, third party compensation consultant or use peer group data. Instead, our senior leadership worked with the Committee on a compensation program that is aligned with and tailored to the uniqueness of directors orCarriage’s High Performance Culture. However, the Committee retains the right to hire a compensation committeeconsultant, approve its compensation, determine the nature and scope of any entityits services, evaluate its performance, and terminate its engagement.
To further our own learning and understanding of how to better approach a simple and transparent compensation plan that has one or morewas appropriate and commensurate with our own identity of high performance, we reviewed internal, historical compensation trend data for executive officers serving as a member of our Board or ourand senior leadership over the last five years. Our internal analysis and recommendation was then presented to the Compensation Committee.Committee for review and approval.
21
CEO Compensation
The Compensation Committee believes that the average annual total compensation for the Chief Executive Officer of $3.1 million over the past five years and any additional realized compensation from the increase in equity value is commensurate with the high level of operating and financial performance by Carriage.
The charts below depict the 2018 mix of total direct compensation (base salary, cash incentive bonus and long-term equity-based incentives) for our CEO and Chairman and other Named Executive Officers as a whole. A significant portion of the Board2018 compensation of Directorsour Named Executive Officers is considered at-risk and is directly affected by our financial results and stock price, both in the amount of Carriage Services, Inc. has reviewedtotal cash compensation earned and the value of outstanding long-term equity awards. As such, 70% of the CEO’s total direct compensation and, on average, 64% of our other NEO’s total direct compensation, is variable and directly affected by both the Company’s and each NEO’s performance.
22
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform Consumer Protection Act, and Item 402(u) of Regulation S-K, the following items are discussed Carriage Services, Inc.’s Compensation Discussionbelow: (i) the median of the annual total compensation of all employees, excluding Mr. Payne, our CEO; (ii) the annual total compensation of our CEO; and Analysis with management. Based on such review and discussions,(iii) the Compensation Committee has recommendedratio of the median of the annual total compensation of all employees to the Boardannual total compensation of Directorsour CEO. This information is intended to provide shareholders with a company-specific metric that can assist in their evaluation of Carriage Services, Inc.our Company’s executive compensation practices.
To identify the median of the total annual compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
We determined that as of December 31, 2018, our employee population consisted of approximately 2,617 individuals with all of these individuals located in the United States. This population consisted of 1,069 full-time and 1,548 part- time employees. Our part-time employees are an integral part of our business and due to our industry, are dedicated members of our community, but may only work on a very limited, as requested basis. We selected December 31, 2018, which is in the last three months of our most recent fiscal year, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner.
To determine the “median employee” from our employee population, we examined the amount of salary, bonus, wages and other taxable income items of our employees as reported by us to the Internal Revenue Service on Form W-2 for 2018. The “median employee’s” annual total compensation included the Company matching amount provided in our Section 401(k) employee savings plan. In making the determination, we annualized the compensation of approximately 408 employees who were hired in 2018, but did not work for us the entire fiscal year. This population consisted of 176 full-time and 232 part-time employees.
We determined our median employee using this compensation measure, which was consistently applied to all of our employees included in the calculation. Since all of our employees are located in the United States, as is our CEO, we did not make any cost of living adjustments when identifying the “median employee.”
Once we determined our median employee, we combined all of the elements of such employee’s compensation for 2018 in accordance with Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of approximately $12,257.
With respect to the annual compensation of our CEO, we used the amount reported in the “Total $” column of our Summary Compensation Discussion and Analysis beTable included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K forStatement.
There has been no major change in our employee population or our employee compensation arrangements since that median employee was identified that we believe would significantly impact our pay ratio disclosure.
For the fiscal year ended December 31, 2015.2018:
The median employee is an Ambassador in the community, working on an as needed or by request basis, proactively participating in civic and community events that create a lasting heritage;
The median annual total compensation of all employees of our Company (other than our CEO) was approximately $12,257; and
The annual total compensation of our CEO, as reported in the Summary Compensation CommitteeTable included elsewhere in this Proxy Statement was $2,379,270.
2018 Base Salaries
The base salary for each of our Named Executive Officers is determined on an individual basis, taking into account such factors as the duties, experience and levels of responsibility of the executive. Base salaries for our Named Executive Officers, are evaluated annually and adjustments are approved by our Compensation TableCommittee based on its evaluation of individual performance.
Our Compensation Committee approved the following annual base salaries of our Named Executive Officers:
| Named Executive Officers | 2017 | 2018 | ||||||
| Melvin C. Payne | $ | 700,000 | $ | 700,000 | ||||
| Paul D. Elliott | $ | 310,000 | $ | 310,000 | ||||
| Shawn R. Phillips | $ | 310,000 | $ | 310,000 | ||||
| Viki K. Blinderman | $ | 280,000 | $ | 280,000 | ||||
| Carl B. Brink | $ | 280,000 | $ | 280,000 | ||||
Mark R. Bruce(1) | $ | 400,000 | $ | 400,000 | ||||
| (1) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
2018 Annual Cash Incentive Bonuses
Melvin C. Payne, Chief Executive Officer
The 2018 cash incentive bonus of $300,000 for Mr. Payne was determined at the Compensation Committee meeting held in February 2019 and was made at the discretion of the Compensation Committee for the following reasons, but not limited to:
The CEO sets the long-term 10 year Vision and 5 year Strategy for Carriage and should be judged on the annual progress towards those goals versus short-term performance metrics that act as a budget;
2018 Performance including, but not limited to Revenue growth, Adjusted Consolidated EBITDA Margin expansion and increasing adjusted Consolidated EBITDA;
2018 Performance compared to 2017 Performance and 5 Year Trend;
Strategic goals and execution thereof that could change the course and composition of the Company;
Acquisition activity;
Equity valuation; and
4E Leadership Development.
Other Named Executive Officers
The 2018 cash incentive bonuses for Messrs. Elliott, Phillips, Brink, Bruce and Ms. Blinderman were determined at the Compensation Committee meeting held in February 2019 and were based upon a previously established bonus targets as a percentage of base salary in addition to individual contribution and Company financial and operational performance results during 2018.
The table below sets forth the 2018 base salary, the incentive bonus targets and the actual incentive bonus payments, and as a percentage of base salary, for Messrs. Elliott, Phillips, Brink, Bruce and Ms. Blinderman.
Individual 2018 Bonus Paid(2) | |||||||||||||
| Named Executive Officers | Annual Base Salary | Target(1) | Amount Paid | % of Salary | |||||||||
| Paul D. Elliott | $ | 310,000 | 50% | $ | 100,000 | 32 | % | ||||||
| Shawn R. Phillips | $ | 310,000 | 50% | $ | 100,000 | 32 | % | ||||||
| Viki K. Blinderman | $ | 280,000 | 50% | $ | 140,000 | 50 | % | ||||||
| Carl B. Brink | $ | 280,000 | 50% | $ | 140,000 | 50 | % | ||||||
Mark R. Bruce(3) | $ | 400,000 | 60% | $ | — | — | % | ||||||
| (1) | Target is based on a percentage of base salary in effect in 2018. |
| (2) | Actual cash incentive bonus paid in 2019 for performance in 2018. |
| (3) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company and did not receive a short-term incentive payment. |
24
2018 Long-Term Equity-Based Incentives
We maintain the 2017 Plan pursuant to which we have granted our Named Executive Officers restricted stock, stock options and performance-based stock awards.
Annual Long-Term Incentive Grants
Restricted stock, stock options and performance awards are awarded by our Compensation Committee after consideration of each individual’s performance toward our recent goals, as well as expected contributions to our long-term success. Our Compensation Committee believes that these forms of equity ownership help align the executive’s interests closely with those of our stockholders and incentivize our executives to contribute to the long-term growth and success of Carriage.
For the 2018 grant, all long-term incentive awards granted are tied to the future performance of the Company, support our High Performance Culture and align with long-term value creation interests for our stockholders. The following chart describes the 2018 grant of restricted stock, stock options and performance awards.
On February 14, 2018, our Named Executive Officers were granted the following:
Long-Term Incentive Element | Grant | Vesting Period/Term | Grant/Exercise Price | |||
| Restricted Stock | 25% of Target | 33 1/3% over 3 years | $25.43 | |||
| Stock Options | 25% of Target | 20% over 5 years 10 year term | $25.43 | |||
| Performance Awards | 50% of Target | These awards will vest (if at all) on December 31, 2022 provided that certain criteria surrounding the 2022 Adjusted Consolidated EBITDA Margin and Adjusted Consolidated EBITDA is achieved and the individual has remained continuously employed by the Company through such date. The Adjusted Consolidated EBITDA Margin performance represents 50% of the award and the Adjusted Consolidated EBITDA performance represents 50% of the award. | Adjusted Consolidated EBITDA: Threshold = 30.3% (50% of shares) Target = 31.1% (100% of shares) Maximum = 32.1% (200% shares) Linear interpolation between threshold to target and target to maximum. *Non-GAAP adjustments can be no greater than 5% of GAAP EBITDA in 2022. Adjusted Consolidated EBITDA: (M=million) Threshold = $115M (50% of shares) Target = $125M (100% of shares) Maximum = $140M (200% shares) Linear interpolation between threshold to target and target to maximum. On both measures, to be eligible to earn an award above Target, the weighted average rate of return for all capital allocation decisions greater than $1M made in 2018 must be greater than or equal to our weighted average cost of capital plus 400 bp at the end of 2022. | |||
Our Compensation Committee believes that these elements of our long-term incentive program properly align management’s long-term compensation with the Company’s compensation philosophy and our mission of maximizing value per share for long-term stockholders. This program allows for more simplicity in structure and the transparency for management to focus on what they can control.
More detailed information regarding the long-term incentive grant is set forth in Note 19, Stockholder’s Equity, to the Consolidated Financial Statements in our 2018 Annual Report on Form 10-K.
25
Our Compensation Committee established 2018 long-term incentive targets for our Named Executive Officers, as shown in the table below based on the Committee’s judgment and the individual’s contribution to our performance:
2018 Annual Base Salary | 2018 Annual Long-Term Incentive Target | ||||||||||
| Named Executive Officers | % of base salary | Target amount | |||||||||
| Melvin C. Payne | $ | 700,000 | 200 | % | $ | 1,400,000 | |||||
| Paul D. Elliott | $ | 310,000 | 150 | % | $ | 465,000 | |||||
| Shawn R. Phillips | $ | 310,000 | 150 | % | $ | 465,000 | |||||
| Viki K. Blinderman | $ | 280,000 | 150 | % | $ | 420,000 | |||||
| Carl B. Brink | $ | 280,000 | 150 | % | $ | 420,000 | |||||
Mark R. Bruce(1) | $ | 400,000 | 175 | % | $ | 700,000 | |||||
| (1) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
The following table sets forth information regarding the compensation for the fiscal years ended December 31, 2015, 2014 and 2013, with respectlong-term incentive granted to our Named Executive Officers.Officers in 2018:
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
| Melvin C. Payne | 2015 | $ | 645,000 | $ | 450,000 | $ | — | $ | 563,810 | $ | 37,183(2) | $ | 1,695,993 | ||||||||||||
| Chief Executive Officer and | 2014 | $ | 625,000 | $ | 563,000 | $ | 1,021,000 | $ | 520,110 | $ | 4,051,791 | $ | 6,780,901 | ||||||||||||
| Chairman of the Board | 2013 | $ | 625,025 | $ | — | $ | — | $ | 403,990 | $ | 52,227 | $ | 1,081,242 | ||||||||||||
| David J. DeCarlo | 2015 | $ | 560,000 | $ | 425,000 | $ | — | $ | 563,810 | $ | 57,320(3) | $ | 1,606,130 | ||||||||||||
President and Vice Chairman of the Board | 2014 | $ | 545,000 | $ | 436,000 | $ | 2,042,000 | $ | 520,110 | $ | 40,729 | $ | 3,583,839 | ||||||||||||
| 2013 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
| L. William Heiligbrodt | 2015 | $ | 560,000 | $ | — | $ | — | $ | 563,810 | $ | — | $ | 1,123,810 | ||||||||||||
Executive Vice President and Secretary(4) | 2014 | $ | 545,000 | $ | 436,000 | $ | 1,021,000 | $ | 520,110 | $ | 4,200,000 | $ | 6,722,110 | ||||||||||||
| 2013 | $ | 543,500 | $ | — | $ | — | $ | 403,990 | $ | — | $ | 947,490 | |||||||||||||
Mark R. Bruce | 2015 | $ | 290,000 | $ | 145,000 | $ | — | $ | 225,524 | $ | — | $ | 660,524 | ||||||||||||
| Regional Partner | 2014 | $ | 280,000 | $ | 105,000 | $ | — | $ | 206,084 | $ | 813,892 | $ | 1,404,976 | ||||||||||||
| 2013 | $ | 260,000 | $ | 104,000 | $ | — | $ | 121,197 | $ | — | $ | 485,197 | |||||||||||||
| Paul D. Elliott | 2015 | $ | 275,000 | $ | 140,000 | $ | — | $ | 214,248 | $ | — | $ | 629,248 | ||||||||||||
| Regional Partner | 2014 | $ | 260,000 | $ | 104,000 | $ | — | $ | 180,324 | $ | 477,000 | $ | 1,021,324 | ||||||||||||
| 2013 | $ | 250,000 | $ | 75,000 | $ | — | $ | 121,197 | $ | 11,117 | $ | 457,314 | |||||||||||||
Shawn R. Phillips | 2015 | $ | 270,000 | $ | 135,000 | $ | — | $ | 197,334 | $ | — | $ | 602,334 | ||||||||||||
| Regional Partner | 2014 | $ | 250,000 | $ | 100,000 | $ | — | $ | 154,563 | $ | 520,923 | $ | 1,025,486 | ||||||||||||
| 2013 | $ | 240,000 | $ | 60,000 | $ | — | $ | 100,998 | $ | — | $ | 400,998 | |||||||||||||
| Viki K. Blinderman | 2015 | $ | 240,000 | $ | 110,000 | $ | — | $ | 140,952 | $ | — | $ | 490,952 | ||||||||||||
| Co-Chief Financial Officer, | 2014 | $ | 230,000 | $ | 78,000 | $ | — | $ | 128,803 | $ | 250,000 | $ | 686,803 | ||||||||||||
| Chief Accounting Officer and Secretary | 2013 | $ | 230,000 | $ | 64,400 | $ | — | $ | 60,599 | $ | — | $ | 354,999 | ||||||||||||
| Carl B. Brink | 2015 | $ | 170,000 | $ | 80,000 | $ | — | $ | 124,038 | $ | — | $ | 374,038 | ||||||||||||
| Co-Chief Financial Officer and Treasurer | 2014 | $ | 150,000 | $ | 42,000 | $ | — | $ | 92,738 | $ | 300,000 | $ | 584,738 | ||||||||||||
| 2013 | $ | 150,000 | $ | 40,000 | $ | — | $ | 60,599 | $ | — | $ | 250,599 | |||||||||||||
| Named Executive Officers | Restricted Stock | Stock Options | Performance Awards(1) | ||||||
| Melvin C. Payne | 13,300 | 50,000 | 26,600 | ||||||
| Paul D. Elliott | 4,420 | 16,610 | 8,840 | ||||||
| Shawn R. Phillips | 4,420 | 16,610 | 8,840 | ||||||
| Viki K. Blinderman | 3,990 | 15,000 | 7,980 | ||||||
| Carl B. Brink | 3,990 | 15,000 | 7,980 | ||||||
Mark R. Bruce(2) | 6,650 | 25,000 | 13,300 | ||||||
| (1) |
| (2) |
| On |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#)(1) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target ($) | Maximum ($) | |||||||||||||||||||||||||||
| Melvin C. Payne | 2/24/2015 | — | — | — | — | — | — | — | 100,000 | $ | 22.58 | $ | 563,810 | |||||||||||||||||||||
| David J. DeCarlo | 2/24/2015 | — | 100,000 | $ | 22.58 | $ | 563,810 | |||||||||||||||||||||||||||
| L. William Heiligbrodt | 2/24/2015 | — | — | — | — | — | — | — | 100,000 | $ | 22.58 | $ | 563,810 | |||||||||||||||||||||
Mark R. Bruce | 2/24/2015 | — | — | — | — | — | — | — | 40,000 | $ | 22.58 | $ | 225,524 | |||||||||||||||||||||
| Paul D. Elliott | 2/24/2015 | — | — | — | — | — | — | — | 38,000 | $ | 22.58 | $ | 214,248 | |||||||||||||||||||||
Shawn R. Phillips | 2/24/2015 | — | — | — | — | — | — | — | 35,000 | $ | 22.58 | $ | 197,334 | |||||||||||||||||||||
| Viki K. Blinderman | 2/24/2015 | — | — | — | — | — | — | — | 25,000 | $ | 22.58 | $ | 140,952 | |||||||||||||||||||||
| Carl B. Brink | 2/24/2015 | — | — | — | — | — | — | — | 22,000 | $ | 22.58 | $ | 124,038 | |||||||||||||||||||||
Executive Compensation Policies and Practices as they relate to our Risk Management
Our Compensation Committee reviews annually the principal components of executive compensation. Our Compensation Committee believes that these cash incentive plans appropriately balance risk, payment for performance and the desire to focus executives on specific financial and leadership measures that promote long-term value creation per share. As a result, our Compensation Committee has made a determination that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Employment Agreements
During 2015, Messrs.2018, Mr. Payne DeCarlo and Heiligbrodt werewas a party to an employment agreement (collectively, the(the “Employment Agreements”Agreement”) with us that generally governed the terms of theirhis employment. TheseThe Employment Agreements generally establish,Agreement establishes, among other things, (a) a minimum base salary, (b) target bonus payouts (expressed as a percentage of base salary), and (c) post-termination payments in certain scenarios. In addition,
Messrs. Bruce, Elliot and Phillips are each party to an employment agreement which establishes, among other things, (a) a minimum base salary for each individual and (b) post-termination payments in certain scenarios. Mr. Brink and Ms. Blinderman are not party to an employment agreement. For a description of the post-termination benefits provided for under the Agreements and the Employment Agreements,all employment agreements see “Executive Compensation-Potential Payments Upon Termination or Change-in-Control”,Change-in-Control,” further discussed herein.
Ms. Blinderman and Mr. Brink are not party to an employment agreement.
On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. In connection with his resignation, Mr. Bruce and the Company entered into a separation and release agreement (the “Separation Agreement”) which provides for (i) continuation of Mr. Bruce’s base salary for 18 months; and (ii) payment by the Company of continued coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for up to 18 months, to the extent Mr. Bruce makes such an election. The Separation Agreement, which terminates Mr. Bruce’s employment agreement with the Company, contains customary release, confidentiality, non-competition, non-solicitation and non-disparagement provisions.
Compensation Evaluation Process
Our Compensation Committee has final approval regarding recommendations of executive officer compensation. Mr. Payne’s role as our Chairman of the Board and Chief Executive Officer in determining executive compensation is to make compensation recommendations to the Board for those other than himself based on his assessment of the individual performance of each executive officer in relation to our overall Company performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for individual Executive Officer and Senior Leadership bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans;
preparing long-term incentive award recommendations for our Compensation Committee’s approval; and
attending our Compensation Committee’s meetings as requested in order to provide additional information, respond to questions and otherwise assist our Compensation Committee.
Given our unique organizational culture and the particular sector in which we belong, there are few direct, public company peers. If necessary, we will review market compensation and direct peer group data with our internal review of the roles and responsibilities of each of our executive positions in order to determine competitive pay levels for each Named Executive Officer of the Company.
During 2018, the Compensation Committee did not engage an independent, third party compensation consultant or use peer group data. Instead, our senior leadership worked with the Committee on a compensation program that is aligned with and tailored to the uniqueness of Carriage’s High Performance Culture. However, the Committee retains the right to hire a compensation consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement.
To further our own learning and understanding of how to better approach a simple and transparent compensation plan that was appropriate and commensurate with our own identity of high performance, we reviewed internal, historical compensation trend data for executive and senior leadership over the last five years. Our internal analysis and recommendation was then presented to the Compensation Committee for review and approval.
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CEO Compensation
The Compensation Committee believes that the average annual total compensation for the Chief Executive Officer of $3.1 million over the past five years and any additional realized compensation from the increase in equity value is commensurate with the high level of operating and financial performance by Carriage.
The charts below depict the 2018 mix of total direct compensation (base salary, cash incentive bonus and long-term equity-based incentives) for our CEO and Chairman and other Named Executive Officers as a whole. A significant portion of the 2018 compensation of our Named Executive Officers is considered at-risk and is directly affected by our financial results and stock price, both in the amount of total cash compensation earned and the value of outstanding long-term equity awards. As such, 70% of the CEO’s total direct compensation and, on average, 64% of our other NEO’s total direct compensation, is variable and directly affected by both the Company’s and each NEO’s performance.
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CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform Consumer Protection Act, and Item 402(u) of Regulation S-K, the following items are discussed below: (i) the median of the annual total compensation of all employees, excluding Mr. Payne, our CEO; (ii) the annual total compensation of our CEO; and (iii) the ratio of the median of the annual total compensation of all employees to the annual total compensation of our CEO. This information is intended to provide shareholders with a company-specific metric that can assist in their evaluation of our Company’s executive compensation practices.
To identify the median of the total annual compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
We determined that as of December 31, 2018, our employee population consisted of approximately 2,617 individuals with all of these individuals located in the United States. This population consisted of 1,069 full-time and 1,548 part- time employees. Our part-time employees are an integral part of our business and due to our industry, are dedicated members of our community, but may only work on a very limited, as requested basis. We selected December 31, 2018, which is in the last three months of our most recent fiscal year, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner.
To determine the “median employee” from our employee population, we examined the amount of salary, bonus, wages and other taxable income items of our employees as reported by us to the Internal Revenue Service on Form W-2 for 2018. The “median employee’s” annual total compensation included the Company matching amount provided in our Section 401(k) employee savings plan. In making the determination, we annualized the compensation of approximately 408 employees who were hired in 2018, but did not work for us the entire fiscal year. This population consisted of 176 full-time and 232 part-time employees.
We determined our median employee using this compensation measure, which was consistently applied to all of our employees included in the calculation. Since all of our employees are located in the United States, as is our CEO, we did not make any cost of living adjustments when identifying the “median employee.”
Once we determined our median employee, we combined all of the elements of such employee’s compensation for 2018 in accordance with Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of approximately $12,257.
With respect to the annual compensation of our CEO, we used the amount reported in the “Total $” column of our Summary Compensation Table included in this Proxy Statement.
There has been no major change in our employee population or our employee compensation arrangements since that median employee was identified that we believe would significantly impact our pay ratio disclosure.
For the fiscal year ended December 31, 2018:
The median employee is an Ambassador in the community, working on an as needed or by request basis, proactively participating in civic and community events that create a lasting heritage;
The median annual total compensation of all employees of our Company (other than our CEO) was approximately $12,257; and
The annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement was $2,379,270.
Based on this information, for 2018, the ratio of the annual total compensation of Mr. Payne to the annual total median compensation of all other employees was 194 to 1.
23
2018 Base Salaries
The base salary for each of our Named Executive Officers is determined on an individual basis, taking into account such factors as the duties, experience and levels of responsibility of the executive. Base salaries for our Named Executive Officers, are evaluated annually and adjustments are approved by our Compensation Committee based on its evaluation of individual performance.
Our Compensation Committee approved the following annual base salaries of our Named Executive Officers:
| Named Executive Officers | 2017 | 2018 | ||||||
| Melvin C. Payne | $ | 700,000 | $ | 700,000 | ||||
| Paul D. Elliott | $ | 310,000 | $ | 310,000 | ||||
| Shawn R. Phillips | $ | 310,000 | $ | 310,000 | ||||
| Viki K. Blinderman | $ | 280,000 | $ | 280,000 | ||||
| Carl B. Brink | $ | 280,000 | $ | 280,000 | ||||
Mark R. Bruce(1) | $ | 400,000 | $ | 400,000 | ||||
| (1) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
2018 Annual Cash Incentive Bonuses
Melvin C. Payne, Chief Executive Officer
The 2018 cash incentive bonus of $300,000 for Mr. Payne was determined at the Compensation Committee meeting held in February 2019 and was made at the discretion of the Compensation Committee for the following reasons, but not limited to:
The CEO sets the long-term 10 year Vision and 5 year Strategy for Carriage and should be judged on the annual progress towards those goals versus short-term performance metrics that act as a budget;
2018 Performance including, but not limited to Revenue growth, Adjusted Consolidated EBITDA Margin expansion and increasing adjusted Consolidated EBITDA;
2018 Performance compared to 2017 Performance and 5 Year Trend;
Strategic goals and execution thereof that could change the course and composition of the Company;
Acquisition activity;
Equity valuation; and
4E Leadership Development.
Other Named Executive Officers
The 2018 cash incentive bonuses for Messrs. Elliott, Phillips, Brink, Bruce and Ms. Blinderman were determined at the Compensation Committee meeting held in February 2019 and were based upon a previously established bonus targets as a percentage of base salary in addition to individual contribution and Company financial and operational performance results during 2018.
The table below sets forth the 2018 base salary, the incentive bonus targets and the actual incentive bonus payments, and as a percentage of base salary, for Messrs. Elliott, Phillips, Brink, Bruce and Ms. Blinderman.
Individual 2018 Bonus Paid(2) | |||||||||||||
| Named Executive Officers | Annual Base Salary | Target(1) | Amount Paid | % of Salary | |||||||||
| Paul D. Elliott | $ | 310,000 | 50% | $ | 100,000 | 32 | % | ||||||
| Shawn R. Phillips | $ | 310,000 | 50% | $ | 100,000 | 32 | % | ||||||
| Viki K. Blinderman | $ | 280,000 | 50% | $ | 140,000 | 50 | % | ||||||
| Carl B. Brink | $ | 280,000 | 50% | $ | 140,000 | 50 | % | ||||||
Mark R. Bruce(3) | $ | 400,000 | 60% | $ | — | — | % | ||||||
| (1) | Target is based on a percentage of base salary in effect in 2018. |
| (2) | Actual cash incentive bonus paid in 2019 for performance in 2018. |
| (3) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company and did not receive a short-term incentive payment. |
24
2018 Long-Term Incentive PlanEquity-Based Incentives
We maintain the 2006 LTIP,2017 Plan pursuant to which during 2015we have granted our Named Executive Officers restricted stock, stock options and performance-based stock awards.
Annual Long-Term Incentive Grants
Restricted stock, stock options and performance awards are awarded by our Compensation Committee after consideration of each individual’s performance toward our recent goals, as well as expected contributions to our long-term success. Our Compensation Committee believes that these forms of equity ownership help align the executive’s interests closely with those of our stockholders and incentivize our executives to contribute to the long-term growth and success of Carriage.
For the 2018 grant, all long-term incentive awards granted are tied to the future performance of the Company, support our High Performance Culture and align with long-term value creation interests for our stockholders. The following chart describes the 2018 grant of restricted stock, stock options and performance awards.
On February 14, 2018, our Named Executive Officers were granted the following:
Long-Term Incentive Element | Grant | Vesting Period/Term | Grant/Exercise Price | |||
| Restricted Stock | 25% of Target | 33 1/3% over 3 years | $25.43 | |||
| Stock Options | 25% of Target | 20% over 5 years 10 year term | $25.43 | |||
| Performance Awards | 50% of Target | These awards will vest (if at all) on December 31, 2022 provided that certain criteria surrounding the 2022 Adjusted Consolidated EBITDA Margin and Adjusted Consolidated EBITDA is achieved and the individual has remained continuously employed by the Company through such date. The Adjusted Consolidated EBITDA Margin performance represents 50% of the award and the Adjusted Consolidated EBITDA performance represents 50% of the award. | Adjusted Consolidated EBITDA: Threshold = 30.3% (50% of shares) Target = 31.1% (100% of shares) Maximum = 32.1% (200% shares) Linear interpolation between threshold to target and target to maximum. *Non-GAAP adjustments can be no greater than 5% of GAAP EBITDA in 2022. Adjusted Consolidated EBITDA: (M=million) Threshold = $115M (50% of shares) Target = $125M (100% of shares) Maximum = $140M (200% shares) Linear interpolation between threshold to target and target to maximum. On both measures, to be eligible to earn an award above Target, the weighted average rate of return for all capital allocation decisions greater than $1M made in 2018 must be greater than or equal to our weighted average cost of capital plus 400 bp at the end of 2022. | |||
Our Compensation Committee believes that these elements of our long-term incentive program properly align management’s long-term compensation with the Company’s compensation philosophy and our mission of maximizing value per share for long-term stockholders. This program allows for more simplicity in structure and the transparency for management to focus on what they can control.
More detailed information regarding the long-term incentive grant is set forth in Note 19, Stockholder’s Equity, to the Consolidated Financial Statements in our 2018 Annual Report on Form 10-K.
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Our Compensation Committee established 2018 long-term incentive targets for our Named Executive Officers, as shown in the table below based on the Committee’s judgment and the individual’s contribution to our performance:
2018 Annual Base Salary | 2018 Annual Long-Term Incentive Target | ||||||||||
| Named Executive Officers | % of base salary | Target amount | |||||||||
| Melvin C. Payne | $ | 700,000 | 200 | % | $ | 1,400,000 | |||||
| Paul D. Elliott | $ | 310,000 | 150 | % | $ | 465,000 | |||||
| Shawn R. Phillips | $ | 310,000 | 150 | % | $ | 465,000 | |||||
| Viki K. Blinderman | $ | 280,000 | 150 | % | $ | 420,000 | |||||
| Carl B. Brink | $ | 280,000 | 150 | % | $ | 420,000 | |||||
Mark R. Bruce(1) | $ | 400,000 | 175 | % | $ | 700,000 | |||||
| (1) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
The following table sets forth information regarding the long-term incentive granted to our Named Executive Officers in 2018:
| Named Executive Officers | Restricted Stock | Stock Options | Performance Awards(1) | ||||||
| Melvin C. Payne | 13,300 | 50,000 | 26,600 | ||||||
| Paul D. Elliott | 4,420 | 16,610 | 8,840 | ||||||
| Shawn R. Phillips | 4,420 | 16,610 | 8,840 | ||||||
| Viki K. Blinderman | 3,990 | 15,000 | 7,980 | ||||||
| Carl B. Brink | 3,990 | 15,000 | 7,980 | ||||||
Mark R. Bruce(2) | 6,650 | 25,000 | 13,300 | ||||||
| (1) | On November 29, 2018, we cancelled all the Performance Award Agreements previously awarded to all individuals in 2016, 2017 and 2018. Prior to such cancellation, each of the Performance Award Agreements provided for contingent compensation, which was payable to such individuals in shares of Common Stock, based on the Company’s performance over a five-year period from the grant date. |
| (2) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. His long-term incentive awards granted in 2018 were cancelled upon his resignation on November 1, 2018 pursuant to the 2017 Plan. |
Executive Compensation Policies and Practices as they relate to our Risk Management
Our Compensation Committee reviews annually the principal components of executive compensation. Our Compensation Committee believes that these cash incentive plans appropriately balance risk, payment for performance and the desire to focus executives on specific financial and leadership measures that promote long-term value creation per share. As a result, our Compensation Committee has made a determination that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Tax and Accounting Considerations
For compensation in excess of $1 million, Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) generally limits our ability to take a federal income tax deduction for compensation paid to covered employees. Effective January 1, 2018, the Tax Cuts and Jobs Act made significant amendments to Section 162(m), which includes; expanding the definition of a covered employee to include the Principal Financial Officer and eliminating the performance based compensation exception unless a written binding agreement was in place as of November 2, 2017 that has not been materially modified after that date. Our Compensation Committee does not believe that compensation decisions should be made solely to maintain the deductibility of compensation for federal income tax purposes.
We recognize compensation expense in an amount equal to the fair value of the share-based awards over the period of vesting. Fair value is determined on the date of the grant. The fair value of restricted stock is determined using the stock price on the grant date. The fair value of options is determined using the Black-Scholes valuation model. The fair value of the performance awards related to internal performance metrics is determined using the stock price on the grant date.
26
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2018, Messrs. Fingerhut, Leibman, Patteson, Schenck and Meehan served on our Compensation Committee. None of Messrs. Fingerhut, Leibman, Patteson, Schenck and Meehan has at any time been an officer or employee of our Company nor had any substantial business dealings with us. None of our Named Executive Officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee.
27
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the “Compensation Committee”) of Carriage Services, Inc.(“Carriage”) has reviewed and discussed Carriage’s Compensation Discussion and Analysis with Carriage management. Based on such review and discussions, the Compensation Committee has recommended to the Board of Directors of Carriage that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
Compensation Committee
Barry K. Fingerhut, Chairman
Bryan D. Leibman
Donald D. Patteson, Jr.
James R. Schenck
Douglas B. Meehan
April 3, 2019
28
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding the compensation for the fiscal years ended December 31, 2018, 2017 and 2016, with respect to our Named Executive Officers:
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1)(2) | Option Awards ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
| Melvin C. Payne | 2018 | $ | 700,000 | $ | 300,000 | $ | 1,014,657 | $ | 318,770 | $ | 45,843(4) | $ | 2,379,270 | ||||||||||||
| Chief Executive Officer and | 2017 | $ | 700,000 | $ | 450,000 | $ | 700,125 | $ | 828,362 | $ | 63,382 | $ | 2,741,869 | ||||||||||||
| Chairman of the Board | 2016 | $ | 670,000 | $ | 700,000 | $ | 381,986 | $ | 327,518 | $ | 45,357 | $ | 2,124,861 | ||||||||||||
| Paul D. Elliott | 2018 | $ | 310,000 | $ | 100,000 | $ | 337,202 | $ | 105,895 | $ | 20,571(5) | $ | 873,668 | ||||||||||||
| Senior Vice President and | 2017 | $ | 310,000 | $ | 100,000 | $ | 232,756 | $ | 275,407 | $ | 26,313 | $ | 944,476 | ||||||||||||
| Regional Partner | 2016 | $ | 290,000 | $ | 150,000 | $ | 115,236 | $ | 96,856 | $ | — | $ | 652,092 | ||||||||||||
Shawn R. Phillips | 2018 | $ | 310,000 | $ | 100,000 | $ | 337,202 | $ | 105,895 | $ | 10,995(6) | $ | 864,092 | ||||||||||||
| Senior Vice President and | 2017 | $ | 310,000 | $ | 140,000 | $ | 232,756 | $ | 275,407 | $ | 22,883 | $ | 981,046 | ||||||||||||
| Head of Strategic and Corporate Development | 2016 | $ | 280,000 | $ | 150,000 | $ | 110,968 | $ | 93,497 | $ | — | $ | 634,465 | ||||||||||||
| Viki K. Blinderman | 2018 | $ | 280,000 | $ | 140,000 | $ | 304,397 | $ | 95,631 | $ | — | $ | 820,028 | ||||||||||||
| Senior Vice President, Principal Financial Officer, | 2017 | $ | 280,000 | $ | 130,000 | $ | 210,197 | $ | 249,008 | $ | — | $ | 869,205 | ||||||||||||
| Chief Accounting Officer and Secretary | 2016 | $ | 250,000 | $ | 125,000 | $ | 81,092 | $ | 67,183 | $ | — | $ | 523,275 | ||||||||||||
| Carl B. Brink | 2018 | $ | 280,000 | $ | 140,000 | $ | 304,397 | $ | 95,631 | $ | 11,531(7) | $ | 831,559 | ||||||||||||
| Senior Vice President, | 2017 | $ | 280,000 | $ | 130,000 | $ | 210,197 | $ | 249,008 | $ | 21,986 | $ | 891,191 | ||||||||||||
| Chief Financial Officer and Treasurer | 2016 | $ | 210,000 | $ | 125,000 | $ | 66,154 | $ | 55,986 | $ | — | $ | 457,140 | ||||||||||||
Mark R. Bruce(8) | 2018 | $ | 400,000 | $ | — | $ | 507,329 | $ | 159,385 | $ | 16,403(9) | $ | 1,083,117 | ||||||||||||
| Executive Vice President and | 2017 | $ | 400,000 | $ | 160,000 | $ | 350,063 | $ | 414,537 | $ | 20,597 | $ | 1,345,197 | ||||||||||||
| Chief Operating Officer | 2016 | $ | 310,000 | $ | 180,000 | $ | 123,772 | $ | 103,574 | $ | — | $ | 717,346 | ||||||||||||
| (1) | Reflects the grant date fair value of restricted stock awards granted in 2018 and includes performance-based stock awards granted in the respective fiscal year, in each case, in accordance with FASB ASC Topic 718. For restricted stock awards granted on February 14, 2018, this column reflects the number of shares awarded multiplied by the grant date closing price of $25.43 on the grant date. The restricted stock awards vest based on continued service at 33 1/3% per year beginning on the first anniversary date of the grant. For performance-based stock awards granted on February 14, 2018, this column reflects the number of shares awarded multiplied by the grant date closing price of $25.43 on the date of grant. The performance-based stock award will vest (if at all) on December 31, 2022 provided that certain criteria surrounding Adjusted Consolidated EBITDA (Adjusted Earnings Before Interest Tax Depreciation and Amortization) and Adjusted Consolidated EBITDA Margin performance is achieved and the Reporting Person has remained continuously employed by Carriage through such date. The Adjusted Consolidated EBITDA performance represents 50% of the award and the Adjusted Consolidated EBITDA Margin performance represents 50% of the award. |
| (2) | On November 29, 2018, we cancelled all Performance Award Agreements previously awarded to all individuals in 2016, 2017 and 2018. Prior to such cancellation, each of the Performance Award Agreements provided for contingent compensation, which was payable to such individuals in shares of Common Stock, based on the Company’s performance over a five-year period from the grant date. |
| (3) | Reflects the grant date fair value of the options granted in the respective fiscal year, computed in accordance with FASB ASC Topic 718. The value of the stock options granted during 2018 was $6.38 per share calculated using the Black–Scholes pricing method on February 14, 2018, the date of grant. The assumptions made in the valuation of these awards are set forth in Note 19, Stockholder’s Equity, to the Consolidated Financial Statements in our 2018 Annual Report on Form 10-K. |
| (4) | Reflects reimbursement of life insurance premiums for Mr. Payne where Carriage was not named the beneficiary totaling $25,000, reimbursement of club dues totaling $2,150, fringe benefits of $12,977, 401(k) matching contributions totaling $3,781 and $1,935 of dividends on unvested restricted stock. |
| (5) | Reflects fringe benefits of $13,970 and 401(k) matching contributions of $6,601. |
| (6) | Reflects fringe benefits of $6,057 and 401(k) matching contributions of $4,938. |
| (7) | Reflects fringe benefits of $6,402 and 401(k) matching contributions of $5,129. |
| (8) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
| (9) | Reflects fringe benefits of $10,863 and 401(k) matching contributions of $5,540. |
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Grants of Plan-Based Awards in 2018
During 2018, we granted our Named Executive Officers restricted stock, options.stock options and performance-based stock awards from the 2017 Plan. The following table sets forth information regarding these grants:
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (1)(2) | All Other Stock Awards: Number of Shares of Stock (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($)(5) | |||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target ($) | Maximum ($) | |||||||||||||||||||||||||||||
| Melvin C. Payne | 2/14/2018 | — | — | — | 26,600 | $ | 676,438 | $ | 1,352,876 | 13,300 | 50,000 | $ | 25.43 | $ | 1,333,427 | |||||||||||||||||||||
| Paul D. Elliott | 2/14/2018 | — | — | — | 8,840 | $ | 224,801 | $ | 449,602 | 4,420 | 16,610 | $ | 25.43 | $ | 443,097 | |||||||||||||||||||||
Shawn R. Phillips | 2/14/2018 | — | — | — | 8,840 | $ | 224,801 | $ | 449,602 | 4,420 | 16,610 | $ | 25.43 | $ | 443,097 | |||||||||||||||||||||
| Viki K. Blinderman | 2/14/2018 | — | — | — | 7,980 | $ | 202,931 | $ | 405,862 | 3,990 | 15,000 | $ | 25.43 | $ | 400,028 | |||||||||||||||||||||
| Carl B. Brink | 2/14/2018 | — | — | — | 7,980 | $ | 202,931 | $ | 405,862 | 3,990 | 15,000 | $ | 25.43 | $ | 400,028 | |||||||||||||||||||||
Mark R. Bruce(6) | 2/14/2018 | — | — | — | 13,300 | $ | 338,219 | $ | 676,438 | 6,650 | 25,000 | $ | 25.43 | $ | 666,714 | |||||||||||||||||||||
| (1) | Reflects the grant date fair value of the performance-based stock awards calculated in accordance with FASB ASC Topic 718. The value of the performance-based stock awards granted during 2018 was $25.43 per share on February 14, 2018, which reflects the stock price on the date of grant. The award will vest (if at all) on December 31, 2022 provided that certain criteria surrounding Adjusted Consolidated EBITDA (Adjusted Earnings Before Interest Tax Depreciation and Amortization) and Adjusted Consolidated EBITDA Margin performance is achieved and the Reporting Person has remained continuously employed by Carriage through such date. The Adjusted Consolidated EBITDA performance represents 50% of the award and the Adjusted Consolidated EBITDA Margin performance represents 50% of the award. |
| (2) | On November 29, 2018, we cancelled all Performance Award Agreements previously awarded to all individuals in 2016, 2017 and 2018. Prior to such cancellation, each of the Performance Award Agreements provided for contingent compensation, which was payable to such individuals in shares of Common Stock, based on the Company’s performance over a five-year period from the grant date. |
| (3) | These are restricted stock awards that vest over three years. The value of the restricted stock awards granted during 2018 was $25.43 per share on February 14, 2018, which reflects the stock price on the date of grant. |
| (4) | These are stock options that vest over five years. Grant date fair value for the stock options is the number of options, multiplied by the option value on the grant date (calculated in accordance with FASB ASC 718), which was $6.38 per share on February 14, 2018, the date of grant. The assumptions made in the valuation of these awards are set forth in Note 19, Stockholder’s Equity, to the Consolidated Financial Statements in our 2018 Annual Report on Form 10-K. |
| (5) | Reflects the grant date fair value of the performance-based stock awards at Target, grant date fair value of the restricted stock awards and the grant date fair value of the option awards. |
| (6) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. His long-term incentive awards granted in 2018 were cancelled upon his resignation on November 1, 2018 pursuant to the 2017 Plan. |
30
Outstanding Equity Awards at Fiscal Year-End
Awards Outstanding at December 31, 2015:2018:
| Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un- Exercisable (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#)(2) | Market Value of Shares of Stock that Have Not Vested(3) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un- Exercisable (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | |||||||||||||||||||||||||||||||||||
| Melvin C. Payne | 27,419 | — | — | $ | 5.70 | 2/28/2021 | 37,500 | $ | 903,750 | 3,284 | — | — | $ | 5.70 | 2/28/2021 | 13,300 | $ | 206,150 | — | $ | — | ||||||||||||||||||||||||||||||
| 66,666 | 33,334 | — | $ | 16.73 | 5/22/2018 | — | — | 100,000 | — | — | $ | 20.49 | 3/3/2019 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| 33,334 | 66,666 | — | $ | 20.49 | 3/3/2019 | — | — | 100,000 | — | — | $ | 22.58 | 2/24/2022 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 100,000 | — | $ | 22.58 | 2/24/2022 | — | — | 23,400 | 35,100 | — | $ | 20.06 | 2/23/2026 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| David J. DeCarlo | 33,334 | 66,666 | — | $ | 20.49 | 3/3/2019 | 75,000 | $ | 1,807,500 | ||||||||||||||||||||||||||||||||||||||||||
| — | 100,000 | — | $ | 22.58 | 2/24/2022 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| L. William Heiligbrodt | 66,666 | 33,334 | — | $ | 16.73 | 5/22/2018 | 37,500 | $ | 903,750 | ||||||||||||||||||||||||||||||||||||||||||
| 33,334 | 66,666 | — | $ | 20.49 | 3/3/2019 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| — | 100,000 | — | $ | 22.58 | 2/24/2022 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Mark R. Bruce | 17,530 | — | — | $ | 4.78 | 5/18/2020 | — | — | |||||||||||||||||||||||||||||||||||||||||||
| 17,913 | — | — | $ | 5.70 | 2/28/2021 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| 26,289 | — | — | $ | 5.94 | 3/5/2022 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| 20,000 | 10,000 | — | $ | 16.73 | 5/22/2018 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| 13,334 | 26,666 | — | $ | 20.26 | 2/25/2019 | — | — | 23,220 | 92,880 | — | $ | 26.54 | 3/21/2027 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 40,000 | — | $ | 22.58 | 2/24/2022 | — | — | — | 50,000 | — | $ | 25.43 | 2/14/2028 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| Paul D.Elliott | 20,000 | 10,000 | — | $ | 16.73 | 5/22/2018 | — | — | 35,000 | — | — | $ | 20.26 | 2/25/2019 | 4,420 | $ | 68,510 | — | $ | — | |||||||||||||||||||||||||||||||
| 38,000 | — | — | $ | 22.58 | 2/24/2022 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 6,920 | 10,380 | — | $ | 20.06 | 2/23/2026 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 11,666 | 23,334 | — | $ | 20.26 | 2/25/2019 | — | — | 7,720 | 30,880 | — | $ | 26.54 | 3/21/2027 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 38,000 | — | $ | 22.58 | 2/24/2022 | — | — | — | 16,610 | — | $ | 25.43 | 2/14/2028 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
Shawn R. Phillips | 19,283 | — | — | $ | 4.78 | 5/18/2020 | — | — | 17,913 | — | — | $ | 5.70 | 2/28/2021 | 4,420 | $ | 68,510 | — | $ | — | |||||||||||||||||||||||||||||||
| 17,913 | — | — | $ | 5.70 | 2/28/2021 | — | — | 22,674 | — | — | $ | 5.94 | 3/5/2022 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| 22,674 | — | — | $ | 5.94 | 3/5/2022 | — | — | 35,000 | — | — | $ | 22.58 | 2/24/2022 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| 16,666 | 8,334 | — | $ | 16.73 | 5/22/2018 | — | — | 6,680 | 10,020 | — | $ | 20.06 | 2/23/2026 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| 10,000 | 20,000 | — | $ | 20.26 | 2/25/2019 | — | — | 7,720 | 30,880 | — | $ | 26.54 | 3/21/2027 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 35,000 | — | $ | 22.58 | 2/24/2022 | — | — | — | 16,610 | — | $ | 25.43 | 2/14/2028 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| Viki K. Blinderman | 10,000 | 5,000 | — | $ | 16.73 | 5/22/2018 | — | — | 25,000 | — | — | $ | 22.58 | 2/24/2022 | 3,990 | $ | 61,845 | — | $ | — | |||||||||||||||||||||||||||||||
| 8,334 | 16,666 | — | $ | 20.26 | 2/25/2019 | — | — | 4,800 | 7,200 | — | $ | 20.06 | 2/23/2026 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 25,000 | — | $ | 22.58 | 2/24/2022 | — | — | 6,980 | 27,920 | — | $ | 26.54 | 3/21/2027 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 15,000 | — | $ | 25.43 | 2/14/2028 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Carl B. Brink | 5,000 | 5,000 | — | $ | 16.73 | 5/22/2018 | — | — | 22,000 | — | — | $ | 22.58 | 2/24/2022 | 3,990 | $ | 61,845 | — | $ | — | |||||||||||||||||||||||||||||||
| — | 12,000 | — | $ | 20.26 | 2/25/2019 | — | — | 4,000 | 6,000 | — | $ | 20.06 | 2/23/2026 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 22,000 | — | $ | 22.58 | 2/24/2022 | — | — | 6,980 | 27,920 | — | $ | 26.54 | 3/21/2027 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||
| — | 15,000 | — | $ | 25.43 | 2/14/2028 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
Mark R. Bruce(4) | 17,530 | — | — | $ | 4.78 | 5/18/2020 | — | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
| 17,913 | — | — | $ | 5.70 | 2/28/2021 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 26,289 | — | — | $ | 5.94 | 3/5/2022 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 40,000 | — | — | $ | 20.26 | 2/25/2019 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 40,000 | — | — | $ | 22.58 | 2/24/2022 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 7,400 | — | — | $ | 20.06 | 2/23/2026 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| 11,620 | — | — | $ | 26.54 | 3/21/2027 | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| (1) | The unexercisable stock options expiring |
| (2) |
| Mr. Payne | Mr. DeCarlo | Mr. Heiligbrodt | |||||||
| 3/3/2016 | 12,500 | 25,000 | 12,500 | ||||||
| 3/3/2017 | 12,500 | 25,000 | 12,500 | ||||||
| 3/3/2018 | 12,500 | 25,000 | 12,500 | ||||||
| 37,500 | 75,000 | 37,500 | |||||||
| Calculated using the closing price of our Common Stock on December 31, |
| (3) | On November 29, 2018, we cancelled all the Performance Award Agreements previously awarded to all individuals in 2016, 2017 and 2018. Prior to such cancellation, each of the Performance Award Agreements provided for contingent compensation, which was payable to such individuals in shares of Common Stock, based on the Company’s performance over a five-year period from the grant date. |
| (4) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. Mr. Bruce may exercise any vested options on or before October 31, 2019 pursuant to the 2017 Plan. |
Option Exercises and Stock Vested During 2015
2018
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting(3) | Value Realized on Vesting(4) | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting(7) | Value Realized on Vesting(8) | ||||||||||||||||||||
| Melvin C. Payne | 27,692(1) | $ | 668,240 | 44,767 | $ | 1,065,088 | 100,000(1) | $ | 1,108,000 | 12,500 | $ | 346,125 | ||||||||||||||||
| David J. DeCarlo | — | — | 25,000 | $ | 596,750 | |||||||||||||||||||||||
| L. William Heiligbrodt | — | — | 37,753 | $ | 897,664 | |||||||||||||||||||||||
Mark R. Bruce | — | — | 3,367 | $ | 80,370 | |||||||||||||||||||||||
| Paul D. Elliott | — | — | 4,000 | $ | 92,760 | — | $ | — | — | $ | — | |||||||||||||||||
Shawn R. Phillips | — | — | 2,904 | $ | 69,318 | 55,000(2) | $ | 319,900 | — | $ | — | |||||||||||||||||
| Viki K. Blinderman | — | — | 1,667 | $ | 39,791 | 40,000(3) | $ | 221,550 | — | $ | — | |||||||||||||||||
| Carl B. Brink | 2,338(2) | $ | 67,150 | 1,000 | $ | 23,870 | 22,000(4) | $ | 139,480 | — | $ | — | ||||||||||||||||
Mark R. Bruce(5) | 30,000(6) | $ | 341,100 | — | $ | — | ||||||||||||||||||||||
| (1) | Mr. Payne exercised |
| (2) | Mr. |
| (3) |
| Mr. Payne | Mr. DeCarlo | Mr. Heiligbrodt | Mr. Bruce | |||||||||||||||||||||
Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | |||||||||||||||||
| 3/3/2015 | 12,500 | 5,143 | — | — | 12,500 | 5,143 | — | — | ||||||||||||||||
| 3/5/2015 | 32,267 | 13,438 | 25,000 | 10,389 | 25,253 | 10,494 | 3,367 | 1,294 | ||||||||||||||||
| Total | 44,767 | 18,581 | 25,000 | 10,389 | 37,753 | 15,637 | 3,367 | 1,294 | ||||||||||||||||
| Mr. Elliott | Mr. Phillips | Ms. Blinderman | Mr. Brink | |||||||||||||||||||||
Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | |||||||||||||||||
| 3/5/2015 | — | — | 2,904 | 1,270 | 1,667 | 613 | 1,000 | 396 | ||||||||||||||||
| 8/31/2015 | 4,000 | 1,572 | — | — | — | — | — | — | ||||||||||||||||
| Total | 4,000 | 1,572 | 2,904 | 1,270 | 1,667 | 613 | 1,000 | 396 | ||||||||||||||||
| (4) | Mr. Brink exercised 10,000 options on March 6, 2018 and 12,000 options on September 20, 2018. He surrendered 5,000 and 12,000 options, respectively, to pay the option price and the taxes associated with the exercises. |
| (5) | On November 1, 2018, Mark R. Bruce resigned from his position as Executive Vice President and Chief Operating Officer of the Company. |
| (6) | Mr. Bruce exercised 30,000 options on March 9, 2018 and surrendered 21,099 options to pay the option price and the taxes associated with the exercise. |
| (7) | Mr. Payne paid the taxes in cash associated with the shares that vested on March 3, 2018. |
| (8) | Value realized on vesting is calculated using the |
Potential Payments Upon Termination or Change-in-Control
The following table sets forth the amounts that would have been payable to certain of our Named Executive Officers under the scenarios for death, disability, retirement, termination without cause or good reason or a corporate change had such scenarios occurred on December 31, 2015.2018. This table does not include accrued vacation. Amounts reported with respect to equity-based awards are reported assuming the closing price of our Common Stock on December 31, 20152018 of $24.10$15.50 per share.
| Event | Melvin C. Payne | David J. DeCarlo | L. William Heiligbrodt | Mark R. Bruce | Paul D. Elliott | Shawn R. Phillips | Melvin C. Payne | Paul D. Elliott | Shawn R. Phillips | |||||||||||||||||||||||||||
| Death, Disability or Retirement | ||||||||||||||||||||||||||||||||||||
Annual incentive award(1) | $ | 580,500 | $ | 448,000 | $ | — | $ | 145,000 | $ | 137,500 | $ | 135,000 | $ | 300,000 | $ | 155,000 | $ | 155,000 | ||||||||||||||||||
Equity awards(2) | 1,542,086 | 2,220,164 | 939,586 | 318,042 | 317,463 | 261,408 | 206,150 | 68,510 | 68,510 | |||||||||||||||||||||||||||
Consulting and non-compete payments(3) | — | — | 1,548,000 | — | — | — | ||||||||||||||||||||||||||||||
| Total | $ | 2,122,586 | $ | 2,668,164 | $ | 2,487,586 | $ | 463,042 | $ | 454,963 | $ | 396,408 | $ | 506,150 | $ | 223,510 | $ | 223,510 | ||||||||||||||||||
| Termination without cause (without a Corporate Change) | ||||||||||||||||||||||||||||||||||||
Cash severance(4) | $ | 1,875,500 | $ | 1,288,000 | $ | — | $ | 435,000 | $ | 412,500 | $ | 405,000 | ||||||||||||||||||||||||
Benefit continuation(5) | 72,477 | 1,360 | — | 35,544 | 36,238 | 34,802 | ||||||||||||||||||||||||||||||
Annual incentive award(6) | — | — | — | 145,000 | 137,500 | 135,000 | ||||||||||||||||||||||||||||||
Cash severance(3) | $ | 2,030,000 | $ | 465,000 | $ | 465,000 | ||||||||||||||||||||||||||||||
Benefit continuation(4) | 74,974 | 37,487 | 24,104 | |||||||||||||||||||||||||||||||||
Annual incentive award(5) | — | 155,000 | 155,000 | |||||||||||||||||||||||||||||||||
| Total | $ | 1,947,977 | $ | 1,289,360 | $ | — | $ | 615,544 | $ | 586,238 | $ | 574,802 | $ | 2,104,974 | $ | 657,487 | $ | 644,104 | ||||||||||||||||||
| Corporate Change (without termination of employment) | ||||||||||||||||||||||||||||||||||||
Equity awards(7) | $ | 903,750 | $ | 1,807,500 | $ | — | $ | 81,145 | $ | 96,400 | $ | 69,986 | ||||||||||||||||||||||||
Equity awards(6) | $ | 206,150 | $ | 68,510 | $ | 68,510 | ||||||||||||||||||||||||||||||
| Total | $ | 903,750 | $ | 1,807,500 | $ | — | $ | 81,145 | $ | 96,400 | $ | 69,986 | $ | 206,150 | $ | 68,510 | $ | 68,510 | ||||||||||||||||||
| Termination following a Corporate Change | ||||||||||||||||||||||||||||||||||||
Cash severance(8) | $ | 3,676,500 | $ | 3,024,000 | $ | — | $ | 435,000 | $ | 412,500 | $ | 405,000 | ||||||||||||||||||||||||
Benefit continuation(9) | 72,477 | 2,719 | — | 71,088 | 72,477 | 69,604 | ||||||||||||||||||||||||||||||
Annual incentive award(10) | — | — | — | 145,000 | 137,500 | 135,000 | ||||||||||||||||||||||||||||||
Equity awards(11) | 1,542,086 | 2,200,164 | — | 318,042 | 317,463 | 261,408 | ||||||||||||||||||||||||||||||
Cash severance(7) | $ | 2,400,000 | $ | 465,000 | $ | 465,000 | ||||||||||||||||||||||||||||||
Benefit continuation(8) | 74,974 | 74,974 | 48,208 | |||||||||||||||||||||||||||||||||
Annual incentive award(9) | 300,000 | 155,000 | 155,000 | |||||||||||||||||||||||||||||||||
Equity awards(10) | 206,150 | 68,510 | 68,510 | |||||||||||||||||||||||||||||||||
| Total | $ | 5,291,063 | $ | 5,226,883 | $ | — | $ | 969,130 | $ | 939,940 | $ | 871,012 | $ | 2,981,124 | $ | 763,484 | $ | 736,718 | ||||||||||||||||||
