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Carriage Services Inc – ‘DEF 14A’ for 5/17/00

On: Thursday, 3/30/00 · For: 5/17/00 · Accession #: 890566-0-409 · File #: 1-11961

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/30/00  Carriage Services Inc             DEF 14A     5/17/00    2:102K                                   Young Chas P Co/FA

Definitive Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material                26    139K 
 2: EX-99.1     Miscellaneous Exhibit                                  6     22K

DEF 14A — Definitive Proxy Solicitation Material
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Additional Information Base Salaries Bonuses for Named Executive Officers for 1999 Carriage Services, Inc Certain Transactions Comparative Stockholder Return Compensation Committee Interlocks and Insider Participation Compensation Committee Report on Executive Compensation Compensation of Directors Compensation Policies for the Chief Executive Officer Employment Agreements Executive Compensation General General Information Organization and Committees of the Board Other Business Proposal No. 2 Record Date and Voting Securities Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Security Ownership of Directors, Executive Officers and Certain Beneficial Owners Stock Option Grants for Named Executive Officers for 1999 Stock Option Grants in 1999 Stock Ownership of Certain Beneficial Owners Summary Compensation Table 1999 Option Exercises and Year-End Option Holdings
1	1st Page - Filing Submission
"	Carriage Services, Inc
5	General Information
7	Record Date and Voting Securities
8	Security Ownership of Directors, Executive Officers and Certain Beneficial Owners
10	Stock Ownership of Certain Beneficial Owners
11	General
13	Organization and Committees of the Board
14	Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
"	Certain Transactions
15	Executive Compensation
"	Summary Compensation Table
16	Stock Option Grants in 1999
17	1999 Option Exercises and Year-End Option Holdings
"	Compensation of Directors
18	Employment Agreements
19	Compensation Committee Report on Executive Compensation
"	Base Salaries
20	Bonuses for Named Executive Officers for 1999
21	Stock Option Grants for Named Executive Officers for 1999
"	Compensation Policies for the Chief Executive Officer
23	Comparative Stockholder Return
24	Compensation Committee Interlocks and Insider Participation
"	Proposal No. 2
26	Other Business
"	Additional Information

DEF 14A 1st Page of 26 TOC ↑Top Previous Next ↓Bottom Just 1st
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)

Filed by the Registrant [X]

Filed by Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Materials Pursuant to
Rule 14a-11(c) or Rule 14a-12

CARRIAGE SERVICES, INC.
(Name of Registrant as Specified in Its Charter)

W. CHRISTOPHER SCHAEPER, SNELL & SMITH, P.C.,
1000 LOUISIANA, SUITE 1200, HOUSTON, TX 77002
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 fee 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:

__________________________________________________________________________

DEF 14A 2nd Page of 26 TOC 1st Previous Next ↓Bottom Just 2nd
[CARRIAGE SERVICES LOGO]

CARRIAGE SERVICES, INC.
1300 POST OAK BLVD., SUITE 1500
HOUSTON, TEXAS 77056

March 30, 2000

Dear Carriage Stockholder:

I am pleased to invite you to Carriage's Annual Meeting of Stockholders.
The meeting will be held at the Doubletree Hotel, 2001 Post Oak Blvd., Houston,
Texas 77056 on Tuesday, May 17, 2000, at 10:00 a.m., Houston time. If you cannot
be present at the Annual Meeting, I urge you to participate by completing the
enclosed proxy and returning it at your earliest convenience.

At the meeting, you and the other stockholders will elect two directors to
Carriage's Board of Directors, and vote on certain other matters discussed in
the accompanying Proxy Statement. You will also have the opportunity to hear
what has happened in our business in the past year and to ask questions. I
encourage you to read the enclosed Notice of Meeting and Proxy Statement, which
contains information about the Board of Directors and its committees and
personal information about each of the nominees for the Board. The Proxy
Statement also describes in detail the other matters that will be voted upon at
the Annual Meeting.

We hope you can join us on May 17. Whether or not you can attend
personally, it is important that your shares are represented at the Meeting.
Please MARK your votes on the enclosed proxy, SIGN AND DATE THE PROXY, and
RETURN it to us in the enclosed envelope. Your vote is important, so please
return your proxy promptly.

Sincerely,

/s/ MELVIN C. PAYNE
MELVIN C. PAYNE
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

DEF 14A 3rd Page of 26 TOC 1st Previous Next ↓Bottom Just 3rd
CARRIAGE SERVICES, INC.
1300 POST OAK BLVD., SUITE 1500
HOUSTON, TEXAS 77056

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000

Carriage Services, Inc. will hold its Annual Meeting of Stockholders at the
Doubletree Hotel, 2001 Post Oak Blvd., Houston, Texas 77056 on Tuesday, May 17,
2000, at 10:00 a.m., Houston time.

We are holding this meeting:

o To elect two Class I directors, each for a three-year term expiring at
the annual meeting of stockholders in 2003, and until their respective
successors are elected and qualified.

o To amend Carriage's 1996 Directors' Stock Option Plan to give the
Board of Directors the discretion to set the terms and conditions on
which options may be granted thereunder.

o To ratify the selection of Arthur Andersen LLP as the independent
public accountants of Carriage for 2000.

o To transact such other business as may properly come before the
meeting or any adjournments thereof.

Your Board of Directors has selected March 20, 2000, as the record date for
determining stockholders entitled to vote at the meeting. A list of stockholders
on that date will be available for inspection at our corporate headquarters,
1300 Post Oak Blvd., Suite 1500, Houston, Texas for ten days before the meeting.

You are cordially invited and urged to attend the Meeting. If, however, you
are unable to attend the Meeting, YOU ARE REQUESTED TO SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. If you
attend the Meeting, and wish to do so, you may vote in person regardless of
whether you have given your proxy. In any event, a proxy may be revoked at any
time before it is exercised.

This Proxy Statement, proxy and Carriage's 1999 Annual Report to
Stockholders are being distributed on or about March 30, 2000.

By Order of the Board of Directors

/s/ THOMAS C. LIVENGOOD
THOMAS C. LIVENGOOD
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND SECRETARY

Houston, Texas
March 30, 2000

DEF 14A 4th Page of 26 TOC 1st Previous Next ↓Bottom Just 4th
TABLE OF CONTENTS

PAGE
NO.
----
GENERAL INFORMATION.................. 1
RECORD DATE AND VOTING SECURITIES.... 3
SECURITY OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND CERTAIN
BENEFICIAL OWNERS.................. 4
Stock Ownership of Certain
Beneficial Owners.............. 6
ELECTION OF DIRECTORS................ 7
General......................... 7
Organization and Committees of
the Board...................... 9
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE............... 10
CERTAIN TRANSACTIONS................. 10
EXECUTIVE COMPENSATION............... 11
Summary Compensation Table...... 11
Stock Option Grants in 1999..... 12
1999 Option Exercises and
Year-End Option Holdings....... 13
Compensation of Directors....... 13
Employment Agreements........... 14
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION............. 15
Base Salaries................... 15
Bonuses for Named Executive
Officers for 1999.............. 16
Stock Option Grants for Named
Executive Officers for 1999.... 17
Compensation Policies for the
Chief Executive Officer........ 17
COMPARATIVE STOCKHOLDER RETURN....... 19
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION.............. 20
AMENDMENTS TO THE 1996 DIRECTORS'
STOCK OPTION PLAN.................. 20
Amendments to Directors' Stock
Option Plan.................... 20
Summary Description of the 1996
Directors' Stock Option Plan... 21
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS..... 22
OTHER BUSINESS....................... 22
ADDITIONAL INFORMATION............... 22

- i -

DEF 14A 5th Page of 26 TOC 1st Previous Next ↓Bottom Just 5th
GENERAL INFORMATION

Q: WHO IS SOLICITING MY PROXY?

A: We -- the Board of Directors of Carriage Services, Inc. -- are sending you
this Proxy Statement in connection with our solicitation of proxies for use
at Carriage's 2000 Annual Meeting of Stockholders. Certain directors,
officers and employees of Carriage and American Stock Transfer & Trust
Company (a proxy solicitor) also may solicit proxies on our behalf by mail,
phone, fax or in person.

Q: WHO IS PAYING FOR THIS SOLICITATION?

A: Carriage will pay for the solicitation of proxies, including the cost of
preparing and mailing this Proxy Statement. Carriage also will reimburse
banks, brokers, custodians, nominees and fiduciaries for their reasonable
charges and expenses to forward our proxy materials to the beneficial owners
of Carriage stock. No additional fee beyond the $750 monthly fee paid to
American Stock Transfer & Trust Company ("AST") to act as Carriage's
transfer agent, together with AST's out-of-pocket expenses, will be paid to
AST.

Q: WHAT AM I VOTING ON?

A: (1) The election of Melvin C. Payne and C. Byron Snyder to the Board of
Directors.

(2) Amendments to Carriage's 1996 Directors' Stock Option Plan.

(3) The approval of the appointment of our independent auditors for 2000.

Q: WHO CAN VOTE?

A: Stockholders as of the close of business on March 20, 2000 are entitled to
vote at the Annual Meeting.

Q: HOW DO I VOTE?

A: You may vote your shares either in person or by proxy. To vote by proxy, you
should mark, date, sign and mail the enclosed proxy in the prepaid envelope.
Giving a proxy will not affect your right to vote your shares if you attend
the Annual Meeting and want to vote in person -- by voting in person you
automatically revoke your proxy. You also may revoke your proxy at any time
before the meeting by giving the Secretary written notice of your revocation
or by submitting a later-dated proxy. If you return your proxy but do not
mark your voting preference, the individuals named as proxies will vote your
shares FOR the election of each of the nominees for director and vote FOR
each of the other proposals described herein.

Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?

A: The Board recommends a vote FOR each of the nominees and each of the other
proposals.

Q: IS MY VOTE CONFIDENTIAL?

A: Proxy cards, ballots and voting tabulations that identify individual
shareholders are mailed or returned directly to Carriage, and handled in a
manner intended to protect your voting privacy. Your vote will not be
disclosed EXCEPT: (1) as needed to permit Carriage to tabulate and certify
the vote; (2) as required by law; or (3) in limited circumstances such as a
proxy contest in opposition to the Board. Additionally, all comments written
on the proxy card or elsewhere will be forwarded to management, but your
identity will be kept confidential unless you ask that your name be
disclosed.

Q: HOW MANY SHARES CAN VOTE?

A: As of the Record Date, March 20, 2000, 14,071,101 shares of Class A Common
Stock, 1,905,662 shares of Class B Common Stock and 1,182,500 shares of
Series D Preferred Stock were outstanding. Each share of Class A Common
Stock is entitled to one (1) vote; each share of Class B Common Stock is
entitled to ten (10) votes; and each share of Series D Preferred Stock is
entitled to approximately .01 of a vote. In summary, there were a total of
33,141,861 eligible votes as of the Record Date.

Q: WHAT HAPPENS IF I WITHHOLD MY VOTE FOR AN INDIVIDUAL DIRECTOR?

A: Withheld votes are counted as "no" votes for the individual director.

DEF 14A 6th Page of 26 TOC 1st Previous Next ↓Bottom Just 6th
Q: CAN I VOTE ON OTHER MATTERS?

A: Carriage's By-laws limit the matters presented at an annual meeting to those
in the notice of the meeting and those otherwise properly presented before
the meeting. We do not expect any other matter to come before the meeting.
If any other matter is presented at the Annual Meeting, your signed proxy
gives the individuals named as proxies authority to vote your shares on such
matters at their discretion.

Q: WHEN ARE STOCKHOLDER PROPOSALS DUE FOR THE ANNUAL STOCKHOLDERS MEETING IN
2001?

A: To be considered for inclusion in the proxy statement for Carriage's 2001
annual meeting, a stockholder proposal must be received at Carriage's
offices no later than December 1, 2000. A shareholder proposal submitted
outside the processes of Rule 14a-8 of the SEC, if received by Carriage
after February 15, 2001, will be considered untimely for presentation at
Carriage's 2001 annual meeting of stockholders.

Q: HOW DO I NOMINATE SOMEONE TO BE A CARRIAGE DIRECTOR?

A: A stockholder may recommend nominees for director by giving the Secretary a
written notice not less than ninety (90) days prior to the anniversary date
of the immediately preceding annual meeting. For the annual meeting in 2001,
the deadline will be February 17, 2001, based upon this year's meeting
occurring on May 17. The notice must include the full name, age, business
and residence address, principal occupation or employment of the nominee,
the number of shares of Carriage Class A Common Stock, Class B Common Stock
and Series D Preferred Stock the nominee beneficially owns, any other
information about the nominee that must be disclosed in proxy solicitations
under Rule 14(a) of the Securities Exchange Act of 1934, and the nominee's
written consent to the nomination and to serve, if elected.

DEF 14A 7th Page of 26 TOC 1st Previous Next ↓Bottom Just 7th
RECORD DATE AND VOTING SECURITIES

Only holders of record of the Class A and Class B Common Stock and Series D
Preferred Stock at the close of business on March 20, 2000, the record date for
the Meeting, are entitled to notice of and to vote at the Meeting. On that date,
Carriage had outstanding (i) 14,071,101 shares of Class A Common Stock, each of
which is entitled to one vote, (ii) 1,905,662 shares of Class B Common Stock,
each of which is entitled to ten votes, and (iii) 1,182,500 shares of Series D
Preferred Stock, each of which is entitled to approximately .01 of a vote. The
voting power of each class or series, as of March 20, 2000, is summarized below:

[Enlarge/Download Table]

PERCENTAGE OF
CLASS OR SERIES OUTSTANDING SHARES NUMBER OF VOTES VOTING POWER
------------------------------------- ------------------ --------------- -------------

Class A Common Stock................. 14,071,101 14,071,101 42.5
Class B Common Stock................. 1,905,662 19,056,620 57.5
Series D Preferred Stock............. 1,182,500 14,140 *
--------------- -------------
TOTAL........................... 33,141,861 100.0
=============== =============

------------

* Less than 1%

The presence at the Meeting, in person or by proxy, of the holders of a
majority of the total voting power of the issued and outstanding shares of Class
A and B Common Stock and Series D Preferred Stock is necessary to constitute a
quorum to transact business. Abstentions and broker non-votes will be counted
for purposes of whether a quorum is present at the Meeting. In the absence of a
quorum at the Meeting, the Meeting may be adjourned without notice other than
announcement at the Meeting until a quorum shall be formed.

If a quorum is present at the Meeting, the nominees for the Class I
directors will be elected by a plurality of the votes cast at the Meeting, and
each other matter will need to be approved by the affirmative vote of the
holders of a majority of the voting power present or represented by proxy at the
Meeting. Since directors are elected by a plurality of the votes cast, shares
that are withheld will have no effect on the outcome of the election of
directors. With respect to any matter other than the election of directors,
abstentions will have the effect of a vote against the proposal. Broker
non-votes will not be counted to determine the stockholders entitled to vote on
a proposal, and will not affect the outcome of the vote on such matter.

All properly signed proxies received prior to the Meeting will be voted in
accordance with the choices specified. If no choice has been specified in proxy,
the shares will be voted in favor of all proposals described herein and in the
discretion of the persons named in the Proxy in connection with any other
business that may properly come before the Meeting. A stockholder giving a Proxy
may revoke it at any time before it is voted at the Meeting by filing with the
Secretary an instrument revoking it, or by signing and delivering to the
Secretary a Proxy bearing a later date, or by voting in person at the Meeting.

DEF 14A 8th Page of 26 TOC 1st Previous Next ↓Bottom Just 8th
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of March 20, 2000, the ownership of
Class A and B Common Stock (including Class A and B Common Stock into which the
Series D Preferred Stock is convertible) of: (i) each director and director
nominee of Carriage, (ii) the Chief Executive Officer, (iii) the other executive
officers named in the Summary Compensation Table set forth under "Executive
Compensation" below, and (iv) all executive officers and directors of Carriage
as a group. Under the rules of the Securities and Exchange Commission, 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 through the exercise of currently available
conversion rights or options. Each person named in the table below has sole
voting and investment power with respect to the shares indicated, except as
otherwise stated in the notes to the table.

[Enlarge/Download Table]

AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
----------------------
CLASS A CLASS B PERCENT OF CLASS PERCENT OF
COMMON COMMON A AND B VOTING
BENEFICIAL OWNER STOCK(1) STOCK(2) COMMON STOCK CONTROL(3)
---------------------------------------- --------- --------- ---------------- ----------

Melvin C. Payne(4)...................... 131,102 529,769 4.1 16.4
C. Byron Snyder(5)...................... 1,376,321 -- 8.6 4.2
Robert D. Larrabee(6)................... 35,238 239,162 1.7 *
Mark W. Duffey.......................... 205,312 -- 1.3 *
Greg M. Brudnicki....................... 211,767 -- 1.3 *
Vincent D. Foster(7).................... 20,000 -- * *
Stuart W. Stedman(8).................... 219,563 145,223 2.3 5.0
Ronald A. Erickson(9)................... 12,400 61,621 * 1.9
Mark F. Wilson(10)...................... 476,337 -- 3.0 1.4
Thomas C. Livengood..................... 10,329 2,000 * *
Russell W. Allen........................ 629 46,392 * 1.4
Gary O'Sullivan......................... 485 -- * *
All directors and executive officers as
a group (12 persons).................. 2,699,483 1,024,167 23.0 31.9

------------

* Indicates less than one percent.

(1) At present, there are no shares of Class A Common Stock which may be
acquired within 60 days upon exercise of outstanding stock options granted
under one of our stock option plans by any of the persons named above
(assuming approval of the amendment to the 1996 Directors' Stock Option
Plan; see "Proposal No. 2 -- Amendment to the 1996 Directors' Stock Option
Plan").

(2) Each share of Class B Common Stock has ten votes per share and is
convertible at any time into one share of Class A Common Stock. If not
converted earlier, any outstanding shares of Class B Common Stock will be
automatically converted into shares of Class A Common Stock on December 31,
2001.

(3) This column sets forth the percentage of voting power held by the person
based on the type of securities held. Each share of Class A Common Stock is
entitled to one vote, each share of Class B Common Stock is entitled to ten
votes, and each share of Series D Preferred Stock is entitled to
approximately .01 of a vote.

(4) Mr. Payne's holdings include 119,161 shares of Class B Common Stock owned
by 1996 Payne Family Partnership, Ltd.; 2,919 shares of Class B Common
Stock owned by the Melvin C. Payne 1996 Trust; 2,919 shares of Class B
Common Stock owned by the Karen P. Payne 1996 Trust; and 5,555 shares of
Class B Common Stock owned by the Melvin C. Payne, Jr. Pension Plan and
Trust.

(FOOTNOTES CONTINUED ON FOLLOWING PAGE)

DEF 14A 9th Page of 26 TOC 1st Previous Next ↓Bottom Just 9th
(5) Mr. Snyder's holdings include 1,278,301 shares of Class A Common Stock
owned by 1996 Snyder Family Partnership, Ltd.; 9,005 shares of Class A
Common Stock owned by the C. Byron Snyder 1996 Trust; and 9,005 shares of
Class A Common Stock owned by the Martha Ann Snyder 1996 Trust.

(6) Mr. Larrabee's holdings include (i) 35,238 shares of Class A Common Stock
held by Larrabee Land Company, Inc., which is owned by Mr. Larrabee and his
wife, and (ii) 1,000,000 shares of Series D Preferred Stock held directly
by Mr. Larrabee and his spouse. Such shares of Series D Preferred Stock are
convertible as of March 20, 2000 into 239,162 shares of Class B Common
Stock which are in turn convertible at any time into 239,162 shares of
Class A Common Stock. Also, such shares of Series D Preferred Stock
presently have 11,958 votes.

(7) All shares are held by Main Street Merchant Partners II, L.P., of which Mr.
Foster is a Managing Director.

(8) Mr. Stedman's holdings include:

o 2,689 shares of Class A Common Stock and 31,309 shares of Class B
Common Stock which are held by the Betty Ann Stedman Trust, of
which Mr. Stedman is a trustee;

o 1,425 shares of Class A Common Stock are held by the Betty Ann West
Stedman Descendants Trust, of which Mr. Stedman is a trustee;

o 4,633 shares of Class A Common Stock and 8,349 shares of Class B
Common Stock which are held by the Wesley West Descendants Trust, of
which Mr. Stedman is a trustee;

o 1,717 shares of Class A Common Stock and 3,130 shares of Class B
Common Stock which are held by the Courtney Lynn Meagher Trust, of
which Mr. Stedman is a trustee;

o 239 shares of Class A Common Stock and 3,130 shares of Class B
Common Stock which are held by the Evan Everett Meagher 1989 Trust,
of which Mr. Stedman is a trustee;

o 19,902 shares of Class A Common Stock and 35,000 shares of Class B
Common Stock which are held by the Wesley West Land Holding Company,
of which Mr. Stedman is the president and an indirect beneficial
owner through a trust of which he is a beneficiary;

o 67,456 shares of Class A Common Stock which are held by the Wesley
West Long Term Partnership, a partnership of which Mr. Stedman
serves as the manager of the general partner;

o 43,550 shares of Class A Common Stock which are held by the Wesley
West Flexible Partnership, a partnership of which Mr. Stedman serves
as the managing partner;

o 24,350 shares of Class A Common Stock which are held by Wesley
West Investment Company L.L.C., of which Mr. Stedman is the sole
Manager;

o 28,500 shares of Class A Common Stock which are held by the Neva and
Wesley West Foundation, of which Mr. Stedman is trustee;

o 2,150 shares of Class A Common Stock which are held by the Lynn
Stedman Meagher Children's 1997 Trust, of which Mr. Stedman is
trustee; and

o 12,470 shares of Class A Common Stock and 5,218 shares of Class
B Common Stock which are owned jointly by Mr. Stedman and his
spouse.

(9) Mr. Erickson's holdings include:

o 4,000 shares of Class A Common Stock and 44,015 shares of Class B
Common Stock which are held by the Alfred and Rose Erickson Trust
f/b/o Ronald A. Erickson;

o 1,400 shares of Class A Common Stock and 17,606 shares of Class B
Common Stock which are held by the Alfred and Rose Erickson Trust
f/b/o Donovan A. Erickson, of which Mr. Erickson is the Trustee;

o 7,000 shares of Class A Common Stock held by Mr. Erickson's minor
son, David S. Erickson.

(10) Mr. Wilson's holdings include 393,079 shares of Class A Common Stock held
by the Mark F. Wilson and Anne Pedersen Wilson Living Trust; 41,629 shares
of Class A Common Stock held by the Wilson Trust B U/A/D 9/9/77 by Francis
Wilson; and 41,629 shares of Class A Common Stock held by the Wilson Trust
C U/A/D 9/9/77 by Francis Wilson, both of which Mr. Wilson is a
beneficiary of and a Co-trustee.

DEF 14A 10th Page of 26 TOC 1st Previous Next ↓Bottom Just 10th
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of March 20, 2000, the persons named below were, to our knowledge, the
only beneficial owners of more than 5% of the outstanding Common Stock,
determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
other than directors and executive officers whose beneficial ownership is
described in the above table.

[Enlarge/Download Table]

AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
--------------------
CLASS
CLASS A B PERCENT OF CLASS PERCENT OF
COMMON COMMON A AND B VOTING
BENEFICIAL OWNER STOCK STOCK COMMON STOCK CONTROL
---------------------------------------- ----------- ------ ---------------- ----------

Capital Group International, Inc.(1).... 2,174,000 -0- 13.6 6.6
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Goldman Sachs Asset Management(2)....... 1,546,700 -0- 9.7 4.7
85 Broad Street
New York, NY 10004
Dimensional Fund Advisors, Inc.(3)...... 825,700 -0- 5.2 2.5
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401

------------

(1) Based solely on Schedule 13G filed with the SEC on February 10, 2000.

(2) Based solely on Schedule 13G filed with the SEC on February 14, 2000.

(3) Based solely on Schedule 13G filed with the SEC on February 4, 2000.

DEF 14A 11th Page of 26 TOC 1st Previous Next ↓Bottom Just 11th
PROPOSAL NO. 1
ELECTION OF DIRECTORS

GENERAL

Carriage's Board of Directors currently consists of nine members. The Board
is divided into three classes (designated Class I, Class II and Class III,
respectively) each having staggered three-year terms. Carriage's Certificate of
Incorporation provides that such classes shall be as nearly equal in number as
possible. The term of office of the Class I directors expires at the 2000 Annual
Meeting. The term of the Class II directors expires at the annual meeting of
stockholders in 2001, and the term of the Class III directors expires at the
annual meeting of stockholders in 2002.

At the Meeting, you and the other stockholders will elect two individuals
to serve as Class I directors for a three-year term expiring at the 2003 annual
meeting and until their successors are duly elected and qualified. Melvin C.
Payne and C. Byron Snyder, two of the three Class I directors whose terms are
expiring at the Meeting, have been nominated by the Board of Directors for
re-election at the Meeting. Proxies may be voted for two directors.

The term of office of the third current Class I director, Robert D.
Larrabee, will also expire upon the 2000 Annual Meeting. Mr. Larrabee has
elected to retire from the Board, and so at that time, the number of positions
on the Board will be reduced from nine to eight. Consequently, only two Class I
directors (Messrs. Payne and Snyder) are nominees for election to the Board at
the Annual Meeting.

WE RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF EACH NOMINEE LISTED
ABOVE AS A CLASS I DIRECTOR. THE INDIVIDUALS NAMED AS PROXIES WILL VOTE THE
ENCLOSED PROXY "FOR" THE ELECTION OF ALL NOMINEES UNLESS YOU DIRECT THEM TO
WITHHOLD YOUR VOTES FOR ONE OR MORE OF THE NOMINEES.

You may not cumulate your votes in the election of directors. The two
nominees receiving the highest number of affirmative votes will be elected to
the Board. You may withhold authority to vote for any or all nominees for
directors. If any nominee becomes unable to serve as a director before the
Meeting (or decides not to serve), the individuals named as proxies will vote
FOR the remainder of the nominees and for such other nominees as we may
designate as a replacement or substitute for those who become unavailable.

The following table sets forth the names, ages and titles of the persons
who have been nominated for election as Class I directors, and our other current
directors and executive officers.

[Enlarge/Download Table]

NAME AGE TITLE
------------------------------------- --- -----------------------------------------------------

NOMINEES FOR CLASS I DIRECTORS
(TERM EXPIRING AT 2003 ANNUAL
MEETING)
Melvin C. Payne(1)................... 57 Chairman of the Board, Chief Executive
Officer and Director
C. Byron Snyder(1)(2)................ 51 Director and Chairman of the Executive
Committee
OTHER CLASS I DIRECTOR
(TERM EXPIRING AT 2000 ANNUAL
MEETING)
Robert D. Larrabee................... 65 Director
CONTINUING CLASS II DIRECTORS
(TERM EXPIRING AT 2001 ANNUAL
MEETING)
Mark W. Duffey(1).................... 43 President and Director
Greg M. Brudnicki.................... 44 Director
Vincent D. Foster(2)(3).............. 43 Director
CONTINUING CLASS III DIRECTORS
(TERM EXPIRING AT 2002 ANNUAL
MEETING)
Stuart W. Stedman(3)................. 42 Director
Ronald A. Erickson(3)................ 63 Director
Mark F. Wilson....................... 53 Director
EXECUTIVE OFFICERS WHO ARE NOT
DIRECTORS
Thomas C. Livengood.................. 44 Executive Vice President, Chief Financial
Officer and Secretary
Russell W. Allen..................... 53 Executive Vice President of Operations

(FOOTNOTES ON FOLLOWING PAGE)

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------------

(1) Member of Executive Committee

(2) Member of Compensation Committee

(3) Member of Audit Committee

Set forth below is a brief description of the business experience of the
directors and executive officers of our company.

DIRECTORS (LISTED IN SAME ORDER AS TABLE SET FORTH ABOVE)

MELVIN C. PAYNE, one of the management founders of Carriage, has been
Chairman of the Board and Chief Executive Officer since December 1996. Prior to
then, he had been the President, Chief Executive Officer and a director of
Carriage since its inception in 1991. Mr. Payne serves on the Board of Directors
of Sovereign Business Forms, Inc., a private company in the business forms
manufacturing industry.

C. BYRON SNYDER has been a director of Carriage since 1991, was Chairman of
the Board of Directors of Carriage from 1991 to December 1996, and is currently
Chairman of the Executive Committee. Mr. Snyder is the President of Sterling
City Capital, LLC, a Houston-based private investment company. Mr. Snyder is
Chairman of the Board of Integrated Electrical Services, Inc., a publicly held
electrical contracting and maintenance services consolidator; American Plumbing
and Mechanical, Inc., a privately held company that provides commercial and
residential plumbing and mechanical contracting services; United Glass
Corporation, a glass fabrication and services company; and Integrated Roofing &
Waterproofing, Inc., a privately held company providing roofing and
waterproofing services.

ROBERT D. LARRABEE has been a director of Carriage since it went public in
August 1996. Mr. Larrabee is the former owner of a group of four funeral homes
and two cemeteries in Washington and Idaho that Carriage acquired in April 1996.
In connection with that transaction, Carriage agreed to undertake to appoint Mr.
Larrabee to the Board if it went public, and Mr. Larrabee also became an
employee of a subsidiary of Carriage. Mr. Larrabee also is the co-founder and
co-owner of Evergreen Estates, a retirement community in Clarkston, Washington.
He is the founding President and past director of Valley Bank in Clarkston,
Washington (now part of U.S. Bank of Idaho); founding Chairman of the Board and
President of Purple Cross Insurance Company (now part of Service Corporation
International); and founder of Lewis-Clark Savings and Loan Association (now
part of Sterling Financial Corporation). He also serves on the Board of
Directors of Sterling Financial Corporation.

MARK W. DUFFEY, one of the management founders of Carriage, has been
President since December 1996. From the inception of Carriage in 1991 to
December 1996, he was Executive Vice President and Chief Financial Officer and
he became a director in 1995. He serves on the Board of Directors of Sovereign
Business Forms, Inc., a private company in the business forms manufacturing
industry.

GREG M. BRUDNICKI became a director of Carriage in November 1997 when
Forest Lawn/Evergreen Management Corp. merged with a subsidiary of Carriage.
Forest Lawn and its affiliate owned and operated three funeral homes and three
cemeteries in Panama City and Fort Walton Beach, Florida and Dothan, Alabama.
Mr. Brudnicki served as the President and Chief Executive Officer of Forest Lawn
until the merger, when he became the Co-Manager of the Forest Lawn cemeteries
and funeral homes operated by Carriage. In connection with the merger, Carriage
agreed to increase the Board of Directors by one member and appoint Mr.
Brudnicki to fill the resulting vacancy. Mr. Brudnicki serves as a trustee for
Bay Medical Center, a non-profit hospital in Panama City, Florida; director of
Peoples 1st Community Bank; and member of the Florida Board of Funeral and
Cemetery Services.

VINCENT D. FOSTER became a director of Carriage in November 1999. Mr.
Foster is a Managing Director of Main Street Capital Partners, a merchant
banking firm. Mr. Foster serves as a nonexecutive Chairman of the Board of
Directors of Quanta Services, Inc., a consolidator in the electrical contracting
industry which Main Street organized; and as director of U.S. Concrete, Inc., a
provider of ready-mixed concrete and related products and services to the
construction industry. From September 1988 through October 1997, Mr. Foster was
a partner of Andersen Worldwide and Arthur Andersen LLP, where he was the
director of the corporate finance practice and the mergers and acquisitions
practice in the southwestern United States.

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STUART W. STEDMAN has been a director of Carriage since it went public in
August 1996. For the past 15 years, Mr. Stedman has been President of Wesley
West Interests, Inc., a management company responsible for various family
holdings, including marketable securities, oil, gas and coal properties, ranch
lands and urban real estate. Mr. Stedman also serves as a Manager of Strand
Energy, L.L.C., a private exploration and production company.

RONALD A. ERICKSON has been a director of Carriage since it went public in
August 1996. Mr. Erickson is Chief Executive Officer of Holiday Companies,
Minneapolis, Minnesota, a family business consisting primarily of convenience
stores, supermarkets, sporting goods stores and wholesale food distribution. Mr.
Erickson is also a director of Andersen Corporation, a privately held
manufacturer of windows and patio doors; and Kinnard Investments, Inc., a
publicly traded corporation engaged in investment banking and related financial
services.

MARK F. WILSON became a director of Carriage in January 1997 when CNM
merged with Carriage. Mr. Wilson served as the President of CNM from 1988 until
its merger with Carriage in January 1997, when he became the President of
Carriage Funeral Services of California, Inc., a subsidiary of Carriage. CNM
owned and operated nine Wilson & Kratzer Funeral Homes and the Rolling Hills
Memorial Park Cemetery in Alameda and Contra Costa Counties, California. In
connection with the CNM merger, Carriage agreed to increase the Board of
Directors to eight members and appoint Mr. Wilson as a director. Mr. Wilson also
serves on the Board of Directors of Mechanics Bank, Richmond, California.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

THOMAS C. LIVENGOOD has been Executive Vice President, Chief Financial
Officer and Secretary of Carriage since December 1996. Mr. Livengood, a
certified public accountant, has responsibility for the financial and
administrative functions of Carriage. Prior to joining Carriage, he served as
Vice President and Chief Financial Officer of Tenneco Energy, previously the
largest division of Tenneco Inc., a Fortune 100 company, prior to the
divestiture of its diversified businesses. Prior to joining Tenneco Energy in
1988, Mr. Livengood served in various financial management capacities with USX
Corp., Texas Oil & Gas Corp. and KPMG Peat Marwick, an international CPA firm.

RUSSELL W. ALLEN has been Carriage's Executive Vice President of Operations
since June 1993. Mr. Allen has over 34 years of operational experience in the
funeral home industry. Prior to joining Carriage, he was affiliated with
Earthman Funeral Directors and Greenwood-Mount Olivet Funeral Homes and
Cemeteries in Fort Worth, Texas for one and 21 years, respectively, serving most
recently as Executive Vice President of Operations with each company. Mr. Allen
previously served as Vice Chairman of the Texas Funeral Service Commission and
as Chairman of the Education and Legislation Committees. He is also a member of
the Texas Cemetery Association and has served on the Legislative Committee with
that organization.

ORGANIZATION AND COMMITTEES OF THE BOARD

During 1999, Carriage's Board met nine times and acted by unanimous written
consent six times. Each of the directors attended at least 75% of the meetings
of the Board and the Committees on which he served, other than Mark F. Wilson,
who attended two-thirds of such meetings. The functions of the Executive, Audit
and Compensation Committees of the Board, and the number of meetings held during
1999, are described below.

The current members of the Executive Committee are Melvin C. Payne, Mark W.
Duffey and C. Byron Snyder. Mr. Snyder is the Chairman of the Committee. The
primary function of the Executive Committee is to exercise many of the powers of
the Board in between regular Board meetings, including the authorization of
contracts, leases and loan documents. The Executive Committee held one meeting
during 1999 and acted by unanimous written consent one time.

The members of the Audit Committee are Ronald A. Erickson, Vincent D.
Foster and Stuart W. Stedman. Mr. Erickson is Chairman of the Committee. The
Audit Committee recommends to the Board the appointment of Carriage's
independent auditors, and reviews the plan, scope and results of the audit with
the auditors and Carriage's officers. The Audit Committee also reviews with the
auditors the principal

DEF 14A 14th Page of 26 TOC 1st Previous Next ↓Bottom Just 14th
accounting policies and internal accounting controls of Carriage. The Audit
Committee met four times during 1999.

The current members of the Compensation Committee are C. Byron Snyder and
Vincent D. Foster. Mr. Foster is Chairman of the Committee. The Compensation
Committee reviews and makes recommendations to the Board concerning the
compensation of Carriage's officers and employees, including stock option plans,
incentive compensation programs and benefit plans. The Compensation Committee
also administers, and makes grants of stock options under, Carriage's stock
option plans. During 1999, the Compensation Committee met one time and acted by
unanimous consent six times.

The Board also established an ad-hoc Pricing Committee, consisting of
Melvin C. Payne and Mark W. Duffey, in connection with a contemplated public
offering of Class A Common Stock in January 1999. This Committee was charged
with reaching agreement with the proposed managing underwriters of the offering
as to price and terms of the offering and attending to related matters. The
Pricing Committee acted by unanimous consent once in 1999. When the offering was
abandoned, the Pricing Committee ceased to exist.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires Carriage's
directors and executive officers, and persons who own more than 10% of a
registered class of Carriage's equity securities, to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of Class A
Common Stock and other equity securities of Carriage. Executive officers,
directors and greater than 10% beneficial owners are required by SEC regulations
to furnish Carriage with copies of all Section 16(a) forms they file.

Based solely on a review of the copies of such reports furnished to
Carriage or written representations that no other reports were required,
Carriage believes that all filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were complied with
during 1999, except that Mr. Foster was inadvertently late in filing his initial
statement of beneficial ownership upon his becoming a director in November 1999,
and Messrs. Fingerhut (who resigned from the Board in December 1999) and
Larrabee were each inadvertently late in reporting one transaction each on a
statement of change in beneficial ownership.

CERTAIN TRANSACTIONS

In connection with our acquisition in January 1997 of certain funeral homes
and cemeteries in California which were controlled by Mark F. Wilson and others:

o Mr. Wilson and one of our subsidiaries entered into a five-year
employment agreement providing for, among other things, the payment of a
base salary to Mr. Wilson of $150,000 per year;

o Mr. Wilson and the subsidiary entered into a five-year non-competition
agreement providing for, among other things, the payment to Mr. Wilson
of $170,000 per year; and

o We agreed to appoint Mr. Wilson to the Board of Directors of Carriage.

Earlier this year, we paid Mr. Wilson $150,000 in connection with our
acquisition of a group of funeral homes which we acquired in 1999.

In connection with our acquisition in November 1997 of certain funeral
homes and cemeteries in Florida, which were controlled by Greg M. Brudnicki and
another person:

o Mr. Brudnicki and one of our subsidiaries entered into a five-year
employment agreement providing for, among other things, the payment of
a base salary to Mr. Brudnicki of $75,000 per year; and

o We agreed to appoint Mr. Brudnicki to the Board of Directors of
Carriage.

In connection with the above-described and another funeral home acquisition
closed in November 1997, we agreed to make certain contingent purchase price
payments to Mr. Brudnicki and the other former owners of those firms if two
identified funeral homes achieved cash flow above certain targets. In one case,
the payment was to be based upon cash flow for the three years ending December
31, 2000 and would be

DEF 14A 15th Page of 26 TOC 1st Previous Next ↓Bottom Just 15th
payable by March 31, 2001, and in the other the payment was to be based upon
cash flow for the two years ending December 31, 2001, with payment due by March
31, 2002. In February 2000, we agreed to amend the relevant agreements, in
effect accelerating 50% of the payments based upon actual results for the two
years ended December 31, 1999, while the other 50% in each case would remain
payable as originally scheduled. With these amendments, Mr. Brudnicki's share in
March 2000 totaled approximately $483,500.

In July 1996, we loaned Russell W. Allen, an executive officer of Carriage,
$316,714 to allow Mr. Allen to exercise his options to purchase shares of Class
B Common Stock of Carriage and to pay the federal income tax liability incurred
pursuant to such exercise. Annual interest payments in 1997 and 1998 were paid
by Mr. Allen's execution of new notes. In October 1999, we loaned Mr. Allen an
additional $100,000. In November 1999, we purchased from Provident Services,
Inc. a note due it from Mr. Allen, for the face value of $542,439. In March
2000, all of these notes were consolidated into a single loan due March 31,
2001, bearing interest at 6% per annum and secured by all stock and options in
Carriage which Mr. Allen now owns or may hereafter acquire, together with
certain personal assets.

In connection with the acquisition by a subsidiary of Carriage of three
corporations controlled by Robert D. Larrabee and his wife, which owned and
operated four funeral homes and two cemeteries in Washington and Idaho, we
agreed to undertake to appoint Mr. Larrabee to our Board of Directors if we went
public. This transaction was entered into prior to Mr. Larrabee becoming a
director of Carriage, and the compensation outlined above does not relate to any
services provided by Mr. Larrabee as a director of Carriage.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE.

The following table sets forth information regarding the compensation for
the years ended December 31, 1999, 1998 and 1997, with respect to the Chief
Executive Officer and the four other most highly compensated executive officers
of Carriage whose total annual salary and bonus during 1999 exceeded $100,000
(collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------------ ------------
OTHER SECURITIES ALL OTHER
NAME AND ANNUAL UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2) SATION(3)
------------------------------------- --------- ---------- ------------ ---------------- ------------ ----------

MELVIN C. PAYNE...................... 1999 $ 271,154 $ 1,800,000(4) 0 150,000(5) $2,464
Chairman of the Board 1998 $ 233,654 0 0 32,000(6) 1,038
and Chief Executive 1997 $ 225,000 0 0 20,000(7) 1,201
Officer
MARK W. DUFFEY....................... 1999 $ 221,923 $ 200,000 0 100,000(5) $1,368
President 1998 $ 192,115 0 0 26,000(6) 2,401
1997 $ 185,000 0 0 16,000(7) 1,957
THOMAS C. LIVENGOOD.................. 1999 $ 188,847 $ 200,000 0 80,000(5) $2,361
Executive Vice President 1998 $ 181,737 0 0 21,000(6) 2,272
CFO and Secretary 1997 $ 175,000 0 0 50,000(7) 2,188
RUSSELL W. ALLEN..................... 1999 $ 178,846 $ 80,000 0 40,000(5) 0
Executive Vice President 1998 $ 169,038 0 0 17,000(6) 0
of Operations 1997 $ 145,000 0 0 12,000(7) 0
GARY O'SULLIVAN...................... 1999 $ 200,000 $ 153,718 0 30,000(5) 0
Senior Vice President -- 1998 $ 197,308 54,000 0 10,000(6) 0
Marketing 1997 $ 190,496 0 0 30,000(7) 0

(FOOTNOTES ON FOLLOWING PAGE)

DEF 14A 16th Page of 26 TOC 1st Previous Next ↓Bottom Just 16th
------------

(1) Excludes perquisites and other personal benefits unless the aggregate amount
of such compensation exceeded the lesser of $50,000 or 10% of the total of
annual salary and bonus reported for the Named Executive Officer.

(2) On September 30, 1999, all options described under this column were
voluntarily cancelled by agreement of Carriage and the Named Executive
Officers.

(3) Each of the amounts in this column reflect contributions by Carriage to its
401(k) Plan for the executive's benefit.

(4) Of this amount, $725,000 was applied in November 1999 against a note due
from Mr. Payne, $600,000 is due in March 2000 and $475,000 is due in March
2001. See "Compensation Policies for the Chief Executive Officer" under
"Compensation Committee Report on Executive Compensation."

(5) All of these options were granted in March 1999 to provide incentives to
management following the public stock price declines resulting from certain
announcements by other death consolidators and the market's negative
reaction to those announcements.

(6) All of these options were granted in March 1999 for 1998 performance.

(7) All of the options issued to Messrs. Payne, Duffey, Allen and Livengood, and
30,000 of the options issued to Mr. O'Sullivan, were granted in February
1998. Of the February 1998 option grants, all but 38,000 shares to Mr.
Livengood and 18,000 shares to Mr. O' Sullivan were for 1997 performance.

STOCK OPTION GRANTS IN 1999

We have four stock option plans:

o the 1995 Stock Incentive Plan (the "1995 Plan");

o the 1996 Stock Option Plan (the "1996 Plan");

o the 1996 Directors' Stock Option Plan (the "Directors' Plan"); and

o the 1998 Stock Option Plan for Consultants (the "Consultants Plan").

A total of 1,450,000 shares of Class A and B Common Stock are reserved for
issuance under the 1995 Plan. Options issued under the 1995 Plan prior to our
initial public offering in August 1996 are satisfied with shares of Class B
Common Stock, but options issued after that date are satisfied with shares of
Class A Common Stock. 1,300,000 shares of Class A Common Stock are reserved for
issuance under the 1996 Plan. 350,000 shares of Class A Common Stock are
reserved for issuance under the Directors' Plan. 100,000 shares of Class A
Common Stock are reserved for issuance under the Consultants Plan. Options
issued under the 1995 Plan and the 1996 Plan may be either "Incentive Stock
Options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-qualified stock options. Options issued under the
Directors' Plan and Consultants Plan are non-qualified stock options.

The following table sets forth information on the grants of options to
acquire shares of Class A Common Stock made during the year ended December 31,
1999 to the Named Executive Officers:

OPTION GRANTS IN LAST FISCAL YEAR

[Enlarge/Download Table]

POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
------------------------------------------------------- ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
GRANTED(1) 1999 ($/SH) DATE 5% 10%
---------- ------------ ----------- ---------- --------- ---------

Melvin C. Payne......................... 182,000 16.0% 13.25 3/23/09 -0- -0-
Mark W. Duffey.......................... 126,000 11.0% 13.25 3/23/09 -0- -0-
Thomas C. Livengood..................... 101,000 8.9% 13.25 3/23/09 -0- -0-
Russell W. Allen........................ 57,000 5.0% 13.25 3/23/09 -0- -0-
Gary O'Sullivan......................... 40,000 3.5% 13.25 3/23/09 -0- -0-

(FOOTNOTES ON FOLLOWING PAGE)

DEF 14A 17th Page of 26 TOC 1st Previous Next ↓Bottom Just 17th
------------

(1) Options granted were for a term of ten years. Of the options granted,
150,000 to Mr. Payne, 100,000 to Mr. Duffey, 80,000 to Mr. Livengood, 40,000
to Mr. Allen and 30,000 to Mr. O'Sullivan were to have vested on the first
anniversary of grant date, or March 24, 2000. All the remaining options were
fully vested on the grant date.

(2) All of these options, as well as all other options held by the Named
Executive Officers under the 1996 Plan, were voluntarily cancelled by mutual
agreement of Carriage and the Named Executive Officers, effective September
30, 1999. Consequently, these options had no realizable value.

1999 OPTION EXERCISES AND YEAR-END OPTION HOLDINGS

No Named Executive Officer has ever exercised any options granted to him
under any of our option plans, whether in 1999 or before. Consequently, no value
has ever been realized by a Named Executive Officer under the 1996 Plan or any
of our other stock option plans.

By September 1999, our stock price was trading in the range of $8-$11 per
share, which was substantially below the weighted average exercise price of
options granted to Named Executive Officers under the 1996 Plan. Therefore,
Carriage agreed with the Named Executive Officers to cancel all outstanding
options under the 1996 Plan, effective as of September 30, 1999. These
cancellations were made without any assurance that any new options would be
issued or, if issued, how many options might be granted or on what terms. The
Board's Compensation Committee is currently reviewing long-term incentive
compensation issues (which may include stock options) for employees (including
senior management), and it expects to have recommendations to the full Board by
May 2000.

COMPENSATION OF DIRECTORS

Prior to this year, it had been our historical practice to compensate
directors who are not executive officers of Carriage, but who may be employees
("eligible directors"), by issuing them options under the Directors' Plan in
lieu of cash compensation. Under the Directors' Plan as presently constituted,
each individual who was an eligible director as of the date of our initial
public offering in August 1996 received a non-qualified stock option to purchase
15,000 shares (or 25,000 if the eligible director also served on the Executive
Committee as of such date) of Class A Common Stock at an exercise price per
share equal to the initial public offering price of $13.50 per share. In
addition, when a new eligible director is appointed or elected to the Board, the
Directors' Plan currently provides that he will receive an option grant to
purchase 15,000 shares of Class A Common Stock (or 25,000 shares if such
director also becomes a member of the Executive Committee). Further, the
Directors' Plan now provides that each eligible director is automatically
granted a non-qualified stock option to purchase 6,000 shares of Class A Common
Stock on the date of each annual meeting of stockholders. The aggregate number
of shares of Class A Common Stock reserved for issuance under the Directors'
Plan is 350,000 shares.

In October 1999, all of the directors who had received options under the
Directors' Plan voluntarily terminated their options by agreement with Carriage.
As was the case under the 1996 Plan, the exercise prices for these options were
substantially higher than the trading price of our Class A Common Stock. These
cancellations were made without any assurance that any new options would be
issued or, if issued, how many options might be granted or on what terms.

Following this action, Vincent D. Foster became a member of our Board.
Consequently, pursuant to the automatic grant terms of the Directors' Plan, he
was issued options to purchase 15,000 shares of Class A Common Stock. As of
December 31, 1999, those were the only options outstanding under the Directors'
Plan.

In February 2000, the Board amended the Directors' Plan to remove the
automatic grant features and to confer upon the full Board the discretion as to
when to grant options and on what terms they may be granted. The eligibility
criteria remains unchanged (options may be granted only to directors who are not
executive officers of the parent corporation, Carriage Services, Inc., even
though they may be employees of one of our subsidiaries; at present, the
eligible directors consist of C. Byron Snyder, Vincent D. Foster, Stuart W.
Stedman, Ronald A. Erickson, Mark F. Wilson, Greg M. Brudnicki and Robert D.
Larrabee), and

DEF 14A 18th Page of 26 TOC 1st Previous Next ↓Bottom Just 18th
the total number of shares which may be granted remains unchanged at 350,000.
However, the amendment adds the stipulations that each grant must be approved in
each instance by (1) at least two-thirds of all members of the entire Board, and
(2) a majority of all members of the Board who are not eligible to receive
options under the Directors's Plan. In addition, the amendment adds the
requirement that shares issued upon exercise of options granted under the
Directors' Plan may not, without Board approval, be sold or disposed of within
six months following the date of grant. These amendments are subject to approval
of our stockholders. See "Proposal No. 2 -- Amendment to the 1996 Directors'
Stock Option Plan."

The amendment to the Directors' Plan will not affect the 15,000 options
currently outstanding. If the amendment is approved at the 2000 Annual Meeting,
then the Board will thereafter consider whether and on what terms it may issue
options. However, there are no present plans or commitments in that regard. If
the amendment is not approved, then options will automatically be granted at the
Annual Meeting and thereafter in accordance with current provisions.

It was also the consensus of the full Board, upon recommendation of the
Compensation Committee after consultation with an outside firm retained to
review management and director compensation, that we should begin paying a
retainer to our outside directors in addition to issuing these options under the
Directors' Plan. Consequently, the Board approved a policy whereby outside
directors receive an annual retainer of $20,000, payable quarterly, commencing
with the second quarter 2000, plus $1,000 per meeting attended in person,
including meetings of committees as well as of the full Board. However, no
additional compensation is payable for attending meetings by telephone or for
attendance at committee meetings held on the same day as full Board meetings.
Each such director can elect to receive such compensation in cash or in shares
of our Class A Common Stock, based upon the fair market value thereof at the
time such compensation is earned, calculated in a manner consistent with the
Directors' Plan. In order to be eligible to receive this compensation, however,
directors may not be officers or employees of Carriage or any subsidiary (unlike
the Directors' Plan, where directors who are employees but not parent company
executive officers are eligible to participate). At present, directors Snyder,
Foster, Erickson and Stedman are eligible to receive this compensation.

EMPLOYMENT AGREEMENTS

Effective November 8, 1999, we entered into separate employment agreements
with Melvin C. Payne, Mark W. Duffey, Thomas C. Livengood and Russell W. Allen.
The employment agreements with Mr. Payne and Mr. Duffey have an initial term of
approximately five years with an evergreen two-year extension continuing after
the first three years of the employment agreements unless either Carriage or the
executive gives 90 days notice of termination. The employment agreements with
Messrs. Livengood and Allen are for initial terms of approximately five years.
Pursuant to these agreements, Messrs. Payne, Duffey, Livengood and Allen are
entitled to receive salaries of not less than $275,000, $225,000, $190,000 and
$180,000, respectively, and a bonus to be determined on an annual basis by the
Board of Directors. In February 2000, the Board increased the base salaries for
Messrs. Payne and Livengood to $375,000 and $205,000, respectively. If the
executive is terminated without cause during the term of the agreement, the
executive will receive a monthly severance payment until the end of the term had
the executive not been terminated plus a proportionate amount of the bonus
earned for the year of termination. Such monthly severance payment would be
equal to the average monthly amount (including salary and bonus) earned by the
executive during the three calendar years prior to his termination. During the
period that the executive receives the monthly severance payments, the executive
also would be entitled to participate in any employee benefit plans or programs
in which the executive was participating at the time of his termination. In
addition, each agreement contains a covenant prohibiting the executive from
competing with Carriage during the period the executive is receiving
compensation under his agreement, provided, however, that following termination
of employment, the executive may elect to forego certain severance payments
which he would be entitled to under the employment agreement and thereafter
would not be prohibited from competing with us. In addition, the agreements
contain customary benefits and perquisites.

DEF 14A 19th Page of 26 TOC 1st Previous Next ↓Bottom Just 19th
Mr. Livengood's agreement additionally provides that he will be entitled to
a special compensation bonus in the amount of $200,000, payable in December
2002, provided that he remains in the continuous full-time employ through that
time.

Effective October 8, 1996, we entered into an employment agreement with
Gary O' Sullivan for a five year term. Pursuant to this agreement, Mr.
O'Sullivan is entitled to receive a salary of $190,000. Effective January 1,
1999, the Board increased Mr. O'Sullivan's salary to $200,000. Mr. O'Sullivan's
bonus structure was changed in 2000, with an increased emphasis on achieving
budgeted location earnings before interest and taxes. If Mr. O'Sullivan is
terminated without cause during the term of the agreement, he will receive his
base salary until the end of the term. In addition, the agreement contains
customary benefits and perquisites. In February 2000, in connection with a
restructuring of our operations group, Mr. O'Sullivan resigned his position as
Senior Vice President of Marketing of the parent company, but he retains that
title with our subsidiaries and his employment with us was otherwise unaffected.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee (the "Committee") is responsible for
recommending compensation arrangements for senior management, making
recommendations with respect to employee benefit plans, making stock option
grants under the 1995 Plan and the 1996 Plan and administering the 1997 Employee
Stock Purchase Plan. Neither member of the Committee is an employee of Carriage
or any of its subsidiaries.

The Committee seeks to improve our performance and maximize stockholder
value through, among other things, establishing appropriate executive
compensation levels and incentives. The Committee believes that compensation
levels should be tied to performance on both an individual and corporate level
so that management will be properly motivated to achieve Carriage's annual and
long term performance goals and to maximize stockholder value. Our executive
compensation policies are designed to:

o Allow us to attract and retain qualified executives with the
leadership and other skills needed by Carriage at this stage in its
development;

o Provide strong incentives to achieve our annual and long term
performance goals, with rewards for both individual and corporate
performance; and

o Solidly align the interests of management with those of the
stockholders.

The Committee seeks to achieve these policy goals through base salary and an
annual incentive and performance based compensation structure that, from year to
year, may consist of cash bonuses, stock options, or both. Historically, the
Committee's philosophy since Carriage became public had been to maintain
relatively modest levels of cash compensation and emphasize stock options in
order to further align the interests of management with those of the
stockholders. In 1999, as the industry climate changed, Carriage's focus began
to shift away from external growth through acquisitions and more toward
promoting internal growth, improving operations and increasing cash flow. As
1999 ended and 2000 began, the Committee determined that executive compensation
should more accurately reflect this change in focus. Consequently, we engaged
the services of an outside consulting firm with experience in advising companies
such as our own as to employee compensation issues, to provide a comprehensive
review of our compensation structure for executives and certain other employees.
The first phase of this process, reviewing base salaries and cash bonuses, was
completed earlier this year, and the full Board adopted the recommendations of
the Committee, discussed in more detail below. The next phase, examining
long-term incentive compensation (through options and otherwise), is ongoing and
is expected to be completed by May 2000.

BASE SALARIES

The base salaries for each of our executive officers are determined on an
individual basis, taking into account such considerations as the duties and
levels of responsibility of the individual and compensation levels set by other
companies within the industry, as well as other companies in the service sector
of

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comparable revenue size. The Committee believes that maintaining a reasonable
base salary structure is necessary to attract and retain talented executives.
The Committee's historical practice had been to establish the base salary
structure significantly below that of the other publicly traded death care
companies and to make up the difference through long-term incentives such as
stock options. Prior to 1999, there had been no increase in the base salaries
for four of the executive officers since 1996, and for the fifth the most recent
raise was in early 1997. In early 1999, the Named Executive Officers received
raises averaging approximately 14%, but at that time long-term incentives such
as stock options were thought to still comprise a significant portion of total
compensation.

With the steep decline in stock price experienced in 1999 and the
cancellation of all outstanding options under the 1996 Plan effective September
30, 1999, the Committee thought it best to re-examine base salaries for the
Named Executive Officers. For this purpose, the Committee relied upon the
services of the outside consulting firm, which gathered data on other
service-sector companies with comparable revenue size. Data was also compiled on
cash compensation paid to executives at other publicly traded death care
companies, but for purposes of determining relative compensation mix, not
aggregate compensation. The Committee's goal was to establish salaries for the
Named Executive Officers at the market median for each position. The Committee
therefore recommended, and the full Board approved, increasing the base salaries
for the Chief Executive Officer and Chief Financial Officer to $375,000 and
$205,000, respectively, and maintaining the other base salaries at their current
levels.

BONUSES FOR NAMED EXECUTIVE OFFICERS FOR 1999

The Committee, in consultation with management, reviews the performance of
Carriage's executive officers in the context of our overall performance, on an
annual basis, in determining whether and to what extent we should award annual
cash bonuses. This review process is typically conducted following Carriage's
release of its year-end financial information, and bonuses are typically awarded
in February or March of that year.

From the time Carriage went public in August 1996 until the third quarter
1999, no Named Executive Officer ever received a cash bonus. For performance in
1997 and 1998, fully vested options were awarded to Named Executive Officers in
lieu of cash bonuses. However, all of these options were cancelled on September
30, 1999. Because of the lack of previous cash bonuses, because the incentives
through option grants proved to have little if any value due to the sharp
declines in industry stock prices throughout 1999, and due to the need to retain
key people in a highly dynamic environment, the Committee felt that it was time
to review and, if appropriate, award cash bonuses to senior management.

Because events were fast moving in 1999, particularly in the third quarter,
the Board elected to accelerate its review of bonuses for management to early in
the fourth quarter. It was the opinion of the Committee and of the full Board
that the senior management team had placed Carriage in a favorable strategic
position in the rapidly changing environment, by investing in operations through
training and other initiatives; by investing in customer relationships, which
management believes will enhance long-term stockholder value; by obtaining key
financing in June and July 1999 under difficult circumstances and giving us a
significant boost in relative liquidity and balance sheet strength; and by
investing in systems and controls which promote integrity and credibility in our
financial presentation. Conversely, the Board felt that events largely beyond
management's control had caused significant pressures on the personal financial
situations of each Named Executive Officer, due to steep loss in value of their
stock holdings, the lack of personal liquidity attributable to relative low base
salaries and the absence of previous cash bonuses, and the loss of all value
from stock options. For these reasons, the Board awarded cash bonuses in the
fourth quarter 1999 as part of a special compensation bonus aggregating
$2,280,000, consisting of $1,800,000 to Mr. Payne (discussed in more detail
under "Compensation Policies for the Chief Executive Officer" below), $200,000
to each of Messrs. Duffey and Livengood, and $80,000 to Mr. Allen.

We conditioned the award of these bonuses to Messrs. Payne, Duffey,
Livengood and Allen on their execution of new five-year employment contracts.
The Board believed that at this critical stage in our development, as Carriage
transitions from a growth-oriented company to one focused on operations and

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cash flow, it was important to ensure continuity and maintain management's
direction and focus, and in this way would stockholder value be enhanced.

Beginning in 2000, the Committee has also adopted a more formal approach to
considering the circumstances under which cash bonuses may be awarded. The
Committee has established for each of the top three Named Executive Officers a
set of specific goals to be achieved, and has set parameters under which these
goals will be evaluated in relation to the appropriate range of cash bonuses for
2000 performance. At the conclusion of the year, each Named Executive Officer
will be individually evaluated to determine the extent to which his goals have
been achieved. However, there are no assurances or commitments with regard to
the payment of any cash bonuses.

STOCK OPTION GRANTS FOR NAMED EXECUTIVE OFFICERS FOR 1999

Carriage awards stock options to its executive officers under the 1996 Plan
and to its key employees under the 1995 Stock Incentive Plan. The purpose of the
stock options is to provide the executive officers and key employees with an
opportunity to build a meaningful equity ownership interest in Carriage. The
Committee believes that management's ownership of a significant equity interest
in Carriage firmly aligns the interests of the executive officers and key
employees with those of Carriage's stockholders.

There has never been any specific guideline or formula in the award of
options to management. When Carriage went public, and when Messrs. Livengood and
O'Sullivan joined us, initial grants totaling 530,000 shares were awarded to the
Named Executive Officers. However, one-third of these options vested 25% per
year over four years, while the other two-thirds vested whenever our stock price
achieved $27.99 over 20 consecutive days, if that event occurred before August
2000. That price was nearly achieved in January 1999, but there is little
prospect that it will happen by August of this year. In that event, those
options would have continued to vest 25% per year over 2001 through 2004. We
also granted options for a total of 178,000 shares to the Named Executive
Officers in lieu of cash bonuses for 1997 and 1998 performance, and options for
an additional 456,000 shares were issued to them in 1998 and 1999 under special
circumstances. All of these options were voluntarily cancelled effective
September 30, 1999 at a time when our stock price was substantially below the
average exercise price; since then, the stock price has dropped even further. At
the time of cancellation, the number of options held by each Named Executive
Officer, and the number of options which were then vested, are as follows:

TOTAL NO. OF TOTAL NO. OF
NAME STOCK OPTIONS VESTED OPTIONS
------------------------------------- -------------- ---------------
Melvin C. Payne...................... 452,000 114,500
Mark W. Duffey....................... 292,000 79,500
Thomas C. Livengood.................. 201,000 44,500
Russell W. Allen..................... 119,000 41,500
Gary O'Sullivan...................... 100,000 28,500

The Committee is in the process of reviewing long-term incentive
compensation for the Named Executive Officers, in consultation with an outside
consulting firm. There is no assurance that any or all of the options which were
cancelled will be reissued. Instead, the Committee intends to consider option
awards in the larger context of the total compensation packages for the Named
Executive Officers in relation to market medians and other relevant factors,
pursuant to a process similar to that which was followed in setting base
salaries and cash bonus guidelines for 2000. The Committee expects to be in a
position to recommend option awards to the full Board by May 2000.

COMPENSATION POLICIES FOR THE CHIEF EXECUTIVE OFFICER

Melvin C. Payne has served as our Chief Executive Officer since Carriage
was founded in 1991. Mr. Payne's base salary was $225,000 between the time
Carriage went public in August 1996 until January 1999, at which time his salary
was increased to $275,000 per year. Earlier this year, when the Committee
examined, with the help of an outside firm, the market medians of executive
compensation at comparable companies, Mr. Payne's base salary was discovered to
be the most significantly below market medians, at

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nearly 37% below the median. As a result, the Compensation Committee
recommended, and the full Board approved, an increase in Mr. Payne's base salary
to $375,000 per year, to bring his salary in line with the market median.

At the time of the initial public offering, Mr. Payne received a grant of
options under the 1996 Plan for 250,000 shares. In lieu of cash bonuses for 1997
and 1998, Mr. Payne received fully vested options for a total of 52,000 shares.
The Committee set these level of options based on its subjective evaluation of
Mr. Payne's performance in those years. In March 1999, Mr. Payne was awarded
another 150,000 options, as an added incentive due to the steep decline in our
stock price which occurred beginning in January of that year. All of these
options were cancelled on September 30, 1999, when the stock price was
substantially below the average exercise price of these options.

The Committee first began examining Mr. Payne's cash compensation structure
in August 1999 when it became apparent, following further public announcements
by other industry consolidators, that stock prices throughout the industry would
continue to be depressed for some time to come. In addition to not realizing any
benefit from the option grants, and having given up liquidity from previous year
cash bonuses, the value of Mr. Payne's personal investment in Carriage had
substantially declined with the slide in stock price. Moreover, since Carriage
went public, Mr. Payne had invested more of his personal net worth in our stock
in open market transactions, and he never sold any of his stock holdings. It was
the Committee's opinion, supported by the full Board, that it was important to
invest in its Chief Executive Officer by giving him the liquidity to relieve
short-term margin debt pressures and allow him to concentrate on earning our
reputation as the best operating company in the industry.

In October 1999, we loaned Mr. Payne $1.2 million on a short-term basis,
the proceeds of which were used by him to pay down margin debt he incurred
primarily in buying Carriage stock over the years. In November 1998, the Board
approved a bonus in the amount of $1.8 million to Mr. Payne. Of this amount,
$725,000 was paid immediately, the net proceeds (after deducting employee
withholdings) from which were used to pay down his debt to us. The balance of
the bonus, $1,075,000, will be paid in two installments: $600,000 in March 2000
and $475,000 in March 2001. In December 1999, Mr. Payne obtained financing
elsewhere and satisfied the remainder of his debt to us. This bonus was declared
in connection with a new five-year employment contract which we signed with Mr.
Payne. Part of the stipulation, however, was that if Mr. Payne voluntarily left
over the course of that five years, he would have to disgorge back to Carriage a
pro rata portion of his bonus.

As Chief Executive Officer, Mr. Payne bears primary responsibility for
Carriage's overall success. Although our stock price has suffered in tandem with
the steep declines in the other public consolidators, it is our belief that this
is mostly attributable to highly negative investor and analyst sentiment toward
the death care sector as a whole and not toward Carriage or its management in
particular. In fact, we believe that as a result of Mr. Payne's stewardship,
Carriage is the best positioned to weather this storm and capitalize on
opportunities that will significantly benefit us in the long term. The Committee
continues to have strong confidence in Mr. Payne's leadership and management
skills to help Carriage achieve its long-term goals for growth and performance.

Compensation Committee

Vincent D. Foster, Chairman
C. Byron Snyder

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COMPARATIVE STOCKHOLDER RETURN

The following graph compares on a cumulative basis the percentage change
during the period from Carriage's initial public offering on August 8, 1996, to
December 31, 1999, in the total stockholder return on (i) our Class A Common
Stock, (ii) the Standard & Poor's 500 Stock Price Index, and (iii) a peer group
index of three other publicly traded companies in the death care industry
(Service Corporation International, The Loewen Group, Inc. and Stewart
Enterprises, Inc.). This graph assumes that the value of an investment in our
Class A Common Stock and in each index was $100 on August 9, 1996, and that all
dividends were reinvested. The returns for each company in the Peer Group are
weighted according to its stock market capitalization at the beginning of each
period for which a return is indicated.

COMPARISON OF STOCKHOLDER TOTAL RETURN AMONG CARRIAGE SERVICES, INC.,
THE S&P 500 INDEX, AND AN INDUSTRY PEER GROUP

[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

[Enlarge/Download Table]

COMPARISON OF STOCKHOLDER RETURNS
------------------------------------------------------
8/9/96 12/31/96 12/31/97 12/31/98 12/31/99
------ -------- -------- -------- --------

Carriage Services, Inc.................. $ 100 $ 136 $ 115 $ 172 $ 36

S&P 500 Index........................... $ 100 $ 112 $ 146 $ 185 $ 221

Peer Group.............................. $ 100 $ 106 $ 137 $ 130 $ 24

The above data is based upon the closing price of Carriage's Class A Common
Stock on its first trading day, August 9, 1996, of $16.50 per share. The initial
public offering price for the Class A Common Stock, as shown in Carriage's
registration statement, was $13.50 per share. If the initial offering price of
$13.50 were used, the stockholder returns in the table above would have been
$166 at December 31, 1996, $141 at December 31, 1997, $211 at December 31, 1998,
and $44 at December 31, 1999.

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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

At December 31, 1999, the only member of the Compensation Committee was C.
Byron Snyder. Barry K. Fingerhut served as a member of the Compensation
Committee throughout 1999 until his resignation from the Board on December 30,
1999. Vincent D. Foster, who joined Carriage's Board on November 4, 1999, was
elected to the Compensation Committee on January 26, 2000. No member of the
Compensation Committee was an officer of Carriage at any time during 1999.

During 1999, no executive officer of Carriage served as (i) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Board of Directors; (ii) a director of another
entity, one of whose executive officers served on the Compensation Committee of
the Board of Directors; or (iii) a member of the compensation committee (or
other board committee performing equivalent functions) of another entity, one of
whose executive officers served as a director of Carriage.

PROPOSAL NO. 2
AMENDMENTS TO THE 1996 DIRECTORS' STOCK OPTION PLAN

DESCRIPTION OF AMENDMENTS

The Board of Directors has approved a proposal to amend the Directors' Plan
to give the Board the flexibility and discretion to award options to eligible
directors whenever, and in whatever amounts and on such terms, as the Board
deems appropriate. The Board's approval of this amendment to the Directors' Plan
was subject to stockholder approval. If our stockholders do not approve this
amendment to the Directors' Plan, then the Director's Plan will continue to
provide for non-discretionary grants as described below.

As presently constituted, whenever someone becomes an eligible director, he
automatically receives a non-qualified stock option to purchase 15,000 shares
(or 25,000 if the eligible director also serves on the Executive Committee as of
such date) of Class A Common Stock. Four directors received such options when we
went public in 1996, and subsequently three directors have received additional
options upon being elected to the Board. In addition, each eligible director
automatically receives options to purchase 6,000 shares of Class A Common Stock
on the date of each annual meeting of stockholders.

The amendment removes these automatic grants. Therefore, no options will
necessarily be granted at the 2000 Annual Meeting, and no options would
necessarily be granted if a new director is elected to the Board. Instead, the
Board could at any time, or from time to time, issue options to eligible
directors. In this way, the Directors' Plan will become like the 1995 Plan and
the 1996 Plan, except that the Compensation Committee will have no part in
recommending options under the Directors' Plan. The full Board can determine
whom among eligible directors will receive options, when options may be granted,
the number of shares covered by any grant, and any vesting requirements
associated with any grant.

The amendment adds two conditions for each discretionary grant: each grant
must be approved by at least two-thirds of all members of the entire Board, and
by a majority of all members of the Board who are not eligible directors; and
shares issued upon exercise of options granted under the Directors' Plan may
not, without Board approval, be sold or disposed of within six months following
the date of grant.

There are a number of key elements which the amendment will not change.
Each option must still be granted at an exercise price equal to the fair market
value of the Class A Common Stock at the time the option is granted. The
amendment does not change the criteria as to who is eligible to receive options
under the Directors' Plan. And the total number of shares which may be granted
under the Directors' Plan, 350,000, will not change as a result of this
amendment.

In October 1999, all of the then-outstanding options under the Directors'
Plan were voluntarily cancelled. An option for 15,000 shares was issued to
Vincent D. Foster when he joined the Board in November 1999. The amendment to
the Directors' Plan has no effect on either the prior cancellations or the
November 1999 automatic grant. There are no current plans or commitments
regarding the issuance of

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options under the Directors' Plan to any eligible director. However, the Board
expects that it will review option grants, in the larger context of options
under all plans, in May 2000.

If the amendment is not approved by the stockholders, then eligible
directors will continue to receive automatic awards at the 2000 Annual Meeting
and at each annual meeting thereafter, and upon any new eligible director
joining the Board, as presently provided in the Directors' Plan.

The affirmative vote of a majority of the voting power of the shares of
capital stock present or represented by proxy at the Meeting will be required to
approve this proposal. WE RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL TO AMEND
THE 1996 DIRECTORS' STOCK OPTION PLAN.

SUMMARY DESCRIPTION OF THE 1996 DIRECTORS' STOCK OPTION PLAN

The terms of the Directors' Plan, including the amendments described above,
are summarized below:

(1) AUTHORIZED SHARES. The aggregate number of shares of Class A
Common Stock that may be issued pursuant to the exercise of options granted
under the Directors' Plan is 350,000 shares. Shares issuable pursuant to
the Directors' Plan may be authorized but unissued shares or reacquired
shares, and the Company may purchase shares required for this purpose.

(2) ELIGIBILITY. A director who is not an executive officer is
eligible to participate in the Directors' Plan (hereinafter an "eligible
director").

(3) STOCK OPTIONS. After giving effect to the amendment, options
issued under the Directors' Plan will be issued to such eligible directors,
in such amounts and subject to such vesting requirements as shall be
approved by at least two-thirds of all members of the entire Board and by a
majority of all members of the Board who are not eligible directors. Shares
issued upon exercise of options granted under the Directors' Plan may not,
without Board approval, be sold or disposed of within six months following
the date of grant.

(4) TERMS OF OPTION GRANTS. All stock options granted under the
Directors' Plan are non-qualified stock options not entitled to special tax
treatment under Section 422 of the Code, and have a term of ten years from
the date of grant. The exercise price of all stock options granted under
the Directors' Plan after the initial public offering will be the "fair
market value" of the Class A Common Stock on the date of grant. Fair
market value, as of any date, means the closing price of the Class A Common
Stock on such date, as reported on the New York Stock Exchange (or any
other exchange that the Class A Common Stock shall then be traded). The
number of shares covered by each option and the exercise price per share
will be proportionately adjusted in the event of a stock split, reverse
stock split, stock dividend, or similar capital adjustment effected without
receipt of consideration by the Company.

(5) TERMINATION AFTER DEATH, DISABILITY OR CHANGE OF
CONTROL. Regardless of any vesting requirements set forth in any award
agreement, all options granted under the Directors' Plan will become fully
vested and exercisable in full if an Eligible Director's membership on the
Board terminates by reason of death or disability or upon the occurrence of
a "Change of Control" while a director is a member of the Board of
Directors. The Directors' Plan provides that a Change of Control occurs (i)
if the Company is dissolved and liquidated, (ii) if the Company is not the
surviving entity in any merger, consolidation, or reorganization, (iii) if
the Company sells, leases or exchanges, or agrees to sell, lease, or
exchange, all or substantially all of its assets, (iv) if any person,
entity or group acquires or gains ownership or control of more than 50% of
the outstanding shares of the Company's voting stock (based upon voting
power), or (v) if, after a contested election of directors, the persons who
were directors before such election cease to constitute a majority of the
Board of Directors. Upon termination of an eligible director's membership
on the Board of Directors, the eligible director will have three months (12
months if such termination is by reason of death or disability) to exercise
his or her options, but only to the extent such options are vested as of
the date of such termination.

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PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

We have selected Arthur Andersen LLP as Carriage's independent public
accountants for the year ending December 31, 2000, and have further directed
that management submit the selection of the independent accountants for your
ratification at the Meeting. Arthur Andersen LLP has audited Carriage's
financial statements since 1992. Representatives of Arthur Andersen LLP are
expected to be present at the Meeting and will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.

Stockholder ratification of the selection of Arthur Andersen LLP as
Carriage's independent public accountants is not required by our By-laws or
otherwise. If Carriage's stockholders fail to ratify the selection, we will
reconsider whether to retain that firm. Even if the selection is ratified, the
Board, in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if we feel that such a change would
be in the best interests of Carriage and its stockholders. The affirmative vote
of the holders of a majority of the voting power of the shares of capital stock
present or represented by proxy at the Meeting will be required to ratify the
selection of Arthur Andersen LLP.

WE RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP.

OTHER BUSINESS

Management does not intend to bring any other business before the Meeting
and has not been informed that any other matters are to be presented at the
meeting by others. If other matters properly come before the Meeting or any
adjournment thereof, the persons named in the accompanying proxy and acting
thereunder will vote in accordance with their best judgment.

Proposals of stockholders intended to be presented at the next annual
meeting of Stockholders, and otherwise eligible, must be received by the
Secretary of Carriage (at the address indicated on the first page of this Proxy
Statement) no later than December 1, 2000, in order to be included in Carriage's
proxy material and form of proxy relating to that meeting.

ADDITIONAL INFORMATION

ANNUAL REPORT

THE ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1999 IS
BEING MAILED TO ALL STOCKHOLDERS ENTITLED TO VOTE AT THE MEETING. THE ANNUAL
REPORT TO STOCKHOLDERS DOES NOT FORM ANY PART OF THE PROXY SOLICITING MATERIALS.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, ARE AVAILABLE
WITHOUT CHARGE TO STOCKHOLDERS UPON REQUEST TO THOMAS C. LIVENGOOD, EXECUTIVE
VICE PRESIDENT AND SECRETARY, CARRIAGE SERVICES, INC., 1300 POST OAK BLVD.,
SUITE 1500, HOUSTON, TEXAS 77056.

REGARDLESS OF THE NUMBER OF SHARES YOU OWN, IT IS IMPORTANT THAT THEY BE
REPRESENTED AT THE MEETING, AND YOU ARE RESPECTFULLY REQUESTED TO SIGN, DATE AND
RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.

By Order of the Board of Directors

/s/ THOMAS C. LIVENGOOD
THOMAS C. LIVENGOOD
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND SECRETARY

Houston, Texas
March 30, 2000

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘DEF 14A’ Filing	Date	First	Last	Other Filings

	3/31/02	15		10-Q
	12/31/01	8	15	10-K, 11-K
	3/31/01	15		10-Q
	2/17/01	6
	2/15/01	6
	12/31/00	14	26	10-K, 11-K
	12/1/00	6	26
For Period End:	5/17/00	2	3
Filed on:	3/30/00	2	26	SC 13G/A
	3/24/00	17
	3/20/00	3	10
	2/14/00	10		SC 13G, SC 13G/A
	2/10/00	10
	2/4/00	10
	1/26/00	24
	12/31/99	15	26	11-K
	12/30/99	24		10-K405
	11/8/99	18
	11/4/99	24
	9/30/99	16	22	10-Q
	1/1/99	19
	12/31/98	15	23	10-K405
	12/31/97	15	23	10-K, 8-K
	12/31/96	23		10-K
	10/8/96	19
	8/9/96	23		424B1
	8/8/96	23		8-A12G/A, S-1/A
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Filing Submission 0000890566-00-000409 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Carriage Services Inc – ‘DEF 14A’ for 5/17/00

On: Thursday, 3/30/00 · For: 5/17/00 · Accession #: 890566-0-409 · File #: 1-11961

Previous ‘DEF 14A’: ‘DEF 14A’ on 3/30/99 for 5/11/99 · Next: ‘DEF 14A’ on 4/27/01 for 5/22/01 · Latest: ‘DEF 14A’ on 3/29/24 for 5/14/24

Definitive Proxy Solicitation Material — Schedule 14AFiling Table of Contents

DEF 14A — Definitive Proxy Solicitation MaterialDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Definitive Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

DEF 14A — Definitive Proxy Solicitation Material
Document Table of Contents