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Carriage Services Inc – ‘DEF 14A’ for 5/22/01

On: Friday, 4/27/01, at 4:43pm ET · For: 5/22/01 · Accession #: 912057-1-511033 · File #: 1-11961

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

 4/27/01  Carriage Services Inc             DEF 14A     5/22/01    1:98K                                    Merrill Corp/FA

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

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material                32    163K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Additional Information All Other Fees Annual Report Appendix A Audit Committee Report on Financial Statements Audit Fees Base Salaries Bonuses for Named Executive Officers for 2000 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 Financial Information Systems Design and Implementation Fees General General Information Melvin C. Payne Number of Proxy Statements and Annual Reports Organization and Committees of the Board Other Business Proposal Proposal No. 1 Reclassification of One Director Proposal No. 2 Election of Directors Proposal No. 3 Ratification of Selection of Independent Public Accountants Recommendation to Include Audited Financial Statements in Annual Report Record Date and Voting Securities Review and Discussions Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Security Ownership of Directors, Executive Officers and Certain Beneficial Owners Separation Agreements with Departed Officers Shareholder's Proposals Stock Option Grants for Named Executive Officers for 2000 Stock Option Grants in 2000 Stock Ownership of Certain Beneficial Owners Stuart W. Stedman Summary Compensation Table Thomas C. Livengood 2000 Option Exercises and Year-End Option Holdings
1	1st Page - Filing Submission
"	Carriage Services, Inc
2	Melvin C. Payne
3	Thomas C. Livengood
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
"	Proposal No. 1 Reclassification of One Director
"	General
11	Proposal
"	Proposal No. 2 Election of Directors
13	Organization and Committees of the Board
14	Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
15	Certain Transactions
"	Executive Compensation
"	Summary Compensation Table
16	Stock Option Grants in 2000
17	2000 Option Exercises and Year-End Option Holdings
18	Separation Agreements with Departed Officers
19	Compensation of Directors
"	Employment Agreements
20	Compensation Committee Report on Executive Compensation
21	Base Salaries
"	Bonuses for Named Executive Officers for 2000
22	Stock Option Grants for Named Executive Officers for 2000
23	Compensation Policies for the Chief Executive Officer
24	Comparative Stockholder Return
25	Compensation Committee Interlocks and Insider Participation
"	Audit Committee Report on Financial Statements
"	Review and Discussions
"	Audit Fees
"	Financial Information Systems Design and Implementation Fees
"	All Other Fees
26	Recommendation to Include Audited Financial Statements in Annual Report
"	Stuart W. Stedman
"	Proposal No. 3 Ratification of Selection of Independent Public Accountants
"	Other Business
"	Shareholder's Proposals
27	Additional Information
"	Annual Report
"	Number of Proxy Statements and Annual Reports
28	Appendix A

DEF 14A 1st Page of 32 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. )

[Download Table]

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12

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

-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)

Payment of Filing Fee (Check the appropriate box):

[Download Table]

/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 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 32 TOC 1st Previous Next ↓Bottom Just 2nd
CARRIAGE SERVICES LOGO

CARRIAGE SERVICES, INC.
1900 ST. JAMES PLACE, 4TH FLOOR
HOUSTON, TEXAS 77056

April 27, 2001

Dear Carriage Stockholder:

I am pleased to invite you to Carriage's Annual Meeting of Stockholders. The
meeting will be held at the Courtyard on St. James Place, 1885 St. James Place,
Houston, Texas 77056 on Tuesday, May 22, 2001, at 10:00 a.m., Houston time. If
you cannot be present at the Annual Meeting, I ask that you 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 be asked to reclassify a third director, 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 22. 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
PRESIDENT AND CHIEF EXECUTIVE OFFICER

DEF 14A 3rd Page of 32 TOC 1st Previous Next ↓Bottom Just 3rd
CARRIAGE SERVICES, INC.
1900 ST. JAMES PLACE, 4TH FLOOR
HOUSTON, TEXAS 77056

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 2001

Carriage Services, Inc. will hold its Annual Meeting of Stockholders at the
Courtyard on St. James Place, 1885 St. James Place, Houston, Texas, 77056, on
Tuesday, May 22, 2001, at 10:00 a.m., Houston time.

We are holding this meeting:

- To reclassify one Class III director as a Class I director to serve for a
two-year term expiring at the annual meeting of stockholders in 2003 and
until his successor is elected and qualifies.

- To elect two Class II directors, each to serve for a three-year term
expiring at the annual meeting of stockholders in 2004 and until their
respective successors are elected and qualified.

- To ratify the selection of Arthur Andersen LLP as the independent public
accountants of Carriage for 2001.

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

Your Board of Directors has selected April 12, 2001, 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,
1900 St. James Place, 4th Floor, Houston, Texas for ten days before the meeting.

You are cordially invited 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 2000 Annual Report to
Stockholders are being distributed on or about April 27, 2001.

By Order of the Board of Directors

/s/ Thomas C. Livengood

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

Houston, Texas
April 27, 2001

DEF 14A 4th Page of 32 TOC 1st Previous Next ↓Bottom Just 4th
TABLE OF CONTENTS

[Download Table]

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

PROPOSAL NO. 1 RECLASSIFICATION OF ONE DIRECTOR............. 6
General................................................... 6
Proposal.................................................. 7

PROPOSAL NO. 2 ELECTION OF DIRECTORS........................ 7
Organization and Committees of the Board.................. 9

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 10

CERTAIN TRANSACTIONS........................................ 11

EXECUTIVE COMPENSATION...................................... 11
Summary Compensation Table................................ 11
Stock Option Grants in 2000............................... 12
2000 Option Exercises and Year-End Option Holdings........ 13
Separation Agreements with Departed Officers.............. 13
Compensation of Directors................................. 14
Employment Agreements..................................... 15

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION..... 16
Base Salaries............................................. 17
Bonuses for Named Executive Officers for 2000............. 17
Stock Option Grants for Named Executive Officers for
2000...................................................... 18
Compensation Policies for the Chief Executive Officer..... 18

COMPARATIVE STOCKHOLDER RETURN.............................. 20

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 21

AUDIT COMMITTEE REPORT ON FINANCIAL STATEMENTS.............. 21
Review and Discussions.................................... 21
Audit Fees................................................ 21
Financial Information Systems Design and Implementation
Fees...................................................... 21
All Other Fees............................................ 21
Recommendation to Include Audited Financial Statements in
Annual Report............................................. 22

PROPOSAL NO. 3 RATIFICATION OF SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS........................................ 22

OTHER BUSINESS.............................................. 22

SHAREHOLDER'S PROPOSALS..................................... 22

ADDITIONAL INFORMATION...................................... 23
Annual Report............................................. 23
Number of Proxy Statements and Annual Reports............. 23

APPENDIX A.................................................. A-1

DEF 14A 5th Page of 32 TOC 1st Previous Next ↓Bottom Just 5th
GENERAL INFORMATION

[Download Table]

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 2001 Annual
Meeting of Stockholders. Certain directors, officers and
employees of Carriage and American Stock Transfer & Trust
Company, a proxy solicitor ("AST") 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
$950 monthly fee paid to 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 reclassification of Mark F. Wilson from a Class III
director to a Class I director.

(2) The election of Greg M. Brudnicki and Vincent D. Foster
to the Board of Directors as Class II directors.

(3) The approval of the appointment of Arthur Andersen LLP
as our independent auditors for 2001.

Q: WHY ARE WE VOTING TO RECLASSIFY MR. WILSON?

A: Carriage has three classes of directors, each of which has
historically had an equal number of directors. During 2000,
one director's position was eliminated at that year's annual
meeting of stockholders and two other directors in different
classes resigned, leaving an unequal number of directors in
each class. Carriage is required by New York Stock Exchange
rules and in its certificate of incorporation to maintain an
equal number of directors in all classes to the extent
practicable.

Q: WHO CAN VOTE?

A: Stockholders as of the close of business on April 12, 2001,
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.

DEF 14A 6th Page of 32 TOC 1st Previous Next ↓Bottom Just 6th
[Download Table]

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
identify will be kept confidential unless you ask that your
name be disclosed.

Q: HOW MANY SHARES CAN VOTE?

A: As of the Record Date, April 12, 2001, Carriage had
outstanding 14,795,551 shares of Class A Common Stock,
1,792,720 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 .0167 of a vote. In summary, there
were a total of 32,742,452 eligible votes as of the Record
Date.

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

A: Because the individual directors are elected by a plurality
of the votes cast at the meeting, a withheld vote will not
have an effect on the outcome of the election of an
individual director.

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 2002?

A: To be considered for inclusion in the proxy statement for
Carriage's 2002 annual meeting, a stockholder proposal must
be received at Carriage's offices no later than December 1,
2001. A shareholder proposal submitted outside the processes
of Rule 14a-8 of the SEC, if received by Carriage after
February 15, 2002, will be considered untimely for
presentation at Carriage's 2002 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 2002,
the deadline will be February 21, 2002, based upon this
year's meeting occurring on May 22. 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 32 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 April 12, 2001, the record date for
the Meeting, are entitled to notice of and to vote at the Meeting. On that date,
Carriage had outstanding (i) 14,795,551 shares of Class A Common Stock, each of
which is entitled to one vote, (ii) 1,792,720 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 .0167 of a vote. The
voting power of each class or series, as of April 12, 2001, is summarized below:

[Enlarge/Download Table]

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

Class A Common Stock.............. 14,795,551 14,795,551 45.2%
Class B Common Stock.............. 1,792,720 17,927,200 54.8%
Series D Preferred Stock.......... 1,182,500 19,701 *
---------- -----
TOTAL......................... 32,742,452 100.0%
========== =====

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

* 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 reclassification of the
Class III director to a Class I director will require approval by holders of a
majority of the votes cast at the Meeting. The nominees for the Class II
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. Because 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, by signing and delivering to the Secretary
a Proxy bearing a later date, or by voting in person at the Meeting after giving
notice to the Chairman of the Meeting of the stockholder's intention to vote in
person not withstanding the fact that the stockholder previously delivered a
Proxy.

DEF 14A 8th Page of 32 TOC 1st Previous Next ↓Bottom Just 8th
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of April 12, 2001, the ownership of the
Class A and B Common Stock and the percent of voting control (which includes
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 (except for
Messrs. Duffey and Allen, who resigned in December 2000), and (iv) all current
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
-------------------- PERCENT OF
CLASS A CLASS B CLASS A AND B PERCENT OF
COMMON COMMON COMMON VOTING
BENEFICIAL OWNER STOCK(1) STOCK(2) STOCK CONTROL(3)
---------------- --------- -------- ------------- ----------

Melvin C. Payne(4)................................ 369,839 529,769 5.4% 16.9%
Greg M. Brudnicki................................. 254,451 0 1.5% *
Vincent D. Foster(5).............................. 21,250 0 * *
Stuart W. Stedman(6).............................. 215,988 145,223 2.2% 5.1%
Ronald A Erickson(7).............................. 8,400 17,606 * *
Mark F. Wilson(8)................................. 530,265 0 3.2% 1.5%
Thomas C. Livengood............................... 147,018 0 * *
Jay D. Dodds...................................... 85,874 0 * *
All directors and executive
officers as a group (8 persons)................. 1,633,085 692,598 13.8% 25.2%

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

* Indicates less than one percent.

(1) The ownership of shares of Class A Common Stock shown in the table includes
shares which may be acquired within 60 days upon exercise of outstanding
stock options granted under our stock option plans by each of the persons
and groups, as follows: Mr. Payne--150,000 shares; Mr. Brudnicki--25,000
shares; Mr. Foster--1,250 shares; Mr. Wilson--25,000 shares;
Mr. Livengood--75,000 shares; Mr. Dodds--47,162 shares; and directors and
executive officers as a group--323,412 shares.

(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 columns 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 0.0167 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.

DEF 14A 9th Page of 32 TOC 1st Previous Next ↓Bottom Just 9th
(5) All shares are held by Main Street Equity Ventures II, L.P., of which
Mr. Foster is a Managing Director.

(6) Mr. Stedman's holdings include:

* 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;

* 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;

* 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;

* 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;

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

* 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;

* 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;

* 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;

* 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;

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

* 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 a trustee; and

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

(7) Mr. Erickson's holdings include:

* 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 a trustee;

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

(8) Mr. Wilson holdings includes 393,079 shares of Class A Common Stock held by
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.

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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of April 12, 2001, 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 A CLASS B PERCENT OF CLASS PERCENT OF
COMMON COMMON A AND B VOTING
BENEFICIAL OWNER STOCK STOCK COMMON STOCK CONTROL
---------------- --------- -------- ---------------- ----------

Capital Group International, Inc.(1) ........... 2,165,700 0 12.8% 6.6%
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Credit Suisse First Boston(2) .................. 3,146,700 0 18.5% 9.6%
11 Madison Avenue
New York, NY 10010
Dimensional Fund Advisors, Inc.(3) ............. 964,500 0 5.7% 2.9%
1299 Ocean Ave., 11th. Floor
Santa Monica, CA 90401
C. Byron Snyder(4).............................. 1,396,311 0 8.2% 4.3%
--------- --- ---- ----
Sub-Total....................................... 7,673,211 0 46.4% 23.4%

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

(1) Based solely on schedule 13G filed with the SEC on February 9, 2001.

(2) Based solely on schedule 13G filed with the SEC on January 11, 2001.

(3) Based solely on schedule 13G filed with the SEC on February 2, 2001.

(4) Based on Form 5 filed with the SEC on February 12, 2001.

PROPOSAL NO. 1
RECLASSIFICATION OF ONE DIRECTOR

GENERAL

Carriage's Board of Directors currently consists of six members after the
resignation of two Board members in December 2000, C. Byron Snyder and Mark W.
Duffey. Mr. Snyder and Mr. Duffey indicated separately to the Board that each
was resigning for personal reasons and not because of any dispute with the Board
or Carriage. Carriage's Certificate of Incorporation gives authority to the
Board to reduce or increase the number of Board members at any time as long as
such reduction does not have the effect of eliminating the term of a Board
member. 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 II directors expires at the 2001 Annual
Meeting. You will asked in Proposal No. 2 to vote on the nominees for Class II
directors. The term of the Class I directors expires at the annual meeting of
stockholders in 2003, and the term of the Class III directors expires at the
annual meeting of stockholders in 2002. The current Board consists of one
Class I director, two Class II directors, and three Class III directors.

DEF 14A 11th Page of 32 TOC 1st Previous Next ↓Bottom Just 11th
PROPOSAL

We recommend that the stockholders approve a reclassification of one of the
Class III directors to become a Class I director to create a balanced Board
where each class of directors has an equal number of directors. We recommend
that Mark F. Wilson, currently a Class III director, be reclassified as a
Class I director. Mr. Wilson's current term as a director is set to expire at
the 2002 Annual Meeting of Carriage's stockholders. Therefore, the effect of
approving this Proposal No. 1 will be to extend Mr. Wilson's term as a director
of Carriage by one year. The Board believes that the reclassification of
Mr. Wilson is in the best interest of Carriage.

WE RECOMMEND THAT YOU VOTE "FOR" PROPOSAL NO. 1 TO RECLASSIFY MR. WILSON AS
A CLASS I DIRECTOR. THE INDIVIDUALS NAMED AS PROXIES WILL VOTE THE ENCLOSED
PROXY "FOR" PROPOSAL NO. 1 UNLESS YOU DIRECT THEM TO VOTE AGAINST THE PROPOSAL
OR TO ABSTAIN.

PROPOSAL NO. 2
ELECTION OF DIRECTORS

As mentioned above, Carriage currently has six directors on its Board that
each serve staggered three-year terms. At the Meeting, you and the other
stockholders will elect two individuals to serve as Class II directors for a new
three-year term expiring at the 2004 annual meeting and until their successors
are duly elected and qualified. Greg M. Brudnicki and Vincent D. Foster, the two
Class II directors whose terms are expiring at the Meeting, have been nominated
by the Board of Directors for re-election at the Meeting to serve for a new
three-year term. Proxies may be voted for two directors. Biography descriptions
for Mr. Brudnicki and Mr. Foster are set forth below.

WE RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF EACH NOMINEE LISTED IN
PROPOSAL NO. 2 AS A CLASS II 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 II directors and our other current
directors (after reclassifying Mr. Wilson in accordance with Proposal No. 1) and
executive officers.

[Download Table]

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

NOMINEES FOR CLASS II DIRECTORS
(TERM EXPIRING AT 2004 ANNUAL MEETING)
Greg M. Brudnicki 45 Senior Vice President of Cemetery
Operations and Director
Vincent D. Foster(2)(3)(4) 44 Director

CONTINUING CLASS III DIRECTORS
(TERM EXPIRING AT 2002 ANNUAL MEETING)
Stuart W. Stedman(2)(3)(4) 43 Director
Ronald A. Erickson(3)(4) 64 Director

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[Enlarge/Download Table]

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

CONTINUING CLASS I DIRECTORS
(TERM EXPIRING AT 2003 ANNUAL MEETING)
Melvin C. Payne(1) 58 Chairman of the Board, Chief Executive
Officer, President and Director
Mark F. Wilson(5) 54 Senior Vice President of Cemetery
Operations and Director

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Thomas C. Livengood 45 Executive Vice President, Chief Financial
Officer and Secretary
Jay D. Dodds 40 Senior Vice President of Funeral
Operations

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

(1) Member of Executive Committee

(2) Member of Compensation Committee

(3) Member of Audit Committee

(4) Member of Nominating Committee

(5) Assumes approval of Mr. Wilson's reclassification as a Class I Director. See
Proposal No. 1.

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)

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 has served as Senior Managing Director of Main Street Equity Ventures
(and its predecessor firm), a venture capital firm, since 1997. From 1988
through 1997, Mr. Foster was a partner of Andersen Worldwide and Arthur Andersen
LLP ("Arthur Andersen"). Mr. Foster was the Director of the Corporate Finance
and Mergers and Acquisitions practice of Arthur Andersen for the southwestern
U.S., specializing in providing merger and acquisition and corporate finance
advisory services to clients. Mr. Foster is also a director of U.S. Concrete,
Inc., Quanta Services, Inc., Fabrication Technologies Corp., and National Alarm
Technologies. Mr. Foster holds a J.D. degree and is a Certified Public
Accountant.

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

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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.

MELVIN C. PAYNE, a management founder 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 assumed the additional duties as President upon
Mr. Duffey's resignation in December 2000. Mr. Payne serves on the Board of
Directors of Sovereign Business Forms, Inc., a private company in the business
forms manufacturing industry.

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.

JAY D. DODDS has been the Senior Vice President of Funeral Operations for
Carriage since October 2000. Mr. Dodds joined Carriage in 1994 as an operations
Vice President. He has over 19 years of professional funeral home and cemetery
experience. Prior to joining Carriage, he was affiliated with Stewart
Enterprises in their Southwest region operating funeral homes and cemeteries for
13 years, most recently serving as Senior Vice President. Mr. Dodds has served
on the education committee of the Texas Funeral Directors Association, and is a
member of the National Funeral Directors Association.

ORGANIZATION AND COMMITTEES OF THE BOARD

During 2000, Carriage's Board met seven times and acted by unanimous written
consent six times. Each of the directors attended all of the meetings of the
Board. The functions of the Executive, Audit, Compensation and Nominating
Committees of the Board, and the number of meetings held during 2000, are
described below.

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
did not meet in 2000 and did not take any action by unanimous written consent.
For most of 2000, Melvin C. Payne, Mark W. Duffey, and C. Byron Snyder were the
members of the Executive Committee. On December 19, 2000, Mr. Snyder resigned
from the Board and the Executive Committee, which was reduced by the Board to
two members. On December 31, 2000, Mr. Duffey resigned from the Board and the
Executive Committee, which was then reduced by the Board to one member. At the
same time, the Board suspended all actions of the Executive Committee until
additional members of the Executive Committee are appointed by the Board.

DEF 14A 14th Page of 32 TOC 1st Previous Next ↓Bottom Just 14th
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. The Compensation Committee held one
meeting and acted by unanimous consent twice. During 2000, C. Byron Snyder and
Vincent D. Foster were the members of the Compensation Committee, and each
member attended the meeting and executed the written consents. Mr. Foster
currently is Chairman of the Committee. As discussed above, on December 19,
2000, Mr. Snyder resigned from the Board and the Compensation Committee, and
Stuart W. Stedman was appointed by the Board to take his place. See the report
of the Compensation Committee on page 16 of this Proxy Statement.

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 accounting policies and internal accounting controls of
Carriage. The members of the Audit Committee are Stuart W. Stedman, Ronald A.
Erickson and Vincent D. Foster. Mr. Foster is currently Chairman of the
Committee. The Audit Committee met six times during 2000, and each member of the
Audit Committee was present at the meetings. See the report of the Audit
Committee on page 21 of this Proxy Statement.

Carriage's Board has adopted a written charter, which is attached to this
Proxy Statement as Appendix A, to be the governing instrument for the Audit
Committee. The New York Stock Exchange, upon which our Class A Common Stock is
traded, requires that each of its listed companies maintain an independent audit
committee. None of the members of our Audit Committee has a relationship with
Carriage that may interfere with the exercise of his independence from
management or Carriage. No member of our Audit Committee is or has been in the
last three years an employee of Carriage or in a business relationship with
Carriage. Also, no immediate family member related to a member of our Audit
Committee is an executive officer of Carriage or any of its affiliates.

In addition to the independence standard, the New York Stock Exchange
requires that each member of the Audit Committee be financially literate and at
least one member must have accounting or related financial management expertise.
Each member of our Audit Committee is financially literate, and Mr. Foster is a
certified public accountant with over 20 years of public accounting experience.
Currently, Mr. Foster is a managing director of a merchant banking firm for
which he reviews and analyzes financial statements as part of his daily
functions.

The Nominating Committee reviews the structure of the full Board and makes
recommendations regarding the size of the Board and the number and
classification of directors. The Nominating Committee also conducts a search for
suitable and qualified candidates to serve as directors when the terms of office
are up for election at each year's annual meeting of stockholders, and submits
the names of candidates for such positions for consideration by the Board. The
Nominating Committee was constituted in December 2000 and includes Stuart W.
Stedman, Chairman, Vincent D. Foster and Ronald A. Erickson. The Nominating
Committee did not meet in 2000, but did act by unanimous written consent in
February 2001 to submit the names of Messrs. Brudnicki and Foster for election
as Class II Directors.

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.

DEF 14A 15th Page of 32 TOC 1st Previous Next ↓Bottom Just 15th
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 2000,
except the following: Vince Foster and Jay Dodds filed respective Forms 3 late;
Mark Wilson filed a Form 4 late; and Robert Larrabee, Byron Snyder, Barry
Fingerhut, and Russell Allen filed respective Forms 5 late.

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,
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. In December 2000, Carriage released Mr. Wilson from his obligations under
that agreement, although we remain obligated to continue to make the payments
thereunder. In the January 1997 transaction, we entered into an employment
contract with Mr. Wilson, which was superseded by a new five-year employment
agreement we signed on January 1, 2001 incident to Mr. Wilson assuming his
corporate-level duties as Senior Vice President of Cemetery Operations, at a
base salary of $150,000 per year.

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, Mr. Brudnicki and one of our subsidiaries entered into an
employment agreement, which was superseded by a new five-year employment
agreement we signed on January 1, 2001 incident to Mr. Brudnicki becoming Senior
Vice President of Cemetery Operations. His annual base salary is $150,000.

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 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
March 2001, we completed the last payment for one of the locations, and
Mr. Brudnicki's share was approximately $48,000.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE.

The following table sets forth information regarding the compensation for
the years ended December 31, 2000, 1999 and 1998, 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 2000 exceeded $100,000
(collectively, the "Named Executive Officers"). Additionally, the following
table sets forth two former officers who departed during 2000 and whose total
annual salary and bonus during 2000 would have made them eligible for inclusion
on the summary. The two departed officers are Mark W. Duffey, the former
President of Carriage, who resigned from office on December 31, 2000,

DEF 14A 16th Page of 32 TOC 1st Previous Next ↓Bottom Just 16th
and Russell W. Allen, the former Executive Vice President of Operations of
Carriage, who resigned on November 3, 2000.

[Enlarge/Download Table]

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

Melvin C. Payne ................... 2000 $364,615 $ 75,000 $112,500(8) 300,000(6) $ 2,574
Chairman of the Board, Chief 1999 $271,154 $1,800,000(3) 150,000(4) $ 2,464
Executive Officer and President 1998 $233,654 $ -- 32,000(5) $ 1,038

Thomas C. Livengood ............... 2000 $203,442 $ 41,000 $ 61,500(9) 150,000(6) $ 2,543
Executive Vice President, 1999 $188,847 $ 200,000 80,000(4) $ 2,361
CFO and Secretary 1998 $181,737 $ -- 21,000(5) $ 2,272

Jay D. Dodds ...................... 2000 $155,769 $ 20,000 $ 30,000(10) 76,212(7) $ 1,944
Senior Vice President-- 1999 $129,231 $ 80,000 20,000(5) $ 7,691
Funeral Operations 1998 $104,615 $ -- $ 7,293

Gregory M. Brudnicki .............. 2000 $100,201 $ 25,454 $ 21,000(11) 50,000(6) $ 1,313
Senior Vice President-- 1999 $ 78,068 $ 36,183 6,000(4) $ 1,428
Cemetery Operations 1998 $ 80,800 $ 6,875 7,000(12) $ 748

Mark F. Wilson .................... 2000 $150,000 $ 164,000(13) $ 21,000(11) 50,000(6) $ 1,875
Senior Vice President-- 1999 $150,000 $ -- 6,000(4) $ 1,786
Cemetery Operations 1998 $155,769 $ -- 7,500(12) $ 1,442

DEPARTED OFFICERS

Mark W. Duffey .................... 2000 $225,000 $ -- 50,000(6) $ --
Former President 1999 $221,923 $ 200,000 100,000(4) $ 1,368
1998 $192,115 $ -- 26,000(5) $ 2,401

Russell W. Allen .................. 2000 $180,000 $ -- -- $ 1,350
Former Executive Vice 1999 $178,846 $ 80,000 40,000(4)
President of Operations 1998 $169,038 $ -- 17,000(5)

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

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

(3) Of this amount, $725,00 was applied in November 1999 against a note due
from Mr. Payne, $60 was applied in March 2000 against a note due from
Mr. Payne and $475,000 was paid in March 2001.

(4) All of these options were granted in March 1999 to provide incentives to
management; but later, on September 30, 1999, all of the options were
voluntarily cancelled.

(5) All of these options were granted in March 1999 for 1998 performance; but
on September 30, 1999, all of the options were voluntarily cancelled.

(6) All of these options were granted in December 2000.

(7) 50,000 shares of the options were granted in December 2000; and 26,212
shares were granted in June 2000.

(8) 94,737 shares of Class A Common Stock @ 1.1875 per share on 12/22/2000.

(9) 51,789 shares of Class A Common Stock @ 1.1875 per share on 12/22/2000.

(10) 25,263 shares of Class A Common Stock @ 1.1875 per share on 12/22/2000.

(11) 17,684 shares of Class A Common Stock @ 1.1875 per share on 12/22/2000.

(12) Included 6,000 shares of options were granted for his service as a
Director. All of those options were subsequently cancelled on
September 30, 1999.

(13) Includes a $150,000 finder's fee for an acquisition we completed in 1999.

STOCK OPTION GRANTS IN 2000

We have four stock option plans:

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

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

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

- 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,
2000, to the Named Executive Officers:

[Enlarge/Download Table]

POTENTIAL
OPTION GRANTS IN LAST YEAR REALIZABLE VALUE
---------------------------------------------------- AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
---------------------------------------------------- RATES OF STOCK
NUMBER OF % OF TOTAL PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
GRANTED 2000 ($/SH) DATE 5% 10%
---------- ------------ ----------- ---------- -------- --------

Melvin C. Payne.............................. 300,000 18.5% 1.5625 12/22/10 580,294 924,021
Thomas C. Livengood.......................... 150,000 9.3% 1.5625 12/22/10 290,147 462,010
Jay D. Dodds................................. 50,000 3.1% 1.1875 12/22/10 96,716 154,003
Jay D. Dodds................................. 26,212 1.6% 2.8750 06/09/10 122,753 195,464
Gregory M. Brudnicki......................... 50,000 3.1% 1.5625 12/22/10 96,716 154,003
Mark F. Wilson............................... 50,000 3.1% 1.5625 12/22/10 96,716 154,003
Mark W. Duffey............................... 50,000 3.1% 2.8750 12/29/10 122,167 194,531
Russell W. Allen............................. -- -- -- -- -0- -0-

2000 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 2000 or before.

The following table provides the values of the Named Executive Officers'
unexercised options at December 31, 2000.

[Enlarge/Download Table]

VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END AT YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------

Melvin C. Payne................................ 150,000 150,000 -- --
Thomas C. Livengood............................ 75,000 75,000 -- --
Jay D. Dodds................................... 42,474 33,738 $7,813 $7,813
Gregory M. Brudnicki........................... 25,000 25,000 -- --
Mark F. Wilson................................. 25,000 25,000 -- --
Mark W. Duffey................................. -- 50,000 -- --
Russell W. Allen............................... -- -- -- --

DEF 14A 18th Page of 32 TOC 1st Previous Next ↓Bottom Just 18th
SEPARATION AGREEMENTS WITH DEPARTED OFFICERS

On December 31, 2000, Mark W. Duffey, Carriage's former president, resigned
from Carriage's Board and from his positions as an officer and employee of
Carriage. In connection with this resignation, Carriage and Mr. Duffey entered
into a Separation Agreement and Release effective as of December 31, 2000, to
supersede and extinguish the rights Mr. Duffey held under his employment
agreement with Carriage dated November 8, 1999.

In connection with the Separation Agreement, Mr. Duffey also executed a
Consulting Agreement with Carriage effective as of January 1, 2001, and an
Exclusive Development Agreement with Carriage effective as of January 1, 2001,
for the purpose of evaluating and developing an e-commerce strategy.

Pursuant to the Separation Agreement, Mr. Duffey is to receive $783,500 in
severance installments payable through December 2003. If Mr. Duffey acquires and
sells any portion of his interest in the e-commerce business, Mr. Duffey's
severance installments will be reduced by the portion of the net proceeds that
he receives in the transaction. In addition, Carriage has agreed to assure that
Mr. Duffey will maintain a level of compensation equal to $150,000 per year from
January 1, 2001 through December 31, 2003, so that if Mr. Duffey's earned income
during any of those years (excluding the consulting fees paid by Carriage as
described below) falls below that level, Carriage will make up the difference.
Further, Carriage has granted Mr. Duffey an option to purchase 50,000 shares of
Carriage's Class A Common Stock at an exercise price of $2 7/8 per share over a
ten-year period. This option will vest over the first four years at a rate of
25% per year.

Because of Mr. Duffey's experience and knowledge of Carriage's business,
Carriage has entered into a Consulting Agreement pursuant to which Mr. Duffey
will provide consulting services to help evaluate and develop an e-commerce
strategy and as otherwise mutually identified by Carriage and Mr. Duffey.
Carriage will compensate Mr. Duffey at a rate of $1,000 per month until
June 2001 and at a rate of $250 per month until December 2004. Under this
agreement, Mr. Duffey has agreed that he will not directly or indirectly compete
with Carriage through December 2004.

Carriage entered into the Exclusive Development Agreement with Mr. Duffey to
provide for the continued evaluation and development of an e-commerce strategy.
Mr. Duffey has been granted the exclusive right until December 31, 2001, to
raise capital for Carriage to pursue an e-commerce strategy, and if the capital
is raised, both Carriage and Mr. Duffey will retain a percentage ownership in
the entity along with any new investors. If Carriage or any new entity
established to develop the e-commerce business receives a cash infusion equal to
at least $10,000,000, Mr. Duffey will receive an additional option to purchase
up to 50,000 fully vested shares of Carriage's Class A Common Stock with an
exercise price equal to the closing price of the Class A Common Stock on the
date of the grant.

In November 2000, Russell W. Allen, Carriage's former vice president of
operations, resigned from his position as an executive officer. In connection
with this resignation, Carriage and Mr. Allen entered into a Separation
Agreement and Release effective as of December 31, 2000, to supersede and
extinguish the rights Mr. Allen held under his employment agreement with
Carriage dated November 8, 1999. Pursuant to the Separation Agreement, Carriage
paid to Mr. Allen $60,000 as severance for his employment

Mr. Allen also executed a Stock Purchase Agreement with Carriage dated
December 18, 2000, for the purchase by Carriage of certain shares of Carriage's
Class A Common Stock held by Mr. Allen. Pursuant to the Stock Purchase
Agreement, Carriage purchased from Mr. Allen 46,392 shares of Carriage's
Class A Common Stock at a price equal to $1.50 per share. The shares previously
were pledged to Carriage to secure a loan to Mr. Allen dated March 31, 2000, in
the original principal amount of $1,068,417. Therefore, Mr. Allen's loan
obligation owing to Carriage was reduced by

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$69,588. Subsequently, in February 2001, Carriage agreed to terminate the
balance of his loan owing to Carriage, and to hold him harmless for any
unanticipated taxes related thereto.

COMPENSATION OF DIRECTORS

Prior to 2000, it was our 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.
The Directors' Plan had provided that eligible directors received automatic
grants of operations upon becoming a director and thereafter at each annual
meeting of stockholders. Various eligible directors had accumulated options
since we went public in August 1996, until October 1999 when all of these
options were voluntarily cancelled. Mr. Foster received an automatic grant for
15,000 shares when he became a director the following month.

We changed this philosophy in two significant respects in 2000. First, the
Board adopted and the stockholders at last year's annual meeting approved an
amendment to the Directors' Plan which removed the automatic grant features and
instead conferred upon the full Board the discretion as to when to grant options
and on what terms they may be granted. With this amendment, each grant must be
approved 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, 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 an aggregate of 350,000 shares of Class A Common Stock reserved
for issuance under the Directors' Plan. In December 2000, Carriage granted to
each of Messrs. Snyder, Stedman, Erickson and Foster an option to purchase up to
50,000 shares of our Class A Common Stock at an exercise price of $1.5625 per
share. At present, Messrs. Stedman, Erickson and Foster remain as eligible
directors for possible future grants under the Directors Plan.

Second, we also began paying a retainer to our outside directors. Under our
new policy adopted last year, each outside director receives an annual retainer
of $20,000, payable quarterly, 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). In 2000, payments of $19,000
were made to each of Messrs. Snyder, Erickson, Stedman and Foster. At present,
directors 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 and Thomas C. Livengood. The employment agreement with
Mr. Payne has 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 agreement with Mr. Livengood is for an initial term
of approximately five years. Pursuant to these agreements, Messrs. Payne and
Livengood are entitled to receive salaries of not less than $275,000 and
$190,000, 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

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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.

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 as of January 1, 2001, Carriage entered into separate employment
agreements with Mark F. Wilson and Greg M. Brudnicki for a term ending on
December 31, 2003. Pursuant to the employment agreements, Messrs. Wilson and
Brudnicki will hold the office and perform the duties of Senior Vice President
of Cemetery Operations with Mr. Wilson being responsible for the Carriage's
cemetery operations in the western region of the United States and
Mr. Brudnicki being responsible for Carriage's cemetery operations in the
eastern region of the United States. The employment agreements provide for
annual salaries equal to $150,000 and for benefits including, but not limited
to, eligibility for a year-end bonus based on performance, eligibility for stock
option grants, and other benefits generally available to employees.

The employment agreements terminate with no further obligation of Carriage
for additional payments upon the death or disability of the employee or his
termination from employment for cause. If the employee is terminated without
cause, Carriage is obligated to continue to pay employee his salary and provide
benefits for the remainder of the term of the employment agreement.
Messrs. Wilson and Brudnicki have agreed that for a two-year period following
the termination of the employment agreements, neither of them will compete with
Carriage or will induce any employees of Carriage to leave Carriage.

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:

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

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

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

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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, stock bonus grants, or any
combination thereof. 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. Toward the end of 1999 and throughout 2000, the Committee
determined that executive compensation should more accurately reflect this
change in focus. Base salaries and other components of compensation were
reviewed in early 2000 and appropriate adjustments made at that time. At the end
of the year, the Compensation Committee again examined executive compensation
and recommended a combination of bonuses consisting of stock and cash awards as
described below, with some stock option grants, but no increases in base salary
for the senior executive management, as further described below.

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 comparable revenue size. The Committee believes that maintaining a reasonable
base salary structure is necessary to attract and retain talented executives.

The year 2000 saw a significant transition in our senior management team.
Three of the five individuals who were identified as Named Executive Officers in
the 2000 Proxy Statement left Carriage in the fourth quarter to pursue
opportunities elsewhere. This was consistent with implementation of our
previously announced Project Fresh Start. Responsibility over our national
funeral preneed program has been transferred to our local managers and our
national cemetery marketing program has been significantly restructured, and so
the position of Senior Vice President of Marketing was eliminated. Jay Dodds,
who had previously held key positions in our operations group, has assumed
operational responsibility for funeral operations, and Mark Wilson and Greg
Brudnicki share operational responsibility for cemetery operations, and so we
now have no Executive Vice President of Operations. The office of President has
been consolidated with Chairman of the Board and Chief Executive Officer. This
philosophy toward a leaner management structure was carried forward throughout
the corporate organization as part of our Fresh Start initiatives.

In February 2000, the Committee recommended, and the Board approved,
increases in the base salaries for Messrs. Payne and Livengood. Although the
Committee recognizes the operational efficiencies and anticipated financial
savings associated with the leaner approach taken through Fresh Start, the
Committee has elected not to recommend any further base salary increase for
Mr. Payne, subject to further review as the year progresses. Mr. Livengood's
base salary was increased to its current level of $225,000 in December 2000.
Messrs. Dodds and Brudnicki received base salary increases to $180,000 and
$150,000 respectively upon their elevations to their present offices, and no
further increases are anticipated subject to review at the end of 2001.

BONUSES FOR NAMED EXECUTIVE OFFICERS FOR 2000

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
bonuses. This review process was historically conducted following Carriage's
release of its year-end financial information, with the intent of awarding
bonuses in February or March of that year. From 1997 through 1999, no cash
bonuses were awarded, the Committee feeling that stock option awards reflected
appropriate incentives for a growth-oriented organization.

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Beginning in 2000, the Committee adopted a more formal approach to
considering the circumstances under which cash bonuses may be awarded. Cash
bonuses were awarded in early 2000 as part of this review process to senior
officers for 1999 performance, and at the same time, the Committee established
for the senior management a set of specific goals to be achieved, with certain
parameters under which these goals will be evaluated in relation to the
appropriate range of cash bonuses for 2000 performance. By the fourth quarter
2000, Project Fresh Start significantly changed the landscape for the overall
compensation picture, with three of the prior year's named executive officers
departing. The Committee recommended, and the Board approved, bonuses to
Messrs. Payne and Livengood which were felt to be within the guidelines, and
bonuses to other members of the new senior management team as well. However, in
lieu of all-cash bonuses, the Committee felt it appropriate, in order to help
preserve Carriage's cash flow and to further incentivize management to enhance
stockholder value, to allocate these bonuses between cash (40%) and grants of
shares of our Class A Common Stock (60%). These shares were not registered under
the Securities Act of 1933, as amended, or any state securities laws, in
reliance upon certain exemptions from registration, meaning that the employees
who received these shares must hold them for the periods called for under
Rule 144 before selling into the open market (in addition to any other
applicable restrictions).

STOCK OPTION GRANTS FOR NAMED EXECUTIVE OFFICERS FOR 2000

Carriage has historically awarded stock options to its executive officers
under the 1996 Plan and to its key employees under the 1995 Stock Incentive
Plan. As part of the corporate office reorganization incident to Fresh Start, we
have begun broadening the range of corporate-level staff participating in the
1996 Plan. The purpose of all of these stock options, regardless of which Plan
they are issued under, 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. In 1996, the year Carriage went public, we issued to the
senior management team options covering a total of 530,000 shares, but
two-thirds of these vested based upon our stock price achieving $27.99 over 20
consecutive days. That nearly happened in January 1999, but with the steep
declines throughout the death care industry market, there was little prospect of
getting back to that level. Additional options had been issued and more were
issued in 1999, but in September of that year, the senior management team
voluntarily cancelled all outstanding options. Going into 2000, and indeed for
most of the year, no senior officer held any options.

In June 2000, management began a thorough evaluation of all field locations,
which in addition to helping to position Carriage for its Fresh Start
initiatives by stratifying properties and identifying strengths and weaknesses,
offered an opportunity to extend options out to field locations where option
grants were thought to provide incentives for superior performance. It was
thought premature at the time, however, to examine option grants for senior
management. By December, however, most of Fresh Start had been implemented, and
the Committee felt the time was right to evaluate whether and to what extend
options should be granted to the newly constituted senior management team.
Consequently, on December 22, 2000, the Committee authorized, and the Board
approved, the issuance of options under the 1996 Plan, as follows:

[Download Table]

NO. OF
NAME STOCK OPTIONS
---- -------------

Melvin C. Payne............................................. 300,000
Thomas C. Livengood......................................... 150,000
Jay D. Dodds................................................ 50,000
Mark F. Wilson.............................................. 50,000
Greg M. Brudnicki........................................... 50,000

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At the time the options were issued, the market price was $1 3/16 per share,
and that is the exercise price for Mr. Dodds. For the other four, however, the
exercise price was set at a premium above the then-market level, at $1 9/16 per
share. All of these options are 50% vested upon issuance, with the remaining
portions vesting 25% per year over two years.

COMPENSATION POLICIES FOR THE CHIEF EXECUTIVE OFFICER

Melvin C. Payne has served as our Chief Executive Officer since Carriage was
founded in 1991. He assumed the additional title of Chairman of the Board in
December 1996 when Mark Duffey became President. When Mr. Duffey left in
December of last year, Mr. Payne took on the additional responsibilities as
President.

From 1996 through 1999, the Committee's approach to Mr. Payne's compensation
was not highly structured. The general philosophy was to keep the salary
relatively low and provide incentives through options while Carriage progressed
through its growth phase. In early 2000, the Committee undertook a more
systematic approach to compensation, among other things engaging an outside firm
to examine the market for executive compensation at comparable companies. As
part of that process, Mr. Payne's base salary was determined to be significantly
below market, and so Mr. Payne's base salary was increased to its current level
of $375,000 per year. The Committee did not recommend an increase in
Mr. Payne's salary as part of the December 2000 review process, but it did
authorize a bonus to him, in recognition of his efforts through Fresh Start and
otherwise, totaling $187,500. Of this amount, 60% (or $112,500) was paid by the
issuance of shares of Carriage's Class A Common Stock based upon the then-market
price of $1 3/16 per share, and the balance of 40% was paid in cash (primarily
so that Mr. Payne would have cash to pay income taxes on the bonus).

From 1996 through 1999, Mr. Payne received several grants of options under
the 1996 Plan totaling a cumulative 452,000 shares. All of these options were
canceled on September 30, 1999, when the stock price was substantially below the
average exercise price of these options, and Mr. Payne remained without options
through most of 2000. In December 2000, the Committee authorized the grant of
options for 300,000 shares. Although the price for Carriage's stock had declined
by that point to $1 3/16 per share, the Committee (with Mr. Payne's concurrence)
elected to issue these options with a strike price at a premium to market, or
$1 9/16 per share.

As Chief Executive Officer, Mr. Payne bears primary responsibility for
Carriage's overall success. Project Fresh Start was conceived and supervised by
Mr. Payne and the team he assembled for that purpose, as a proactive approach to
the challenges which were foreseen to be coming for the death care industry in
general and Carriage in particular. A key component of Fresh Start was achieving
long-term liquidity and financial flexibility through appropriate modifications
to Carriage's credit agreements with its bank and insurance company lenders.
Under his leadership, these modifications were successfully completed in
November 2000. The Committee recognized these achievements and the additional
responsibilities assumed by Mr. Payne in December, but it also recognizes the
challenges which remain for Carriage. We intend to stay closely attuned to these
compensation issues as the results from Fresh Start initiatives begin to
manifest themselves throughout 2001.

Compensation Committee

Vincent D. Foster, Chairman
Stuart W. Stedman

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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, 2000, 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 the two other publicly traded companies in the death care industry
(Service Corporation International 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.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

Comparison of Stockholder return Among Carriage Services, Inc., the S&P 500
Index, and an Industry Peer Group

[Download Table]

CARRIAGE S&P 500 PEER

Services, Inc Index Group
08/09/96 $100 $100 $100
12/31/96 $136 $112 $100
12/31/97 $115 $146 $143
12/31/98 $172 $185 $149
12/31/99 $36 $221 $28
12/31/00 $9 $199 $8

[Enlarge/Download Table]

COMPARISON OF STOCKHOLDER RETURNS
---------------------------------------------------------------
08/09/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------

CARRIAGE SERVICES, INC............................. $100 $136 $115 $172 $ 36 $ 9

S&P 500 INDEX...................................... $100 $112 $146 $185 $221 $199

PEER GROUP......................................... $100 $100 $143 $149 $ 28 $ 8

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,
$44 at December 31, 1999, and $12 at December 31, 2000.

DEF 14A 25th Page of 32 TOC 1st Previous Next ↓Bottom Just 25th
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

At December 31, 2000, the members of the Compensation Committee were Vincent
D. Foster and Stuart W. Stedman. During 2000, C. Byron Snyder also served as a
member of Carriage's Compensation Committee until he resigned on December 19,
2000, at which time the Board appointed Mr. Stedman to take his place. No member
of the Compensation Committee was an officer of Carriage at any time during
2000.

During 2000, 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.

AUDIT COMMITTEE REPORT ON FINANCIAL STATEMENTS

As members of the audit committee of the Board of Directors, we are
responsible for helping to ensure the reliability of Carriage's financial
statements. In keeping with this goal, the Board of Directors has adopted a
written charter (Appendix A) for the audit committee to follow.

REVIEW AND DISCUSSIONS

The audit committee has reviewed and discussed Carriage's audited financial
statements with management. It has also discussed with the independent auditors
the matters required to be discussed by Statement on Auditing Standard Nos. 61
and 90. Additionally, the audit committee has received the written disclosures
and the letter from the independent accountants at Arthur Andersen LLP, as
required by Independent Standards Board Standard No. 1 (Independence Discussions
with Audit Committees) and has discussed with the independent accountants their
independence.

In an effort to maintain the accountant's independence, the audit committee
has considered whether Arthur Andersen LLP's rendering of non-audit services is
compatible with maintaining its independence. We have concluded that the
rendering of both types of services does not result in a conflict.

AUDIT FEES

The fees billed to Carriage by Arthur Andersen LLP for the audit of
Carriage's financial statements for the fiscal year ending December 31, 2000,
totaled $194,082. These fees included the fees related to the firm's testing of
the Fresh Start charges totaling $57,082, as well as the fees for the reviews of
Carriage's interim unaudited financial statements included in its periodic
reports filed with the Securities and Exchange Commission totaling $24,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

Arthur Andersen LLP did not perform any services for Carriage related to
financial information systems design and implementation during the year ending
December 31, 2000.

ALL OTHER FEES

The fees billed by Arthur Andersen LLP for all other fees for the year
ending December 31, 2000, totaled $407,057. Specifically, Carriage paid $51,382
for Federal and State income tax compliance and

DEF 14A 26th Page of 32 TOC 1st Previous Next ↓Bottom Just 26th
consulting fees, $132,833 for consulting fees related to a franchise tax
minimization project and $222,842 in fees related to the implementation of the
SEC's Staff Accounting Bulletin No. 101.

RECOMMENDATION TO INCLUDE AUDITED FINANCIAL STATEMENTS IN ANNUAL REPORT

Based on the audit committee's discussions with management and the
independent accountants, and its review of the representation of management and
the report of the independent accountants to the audit committee, the audit
committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 2000, with the Securities and Exchange
Commission.

Audit Committee

Vincent D. Foster, Chairman

Stuart W. Stedman

Ronald A. Erickson

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, 2001, 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 NO. 3 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.

SHAREHOLDER'S PROPOSALS

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, 2001, in order to be included in Carriage's
proxy material and form of proxy relating to that meeting.

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ADDITIONAL INFORMATION

ANNUAL REPORT

The Annual Report to Stockholders for the year ended December 31, 2000 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, 2000, 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., 1900 St. James
Place, 4th Floor, Houston, Texas 77056.

NUMBER OF PROXY STATEMENTS AND ANNUAL REPORTS

Only one copy of this Proxy Statement and the Annual Report accompanying
this Proxy Statement will be mailed to stockholders who have the same address
unless we receive a request that the stockholders with the same address are to
receive separate Proxy Statements and Annual Reports. These additional copies
will be supplied at no additional cost to the requesting stockholder.

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
April 27, 2001

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APPENDIX A
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

CHARTER

I. PURPOSE

The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Company to
the public; the Company's systems of internal controls regarding finance,
accounting and legal compliance that management and the Board have
established; and the Company's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee
should encourage continuous improvement of, and should foster adherence to,
the Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:

- Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.

- Review and appraise the audit efforts of the Company's independent
accountants.

- Provide an open avenue of communication among the independent accountants,
senior management, the accounting and financial reporting personnel of the
Company and the Board of Directors.

The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.

II. COMPOSITION

The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. Members of the Audit Committee shall be considered
independent if they have no relationship to the Company that may interfere
with the exercise of their independence from management and the Company. All
members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall
have accounting or related financial management expertise. Committee members
may enhance their familiarity with finance and accounting by participating
in educational programs conducted by the Company or an outside consultant.

The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors
shall be duly elected and qualified. Unless a Chair is elected by the full
Board, the members of the Committee may designate a Chair by majority vote
of the full Committee membership.

III. MEETINGS

The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with senior management, the
financial or accounting officers responsible for establishing and
maintaining internal controls, and the independent accountants in separate
executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed

A-1

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privately. In addition, the Committee or at least its Chair should meet with
the independent accountants and management quarterly to review the Company's
financials consistent with section IV.4.

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Audit Committee shall:

Documents/Reports Review

1. Review and update this Charter periodically, at least annually, as
conditions indicate.

2. Review the organization's annual financial statements and any reports or
other financial information submitted to the public, including any
certification, report, opinion, or review rendered by the independent
accountants.

3. Review the MATTERS TO BE COMMUNICATED TO THE AUDIT COMMITTEE issued by the
independent accountants which includes consideration of any material
weaknesses in internal accounting control.

4. Review with financial management and the independent accountants the 10-Q
prior to its filing or prior to the release of earnings. The Chair of the
Committee may represent the entire Committee for purposes of this review.

Independent Accountants

5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees
and other compensation to be paid to the independent accountants. On an
annual basis, the Committee should review and discuss with the accountants
all significant relationships the accountants have with the Company to
determine the accountants' independence. The Committee is responsible for
ensuring the audit firm submits a formal statement regarding relationships
and services which may impact independence and discussing any relevant
matters with the auditors.

6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.

7. Provide a venue whereby the independent accountants, out of the presence of
management, can contact members of the Committee about internal controls and
the fullness and accuracy of the organization's financial statements. The
outside auditor is ultimately accountable to the Board of Directors and the
Committee.

Financial Reporting Processes

8. Consider and review with the independent accountants the adequacy of the
Company's internal controls including computerized information systems and
security.

9. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.

10. Consider and approve, if appropriate, major changes to the Company's
accounting principles and practices as suggested by the independent
accountants, management, or the financial accounting department.

Process Improvement

11. Establish regular and separate systems of reporting to the Audit Committee
by each of management and the independent accountants regarding any
significant judgments made in

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management's preparation of the financial statements and the view of each as
to appropriateness of such judgments.

12. Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.

13. Review any significant disagreement among management and the independent
accountants or the accounting department in connection with the preparation
of the financial statements.

14. Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved by
the Audit Committee, have been implemented. (This review should be conducted
at an appropriate time subsequent to implementation of changes or
improvements, as decided by the Committee.)

Legal Compliance

15. Review, with the organization's counsel, legal compliance matters including
corporate securities trading policies.

16. Review, with the organization's counsel, any legal matter that could have a
significant impact on the organization's financial statements.

17. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.

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[Enlarge/Download Table]

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

CARRIAGE SERVICES, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 22, 2001

The undersigned, hereby revoking all prior proxies, hereby appoints Melvin C.
Payne and Thomas C. Livengood, and each of them, his true and lawful proxies, with
full and several power of substitution, to vote all the shares of Class A or B Common
Stock or Series D Preferred Stock of CARRIAGE SERVICES, INC. standing in the name of
the undersigned, at the Annual Meeting of Stockholders of CARRIAGE SERVICES, INC. to
be held on May 22, 2001 and at any adjournment(s) thereof, on all matters coming
before said meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS AS STATED ON
THE REVERSE SIDE OF THIS PROXY CARD AND, UNLESS A CONTRARY CHOICE IS SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF SUCH PROPOSALS.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE -----------
SEE REVERSE
SIDE
-----------

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

DEF 14A Last Page of 32 TOC 1st Previous Next ↓Bottom Just 32nd
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

ANNUAL MEETING OF STOCKHOLDERS
CARRIAGE SERVICES, INC.

MAY 22, 2001

PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED

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

A PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE

VOTE FOR VOTE
ALL NOMINEES LISTED WITHHELD FOR AGAINST ABSTAIN
2. ELECTION OF NOMINEES: GREG M. BRUDNICKI 1. PROPOSED TO RECLASSIFY
TWO CLASS II [ ] [ ] VINCENT D. FOSTER ONE CLASS III DIRECTOR [ ] [ ] [ ]
DIRECTORS FOR AS A CLASS I DIRECTOR
A THREE-YEAR TERM ENDING AT THE 2004 ANNUAL
MEETING OF STOCKHOLDERS. 3. PROPOSED TO RATIFY
ARTHUR ANDERSON LLP AS
VOTE FOR ALL NOMINEES LISTED, EXCEPT VOTE THE INDEPENDENT PUBLIC [ ] [ ] [ ]
WITHHELD FROM THE FOLLOWING NOMINEES (IF ANY): ACCOUNTANTS OF THE
COMPANY FOR 2001.
----------------------------------------------
4. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON ANY OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT(S) THEREOF.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY BY USING THE ENCLOSED ENVELOPE.

SIGNATURE: PRINT NAME DATED: , 2001
----------------------------------------------- ---------------------------------------- -------
NOTE: (PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. FOR JOINT ACCOUNTS, EACH JOINT OWNER SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC. SHOULD ALSO INDICATE WHEN SIGNING.)

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

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Dates Referenced Herein and Documents Incorporated by Reference

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

	12/31/03	18	20	10-K, 11-K
	3/31/02	15		10-Q
	2/21/02	6
	2/15/02	6
	12/31/01	8	26	10-K, 11-K
	12/1/01	6	26
For Period End:	5/22/01	2	32
Filed on:	4/27/01	2	27
	4/12/01	3	10
	3/31/01	15		10-Q
	2/12/01	10		SC 13G/A
	2/9/01	10
	2/2/01	10		SC 13G
	1/11/01	10		SC 13G
	1/1/01	15	20
	12/31/00	13	27	10-K, 11-K
	12/22/00	22		424B3
	12/19/00	13	25
	12/18/00	18		8-K
	11/3/00	16
	3/31/00	18		10-Q
	12/31/99	15	24	11-K
	11/8/99	18	19
	9/30/99	16	23	10-Q
	12/31/98	15	24	10-K405
	12/31/97	24		10-K, 8-K
	12/31/96	24		10-K
	8/9/96	24		424B1
	8/8/96	24		8-A12G/A, S-1/A
				List all Filings

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Filing Submission 0000912057-01-511033 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Carriage Services Inc – ‘DEF 14A’ for 5/22/01

On: Friday, 4/27/01, at 4:43pm ET · For: 5/22/01 · Accession #: 912057-1-511033 · File #: 1-11961

Previous ‘DEF 14A’: ‘DEF 14A’ on 3/30/00 for 5/17/00 · Next: ‘DEF 14A’ on 4/15/02 for 5/7/02 · Latest: ‘DEF 14A’ on 3/29/24 for 5/14/24

Definitive Proxy Solicitation Material — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

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