Carriage Services Notice of 2021 Annual Meeting of Stockholders and Proxy Satement May 18, 2021 Houston, Texas
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Under Rule 14a-12 | |
Carriage Services, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
1 | Title of each class of securities to which transaction applies:
| |||
2 | Aggregate number of securities to which transaction applies:
| |||
3 | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
4 | Proposed maximum aggregate value of transaction:
| |||
5 | Total fee paid:
| |||
☐ | Fee paid previously with preliminary materials: | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. | |||
1 | Amount previously paid:
| |||
2 | Form, Schedule or Registration Statement No.:
| |||
3 | Filing Party:
| |||
4 | Date Filed:
| |||
Carriage Services Notice of 2021 Annual Meeting of Stockholders and Proxy Satement May 18, 2021 Houston, Texas
 | CARRIAGE SERVICES, INC. 3040 Post Oak Boulevard, Suite 300 Houston, Texas 77056 |
April 5, 20211, 2022
Dear Fellow Stockholder:
We are pleased to invite you to the 20212022 Annual Meeting of Stockholders of Carriage Services, Inc. (“Carriage”). The Annual Meeting will be held at 3040 Post Oak Boulevard, Suite 850, Houston, Texas 77056 on Tuesday, May 18, 2021,17, 2022, at 9:00 a.m., Central Standard Time. Whether or not you plan to attend the Annual Meeting, we ask that you participate by casting your vote at your earliest convenience.
Our 2021 theme was “TransformativeAccelerating High Performance Flywheel Effect! in 2020 was driven” and we could not be more proud of the efforts by heroic work performed by our employees serving families in the faceCarriage Team of an ever changing landscape from the Coronavirus Pandemic (the “Pandemic”). The courageous, creative and nimble leadership of so many within Carriage led to record financial performance.
As we continuedTeams to focus on the integrationhow they could each help push our High Performance Flywheel forward. Regardless of title or responsibilities, we saw broad contributions across our four large strategic transactionsportfolio of funeral homes and cemeteries from Energized teams, which closedled to substantial improvement throughout our Company that combined to produce record results in 2021. Not surprisingly, Carriage’s share price increased 105.9% from $31.32 at the end of 20192020 (first close above $30 at year-end in our public company history) to $64.44 at the end of 2021, leading our sector in shareholder returns for the second straight year.
As we wrap up the first quarter and look forward to what lies ahead for the beginningremainder of 2020, the Pandemic rapidly evolvedyear, our 2022 theme of “High Performance Value Creation Culture” is the perfect description of where Carriage stands today. While “High Performance” can be seen in our results, it is the pairing of “High Performance” with both “Value Creation” and “Culture” that is critical to our continued success. Specifically, ensuring that all members of the Carriage Team came togethernot only understand, but are focused on, creating value in their respective roles is what leads to quickly plan and pivot along the way. an enduring culture of value creation that we are confident will define Carriage for years to come.
As Chairman and Lead Director of the Board of Directors, we couldhope our shareholders will take the time to get to know the story of Carriage, our vision and strategy, and the men and women who are executing upon that vision and strategy each day. Rather than rely upon a third party’s recommendations as to how you should vote your shares, particularly when that third party has not be more proudvisited one of our businesses, taken the leadershiptime to talk with a single employee, or made any effort to learn about who and skill on display at all levels within the Carriage Team.
The intense focus, beginning in September 2018,what is driving Carriage’s performance, we encourage you to build a new foundation of strategic leadership, execution, and accountability at all levels, which included material changes to everything fromread our Standards Operating Model to our Executive Team composition, had us well prepared for the challenging environment we all encountered in 2020, andreleases, which we continuebelieve are among the most transparent of any public company, and reach out if you have questions or would like to battle today. We believe that in 2021, Carriage is well positioned for unprecedented performance and valuation success over the next five years. However, despite the record performance of 2020, we will never become complacent, but rather remain focused on ensuring Carriage continues to provide the best service to every family that entrusts us to take care of their loved one, while also ensuring we provide our stockholders with exceptional value through thoughtful execution and savvy capital allocation.
We believe Carriage remains a unique value creation opportunity for stockholders, led by our team of A Player leaders who are driven and incentivized by our high performance incentive plans and “pay for performance” philosophy to compensation, which is led and supported bylearn more. Both our Board of Directors. Speaking on behalf of the entire Board of Directors and our Executive Leadership Team will be happy to visit with you or put you in touch with any one of our wonderful leaders located throughout the country.
As we remain committedhave done many times before, we invite all shareholders to becoming recognized by institutional investors and those invisit any of our industry as a superior Consolidation, Operating andmore than 200 businesses or travel to Houston to meet our Support Center Team where you can see our “High Performance 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 shares.Culture” in action.
We hope you can join us on May 1817th and we encourage you to read the Notice of Annual Meeting and Proxy Statement, which contains information about the voting options, instructions, and descriptions of the proposals for this meeting. It is important that your voice is heard and your shares are represented at the Annual Meeting by casting your vote as soon as possible. Thank you for your belief in, and support of, Carriage and the nearly 3,000 men and women who lead and provide our local service and performance every day. day across our portfolio of Being The Best funeral homes and cemeteries.
Sincerely,
Melvin C. Payne Chairman of the Board and |  |
Bryan D. Leibman Lead Director of the Board |  |
P.S. A Personal Note from Mel Payne
As our High Performance Transformation was being executed over the last three years, as comprehensively covered in my 2020 and 2021 Shareholder Letters and in each quarterly earnings release (more akin to a chapter in a book about high performance in our industry), I got heavily involved in Investor Relations and outreach to potential equity investors starting in November 2020. I have had countless Zoom one-on-ones with Ben Brink at virtual investor conferences hosted by our four sell side analysts since that time, a timeframe during which our shares outperformed the vast majority of public companies in any sector of the market.
Not even ONCE has a serious (or unserious) institutional investor brought up ESG issues that are being promoted as the holy grail of sustainable investing. WHY? Because serious equity investors care about all the areas of a company that are fundamental to its ability to not only survive but thrive in its particular sector. And Carriage is indeed thriving!
The dirty little secret, which everyone playing this game knows is not a secret, is that only the proxy departments of the largest funds and asset managers care about ESG, and only during proxy season. Touting the virtues of ESG as a priority for sustainable investing serves as a politically correct way to attract large amounts of large pension money to manage, but of course with appropriate management fees. I have yet to talk to anyone in a proxy department who has actually read any of our amazing materials that are available on our Company, nor have any of them cared, as they only want to know when we will recruit a woman to our Board. They couldn’t care less about the many women who help lead our Company as Managing Partners, Sales Managers and Leaders of Critical Support Teams. See Kristi Ah You’s email to me dated February 22, 2022, at the end of our 2021 Shareholder Letter.
The message being conveyed to me in this annual ritual is that I am a BAD Chairman and CEO, and we are a clueless Company out of step with modern good governance best practices despite our astonishing, record-breaking performance and share price increases for two consecutive years during a once in a lifetime COVID Pandemic. Such a conclusion by any outside party given the current “Sistine Chapel” beauty of Carriage today (See the first two pages of our 2021 Shareholder Letter) is laughable and flies in the face of our Best Is Yet To Come theme for this Shareholder Letter / Annual Report. As Co-Founder, Chairman and CEO since our IPO in 1996, I have navigated through countless rotations of Board Members who had no skin in the game and were out of alignment with my Being The Best Vision of evolving an innovative and superior radically decentralized business model. Although I have never met Jim Collins and am sure he is completely unaware of our existence, I am even more certain that he would be completely shocked that Carriage has evolved into a Good To Great / Built To Last Company by rigorously applying a handful of high performance ideas and concepts researched so brilliantly in his book Good To Great.
Let me detail just one unbelievable fact about the Environmental “E” Score in ESG. Wildfires during 2021 in the Taiga forest of Siberia’s Yakutia region were bigger than all other worldwide fires combined. They are burning Boreal forest peat land that overlies thawing permafrost, releasing over 500 million tons of carbon dioxide into the atmosphere in the 2021 fire season alone, much of which is in the form of methane gas, by far the most damaging greenhouse emissions. Smoke from as many as 300 massive wildfires in Russia’s Siberia region reached the geographic North Pole including Canada for the first time in recorded history, according to NASA, “providing more evidence that there are no climate borders on earth as the climate changes.” Many of these fires are left to burn because the region is almost twice the size of Alaska and sparsely populated, while the rest mostly burn out of control because of a lack of equipment and manpower, which have had for years a low priority from an energy and wannabe military superpower now in a war that Russia initiated with Ukraine, which has likely changed the investment landscape worldwide for many years into the future.
Moreover, according to the U.N., the world population will increase to almost 8 billion in 2022, of which only 330 million or 4.1% live in America. An overwhelmingly large percentage of this total live in developing countries such as India, China (still building many coal-fired plants annually), Brazil, Indonesia, Russia (rejoining the developing world rapidly under severe economic sanctions), and many countries in Africa, all of which need cheap energy to build their economies and improve the lives and standards of living for their people. My “wickedly witty” idea to protect America from everyone else’s climate pollution is to build a climate bubble for the lower 48 states. Sadly, Alaska and Hawaii are not “doable deals.” If anyone has the curiosity to learn much more about climate change on Earth than what they know now as
“settled science,” I highly recommend the book by John Dvorak in 2021, “How The Mountains Grew: ANew Geological History of North America,” which brilliantly covers the compelling story of climate cycles and the repeated evolution and then extinction of almost all living plant and animal species since earth was formed 4.51 billion years ago.
Climate change and the fossil fuel energy to power our economies are impossible to de-link or replace anytime soon, as Germany and Europe are finding out currently the hard way. As Chancellor Olaf Scholz of Germany told the Bundestag (German Legislature) on Wednesday, March 23, 2022, a boycott of Russian oil and gas would have severe economic and social consequences in Germany and the rest of Europe. Mr. Scholz vowed to end Germany’s dependence on Russian energy as soon as possible (relies on Russia for 55% of its natural gas, 50% of its coal and 35% of its oil), but “To do so from day one to the next would mean plunging our country and all of Europe into recession, and hundreds of thousands of our jobs would be at risk,” Mr. Scholz said, as reported by The New York Times.
On Wednesday, March 23 (same day), Russia doubled down on this irony of all ironies by announcing it would accept only rubles for energy payment, forcing European countries to prop up Russia’s currency and economy while Russia continues its “war crimes invasion and destruction” of Ukraine. I wonder if Institutional Shareholder Services (“ISS”), one of the largest “proxy advisors,” has ever provided an ESG Score to Gazprom, the Russian majority state owned energy giant providing all the natural gas to Germany that has to be paid in rubles.
How many of you reading this letter realize that ISS has been bought and sold six times since its founding in 1985, each time at a higher price (mostly by private equity firms) because of the trend of huge amounts of institutional money flowing into politically correct “ESG sustainability investing,” which also falls under the label of Stakeholder Capitalism. ISS is now owned by the German investment group Deutsche Borse AG (almost equal irony but not quite), yet some prominent institutional investors in the U.S. buy their “research” of unsupported and inapplicable “one size fits all” metrics and ESG Scores, and even worse, vote their share proxies according to ISS’s recommendations. I have studied their fake metrics and read their ridiculous reports on the company I founded over 30 years ago (unrecognizable to me), along with their “peer comparison companies,” none of whose shares I would buy as a self-taught professional investor. It’s a sad day indeed for entrepreneurial risk taking and capital formation in the best public markets in the world when an institutional investor benefitting significantly from our superior shareholder returns chooses instead to vote against management’s recommendations because of a recommendation by ISS.
ISS has a HUGE CONFLICT OF INTEREST, as it owns NO SHARES in Carriage (I own about 10% together with my wife and two grown children), yet they will reach out to us after a bad ESG Score with their offer to help craft a solution. There’s only one small catch: ISS will charge us a not-so-small consulting fee to help resolve a problem (ESG) that never existed in the first place until they “Scored” the fictitious problem using fake metrics that have no connection whatsoever to the reality of our Company, its operations, and wonderful people doing noble work, family-by-family, in all the communities in which we operate.
I co-founded Carriage over thirty years ago with the Mission/Vision of Being The Best in our industry and have built Carriage since then using Five Guiding Principles, the first of which is by far the most profoundly important: Honesty, Integrity and Quality in All That We Do! Paying ISS for protection against a bad ESG Score based on fake metrics violates every word of this FirstGuiding Principle for me and our Company.
I believe that I have a moral and fiduciary duty to protect our Company and its wonderful leaders and employees from outside danger, and in doing so to protect our shareholders as well, of which I and my family are among the largest. That duty is especially strong for those “little investors” whose life savings are invested in index funds and large asset managers, yet the “little investors” are unaware that the proxies for their investment in our Company are being voted high up in an investment firm by those who have a political and social agenda and don’t know anything about our Company or how to create and increase sustainable shareholder value.
I’m a Vietnam War Veteran from my service in the countryside (no American troops within 30-40 miles) in 1967 / 1968 pioneering the modern concept of counterinsurgency, a life changing experience serving my country that resulted in me evolving into an entrepreneur willing to take the risk of starting Carriage from scratch at 48 years of age with no prior knowledge or experience in the funeral and cemetery business, and no money. Only in America and only in our capital markets would a dream like Carriage have had
a chance of becoming a reality as a public company listed on the New York Stock Exchange, so I will be eternally grateful for being born in America.
I have learned in my almost 80 years that someone will always be called upon to summon the courage to speak truth to power, in this case the power of those voting proxies representing all of our common shares. I stand by my conviction that the current proxy system is broken and ask other Chairmen and CEO’s and Board Members, as well as professional money managers who “pick winning companies and their stocks,” to stand proudly with me for change that makes sense for a more democratic system of proxy voting that doesn’t favor the political elite over everyone else.
I have told the proxy personnel that I get to talk to during proxy season when they raise our “problem of not having a woman Board Member” that I would gladly add a woman as our next Board Member that they recommend who fits the profile of a high reputation and skilled value investor in the same vein as Warren Buffett and Charlie Munger, except 50 or 60 years younger. I have yet to get a recommended name, but patience I have learned, is a virtue in investing and getting the Right Who Board Members.
A female investor whose firm has bought a meaningful number of CSV shares is exactly the type of Board Member with real skin in the game that our Company deserves at this pivotal point to highlight the litany of investment merits that confirm “The Best Is Yet To Come.”
| – | Mel Payne |
CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
NOTICE OF 20212022 ANNUAL MEETING OF STOCKHOLDERS
 | DATE & TIME: May 9:00 a.m. Central Time | MEETING AGENDA 1. Elect two (2) class
2. To approve, on an advisory basis, our
3.
| ||
|
PLACE: Carriage Services, Inc. 3040 Post Oak Boulevard, Suite 850, Houston, Texas 77056 | |||
|
RECORD DATE: March |
| YOUR VOTE IS IMPORTANT - YOU CAN VOTE IN ONE OF THREE WAYS: |
 | VIA THE INTERNET Visit the website listed on your
|  | BY MAIL Sign, date and return your proxy card in the enclosed envelope |  |
IN PERSON Attend the Annual Meeting | |||||
We are pleased to continue taking advantage of the Notice & Access method of delivery for our Annual Report, Proxy Statement and other Proxy materials (collectively the “Proxy Materials”). The Proxy Materials will be available online as described in this Proxy Statement and hard copies will not be delivered, unless expressly requested by a stockholder.
We continue to monitor the COVID-19 situation and the related recommendations and protocols issued by public health authorities and federal, state, and local governments. If necessary, we may impose additional procedures or limitations on meeting attendees or determine that alternate Annual Meeting arrangements are advisable or required (i.e., a virtual-only meeting). If we determine that such alternative arrangements are advisable or required, then we will announce our decision and post additional information on our Investors Relations website at www.carriageservices.com and file a notice with the Securities and Exchange Commission (the “SEC”). Please check this website in advance of the Annual Meeting date if you are planning to attend in person.
On or about April 5, 2021,4, 2022, we will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) detailing how to access the Proxy Materials electronically and how to submit your proxy via the Internet. You are entitled to vote if you were a stockholder of record on March 19, 2021.18, 2022. The Notice 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 continue to believe this process provides our stockholders with a convenient way to access the Proxy Materials and submit their proxies online, while reducing the environmental impact of our Annual Meeting and lowering the costs of printing and distribution.
If your shares are held in a stock brokerage account or by a financial institution 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 order of the Board of Directors,
Steven D. Metzger
SeniorExecutive Vice President, Chief Administrative Officer, General Counsel & Secretary
April 5, 20211, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING
TO BE HELD ON TUESDAY, MAY 18, 202117, 2022
The Notice of Annual Meeting of Stockholders, the Proxy Statement and the 20202021 Annual Report to Stockholders are available at
www.carriageservices.com.
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 20212022 Annual Meeting of Stockholders (our “Annual Meeting”).
Annual Meeting Date and Location
We intend to hold our Annual Meeting in person at our offices at 3040 Post Oak Boulevard, Suite 850, Houston, Texas 77056, on Tuesday, May 18, 2021,17, 2022, at 9:00 a.m., Central Standard Time. If you plan to attend in person, please use the main lobby entrance where you will see an area to check in prior to entering the room.
We continue to monitor the COVID-19 situation and the related recommendations and protocols issued by public health authorities and federal, state, and local governments. If necessary, we may impose additional procedures or limitations on meeting attendees or determine that alternate Annual Meeting arrangements are advisable or required (i.e., a virtual-only meeting). If we determine that such alternative arrangements are advisable or required, then we will announce our decision and post additional information on our Investors Relations website at www.carriageservices.com and file a notice with the SEC. Please check this website in advance of the Annual Meeting date if you are planning to attend in person.
Mailing Date and Delivery of Proxy Materials
On or about April 5, 2021,4, 2022, 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 2021our Annual Meeting.
Stockholders Sharing the Same 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 financial institution, 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, you must contact your broker to revoke your consent. You may also contact the Company directly to request copies of materials by submitting a written request to our Corporate Secretary at 3040 Post Oak Boulevard, Suite 300, Houston, TX 77056. 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, par value $.01 per share (the “Common Stock”) at the close of business on March 19, 2021,18, 2022, the record date for our Annual Meeting (the “Record Date”), and are therefore entitled to vote at our Annual Meeting.
2021 Proxy Statement 1
Proxy Statement
This Proxy Statement, along with a proxy card, is made 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
2022 Proxy Statement 1
Proxy Statement
or about April 5, 2021.4, 2022. 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.
What am I voting on and how does our Board recommend that I vote?
Proposal Number | Subject of Proposal | Recommended Vote | For details | Subject of Proposal | Recommended Vote | For details see pages starting on | ||||||
| 1 | Re-elect Melvin C. Payne and James R. Schenck to our Board as Class I Directors. | FOR the proposal | 6 | Re-elect Bryan D. Leibman and Dr. Achille Messac to our Board as Class II Directors. | FOR each nominee | 6 | ||||||
| 2 | Approve, on an advisory basis, our Named Executive Officer compensation. | FOR the proposal | 46 | Approve, on an advisory basis, our Named Executive Officer compensation. | FOR the proposal | 47 | ||||||
| 3 | Approve our proposed Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan | FOR the proposal | 47 | Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. | FOR the proposal | 49 | ||||||
| 4 | Approve our proposed First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan | FOR the proposal | 51 | |||||||||
| 5 | Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. | FOR the proposal | 62 | |||||||||
We will also transact any other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
Our Board has appointed Melvin C. Payne, our Chief Executive Officer (“CEO”) and Chairman of the Board, and Steven D. Metzger, our SeniorExecutive Vice President, Chief Administrative Officer, General Counsel 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 is entitled to vote at the meeting?
You may receive notice of and vote at our Annual Meeting if you were a stockholder of record as of the close of business on the Record Date. As of the Record Date, there were 18,017,88115,360,758 shares of Common Stock outstanding and entitled to vote.
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.
Why 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.
2 Carriage Services
Proxy Statement
What is the difference between a stockholder of record and a “street name” holder?
Most stockholders hold their shares through a financial institution, 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 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 financial institution, broker or other nominee, you are considered the beneficial owner of shares held in “street name” and your financial institution, |
2 Carriage Services
Proxy Statement
broker or other nominee is the stockholder of record. As the beneficial owner, you have the right to direct your financial institution, 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 financial institution, broker or other nominee provides to you. |
How do I vote my shares?
Stockholders of Record. There are three ways to vote:
INTERNET | 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. You may vote online until 11:59 p.m., Central Standard Time the day before the Annual Meeting. | |
BY MAIL | If you requested a copy of this Proxy Statement and proxy card and would like to vote by mail, please send your completed and signed proxy card in the prepaid envelope provided so that it is received in the mail by us by May | |
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. | |
Street Name Stockholder. There are three ways to vote:
BY METHODS LISTED ON VOTING INSTRUCTION FORM | Please refer to the voting instruction form or other information forwarded by your financial institution, broker or other nominee to determine whether you may submit a proxy by telephone or electronically on the 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 and signing your voting instruction card or other information forwarded by your financial institution, 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 financial institution, 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. | |
May I change or revoke my vote?
Yes, if you are a stockholder of record, you may change your vote or revoke your proxy at any time before your shares are voted at the meeting by:
submitting written notice of revocation no later than May 17, 202116, 2022 to our home office, which is located at 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, Attn: Corporate Secretary;
2021 Proxy Statement 3
Proxy Statement
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 17, 2021;16, 2022; 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 financial institution, broker or other nominee in accordance with such entity’s procedures. Please refer to the materials that your financial institution, broker or other nominee provided to you.
2022 Proxy Statement 3
Proxy Statement
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.Meeting for the purpose of establishing a quorum.
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 financial institution, broker or other nominee describing how to vote your shares. If you do not instruct your financial institution, 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 financial institutions, brokers and other nominees do not have discretionary authority to vote unless they receive timely instructions from you. When a financial institution, broker or other nominee does not have discretion to vote on a particular matter and you have not given timely instructions on how the financial institution, 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 III Directors), and Proposal 2 (Advisory Vote to Approve Our Named Executive Officer Compensation), Proposal 3 (Approval of the Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan), and Proposal 4 (Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan) 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 53 (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.
What vote is required to approve each proposal?
| • | Proposal 1 (Election of the Class |
| • | Proposal 2 (Advisory Vote to Approve Named Executive Officer Compensation): Approval of this proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of |
4 Carriage Services
Proxy Statement
Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. |
| • | Proposal 3 |
|
|
4 Carriage Services
Proxy Statement
December 31, |
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 financial institutions, 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 SEC within four business days of our Annual Meeting.
May I propose actions for consideration at next year’s Annual Meeting or nominate individuals to serve as directors?
You may submit proposals for consideration at future annual meetings. See “Stockholder Proposals for the 20222023 Annual Meeting” for information regarding the submission of stockholder proposals for next year’s 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.
20212022 Proxy Statement 5
ELECTION OF CLASS III DIRECTORS
We currently have sevensix 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 III Directors for a new three-year term expiring on the date of our 20242025 Annual Meeting and until their successors are duly elected and qualified. This classification of our Board may have the effect of delaying or preventing changes in control of our Company.
Our Corporate Governance Committee has recommended that we nominate Melvin C. PayneBryan D. Leibman and James R. SchenckDr. Achille Messac for re-election at our Annual Meeting to serve as our Class III Directors for a new three-year term. Proxies may be voted for each of the Class III Directors. The biographical description for Mr. PayneLeibman and Mr. SchenckDr. Messac are included below.
On June 26, 2020, William W. GoetzMay 17, 2021, James R. Schenck resigned as the President and Chief Operating Officer of the Company, as well as resigning his position as a member of the Board, as a Class III director.
On July 30, 2020, Dr. Achille Messac was elected28, 2021, upon the recommendation of our Corporate Governance Committee, the Board realigned the Company’s classes of directors to serveprovide for equal apportionment among the three classes, as a membercontemplated by the Company’s Amended and Restated Certificate of Incorporation. To facilitate the class realignment, on July 28, 2021, Barry K. Fingerhut resigned from the Board as a Class II director, withand, effective as of July 28, 2021, was re-elected by the Board to serve as a term expiring onClass I director until the dateCompany’s 2024 annual meeting of our 2022 Annual Meeting.shareholders.
Directors are elected by a majority of votes cast. Our bylaws provide that in an uncontested election if the nominee director does not receive a majority of the votes cast, the nominee must promptly deliver a written resignation to our Board 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. Our Board, by a majority vote, is then required to promptly determine whether to accept the resignation of the director or decline to accept the resignation. If our Board declines 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 accepts the resignation, the directorship will become vacant and the Board 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.
Independence
| Age
|
| ||
* - Independent Directors only | ||||
6 Carriage Services
Proposal No. 1 Election of Class III Directors
| Skills and Qualifications | ||||||||||||||||
Industry Experience | 1 |
|
|
|
|
|
|
| ||||||||
Senior Leadership Experience | 6 | |||||||||||||||
Risk Oversight and Management Experience | 5 |
| ||||||||||||||
Operations Experience | 4 | |||||||||||||||
Regulatory Experience | 5 | |||||||||||||||
| ||||||||||||||||
Finance / Accounting | 4 | |||||||||||||||
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 StatementandFive Guiding PrinciplesPrinciples;;
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.
Described below are the principal occupations, positions and directorships for at least the past five years of our director nominees and continuing directors, 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.
20212022 Proxy Statement 7
Proposal No. 1 Election of Class III Directors
Nominees for Director
|
| |
President and Chief Executive Officer of
Age: Director since
Committees: • Compensation • Audit • Corporate Governance |
Additional Qualifications: Mr. | |
Dr. Achille Messac
Former Dean of Engineering for Howard University and Mississippi State University
Age: 65 Director since 2020 (Class II) Committees: • Compensation • Audit • Corporate Governance | Dr. Achille Messac previously served as the Dean of Engineering for Howard University from 2016 to 2019, and previously for Mississippi State University. Prior to his leadership roles at those institutions, Dr. Messac served as a senior member of the technical staff at Draper Laboratory where he contributed to work in critical areas of aerospace engineering, including work for the Space Shuttle and Space Station. Dr. Messac has also served on the Board as Faculty Senate President for Rensselaer Polytechnic Institute, as Department Chair and Distinguished Professor at Syracuse University, as professor at Northeastern University, and has served on the Board of the American Institute of Aeronautics and Astronautics. Dr. Messac received his BS, MS and PhD from MIT in aerospace engineering and is a Fellow of the American Institute of Aeronautics and Astronautics, The American Society of Mechanical Engineering, and The American Association for the Advancement of Science. Additional Qualifications: Dr. Messac brings to the Board extensive leadership in the aerospace and higher education technological fields, which included significantly advancing performance, strategic capital allocation, and fiscal effectiveness. Additionally, his leadership and past experiences, along with leading roles in strategic planning, resulted in successful approaches to advance high performance. |
You may not cumulate your votes in the election of the Class III 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.
BOARD RECOMMENDATION
FOR THE REASONS STATED ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THE CLASS |
8 Carriage Services
Proposal No. 1 Election of Class III Directors
Continuing Directors
Barry K. Fingerhut
Chief Executive Officer of Certification Partners, LLC
Age: Director since 2012 (Class I)
Committees: • Compensation (Chair) • Audit • Corporate Governance |
Barry K. Fingerhut has served as 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, financial services industry, as well as other industries. Currently, he serves on a number of private company and non-profit Boards. Mr. Fingerhut previously served on our Board from 1995 through 1999. He received a BS with distinction from the University of Maryland and an MBA with distinction in Finance/Investments from New York University.
Additional Qualifications: Mr. Fingerhut brings to the Board extensive and broad investment experience along with significant historical knowledge of Carriage. | |
|
|
2021 Proxy Statement 9
Proposal No. 1 Election of Class I Directors
|
| |
|
|
10 Carriage Services
Proposal No. 1 Election of Class I Directors
Douglas B. Meehan
Deputy Chief Investment Officer for van Biema Value Partners, LLC
Age: Director since 2018 (Class III)
Committees: • Compensation • Audit • Corporate Governance |
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. Mr. Meehan received a BA in Philosophy from Columbia University, a PhD in Philosophy and Cognitive Science from the City University Graduate Center, and an MBA from Columbia Business School, where he participated in the Applied Value Investing Program.
Additional Qualifications: Mr. Meehan brings to the Board his extensive financial markets and real estate experience, as well as experience with sophisticated transactions. |
20212022 Proxy Statement 119
Proposal No. 1 Election of Class II Directors
Donald D. Patteson, Jr. Former Chairman of the Board of Directors and Chief Executive Officer of Sovereign Business Forms, Inc. (“Sovereign”)
Age: 76 Director since 2011 (Class III) Committees: • Compensation • Audit (Chair) • Corporate Governance | 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. He also served on the Board of Directors of Rosetta Resources Inc. and Cal Dive International, Inc. until 2015. Mr. Patteson received a BA and an MBA with a concentration in finance from the University of Texas. Additional Qualifications: Mr. Patteson brings to the Board his executive experience as a Chief Executive Officer and Chief Financial Officer, enabling him to provide the Board with executive and financial management expertise, as well as experience with major financial transactions. | |
Melvin C. Payne Co-Founder of Carriage
Age: 79 Director since 1991 (Class I) Committees: • None | Melvin C. Payne, co-founder of Carriage, has served as our CEO and a director since our inception in 1991, and as Chairman of the Board since December 1996. Prior to co-founding Carriage, Mr. Payne held a variety of financial and executive leadership roles, including serving as an Executive Vice President for WEDGE Group where he focused on leveraged buyouts; serving as Chief Financial Officer and then President and Chief Executive Officer for Independent Refining Company; serving as Head of the Chemical Division for Texas Commerce Bank; and overseeing the analysis and private placement of industrial and commercial loans at Prudential Insurance Company. Additional Qualifications: Mr. Payne, a Vietnam Veteran, earned his Bachelors in Chemical Engineering from Mississippi State University and his MBA from Tulane University. |
10 Carriage Services
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, and which is achieved through 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 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 Great Concepts 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 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’s sustainable high performance and reputation over time.
Melvin C. Payne, our co-founder and largest individual stockholder, is our CEO 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 CEO and Chairman of our Board, based upon Mr. Payne’s specific expertise, unique knowledge of the Company, passion and long-term vision for Carriage. This arrangement provides a clear, unified strategic vision and 4E Leadership approach 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 CEO’s performance. As part of that annual evaluation and long-term planning, our Corporate Governance Committee is charged with evaluating the succession of our CEO. Mr. Payne agreed to an extension of his employment agreement on
2022 Proxy Statement 11
Corporate Governance
February 17, 2021, which will ensure his continued leadership as CEO for an additional seven years. As
12 Carriage Services
Corporate Governance
On June 2, 2021, as part of his extension,a broader succession plan format, our Board, in coordination with our CEO, established a new Strategic Vision and Principles Group (the “SVPG”) that is chaired by our CEO, along with appointing Carlos Quezada to Executive Vice President and Chief Operating Officer, Steven D. Metzger to Executive Vice President, Chief Administrative Officer, General Counsel and Secretary, and C. Benjamin Brink to Executive Vice President, Chief Financial Officer and Treasurer. In conjunction with their respective appointments, each of Messrs. Quezada, Metzger and Brink serve as members on the SVPG. Subsequently, on February 23, 2022, our Board appointed Carlos Quezada to President and Chief Operating Officer. The creation of the SVPG, and the subsequent promotion of Mr. Quezada, will allow Mr. Payne confirmed that he intends to be involved withallocate more of his time, passion and energy developing the members of the SVPG as future executive leaders of the Company, as long as his health is good and he is adding valuealong with his energy, passion and vision for Carriage and commitment to mentoring 4E Leaders forthem on the future; nevertheless,Company’s never ending Good To Great journey. That being the case, the Corporate Governance Committee continues to annually considersconsider and discussesdiscuss CEO succession planning. The Board also periodically reviews our leadership structure to determine if it is still appropriate in light of the Company’s specific circumstances and needs and any other relevant factors.
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.
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 one of our biggest risk areas 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.
Additionally, in executing this responsibility, our Board provides their 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 Company, leadership and people. For example, during 2020,2021, those processes included monthlyregular update calls outside of quarterly Board meetings to discuss impacts from the PandemicCOVID-19 pandemic on the business, and how senior leadership was addressing those impacts.impacts and related performance and operational concerns. The Board was also involved in regular discussions during operational and strategic reviews with the Company’s senior leadership, as well as discussions surrounding the programs, policies, processes and controls related to the Company’s financial activities and performance; controllership and financial reporting; executive officer development and evaluation; compliance with the Company’s Code of Business Conduct and Ethics; applicable laws and regulations; information technology; and internal audits. Our Board also relies on each of its committees to help administer its oversight duties for those areas which they have oversight responsibilities.
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.
12 Carriage Services
Corporate Governance
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 represent 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.
2021 Proxy Statement 13
Corporate Governance
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 company boards, we 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 sevensix directors on our Board who each serve staggered three-year terms. SixFive directors are independent. The average age of all directors currently serving on our Board is 6466.5 years. The average age of all independent directors is 6164 years. The average tenure of all independent directors is 96.8 years.
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.
Our Corporate Governance Committee 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. For our 20222023 Annual Meeting of Stockholders, the deadline will be February 17, 2022,16, 2023, based upon this year’s meeting occurring on May 18, 2021.17, 2022. 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.
14 Carriage Services
Corporate Governance
Organization and Committees of Our Board
During 2020,2021, our Board met 57 times and acted by unanimous written consent 95 additional times. Each of the directors attended all of the meetings of our Board except for Mr. Leibman and Mr. Patteson, Jr. who waswere each unable to attend the meetings held on July 26, 2021 and July 28, 2021, along with Mr. Leibman
2022 Proxy Statement 13
Corporate Governance
being unable to attend the meeting held on May 19th.January 26, 2021. 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 20202021 Annual Meeting of Stockholders virtually, excluding Mr. Leibman.Stockholders.
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 20202021 are described below.
| Director | Compensation | Audit | Corporate Governance | |||
Melvin C. Payne(*) | — | — | — | |||
Bryan D. Leibman(I)(L) | X | X | X | |||
Barry K. Fingerhut(I) | Chairman | X | X | |||
Douglas B. Meehan(I) | X | X | X | |||
Dr. Achille Messac(I) | X | X | ||||
Donald D. Patteson, Jr.(I) | X | Chairman | X | |||
| ||||||
| (*) | As CEO of the Company, Mr. Payne is not independent. |
| (I) | Independent Director. |
| (L) | Lead Director. |
Compensation Committee.
Our Compensation Committee’s principal functions and responsibilities are to:
review, evaluate and approve our executive 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 CEO or (4) by our Compensation Committee’s outside compensation consultant, if a consultant is engaged by our Compensation Committee.
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 CEO, 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;
2021 Proxy Statement 15
Corporate Governance
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;
14 Carriage Services
Corporate Governance
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 63 times during 20202021 and acted by unanimous written consent 56 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.
Our Audit Committee’s principal functions and responsibilities 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 46 times during 20202021 and did not act by unanimous written consent. All committee members were present at such meetings, except for Mr. Leibman and Mr. Patteson Jr., who waswere each unable to attend the meetingmeetings held on May 19th.July 26, 2021 and July 28, 2021. All members of our Audit Committee are independent as 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 the “Audit Committee Report” on page 5448 for additional information regarding our Audit Committee.
Corporate Governance Committee.
Our Corporate Governance Committee’s principal functions and responsibilities 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 CEO and other members of the Executive Leadership Team;
2022 Proxy Statement 16 Carriage Services15
Corporate Governance
lead our Board in its annual review of the performance of our Board and its committees;
review the Company’s compliance programs, including, but not limited to, the Code of Business Conduct and Ethics and the Insider Trading and Anti-Hedging Policy; and
perform such other functions as our Board may assign to our Corporate Governance Committee from time to time.
Our Corporate Governance Committee met 2 times during 20202021 and did not act by unanimous written consent. All committee members were present at such meetings.meetings except for Mr. Leibman and Mr. Patteson Jr., who were each unable to attend the meeting held on July 28, 2021 .
In accordance with applicable laws, regulations, our Corporate Governance Guidelines, and the rules of the NYSE, our Board must affirmatively determine the independence of each director and director nominee. Accordingly, our Board determined that Messrs. Fingerhut, Leibman, Meehan, Messac, Patteson, and SchenckPatteson do not have a material relationship with Carriage (either directly or as a partner, stockholder or officer of an organization that has a material relationship with Carriage) and are “independent” as defined under the NYSE’s listing standards and by 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 CEO and Chairman of our Board.CEO.
Board’s Interaction with Stockholders
Our CEO and Executive Leadership Team are responsible for establishing effective communication with our stockholders. Independent directors are not precluded from meeting with stockholders, but where appropriate, our CEO or other members of our Executive 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.
In accordance with our Corporate Governance Guidelines, our Board performsmembers perform 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 adopted 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: Corporate Secretary.
2021 Proxy Statement 1716 Carriage Services
Corporate Governance
Corporate Social Responsibility
One of our key guiding principles is “Belief in the Power of People Through Individual Initiative and Teamwork.” 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.
Compensation Committee Interlocks and Insider Participation
During 2020,2021, Messrs. Fingerhut, Leibman, Meehan, Messac, Patteson and SchenckPatteson served on our Compensation Committee. None of Messrs. Fingerhut, Leibman, Meehan, Messac, Patteson or Schenck hasPatteson 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.
2022 Proxy Statement 17
The Carriage High Performance Culture
Our Commitment to an Empowered and Enduring Company, Culture, and Partnership with our Communities
At Carriage, we are aware of the recent focus on “ESG,” but rather than change a long cultivated and effective approach focused on people and empowerment to make thoughtful and broadly meaningful decisions, in an effort to instead fit a pre-determined system crafted by third parties who are unfamiliar with our Company, we believe it is more helpful to provide greater detail to our shareholders as to who and what have been helping drive our High Performance these past several years. Our focus when it comes to building and continuously developing a company and culture of empowered leaders has been, and always will be, people.
Investment in People
We are focused on Being the Best in our industry and, as a result, everything begins with our employees. We empower our team to make decisions that will have a positive and lasting impact, not only on the client families who we are privileged to serve, but also within our communities, ultimately resulting in long term value for our shareholders. In order to equip, position and motivate our employees to make these important, and often local decisions, we are intentional in creating a culture driven by both High Performance and our Five Guiding Principles, both of which have served as the foundation for Carriage for more than 30 years. We have written extensively over the years about our unique culture and encourage our shareholders to review prior releases for greater insight.
In combination with this focus on culture, we also invest holistically in our employees, from education and development (e.g. health and safety training, tuition reimbursement programs, etc.) to financial wellness (e.g. an employee stock purchase plan, 401k Plan with a company match, etc.) to an overall focus on physical and mental wellness (free biometric screenings resulting in discounts on health insurance, discounts on gym memberships, an employee assistance program, etc.). For 2022, we have also welcomed the creation of Carriage’s first ever “Wellness Committee” which is comprised of a number of Carriage employees who have a passion for, and are focused on, continuing to build upon a program of enhanced and broad wellness opportunities for our approximately 2,700 employees. We are continuously exploring opportunities to invest in the education, development and well-being of our most important asset – our people.
People Driven Purpose
Our focus on people and culture begins with our employees who then lead the service provided to our client families along with our partnership with the numerous communities of which we are a part. As it relates to our focus on partnership with our client families and our communities, our businesses are intimately involved with their respective communities at a local level. We encourage any shareholder who would like to learn more about the unique relationships between our businesses and their local communities to reach out to one of our Managing Partners.
At a broader level of support and engagement, “Carriage Cares” is our 501(c)(3) non-profit organization which is overseen by a committee of employees. While currently entirely funded by our employees, Carriage Cares was initially established years ago to support fellow employees who were adversely impacted by natural disasters. The purpose and reach of Carriage Cares has since grown through the passion of its committee members who have worked together to expand our fundraising focus in an effort to identify opportunities within the various communities across the country for our businesses to give back, not only with financial contributions to support local charitable causes, but also through “roll up our sleeves” volunteer opportunities.
18 Carriage Services
The Carriage Connection
First Who Then What
As it relates to our focus on people, we also believe diversity is a key component to our success and can be found in a number of areas, including thought, gender, race, ethnicity, age and life experience, among many other areas. Diversity, in all senses of the word, within Carriage continues to expand. For example, within our decentralized owner/operator model, our entrepreneurial Managing Partners who lead our businesses are our most critical leaders. Over the course of the past five years, we have seen the number of women serving in our Managing Partner roles steadily increase each year. More specifically, the number of women leading our businesses has nearly doubled during this short time. Moreover, some of our top producing Sales Managers are women and our two most recent additions to our Director of Support and Sales Support leadership teams are women.
Managing Partners Diversity
| ||
81% increase of Female Managing Partners since 2017 | ||
Among our Support Center Team of 112 employees, more than half are women and 53% are racial or ethnic minorities. We are also proud to employ a team of more seasoned employees, with an average age of 53 across our businesses.
|
of our Support Center Team are racial or ethnic minorities |
| We are proud to employ a team of more seasoned employees, with an average age of 53 across our businesses |
It is important to note that none of these numbers are driven by quotas or a “check the box” approach to diversity. It is entirely organic and the result of a High Performance Culture where we will always seek out the very best talent, regardless of gender, race or age. Rather than be directed by those outside of our Company to look for candidates who fit a particular profile, we will continue to focus on recruiting the very best talent that, in our experience, naturally leads to a broadly diverse High Performance Team.
2022 Proxy Statement 19
The Carriage Connection
With that said, it is our thought diversity of which we are most proud and focused. From our businesses to our Support Center, we encourage our employees to be independent thinkers and drive thoughtful decision-making supported by both data and creativity. We do not subscribe to a “playbook” approach that should be followed by every business, but rather an encouragement to know your employees, customers, and your community and then build a customized approach that best serves those unique stakeholders. One size most certainly does not fit all at Carriage.
The Right Who’s Making the Right Decisions
We believe that when you empower The Right Who to make decisions rather than force outside initiatives down, you will see positive and lasting results occur organically. For example, as it relates to environmental matters, as our businesses are updated or remodeled, or where we expand our business, we empower our Managing Partners to use energy-efficient lighting, heating, and cooling at their businesses. Managing Partners also have the autonomy to add electric vehicles to their fleets. Additionally, we partner with and support our Managing Partners and the businesses they lead from our Support Center, which occupies approximately 48,000 square feet of leased office space in Houston, Texas. The home of our Support Center has obtained a LEED Silver Certification and an ENERGY STAR Certified score of 94. These are all decisions our leaders are empowered to make without receiving a mandate from a third party who is neither familiar with our local business or the community.
Moreover, we operate cemeteries across several states that have been challenged in recent years by drought and other water usage issues, such as California, Nevada and Idaho. While we have a duty to perpetually maintain and irrigate these cemeteries, our Managing Partners are sensitive to water issues affecting their local communities. As part of an effort to lessen our impact on municipal water sources in those communities, along with being good community partners, we use, where available, water resources drawn from on-site wells or reclaimed water sources for our cemetery maintenance and irrigation activities, as opposed to utilizing municipal or other resource-constrained water sources. As of December 31, 2021, twelve of our thirty-one, or approximately 39%, of our cemeteries utilized on-site wells or reclaimed water sources for our cemetery maintenance and irrigation activities, with one cemetery in the process of completing an on-site well. | 39% of our cemeteries utilized on-site wells or reclaimed water sources for our cemetery maintenance and irrigation activities | |||||
We believe our decentralized approach to operating our businesses leads to not only growth in local markets, but shows our commitment to being good community partners, along with demonstrating the difference our people and businesses can make in the communities they serve, environmental or otherwise, particularly when they are empowered to lead and customize these local approaches.
Experienced Leadership & Continuous Education, Growth and Improvement
Leading this “First Who Then What” approach to culture and decision-making is our management team and Board of Directors who each bring a unique background and set of skills that have contributed to the Company’s transformation, turnaround, and High Performance over the past several years. When it comes to governance, we believe “good governance” begins with a strong team who have worked together to build a proven track record of performance.
20 Carriage Services
The Carriage Connection
As part of our Board’s strategic and risk oversight, the Board continually assesses whether changes to our corporate governance policies and practices are appropriate with regular reviews and updates to not only those policies, but also to our by-laws and committee charters. Our Board is also encouraged to continuously learn and grow through various avenues, including customized questionnaires and discussions surrounding key hypotheticals involving the Company’s future, invitations to attend our regular operations leadership calls to learn more about what is driving performance, as well as educational opportunities both presented during Board and Committee meetings, as well as support to gain additional education outside of meetings.
We encourage our shareholders to take the time to learn more about the unique background of each individual member of the Company’s Management Team and Board of Directors to better understand these individuals, their stories, and the impact he or she has had on Carriage’s High Performance Culture.
2022 Proxy Statement 21
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 for 2020 provides the following:
|
| Annual Retainer(1) | ||||
Board – Independent Director | $140,000 | ||||
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 | $ — | ||||
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. |
Our Director Compensation Policy provides the option for any director to elect to receive their annual retainer, which is paid in quarterly installments, in unrestricted shares of our Common Stock by providing to us written notice. 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 also 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 appointment or election to the Board, which can be taken in cash or unrestricted 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. Pursuant to our Director Compensation Policy any such new director grant shall vest immediately.
Our Director Compensation Policy further provides that our employee directors are not separately compensated for their service as directors.
2021 Proxy Statement 1922 Carriage Services
Director Compensation
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2020:2021:
| Name | Fees Paid in Cash | Fee Paid in Stock(1) | Stock Awards(2) | Total | Fees Paid in Cash | Fee Paid in Stock(3) | Stock Awards | Total | ||||||||||||||||||||||||||||
Barry K. Fingerhut | $ 100 | $144,900 | $ — | $145,000 | $ 174 | $144,827 | $ — | $145,000 | ||||||||||||||||||||||||||||
Bryan D. Leibman | $ 50,048 | $ 99,952 | $ — | $150,000 | $ 50,115 | $ 99,885 | $ — | $150,000 | ||||||||||||||||||||||||||||
Donald D. Patteson, Jr. | $110,033 | $ 39,967 | $ — | $150,000 | $110,048 | $ 39,952 | $ — | $150,000 | ||||||||||||||||||||||||||||
James R. Schenck | $ 100 | $144,900 | $ — | $145,000 | $ 92 | $ 54,880 | $ — | $ 54,973 | ||||||||||||||||||||||||||||
Douglas B. Meehan | $ 47 | $139,953 | $ — | $140,000 | $ 98 | $139,902 | $ — | $140,000 | ||||||||||||||||||||||||||||
Dr. Achille Messac | $ 28 | $ 58,945 | $24,994 | $ 83,967 | $ 131 | $142,782 | $ — | $142,912 | ||||||||||||||||||||||||||||
| (1) | Reflects compensation paid to Mr. Schenck through May 17, 2021, the effective date of his resignation as a member of the Board. |
| (2) | Reflects the prorated compensation paid to Dr. Messac upon being appointed chair of the Corporate Governance Committee, which was effective as of June 1, 2021. |
| (3) | 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 | Bryan D. Leibman | Donald D. Patteson, Jr. | James Schenck | Douglas B. Meehan | Dr. Achille Messac | ||||||||||||||||||||||||
March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Number of shares | 2,244 | 1,547 | 619 | 2,244 | 2,167 | — | ||||||||||||||||||||||||
Stock price | $16.15 | $16.15 | $16.15 | $16.15 | $16.15 | $ — | ||||||||||||||||||||||||
June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Number of shares | 1,999 | 1,379 | 551 | 1,999 | 1,931 | — | ||||||||||||||||||||||||
Stock price | $18.12 | $18.12 | $18.12 | $18.12 | $18.12 | $ — | ||||||||||||||||||||||||
September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Number of shares | 1,624 | 1,120 | 448 | 1,624 | 1,568 | 1,074 | ||||||||||||||||||||||||
Stock price | $22.31 | $22.31 | $22.31 | $22.31 | $22.31 | $22.31 | ||||||||||||||||||||||||
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Number of shares | 1,156 | 798 | 319 | 1,156 | 1,117 | 1,117 | ||||||||||||||||||||||||
Stock price | $31.32 | $31.32 | $31.32 | $31.32 | $31.32 | $31.32 | ||||||||||||||||||||||||
|
|
| Barry K. Fingerhut | Bryan D. Leibman | Donald D. Patteson, Jr. | James R. Schenck | Douglas B. Meehan | Dr. Achille Messac | ||||||||||||||||||
March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Number of shares | 1,029 | 710 | 284 | 1,029 | 994 | 994 | ||||||||||||||||||
Stock price | $35.19 | $35.19 | $35.19 | $35.19 | $35.19 | $35.19 | ||||||||||||||||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Number of shares | 979 | 676 | 270 | 505 | 946 | 957 | ||||||||||||||||||
Stock price | $36.97 | $36.97 | $36.97 | $36.97 | $36.97 | $36.97 | ||||||||||||||||||
September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Number of shares | 812 | 560 | 224 | — | 784 | 812 | ||||||||||||||||||
Stock price | $44.59 | $44.59 | $44.59 | $ — | $44.59 | $44.59 | ||||||||||||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Number of shares | 562 | 387 | 155 | — | 543 | 562 | ||||||||||||||||||
Stock price | $64.44 | $64.44 | $64.44 | $ — | $64.44 | $64.44 | ||||||||||||||||||
2022 Proxy Statement 20 Carriage Services23
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 19, 2021,18, 2022, the number of shares beneficially owned and the percentage of the Common Stock held by: (1) each of our directors and director nominees, (2) our Principal Executive Officer and Principal Financial Officer, (3) our other executive officers named in the Summary Compensation Table set forth under “Executive Compensation,” and (4) all our current executive officers and directors as a group. Under the rules of the SEC, on any day, a person is deemed to own beneficially all securities as to which that person owns or shares voting or investment power, as well as all securities which such person may acquire within 60 days of such date through the exercise of currently available conversion rights or options. Except as otherwise stated in the notes to the table, each person named in the table below has sole voting and investment power with respect to the shares indicated.
Beneficial Owner | Common Stock | Stock Options(1) | Number of Shares Beneficially Owned | Percent of Common Stock | Common Stock | Stock Options(1) | Number of Shares Beneficially Owned | Percent of Common Stock | ||||||||||||||||||||||||||||
Melvin C. Payne(2)(3) | 1,271,829 | 281,380 | 1,553,209 | 8.6 | % | 1,237,101 | 290,645 | 1,527,746 | 9.9 | % | ||||||||||||||||||||||||||
Shawn R. Phillips | 78,553 | 115,220 | 193,773 | 1.1 | % | 104,828 | 71,588 | 176,416 | 1.1 | % | ||||||||||||||||||||||||||
C. Benjamin Brink | 23,858 | 68,920 | 92,778 | * | 32,809 | 66,900 | 99,709 | * | ||||||||||||||||||||||||||||
Viki K. Blinderman(5) | 34,312 | 6,980 | 41,292 | * | ||||||||||||||||||||||||||||||||
Paul D. Elliott(6) | 31,755 | 79,188 | 110,943 | * | ||||||||||||||||||||||||||||||||
Peggy Schappaugh | 19,397 | 15,500 | 34,897 | * | ||||||||||||||||||||||||||||||||
Steven D. Metzger | 4,708 | — | 4,708 | * | 7,514 | 10,000 | 17,514 | * | ||||||||||||||||||||||||||||
Carlos R. Quezada | 5,230 | 10,000 | 15,230 | * | ||||||||||||||||||||||||||||||||
Shane T. Pudenz | — | 1,400 | 1,400 | * | ||||||||||||||||||||||||||||||||
Donald D. Patteson, Jr. | 58,647 | — | 58,647 | * | 61,840 | — | 61,840 | * | ||||||||||||||||||||||||||||
Bryan D. Leibman(6) | 32,257 | — | 32,257 | * | ||||||||||||||||||||||||||||||||
James R. Schenck | 23,012 | — | 23,012 | * | ||||||||||||||||||||||||||||||||
Bryan D. Leibman(7) | 37,590 | — | 37,590 | * | ||||||||||||||||||||||||||||||||
Barry K. Fingerhut | 21,104 | — | 21,104 | * | 24,486 | — | 24,486 | * | ||||||||||||||||||||||||||||
Douglas B. Meehan | 14,554 | — | 14,554 | * | 17,821 | — | 17,821 | * | ||||||||||||||||||||||||||||
Dr. Achille Messac | 4,073 | — | 4,073 | * | 7,398 | — | 7,398 | * | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
All current directors and executive officers as a group | 1,566,907 | 472,500 | 2,039,407 | 11.3 | % | |||||||||||||||||||||||||||||||
All current directors and executive officers as a group (13 persons) | 1,587,769 | 545,221 | 2,132,990 | 11.0 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
| * | Indicates less than 1%. |
| (1) | The ownership of stock options shown in the table includes shares of Common Stock which may be acquired within 60 days upon the exercise of outstanding stock options granted under our stock option plans. For unexercisable stock options, see “Executive Compensation – Outstanding Equity Awards at Fiscal Year-End” in this Proxy Statement. |
| (2) | Mr. Payne’s holdings include 4,164 shares of Common Stock held in an Annuity Trust for Mr. Payne’s benefit, 4,164 shares of Common Stock held in an Annuity Trust for Mr. Payne’s spouse’s benefit and 24,354 shares of Common Stock held by Mr. Payne’s spouse. |
| (3) | Mr. Payne has |
| (4) | Mr. Phillips has 61,842 shares of Common Stock pledged as collateral. |
| (5) | Mr. Brink’s holdings include |
| (6) | Mr. Elliott’s holdings include 6,029 shares of Common Stock held jointly by himself and his spouse. |
|
Mr. Leibman’s holdings include 2,576 shares of Common Stock held by Mr. Leibman’s minor children. |
2021 Proxy Statement 2124 Carriage Services
Security Ownership of Directors, Executive Officers and Certain Beneficial Owners
Stock Ownership of Certain Beneficial Owners
As of March 19, 2021,18, 2022, the persons named below were, to our knowledge, the only beneficial owners of more than 5% of our outstanding Common Stock, determined in accordance with Rule 13d-3 of the Exchange Act, other than directors and executive officers whose beneficial ownership is described in the previous table.
Beneficial Owner | Number of Shares Beneficially Owned | Percent of Common Stock | ||||||||
Dimensional Fund Advisors LP(1) Building One, 6300 Bee Cave Road Austin, TX 78746 | 1,437,907 | 8.0 | % | |||||||
BlackRock Inc.(2) 55 East 52nd Street New York, NY 10055 | 1,304,339 | 7.2 | % | |||||||
Renaissance Technologies(3) 800 Third Avenue New York, New York 10022 | 1,091,400 | 6.1 | % | |||||||
Ameriprise Financial, Inc.(4) 145 Ameriprise Financial Center Minneapolis, MN 55474 | 1,050,533 | 5.8 | % | |||||||
Global Alpha Capital Management(5) 800 Third Avenue Montreal, Quebec, Canada H3A 3J6 | 1,010,898 | 5.6 | % | |||||||
The Vanguard Group(6) 100 Vanguard Blvd. Malvern, PA 19355 | 905,599 | 5.0 | % | |||||||
Beneficial Owner | Number of Shares Beneficially Owned | Percent of Common Stock | ||||||
Dimensional Fund Advisors LP(1) 6300 Bee Cave Road Building One Austin, TX 78746 | 1,246,328 | 8.1 | % | |||||
BlackRock Inc.(2) 55 East 52nd Street New York, NY 10055 | 1,143,398 | 7.4 | % | |||||
Ameriprise Financial, Inc.(3) 145 Ameriprise Financial Center Minneapolis, MN 55474 | 1,052,540 | 6.9 | % | |||||
Global Alpha Capital Management(4) 1800 McGill College Suite 1300 Montreal, Quebec, Canada H3A 3J6 | 893,668 | 5.8 | % | |||||
Renaissance Technologies(5) 800 Third Avenue New York, New York 10022 | 880,500 | 5.7 | % | |||||
The Vanguard Group(6) 100 Vanguard Blvd. Malvern, PA 19355 | 855,916 | 5.6 | % | |||||
| (1) | Based solely on Schedule 13G/A filed with the SEC on February |
| (2) | Based solely on Schedule 13G/A filed with the SEC on |
| (3) | Based solely on Schedule 13G/A filed with the SEC on February 14, 2022. Ameriprise Financial, Inc. has shared voting power as to 1,052,365 shares and shared dispositive power as to 1,052,540 shares. |
| (4) | Based solely on Schedule 13G/A filed with the SEC on February 10, 2022. Global Alpha Capital Management has sole voting power as to 835,580 shares and sole dispositive power as to 893,668 shares. |
| (5) | Based solely on Schedule 13G/A filed with the SEC on February 11, |
Based solely on Schedule |
|
|
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC and the NYSE reports of ownership and changes in ownership of Common Stock and other of our equity securities on Forms 3, 4, and 5, and to furnish us with copies of all Forms 3, 4, and 5 they file.
The Company believes, based solely on our review of the copies of such forms and written representations from reporting persons, that all filings required to be made under Section 16(a) of the Exchange Act were timely made for the fiscal year ended December 31, 2020,2021, except for the following 17 instances:instance:
On May 26, 2020,March 2, 2021, a late Form 4 was filed for Mr. Melvin PayneCarlos Quezada related to the grantpurchase of 55,897 performance awards on May 19, 2020.
On May 26, 2020, late Form 4s were filed for Messrs. Christopher Manceaux, William Goetz, Paul Elliot, Carl Benjamin Brink, Michael Loeffel, Steven Metzger, Shawn Phillips and Mses Viki Blinderman and Peggy Schappaugh related to the grant of 13,974 performance awards on May 19, 2020.
22 Carriage Services
Security Ownership of Directors, Executive Officers and Certain Beneficial Owners
On May 26, 2020, a late Form 4 was filed for Adeola Olaniyan related to the grant of 6,987 performance awards on May 19, 2020.
On July 7, 2020, a late Form 3 was filed for Mr. Carlos Quezada to report his initial beneficial ownership of securities, which was due to an extended, six-day delay by the SEC issuing Mr. Quezada’s new CIK number to the Company.
On July 9, 2020, a late Form 4 was filed for Mr. Bryan Leibman related to the grant of 1,379750 shares of Common Stock on June 30, 2020.
On July 9, 2020, a late Form 4 was filed for Mr. Donald Patteson, Jr. related to the grant of 551 shares of Common Stock on June 30, 2020.
On July 9, 2020, a late Form 4 was filed for Mr. James Schenck related to the grant of 1,999 shares of Common Stock on June 30, 2020.
On July 9, 2020, a late Form 4 was filed for Mr. Douglas Meehan related to the grant of 1,931 shares of Common Stock on June 30, 2020.
On July 9, 2020, a late Form 4 was filed for Mr. Barry Fingerhut related to the grant of 1,999 shares of Common Stock on June 30, 2020.February 24, 2021.
20212022 Proxy Statement 2325
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, 2020.2021.
Compensation Committee
Barry K. Fingerhut, Chairman
Bryan D. Leibman
Douglas B. Meehan
Dr. Achille Messac
Donald D. Patteson, Jr.
James R. Schenck
April 5, 20211, 2022
2426 Carriage Services
The following table sets forth the name, age and title of our Executive Officers as of the date of this Proxy Statement. Our Executive Officers serve at the discretion of our Board. There are no family relationships between any of our directors and our Executive Officers. In addition, there are no arrangements or understandings between any of our Executive Officers and any other person pursuant to which any person was selected as an executive officer.
The Executive Officers of the Company are as follows:
Name | Age | Title | ||
Melvin C. Payne |
| CEO & Chairman of the Board (Principal Executive Officer) | ||
| 51 | President and Chief Operating Officer | ||
C. Benjamin Brink |
|
| ||
Steven D. Metzger | 44 | Executive Vice President, Chief Administrative Officer, General Counsel & Secretary | ||
Paul D. Elliott |
| Senior Vice President & Regional Partner | ||
|
| Senior Vice President & Regional Partner | ||
|
|
| ||
|
|
| ||
|
|
| ||
Peggy Schappaugh |
| Vice President of Operations & Acquisitions Analysis | ||
The biographical information for Mr. Payne is located under “Proposal No. 1: Election of Class III Directors – Nominees for DirectorContinuing Directors.”
Carlos R. Quezada
Age: 51 | Carlos R. Quezada serves as our President and Chief Operating Officer and joined Carriage in June 2020. Prior to joining Carriage, Mr. Quezada was a Managing Director for SCI from 2009 to 2020, where he served in leadership roles for both sales and operations. Mr. Quezada joined the death care industry after serving in the hospitality industry where he served in a variety of leadership roles, including Chief Operating Officer, President and Chief Executive Officer for privately held multiunit companies. Mr. Quezada has a Masters in Management from Tulane University and an MBA with an emphasis in Finance from Universidad Francisco Marroquin. |
C. Benjamin Brink
Age: |
C. Benjamin Brink joined Carriage in January 2009 and has served as a |
2022 Proxy Statement 27
Executive Management
Steven D. Metzger
Age: 44 | Steven D. Metzger joined Carriage in May 2018 and serves as our Executive Vice President, Chief Administrative Officer, General Counsel & Secretary. Prior to joining Carriage, Mr. Metzger served as Senior Vice President, General Counsel and Secretary for a publicly traded company in the restaurant industry. Prior to that, he spent seven years with SCI where he served in various leadership roles including Managing Counsel for the Legal Department and Chief Compliance Officer for SCI’s registered investment advisor. Mr. Metzger began his career as a litigator at a Houston law firm and received both his BA in Government and his Juris Doctorate from the University of Texas at Austin. |
Paul D. Elliott
Age: |
Paul D. Elliott joined Carriage in September 2012 as our Regional Partner – West and was promoted to Senior Vice President in February 2017. Prior to joining Carriage, Mr. Elliott served as a Managing Director for Service Corporation International (“SCI”). From February 1995 to August 2012, Mr. Elliott held various management roles in sales and operations within 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. |
2021 Proxy Statement 25
Executive Management
|
|
|
|
Shawn R. Phillips
Age: |
Shawn R. Phillips joined Carriage in September 2007 and |
Age: |
|
2628 Carriage Services
Executive Management
Peggy Schappaugh
Age: |
Peggy Schappaugh joined Carriage in August 2003 as an Operations Analyst and was promoted to Vice President of Operations and Acquisition Analysis in 2020. Mrs. Schappaugh has also served in other operationally focused roles within Carriage. Prior to joining Carriage, Mrs. Schappaugh served as an accountant at a publicly traded oil and gas company. Mrs. Schappaugh is a CPA and possesses a BBA in Accounting from Texas A&M University in College Station. |
20212022 Proxy Statement 2729
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis describes in detail the compensation paid to our Named Executive Officers (“NEOs”) listed in the Summary Compensation Table. This section is designed to provide our stockholders with insight into, and an understanding of, our compensation programs and practices, along with the decision-making process as it relates to the compensation of our NEOs.
For 2020,2021, our NEOs were:
Name | Title | |
Melvin C. Payne | CEO & Chairman of the Board (Principal Executive Officer) | |
| ||
C. Benjamin Brink(2) | ||
Steven D. Metzger(2) | Executive Vice President, Chief Administrative Officer, General Counsel & Secretary | |
Shawn R. Phillips | Senior Vice President & Regional Partner | |
| Former Senior Vice President, | |
| (1) | On February 23, 2022, the Board appointed Mr. Quezada to serve as President and Chief Operating Officer effective immediately as of the date of appointment. |
| (2) | Ms. Blinderman resigned from her position as Senior Vice President, Chief Accounting Officer and Principal Financial Officer effective March 31, 2021 and as Secretary effective February 2, 2021. |
|
|
Our compensation program for our NEOs is unique to our identity as it is driven by our High Performance Culture. In order to better understand the decisions regarding our executive compensation program, a brief look into Carriage’s history and our High Performance Culture is beneficial.
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, 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-Hand
Growth of the Company Is Driven by Decentralization and Partnership
We are on a Good To Great Journey that will never end. In order to be great, the journey must be one of learning, adapting to change, and continuous improvement. What we have learned is that from 1991 to 2003, we were not aligned with our own Guiding Principles when we employed a “budget and control,” top-down management model for operating and consolidating the highly fragmented funeral and cemetery industry. Even after implementing a High Performance Standards Operating Model in 2004, our learning journey continued on how to even become good at operating with High Performance Standards that do not change from year-to-year.Standards.
Our Good To Great Journey of learning and improvement continues. Properly aligned, we always find ourselves returning to the Good To Great concepts of “First Who, Then What,” “Right People on the bus in the Right Seats (and the wrong people off the bus),” and the “Flywheel Effect,” as they remind us and reaffirm for us each and every time that the achieved quantitative results are not sustainable without the bedrock establishment of these qualitative Good To Great ideas that are deeply rooted into our High Performance Culture.
2830 Carriage Services
Compensation Discussion and Analysis
Our compensation program is aligned with our Mission Statement, Five Guiding Principles and Good To Great concepts driving our High Performance Culture, beginning with how we think, the unique language we use internally, and leading directly into the actions we take. The key is first accepting and understanding that our High Performance Standards Operating Model is leadership-based (as opposed to the management focus required in a top-down, budget and control model). 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, EnergizesEnergize Others, Edge, Execute), initially developed by Jack Welch at General Electric, but tailored and evolved specifically to 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 our 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.
We are transparent and openly invite investors, analysts and anyone who wishes to learn more about Carriage, both in general and as a long-term value creation investment platform, to observe the unique and complete transparency of our High Performance Culture.
Compensation Philosophy and Practices
Carriage’s executive compensation programs align our executive pay with the Company’s operational and financial performance, as well as support our short-term and long-term business objectives. The Compensation Committee consists entirely of independent Board members and is responsible for the approval and oversight of compensation and employment agreements affecting Carriage’s NEOs.
During 2020,2021, the Compensation Committee continued to implement the executive compensation philosophy (the “Philosophy”), which was developed to formalize the strategy behind our executive compensation practices and to serve as an ongoing reference point for executive compensation decisions. The Philosophy has been developed based on our Being The Best Mission Statement and Five Guiding Principles and may be summarized in this manner:
to attract, motivate, and retain exceptional 4E Leadership talent that are leaders within our High Performance Culture Executive Leadership Team (“First Who”). These leaders are expected to improve on the already industry leading operating performance through attracting and motivating individual business Managing Partners and Houston Support Center leaders with 4E Leadership characteristics, enhance our best-in-class corporate support functions, and make sound decisions regarding long-term stockholder value creation, particularly involving capital allocation (“Then What”);
to provide 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.
2020 Good to Great II Five Year Shareholder Value Creation Incentive Plan
For a stockholder to gain a clear picture of this Philosophy, one need look no further than how long term incentive compensation (“Executive LTI”) was addressed for our CEO and Executive Leadership Team in 2020. No member of the Company’s Executive Leadership Team was awarded a single share of restricted stock or a single stock option in 2020. Rather, the entirety of Executive LTI was addressed through a single “Good to Great II Five Year Shareholder Value Creation Incentive Plan,” (the “GTG II Plan”) which only compensates these senior leaders at the end of a five year period and, then, only if they have created
20212022 Proxy Statement 2931
Compensation Discussion and Analysis
substantial stockholder value by achieving one of five Compounded Annual Growth Rates (“CAGR”) for the Company’s Common Stock over that period, the minimum target being a 20% CAGR and ranging all the way up to a possible 40% CAGR. In other words, the Executive Leadership Team must drive efforts to create significant stockholder value to receive LTI compensation.
You will not see many public company CEO’s and executive teams agree to forego restricted stock and stock options completely as part of LTI in a given year, but our Executive Leadership Team has complete conviction in its ability to execute at a sustained high level that will drive stockholder value beyond the CAGR targets over the next five years. In addition to the Company’s Executive Leadership Team, thirty-nine (39) other key leaders in the Company are participants in the GTG II Plan, which has created a broad and shared motivation to create stockholder value throughout different levels of leadership across the Company. The Carriage Leadership Team is ALL IN!
30 Carriage Services
Compensation Discussion and Analysis
This GTG II Plan complements our broader Philosophy, which can be seen in both our annual and five year incentive programs for our Managing Partners, all of which are driven by high performance standards necessary to drive stockholder value.
What We Do | What We Do Not Do | |||||
✔ Pay for Performance
• A significant portion of • Our CEO’s • Our
✔ Anti-Hedging Policy
• The Company’s Insider Trading and Anti-Hedging Policy includes provisions that specifically prohibit all employees, including our NEOs and Directors, from entering into any financial instrument or otherwise engage in any transactions that hedge or offset any decrease in the market value or limit the ability to profit from an increase in the market value of the Company’s stock. The Company’s policy also prohibits all employees, including our NEOs and Directors, from buying or selling warrants, puts or calls, options, forward transactions or other derivative securities or instruments involving the Company’s stock. Our Corporate Governance Committee is responsible for reviewing the Company’s compliance programs, including our Insider Trading and Anti-Hedging Policy.
✔ Mitigate Risk
• Carriage is principle-based in its unwavering beliefs and every day practices as reflected in our Five Guiding Principles. Our first Guiding Principle of • We have share ownership and trading guidelines for officers. • 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.
✔ Manage Dilution
• We regularly evaluate share utilization levels within our long-term incentive plans and we manage the dilutive impact of stock-based compensation to appropriate levels. • | ✘ No supplemental retirement plans.
✘ No repricing of underwater stock options.
✘ No option exercise prices below 100% of fair market 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. | |||||
We regularly engage with stockholders on all matters regarding the Company’s results, operations, leadership and culture including other such topics as executive compensation, retention and succession
2021 Proxy Statement 31
Compensation Discussion and Analysis
planning. Messrs. Payne and Brink lead our investor relations function engaging in various investor
32 Carriage Services
Compensation Discussion and Analysis
meetings throughout the year. These meetings are open and transparent to our corporate governance and general investor concerns and issues. Our ongoing outreach program allows management the opportunity to continually address these topics and ensure our compensation practices align with the interests of our stockholders.
Consideration of Previous Stockholder Advisory Vote
The Compensation Committee also considers the outcome of the Company’s advisory stockholder vote on our NEO compensation program and any associated stockholder outreach efforts when making compensation decisions. At our 20202021 Annual Meeting of Stockholders, our stockholders expressed strong support for the Company’s proposal to ratify our NEO compensation program. For that approval, approximately 94%92% of shares voted were in favor of our 20192020 NEO compensation program. This continued strong stockholder support has reaffirmed our Compensation Committee’s approach to our executive compensation philosophy, practices and programs.
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.
Each element of our executive compensation program for NEOs has been designed to align with our Philosophy and our goal of growing the intrinsic value of Carriage per share for our long-term stockholders through disciplined and consistent high-level execution of our three core models (Standards Operating, Strategic Acquisition and 4E Leadership).
The Philosophy, which first begins with our belief in the Good To Great concept of “First Who, Then What,” defines the “Right Who” to be someone who inherently already possesses 4E Leadership characteristics as a starting point and thatwho believes in and is completely aligned with our Mission Statement and Five Guiding Principles.
The Compensation Committee uses internal data to determine the compensation for most executive leadership positions. Due to the uniqueness of our industry and the size of our Company within the industry, executive officer compensation may be difficult to benchmark against market data. We do have insight into compensation philosophy and structures of main competitors within our industry as well as public companies with similar revenue and EBITDA profiles to maintain competitive and retain top 4E talent. Internal data is also considered in establishing compensation for positions considered to be equivalent in responsibilities and importance, especially where precise external data is not available.
The allocation between cash and equity compensation and between short-term and long-term incentives, was determined based on the discretion of the Compensation Committee. The ultimate allocation will depend on our future company and individual performance and potentially future changes in our share price. If vesting targets are achieved, it is likely that a substantial percentage of the amount realized will be from long-term, equity-based incentives, which is consistent with our Philosophy and our commitment to long-term value creation for our stockholders. We believe the elements of our compensation structure create incentives for the executives to take actions and make decisions that will benefit Carriage over the long-term and create long-term value for our stockholders.
2022 Proxy Statement 32 Carriage Services33
Compensation Discussion and Analysis
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 | Provide market competitive cash incentive opportunities that will motivate our executives to achieve and exceed financial goals that support our Being The Best High Performance Standards.
Align management and stockholder interests by linking pay and performance. | ||||||||||
Long-Term Incentives | Restricted Stock: | Time-based awards vesting over a minimum of three years. | Provide market competitive equity award opportunities that will align executive interests with our stockholders. | |||||||||
| Stock Options: | The executive only realizes the potential appreciation in our stock price above the exercise price for stock options. | Encourage executive share ownership. | ||||||||||
| 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. | Encourage retention of executives who enhance our High Performance Culture consistent 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. NEOs may be reimbursed for life insurance, executive | Provide for current and future needs of the executives and their families.
Enhance recruitment and retention. | ||||||||||
Post-Termination Compensation | Our NEOs are party to employment agreements whereby they may be entitled to certain payments upon termination as more fully described herein. | Enhance retention and attraction of management by providing employment protection. | ||||||||||
We regularly review how our levels of compensation align with performance and how our mix of pay (base salary versus annual cash incentives and long-term incentives) will allow us to attract and retain executive level 4E Leaders, while motivating these leaders to execute upon both annual and long-term goals.
All of our executive officers have employment agreements with the Company (the “Agreements”) which were effective on November 5, 2019.2019, except for Mr. Quezada’s agreement which is dated June 25, 2020, the date he joined the Company. Each of these Agreements are for terms of three years (nine years in the case of Mr. Payne as a result of a seven year extension and amendment entered into as of February 17, 2021) and obligate the Company to make certain payments and provide certain benefits to the Company’s executive officers upon a qualifying termination of employment as defined within the Agreements. On June 2, 2021, in conjunction with the promotion of Mr. Quezada to Executive Vice President and Chief Operating Officer, Mr. Brink to Executive Vice President, Chief Financial Officer and Treasurer and Mr. Metzger to Executive Vice President, Chief Administrative Officer, General Counsel and Secretary, each of Messrs. Quezada, Brink, and Metzger entered into amendments to their respective employment
34 Carriage Services
Compensation Discussion and Analysis
agreements with the Company that increased their (i) respective minimum base salaries and (ii) minimum target bonus amounts (short term). Pursuant to the Agreements, the executive officers agreed to certain non-competition provisions and other restrictive covenants during the term of his or her employment and for a period of 24 months thereafter. The Agreements supersede any prior agreements entered into by the Company and any of the executive officers. The Agreements for all of the executive officers are identical, except as noted herein.
2021 Proxy Statement 33
Compensation Discussion and Analysis
The Agreements establish, among other things, (a) a minimum base salary, (b) minimum target bonus amounts (expressed as a percentage of base salary), and (c) post-termination payments due in certain scenarios. For a description of the post-termination benefits provided for in the Agreements see the “Potential Payments Upon Termination” section as further discussed herein.
2020 Temporary Reduction in Base Salary for NEOs
On April 23, 2020, the Company’s Executive Leadership Team, including its NEOs, agreed to temporary reductions in each of their respective salaries, effective as of April 19, 2020 (the “Reduction”), as the Company evaluated the potential impact of the Pandemic to its operations. After analyzing more than two months of subsequent data related to the Company’s performance, the Board reinstated the Executive Leadership Team’s, including its NEOs’, salaries to their pre-Reduction amounts on June 26, 2020, to be effective June 28, 2020. As a result of the Company’s 2020 performance, each member of the Company’s Executive Leadership Team, including its NEOs, were reimbursed the amount of salary forfeited during the Reduction.
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 CEO in determining executive compensation is to make compensation recommendations to the Board 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 (generally for one to five years) to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
developing recommendations for executive officer’s 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 executive officer of the Company, including our NEOs.
During 2020,2021, the Compensation Committee did not engage an independent, third party compensation consultant or use peer group data. Instead, our Executive Leadership Team worked with the Committee on a compensation program that is aligned with and tailored to the uniqueness of our High Performance Culture.while also taking into account publicly available data of named executive officers of other public companies with similar revenue and EBITDA profiles. 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.
The Compensation Committee believes that the average annual total compensation for the CEO of $3.5$4.1 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, particularly given the record performance of the Company in 2020.2021.
The charts below depict the 20202021 mix of total direct compensation (base salary, cash incentive bonus and long-term equity-based incentives) for our CEO and Chairman and our other NEOs as a whole. The long-term equity-based incentives are composed of (1) stock options which were valued at $10.14 per share calculated using the Black-Scholes pricing method and (2) additional performance-based stock awards issued on June 1, 2021 to Messrs. Quezada, Brink and Metzger, which were valued using the anticipated value of the awards at the 20%
34 Carriage Services
Compensation Discussion and Analysis
30% compounded annual growth rate (“CAGR”) target payout upon vesting (Refer to “Long-Term Equity-Based Incentives” on page 3137 for additional details).
2022 Proxy Statement 35
Compensation Discussion and Analysis
A portion of the 20202021 compensation of our NEOs 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, 79%83% of the CEO’s total direct compensation and, on average, 67%83% of our other NEOs’ total direct compensation, is variable and directly affected by both the Company’s and each NEOs’ performance.
CEO & Chairman
| Other Named Executive Officers
|
The base salary for each of our NEOs is determined on an individual basis, taking into account such factors as the duties, experience and levels of responsibility of each executive. Base salaries for our NEOs, 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 NEOs for 2020:2021:
Named Executive Officers | ||
Melvin C. Payne | $ | |
Carlos R. Quezada | $400,000 | |
C. Benjamin Brink | $400,000 | |
Steven D. Metzger | $400,000 | |
Shawn R. Phillips | $340,000 | |
Viki K. Blinderman(1) | $320,000 | |
| ||
| ||
| ||
| (1) | Ms. Blinderman resigned from her position as Senior Vice President, Chief Accounting Officer and Principal Financial Officer effective March 31, |
Melvin C. Payne, CEO
The 20202021 cash incentive bonus of $1,000,000$1,200,000 for Mr. Payne was determined at the Compensation Committee meeting held in February 20212022 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;
20202021 Performance including, but not limited to record Revenue growth, Adjusted Consolidated EBITDA Margin expansion and increasing adjusted Consolidated EBITDA;
2021 Proxy Statement Performance compared to 2020 Performance and 5 Year Trend;
3536 Carriage Services
Compensation Discussion and Analysis
2020 Performance compared to 2019 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 20202021 cash incentive bonuses for Messrs. Brink, PhillipsQuezada, Metzger, and MetzgerPhillips were determined at the Compensation Committee meeting held in February 20212022 and were based upon previously established bonus targets as a percentage of base salary in addition to individual contributioncontributions, responsibilities and Company financial and operational performance results during 2020.2021.
The table below sets forth the 20202021 base salary, the incentive bonus targets and the actual incentive bonus payments, as a percentage of base salary, for Ms. BlindermanMessrs. Quezada, Brink, Metzger, and Messrs. Brink, Phillips, and Metzger.Phillips.
|
| Annual Base Salary |
| Individual 2020 Bonus Paid(2) |
| Annual Base Salary |
| Individual 2021 Bonus Paid(3) |
| ||||||||||||||||||||||||||||||||||||||||||
Named Executive Officers | Target(1) | Amount Paid | % of Salary |
| Target(1) | Amount Paid | % of Salary |
| ||||||||||||||||||||||||||||||||||||||||||
Viki K. Blinderman(3) | $ | 320,000 | 50 | % | $ | — | — | % |
| |||||||||||||||||||||||||||||||||||||||||
Carlos R. Quezada | $ | 400,000 | 75 | % | $ | 500,000 | 125 | % |
| |||||||||||||||||||||||||||||||||||||||||
C. Benjamin Brink | $ | 320,000 | 50 | % | $ | 200,000 | 63 | % |
| $ | 400,000 | 75 | % | $ | 400,000 | 100 | % |
| ||||||||||||||||||||||||||||||||
Steven D. Metzger | $ | 400,000 | 75 | % | $ | 400,000 | 100 | % |
| |||||||||||||||||||||||||||||||||||||||||
Shawn R. Phillips | $ | 320,000 | 50 | % | $ | 220,000 | 69 | % |
| $ | 340,000 | 50 | % | $ | 250,000 | 74 | % |
| ||||||||||||||||||||||||||||||||
Steven D. Metzger | $ | 320,000 | 50 | % | $ | 200,000 | 63 | % |
| |||||||||||||||||||||||||||||||||||||||||
Viki K. Blinderman(2) | $ | — | — | % | $ | — | — | % |
| |||||||||||||||||||||||||||||||||||||||||
| (1) | Target is based on a percentage of base salary in effect in |
| (2) | Reflects no salary or bonus paid to Ms. Blinderman because her last day of employment was March 31, 2021. |
| (3) | Actual cash incentive bonus paid in |
|
Long-Term Equity-Based Incentives
We maintain the 2017 Omnibus Incentive Plan (the “2017 Plan”) pursuant to which we have granted our NEOs restricted stock, stock options or 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.
Our Compensation Committee established 20202021 long-term incentive targets for our NEOs, as shown in the table below:
|
| 2020 Annual Base Salary | 2020 Annual Long-Term Incentive Target |
| 2021 Annual Base Salary | 2021 Annual Long-Term Incentive Target |
| ||||||||||||||||||||||||||||||||||
Named Executive Officers | % of base salary | Target amount |
| % of base salary | Target amount |
| ||||||||||||||||||||||||||||||||||
Melvin C. Payne | $ | 800,000 | 200 | % | $ | 1,600,000 |
| $ | 900,000 | 200 | % | $ | 1,800,000 |
| ||||||||||||||||||||||||||
Viki K. Blinderman(1) | $ | 320,000 | 150 | % | $ | 480,000 |
| |||||||||||||||||||||||||||||||||
Carlos R. Quezada | $ | 400,000 | 175 | % | $ | 700,000 |
| |||||||||||||||||||||||||||||||||
C. Benjamin Brink | $ | 320,000 | 150 | % | $ | 480,000 |
| $ | 400,000 | 175 | % | $ | 700,000 |
| ||||||||||||||||||||||||||
Steven D. Metzger | $ | 400,000 | 175 | % | $ | 700,000 |
| |||||||||||||||||||||||||||||||||
Shawn R. Phillips | $ | 320,000 | 150 | % | $ | 480,000 |
| $ | 340,000 | 150 | % | $ | 510,000 |
| ||||||||||||||||||||||||||
Steven D. Metzger | $ | 320,000 | 150 | % | $ | 480,000 |
| |||||||||||||||||||||||||||||||||
Viki K. Blinderman(1) | $ | — | — | % | $ | — |
| |||||||||||||||||||||||||||||||||
| (1) | No salary or bonus target amount listed for Ms. Blinderman |
36 Carriage Services
Compensation Discussion and Analysis
For the 20202021 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. Our
2022 Proxy Statement 37
Compensation Committee initially approved 2020 long term performance awards for our NEOs on February 19, 2020 (the “February Performance Awards”) which were predicated on a five year time frame during which the Company’s share price had to reach one of three predetermined growth targets. The February Performance Awards, as well as performance awards granted to our NEOs in 2019, were both cancelled on May 19, 2020.Discussion and Analysis
On May 19, 2020, the Compensation Committee approved a new Performance Award (the “May 2020 Performance Award”) which is predicated on a performance period ending on December 31, 2024 and which requires the Company’s share price to reach one of five predetermined compound annual growth rates – 20%, 25%, 30%, 35% or 40% in order for the award to be earned by the NEOs.
The following chart describescharts describe the 20202021 grant of awards.
On May 19, 2020,February 17, 2021, our NEOs were granted the following:
Long-Term Incentive Element | Grant | Vesting Period/Term | Grant/Exercise Price | |||
Restricted Stock | None | N/A | N/A | |||
Stock Options | ||||||
Performance Awards | None | N/A | N/A | |||
On February 17, 2021, Mr. Payne was granted the following stock options and, on June 1, 2021, Messrs. Quezada, Brink and Metzger were granted the following performance awards:
Additional Equity Awards | Grant | Vesting Period/Term | Grant/Exercise Price | |||
Stock Options(1) | Discretionary | When the price of our common stock closes at or above $53.39 for three consecutive days; 10 year term | $34.79 | |||
Stock Options(1) | Discretionary | When the price of our common stock closes at or above $77.34 for three consecutive days; 10 year term | $34.79 | |||
Performance Awards(2) | Discretionary | These awards will vest (if at all) on December 31, 2024, provided that |
35% CAGR = $64.48 40% CAGR = $77.34 | |||
The Company named our 2020 long-term incentive grant of performance awards “Good to Great II Five Year Shareholder Value Creation Incentive Plan” as we firmly believe performance will lead to greater stockholder value as ultimately evidenced by the growth in our stock price.
| (1) | Stock options were granted to Mr. Payne on February 17, 2021 as consideration for signing a seven year extension to his employment agreement with the Company. |
| (2) | On June 1, 2021, we amended the performance award agreements previously granted on May 19, 2020 and June 25, 2020 for Messrs. Quezada, Brink, and Metzger. The amendment increased the amount of potential performance awards payable in shares for the last three predetermined growth targets under their respective agreements as consideration for their respective promotions and additional responsibilities. |
Our Compensation Committee believes that this element of our long-term incentive program properly aligns management’s long-term compensation with the Company’s compensation philosophyPhilosophy and our mission of maximizing value per share for long-term stockholders. Generally, our long-term incentive programs allows for more simplicity in structure and the transparency for management to focus on operations and performance.
All vested incentive awards are payable in shares of our Common Stock. More detailed information regarding the long-term incentive grant is set forth above as well as in Note 18, Stockholder’s Equity, to the Consolidated Financial Statements in our 20202021 Annual Report on Form 10-K.
The table below outlines the Five Year CAGR over the stock price at May 15, 2020 regardingOn June 1, 2021, we amended the performance awardsaward agreements previously granted to our NEOs on May 19, 2020:
| Five Year Compounded Carriage Growth Rate | ||||||||||||||||||||||||||||||
|
| 20% CAGR | 25% CAGR | 30% CAGR | 35% CAGR | 40% CAGR |
| ||||||||||||||||||||||||
Anticipated Share Price achieved on/before 12/31/2024 | $ | 35.78 | $ | 43.88 | $ | 53.39 | $ | 64.48 | $ | 77.34 |
|
|
| |||||||||||||||||
Less Share Price on 5/15/2020 | 14.38 | 14.38 | 14.38 | 14.38 | 14.38 |
|
|
| ||||||||||||||||||||||
Value Created per Share | $ | 21.40 | $ | 29.50 | $ | 39.01 | $ | 50.10 | $ | 62.96 |
|
|
| |||||||||||||||||
2021 Proxy Statement 37
Compensation Discussion2020 and Analysis
June 25, 2020 for Messrs. Quezada, Brink and Metzger. The amendment increased the potential amount of performance awards payable in shares for the last three predetermined growth targets under their respective agreements.
The table below denotes the number of amended performance awards granted on May 19, 2020June 1, 2021 at the respective target price of 20%, 25%, 30%, 35% or 40% CAGR over the stock price at May 15, 2020.2020 for Messrs. Quezada, Brink and Metzger.
Named Executive Officers | 20% CAGR | 25% CAGR | 30% CAGR | 35% CAGR | 40% CAGR | ||||||||||||||||||||
Melvin C. Payne | 55,897 | 91,158 | 140,476 | 155,087 | 181,019 | ||||||||||||||||||||
Viki K. Blinderman(1) | 13,974 | 22,789 | 32,778 | 38,772 | 45,255 | ||||||||||||||||||||
C. Benjamin Brink | 13,974 | 22,789 | 32,778 | 38,772 | 45,255 | ||||||||||||||||||||
Shawn R. Phillips | 13,974 | 22,789 | 32,778 | 38,772 | 45,255 | ||||||||||||||||||||
Steven D. Metzger | 13,974 | 22,789 | 32,778 | 38,772 | 45,255 | ||||||||||||||||||||
|
| 20% CAGR | 25% CAGR | 30% CAGR | 35% CAGR | 40% CAGR |
| ||||||||||||||||||||||||
Anticipated Share Price achieved on/before 12/31/2024 | $ | 35.78 | $ | 43.88 | $ | 53.39 | $ | 64.48 | $ | 77.34 |
|
|
| |||||||||||||||||
Original Payout | 13,974 | 22,789 | 32,778 | 38,772 | 45,255 |
|
|
| ||||||||||||||||||||||
Amended Payout | 13,974 | 22,789 | 56,190 | 69,789 | 77,580 |
|
|
| ||||||||||||||||||||||
Incremental Payout | — | — | 23,412 | 31,017 | 32,325 |
|
|
| ||||||||||||||||||||||
|
38 Carriage Services
Compensation Discussion and Analysis
| Named Executive Officers | 20% CAGR | 25% CAGR | 30% CAGR | 35% CAGR | 40% CAGR |
| ||||||||||||||||||||||||
Anticipated Share Price achieved on/before 12/31/2024 | $ | 35.78 | $ | 43.88 | $ | 53.39 | $ | 64.48 | $ | 77.34 |
|
|
| |||||||||||||||||
Carlos R. Quezada | 13,974 | 22,789 | 56,190 | 69,789 | 77,580 |
|
|
| ||||||||||||||||||||||
C. Benjamin Brink | 13,974 | 22,789 | 56,190 | 69,789 | 77,580 |
|
|
| ||||||||||||||||||||||
Steven D. Metzger | 13,974 | 22,789 | 56,190 | 69,789 | 77,580 |
|
|
| ||||||||||||||||||||||
In accordance with Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“ASC Topic 718”), the May 2020June 2021 Amended Performance Awards were measured using the Monte Carlo pricing simulation model, calculated at $9.69$36.36 per share using the anticipated award at the 20%30% CAGR threshold (minimum target level). As such, the value in the table below is appropriately reflected within the “Summary Compensation Table,” further discussed herein.
Named Executive Officers | ASC 718 Value | ||||
Melvin C. Payne | $ | 541,642 | |||
Viki K. Blinderman(1) | $ | 135,408 | |||
C. Benjamin Brink | $ | 135,408 | |||
Shawn R. Phillips | $ | 135,408 | |||
Steven D. Metzger | $ | 135,408 | |||
|
Named Executive Officers | ASC 718 Value | ||||
Carlos R. Quezada | $ | 851,191 | |||
C. Benjamin Brink | $ | 851,191 | |||
Steven D. Metzger | $ | 851,191 | |||
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 $1 million, Section 162(m) of the Internal Revenue Code of 1986, as amended generally, limits our ability to take a federal income tax deduction for compensation paid to covered employees. Our Compensation Committee does not believe that compensation decisions should be made solely to maintain the deductibility of compensation for federal income tax purposes.
We recognize compensation expense in an amount equal to the fair value of the share-based awards over the period of vesting. Fair value is determined on the date of the grant. The fair value of restricted stock is determined using the stock price on the grant date. The fair value of options is determined using either the Black-Scholes valuation model or the Monte-Carlo simulation pricing model. The fair value of the performance awards related to the stock price is determined using Monte-Carlo simulation pricing model. More detailed information and related assumptions regarding the 20202021 long-term incentive grant is set forth in Note 18, Stockholder’s Equity, to the Consolidated Financial Statements in our 20202021 Annual Report on Form 10-K.
2022 Proxy Statement 38 Carriage Services39
The following table sets forth information regarding the compensation for the fiscal years ended December 31, 2021, 2020 2019 and 2018,2019, with respect to our NEOs:
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(4)(5) ($) | Option Awards | All Other Compensation(6) | Total ($) | ||||||||||||||||||||||||||||
Melvin C. Payne |
| 2020 | $ | 800,000 | $ | 1,000,000 | $ | 541,642 | $ | — | $ | 14,036 | $ | 2,355,678 | |||||||||||||||||||||
CEO and Chairman of the Board |
| 2019 | $ | 777,000 | $ | 777,000 | $ | 457,000 | $ | — | $ | 31,675 | $ | 2,042,675 | |||||||||||||||||||||
(Principal Executive Officer) |
| 2018 | $ | 700,000 | $ | 300,000 | $ | 1,014,657 | $ | 318,770 | $ | 45,843 | $ | 2,379,270 | |||||||||||||||||||||
Viki K. Blinderman(1) |
| 2020 | $ | 320,000 | $ | — | $ | 135,408 | $ | — | $ | — | $ | 455,408 | |||||||||||||||||||||
Senior Vice President, Chief Accounting Officer |
| 2019 | $ | 300,000 | $ | 150,000 | $ | 47,985 | $ | — | $ | — | $ | 497,985 | |||||||||||||||||||||
and Secretary (Principal Financial Officer) |
| 2018 | $ | 280,000 | $ | 140,000 | $ | 304,397 | $ | 95,631 | $ | — | $ | 820,028 | |||||||||||||||||||||
C. Benjamin Brink(2) |
| 2020 | $ | 320,000 | $ | 200,000 | $ | 135,408 | $ | — | $ | 10,232 | $ | 665,640 | |||||||||||||||||||||
Senior Vice President, |
| 2019 | $ | 300,000 | $ | 150,000 | $ | 47,985 | $ | — | $ | 15,365 | $ | 513,350 | |||||||||||||||||||||
Chief Financial Officer and Treasurer |
| 2018 | $ | 280,000 | $ | 140,000 | $ | 304,397 | $ | 95,631 | $ | 11,531 | $ | 831,559 | |||||||||||||||||||||
Shawn R. Phillips |
| 2020 | $ | 320,000 | $ | 220,000 | $ | 135,408 | $ | — | $ | 13,513 | $ | 688,921 | |||||||||||||||||||||
Senior Vice President, Regional Partner and |
| 2019 | $ | 310,000 | $ | 125,000 | $ | 47,985 | $ | — | $ | 12,647 | $ | 495,632 | |||||||||||||||||||||
Head of Strategic and Corporate Development |
| 2018 | $ | 310,000 | $ | 100,000 | $ | 337,202 | $ | 105,895 | $ | 10,995 | $ | 864,092 | |||||||||||||||||||||
Steven D. Metzger(3) |
| 2020 | $ | 320,000 | $ | 200,000 | $ | 135,408 | $ | — | $ | — | $ | 655,408 | |||||||||||||||||||||
Senior Vice President & |
| 2019 | $ | 250,000 | $ | 150,000 | $ | 47,985 | $ | — | $ | — | $ | 447,985 | |||||||||||||||||||||
General Counsel |
| 2018 | $ | 210,000 | $ | 50,000 | $ | — | $ | — | $ | 65,103 | $ | 325,103 | |||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(2)(3) ($) | Option Awards ($)(4)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||
Melvin C. Payne |
| 2021 |
| $ | 900,000 |
| $ | 1,200,000 |
| $ | — |
| $ | 3,204,500 |
| $ | 42,281 |
| $ | 5,346,781 |
| |||||||
CEO & Chairman of the Board |
| 2020 |
| $ | 800,000 |
| $ | 1,000,000 |
| $ | 541,642 |
| $ | — |
| $ | 14,036 |
| $ | 2,355,678 |
| |||||||
(Principal Executive Officer) |
| 2019 |
| $ | 777,000 |
| $ | 777,000 |
| $ | 457,000 |
| $ | — |
| $ | 31,675 |
| $ | 2,042,675 |
| |||||||
Carlos R. Quezada |
| 2021 |
| $ | 400,000 |
| $ | 500,000 |
| $ | 851,191 |
| $ | 507,000 |
| $ | 57,849 |
| $ | 2,316,040 |
| |||||||
President & Chief Operating |
| 2020 |
| $ | 300,000 |
| $ | 200,000 |
| $ | 135,408 |
| $ | — |
| $ | 12,106 |
| $ | 647,514 |
| |||||||
Officer |
| 2019 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| |||||||
C. Benjamin Brink |
| 2021 |
| $ | 400,000 |
| $ | 400,000 |
| $ | 851,191 |
| $ | 507,000 |
| $ | 14,314 |
| $ | 2,172,505 |
| |||||||
Executive Vice President, |
| 2020 |
| $ | 320,000 |
| $ | 200,000 |
| $ | 135,408 |
| $ | — |
| $ | 10,232 |
| $ | 665,640 |
| |||||||
Chief Financial Officer & Treasurer (Principal Financial Officer) |
| 2019 |
| $ | 300,000 |
| $ | 150,000 |
| $ | 47,985 |
| $ | — |
| $ | 15,365 |
| $ | 513,350 |
| |||||||
Steven D. Metzger |
| 2021 |
| $ | 400,000 |
| $ | 400,000 |
| $ | 851,191 |
| $ | 507,000 |
| $ | 10,150 |
| $ | 2,168,341 |
| |||||||
Executive Vice President, Chief |
| 2020 |
| $ | 320,000 |
| $ | 200,000 |
| $ | 135,408 |
| $ | — |
| $ | — |
| $ | 655,408 |
| |||||||
Counsel & Secretary |
| 2019 |
| $ | 250,000 |
| $ | 150,000 |
| $ | 47,985 |
| $ | — |
| $ | — |
| $ | 447,985 |
| |||||||
Shawn R. Phillips |
| 2021 |
| $ | 340,000 |
| $ | 250,000 |
| $ | — |
| $ | 507,000 |
| $ | 13,083 |
| $ | 1,110,083 |
| |||||||
Senior Vice President & |
| 2020 |
| $ | 320,000 |
| $ | 220,000 |
| $ | 135,408 |
| $ | — |
| $ | 13,513 |
| $ | 688,921 |
| |||||||
Regional Partner |
| 2019 |
| $ | 310,000 |
| $ | 125,000 |
| $ | 47,985 |
| $ | — |
| $ | 12,647 |
| $ | 495,632 |
| |||||||
Viki K. Blinderman(1) |
| 2021 |
| $ | 82,462 |
| $ | — |
| $ | — |
| $ | — |
| $ | 506,329 |
| $ | 588,791 |
| |||||||
Former Senior Vice President, |
| 2020 |
| $ | 320,000 |
| $ | — |
| $ | 135,408 |
| $ | — |
| $ | — |
| $ | 455,408 |
| |||||||
& Secretary (Principal Financial Officer) |
| 2019 |
| $ | 300,000 |
| $ | 150,000 |
| $ | 47,985 |
| $ | — |
| $ | — |
| $ | 497,985 |
| |||||||
| (1) | Ms. Blinderman resigned from her position as Senior Vice President, Chief Accounting Officer and Principal Financial Officer effective March 31, |
| (2) | On |
|
|
Reflects the grant date fair value of the performance-based stock awards |
Reflects the grant date fair value of the stock options granted on February 17, 2021 computed in accordance with ASC Topic 718. The |
| (5) | In addition to the stock options described above, Mr. Payne was granted an additional 150,000 stock options on February 17, 2021. These options will vest when the price of our Common Stock closes at or above $77.34 (100,000 options) and $53.39 (50,000 options) for three consecutive days within the ten-year term and Mr. |
40 Carriage Services
Executive Compensation
| (1) | The following table describes each component of the “All Other Compensation” column for |
Name | Reimbursement ($)(1) | 401(k) ($)(2) | Dividends on Unvested Restricted Stock ($)(3) | Perquisites and other Personal Benefits ($)(4) | Total All Other ($) | 401(k) Matching Contributions ($)(2) | HSA Matching ($)(3) | Dividends on Unvested Restricted Stock ($)(4) | Perquisites and other Personal Benefits ($) | Severance Payments | Total All Other Compensation ($) | ||||||||||||||||||||||||||||||||||||||||||||
Melvin C. Payne | $ | 2,232 | $ | 9,975 | $ | 1,829 | $ | — | $ | 14,036 | $ | 5,599 | $ | — | $ | 443 | $ | 36,238 | (5) | $ | — | $ | 42,281 | ||||||||||||||||||||||||||||||||
Carlos R. Quezada | $ | 9,135 | $ | — | $ | — | $ | 48,714 | (6) | $ | — | $ | 57,849 | ||||||||||||||||||||||||||||||||||||||||||
C. Benjamin Brink |
| — | $ | 9,683 | $ | 549 | $ | — | $ | 10,232 | $ | 9,816 | $ | 700 | $ | 133 | $ | 3,665 | (7) | $ | — | $ | 14,314 | ||||||||||||||||||||||||||||||||
Steven D. Metzger | $ | 10,150 | $ | — | $ | — | $ | — | $ | — | $ | 10,150 | |||||||||||||||||||||||||||||||||||||||||||
Shawn R. Phillips |
| — | $ | 3,809 | $ | 608 | $ | 9,096 | $ | 13,513 | $ | 7,362 | $ | 700 | $ | 147 | $ | 4,874 | (7) | $ | — | $ | 13,083 | ||||||||||||||||||||||||||||||||
Viki K. Blinderman(1) | $ | 10,042 | $ | — | $ | 133 | $ | — | $ | 496,154 | $ | 506,329 | |||||||||||||||||||||||||||||||||||||||||||
| (1) |
|
| (2) | The amounts represent matching contributions by the Company to the accounts of NEOs in our 401(k) Plan. |
| (3) | The amounts represent matching contributions by the Company to the health savings accounts of NEOs. |
| (4) | The amounts represent dividends paid on unvested restricted stock. |
The amount reflects benefits received for family members’ travel for award trips hosted by the Company. |
| (6) | The amount includes |
| (7) | The amount reflects benefits received for spousal travel for award trips hosted by the Company. |
2021 Proxy Statement 39
Executive Compensation
On May 19, 2020,February 17, 2021, we granted our NEOs stock options from the 2017 Plan. On June 1, 2021, we amended the performance-based stock awards from the 2017 Plan.Plan for three of our NEOs. The following table sets forth information regarding these grants:
Name | Grant Date |
Estimated Future Payouts Under |
Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($)(3) | Grant Date |
Estimated Future Payouts Under |
Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($)(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#)(1) | Target (#)(1) | Maximum (#)(2) |
Threshold ($) | Target ($) | Maximum ($) | Threshold (#)(1) | Target (#)(1) | Maximum (#)(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Melvin C. Payne |
| 5/19/2020 |
| — |
| — |
| — |
| 55,897 |
| 55,897 |
| 181,019 |
| — |
| — |
| — | $ | 541,642 |
| 2/17/2021 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 300,000 |
| $ | 34.79 |
| $ | 3,204,500 |
| ||||||||||||||||||||||||||||||||||||||||||||
Viki K. Blinderman(4) |
| 5/19/2020 |
| — |
| — |
| — |
| 13,974 |
| 13,974 |
| 45,255 |
| — |
| — |
| — | $ | 135,408 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carlos R. Quezada |
| 2/17/2021 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 50,000 |
| $ | 34.79 |
| $ | 507,000 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/1/2021 |
|
| — |
|
| — |
|
| — |
|
| 23,412 |
|
| 23,412 |
|
| 32,325 |
|
| — |
|
| — |
| $ | — |
| $ | 851,191 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Benjamin Brink |
| 5/19/2020 |
| — |
| — |
| — |
| 13,974 |
| 13,974 |
| 45,255 |
| — |
| — |
| — | $ | 135,408 |
| 2/17/2021 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 50,000 |
| $ | 34.79 |
| $ | 507,000 |
| ||||||||||||||||||||||||||||||||||||||||||||
| 6/1/2021 |
|
| — |
|
| — |
|
| — |
|
| 23,412 |
|
| 23,412 |
|
| 32,325 |
|
| — |
|
| — |
| $ | — |
| $ | 851,191 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven D. Metzger |
| 2/17/2021 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 50,000 |
| $ | 34.79 |
| $ | 507,000 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/1/2021 |
|
| — |
|
| — |
|
| — |
|
| 23,412 |
|
| 23,412 |
|
| 32,325 |
|
| — |
|
| — |
| $ | — |
| $ | 851,191 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shawn R. Phillips |
| 5/19/2020 |
| — |
| — |
| — |
| 13,974 |
| 13,974 |
| 45,255 |
| — |
| — |
| — | $ | 135,408 |
| 2/17/2021 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 50,000 |
| $ | 34.79 |
| $ | 507,000 |
| ||||||||||||||||||||||||||||||||||||||||||||
Steven D. Metzger |
| 5/19/2020 |
| — |
| — |
| — |
| 13,974 |
| 13,974 |
| 45,255 |
| — |
| — |
| — | $ | 135,408 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Reflects the additional shares issued for the anticipated award at the |
| (2) | Reflects the additional shares issued for the anticipated award at the 40% CAGR target (fifth tier target payout), which represents the maximum |
| (3) | Reflects the grant date fair value of the stock option awards of $10.14 per share calculated using the Black-Scholes on February 17, 2021 and the grant date fair value of the performance-based stock awards amended on June 1, 2021 of $36.36 per share, at the |
|
On February 19, 2020, we granted our NEOs performance-based stock awards from the 2017 Plan. On May 19, 2020, we cancelled these performance-based stock awards granted on February 19, 2020, in addition to performance-based stock awards granted on February 20, 2019. The following tables set forth information regarding the cancelled February 19, 2020 grants:
Five Year Compounded Carriage | |||||||||||||||
15% CAGR | 20% CAGR | 25% CAGR | |||||||||||||
Anticipated Share Price on/before 12/31/2024 | $ | 51.49 | $ | 63.70 | $ | 78.12 | |||||||||
Less Share Price on 12/31/2019 |
| 25.60 |
| 25.60 |
| 25.60 | |||||||||
Value Created per Share | $ | 25.89 | $ | 38.10 | $ | 52.52 | |||||||||
The table below denotes the amount of performance-based stock awards granted on February 19, 2020 at the respective target price of 15%, 20% or 25% CAGR over the stock price at December 31, 2019.
Named Executive Officers | 15% CAGR | 20% CAGR | 25% CAGR | ||||||||||||
Melvin C. Payne |
| 40,000 |
| 66,000 |
| 96,000 | |||||||||
Viki K. Blinderman |
| 9,000 |
| 15,000 |
| 22,000 | |||||||||
C. Benjamin Brink |
| 9,000 |
| 15,000 |
| 22,000 | |||||||||
Shawn R. Phillips |
| 9,000 |
| 15,000 |
| 22,000 | |||||||||
Steven D. Metzger |
| 9,000 |
| 15,000 |
| 22,000 | |||||||||
2022 Proxy Statement 40 Carriage Services41
Executive Compensation
Outstanding Equity Awards at Fiscal Year-End
Awards Outstanding at December 31, 2020:2021:
| 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 (#) | 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 ($)(4) | Number of Securities Underlying Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un- Exercisable(1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price | Option Expiration Date | Number of Shares of Stock that Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested() | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Melvin C. Payne |
| 100,000 |
| — |
| — | $ | 22.58 |
| 2/24/2022 |
| 4,433 | $ | 138,842 |
| — |
| — |
| 54,545 |
|
| — |
|
| — |
| $ | 20.06 |
|
| 2/23/2026 |
|
| — |
| $ | — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||||||||||
| 46,800 |
| 11,700 |
| — | $ | 20.06 |
| 2/23/2026 |
| — |
| — |
| — |
| — |
| 92,880 |
|
| 23,220 |
|
| — |
| $ | 26.54 |
|
| 3/21/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| 69,660 |
| 46,440 |
| — | $ | 26.54 |
| 3/21/2027 |
| — |
| — |
| — |
| — |
| 30,000 |
|
| 20,000 |
|
| — |
| $ | 25.43 |
|
| 2/14/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| 20,000 |
| 30,000 |
| — | $ | 25.43 |
| 2/14/2028 |
| — |
| — |
| — |
| — |
| 50,000 |
|
| 100,000 |
|
| — |
| $ | 34.79 |
|
| 2/17/2031 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 55,897 | $ | 541,642 |
| — |
|
| 150,000 |
|
| — |
| $ | 34.79 |
|
| 2/17/2031 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 155,087 |
| $ | 9,993,806 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Viki K. Blinderman(5) |
| 25,000 |
| — |
| — | $ | 22.58 |
| 2/24/2022 |
| 1,330 | $ | 41,656 |
| — |
| — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,600 |
| 2,400 |
| — | $ | 20.06 |
| 2/23/2026 |
| — |
| — |
| — |
| — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,940 |
| 13,960 |
| — | $ | 26.54 |
| 3/21/2027 |
| — |
| — |
| — |
| — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carlos R. Quezada |
| — |
|
| 13,333 |
|
| — |
| $ | 18.02 |
|
| 6/25/2030 |
|
| — |
| $ | — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,000 |
| 9,000 |
| — | $ | 25.43 |
| 2/14/2028 |
| — |
| — |
| — |
| — |
| — |
|
| 50,000 |
|
| — |
| $ | 34.79 |
|
| 2/17/2031 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 13,974 | $ | 135,408 |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 69,789 |
| $ | 4,497,203 |
| ||||||||||||||||||||||||||||||||||||||||||||||
C. Benjamin Brink |
| 22,000 |
| — |
| — | $ | 22.58 |
| 2/24/2022 |
| 1,330 | $ | 41,656 |
| — |
| — |
| 10,000 |
|
| — |
|
| — |
| $ | 20.06 |
|
| 2/23/2026 |
|
| — |
| $ | — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||||||||||
| 8,000 |
| 2,000 |
| — | $ | 20.06 |
| 2/23/2026 |
| — |
| — |
| — |
| — |
| 27,920 |
|
| 6,980 |
|
| — |
| $ | 26.54 |
|
| 3/21/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| 20,940 |
| 13,960 |
| — | $ | 26.54 |
| 3/21/2027 |
| — |
| — |
| — |
| — |
| 9,000 |
|
| 6,000 |
|
| — |
| $ | 25.43 |
|
| 2/14/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| 6,000 |
| 9,000 |
| — | $ | 25.43 |
| 2/14/2028 |
| — |
| — |
| — |
| — |
| — |
|
| 50,000 |
|
| — |
| $ | 34.79 |
|
| 2/17/2031 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 13,974 | $ | 135,408 |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 69,789 |
| $ | 4,497,203 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Steven D. Metzger |
| — |
|
| 50,000 |
|
| — |
| $ | 34.79 |
|
| 2/17/2031 |
|
| — |
| $ | — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 69,789 |
| $ | 4,497,203 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shawn R. Phillips |
| 22,674 |
| — |
| — | $ | 5.94 |
| 3/5/2022 |
| 1,473 | $ | 46,134 |
| — |
| — |
| 16,700 |
|
| — |
|
| — |
| $ | 20.06 |
|
| 2/23/2026 |
|
| — |
| $ | — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||||||||||
| 35,000 |
| — |
| — | $ | 22.58 |
| 2/24/2022 |
| — |
| — |
| — |
| — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,360 |
| 3,340 |
| — | $ | 20.06 |
| 2/23/2026 |
| — |
| — |
| — |
| — |
| 30,880 |
|
| 7,720 |
|
| — |
| $ | 26.54 |
|
| 3/21/2027 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| 23,160 |
| 15,440 |
| — | $ | 26.54 |
| 3/21/2027 |
| — |
| — |
| — |
| — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,644 |
| 9,966 |
| — | $ | 25.43 |
| 2/14/2028 |
| — |
| — |
| — |
| — |
| 9,966 |
|
| 6,644 |
|
| — |
| $ | 25.43 |
|
| 2/14/2028 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 13,974 | $ | 135,408 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| 50,000 |
|
| — |
| $ | 34.79 |
|
| 2/17/2031 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven D. Metzger |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 13,974 | $ | 135,408 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 38,772 |
| $ | 2,498,468 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The |
| (2) |
|
| (3) | Represents the number of performance-based stock awards that will vest at the 35% CAGR target multiplied by $64.44, which is the closing price of our Common Stock on December 31, |
|
|
|
2021 Proxy Statement 4142 Carriage Services
Executive Compensation
Option Exercises and Stock Vestings
The following table sets forth information regarding the option exercises and stock vestings for the fiscal year ended December 31, 20202021 with respect to our NEOs:
| 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(6) | Value Realized on Vesting(7) | |||||||||||||||||||||||||||||||||||||
Melvin C. Payne |
| 3,284 | (1) | $ | 76,156 |
| 4,433 | $ | 108,830 |
| 103,955 | (1) | $ | 2,726,811 |
|
| 4,433 |
| $ | 162,159 |
| ||||||||||||||||||||||||
Viki K. Blinderman(5) |
| — | $ | — |
| 1,330 | $ | 32,652 | |||||||||||||||||||||||||||||||||||||
Carlos R. Quezada |
| 6,667 | (2) | $ | 194,543 |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||
C. Benjamin Brink |
| — | $ | — |
| 1,330 | $ | 32,652 |
| 22,000 | (3) | $ | 661,078 |
|
| 1,330 |
| $ | 48,651 |
| |||||||||||||||||||||||||
Steven D. Metzger |
| — |
| $ | — |
|
| — |
| $ | — |
| |||||||||||||||||||||||||||||||||
Shawn R. Phillips |
| 17,913 | (2) | $ | 311,149 |
| 1,473 | $ | 36,162 |
| 57,674 | (4) | $ | 1,178,964 |
|
| 1,473 |
| $ | 53,882 |
| ||||||||||||||||||||||||
Steven D. Metzger |
| — | $ | — |
| — | $ | — | |||||||||||||||||||||||||||||||||||||
Viki K. Blinderman |
| 86,900 | (5) | $ | 1,083,088 |
|
| 1,330 |
| $ | 48,651 |
| |||||||||||||||||||||||||||||||||
| (1) | Mr. Payne exercised |
Mr. |
| (2) | Mr. Quezada exercised 6,667 options on September 1, 2021 and surrendered 2,657 shares to pay the option price and taxes associated with this exercise. Mr. Quezada sold 4,010 shares on September 1, 2021, which resulted in a short-swing profit, which he returned to the Company on September 14, 2021. |
| (3) | Mr. Brink exercised 17,572 options on December 1, 2021 and surrendered 11,500 shares to pay the option price and taxes associated with this exercise. Mr. Brink exercised 4,428 options on December 3, 2021. Mr. Brink paid the option price associated with this exercise in cash. |
| (4) | Mr. Phillips exercised a total of 57,674 options on June 23, 2021. Mr. Phillips surrendered 24,823 shares to pay the option price and taxes associated with 32,198 of the options exercised. Mr. Phillips paid the option price associated with the remaining 25,476 options exercised in cash. |
| (5) | Ms. Blinderman exercised 79,920 options on March 10, 2021 and surrendered 59,833 shares to pay the option price and taxes associated with this exercise. Ms. Blinderman exercised 6,980 options on March 22, 2021 and surrendered 5,569 shares to pay the option price and taxes associated with this exercise. Ms. Blinderman resigned from her position as Senior Vice President, Chief Accounting Officer and Principal Financial Officer effective March 31, 2021. |
| (6) | Includes vested shares withheld to pay taxes as follows: |
| Mr. Payne | Ms. Blinderman | Mr. Brink | Mr. Phillips | |||||||||||||||||||||||||||||||||||||
| Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | |||||||||||||||||||||||||||||||||
2/14/2020 |
| 4,433 |
| 1,097 |
| 1,330 |
| 394 |
| 1,330 |
| 394 |
| 1,473 |
| 436 | ||||||||||||||||||||||||
| Mr. Payne | Mr. Brink | Mr. Phillips | Ms. Blinderman | |||||||||||||||||||||||||||||
Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | Acquired Shares | Shares Withheld For Taxes | |||||||||||||||||||||||||
2/14/2021 |
| 4,433 |
|
| 1,804 |
|
| 1,330 |
|
| 394 |
|
| 1,473 |
|
| 701 |
|
| 1,330 |
|
| 394 |
| ||||||||
Value realized on vesting is calculated using the closing price of our Common Stock on the date that the shares vested. |
|
2022 Proxy Statement 42 Carriage Services43
Executive Compensation
Potential Payments Upon Termination
The following table sets forth the amounts that would have been payable to certain of our NEOs under the scenarios for death, disability, involuntary termination without cause not within a corporate change period, or involuntary termination without cause within a corporate change period, or termination by executive for good reason within a corporate change period, had such scenarios occurred on December 31, 2020.2021. Amounts reported with respect to equity-based awards are reported assuming the closing price of our Common Stock on December 31, 20202021 of $31.32$64.44 per share.
Event | Melvin C. Payne | Viki K. Blinderman(6) | C. Benjamin Brink | Shawn R. Phillips | Steven D. Metzger | Melvin C. Payne | Carlos R. Quezada | C. Benjamin Brink | Steven D. Metzger | Shawn R. Phillips | Viki K. Blinderman(8) | ||||||||||||||||||||||||||||||||||||||
Death or Disability | |||||||||||||||||||||||||||||||||||||||||||||||||
Base salary | $ | 800,000 | $ | 320,000 | $ | 320,000 | $ | 320,000 | $ | 320,000 | $ | 900,000 |
| $ | 400,000 |
| $ | 400,000 |
| $ | 400,000 |
| $ | 340,000 |
| $ | — |
| |||||||||||||||||||||
Target annual bonus(1) |
| 1,000,000 |
| 160,000 |
| 160,000 |
| 160,000 |
| 160,000 |
| 900,000 |
|
| 300,000 |
|
| 300,000 |
|
| 300,000 |
|
| 170,000 |
|
| — |
| |||||||||||||||||||||
Benefit continuation(2) |
| 28,365 |
| — |
| 40,010 |
| 25,988 |
| 13,558 | |||||||||||||||||||||||||||||||||||||||
Equity awards(3) |
| 669,267 |
| 188,418 |
| 183,914 |
| 216,246 |
| — | |||||||||||||||||||||||||||||||||||||||
Benefits continuation(2) |
| 31,006 |
|
| 46,313 |
|
| 42,563 |
|
| 14,776 |
|
| 28,484 |
|
| — |
| |||||||||||||||||||||||||||||||
Equity awards(3)(4)(5) |
| 13,677,511 |
|
| 5,722,301 |
|
| 5,601,986 |
|
| 5,103,384 |
|
| 4,146,485 |
|
| — |
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | $ | 2,497,632 | $ | 668,418 | $ | 703,924 | $ | 722,234 | $ | 493,558 | $ | 15,508,517 |
| $ | 6,468,614 |
| $ | 6,344,549 |
| $ | 5,818,160 |
| $ | 4,684,969 |
| $ | — |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Termination without cause (without a Corporate Change) | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash severance | $ | 2,600,000 | $ | 800,000 | $ | 800,000 | $ | 800,000 | $ | 800,000 | $ | 2,700,000 |
| $ | 1,100,000 |
| $ | 1,100,000 |
| $ | 1,100,000 |
| $ | 850,000 |
| $ | — |
| |||||||||||||||||||||
Benefit continuation(2) |
| 28,365 |
| — |
| 40,010 |
| 25,988 |
| 13,558 | |||||||||||||||||||||||||||||||||||||||
Benefits continuation(2) |
| 31,006 |
|
| 46,313 |
|
| 42,563 |
|
| 14,776 |
|
| 28,484 |
|
| — |
| |||||||||||||||||||||||||||||||
Equity awards(3)(4)(5) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | $ | 2,628,365 | $ | 800,000 | $ | 840,010 | $ | 825,988 | $ | 813,558 | $ | 2,731,006 |
| $ | 1,146,313 |
| $ | 1,142,563 |
| $ | 1,114,776 |
| $ | 878,484 |
| $ | — |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Termination without cause (following a Corporate Change) | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash severance(5) | $ | 3,400,000 | $ | 800,000 | $ | 800,000 | $ | 800,000 | $ | 800,000 | |||||||||||||||||||||||||||||||||||||||
Benefit continuation(2) |
| 28,365 |
| — |
| 40,010 |
| 25,988 |
| 13,558 | |||||||||||||||||||||||||||||||||||||||
Equity awards(3) |
| 669,267 |
| 188,418 |
| 183,914 |
| 216,246 |
| — | |||||||||||||||||||||||||||||||||||||||
Cash severance(7) | $ | 3,600,000 |
| $ | 1,100,000 |
| $ | 1,100,000 |
| $ | 1,100,000 |
| $ | 850,000 |
| $ | — |
| |||||||||||||||||||||||||||||||
Benefits continuation(2) |
| 31,006 |
|
| 46,313 |
|
| 42,563 |
|
| 14,776 |
|
| 28,484 |
|
| — |
| |||||||||||||||||||||||||||||||
Equity awards(3)(4)(5) |
| 13,677,511 |
|
| 5,722,301 |
|
| 5,601,986 |
|
| 5,103,384 |
|
| 4,146,485 |
|
| — |
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | $ | 4,097,632 | $ | 988,418 | $ | 1,023,924 | $ | 1,042,234 | $ | 813,558 | $ | 17,308,517 |
| $ | 6,868,614 |
| $ | 6,744,549 |
| $ | 6,218,160 |
| $ | 5,024,969 |
| $ | — |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
| (1) | Reflects payment of annual bonus pursuant to the terms of their employment agreements in effect on December 31, |
| (2) | Amounts reflect estimated cost of |
| (3) | Reflects accelerated vesting of |
| (4) | At December 31, 2021, we had satisfied certain performance criteria for the first three target payouts (20%, 25% and |
| (5) | Mr. Payne’s unvested stock options that contain a market condition have |
Amounts reflect cash severance payable under the terms of employment agreements in effect on December 31, |
Amounts with respect to |
Ms. Blinderman resigned from her position as Senior Vice President, Chief Accounting Officer and Principal Financial Officer effective March 31, |
44 Carriage Services
Executive Compensation
Employment Agreements
As previously discussed, each of our NEOs have employment agreements with terms of three years (nine years in the case of Mr. Payne as a result of a seven year extension and amendment entered into as of February 17, 2021) which were entered into November 5, 2019 (except for Mr. Quezada which is dated June 25, 2020, the date he joined the Company) and obligate the Company to make certain payments and provide certain benefits to the Company’s NEOs upon a qualifying termination of employment as defined within the Agreements. On June 2, 2021, each of Messrs. Quezada, Brink, and Metzger entered into amendments to their respective employment agreements with the Company that increased their (i) respective minimum base salaries and (ii) minimum target bonus amounts (short term). Pursuant to the Agreements, each NEO agreed to certain non-competition provisions and other restrictive covenants, during the term of his or her employment and for a period of 24 months thereafter. The Agreements supersede any prior agreements entered into by the Company and any of the NEOs. The Agreements for all of the NEOs are identical, except as noted above.
2021 Proxy Statement 43
Executive Compensation
The Agreements establish, among other things, (a) a minimum base salary, (b) a target annual bonus (expressed as a percentage of base salary), and (c) post-termination payments due in certain scenarios. For a description of the post-termination benefits provided for under the Agreements see “Executive Compensation-Potential Payments Upon Termination,” further discussed herein. The Company believes it is in the best interest of stockholders to ensure the executive leadership team have employment agreements which align with the Company’s goal of driving performance and creating long-term stockholder value.
Long-Term Incentive Plan Awards
Pursuant to the terms of our 2017 Plan, except as otherwise provided in an award agreement, upon a change of control, as defined by the 2017 Plan, all then-outstanding awards shall immediately vest and be settled in accordance with the 2017 Plan. This immediate vesting shall not occur in the event a replacement award, as defined by the 2017 Plan, is issued to a participant in connection with a change of control. In the event a replacement award is issued to a participant and a subsequent qualifying termination, as defined by the 2017 Plan, occurs within the one-year period following a change of control, all replacement awards held by the participant shall become fully vested and free of restrictions in accordance with the 2017 Plan.
Separation Agreement with Ms. Blinderman
Ms. Blinderman resigned from her position as the Company’s Senior Vice President, Chief Accounting Officer, and Principal Financial Officer, effective March 31, 2021, and as Secretary, effective February 2, 2021. Related toIn connection with her resignation, Ms. Blinderman and the Company entered into a separation and release agreement (the “Separation Agreement”) which provided for, among other things, (i) the continuation of Ms. Blinderman’s base salary for 24 months; (ii) a one-time payment; and (iii) the acceleration of certain unvested stock options. Under the terms of the Separation Agreement, Ms. Blinderman retained all vested equity awards and all unvested equity awards were cancelled as of the March 31, 2021, for which she has no right or claim, other than the following awards, which were accelerated and fully vested on February 28, 2021: 3,767 Incentive Stock Options with a Grant Date of March 21, 2017; 3,000 Incentive Stock Options with a Grant Date of February 14, 2018; 3,213 Non-Qualified Stock Options with a Grant Date of March 21, 2017; and 3,000 Non-Qualified Stock Options with a Grant Date of February 14, 2018.
We do not sponsor a pension plan.
Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
We do not sponsor any nonqualified defined contribution or other nonqualified deferred compensation plans.
2022 Proxy Statement 44 Carriage Services45
Executive Compensation
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 our stockholders 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, 2020,2021, our employee population consisted of approximately 2,7182,657 individuals with all of these individuals located in the United States. This population consisted of 1,1261,139 full-time and 1,5921,518 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, 2020,2021, 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 2019.2021. 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 367429 employees who were hired in 2020,2021, but did not work for us the entire fiscal year. This population consisted of 164183 full-time and 203246 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 20202021 in accordance with Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of approximately $17,585.$21,750.
With respect to the annual compensation of our CEO, we used the amount reported in the “Total $” column of our Summary Compensation Table for the year 20202021 included above 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, 2020:2021:
The median employee is an Ambassador in the community, working on an as neededas-needed or by request basis, proactively participating in civic and community events that create a lasting heritage;heritage for our businesses;
The median annual total compensation of all employees of our Company (other than our CEO) was approximately $17,585;$21,750; and
The annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement was $2,355,678.$5,346,781.
Based on this information, for 2020,2021, the ratio of the annual total compensation of Mr. Payne to the annual total median compensation of all other employees was 134246 to 1.
2021 Proxy Statement 4546 Carriage Services
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
In accordance with Section 14A of the Securities and Exchange Act, as amended, and as a matter of good corporate governance, we seek your vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed in this Proxy Statement under “Compensation Discussion and Analysis” and “Executive Compensation.”
We urge our stockholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes in more detail how our Named Executive Officer compensation policies and programs operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative appearing under the “Executive Compensation” section of this Proxy Statement, which provide detailed information on the compensation of our Named Executive Officers. Our Compensation Committee believes that the policies and programs articulated in the “Compensation Discussion and Analysis” section are effective in achieving our goals and that the compensation of our Named Executive Officers reported in this Proxy Statement has contributed to our High Performance Culture and Being The Best Mission.
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 Carriage’s Named Executive Officers, as disclosed in the Proxy Statement for the 20212022 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC (including, but not limited to, the 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 this Proxy Statement. This vote is advisory and, therefore, not binding on us, our Board, or our Compensation Committee. Although the vote is non-binding, our Board and our Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the advisory vote on Named Executive Officer compensation when making future compensation decisions.
FOR THE REASONS STATED ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY APPROVAL OF OUR NAMED EXECUTIVE OFFICER COMPENSATION, AS DISCLOSED IN THIS PROXY STATEMENT. |
46 Carriage Services
APPROVAL OF THE THIRD AMENDMENT TO THE AMENDED AND RESTATED CARRIAGE SERVICES, INC. 2007 EMPLOYEE STOCK PURCHASE PLAN
On March 30, 2021, upon the recommendation of the Compensation Committee, our Board approved the Third Amendment (the “Third Amendment”) to our Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan (the “2007 ESPP”) to increase the number of shares and directed that the matter be submitted to the stockholders of the Company for their approval at the Annual Meeting. The Third Amendment will amend the 2007 ESPP to increase the number of Common Stock available for purchase under the 2007 ESPP from 1,250,000 to 1,550,000, effective as of May 18, 2021, in order to continue the practice of our employees having the option to purchase Carriage Common Stock through payroll deductions.
The purpose of the 2007 ESPP is to provide employees of the Company and its designated subsidiaries the opportunity to purchase shares of Common Stock at a discount from the prevailing market price through our payroll deduction system. As a result, the 2007 ESPP provides an incentive for employees to acquire or increase their ownership interest in the Company. We strongly believe that employee stock ownership is important for the Company’s success, provides our employees the opportunity to strengthen their ownership in our Company and aligns with our second Guiding Principle, “Hard work, pride of accomplishment and shared success through employee ownership.”
Our Board believes it is important for our employees to continue to have this option and hereby ask stockholders to approve the Third Amendment to increase the shares of Common Stock available under the plan to 1,550,000. It is our intention to have the 2007 ESPP qualify under section 423 of the Internal Revenue Code of 1986. The provisions of the 2007 ESPP shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Internal Revenue Code.
Participation in the 2007 ESPP is open to all employees, including part-time employees, which we believe has been one of many components that has encouraged employees to view their contribution to the Company from the perspective of an owner and aligns our employees with our Good to Great Journey.
Summary of the 2007 ESPP
The following brief summary of certain features of the 2007 ESPP, as amended by the First, Second, and Third Amendments is qualified in its entirety by reference to the full text of the 2007 ESPP, the First Amendment, and the Second Amendment, which are attached hereto as Appendix A, and the full text of the Third Amendment which is attached hereto as Appendix B. To the extent there is a conflict between this summary and the actual terms of the 2007 ESPP, the First Amendment, the Second Amendment and the Third Amendment, the terms of the 2007 ESPP, the First Amendment, the Second Amendment and the Third Amendment will govern.
20212022 Proxy Statement 47
Proposal No. 3 Approval of the Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan
Share Availability
A total of 1,550,000 shares of Common Stock will be available for sale under the 2007 ESPP, subject to adjustment as provided in the 2007 ESPP.
Administration
The 2007 ESPP may be administered by the Compensation Committee of the Board, or if so designated, another committee appointed by the Board. Currently, the Compensation Committee administers the 2007 ESPP. The Compensation Committee has the full power to adopt, amend and rescind any rules deemed desirable and appropriate to administer the 2007 ESPP.
Eligibility
All employees, including part-time employees, of the Company and those subsidiaries designated by the Board are eligible to participate in the 2007 ESPP. As of March 19, 2021, approximately 2,752 individuals were eligible to participate in the 2007 ESPP. An eligible employee, however, may not participate if such option would permit the employee to purchase, under all stock purchase plans of the Company, Common Stock with a fair market value of more than $25,000 (determined at the time such options are granted) in any calendar year.
Offering Periods and Purchase Periods
The 2007 ESPP is implemented by a series of one-year offering periods (“Offering Periods”) starting on January 1 of each year. Each Offering Period will have four purchase periods (“Purchase Periods”) of three consecutive months each, starting on January 1, April 1, July 1 and October 1. Employees are allowed to begin participating in the 2007 ESPP at the beginning of an Offering Period or at the beginning of a Purchase Period within an Offering Period.
Participation Procedure
An eligible employee may become a participant by completing a subscription agreement prior to the beginning of an offering date or entry date. A participant may elect to have payroll deductions of between 1% and 15% of such participant’s compensation on each payday, which is credited to the participant’s account. No participant, however, may make payroll deductions during any year if such option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its subsidiaries to accrue at a rate that exceeds twenty-five thousand dollars ($25,000) of the fair market value of such stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time, nor may a participant purchase more than 5,000 shares of Common Stock during any Offering Period. On the last day of each Purchase Period, the amount in each participant’s account is used to purchase shares of Common Stock. A participant may decrease or increase the rate of his or her contributions on one occasion only during a Purchase Period by completing and filing a new subscription agreement.
Purchase Price of Shares
The purchase price for the shares of Common Stock on any purchase date will be, with respect to a Purchase Period, an amount equal to the lower of (a) 85% of the fair market value of a share of Common Stock on the offering date for the Offering Period that includes such Purchase Period or (b) 85% of the fair market value of a share of Common Stock on the exercise date respecting such Purchase Period; provided, however, that if a participant’s entry date occurs after the offering date for the Offering Period that includes such Purchase Period, then the amount in clause (a) of this definition with respect to such participant for such Purchase Period shall be the greater of (i) 85% of the fair market value of a share of Common Stock on such offering date or (ii) 85% of the fair market value of a share of Common Stock on such participant’s entry date. The fair market value of a share of Common Stock on a given date will be determined by the Compensation Committee based on the closing price of the Common Stock on the NYSE for such date. If the Common Stock is not traded on such date, the price will be determined on the immediately preceding trading date on which there was a closing price.
48 Carriage Services
Proposal No. 3 Approval of the Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan
Delivery of Shares to Participants
Shares of Common Stock purchased with a participant’s payroll deductions will be issued to the participant as promptly as practicable after each purchase date. Delivery may be made by direct deposit into a book entry account or brokerage account in the name of the participant.
Termination of Employment
Upon a participant’s termination of employment for any reason including death or disability, participation in the 2007 ESPP ceases and all amounts credited to the participant’s account will be immediately distributed to the participant or in the event of the participant’s death, the participant’s beneficiary.
Voluntary Withdrawal
A participant may voluntarily withdraw all contributions credited to his or her account at any time prior to two business days prior to the last day of a Purchase Period. Should a participant voluntarily withdraw during an Offering Period, they may do so for one occasion only during an Offering Period.
Transferability
No interest in the 2007 ESPP or in payroll deductions credited to a participant’s account may be transferred or assigned by a participant except by will or the laws of descent and distribution.
Equitable Adjustments
The maximum number of shares of Common Stock that may be issued under the 2007 ESPP are subject to adjustment in the event of stock dividends, spin off, stock splits, combinations or reclassification of shares, reverse stock splits, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration, provided that no adjustment will be made upon conversion of any convertible securities of the Company. In the event of a merger of the Company with another corporation, each option under the 2007 ESPP will be either assumed or substituted by the successor corporation, provided that the Committee retains the sole discretion to shorten any Purchase Period in lieu of such assumption or substitution.
Plan Amendment or Termination
The Board may at any time terminate or amend the 2007 ESPP; provided, however no such termination may affect options previously granted nor may an amendment make any change in any option theretofore granted which adversely affects the rights of any participant. In addition, to the extent required by Internal Revenue Code Section 423, the Company shall seek to obtain stockholder approval in such a manner and degree required for any amendment.
Federal Income Tax Consequences
The 2007 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423(a) of the Internal Revenue Code of 1986. This section provides that participants do not realize any income at the date of grant or at the time of receipt of the shares and that such income is postponed until they dispose of the shares. The tax consequences to participants upon disposition is dependent upon the variables determining the option price, the sale price, and the holding period.
The Company is entitled to a deduction under the Internal Revenue Code only to the extent that ordinary income is realized by the participant as a result of disqualifying dispositions.
New Plan Benefits
Participation in the 2007 ESPP is voluntary and each eligible employee will make his or her own decision whether and to what extent to participate in the 2007 ESPP. It is therefore not possible to determine the benefits or amounts that will be received in the future by individual employees or groups of employees under the 2007 ESPP.
2021 Proxy Statement 49
Proposal No. 3 Approval of the Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan
Equity Compensation Plan Information
The following table presents information as of December 31, 2020, regarding the number of shares of our Common Stock that are available for issuance under all of our existing equity compensation plans.
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(1) | ||||||||||||
Equity compensation plans approved by security holders | 911,736 | $ | 23.40 | 1,951,795 | |||||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||||
|
|
|
|
|
| ||||||||||
Total | 911,736 | $ | 23.40 | 1,951,795 | |||||||||||
|
|
|
|
|
| ||||||||||
|
|
50 Carriage Services
APPROVAL OF THE FIRST AMENDMENT TO THE CARRIAGE SERVICES, INC. 2017 OMNIBUS INCENTIVE PLAN
On March 30, 2021, upon the recommendation of the Compensation Committee, the Board approved an amendment (the “First Amendment”) to our Carriage Services, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”), to increase the number of shares of Common Stock authorized under the 2017 Plan and directed that the matter be submitted to the stockholders of the Company for their approval at the Annual Meeting. The First Amendment would increase by 1,500,000 the number of authorized shares of Carriage Common Stock (“Shares”) available for issuance under the 2017 Plan from 1,555,000 Shares to 3,055,000 Shares, effective as of May 18, 2021.
The 2017 Plan provides for various types of awards, including restricted stock, stock options and performance awards, to be awarded to our employees based on an individual’s performance in support of our near-term goals, as well as expected contributions to our long-term success. We believe that these forms of equity ownership help align our employee’s interests closely with those of our stockholders, motivate our employees to deliver long-term sustained growth, in addition to strong total stockholder returns, and incentivize our employees to contribute to the long-term growth and success of Carriage. In addition, the 2017 Plan allows us to recruit and retain 4E leaders who enhance our High Performance Culture consistent with our Good To Great Journey.
Without approval of this First Amendment, we believe the number of Shares remaining available for grants under the 2017 Plan may be inadequate to achieve the stated purpose of the 2017 Plan in the future. We are therefore seeking stockholder approval to increase the authorized Shares by 1,500,000 pursuant to the First Amendment to the 2017 Plan, which we anticipate will be a sufficient amount for equity grants and enable us to make reasonable, competitive equity grants that further support employee and stockholder alignment for the next few years. No other changes are being proposed for the 2017 Plan.
Summary of the 2017 Plan
The following is a summary of the material features of the 2017 Plan, as amended by the First Amendment, and is qualified in its entirety by reference to the full text of the 2017 Plan filed as Appendix A to the Proxy Statement on Schedule 14A filed on April 5, 2017 and to the full text of the First Amendment which is attached hereto as Appendix C. To the extent there is a conflict between this summary and the actual terms of the 2017 Plan and the First Amendment, the terms of the 2017 Plan and First Amendment will govern.
Purpose and Eligibility
The purpose of the 2017 Plan is to foster and promote the long-term financial success of the Company by, (a) motivating superior performance by means of performance-related incentives, (b) encouraging and providing for the acquisition of an ownership interest in the Company by participants, and (c) enabling the Company to attract and retain qualified and competent persons as employees of the Company and to serve as members of the Board. The 2017 Plan authorizes the grant of awards under the plan (“Awards”) to employees of the Company or any of its Subsidiaries, non-employee directors of the Company, and to certain third-party service providers of the Company or any of its Subsidiaries (collectively, the “Eligible Individuals”). As of March 19, 2021, there were approximately 2,758 Eligible Individuals who were employees of the Company or its subsidiaries or non-employee directors of the Company.
Administration
The Compensation Committee will administer the 2017 Plan, including, without limitation, selecting which of the Eligible Individuals will receive Awards (such individuals, the “Participants”) as well as establishing the form and terms of Awards such as vesting, exercisability, and other restrictions. Subject to certain
2021 Proxy Statement 51
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
limitations, the Compensation Committee may delegate some or all of its authority with respect to the 2017 Plan to one or more alternative administrators such as one or more of its members or one or more of our officers.
Shares Available under the 2017 Plan
Subject to capitalization adjustments described below and other limited adjustments in the 2017 Plan and the share counting rules described below, an aggregate of approximately 3,055,000 Shares will be available for grants under the 2017 Plan, which such amount is comprised of 2.5 million Shares plus the number of Shares that remain available for grant under the 2006 Plan as of the 2017 Plan Effective Date (approximately 555,000 Shares). In addition, there are approximately 677,000 outstanding Shares subject to Awards under the 2006 Plan that could be forfeited, cancelled or otherwise not issued and could become available for Awards under the 2017 Plan. Shares issued under the 2017 Plan may be authorized and unissued Shares. All Shares available for issuance under the 2017 Plan may be used for any type of Award, including, without limitation, Incentive Stock Options (described below).
Share Counting Rules
The number of Shares reserved for issuance under the 2017 Plan will be reduced by one (1.00) Share for every one (1.00) Share that is subject to an Award. Any Shares that are subject to an Award granted under the 2017 Plan or that are subject to an outstanding award previously granted under the 2006 Plan that either (i) terminates by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares (or with the forfeiture of Shares in connection with a restricted stock award); (ii) is settled in cash in lieu of Shares; or (iii) is exchanged with the Compensation Committee’s permission prior to the issuance of Shares for an Award not involving Shares, will become available again for grant under the 2017 Plan. Further, any Shares that are tendered or withheld to pay the exercise price of, or withheld to satisfy a tax obligation with respect to, an Award granted under the 2017 Plan or an outstanding award under the 2006 Plan, will become available again for grants under the 2017 Plan. And, any Shares that are purchased by the Company on the open market using the proceeds from the exercise of a stock option granted under the 2017 Plan or under the 2006 Plan will be added to the share reserve and will become available for future grants under the 2017 Plan. Shares subject to substitute awards that were approved by an acquired or combined company’s stockholders and not granted in connection with the transaction shall not be counted against the Share reserve available under the 2017 Plan, nor shall they reduce the Shares authorized for grant to a Participant in any calendar year, but only to the extent permitted under and in accordance with the Code, other applicable law and exchange rules.
Awards and Term of 2017 Plan
The 2017 Plan provides for the following types of Awards: stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance share units, performance units and other stock-based awards or cash-based awards. Each Award will be evidenced by a written or electronic agreement or statement (“Award Agreement”) that specifies the Award’s terms and conditions as determined by the Compensation Committee. Unless sooner terminated by the Board, the 2017 Plan shall automatically terminate ten (10) years from the 2017 Plan Effective Date. After the 2017 Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the 2017 Plan’s terms and conditions.
A detailed description of each type of Award follows.
Stock Options
Under the 2017 Plan, the plan administrator may grant Awards in the form of an option to purchase Shares (“Stock Options”) that are intended to meet the requirements of Section 422 of the Internal Revenue Code (referred to as “Incentive Stock Options”) and other Stock Options that do not meet such requirements (referred to as “Non-Qualified Stock Options”). The applicable Award Agreement will specify whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option. A Stock Option will grant the holder the right to purchase a specific number of Shares at a fixed price (“Exercise Price”) over a period not to exceed the day before the expiration of ten (10) years from the date of the grant.
52 Carriage Services
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
A Stock Option’s Exercise Price may not be less than one hundred percent (100%) of the fair market value of a Share on the date the Option is granted.
A Participant will not have any stockholder rights with respect to any Shares subject to an unvested Stock Option.
Stock Appreciation Rights
Under the 2017 Plan, the plan administrator may grant Awards in the form of a stock appreciation right or “SAR.” A stock appreciation right will allow the holder to exercise that right as to a specific number of Shares over a period not to exceed the day before the expiration of ten (10) years from the grant date and receive the appreciated value of such Shares. The appreciated value is equal to the excess of (i) the fair market value of the Shares as to which the right is exercised (determined as of the date of exercise) over and (ii) the aggregate Grant Price (as defined below) for those Shares. The applicable Award Agreement will specify whether this value will be paid in cash, Shares or a combination of both.
A SAR’s grant price per Share (“Grant Price”) may not be less than one hundred percent (100%) of the fair market value per Share on the date the SAR is granted. A Participant will not have any stockholder rights with respect to any Shares subject to an unvested Stock Appreciation Right.
Restricted Stock and Restricted Stock Units
Under the 2017 Plan, the plan administrator may grant Awards denominated in Shares (“Restricted Stock”) or stock units (“Restricted Stock Units” or “RSUs”) that are subject to a period in which such Restricted Stock or RSUs are subject to forfeiture based on discontinued service, the failure to achieve performance criteria and/or the occurrence of other events as determined by the plan administrator. Restricted Stock is a grant of Shares that are subject to a substantial risk of forfeiture. Each RSU corresponds in value to a single Share. Restricted Stock Units may be paid in cash, Shares or a combination of the two as determined by the plan administrator and set forth in the applicable Award Agreement.
The plan administrator may impose such conditions or restrictions on Restricted Stock or Restricted Stock Units, as it deems advisable. Holders of Restricted Stock will have the same voting rights and dividend rights, except dividends for performance-based Restricted Stock, as holders of Shares unless such rights are expressly limited by the plan administrator in the applicable Award Agreement. No Restricted Stock Unit will confer any voting rights. The plan administrator will determine and set forth in each applicable Award Agreement the extent to which a holder of RSUs has the right to receive dividend equivalents on each unit and the conditions under which such dividend equivalents will be paid to the holder. No dividends or dividend equivalents will be paid on performance-based Restricted Stock or RSUs unless the applicable performance goals are satisfied.
Performance Share Units and Performance Units
Under the 2017 Plan, the plan administrator may grant an Award denominated in Shares (“Performance Share Units” or “PSUs”) or denominated in dollar units (“Performance Units” or “PUs”) that are earned based on the achievement of one or more performance goals over a specified performance period. The number of PSUs or PUs earned over a performance period may vary based on the level of achieved performance.
Each Performance Share Unit will have a value that corresponds to the fair market value of a Share. Each Performance Unit will have an initial dollar value as determined in the discretion of the plan administrator. The dollar value of Performance Units (or the number of Performance Units earned) may vary based on the level of achieved performance over the applicable performance period. Performance Share Units and Performance Units may be payable in the form of cash, Shares or a combination of the two as determined by the plan administrator and set forth in the applicable Award Agreement.
The plan administrator will determine and set forth in each applicable Award Agreement the extent to which a holder of PSUs has the right to receive dividend equivalents on each unit and the conditions under which such dividend equivalents will be paid to the holder. No dividend equivalents will be paid on PSUs unless the applicable performance goals are satisfied.
2021 Proxy Statement 53
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
Cash-Based Awards and Stock-Based Awards
Under the 2017 Plan, the plan administrator may grant Awards, not otherwise described by the terms of the 2017 Plan that are denominated in cash (“Cash-Based Awards”) or denominated in stock (“Other Stock-Based Awards”). The plan administrator will determine the terms and conditions applicable to each Cash-Based Award and Stock-Based Award, which may include a vesting requirement based on the completion of a service period with the Company or achievement of a specified performance goal(s) and form of payment in Shares, cash or a combination of the two. The plan administrator may impose such restrictions on Shares acquired pursuant to the settlement of Other Stock-Based Awards as it determines advisable.
Code Section 162(m) Performance-Based Compensation and Performance Measures for Awards
The plan administrator may grant Awards that are intended to provide compensation solely on account of the attainment of one or more pre-established, objective performance criteria under circumstances that are intended to qualify such compensation as performance-based compensation under Section 162(m) of the Internal Revenue Code. The vesting, level of payout or value of such Awards will be determined by the attainment of one or more goals based upon one or more of the following performance measures (the “Performance Measures”): cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, cash flow before or after payment of a dividend and cash flow return on investment); capital expenditures; earnings (either in aggregate or on a per-share basis, and on pre-tax or post-tax basis); earnings before or after either, or any combination of, interest, taxes, depreciation, or amortization; economic value added; expenses/costs (including cost reduction and expense management); gross or net income; gross or net operating margins; gross or net operating profits; gross or net revenues/sales; individual objective performance measures; market share; net asset value per share; net income; net borrowing, debt leverage levels, credit quality or debt ratings; operating and maintenance cost management; operational performance measures; operating profit; operating ratios and measures; profitability ratios; retained earnings; return measures (including, but not limited to, return on assets, total assets employed, equity, capital, invested capital, sales or revenues); share price (including, but not limited to, growth in share price and total stockholder return); strategic business objectives (including objective project milestones); transactions relating to acquisitions or divestitures; or working capital.
In any Award intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code, the plan administrator may provide that the evaluation of the achievement of one or more applicable Performance Measures may include or exclude the impact of one or more of the following on reported financial results: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) changes in tax laws, accounting principles or other laws or provisions, (iv) reorganization or restructuring programs, (v) acquisitions or divestitures, (vi) foreign exchange gains and losses or (g) unusual or infrequent items under Accounting Standards Codification Topic 225. Such inclusions or exclusions shall be prescribed in a form and at a time that meets the requirements of Code Section 162(m) for qualification of the Award as performance-based compensation under Code Section 162(m). Further, the Performance Measures may: (i) relate to the performance of the Company or any Subsidiary as a whole or any business unit or division of the Company or any Subsidiary or any combination thereof, (ii) be compared to the performance of a group of comparator companies, or published or special index, (iii) be based on change in the Performance Measure over a specified period of time, (iv) relate to or be compared to one or more other Performance Measures, or (v) any combination of the foregoing.
The plan administrator is under no obligation to structure Awards granted under the 2017 Plan to qualify as performance-based compensation under Code Section 162(m) and has the express authority to grant Awards that do not qualify as performance-based compensation. Additionally, there is no guarantee that an Award that is intended to qualify as performance-based compensation under Code Section 162(m) will so qualify in any particular circumstance. To maintain flexibility in compensating our executives, the plan administrator reserves the right to use its judgment to grant or approve Awards or compensation that is non-deductible when the plan administrator believes such Awards or compensation is appropriate. Further, the plan administrator has the discretion to adjust otherwise payable performance-based compensation downward, either on a formula or discretionary basis or any combination as the plan
54 Carriage Services
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
administrator determines in its sole discretion but does not have the authority to adjust upward any otherwise payable performance-based compensation.
At the time stockholder approval was obtained for the 2017 Plan, it also constituted approval of the material terms of the Performance Measures under the 2017 Plan for purposes of establishing the specific vesting targets for one or more Awards under the 2017 Plan that are intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code
Annual Limits on Grants under the 2017 Plan
Subject to capitalization adjustments or other limited adjustments under the 2017 Plan, the following limits apply to grants of Awards under the 2017 Plan:
The maximum aggregate number of Shares that may be subject to Awards of Options or SARs granted to any Participant in any calendar year is 300,000 Shares.
The maximum aggregate number of Shares that may be subject to Awards of Restricted Stock, Restricted Stock Units, Performance Share Units and Other Stock-Based Awards that are intended to be performance-based compensation and exempt from the limits in Code Section 162(m) granted to any one Participant in any calendar year is 300,000 Shares. The foregoing maximum applies to any performance period that is equal to a fiscal year and will be adjusted to the corresponding fraction or multiple of that amount for any performance period of a different duration. For example, if the duration of a performance period is two calendar years, then the maximum amount will be adjusted to equal the product of 300,000 Shares and two (2), or 600,000 Shares.
The maximum aggregate amount that may be paid to any Participant in any calendar year under an Award of Performance Units, Cash-Based Awards or any other Awards that are intended to be performance-based compensation and exempt from the limits in Code Section 162(m) and that is payable or denominated in cash is $3,000,000.00 determined as of the date of payout. The foregoing maximum applies to any performance period that is equal to a fiscal year and will be adjusted to the corresponding fraction or multiple of that amount for any performance period of a different duration. For example, if the duration of a performance period is three calendar years, then the maximum amount will be adjusted to equal the product of $3,000,000.00 and three (3), or $9,000,000.
The maximum aggregate value of Awards granted or paid to an incumbent non-employee director who does not serve as Lead Director of our Board may not exceed $450,000.00 during any calendar year; provided, however, that the maximum aggregate value of Awards granted or paid to a new, non-employee director during the calendar year in which the non-employee director is first appointed or elected to our Board may not exceed $550,000.00. The maximum aggregate value of Awards granted or paid to an incumbent non-employee director who serves as Lead Director of our Board may not exceed $650,000.00 during any calendar year.
Prohibition on Repricing/Cash-Out of Stock Options and SARs
The plan administrator may not implement any of the following repricing or cash-out programs without obtaining stockholder approval: (i) a reduction in the Exercise Price or Grant Price of any previously granted Stock Option or SAR, (ii) a cancellation of any previously granted Stock Option or SAR in exchange for another Stock Option or SAR with a lower Exercise Price or Grant Price, respectively, or (iii) a cancellation of any previously granted Stock Option or SAR in exchange for cash or another Award if the Exercise Price of the Stock Option or the Grant Price of the SAR exceeds the fair market value of a Share on the date of such cancellation, in each case other than in connection with a Change in Control (as defined in the 2017 Plan) or the capitalization adjustment provisions in the 2017 Plan.
Change in Control and Vesting Acceleration
Generally, except as provided otherwise in an Award Agreement, the occurrence of a “Change in Control” (as such term is defined in the 2017 Plan) will result in the immediate vesting of any outstanding, unvested Awards and the settlement of such Awards shortly thereafter, unless an Award is assumed, replaced or continued by a successor entity. With respect to Awards that are subject to performance-based vesting, upon the occurrence of a Change in Control, all applicable performance conditions will be deemed
2021 Proxy Statement 55
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
satisfied either (i) based on actual performance, to the extent determinable, through the date immediately prior to the date of the Change in Control, with performance goals adjusted to reflect the truncated performance period and payable without proration or (ii) as if target performance was achieved prorated to reflect the portion of the performance period that has elapsed through the date of the Change in Control, whichever will result in the largest payout to the Participant.
Changes in Capitalization
If an equity restructuring causes the per-share value of our Shares to change, such as by reason of a stock dividend, extraordinary cash dividend, stock split, spin-off, rights offering, recapitalization or otherwise, then equitable adjustments will be made to the number of Shares available for issuance under the 2017 Plan and to the terms of outstanding Awards in a manner designed to preclude any dilution or enlargement of the 2017 Plan and any outstanding Awards.
Transferability
ISOs may only be transferred by will or the laws of descent and distribution. Generally, all other Awards are not transferable other than by will or the laws of descent and distribution or, subject to the consent of the plan administrator, pursuant to a domestic relations order entered into by a court of competent jurisdiction.
Withholding
The plan administrator may provide holders of Awards with the right to have the Company withhold cash or a portion of the Shares otherwise issuable to such individuals in satisfaction of any applicable withholding taxes to which they become subject in connection with the exercise, vesting or settlement of their Awards. Alternatively, the plan administrator may allow such individuals to deliver cash or previously acquired Shares in payment of such withholding tax liability
Clawback and Forfeitures for Cause
The plan administrator may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable treatment of an Award.
Upon a Participant’s termination of service for cause, the Participant will forfeit, as of the date immediately preceding such termination of service, any and all outstanding and unexercised Options and SARs as well as any outstanding and unvested Restricted Stock, RSUs, Performance Share Units, Performance Units, Cash-Based Awards, and Other Stock-Based Awards
Amendment and Termination
Unless terminated earlier by our Board, the 2017 Plan will remain effective until it expires on the ten year anniversary of its effectiveness. However, our Board may, at any time and subject to the terms of the 2017 Plan, amend, suspend, or terminate the 2017 Plan in whole or in part. No amendment of the 2017 Plan may result in the “repricing” of any outstanding Stock Options or SARs without stockholder approval. To the extent necessary under any applicable law, regulation or exchange requirement, no amendment will be effective unless approved by the stockholders of the Company. No termination, amendment or suspension of the 2017 Plan may adversely affect in any material way any Award previously granted under the 2017 Plan without the written consent of the Award recipient, subject to certain limited exceptions that permit our Board or plan administrator to amend outstanding Awards to adjust for the occurrence of certain unusual or nonrecurring events and to conform to Awards to certain legal requirements
Summary of Federal Income Tax Consequences of Awards Granted under the 2017 Plan
The following is a general summary of the United States Federal income tax treatment associated with the 2017 Plan as of the date of this proxy statement. The federal tax laws are complex and subject to change, and the tax consequences for any Participant in the 2017 Plan will depend on his or her individual circumstances.
56 Carriage Services
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
Stock Options
Stock Options granted under the 2017 Plan may be either Incentive Stock Options that satisfy the requirements of Section 422 of the Code or Non-Qualified Stock Options that are not intended to meet such requirements. The Federal income tax treatment for the two types of options differs as follows:
Incentive Stock Options.No taxable income is recognized by the Participant upon the grant of an Incentive Stock Option. Generally, a Participant will notrecognize taxable income at the time an Incentive Stock Option is exercised, although taxable income may arise upon exercise for alternative minimum tax purposes. The Participant will recognize taxable income in the year in which the Shares acquired upon the exercise of an Incentive Stock Option are sold or otherwise made the subject of certain other dispositions. For Federal tax purposes, dispositions are divided into two categories: (i) qualifying, and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two (2) years after the date the related Incentive Stock Option was granted and more than one (1) year after the date such Incentive Stock Option was exercised for those shares. If the sale or disposition occurs before both of these two periods are satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition, the Participant will recognize long-term capital gain in an amount equal to the excess of (i) the amount realized upon the sale or other disposition of the acquired Shares over (ii) the Exercise Price paid for those shares. If there is a disqualifying disposition of the acquired Shares, then the excess of (i) the fair market value of those shares on the exercise date or (if less) the amount realized upon such sale or disposition over (ii) the Exercise Price paid for the shares will be taxable as ordinary income to the Participant. Any additional gain recognized upon the disposition will be a capital gain. We will not be entitled to any income tax deduction if the Participant makes a qualifying disposition of the shares. If the Participant makes a disqualifying disposition of the purchased shares, then the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder in connection with the disqualifying disposition.
Non-Qualified Options. No taxable income is recognized by a Participant upon the grant of a Non-Qualified Stock Option. The Participant will recognizeordinary income in the year in which the Non-Qualified Stock Option is exercised, equal to the excess of the fair market value of the Shares acquired upon the exercise of the Non-Qualified Stock Option on the exercise date over the Exercise Price paid for the shares (and subject to any applicable income tax withholding). We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant with respect to an exercised Non-Qualified Stock Option.
Stock Appreciation Rights
No taxable income is recognized by a Participant upon the grant of a Stock Appreciation Right. The Participant will recognize ordinary income in the year in which the Stock Appreciation Right is exercised, in an amount equal to the fair market value of the Shares issued to the Participant upon the exercise of the Stock Appreciation Right (or the amount of the cash payment made to the Participant upon the exercise of the Stock Appreciation Right) and subject to any applicable income tax withholding. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant with respect to an exercised Stock Appreciation Right.
Restricted Stock
No taxable income is recognized by a Participant upon the grant of Restricted Stock, unless the Participant makes an election to be taxed at the time of grant under Code Section 83(b). If such election is made, the Participant will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding) at the time of the grant in an amount equal to the excess of the fair market value of the Shares subject to such grant at such time over the amount, if any, paid for those shares.
If the Participant does not make an election under code Section 83(b) to be taxed at the time of grant, the Participant will recognize ordinary income when Shares subject to the grant subsequently vest in an amount equal to the excess of the fair market value of the shares on the vesting date over the amount, if
2021 Proxy Statement 57
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
any, paid for the shares (and subject to any applicable income tax withholding). Subject to the deductibility limitations of Code Section 162(m), the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant in connection with the vesting of a Restricted Stock Award.
In addition, a Participant receiving dividends with respect to Restricted Stock for which the above-described election has not been made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding), rather than dividend income, in an amount equal to the dividends paid and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Code Section 162(m) apply
Restricted Stock Units
No taxable income is recognized by a Participant upon the grant of Restricted Stock Units. The Participant will recognize ordinary income in the year in which the RSU grant is settled and paid in an amount equal to the fair market value of the Shares issued to the Participant upon the settlement of the RSUs (or the amount of the cash payment made to the Participant upon the settlement of the RSUs) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant at the time the RSU is settled and paid.
In addition, a Participant eligible to receive dividend equivalents with respect to a grant of Restricted Stock Units will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding), rather than dividend income, in the year in which the dividend equivalent is paid in an amount equal to such payment if made in cash (or, if such payment is made in Shares, then the fair market value of such shares on the date of payment). The Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Code Section 162(m) apply.
Performance Share Units
No taxable income is recognized by a Participant upon the grant of Performance Share Units. The Participant will recognize ordinary income in the year in which the PSU grant is settled and paid in an amount equal to the fair market value of the Shares issued to the Participant upon the settlement of the Performance Share Units (or cash paid to the Participant upon the settlement of the Performance Share Units) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant at the time the PSU is settled and paid. The deduction will be allowed for the taxable year in which such ordinary income is recognized by the Participant.
In addition, a Participant eligible to receive dividend equivalents with respect to a grant of Performance Share Units will recognize compensation taxable as ordinary income (and subject to any applicable income tax withholding), rather than dividend income, in the year in which the dividend equivalent is paid in an amount equal to such payment (or, if such payment is made in Shares, then the fair market value of such shares on the date of payment). The Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Code Section 162(m) apply.
Performance Units
No taxable income is recognized by a Participant upon the grant of Performance Units. The Participant will recognize ordinary income in the year in which the Performance Units are settled and paid in an amount equal to the cash payment made to the Participant upon the settlement of the Performance Units (or the fair market value of the Shares issued to the Participant upon the settlement of the Performance Unit) and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant at the time the Performance Units are settled and paid.
58 Carriage Services
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
Other Stock-Based Awards and Cash-Based Awards
Generally, with respect to Other Stock-Based Awards and Cash-Based Awards, no taxable income is recognized by a Participant upon the grant of such Awards unless, at the time of grant, any Shares issued or cash paid to the Participant is fully vested and non-forfeitable. In this case, the Participant would recognize ordinary income equal to the fair market value of the Shares issued to the Participant at the time of grant or the amount of the cash payment made to the Participant at the time of grant and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant at the time of grant. The deduction will be allowed for the taxable year in which such ordinary income is recognized by the Participant.
If Other Stock-Based Awards or Cash-Based Awards are subject to vesting and forfeiture provisions, a Participant will not recognize taxable income upon the grant of such Awards but will recognize ordinary income in the year in which such Awards are settled and paid in an amount equal to the fair market value of the Shares issued to the Participant upon the settlement of such Awards or the amount of the cash payment made to the Participant upon the settlement of such Awards and subject to any applicable income tax withholding. Subject to the deductibility limitations of Code Section 162(m), the Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the Participant at the time such Awards are settled and paid.
Other Tax Considerations
Upon accelerated exercisability of options and accelerated lapsing of restrictions upon Restricted Stock or other Awards in connection with a Change in Control (as such term is defined in the 2017 Plan), certain amounts associated with such Awards could, depending upon the individual circumstances of the Participant, constitute “excess parachute payments” under the golden parachute provisions of Code Section 280G. Whether amounts constitute “excess parachute payments” depends upon, among other things, the value of the accelerated Awards and the past compensation of the Participant.
Code Section 409A generally provides that any deferred compensation arrangement which does not meet specific written requirements regarding (i) timing and form of payouts, (ii) advance election of deferrals, and (iii) restrictions on acceleration of payouts results in immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. In addition, tax on the amounts included in income are also subject to a twenty (20%) excise tax and interest. In general, to avoid a violation of Code Section 409A, amounts deferred may only be paid out on separation from service, disability, death, a specified time, a change in control (as defined by the Treasury Department), or an unforeseen emergency. Furthermore, the election to defer generally must be made in the calendar year prior to performance of services, and any provision for accelerated payout other than for reasons specified by the Treasury may cause the amounts deferred to be subject to early taxation and to the imposition of the excise tax. Code Section 409A is broadly applicable to any form of deferred compensation other than tax-qualified retirement plans and bona fide vacation, sick leave, compensatory time, certain disability pay or death benefits, and may be applicable to certain Awards under the 2017 Incentive Plan. Awards under the 2017 Incentive Plan that are subject to Code Section 409A are intended to satisfy the requirements of Code Section 409A, as specified in an Award Agreement.
Generally, taxable compensation earned by “covered employees” (as defined in Code Section 162(m)) that are granted and administered by the Compensation Committee for Stock Options, Stock Appreciation Rights, or certain other applicable Awards, as determined by the Compensation Committee in its sole discretion, are intended to constitute qualified performance-based compensation. The Company should, therefore, be entitled to a tax deduction for compensation paid in the same amount as the ordinary income recognized by the covered employees without any reduction under the limitations of Code Section 162(m) on deductible compensation paid to such employees. However, the Compensation Committee may determine, within its sole discretion, to grant Awards to such covered employees that do not qualify as performance-based compensation. Under Code Section 162(m), the Company is denied a deduction for annual compensation paid to such employees in excess of one million dollars ($1,000,000).
2021 Proxy Statement 59
Proposal No. 4 Approval of the First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan
New Plan Benefits
Because the number of Awards to be made pursuant to the 2017 Plan, as amended, is subject to the discretion of the Compensation Committee, the type, number, recipients and other terms of such Awards cannot be determined with certainty at this time.
Equity Compensation Plan Information
For more information regarding the number of shares of our Common Stock that are available for issuance under all of our existing equity compensation plans as of December 31, 2020, refer to the table on page 45 included in the “Summary of 2007 ESPP – Equity Compensation Plan Information” section of our Proposal No. 3: Approval of the Third Amendment to the Amended and Restated 2007 Employee Stock Purchase Plan.
On March 19, 2021, the closing price of our Shares on the New York Stock Exchange was $36.82.
|
60 Carriage Services
The Audit Committee of the Board (the “Audit Committee”) of the Company is comprised of sixfive directors, each of whom has been determined by our Board to be independent and financially literate under the NYSE’s listing standard requirements and the rules and regulations of the SEC. The Audit Committee’s responsibilities are set forth in the Audit Committee Charter, available on our website at www.carriageservices.com.
As set forth in the Audit Committee Charter, the Audit Committee assists our Board in fulfilling its oversight regarding, among other things:
the integrity of our financial statements, including the adequacy and effectiveness of the Company’s financial reporting and disclosure controls and procedures;
the engagement of the Company’s independent registered public auditor, including its qualifications, independence and performance;
the performance, function and design of the Company’s internal audit function; and
the compliance by the Company with legal and regulatory requirements.
With respect to the Company’s financial reporting process, Company management is responsible for establishing and maintaining internal controls and preparing the Company’s financial statements. Our independent registered public accounting firm for the fiscal year ended December 31, 2020,2021, Grant Thornton LLP, is responsible for auditing these financial statements. It is the responsibility of the Audit Committee to oversee these activities.
The Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 20202021 with Company management. The Audit Committee has discussed with Grant Thornton LLP the matters required to be discussed under the applicable standards of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. Additionally, the Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the PCAOB regarding Grant Thornton LLP’s communications with the Audit Committee concerning independence, and has discussed with Grant Thornton LLP their independence.
Based on the Audit Committee’s review and discussions with management and Grant Thornton LLP referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 for filing with the SEC.
Audit Committee
Donald D. Patteson, Jr., Chairman
Barry K. Fingerhut
Bryan D. Leibman
Douglas B. Meehan
Dr. Achille Messac
James R. Schenck
April 5, 20211, 2022
2021 Proxy Statement 6148 Carriage Services
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP
General
Our Audit Committee has selected Grant Thornton to audit our consolidated financial statements. Grant Thornton has served as our independent registered public accounting firm since 2014.
Representatives of Grant Thornton are expected to be present at our Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders.
Although ratification is not required by Delaware law, our bylaws or otherwise, our Board is submitting our Audit Committee’s appointment of Grant Thornton to our stockholders for ratification as a matter of good corporate practice. Even if the appointment is ratified, our Audit Committee, in its discretion, may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders. If the appointment of Grant Thornton is not ratified, our Audit Committee will evaluate the basis for the stockholders’ vote when determining whether to continue the firm’s engagement.
FOR THE REASONS STATED ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, |
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
As part of its duties, our Audit Committee is required to annually pre-approve audit and non-audit services performed by the independent registered public accounting firm in order to ensure that the provision of such services does not impair the audit firm’s independence. Our Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent auditors. All audit fees for 20202021 and 20192020 were pre-approved by our Audit Committee.
Fees billed to us by Grant Thornton during 20202021 and 20192020 were as follows:
|
| Year Ended December 31, |
| Year Ended December 31, |
| ||||||||||||||||||||
|
| 2020 | 2019 |
| 2021 | 2020 |
| ||||||||||||||||||
Audit fees | $1,128,875 | $1,052,295 |
| $1,214,830 | $1,128,875 |
| ||||||||||||||||||
Audit-Related fees | $ — | $ — |
| $ — | $ — |
| ||||||||||||||||||
The Company did not engage any firm to perform non-audit services during these years.
2022 Proxy Statement 62 Carriage Services49
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policies and Procedures for Review and Approval of Related Party Transactions
We have established procedures to identify, review, approve, and ratify transactions with related persons and bring them to the attention of our Board for consideration. These procedures include formal written questionnaires to our directors and executive officers. Each year, we require our directors and executive officers to complete a questionnaire that requires them to identify and describe any transactions with Carriage that they or their respective related parties may have been involved in, whether or not material.
Our Corporate Governance Committee has the responsibility to review and discuss with management and approve any transactions or courses of dealing with related parties. During this process, related party transactions are disclosed to all Board members. To the extent such transactions are ongoing business relationships, the transactions are reviewed annually and such relationships will be on terms not materially less favorable than what would be usual and customary in similar transactions between unrelated persons dealing at arm’s length. Our Corporate Governance Committee intends to approve only those related party transactions that are in the best interest of us and our stockholders. The policies and procedures for related party transactions are documented in our Code of Business Conduct and Ethics, a copy of which is available free of charge on our website at www.carriageservices.com.
Since January 1, 2020,2021, there were no reportable transactions between Carriage and related persons, and there are no such currently proposed or anticipated transactions.
Management does not intend to bring any other business before our Annual Meeting and has not been informed that any other matters are to be presented at our Annual Meeting by others. If other matters properly come before our Annual Meeting or any adjournment or postponement thereof, the persons named in the accompanying proxy and acting thereunder will vote in accordance with their best judgment.
2021 Proxy Statement 6350 Carriage Services
STOCKHOLDER PROPOSALS FOR THE 20222023 ANNUAL MEETING
Pursuant to rules promulgated by the SEC, stockholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at our 20222023 Annual Meeting of Stockholders may do so by following the procedures set forth under Rule 14a-8 of the Exchange Act. In general, to be eligible for inclusion in our proxy materials, stockholder proposals must be received by our Corporate Secretary at 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056 no later than December 7, 2021.2, 2022. However, if the date of our 20222023 Annual Meeting of Stockholders is more than 30 days from the date of the 20212022 Annual Meeting of Stockholders, then the deadline shall be a reasonable time before we begin to print and send our proxy materials for our 20222023 Annual Meeting of Stockholders.
In addition, pursuant to our bylaws, a stockholder may recommend nominees for director not for inclusion in our proxy materials, as further discussed herein in our “Corporate Governance – Direction Nomination Process” section. For all other stockholder proposals intended for presentation at our 20222023 Annual Meeting of Stockholders, but not for inclusion in our 20212022 proxy materials, a stockholder must deliver a copy of the proposal to our Corporate Secretary at our principal offices listed above no less than 45 days before the date on which we first send our proxy materials for the 20222023 Annual Meeting of Stockholders. For our 20222023 Annual Meeting of Stockholders, the deadline will be February 19, 2022,18, 2023, based on the proxy materials for this year’s meeting being sent on or about April 5, 2021.4, 2022.
Under Rule 14a-4(c) of the Exchange Act, our Board may exercise discretionary voting authority under proxies solicited by it with respect to any matter timely and properly presented by a stockholder at our 20222023 Annual Meeting of Stockholders that the stockholder does not seek to have included in our proxy statement if (except as described in the following sentence) the proxy statement discloses the nature of the matter and how our Board intends to exercise its discretion to vote on the matter, unless the stockholder satisfies the other requirements of Rule 14a-4(c)(2) of the Exchange Act. If we receive untimely notice of the matter and the matter nonetheless is permitted to be presented at our 20222023 Annual Meeting of Stockholders, our Board may exercise discretionary voting authority with respect to the matter without including any discussion of the matter in the proxy statement for the meeting. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above and other applicable requirements.
2022 Proxy Statement 64 Carriage Services51
Our Annual Report to Stockholders for the year ended December 31, 20202021 (our “Annual Report”) is being delivered electronically or mailed, if so elected, to all stockholders entitled to vote at our Annual Meeting. Our Annual Report does not form any part of the proxy soliciting materials.
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2021, but not including exhibits, is also available at www.carriageservices.com. A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2021, excluding exhibits, will be furnished at no charge to each person to whom a proxy statement is delivered upon the request to the Corporate Secretary in writing at Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, or call our Corporate Secretary at 713-332-8400. Exhibits to the Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 are available upon payment of a reasonable fee, which is limited to our expenses in furnishing the requested exhibit(s). Such requests should be directed to the Corporate Secretary of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, AND YOU ARE RESPECTFULLY REQUESTED TO VOTE VIA THE INTERNET OR COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
|
By Order of the Board of Directors,
Steven D. Metzger
SeniorExecutive Vice President, Chief Administrative Officer, General Counsel & Secretary
Houston, Texas
April 5, 20211, 2022
2021 Proxy Statement 65
AMENDED AND RESTATED
CARRIAGE SERVICES, INC.
2007 EMPLOYEE STOCK PURCHASE PLAN
(Effective as of August 1, 2013)
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 Proxy Statement A-1
Appendix A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-252 Carriage Services
Appendix A
|
|
|
|
|
|
|
|
|
|
2021 Proxy Statement A-3
Appendix A
|
|
|
|
|
|
|
|
A-4 Carriage Services
Appendix A
|
|
|
|
|
|
|
|
|
|
|
2021 Proxy Statement A-5
Appendix A
|
|
|
|
|
|
|
|
A-6 Carriage Services
Appendix A
|
|
|
|
|
|
|
2021 Proxy Statement A-7
Appendix A
|
|
|
|
|
|
|
|
|
|
|
A-8 Carriage Services
Appendix A
|
|
|
2021 Proxy Statement A-9
Appendix A
FIRST AMENDMENT TO
THE AMENDED AND RESTATEDANNUAL MEETING OF STOCKHOLDERS OF
CARRIAGE SERVICES, INC.
2007 EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, Carriage Services, Inc. maintains the Amended and Restated Carriage Services 2007 Employee Stock Purchase Plan (effective August 1, 2013) (the “Plan”); and
WHEREAS, the Plan is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code, and the Plan originally became effective as of March 6, 2007, and was amended and restated effective as of August 1, 2013 to incorporate certain changes; and
WHEREAS, the Board has authorized the amendment of this Plan effective as of May 16, 2018 to increase the number of shares of Common Stock that may be sold under the Plan by an additional two hundred fifty thousand (250,000) shares and to incorporate certain other changes as provided herein.
NOW, THEREFORE, BE IT RESOLVED that the Plan is amended as follows:
|
“Continuous Status as an Eligible Employee” shall mean the absence of any interruption or termination of service as an Eligible Employee. Continuous Status as an Eligible Employee shall not be considered interrupted in the case of (i) military leave, sick leave or any other leave of absence approved in writing by the Company, provided that any such military, sick or other leave of absence is for a period of not more than three (3) months, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or (ii) transfers between locations of the Company or between the Company and its Designated Subsidiaries.
|
|
Term of Plan; Effective Date. The Plan originally became effective as of March 6, 2007 and was approved by the stockholders of the Company on May 22, 2007. The Plan was amended and restated hereby effective as of August 1, 2013, and the Plan is being amended effective as of May 16, 2018, and shall continue until all the Shares available pursuant to Section 12 have been issued, unless earlier terminated by the Board pursuant to Section 19.
A-10 Carriage Services
Appendix A
SECOND AMENDMENT TO THE AMENDED AND RESTATED
CARRIAGE SERVICES, INC. 2007 EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, Carriage Services, Inc. (the “Company”) maintains the Amended and Restated Carriage Services 2007 Employee Stock Purchase Plan (effective August 1, 2013) (the “Plan”); and
WHEREAS, the Plan is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code,[1] and the Plan originally became effective as of March 6, 2007, and was amended and restated effective as of August 1, 2013 to incorporate certain changes, and was then further amended, effective May 16, 2018; and
WHEREAS, the Company’s Board of Directors has authorized the amendment of this Plan, effective July 31, 2019, to allow for all employees of the Company to participate in the Plan and to allow all participants of the Plan to increase and decrease their Contributions one time per Purchase Period.
NOW, THEREFORE, BE IT RESOLVED that the Plan is hereby amended as follows:
|
“’Eligible Employee’ shall mean any Employee.”
|
“Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee shall be granted an option under the Plan if such option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that exceeds Twenty-Five Thousand Dollars ($25,000) of the Fair Market Value of such stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time.”
|
“A participant’s contribution election shall remain in effect for successive Purchase Periods and Offering Periods unless and until such election is terminated or changed in accordance with this Plan.”
|
“A participant may discontinue his or her participation in the Plan as provided in Section 10 or on one occasion only during an Offering Period; may decrease the rate of his or her Contributions on one occasion only during a Purchase Period; and may increase the rate of his or her Contributions on one occasion only during a Purchase Period; all by completing and filing with the Company a new subscription agreement.”
|
2021 Proxy Statement A-11
THIRD AMENDMENT TO THE
AMENDED AND RESTATED
CARRIAGE SERVICES, INC.
2007 EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, Carriage Services, Inc. (“Carriage”) maintains the Amended and Restated Carriage Services 2007 Employee Stock Purchase Plan (effective August 1, 2013), as amended by the First Amendment effective as of May 16, 2018, and as further amended by the Second Amendment effective as of July 31, 2019 (collectively, the “Plan”); and
WHEREAS, the Plan is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code,[1] and the Plan originally became effective as of March 6, 2007, and was amended and restated effective as of August 1, 2013 to incorporate certain changes; and
WHEREAS, the Carriage Board of Directors (the “Board”), based on the recommendation and approval of the Board’s Compensation Committee, has authorized the Third Amendment of this Plan effective as of May 18, 2021, subject to the approval of Carriage’s shareholders, to increase the number of shares of Common Stock that may be sold under the Plan by an additional three hundred thousand (300,000) shares and to incorporate certain other changes as provided herein.
NOW, THEREFORE, BE IT RESOLVED that the Plan is amended as follows:
|
|
Term of Plan; Effective Date. The Plan originally became effective as of March 6, 2007 and was approved by the stockholders of the Company on May 22, 2007. The Plan was amended and restated hereby effective as of August 1, 2013. The Plan was amended effective as of May 16, 2018, further amended effective as of July 31, 2019, and is being further amended effective as of May 18, 2021, and shall continue until all the Shares available pursuant to Section 12 have been issued, unless earlier terminated by the Board pursuant to Section 19.
|
2021 Proxy Statement B-1
FIRST AMENDMENT TO THE
CARRIAGE SERVICES, INC.
2017 OMNIBUS INCENTIVE PLAN
WHEREAS, Carriage Services, Inc. (“Carriage”) maintains the Carriage Services, Inc. 2017 Omnibus Incentive Plan (effective May 17, 2017) (the “Plan”); and
WHEREAS, the Carriage Board of Directors (the “Board”), based on the recommendation and approval of the Board’s Compensation Committee, has authorized the amendment of this Plan effective as of May 18, 2021, subject to the approval of Carriage’s shareholders, to increase the number of shares of Common Stock that may be the subject of Awards[1] and issued under the Plan by an additional one million five hundred thousand (1,500,000) shares, as provided herein.
NOW, THEREFORE, BE IT RESOLVED that the Plan is amended as follows:
|
“Number of Shares Authorized and Available for Awards. Subject to adjustment as provided under Section 4.4 (Adjustments) and Section 17.2 (Actions Respecting Awards), the total number of Shares that may be the subject of Awards and issued under the Plan shall be the sum of (i) 2,500,000 Shares and (ii) the number of Shares available for grant under the Prior Plan as of the Effective Date. Such Shares may be authorized and unissued Shares. Any of the authorized Shares may be used for any type of Award under the Plan, and any or all of the Shares may be allocated to Incentive Stock Options. Solely for the purpose of determining the number of Shares available for Awards under this Section 4.1, the number of shares available for issuance under the Plan shall be reduced by one (1.00) Share for every one (1.00) Share granted in respect of an Award.”
|
2021 Proxy Statement C-1
CARRIAGE SERVICES CARRIAGE SERVICES, INC. 3040 Post Oak Boulevard, Suite 300 Houston, Texas 77056 713.332.8400 www.carriageservices.com
ANNUAL MEETING OF STOCKHOLDERS OFCARRIAGE SERVICES, INC.
3040 Post Oak Blvd., Suite 850
Houston, Texas 77056
May 18, 2021
17, 2022
9:00 a.m. Central Time
Directions to attend the meeting in person may be obtained by contacting the
Corporate Secretary at 713-332-8400
Please complete, sign, date
and mail your proxy card in
the envelope provided as
soon as possible.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to
be Held on May 18, 2021:
17, 2022:
The Proxy Statement and 20202021 Annual Report to Stockholders are available on the Internet at
https://investors.carriageservices.com/sec-filings-annual-reports-proxy-investor-materialsPlease detach along perforated line and mail in the envelope provided.20233330000000001000 7 051821THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES,AND “FOR” PROPOSALS 2, 3, 4 AND 5. x PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE1. Election of two Class I Directors for a three-year term ending at the 2024 Annual Meeting of Stockholders.NOMINEES:FOR ALL NOMINEES O O Melvin C Payne. James R. SchenckFOR WITHHOLD ALL NOMINEES AUTHORITYFOR (See ALL instructions EXCEPT below)2.To approve on an advisory basis our 2020 Named Executive Officer compensation.3.Approve our proposed Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan.4.Approve our proposed First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan.5.Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ended 2021.Note: In their discretion, the Proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment(s) thereof.INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:MARKâ^“X” HERE IF YOU PLAN TO ATTEND THE MEETING.To indicate change your the new address address on your in the account, address please space check above the . Please box at note right and that changes this method to the . registered name(s) on the account may not be submitted viaSignature of StockholderDate:Signature of StockholderDate:Note: Please full title sign as such exactly . If the as signer your name is a corporation, or names appear please on sign this full Proxy corporate . When name shares by duly are authorized held jointly, officer, each holder giving should full title sign as such .When . If signer signing is a as partnership, executor, administrator, please sign in attorney, partnership trustee name or by guardian, authorized please person give.
 | Please detach along perforated line and mail in the envelope provided. | |
 |  |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES, AND “FOR” PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ | ||||||||||||
1. Election of two Class II Directors for a three-year term ending at the 2025 Annual Meeting of Stockholders. | 2. To approve on an advisory basis our 2021 Named Executive Officer compensation. | FOR ☐ | AGAINST ☐ | ABSTAIN ☐ | ||||||||
| NOMINEES: | 3. Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ended 2022. | ☐ | ☐ | ☐ | ||||||||
☐ FOR ALL NOMINEES | ○ Bryan D. Leibman ○ Dr. Achille Messac | |||||||||||
☐ WITHHOLD AUTHORITY FOR ALL NOMINEES | Note: In their discretion, the Proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment(s) thereof. | |||||||||||
☐ FOR ALL EXCEPT (See instructions below) | ||||||||||||
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ● | ||||||||||||
MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. ☐ | ||||||||||||
| To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | ☐ | |||||||||||
| Signature of Stockholder | Date: | Signature of Stockholder | Date: |
 | Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | |
ANNUAL MEETING OF STOCKHOLDERS OF
CARRIAGE SERVICES, INC.
3040 Post Oak Blvd., Suite 850
Houston, Texas 77056
May 18, 2021
17, 2022
9:00 a.m. Central Time
Directions to attend the meeting in person may be obtained by contacting the Corporate Secretary at 713-332-8400PROXY VOTING INSTRUCTIONSINTERNET - Access “www.voteproxy.com” and follow the on-screen COMPANY NUMBER instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.Vote online until 11:59 PM EST the day before the meeting. ACCOUNT NUMBER MAIL—Sign, date and mail your proxy card in the envelope provided as soon as possible.IN PERSON—You may vote your shares in person by attending the Annual Meeting.Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting tobe Held on May 18, 2021:The Proxy Statement and 2020 Annual Report to Stockholders are available on the Internet at https://investors.carriageservices.com/sec-filings-annual-reports-proxy-investor-materialsPlease detach along perforated line and mail in the envelope provided IF you are not voting via the Internet.20233330000000001000 7 051821THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES,AND “FOR” PROPOSALS 2, 3, 4 AND 5. x PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE1. Election of two Class I Directors for a three-year term ending at the 2024 AnnualMeeting of Stockholders.NOMINEES:FOR ALL NOMINEES O O Melvin C Payne. James R. SchenckFOR WITHHOLD ALL NOMINEES AUTHORITYFOR (See ALL instructions EXCEPT below)2.To approve on an advisory basis our 2020 Named Executive Officer compensation.3.Approve our proposed Third Amendment to the Amended and Restated Carriage Services, Inc. 2007 Employee Stock Purchase Plan.4.Approve our proposed First Amendment to the Carriage Services, Inc. 2017 Omnibus Incentive Plan.5.Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ended 2021.Note: In their discretion, the Proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment(s) thereof.INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:To indicate change your the new address address on your in the account, address please space check above the . Please box at note right and that changes this method to the . registered name(s) on the account may not be submitted viaMARKâ^“X” HERE IF YOU PLAN TO ATTEND THE MEETING.Signature of StockholderDate:Signature of StockholderDate:Note: title Please as such sign .exactly If the signer as your is a name corporation, or names please appear sign on full this corporate Proxy. When name shares by duly are authorized held jointly, officer, each giving holder full should title as sign such ..WhenIf signer signing is a as partnership,executor, please administrator, sign in attorney, partnership trustee name or by guardian, authorized please person give full .
 | Corporate Secretary at 713-332-8400 | |||
PROXY VOTING INSTRUCTIONS | ||||
INTERNET - Access “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. Vote online until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON -You may vote your shares in person by attending the Annual Meeting. | COMPANY NUMBER | |||
ACCOUNT NUMBER | ||||
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 17, 2022: The Proxy Statement and 2021 Annual Report to Stockholders are available on the Internet at https://investors.carriageservices.com/sec-filings-annual-reports-proxy-investor-materials | ||||
| Please detach along perforated line and mail in the envelope provided IF you are not voting via the Internet. | | ||
 |  |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES, AND “FOR” PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ | ||||||||||||
1. Election of two Class II Directors for a three-year term ending at the 2025 Annual Meeting of Stockholders. | 2. To approve on an advisory basis our 2021 Named Executive Officer compensation. | FOR ☐ | AGAINST ☐ | ABSTAIN ☐ | ||||||||
| NOMINEES: | 3. Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ended 2022. | ☐ | ☐ | ☐ | ||||||||
☐ FOR ALL NOMINEES | ○ Bryan D. Leibman ○ Dr. Achille Messac | |||||||||||
☐ WITHHOLD AUTHORITY FOR ALL NOMINEES | Note: In their discretion, the Proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment(s) thereof. | |||||||||||
☐ FOR ALL EXCEPT (See instructions below) | ||||||||||||
INSTRUCTIONS:To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: ● | ||||||||||||
MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. ☐ | ||||||||||||
| To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | ☐ | |||||||||||
| Signature of Stockholder | Date: | Signature of Stockholder | Date: |
| Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | |
Important Notice of Availability of Proxy Materials for the Shareholder Meeting of
CARRIAGE SERVICES, INC.
To Be Held On:
May 18, 202117, 2022 at 9:00 a.m. Central Time
3040 Post Oak Blvd., Suite 850, Houston, Texas 77056COMPANY NUMBERACCOUNT NUMBERCONTROL NUMBER
COMPANY NUMBER | ||||
ACCOUNT NUMBER | ||||
CONTROL NUMBER |
This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting.
If you want to receive a paper or e-mail copy of the proxy materials you must request one. There is no charge to you for requesting a copy. To facilitate timely delivery please make the request as instructed below before 5/7/21.
6/22.
Please visit https://investors.carriageservices.com/sec-filings-annual-reports-proxy-investor-materials, where the following materials are available for view:• Notice of Annual Meeting of Stockholders• Proxy Statement• Form of Electronic Proxy Card
• Notice of Annual Meeting of Stockholders • Proxy Statement • Form of Electronic Proxy Card • Annual Report on Form 10-K | ||||
| TO REQUEST MATERIAL: | TELEPHONE: 888-Proxy-NA(888-776-9962)718-921-8562 (for international callers) | |||
| E-MAIL: info@astfinancial.com WEBSITE: https://us.astfinancial.com/OnlineProxyVoting/ProxyVoting/RequestMaterials | |||
| TO VOTE: | ONLINE: To access your online proxy card, please visit www.voteproxy.comand follow the on-screen instructions or scan the QR code with your smartphone. You may enter your voting instructions at www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off or meeting date. IN PERSON: You may vote your shares in person by attending the Annual Meeting. TELEPHONE: To vote by telephone, please visit www.voteproxy.comto view the materials and to obtain the toll free number to call. MAIL: You may request a card by following the instructions above. | |||
1. Election of two Class II Directors for a three-year term ending at the 2025 Annual Meeting of Stockholders. | 2. To approve on an advisory basis our 2021 Named Executive Officer compensation. 3. Ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ended 2022. | |
NOMINEES: | ||
Bryan D. Leibman | ||
Dr. Achille Messac | ||
Note: In their discretion, the Proxies are authorized to vote upon any other business as may properly come before the meeting or any adjournment(s) thereof. | ||
Please note that you cannot use this notice to vote by mail. | ||
CARRIAGE SERVICES, INC.
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders on May 18, 2021
17, 2022
The undersigned, hereby revoking all prior proxies, hereby appoints Melvin C. Payne and Steven D. Metzger, and each of them, his true and lawful proxies, with full and several power of substitution, to vote all the shares of Common Stock of CARRIAGE SERVICES, INC. standing in the name of the undersigned, at the Annual Meeting of Stockholders of CARRIAGE SERVICES, INC. to be held on May 18, 202117, 2022 and at any adjournments or postponements thereof, on all matters coming before said meeting.
This proxy, when properly executed, will be voted in accordance with your indicated directions. If no direction is made, this proxy will be voted FOR the election of the director nominees in Proposal 1, FOR Proposal 2, FOR Proposal 3 FOR Proposal 4, FOR Proposal 5 and as the proxies deem advisable on all other matters that may properly come before the meeting.
(Continued and to be signed on the reverse side)1.1 14475
 |  |
53%
