UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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ý Definitive Proxy Statement
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Carriage Services, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
April 9, 2014
Dear Stockholder:
I am pleased to invite you to the 2014 Annual Meeting of Stockholders of Carriage Services, Inc. (“Carriage”). The Annual Meeting will be held at the Lakes on Post Oak Conference Center, 3050 Post Oak Boulevard, 2nd Floor, Houston, Texas 77056, on Wednesday, May 21, 2014, at 9:00 a.m., Central Daylight Time. Whether or not you plan to attend the Annual Meeting, I ask that you participate by completing the enclosed proxy card and returning it at your earliest convenience.
At the Annual Meeting, you and our other stockholders will be asked to elect two Class III directors to Carriage’s Board of Directors, to hold an advisory vote to approve Carriage’s named executive officer compensation and to ratify the appointment of Carriage’s independent registered public accounting firm. You will also have the opportunity to hear what has happened in Carriage’s business during the past year and to ask questions. I encourage you to read the enclosed Notice of Annual Meeting and Proxy Statement, which contains information about our Board of Directors and its committees and our executive management team.
We hope you can join us on May 21st. Whether or not you can attend personally, it is important that your shares are represented at the Annual Meeting. Please mark your votes on the enclosed proxy card, sign and date the proxy card, and return it to us in the enclosed envelope. Your vote is important, so please return your proxy card promptly.
Sincerely,
MELVIN C. PAYNE
Chairman of the Board
and Chief Executive Officer





CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056
 
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 21, 201417, 2016
 
Carriage Services, Inc. (“Carriage”) will hold its Annual Meeting of Stockholders (“Annual Meeting”) at the Lakes on Post Oak Conference Center, 30503040 Post Oak Boulevard, 2nd Floor,Lobby Level, Houston, Texas 77056, on Wednesday,Tuesday, May 21, 2014,17, 2016, at 9:00 a.m., Central Daylight Time.
Carriage is holding the Annual Meeting to:
elect two Class IIIII directors to serve for a three-year termterms expiring at the annual meeting of stockholders in 20172019 and until thetheir successors are elected and qualified;
hold an advisory vote to approve Carriage’s named executive officer compensation;
ratify the appointment of Grant Thornton LLP as Carriage’s independent registered public accounting firm for the fiscal year ending December 31, 2014;2016; and
transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
Carriage’s Board of Directors has selected March 26, 201424, 2016 as the record date for determining stockholders entitled to vote at the Annual Meeting. A list of stockholders as of that date will be available for inspection by stockholders for any purpose germane to the meeting during normal business hours at Carriage’s corporate headquarters, which is located at 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, at least 10 days before the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are requested and encouraged to vote via the internet or complete, sign and date the accompanying proxy card and return it promptly in the enclosed envelope. If you attend the Annual 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.
By Order of the Board of Directors,
                                
L. William Heiligbrodt
Executive Vice President
Viki K. Blinderman

Co-Chief Financial Officer, Chief Accounting Officer and Secretary
Houston, Texas
April 9, 20145, 2016


 
YOUR VOTE IS IMPORTANT!
Your vote is important regardless of how many shares you own. Please vote via the internet or complete, sign and return the enclosed proxy card in the accompanying envelope as soon as possible even if you plan to attend the Annual Meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON WEDNESDAY,TUESDAY, MAY 21, 201417, 2016
The Notice of Annual Meeting of Stockholders, the Proxy Statement and the 20132015 Annual Report to Stockholders are available at www.carriageservices.com.




TABLE OF CONTENTS
 
 Page No.
  
 
PROXY STATEMENT
1
20142016 Annual Meeting Date and Location
1
About Our Annual Meeting
1
  
CORPORATE GOVERNANCE
5
General
5
Independence
5
Board Leadership Structure and Executive Sessions
5
Board’s Oversight of Risk
65
Director Nomination Process
6
Board’s Interaction with Stockholders
7
Annual Evaluations; Succession Planning
7
Business Conduct and Ethics
7
Organization and Committees of Our Board
87
Attendance at Annual Stockholder Meetings
108
Recent EventsBoard’s Interaction with Stockholders
119
Annual Evaluations
9
Corporate Governance Guidelines, Business Conduct and Ethics

9
  
DIRECTOR COMPENSATION
1110
General
1110
20132015 Director Compensation Table
1210
  
PROPOSAL NO. 1: ELECTION OF CLASS II DIRECTORS
13
PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE EXECUTIVE OFFICER COMPENSATION
15
PROPOSAL NO. 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
16
General
16
Audit and Other Fees
17
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
17
AUDIT COMMITTEE REPORT
18
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
19
Stock Ownership of Management
19
Stock Ownership of Certain Beneficial Owners
20
Section 16(a) Beneficial Ownership Reporting Compliance
20
EQUITY COMPENSATION PLAN INFORMATION
2111
  
EXECUTIVE MANAGEMENT
2113
  
COMPENSATION DISCUSSION AND ANALYSIS
2314
Executive Summary
Context for Compensation Decision-making within Carriage Services

2314
20132015 Performance Highlights
2315
AlignmentConsideration of Company PerformancePrevious Shareholder Advisory Vote
16
Compensation Philosophy and Practices
17
Elements of Compensation
18
Management’s Role in Determining Executive PayCompensation
19
Compensation Evaluation Process
19
Performance-Based Compensation
20
Base Salaries
21
Annual Cash Incentive Bonuses
21
Long-Term Equity-Based Incentives
22
2016 Compensation
24
Executive Compensation Practices
Severance Benefits
25
Compensation Program ObjectivesOther Benefits and Perquisites
25
Executive Compensation PhilosophyPolicies and Elements of CompensationPractices as they Relate to Our Risk Management
25
Best PracticesTax and Accounting Considerations
25
Executive Compensation Philosophy
25
Peer Group Companies and Benchmarking
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

26
Elements of the 2013 Compensation Program
COMPENSATION COMMITTEE REPORT
26
EXECUTIVE COMPENSATION
27
Summary Compensation Table
27
Grants of Plan-Based Awards in 2015
28
Employment Agreements
28
Long-Term Incentive Plan
28
Outstanding Equity Awards at Fiscal Year-End
29
Option Exercises and Stock Vested During 2015
30
Pension Benefits
30

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Base Salaries
27
Annual Cash Incentive Bonuses
27
Long-Term Equity-Based Incentives
29
Severance Benefits
30
Other Benefits and Perquisites
31
Management’s Role in Determining Executive Compensation
31
Consultant's Role in Determining Executive Compensation
32
Consideration of Previous Shareholder Advisory Vote
32
Executive Compensation Policies and Practices as they relate to our Risk Management
32
Tax and Accounting Considerations
33
COMPENSATION COMMITTEE REPORT
34
EXECUTIVE COMPENSATION
35
Summary Compensation Table
35
Grants of Plan-Based Awards in 2013
36
Employment Agreements
36
Long-Term Incentive Plan
36
Outstanding Equity Awards at Fiscal Year-End
37
Option Exercises and Stock Vested During 2013
38
Pension Benefits
39
Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
3930
Potential Payments Upon Termination or Change-in-Control
31
  
PROPOSAL NO. 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
4234
PROPOSAL NO. 3: RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP
35
General
35
Audit and Other Fees
35
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
35
AUDIT COMMITTEE REPORT
36
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
37
Stock Ownership of Management
37
Stock Ownership of Certain Beneficial Owners
38
Section 16(a) Beneficial Ownership Reporting Compliance
38
  
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
4339
Policies and Procedures for Review and Approval of Related Party Transactions
4339
Related Party Transactions
4339
  
OTHER BUSINESS
4339
  
STOCKHOLDER PROPOSALS FOR THE 20152017 ANNUAL MEETING
4339
  
ADDITIONAL INFORMATION
4540
Annual Report
4540
Householding
4540
  
 

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CARRIAGE SERVICES, INC.
3040 Post Oak Boulevard, Suite 300
Houston, Texas 77056

PROXY STATEMENT
 
This Proxy Statement (this “Proxy Statement”) is being furnished to you by the Board of Directors (our “Board”) of Carriage Services, Inc. (“Carriage Services,” “Carriage,” the “Company,” “we,” “us” or “our”) for use at our 20142016 Annual Meeting of Stockholders (our “Annual Meeting”).
20142016 Annual Meeting Date and Location
Our Annual Meeting will be held at the Lakes on Post Oak Conference Center, 30503040 Post Oak Boulevard, 2nd Floor,Lobby Level, Houston, Texas 77056, on Wednesday,Tuesday, May 21, 2014,17, 2016, at 9:00 a.m., Central Daylight Time.
About Our Annual Meeting
Why am I receiving these proxy materials?
Our Board is soliciting your proxy to vote at our Annual Meeting because you owned shares of our common stock (“Common Stock”) at the close of business on March 26, 2014,24, 2016, the record date for our Annual Meeting (the “Record Date”), and are therefore entitled to vote at our Annual Meeting.
This Proxy Statement, along with a proxy card, is being mailed to our stockholders on or about April 14, 2014.15, 2016. We have also made these materials available to you free of charge on the Internet. This Proxy Statement summarizes the information that you need to know in order to cast your vote at our Annual Meeting. As a stockholder, your vote is very important and our Board strongly encourages you to exercise your right to vote. You do not need to attend our Annual Meeting in person to vote your shares. Whether or not you plan to attend our Annual Meeting, we encourage you to vote your shares by voting via the internet or completing, signing, dating and returning the enclosed proxy card in the envelope provided. See “About Our Annual Meeting–Meeting – How do I vote my shares?” below.
What is the purpose of our Annual Meeting?
At our Annual Meeting, as a stockholder, you will be asked:
•to re-elect David J. DeCarloBarry K. Fingerhut and elect DonaldBryan D. Patteson, Jr.Leibman to our Board as Class IIIII directors;
•to approve, on an advisory basis, our named executive officer compensation;
to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014;2016; and
to transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
In addition, you will have the opportunity to hear what has happened in Carriage’s business during the past year and our executive officers will respond to appropriate questions.
Who is entitled to vote at the meeting?
Only our stockholders of record as of the close of business on the Record Date are entitled to receive notice of our Annual Meeting and to vote at our Annual Meeting. On March 26, 2014,24, 2016, we had 18,468,04916,601,880 shares of Common Stock issued and outstanding and entitled to vote at our Annual Meeting.
How many votes can I cast?
You are entitled to one vote for each share of Common Stock you owned on the Record Date on all matters presented at our Annual Meeting.
Is my vote important?
Your vote is important regardless of how many shares of Common Stock you own. Please take the time to vote. Please read the instructions below, choose the way to vote that is easiest and most convenient to you and cast your vote as soon as possible.

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What is the difference between a stockholder of record and a “street name” holder?
Most stockholders hold their shares through a bank, broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned in street name.
Stockholder of Record. If your shares are registered directly in your name with the American Stock Transfer & Trust Company, LLC, our transfer agent, you are considered with respect to those shares, to be the stockholder of record with respect to those shares, and you have the right to grant your voting proxy directly with the Company or to vote in person at our Annual Meeting.
Street Name Stockholder. If your shares are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name.”name” and your bank, broker or other nominee is the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares and are also invited to attend our Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at our Annual Meeting unless you obtain a legal proxy from the stockholder of record holder prior to attending our Annual Meeting giving you the right to vote the shares. In order to vote your shares, you will need to follow the directions your bank, broker or other nominee provides to you.
How do I vote my shares?
Stockholders of Record. Stockholders of record may vote their shares or submit a proxy to have their shares voted or vote their shares by one of the following methods:
lnternet. To vote via the internet, go to “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. Vote online until 11:59 PM EST the day before the meeting.
By Mail. To vote by proxy by mail, you should mark, sign, date and mail the enclosed proxy card in the prepaid envelope provided. The shares you own will be voted according to the instructions on the proxy card that you provide. If you return your proxy card but do not mark your voting preference, the individuals named as proxies will vote your shares FOR the election of each of the Class IIIII director nominees and FOR the other proposals described in this Proxy Statement.
In Person. If you attend our Annual Meeting, you may vote by delivering your completed proxy card in person or by completing a ballot, which will be available at our Annual Meeting. Attending our Annual Meeting without delivering your completed proxy card or completing a ballot will not count as a vote. Submitting a proxy prior to our Annual Meeting will not prevent you from attending our Annual Meeting and voting in person.
Street Name Stockholder. Street name stockholders may generally vote their shares or submit a proxy to have their shares voted or vote their shares by one of the following methods:
By Mail. You may indicate your vote by completing, signing and dating your voting instruction card or other information forwarded by your bank, broker or other nominee and returning it to such partythem in the manner specified in such materials.their instructions.
By Methods Listed on Voting Instruction Form. Please refer to yourthe voting instruction form or other information forwarded by your bank, broker or other nominee to determine whether you may submit a proxy by telephone or electronically on the Internet, following the instructions on the voting instruction form or other information they provided by the record holder.to you.
In Person with a Proxy from the Record Holder. You may vote in person at our Annual Meeting if you obtain a legal proxy from your bank, broker or other nominee. Please consult the voting instruction form or other information sent to you by the record holder to determine how to obtain a legal proxy in order to vote in person at our Annual Meeting.
Can I revoke my proxy?
Yes, if you are a stockholder of record, you can revoke your proxy at any time before it is exercisedvoted at the meeting by:
submitting written notice of revocation to our principal executive offices,home office, which areis located at 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, Attn: Corporate Secretary no later than May 20, 2014;16, 2016;
submitting a later dated proxy with new voting instructions by mail;mail that is received by May 16, 2016; or
attending our Annual Meeting and voting your shares in person.

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If you are a street name stockholder and you vote by proxy, you may change your vote by submitting new voting instructions to your bank, broker or other nominee in accordance with such entity’s procedures. Please refer to the materials that your bank, broker or other nominee provided to you.

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What is a quorum?
A quorum is the effectpresence at our Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of our Common Stock entitled to vote on a matter at our Annual Meeting. There must be a quorum for our Annual Meeting to be held. If a quorum is not present, our Annual Meeting may be adjourned or postponed until a quorum is reached. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of votes considered to be present at our Annual Meeting.
What are “broker non-votes” andabstentions and what vote is required to approve each proposal?how do they affect voting results?
If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee describing how to vote your shares. If you do not instruct your bank, broker or other nominee how to vote your shares, they may vote your shares as they decide as to each matter for which they have discretionary authority under the rules of the New York Stock Exchange (the “NYSE”).
There are also non-discretionary matters for which banks, brokers and other nominees do not have discretionary authority to vote unless they receive timely instructions from you. When a bank, broker or other nominee does not have discretion to vote on a particular matter and you have not given timely instructions on how the bank, broker or other nominee should vote your shares, a “broker non-vote” results. Although any broker non-vote would be counted as present at the meeting for purposes of determining a quorum, it would be treated as not entitled to vote with respect to non-discretionary matters.
Abstentions occur when stockholders are present at our Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholders are voting. Abstentions will have no effect on the election of directors but will have the effect of a vote against the other proposals being considered at the meeting.
If your shares are held in street name and you do not give voting instructions, pursuant to NYSE Rule 452, the record holder will not be permitted to vote your shares with respect to Proposal 1 (Election of Class IIIII Directors) or Proposal 2 (Advisory Vote to Approve Named Executive Officer Compensation), and your shares will be considered “broker non-votes” with respect to these proposals. If your shares are held in street name and you do not give voting instructions, the record holder will nevertheless be entitled to vote your shares with respect to Proposal 3 (Ratification of the Appointment of Grant Thornton LLP) in the discretion of the record holder.
Abstentions occur when stockholders are present at our Annual Meeting in person or by proxy but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholders are voting. Abstentions will have no effect on the election of directors but will have the effect of a vote against the other proposals being considered at the meeting.
What vote is required to approve each proposal?
Proposal 1 (Election of Class IIIII Directors): To be elected, each director nominee must receive the affirmative vote of a plurality of the votes of the shares of Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. This means that the director nominees with the most votes will be elected. Votes may be cast in favor of or withheld from the election of each nominee. Votes that are withheld from a director’s election will be counted toward a quorum, but will not affect the outcome of the vote on the election of a director. Broker non-votes will have no effect on the outcome of the vote for directors.
Proposal 2 (Advisory Vote to Approve Named Officer Executive Compensation): Approval of this proposal requires the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. Abstentions will be counted in determining the total number of shares “entitled to vote” on this proposal and will have the same effect as a vote “Against” this proposal. Broker non-votes will have no effect on the outcome of the vote on this proposal. While this vote is required by law, it will neither be binding on us, our Board or our Compensation Committee, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, us, our Board or our Compensation Committee. However, our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.
Proposal 3 (Ratification of the Appointment of Grant Thornton LLP): Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20142016 requires the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock present in person or represented by proxy at our Annual Meeting and entitled to vote on the proposal. Abstentions will be counted in determining

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the total number of shares “entitled to vote” on this proposal and will have the same effect as a vote “Against” this proposal.
Our Board has appointed Melvin C. Payne, our Chief Executive Officer and Chairman ofWhat is the Board, and L. William Heiligbrodt, our Executive Vice President and Secretary, as the management proxy holdersBoard's recommendation for our Annual Meeting. For stockholders who have their shares voted by duly submitting a proxy by mail, or in person at our Annual Meeting, the management proxy holders will vote all shares represented by such valid proxies as our Board recommends, unless a stockholder appropriately specifies otherwise.each proposal?
Our Board recommends that you vote:
FOR the election of the two Class IIIII director nominees;
FOR the approval, on an advisory basis, of our named executive officer compensation; and
FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014.2016.

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What isOur Board has appointed Melvin C. Payne, our Chief Executive Officer (“CEO”) and Chairman of the Board, and Viki K. Blinderman, our Co-Chief Financial Officer, Chief Accounting Officer and Secretary, as the management proxy holders for our Annual Meeting. For stockholders who have their shares voted by duly submitting a quorum?
A quorum isproxy via the presenceinternet, by mail, or in person at our Annual Meeting, in person orthe management proxy holders will vote all shares represented by proxy, of the holders ofsuch valid proxies as our Board recommends, unless a majority of the outstanding shares of our Common Stock entitled to vote on a matter at our Annual Meeting. There must be a quorum for our Annual Meeting to be held. If a quorum is not present, our Annual Meeting may be adjourned or postponed from time to time until a quorum is reached. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of votes considered to be present at our Annual Meeting.stockholder appropriately specifies otherwise.
Who will bear the cost of soliciting votes for our Annual Meeting?
We will bear the entire cost of soliciting proxies, including the cost of the preparation, assembly, printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to our stockholders in connection with our Annual Meeting. In addition to this solicitation by mail, certain directors, officers and employees may also solicit proxies on our behalf by use of mail, telephone, facsimile, electronic means, in person or otherwise. These persons will not receive any additional compensation for assisting in the solicitation but may be reimbursed for reasonable out-of-pocket expenses in connection with the solicitation. We reimburse banks, brokers, custodians, nominees and fiduciaries for their reasonable charges and expenses to forward our proxy materials to the beneficial owners of our Common Stock.
Where can I find the voting results?
We will report the voting results in a Current Report on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”) within four business days of our Annual Meeting.
May I propose actions for consideration at next year’s annual meeting or nominate individuals to serve as directors?
You may submit proposals for consideration at future annual meetings. See “Stockholder Proposals for the 20152017 Annual Meeting” for information regarding the submission of stockholder proposals atfor next year’s annual meeting.
How do I get directions to the Annual Meeting?
For directions to the Annual Meeting, please contact our Corporate Secretary at (713) 332-8400.

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CORPORATE GOVERNANCE
General
We are committed to integrity, reliability and transparency in our disclosures to the public. To evidence this commitment, our Board has adopted charters for its committees, Corporate Governance Guidelines and a Code of Business Conduct and Ethics. These documents provide the framework for our corporate governance. A complete copy of the current version of each of these documents is accessible through our website at www.carriageservices.com or you may receive copies free of charge by writing to us at Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, Attn: Investor Relations. Our Board regularly reviews corporate governance developments and modifies our governance documents as it deems appropriate.
Independence
Our Corporate Governance Guidelines require that our Board composition comply with the NYSE listing standards, including the requirement that a majority of our Board consist of independent directors. Our Board hasDirectors affirmatively determined that Messrs.Barry K. Fingerhut, Donald D. Patteson, Jr., Richard W. Scott and ScottBryan D. Leibman do not have a material relationship with Carriage (either directly or as a partner, shareholder or officer of an organization that has a relationship with Carriage) and therefore, are “independent” as defined under the NYSE’s listing standards.standards and the Securities and Exchange Commission standard Item 407(a) of Regulation S-K.
Mr.Melvin C. Payne isand David J. DeCarlo are not independent because hethey are employees of Carriage and currently serve as our Chief Executive Officer and Chairman of our Board and President and Vice Chairman of our Board, respectively.
Board Leadership Structure and Oversight of Risk
Carriage was founded on our Mission Statement to be the most professional, ethical and highest quality funeral and cemetery service organization in our industry, which we have shortened for communication purposes to Being The Best, and is an employeeachieved by alignment with our Five Guiding Principles:

1.Honesty, Integrity and Quality in All That We Do
2.Hard work, Pride of Accomplishment, and Shared Success Through Employee Ownership
3.Belief in the Power of People Through Individual Initiative and Teamwork
4.Outstanding Service and Profitability Go hand-in-Hand
5.Growth of the Company Is Driven by Decentralization and Partnership
All of our directors, officers and employees must be aligned with these Five Guiding Principles to ensure outstanding execution of our three core models and all other elements and linkages of Carriage’s High Performance Culture Framework. While our commitment is to all Five Guiding Principles equally, there is a reason why the First Guiding Principle is the First “most equal” of the Five: Because it is the foundation and cornerstone Guiding Principle upon which our Mission of Being The Best and other Four Guiding Principles are built upon.
At a high level, commitment to our Mission Statement and alignment with our Five Guiding Principles, together with a relentless focus to execute our Good To GreatConcepts such as “First Who, Then What” and “Right People in the Right Seats”, are what have driven the resulting “Flywheel Effect” of our accelerated high performance operating results since 2012. Our Board understands the importance and uniqueness of these qualitative drivers of Carriage Services’ High Performance Culture as being critical towards our ability to execute sustainable, high performance quantitative results consistently over time through outstanding execution of our Standards Operating Model, 4E Leadership Model and Strategic Acquisition Model. Our Board also fundamentally understands that the biggest continuing risk for the Company is that executive and senior leadership would not continue the evolution of our unique High Performance Culture ideas and concepts. Our continued success and effective risk management emanates from being highly selective about leadership of the Company and currently servesfinding leaders that are aligned with our Five Guiding Principles and the idea of Carriage Services as a High Performance CultureCompany. We utilize a 4E Leadership Model, initially developed by Jack Welch at General Electric and then tailored and evolved in our unique culture, to select and assess our leaders at all levels of the Company. 4E Leaders have a winning, entrepreneurial, competitive spirit and want to make a difference in Carriage Services’ sustainable high performance and reputation over time.
Melvin C. Payne, the co-founder and largest individual shareholder, is our Chief Executive Officer and Chairman of our Board. Mr. DeCarlo is not independent because he is an employee of the Company and currently serves as President and Vice Chairman of our Board. Mr. Heiligbrodt is not independent because he is an employee of the Company and currently serves as our Executive Vice President and Secretary.
Board Leadership Structure and Executive Sessions
On March 3, 2014, L. William Heiligbrodt resigned from the Board. Mr. Heiligbrodt has served as the Vice Chairman of the Board, Executive Vice President and Secretary of the Company since September 2011 and served as a non-employee director of the Company from February 2009 to September 2011. Mr. Heiligbrodt will continue to serve as the Executive Vice President and Secretary of the Company. David J. DeCarlo was appointed Vice Chairman of the Board and President of the Company effective March 3, 2014. Mr. DeCarlo has served as a non-employee director of the Company since September 2011.
Our Board adheres to a flexible approach on the question of whether to separate or combine the roles of Chairman and Chief Executive Officer. Our Board believes that these are matters that should be discussed and determined by our Board from time to time and that they depend upon the current performance of Carriage and the experience, knowledge and temperament of our Chief Executive Officer. Currently, our Board has combined the roles of Chairman and Chief Executive Officer in Mr. Payne. Our Board currently is of the viewbelieves that it is in the best interest of Carriage and its stockholders for Mr. Payne to serve as our Chief Executive Officer also to serve as theand Chairman of our Board. Our Board believes thisbased upon Mr. Payne's specific expertise, knowledge, passion and long-term vision for the Company. This arrangement permitsprovides a clear, unified strategic vision and 4E Leadership for Carriage, that ensures partnership and alignment between senior leadership and our Board, and management, provides clear leadership for Carriage and helps ensure accountability for our performance.
Our Board’s goal isenables the Company to achieve the optimal model for effective oversight of our management. It believescontinue its evolution as a High Performance CultureCompany that there is no single, generally accepted approachjust happens to providing Board leadership, and that each of the possible leadership structures for a board must be considered in the context of the individuals involvedfuneral and the specific circumstances facing a company. Accordingly, given the dynamic and competitive environment in which Carriage operates, the right Board leadership structure may vary as circumstances warrant.
Our Board believes that its current leadership structure provides independent Board leadership and engagement while deriving the benefit of having our Chief Executive Officer also serve as Chairman of our Board. As the individual with primary responsibility for managing our day-to-day operations and with in-depth knowledge and understanding of Carriage, our Board believes thatcemetery service business. Mr. Payne is also best positioned to lead our Board through reviews of key business and strategic issues. Having an independent Lead Director (as discussed in more detail below) provides independent oversightissues, and most importantly, to lead the Board’s understanding of management, including risk oversight, while avoiding the risklinkage of confusion regarding our Board’s oversight responsibilitiesCarriage’s unique High Performance Culture to the Company becoming recognized as a superior Consolidation, Operating and the day-to-day management of business operations.Value Creation investment platform.
Our corporate governance practices have provided balanceCompensation Committee performs an annual evaluation of our Chief Executive Officer’s performance. As part of our annual evaluations and accountability tolong-term planning, our Corporate Governance Committee is charged with evaluating the unified rolesuccession of Chairman andour Chief Executive Officer. ThisMr. Payne has publicly stated that he has no plans for retirement and that he intends to be involved with the Company as long as his health is evidenced by a majority of experienced, independent directors, including a Lead Directorgood and he is adding value with responsibilities on behalf ofhis energy, passion, vision for Carriage and commitment to mentoring 4E Leaders for the independent directors, key Board committees comprised entirely of independent directors, and strong and effective governance principles.future.

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In accordance with our Corporate Governance Guidelines, our independent directors meet in executive session at least quarterly, outside of the presence of management directors or other members of management, both with the independent auditors and then without anyone else present. In connection with our Corporate Governance Guidelines, our Board establishedWe also have the position of Lead Director, who is required to be qualified as independent and appointed by a majority of the independent directors. The Lead Director’s role is to lead and facilitate the functioningfunction of our Board independently of management and to enhance the quality of our Board’s governance.Board by facilitating their deeper understanding of all elements and linkages of Carriage’s High Performance Culture Framework. The Lead Director presides at the executive sessions of the independent directors. David J. DeCarlo was our Lead Director in 2013 through March 3, 2014.directors during quarterly Board meetings. Richard W. Scott currently serves as our Lead Director.
Board’s Oversight of Risk
Our Board is responsible for overseeing our company’s management of risk. Our Board strives to effectively oversee our company’s enterprise-wide risk management in a way that balances managing risks while enhancing the long-term value of our company for the benefit of our stockholders. Our Board understands that its focus on effective risk oversight is critical to setting Carriage’s tone and culture towards effective risk management. To administer its oversight function, our Board seeks to understand Carriage’s risk philosophy by having discussions with management to establish a mutual understanding of Carriage’s overall appetite for risk. Our Board maintains an active dialogue with management about existing risk management processes and how management identifies, assesses and manages our most significant risk exposures. Our Board expects frequent updates from management about Carriage’s most significant risks so as to enable it to evaluate whether management is responding appropriately.
Our Board relies on each of its committees to help oversee the risk management responsibilities relating to the functions performed by such committees. Our Audit Committee periodically discusses with management Carriage’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. Our Compensation Committee helps our Board to identify our exposure to any risks potentially created by our compensation programs and practices. (For additional information about the relationship of our compensation policies and practices to risk management, please see “Executive Compensation Policies and Practices as they Relate to Our Risk Management.”) Our Corporate Governance Committee oversees risks relating to our corporate compliance programs and assists our Board and management in promoting an organizational culture that encourages commitment to ethical conduct and a commitment to compliance with the law. Each of these committees is required to make regular reports of its actions and any recommendations to our Board, including recommendations to assist our Board with its overall risk oversight function. During each regularly scheduled Board meeting each year, the full Board also reviews our company’s long-term strategic plans for a particular division and the principal issues, including foreseeable risks that division expects to face in the future.
We believe that the oversight function of our Board and its committees combined with its active dialogue with managementsenior leadership about effective risk management relative to continuously assessing for the “Right Who” leaders and the Right Quality of Staff at all levels, provides our companyCompany with the appropriate framework to help ensure effective risk oversight. There is a fundamental Board understanding that the continuing biggest risk area for the Company would be not having or not hiring the “Right Who” senior leadership in the future, and that hiring the ‘Wrong Who” senior leadership, including and especially the CEO in case Mr. Payne was for some reason unable to fulfill his CEO responsibilities, could have a major negative impact on the nature of Carriage’s High Performance Culture. In executing this responsibility, independent directors provide independent oversight, including risk oversight and a significant amount of time is spent by our Board and committees, in conjunction with senior leadership, discussing how we identify, assess and manage our most significant risk exposures with respect to our leadership and people. Our Board also relies on each of its committees to help administer its oversight duties.
Director Nomination Process
Our Corporate Governance Committee, as a whole, is responsible for reviewing the requisite skills and characteristics of new Board members as well as the composition of our Board as a whole. Nominees for directorship are selectedwith significant input by our Corporate Governance Committee in accordance with the policiesCarriage’s executive and principles in the charter of our Corporate Governance Committee, a copy of which is available free of charge on our website at www.carriageservices.com. Our Corporate Governance Committee believessenior leadership.
We believe that the minimum qualifications and skills necessary for serving as a director areinclude:
1.
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles;
2.Business and investment savvy, including an owner-oriented attitude and conviction that Carriage has evolved into a superior shareholder value creation investment platform and therefore represents a superior long-term investment opportunity; and
3.
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
We do not have a nominee demonstrates an abilityformal policy on board diversity when considering board candidates, as we strive to make a meaningful contribution to our Board’s oversight of our business and affairs and has a reputation for ethical conduct. Nominees for director will includeseek individuals who taking into account their diversity, age, skills, and experience indemonstrate the context of the needs of our Board, as well as other relevant factors such as conflicts of interest and other commitments, would enhance our Board’s ability to manage and direct our affairs and business. Noaforementioned characteristics or attributes. While no director may serve on more than five other public company boards or on the audit committee for more than two other public companies.companies, we much prefer candidates that are singularly focused on Carriage's uniqueness and not on being a “Professional Board Member.” We currently have notno established term limits or age restrictions, as we do not wish to risk losing the contribution of directors who have been able to develop over a period of time,an increasing insight and deep understanding into all the elements and linkages of our business and operations. However, we have determined that no director may be nominated to a new term if he or she would be age 75 or older at the time of the election. Although we do not have a formal policy on board diversity, when considering board candidates, our Corporate Governance Committee strives to achieve a balance of knowledge, experience, and perspective such that our Board reflects a diversity of backgrounds and experiences.unique High Performance Culture Framework.
Our Corporate Governance Committee identifies potential candidates by askingfor our current directorsBoard fluidly and executive officerscollaboratively with our existing senior leadership based upon the criteria set forth above. Once a potential candidate is identified and the individual expresses a willingness to notifybe considered for election to our Board, our Corporate Governance Committee if they become aware of individuals who meetand Mr. Payne will request information from the criteria described above. Ourcandidate, review the individual’s qualifications, and conduct one or more interviews with the candidate. When this process has completed, our Corporate Governance Committee also has the authoritytenders its recommendation to engage firms that specialize in identifying director candidates. our full Board for consideration.
Our Corporate Governance Committee will also consider candidates recommended by stockholders in the same manner in which our Corporate Governance Committee considers candidates identified by the committee.manner. A stockholder may recommend

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nominees for director by giving our Corporate Secretary a written notice not less than 90 days prior to the anniversary date of the immediately preceding annual meeting. For our 20152017 Annual Meeting of Stockholders, the deadline will be February 20, 2015,17, 2017, based upon this year's meeting occurring on May 21st.17, 2016. The notice must include the name and address of the stockholder giving notice and the number of shares of Common Stock beneficially owned by the stockholder. The notice must also include the full name, age, business address, principal occupation or employment of the nominee, the number of shares of Common Stock that the nominee beneficially owns, any other information about the nominee that must be disclosed in proxy solicitations under Regulation 14A of the Securities Exchange Act of 1934 (the “Exchange Act”), and the nominee'snominee’s written consent to the nomination and to serve, if elected. Please see “Stockholder Proposals for the 2014 Annual Meeting.”
Once our Corporate Governance Committee has identified a potential candidate, it collects and reviews available information regarding the individual, and if our Corporate Governance Committee determines that the candidate warrants further consideration, our Corporate Governance Committee Chair, or another Committee member, will contact the person. Generally, if the individual expresses a willingness to be considered for election to our Board, our Corporate Governance Committee will request information from the candidate, review the individual’s qualifications, and conduct one or more interviews with the candidate. When our Corporate Governance Committee has completed this process, it tenders its recommendation to our full Board for consideration.
No third party search firm was engaged in 2013.
Board’s Interaction with Stockholders
Our Chief Executive Officer and other corporate officers are responsible for establishing effective communication with our stockholders. It is our policy that management speaks for Carriage. This policy does not preclude independent directors from meeting with stockholders, but where appropriate, management should be present at such meetings.
Stockholders and other interested parties may contact any member of our Board or any of its committees via U.S. mail, by addressing any correspondence to our Board, the applicable committee, the independent directors as a group or any individual director by either name or title, in care of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056; Attn: Corporate Secretary. In the case of communications addressed to the independent directors, our Corporate Secretary will send appropriate stockholder communications to the Lead Director. In the case of communications addressed to a committee of our Board, our Corporate Secretary will send appropriate stockholder communications to the Chairman of such committee.
Annual Evaluations; Succession Planning
We have an annual process for our Board and each committee to perform self-evaluations. These are conducted through written questionnaires compiled on a confidential basis by the Chairman of our Corporate Governance Committee with summary results presented to our full Board annually. In addition, our Compensation Committee performs an annual evaluation of our Chief Executive Officer’s performance.
As part of our long-range planning, our Corporate Governance Committee is charged with evaluating the succession of our Chief Executive Officer, both in the event of an emergency and upon retirement.
Business Conduct and Ethics
Our Code of Business Conduct and Ethics requires all of our directors, officers and employees to adhere to certain basic principles to uphold our mission to be the most professional, ethical and highest quality service organization in the deathcare industry. Our code requires them to comply with the law, avoid conflicts of interest, compete fairly and honestly, maintain a safe and healthy work environment, and preserve our assets. We do not presently believe that there will be any occasion requiring any changes in or waivers under the code, for the benefit of our senior financial officers, but in the event of exceptional circumstances in which such a change or waiver becomes necessary, it would require Board approval and, where appropriate, prompt public disclosure. Our code includes specific compliance procedures and a mechanism for reporting violations through our Human Resources Department. A copy of our Code of Business Conduct and Ethics is available free of charge on our website at www.carriageservices.com.

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Organization and Committees of Our Board
During 2013,2015, our Board met fourfive times and acted by unanimous written consent tenseven additional times. Each of the directors attended all of the meetings of our Board. During 2013,2015, our Board had, and appointed the members of,to the Compensation, Audit and Corporate Governance Committees. Each of these committees has its own charter, and Executive Committees, identified ina copy of the table below.current version is available free of charge on our website at www.carriageservices.com. The functions of each committee, and the number of meetings held during 2013,2015, are described below. Refer to the "Recent Events" in this section below for changes and status
The current members of Committeeseach committee as of the Record Date.Date are identified in the following table:
       
Director  Compensation  Audit  
Corporate
Governance
Executive
Melvin C. Payne(*Payne(*)
         X
L. William Heiligbrodt(*
David J. DeCarlo(**)
         Chairman
David J. DeCarlo(I) (***)ChairmanXXX
Barry K. Fingerhut(I)  X  X  XChairman
Donald D. Patteson, Jr.(I)  X  Chairman  X
Richard W. Scott(I)ChairmanXX
Bryan D. Leibman(I)(***)
 X X ChairmanX

(*)Chairman of our Board and Chief Executive Officer and Director.Officer.
(**)Vice Chairman Executive Vice President, Secretaryof our Board and President.
(I)Independent Director.
(***)
On March 6, 2013, David J. DecarloSeptember 28, 2015, our Board elected Bryan D. Leibman to serve as a Class II director until our 2016 Annual Meeting of Stockholders. Mr. Leibman was appointed as the Chairman of the Executive Committee by the Board.
(I)Independent Director.to serve on our Audit, Compensation and Corporate Governance Committees.

Compensation Committee. Pursuant to the charter of our Compensation Committee, theThe purposes of our Compensation Committee are to:
review, evaluate and approve our officer compensation plans, policies and programs;
recommend to our Board director compensation plans, policies and programs;
produce the Compensation Committee Report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders;
otherwise discharge our Board’s responsibilities relating toreview and approve the compensation of our officers and directors, including approval of grants to officers and employees under our stock incentive plans; and
perform such other functions as our Board may assign from time to time.
In connection with these purposes,Generally, our Board has charged our Compensation Committee with the overall responsibility for establishing, implementing and monitoring the compensation for our executive officers. In general, executiveExecutive Officers and Senior Leadership. Executive compensation matters are presented to our Compensation Committee or raised with ourthe Compensation Committee in onea variety of the following ways:ways, including: (1) at the request of our Compensation Committee Chairman or two or more members of the Compensation Committee or two members of our Board, (2) in accordance with our Compensation Committee’s agenda, which is reviewed by our Compensation Committee members and other directors on an annual basis, (3) by our Chief Executive Officer or (4) by our Compensation Committee’s outside compensation consultant, if a consultant is engaged by our Compensation Committee.
Our Compensation Committee makes all final decisions regarding executive officer compensation. Mr. Payne’s role as our Chairman of the Board and Chief Executive Officer in determining executive compensation is to make recommendations on compensation decisions for those other than himself based on the individual performance of each executive officer and our overall performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting information and analysis to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
attending our Compensation Committee’s meetings as requested in order to provide information, respond to questions and otherwise assist our Compensation Committee;
developing individual executive officer bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans; and
preparing stock award recommendations for our Compensation Committee’s approval.
Pursuant to its charter, our Compensation Committee has authority to, in its sole discretion, to retain and determine funding for independent legal counsel, as well as other experts and advisors, including the authority to retain, approve the fees

8


payable to, amend the engagement with and terminate any compensation consultant to be used in the evaluation of the compensation of our executive officers and directors as it deems necessary or appropriate to fulfill its responsibilities.
In connection with its 2013 engagement of Pearl Meyer & Partners, LLC., the Compensation Committee assessed the independence of Pearl Meyer & Partners, LLC. pursuant to applicable SEC and NYSE rules and concluded that Pearl Meyer & Partners, LLC.’s work for the Compensation Committee does not raise any conflict of interest.
To the extent permitted by applicable law, our Compensation Committee may delegate some or all of its authority under its charter to its chairman, any one of its members or any subcommittees it may form when it deems such action appropriate. Mr. Payne, as our Chairman of the Board and Chief Executive Officer, makes recommendations on compensation decisions for those other than himself based on the individual performance of each Executive Officer or Senior Leader and the Company's overall performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting compensation information and analysis to enable our Compensation Committee to execute its responsibilities; developing individual Executive Officer and Senior Leadership bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans;
preparing stock award recommendations for our Compensation Committee’s approval; and
attending our Compensation Committee’s meetings as requested in order to provide additional information, respond to questions and otherwise assist our Compensation Committee.
Our Compensation Committee makes all final decisions regarding executive officer compensation.

7


In 2013,2015, our Compensation Committee met fourtwo times and acted by unanimous written consent fivetwo additional times. Each member of our Compensation Committee was present at all meetings. Our Compensation Committee is governed by the Compensation Committee Charter, which is available free of charge on our website at www.carriageservices.com.
All members of our Compensation Committee meet the heightened standards of independence with respect to compensation committee members in the NYSE's listing standards and applicable SEC rules.
Audit Committee. Pursuant to the charter of our Audit Committee, theThe purposes of our Audit Committee are to:
assist our Board in fulfilling its oversight responsibilities regarding the:
◦integrity of our financial statements;
◦qualifications and independence of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other review or attestation services for Carriage;
◦performance of our internal audit function and independent auditors;
◦compliance by Carriage with legal and regulatory requirements; and
annually prepare the Audit Committee Report for inclusion in our proxy statement for our annual meeting of stockholders; and
perform such other functions as our Board may assign to our Audit Committee from time to time.
In connection with these purposes, our Audit Committee annually selects, engages and evaluates the performance and ongoing qualifications of, and determines the compensation for, our independent registered public accounting firm and confirms their independence. The Audit Committee also reviews our annual and quarterly financial statements and confirms the independence of our independent registered public accounting firm. Our Audit Committee also meets with our management and externalindependent registered public accounting firm regarding the adequacy of our financial controls and our compliance with legal, tax and regulatory matters and significant internal policies. While our Audit Committee has the responsibilities and powers set forth in its charter, it is not the duty of our Audit Committee to plan or conduct audits, to determine that our financial statements are complete and accurate or to determine that such statements are in accordance with accounting principles generally accepted in the United States and other applicable rules and regulations. Our management is responsible for the preparation of our financial statements in accordance with accounting principles
generally accepted in the United States and our internal controls. Our independent registered public accounting firm is responsible for the audit work on our financial statements. It is also not the duty of our Audit Committee to conduct investigations or to assure compliance with laws and regulations and our policies and procedures. Our management is responsible for compliance with laws and regulations and compliance with our policies and procedures.
Our Audit Committee met sixfive times during 2013.2015. There were no actions by unanimous written consent during 2015. Each member of our Audit Committee was present at all meetings. See “Audit Committee Report” below for additional information regarding our Audit Committee. Our Audit Committee is governed by the Audit Committee Charter, which is available free of charge on our website at www.carriageservices.com.
All members of our Audit Committee are independent as that term is defined in the NYSE’s listing standards and by Rule 10A-3 promulgated under the Exchange Act. Our Board has determined that each member of our Audit Committee is financially literate and that Mr. Patteson has the necessary accounting and financial expertise to serve as Chairman. Our Board has also determined that Mr. Patteson is an “audit committee financial expert” following a determination that he met the criteria for such designation under the SEC’s rules and regulations. ForSee “Audit Committee Report” below for additional information regarding Mr. Patteson’s business experience, please read “Proposal No. 1: Election of Directors.”our Audit Committee.
Corporate Governance Committee. Pursuant to the charter of our Corporate Governance Committee, theThe purposes of our Corporate Governance Committee are to:
assist our Board by identifying individuals qualified to become Board members, and to recommend to our Board the director nominees for the next annual meeting of stockholders;

9


recommend to our Board the Corporate Governance Guidelines applicable to Carriage;
lead our Board in its annual review of the performance of our Board and its committees and of our senior management;
recommend to our Board director nominees for each committee; and
perform such other functions as our Board may assign to our Corporate Governance Committee from time to time.
Our Corporate Governance Committee met oncetwo times in 20132015 and acted by unanimous written consent twoone additional times.time. All committee members were present at such meeting.
Executive Committee. Our Executive Committee acts on behalf of our Board in between meetings of our Board, assures coordination of activity among the various committees of our Board, and serves as a sounding board for the Chairman of the Board in the overall management of the business and affairs of Carriage. Our Executive Committee met two times in 2013 and acted by unanimous written consent four additional times. All committee members were present at each meeting except Melvin C. Payne was not present for the meeting held on September 12, 2013. As discussed in “Recent Events” in this section below, the Executive Committee was dissolved as of March 3, 2014. Due to the relatively small size of our Board, the need for an Executive Committee as a liaison to the Board was deemed unnecessary.meetings.
Attendance at Annual Stockholder Meetings
Each ofyear we hold the annual meeting on the same day as our Board and Committee meetings such that all directors is expected to devote sufficient time and attention to his duties and to attend all Board, committee and stockholders’ meetings. Although we do not have a formal policy requiring them to do so, we encourage our directors tomay attend the annual meeting of stockholders and expect that they will do so.meeting. All of our then current directors, except one, attended the 20132015 Annual Meeting of Stockholders.

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Recent EventsBoard’s Interaction with Stockholders
On March 3, 2014, David J. DeCarlo joinedOur Chief Executive Officer and senior leadership team are responsible for establishing effective communication with our stockholders. Independent directors are not precluded from meeting with stockholders, but where appropriate, our executive and senior leadership team as Presidentshould be present at such meetings.
Stockholders and Vice Chairman of the Board. Mr. DeCarlo will lead Strategic and Corporate Development, Supply and Project Development and Operations Support including Information Technology and Human Resources. L. William Heiligbrodt is now our Executive Vice President and Secretary and has resigned from the Board. Mr. Heiligbrodt will lead Treasury and Finance, Accounting and Reporting, Legal and Investor Relations. Additionally, the Executive Committee was dissolved as of March 3, 2014. Due to the relatively small sizeother interested parties may contact any member of our Board or any of its committees, by addressing any correspondence in care of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056; Attn: Corporate Secretary. In the need for an Executive Committee as a liaisoncase of communications addressed to the independent directors, our Corporate Secretary will send appropriate stockholder communications to the Lead Director. In the case of communications addressed to a committee of our Board, was deemed unnecessary.our Corporate Secretary will send appropriate stockholder communications to the Chairman of such committee.
Annual Evaluations
TheOur Board and each committee perform annual self-evaluations. These self-evaluations are conducted through written questionnaires circulated prior to the last regularly scheduled meeting of the Board before the Annual Meeting of Stockholders and compiled on a confidential basis by the Assistant Corporate Secretary. At their last regularly scheduled meeting before the Annual Meeting of Stockholders, detailed results of the self-evaluations are provided to the Corporate Governance Committee with summary results presented to our full Board.
Corporate Governance Guidelines, Business Conduct and Ethics
We are committed to integrity, reliability and transparency in our disclosures to the public, all characteristics consistent with our First Guiding Principle, “Honesty, Integrity and Quality in All That We Do”. To evidence this commitment, our Board has adopted charters for its committees, Corporate Governance Guidelines and a Code of Business Conduct and Ethics. These documents provide the framework for our corporate governance. Our Code of Business Conduct and Ethics requires all of our directors, officers and employees must be alignment with our Five Guiding Principles to achieve our Mission Statement of being to be the most professional, ethical and highest quality service organization in the funeral and cemetery industry.
A complete copy of the current membersversion of each committee as of the Record Date are identified in the following table:these documents is accessible through our website at www.carriageservices.com or you may receive copies free of charge by writing to us at Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, Attn: Investor Relations.

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DirectorCompensationAudit
Corporate
Governance
Melvin C. Payne(*)
David J. DeCarlo(**)
Barry K. Fingerhut(I)XXChairman
Donald D. Patteson, Jr.(I)XChairmanX
Richard W. Scott(I)ChairmanXX

(*)Chairman of our Board, Chief Executive Officer and Director.
(**)Vice Chairman, President and Director.
(I)Independent Director.

DIRECTOR COMPENSATION
General
We compensate our directors through cash payments, including retainers and meeting attendance fees, and through stock-based awards. Our Director Compensation Policy provides for the following cash payments, including retainers and meeting attendance fees:
   Annual Cash Retainer  
Per Meeting Cash Fee(2)
Board - Independent Director $40,000
(1) 
 $2,000
Board - Lead Director $115,000
(1) (3) 
 $2,000
Audit Committee      
Chair $17,500
(4) 
 $2,000
Member $—
  $2,000
Compensation Committee      
Chair $15,000
(4) 
 $1,600
Member $—
  $1,600
Corporate Governance Committee      
Chair $15,000
(4) 
 $1,600
Member $—
  $1,600

(1)Paid on a quarterly basis. No cash retainers are paid to employee directors.
(2)Paid for attendance at any special or regular meeting of the Board or Committee, whether attended in person or by phone. No Per Meeting Cash Fees are paid to employee directors.
(3)The Lead Director receives this annual retainer in addition to the retainer paid to other Independent Directors.
(4)Paid on the date of our Annual Meeting of Stockholders.
Our Director Compensation Policy provides that any new independent director will receive, upon appointment or election to our Board, a grant of $100,000 in shares of our Common Stock. Following their initial appointment or election to our Board, each independent director of our Board is entitled to an annual equity retainer of $75,000 payable in shares of Common Stock, paid on the date of our Annual Meeting of Stockholders. Common Stock grants to our independent directors are issued under our Second Amended and Restated 2006 Long-Term Incentive Plan.
Our Director Compensation Policy provides for the following cash payments, including retainers and meeting attendance fees, and stock-based awards: (a) the chairman of our Audit Committee is entitled to a retainer of $17,500 and the chairman of each of the Compensation, Corporate Governance and Executive Committees is entitled to an annual cash retainer of $15,000; (b) the Lead Director of our Board is entitled to an annual cash retainer of $115,000; and (c) each independent director of our Board is entitled to an annual cash retainer of $40,000 paid on a quarterly basis and an annual equity retainer of $75,000 payable in shares of Common Stock. Additionally, each independent director is entitled to $2,000 for each regular or special meeting of the full Board, our Audit Committee and the Executive Committee attended in person or by phone. Members of the other committees and their chairmen receive $1,600 for each committee meeting held in person or by phone that such director attends.
In addition to the annual compensation paid to our Directors, as described above, in August 2012, the Compensation Committee granted special performance-based stock awards (“PBS Awards”) to each of our outside directors along with the Named Executive Officers and certain other employees. The PBS Awards were intended to further align the interests of these directors with the interests of our stockholders by rewarding them for their contributions toward transforming Carriage from a “good” deathcare operating and consolidation company to a “great” high-performance service and sales company.  To the extent vested, each PBS Award represented the right to receive a specified number of shares of our Common Stock, subject to the grantee's payment, with respect to each share of Common Stock subject to such PBS Award, of an amount equal to the greater of (a) the then-current market price per share of our Common Stock on the date such PBS Award was granted plus $0.50 or (b) $9.00.  Each PBS Award would have vested if on or before the fifth anniversary of the applicable grant date, the closing price of our Common Stock was greater than or equal to $21.50 on any three days, whether or not consecutive, within a period of 30 consecutive calendar days, subject to the grantee's continuous employment or service relationship with us through such datePlan (the “Price Vesting Date”“2006 LTIP”). However, if the Price Vesting Date occurred prior to the first anniversary of the grant date, then each PBS Award would not vest until the first anniversary of such grant date, subject to the grantee's continued employment or service relationship with us through the first anniversary of the applicable grant date.

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During 2014, our outside Directors received the following cash out payments with respect to the termination of their Awards:
Name PBS Award Size (in shares)
Cash Out Payment(1)
David J. DeCarlo 80,000
$800,000
Barry K. Fingerhut 80,000
$800,000
Donald D. Patteson, Jr. 80,000
$800,000
Richard W. Scott 80,000
$800,000

(1)On January 3, 2014, the Company offered its employees (including its Named Executive Officers) and directors who held outstanding PBS Awards an opportunity to surrender their PBS Awards to the Company in exchange for cash payments equal to the product of (i) the difference between (x) $19.00 and (y) the applicable purchase price under their PBS Awards and (ii) the number of shares of the Company’s common stock subject to their PBS Awards (the “Cash Out Payments”). All outstanding PBS Awards have been surrendered to the Company and canceled. All holders of these PBS Awards surrendered their shares in exchange for cash out payments of approximately $16.1 million of which $3.2 million was paid to our Directors, or $10.00 per PBS Award.
Under our Director Compensation Policy, the annual cash retainers for each committee chairman and the annual equity retainer are paid on the date of our annual meeting of stockholders.
20132015 Director Compensation Table
Name 
Fees Earned or Paid
in Cash
 Stock  Awards Total Fees Earned in Cash  Stock  Awards Total
David J. DeCarlo(2)
 $215,400
 $
75,000(1)
 $290,400
Barry K. Fingerhut $66,400
 $
75,000(1)
 $141,400
 $81,400
 $
75,000(1)
 $156,400
Donald D. Patteson, Jr. $83,900
 $
75,000(1)
 $158,900
 $83,900
 $
75,000(1)
 $158,900
Richard W. Scott $81,400
 $
75,000(1)
 $156,400
 $196,400
 $
75,000(1)
 $271,400
Bryan D. Leibman $14,000
 $
100,000(2)
 $114,000
(1)On May 22, 2013,19, 2015, Messrs. DeCarlo, Fingerhut, Patteson and Scott each received an annual equity grant of $75,000 in shares of fully-vested Common Stock, resulting in 4,4822,953 shares granted to each individual, based upon a closing price of $16.73$25.39 on such date. Amounts reported with respect to these awards reflect the grant date fair value, calculated in accordance with FASB ASC Topic 718. As of December 31, 2013,2015, Messrs. DeCarlo,Fingerhut, Patteson and Scott had no shares of unvested restricted stock and 80,000 PBS Awards unvested and outstanding each, Mr. Fingerhut had 4,209 shares of restricted stock and 80,000 PBS Awards unvested and outstanding.
(2)
On March 3, 2014, David J. DeCarlo joinedSeptember 28, 2015, our executive leadership teamBoard elected Bryan D. Leibman to serve as Presidenta Class II director until our 2016 Annual Meeting of Stockholders. Mr. Leibman was appointed to serve on our Audit, Compensation and Vice ChairmanCorporate Governance Committees. He received 4,837 shares of Common Stock in new director compensation awards valued at $100,000 based upon a closing price of $20.67 on the date of the Boardgrant. Half of these shares were fully vested on the date of grant and the remaining half vest in equal installments on each of the first two anniversaries of the date of grant. For Mr. Leibman, 2,418 shares were vested upon grant on September 28, 2015, 1,209 shares will no longer receive paymentsvest on September 28, 2016 and 1,210 shares will vest on September 28, 2017. Amounts reported with respect to these awards under our Director Compensation Policy.reflect the grant date fair value, calculated in accordance with FASB ASC Topic 718.


1210


PROPOSAL NO. 1:
ELECTION OF CLASS II DIRECTORS
We currently have fivesix directors on our Board who each serve staggered three-year terms. At our Annual Meeting, the stockholders will elect two individuals to serve as Class IIIII directors for a new three-year termterms expiring on the date of the 20172019 annual meeting and until thetheir successors are duly elected and qualified.
Our Corporate Governance Committee has recommended that we nominate David J. DeCarloBarry K. Fingerhut for re-election and DonaldBryan D. Patteson, Jr.Leibman for election at our Annual Meeting to serve as Class IIIII directors for anew three-year term.terms. Proxies may be voted for each of the Class IIIII directors. The biography descriptions for Mr. DeCarloMessrs. Fingerhut and Mr. PattesonLeibman are included below.
The following table sets forth the name, age and title of the persons who have been nominated for election as Class II directors and our other current directors.
NameAgePositions and Offices with Carriage, Director Since
Continuing Class II Directors
(If re-elected, term expires at 2019 Annual Meeting)
Barry K. Fingerhut70Director, 2012
Bryan D. Leibman(1)
47Director, 2015
Class III Directors
(Term expires at 2017 Annual Meeting)
David J. DeCarlo70Director, 2011; President and Vice Chairman of the Board, 2014
Donald D. Patteson, Jr.70Director, 2011
Class I Directors
(Term expires at 2018 Annual Meeting)
Melvin C. Payne73Chairman of the Board and Chief Executive Officer, 1991
Richard W. Scott62Director, 2009
(1)
On September 28, 2015, our Board elected Bryan D. Leibman to serve as a Class II director until our 2016 Annual Meeting of Stockholders. Mr. Leibman was appointed to serve on our Audit, Compensation and Corporate Governance Committees. Upon electing Mr. Leibman to the Board, the Corporate Governance Committee approved to increase the Board membership from five to six members.
Our Board believes that each of our directors is highly qualified to serve as a member of our Board. In particular, our Board seeks individuals who demonstrate:
A deep, genuine belief, understanding and commitment to our Being The Best Mission Statement and Five Guiding Principles,
Business and investment savvy, including an owner-oriented attitude and conviction that Carriage Services has evolved into a high value, superior investment platform, and
An ability to make a meaningful contribution and engagement to our Board’s oversight of all elements and linkages of our High Performance Culture Framework.
Our Board unanimously recommends that you vote “FOR” the election of each of the Class IIIII director nominees.
You may not cumulate your votes in the election of the Class IIIII directors. You may withhold authority to vote for any of the nominees for director. If a nominee becomes unable to serve as a director before our Annual Meeting (or decides not to serve), the individuals named as proxies will vote, in accordance with instructions provided, FORfor such other nominee as we may designate as a replacement or substitute, or our Board may reduce the size of the Board to eliminate the vacancy.
The following table sets forth the name, age and title of the persons who have been nominated for election as Class III directors and our other current directors.
NameAgePositions and Officers with Carriage, Director Since
Continuing Class III Directors
(If elected, term expires at 2017 Annual Meeting)
David J. DeCarlo68Director, 2011; President and Vice Chairman, 2014
Donald D. Patteson, Jr.68Director, 2011
Class I Directors
(Term expires at 2015 Annual Meeting)
Melvin C. Payne71Chairman of the Board, Chief Executive Officer and Director, 1991
Richard W. Scott60Director, 2009
Class II Director
(Term expiring at 2016 Annual Meeting)
Barry K. Fingerhut68Director, 2012
On March 3, 2014, L. William Heiligbrodt resigned from the Board. Mr. Heiligbrodt, age 72, served as the Vice Chairman of the Board, Executive Vice President and Secretary of the Company since September 2011 and served as a non-employee director of the Company from February 2009 to September 2011. Mr. Heiligbrodt will continue to serve as the Executive Vice President and Secretary of the Company.
Our Board believes that each of our directors is highly qualified to serve as a member of our Board. Each of the directors has contributed to the mix of skills, core competencies and qualifications of our Board. Our directors are highly educated and have diverse backgrounds and talents and extensive track records of success in what we believe are relevant positions with reputable organizations. Our Board believes that through their varying backgrounds, our directors bring a wealth of experiences and new ideas to our Board.
Described below are the principal occupations, positions and directorships for at least the past five years of our directors and director nominees, as well as certain information regarding their individual experience, qualifications, attributes and skills that led our Board to conclude that they should serve on our Board. There are no family relationships among any of our directors or executive officers.

11


Barry K. Fingerhut has been the Chief Executive Officer and majority equity owner of Certification Partners, LLC, a developer and global distributor of vendor neutral IT content and certifications, since the fall of 2010. Prior to 2010, he focused much of his career investing in small capitalization companies in the for-profit education and training, financial services, as well as many other industries. Currently, he serves on a number of private company and non-profit Boards. Mr. Fingerhut also served on our Board for the period from 1995 through 1999.
Additional Qualifications: Mr. Fingerhut was selected to serve on our Board due to his past experience with Carriage and his extensive investment knowledge.
Bryan D. Leibman has been the President and Chief Executive Officer of Frosch Travel (FROSCH), a privately held global travel management company, since 2000. He is a certified physician who opted to pursue his passion for business and entrepreneurship by joining and leading his family’s successful travel business since 1998.
Additional Qualifications: Mr. Leibman brings entrepreneurial growth, merger and acquisition experience to our Board. We believe his vision and leadership at FROSCH brings to our Board development of an innovative and forward driving management style and commitment to core values in the services sector.
David J. DeCarlo became ourhas been President and Vice Chairman of the Board of Directors onsince March 3, 2014. From May 2011 to March 3, 2014, Mr. DeCarlo was an independent director of the Company.Carriage. He has had more than 24 years of experience in the deathcare industry, having served as an executive officer in various roles for Matthews International Corporation (“Matthews”), a leading worldwide supplier of deathcare products, including serving as President of the Bronze Division and

13


Group President of the Memorialization Group. Mr. DeCarlo also served as a director of Matthews for 22 years. He retired from Matthews as Vice Chairman of the Board of Directors in 2008. Before joining Matthews in 1985, Mr. DeCarlo held diverse management and executive roles in finance, manufacturing, operations, sales, marketing and management and information systems at several Fortune 500 companies. Mr. DeCarlo has an MBA in Finance, a Masters of Arts in Economics and Statistics, and a Ph.D. in Applied Economics and Finance (all but dissertation) from the Wharton School of Finance and University of Pennsylvania, as well as a Bachelor of Science degree in Industrial Management from West Virginia University.
Additional Qualifications: Mr. DeCarlo was selected to serve on our Board as a result of his long history in the deathcare industry and experience in a multitude of executive roles in other industries, which makes him highly qualified to be a member of our Board.industries.
Donald D. Patteson, Jr. was elected to our Board in August 2011. He is the founder and, prior to its sale in June 2014, the Chairman of the Board of Directors of Sovereign Business Forms, Inc. (“Sovereign”), a consolidator in the wholesale manufacturing of custom business forms and related productsa segment of the printing industry. Prior to founding Sovereign in August 1996, heHe also served as Managing Director of Sovereign Capital Partners, an investment firm specializing in leveraged buyouts. Mr. Patteson also previously served as President and Chief Executive Officer of WBC Holdings, Inc., a consolidatorSovereign from August 1996 until his retirement in the rent-to-own industry, and was President and Chief Executive Officer of Temple Marine Drilling, Inc./R.C. Chapman Drilling Co., Inc., a consolidation and workout subsidiary of GE Capital in the drilling industry. He was President, Chief Executive Officer and Director of Temple Drilling and held various other executive and financial management positions in the offshore drilling industry.August 2008. Mr. Patteson began his business career with Arthur Andersen’s management consulting practice. Mr. Patteson currently servesserved on the Board of Directors of Rosetta Resources Inc. as a member of the Audit Committee and a member of the Compensation Committee.Cal Dive International, Inc. until mid-year 2015.
Additional Qualifications: Mr. Patteson was selectedbrings to serve on ourthe Board based on his extensive experience as Chief Executive Officer and Chief Financial Officer in various industries, enabling him to provide the Board with executive and financial management rolesexpertise, as well as his experience in the consolidation industry.with major financial transactions.
Melvin C. Payne, a management founderco-founder of Carriage, has been our Chief Executive Officer and a director since our inception in 1991, and our Chairman of the Board and Chief Executive Officer since December 1996.
Additional Qualifications: Mr. Payne has been a director and Chief Executive Officerbrings to the Board his 25 years of Carriage since our inception in 1991. Prior to co-founding Carriage, Mr. Payne spent 10 years in the private company turnaround business involving numerous industries. Prior to his turnaround career, Mr. Payne worked 10 years in the corporate lending business, initially with Prudential Insurance Company and later with Texas Commerce Bank in Houston. Mr. Payne was selected to serve on our Board because he isexperience as our Chief Executive Officer and our founder and has proven management skills. Mr. Payne’s also has prior diverse industry and financial experience coupled with his personal leadership and founder’s vision for Carriage makes him highly qualified to serve as Chairman of the Board.Carriage.
Richard W. Scott was elected to our Board in 2009. Mr. Scott is a seasoned financial services executive with over 30 years of capital markets experience. Since January 2009, he has served as the Senior Vice President and Chief Investment Officer of Loews Corporation, a diversified holdings company, since 2009 and from 2001 to 2008 he was a senior executive in Insurance Portfolio Management with AIG Investments, a global company engaged in asset management, including service as the Chief Investment Officer–InsuranceOfficer-Insurance Operations. His career has included extensive
Additional Qualifications: Mr. Scott is a seasoned financial services executive and professional responsibility for all aspectswith over 30 years of fixed income and insurance portfolio management on both domestic and global platforms, as well as extensive experience as a mergers and acquisitions and capital markets attorney. Mr. Scott brings multidimensional experience to Carriage.experience. He was selected to serve on our Board because of his extensive experience in merger and acquisition transaction analysis, investment management, capital markets strategy and financial performance measurement, all of which provide valuable insight to Carriage.measurement.
Barry K. Fingerhut was elected to our Board in March 2012. Mr. Fingerhut has been the Chief Executive Officer and majority equity owner of Certification Partners, LLC, a developer and global distributor of IT certification programs, since the fall of 2010. Prior to 2010, he focused much of his career on investing in small capitalization companies in the for-profit education and training, publishing, media, consumer services, hydrocarbon, investment and financial services industries. He served as President of GeoCapital, LLC from 1981 to 2004, following two years at First Manhattan Co. and four years as a Limited Partner, then as General Partner of Weiss, Peck & Greer. In 1992, he co-founded Wheatley Partners, a venture capital partnership, specializing in investments in new technologies and services. In 2004, he formed Fingerhut Management, a family and friends investment office in New York City. In 2009, he co-founded The Caregiver Institute, LLC, formed to address the enormous challenges of aiding the work of home caregivers in the United States. Mr. Fingerhut also served on our Board for the period from 1995 through 1999. Mr. Fingerhut was selected to serve on our Board due to his past experience with Carriage and his extensive investment knowledge. Our Board believes that this experience and knowledge makes him a highly qualified member of our Board.

1412


PROPOSAL NO. 2:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the Exchange Act require that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
At our 2013 Annual Meeting of Stockholders, which was held on May 22, 2013, our stockholders expressed their approval of our named executive officer compensation programs with 95% of all votes cast being in favor of approval of such programs. Our Compensation Committee and our Board were very appreciative of the positive vote. The strong stockholder support has reaffirmed our Compensation Committee’s approach to executive compensation philosophy and programs. Accordingly, for 2014, our Compensation Committee has continued to administer similar reward programs and to demonstrate the same consistent pay philosophies that have been in place historically.
Our Compensation Committee and Board have determined to give stockholders the opportunity to approve, on an advisory basis, our named executive officer compensation on an annual basis. As such, the next such vote will occur in 2015.
As described in “Compensation Discussion and Analysis,” our Compensation Committee has structured our named executive officer compensation programs to achieve the following key objectives:
Pay competitive levels of salary and total compensation;
Reward management for our strong performance and successful execution of our strategic operating models; and
Align incentives with the long-term interests of our stockholders.
We urge our stockholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes in more detail how our named executive officer compensation policies and programs operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing under “Executive Compensation,” which provide detailed information on the compensation of our Named Executive Officers. Our Compensation Committee believes that the policies and programs articulated in the “Compensation Discussion and Analysis” section are effective in achieving our goals and that the compensation of our Named Executive Officers reported in this Proxy Statement has contributed to our recent and long-term success.
Accordingly, we are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement by voting “FOR” the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of Carriage’s Named Executive Officers, as disclosed in the Proxy Statement for the 2014 Annual Meeting of Stockholders of Carriage pursuant to the compensation disclosure rules of the Securities and Exchange Commission (including, but not limited to, the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables, notes and narrative).”
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. This vote is advisory, and therefore not binding on us, our Board or our Compensation Committee. Although the resolution is non-binding, our Board and our Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the advisory vote on named executive officer compensation when making future compensation decisions.
Our Board unanimously recommends that you vote “FOR” the advisory vote to approve named executive officer compensation, as disclosed in this Proxy Statement.


15


PROPOSAL NO. 3:
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit Committee of the Company recently conducted a competitive process to select an audit firm to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014. The Company invited a number of firms to submit proposals, including KPMG LLP (“KPMG”), the Company’s independent registered public accounting firm at that time. As a result of this process and after careful deliberation, on March 19, 2014, the Audit Committee approved the engagement of Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014, effective immediately, and thereby approved the dismissal of KPMG from that role.

The audit reports of KPMG on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2013 and 2012 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of KPMG on the effectiveness of internal control over financial reporting as of December 31, 2013 and 2012 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
During the fiscal years ended December 31, 2013 and 2012, and the subsequent interim period through March 19, 2014, there were no (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to KPMG’s satisfaction, would have caused KPMG to make reference to the subject matter thereof in its reports for such fiscal years and interim period, or (ii) “reportable events” (as that term is described in Item 304(a)(1)(v) of Regulation S-K).
The Company furnished a copy of the above disclosures to KPMG and requested that KPMG provide a letter addressed to the SEC stating whether or not it agrees with the statements made above. A copy of such letter is filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 19, 2014.
During the fiscal years ended December 31, 2013 and 2012, and the subsequent interim period through March 19, 2014, neither the Company nor anyone on its behalf consulted with Grant Thornton regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company that Grant Thornton concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of a “disagreement” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K); or a “reportable event” (as that term is described in Item 304(a)(1)(v) of Regulation S-K).
Representatives of Grant Thornton are expected to be present at our Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders. KPMG is not expected to be present at the annual meeting.
Although ratification is not required by Delaware law, our bylaws or otherwise, our Board is submitting our Audit Committee’s appointment of Grant Thornton to our stockholders for ratification as a matter of good corporate practice. Even if the appointment is ratified, our Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders. If the appointment of Grant Thornton is not ratified, our Audit Committee will evaluate the basis for the stockholders’ vote when determining whether to continue the firm’s engagement.
Our Board unanimously recommends that you vote “FOR” the ratification of the appointment of Grant Thornton as our independent registered public accounting firm for the fiscal year ending December 31, 2014.

16


Audit and Other Fees
Fees billed to us by KPMG during 2013 and 2012 were as follows:
  Year Ended December 31,
  2013 2012
Audit fees $962,500
 $898,200
Audit-related fees(1)
 80,974
 $10,782
Tax fees —
 —
All other fees —
 —
Total $1,043,474
 $908,982
(1)During 2013, services were performed by KPMG in relation to a potential debt offering as well as a Form S-8, which was not filed. During 2012, services were performed by KPMG in relation to a proposed accounting policy change.
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
As part of its duties, our Audit Committee is required to annually pre-approve audit and non-audit services performed by the independent registered public accounting firm in order to ensure that the provision of such services does not impair the audit firm’s independence. If a type of service to be provided by the independent registered public accounting firm has not received pre-approval during this annual process, it will require specific pre-approval by our Audit Committee. Our Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent auditors. All audit fees and audit-related fees for 2013 and 2012 were pre-approved by our Audit Committee.

17


AUDIT COMMITTEE REPORT
The Audit Committee (the “Audit Committee”) of the Board of Directors of Carriage Services, Inc. (“Carriage”) has reviewed and discussed the audited financial statements of Carriage for the fiscal year ended December 31, 2013 with Carriage management. The Audit Committee has discussed with KPMG LLP, Carriage's independent registered public accounting firm for the fiscal year ended December 31, 2013, the matters required to be discussed by Statement on Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. Additionally, the Audit Committee has received the written disclosures and the letter from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP's communications with the Audit Committee concerning independence, and has discussed with KPMG LLP their independence.
Based on the Audit Committee's review and discussions with management and KPMG LLP referred to above, the Audit Committee recommended to the Board of Directors of Carriage that the audited consolidated financial statements be included in Carriage's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 for filing with the Securities and Exchange Commission.
Audit Committee
Donald D. Patteson, Jr., Chairman
David J. DeCarlo, member through March 3, 2014
Barry K. Fingerhut
Richard W. Scott


18


SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
Stock Ownership of Management
The following table sets forth, as of March 26, 2014, the number of shares beneficially owned and the percentage of the Common Stock held by: (1) each of our directors and director nominees, (2) our Principal Executive Officer and Principal Financial Officer, (3) our other executive officers named in the Summary Compensation Table set forth under “Executive Compensation,” and (4) all our current executive officers and directors as a group. Under the rules of the SEC, on any day, a person is deemed to own beneficially all securities as to which that person owns or shares voting or investment power, as well as all securities which such person may acquire within 60 days of such date through the exercise of currently available conversion rights or options. Except as otherwise stated in the notes to the table, each person named in the table below has sole voting and investment power with respect to the shares indicated.
Beneficial Owner Common Stock 
Stock  Options(1)
 
Number of Shares
Beneficially
Owned
 Percent of
Common Stock
Melvin C. Payne(2)(3)
 1,501,207
 95,952
 1,597,159
 8.6%
L. William Heiligbrodt(4)(5)
 346,541
 33,333
 379,874
 2.1%
George J. Klug(6)
 161,853
 64,238
 226,091
 1.2%
David J. DeCarlo(7)
 175,013
 —
 175,013
 *
Shawn R. Phillips

 57,720
 60,645
 118,365
 *
Richard W. Scott(8)
 101,581
 —
 101,581
 *
Mark R. Bruce

 34,000
 62,968
 96,968
 *
Donald D. Patteson, Jr. 39,362
 —
 39,362
 *
Paul D. Elliott 18,660
 10,000
 28,660
 *
Barry K. Fingerhut 7,616
 —
 7,616
 *
All current directors and executive officers as a group (10 persons) 2,443,553
 327,136
 2,770,689
 15.0%
*Indicates less than 1%.
(1)The ownership of stock options shown in the table includes shares which may be acquired within 60 days upon the exercise of outstanding stock options granted under our stock option plans. For unexercisable stock options, see “Executive Compensation—Outstanding Equity Awards at Fiscal Year-End” in this Proxy Statement.
(2)Mr. Payne’s holdings include 70,000 shares of Common Stock held by Mr. Payne’s minor daughter and 3,518 shares of Common Stock held by Mr. Payne’s spouse.
(3)Mr. Payne has pledged 810,909 shares of his common stock pursuant to a margin account which was opened in October 2012.
(4)Mr. Heiligbrodt’s holdings include 94,627 shares of Common Stock held by the Agent for Corinne C. Heiligbrodt Separate Property.
(5)Mr. Heiligbrodt has pledged 154,389 shares of his common stock pursuant to a margin account which was opened in June 27, 2013.
(6)Mr. Klug retired effective August 9, 2013.
(7)Mr. DeCarlo's holdings include 60,329 shares of Common Stock held by the Peggy J. DeCarlo 2012 Irrevocable Trust.
(8)Mr. Scott’s holdings include 1,000 shares of Common Stock held by Mr. Scott’s minor daughter and son.

19


Stock Ownership of Certain Beneficial Owners
As of April 8, 2014, the persons named below were, to our knowledge, the only beneficial owners of more than 5% of our outstanding Common Stock, determined in accordance with Rule 13d-3 of the Exchange Act, other than directors and executive officers whose beneficial ownership is described in the above table.
Beneficial Owner 
Number of Shares
Beneficially
Owned
 Percent of Common Stock
Zazove Associates, LLC(1)
1001 Tahoe Blvd.
Incline Village, NV 89451
 2,665,660
 12.6%
Keeley Asset Management Corp(2)
111 West Jackson, Suite 810
Chicago, IL 60604
 1,878,216
 10.2%
FMR LLC(3)
82 Devonshire Street
Boston, MA 02109
 1,695,626
 9.2%
Dimensional Fund Advisors LP(4)
Palisades West, Building One,
6300 Bee Cave Road
Austin, TX 78746
 1,504,021
 8.1%
Renaissance Technologies, LLC.(5)
800 Third Avenue
New York, New York 10022
 1,097,100
 5.9%
BlackRock, Inc.(6)
40 East 52nd Street
New York, New York 10022
 962,168
 5.2%
(1)Based solely on Schedule 13G/A filed with the SEC on January 9, 2014. Zazove Associates, LLC, Zazove Associates, Inc. and Gene T. Pretti have sole voting and dispositive power as to 2,665,660 shares, of which 2,610,614 shares are issuable upon the conversion of Carriage Services Capital Trust Preferred Securities. These Carriage Services Capital Trust Preferred Securities were redeemed as of March 13, 2014.
(2)Based solely on Schedule 13G filed with the SEC on April 4, 2014. Keeley Asset Management Corp. has sole voting power as to 1,801,726 shares and sole dispositive power as to 1,878,216 shares.
(3)Based solely on Schedule 13G/A filed with the SEC on February 14, 2014. FMR LLC has sole voting power as to 325,832 shares and sole dispositive power as to 1,695,626 shares.
(4)Based solely on Schedule 13G/A filed with the SEC on February 10, 2014. Dimensional Fund Advisors LP has sole voting power as to 1,469,263 shares and sole dispositive power as to 1,504,021 shares.
(5)Based solely on Schedule 13G filed with the SEC on February 13, 2014. Renaissance Technologies, LLC has sole voting power as to 1,061,400 shares and sole dispositive power as to 1,097,100 shares.
(6)Based solely on Schedule 13G/A filed with the SEC on January 28, 2014. BlackRock, Inc. has sole voting power as to 946,062 shares and sole dispositive power as to 962,168 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities to file with the SEC and the NYSE reports of ownership and changes in ownership of Common Stock and other of our equity securities on Forms 3, 4 and 5. Executive officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Forms 3, 4 and 5 they file.
To our knowledge, based solely on our review of the copies of such reports furnished to us or written representations from reporting persons, we believe that all filings required to made under Section 16(a) of the Exchange Act were timely made for the fiscal year ended December 31, 2013, except for the following: Mr. Klug's Form 4 for common shares withheld to cover taxes associated with the accelerated vesting of shares of restricted stock on August 9, 2013 was filed on August 21, 2013.

20


EQUITY COMPENSATION PLAN INFORMATION
The following table provides information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2013:
Plan Category 
Number of securities  to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
 
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
 
Number of  securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
Equity compensation plans approved by security holders 766,459
 $13.03
 680,411
Equity compensation plans not approved by security holders —
 —
 —
Total 766,459
 $13.03
 680,411
EXECUTIVE MANAGEMENT
The following table sets forth the name, age and title of our named executive officers as of the date of this Proxy Statement. Our named executive officers serve at the discretion of our Board. There are no family relationships between any of our directors and named executive officers. In addition, there are no arrangements or understandings between any of our named executive officers and any other person pursuant to which any person was selected as an executive officer.
The following individuals were our Named Executive Officers for the fiscal year ended December 31, 2015:
Name Age Title
Melvin C. Payne 7173 Chief Executive Officer, Chairman of the Board Chief Executive Officer and Director
David J. DeCarlo 6870 President and Vice Chairman of the Board
L. William Heiligbrodt(1)
 7274 Executive Vice President and Secretary
Mark R. Bruce

 4749 Regional Partner - East
Paul D. Elliott 5254 Regional Partner - West
Shawn R. Phillips

 5052 Regional Partner - Central
Viki K. Blinderman47
Co-Chief Financial Officer, Chief Accounting Officer and Secretary

Carl B. Brink34Co-Chief Financial Officer and Treasurer
(1)On May 21, 2015, L. William Heiligbrodt, as a result of his announced retirement as of March 4, 2016 from the Company, resigned as Executive Vice President, Principal Financial Officer and Secretary. Effective May 21, 2015, Carl B. Brink became the Company’s Principal Financial Officer and Viki K. Blinderman became the Company's Secretary. On August 4, 2015, the Board appointed Viki K. Blinderman and Carl B. Brink as Co-Chief Financial Officers. Ms. Blinderman also currently serves as the Company's Chief Accounting Officer and Principal Accounting Officer and Mr. Brink currently serves as the Company's Treasurer.
The biographical information for Messrs. Payne and DeCarlo is located under “Proposal No. 1: Election of Class II Directors.”
L. William Heiligbrodt has beenwas our Executive Vice President and Secretary since March 2014.from September 2011 until May 2015. From September 2011 to March 3, 2014, Mr. Heiligbrodt was also our Vice Chairman Executive Vice President and Secretary of the Board. Mr. Heiligbrodt was an independent director of Carriage from February 2009 to September 2011. From February 2003 until his appointment onto our Board, Mr. Heiligbrodt was a private investor and managing partner in a family business. From February 1999 to February 2003, he served as a consultant to Service Corporation International (“SCI”), a funeral services corporation. Mr. Heiligbrodt was the President and Chief Operating Officer of SCI until February 1999, and, prior to holding such positions, served in various management positions with SCI beginning in February 1990. Prior to joining SCI, Mr. Heiligbrodt served as President of Provident Services, Inc. from March 1988 to February 1990. Prior to that, he served for five years as Vice Chairman and Chief Executive Officer of WEDGE Group Incorporated. Before WEDGE Group Incorporated, Mr. Heiligbrodt served as Chairman of Texas Commerce Bank, Houston and Vice Chairman of Texas Commerce Bancshares, Inc. and as a director of both companies.
Mark R. Bruce has been with Carriage since May 2005 and has served as our Regional Partner-East since November 2010. Prior to his appointment as Regional Partner-East, Mr. Bruce served as our Director of Sales Support, Director of Support, Director of Training and Development and Regional Partner-Central. Prior to joining Carriage, Mr. Bruce served for 12 years in various sales and operational leadership roles with other public funeral and cemetery service companies. Mr. Bruce has a BA in International Studies from The American University and an MBA from Northern Illinois University.
Paul D. Elliott joined Carriage in September 2012 as our Regional Partner-West. Prior to joining Carriage, Mr. Elliott was Managing Director for SCI.Service Corporation International (SCI). From February 1995 to August 2012, Mr. Elliott held various management roles in sales, corporate and operations with SCI. From September 1984 to December 1994, Mr. Elliott was a partner in his family'sfamily’s funeral home in Kansas. Mr. Elliott is a graduate of the University of Kansas and the Dallas Institute of Funeral Service.

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Shawn R. Phillips has been with Carriage since September 2007 and has served as our Regional Partner-Central since June 2011 and our Regional Partner-West from 2007 to 2011. Prior to joining Carriage, Mr. Phillips served from 1983 to 2007 in various leadership and operational roles with other public funeral service and cemetery service companies. From 1979 to 1983, Mr. Phillips worked for an independent funeral operator. Mr. Phillips is a licensed Funeral Director and Embalmer.
Viki K. Blinderman joined Carriage in May 2002 and was appointed as the Secretary of the Company on May 21, 2015 and Co-Chief Financial Officer on August 4, 2015. Ms. Blinderman has served as our Chief Accounting Officer since September 2012. Ms. Blinderman also served as our Corporate Controller and held several other positions in the Company. Prior to joining Carriage, Ms. Blinderman served as the Chief Financial Officer of a privately-held litigation support and practiced in public accounting. Ms. Blinderman is a CPA and possesses a BBA and a MPA in Accounting from the University of Texas at Austin.
Carl B. Brinkjoined Carriage in January 2009 and was appointed Principal Financial Officer on May 21, 2015 and Co-Chief Financial Officer on August 4, 2015. Mr. Brink has served as our Treasurer since January 2012. Mr. Brink also served as our Cash Supervisor from January 2009 through January 2012. Prior to joining Carriage, Mr. Brink served as the Cash Manager for International Paper in their Corporate Treasury group from 2006 to 2009. Mr. Brink has a BS in Finance from the University of Tennessee.

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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation DiscussionCarriage Services’ compensation program for its executive officers is more intrinsically unique to the Company’s identity as driven by our high and Analysis provides informationtrending higher over time sustainable performance. Therefore, the following discussion and analysis section on compensation will read differently from most publicly traded companies. In order to better understand the decisions regarding theour executive compensation program, this requires a very brief look back into Carriage Services’ history.
Our Mission Statement states that we are committed to being the most professional, ethical, and highest quality funeral and cemetery service organization in our industry, or simply stated as Being The Best, has not changed since its inception in 1991, and neither have our Five Guiding Principles:
Honesty, Integrity and Quality in All That We Do
Hard work, Pride of Accomplishment, and Shared Success Through Employee Ownership
Belief in the Power of People Through Individual Initiative and Teamwork
Outstanding Service and Profitability Go hand-in-Hand
Growth of the Company Is Driven by Decentralization and Partnership
Carriage Services is on a Good To Great Journey that will never end. What is not explicitly stated is that in order to be great, the journey must be one of learning, adapting to change, and continuous improvement. What we have learned is that from 1991 to 2003, we were not aligned with our own Guiding Principles when we employed a “budget and control” model for operating and consolidating the highly fragmented funeral and cemetery industry under a top-down management structure. Even after implementing a High Performance Standards Operating Model in 2004, our principallearning journey continued on how to even first become good at operating with High Performance Standards that do not change from year-to-year and are governed by a Standards Council comprised of our best Managing Partners and former owners.
Since Carriage’s “New Beginning” in 2012, our Good To Great Journey of learning and improving continues. Properly aligned, we always find ourselves returning to the Good To Great concepts of “First Who, Then What,” “Right People on the bus in the Right Seats (and the wrong people off the bus),” and the “Flywheel Effect,” as they remind us and reaffirm for us each and every time that the achieved quantitative results are not sustainable without the bedrock establishment of these qualitative Good To Great ideas that are deeply rooted into our High Performance Culture.
Therefore, the Company’s compensation program should also be aligned – beginning with how we think, the unique language we use internally, and leading directly into the actions we take – with our Mission Statement, Five Guiding Principles and Good To Great concepts driving our High Performance Culture. Carriage Services recognizes that it represents a “square peg” in a world of public company “round holes,” but we take pride in our edges. We primarily looked internally to our own historical, trend compensation data versus the corresponding performance in the evolution of the “Right Who’s” in executive officer,and senior leadership from 2012 through 2015, and therefore elected not to utilize an independent, third-party compensation consultant this year.
The key is first accepting and understanding that our principalHigh Performance Standards Operating model is leadership-based (as opposed to the management focus required in a top-down, budget and control model). Identifying the “Right Who’s” with 4E Leadership characteristics that fit into Carriage Services’ culture is what drives high and sustainable operating and financial officer,performance. A corresponding compensation plan is then tailored to the “Right Who” and commensurate with the performance proven over time.
Carriage Services has always kept an open door and has openly invited the general investor, investment firms, investment analysts and anyone who wishes to learn more about the Company, both in general and as a long-term value creation investment platform, and to observe the unique and complete transparency of our three other most highly-compensated executive officersHigh Performance Culture.
Context for Compensation Decision-making within Carriage Services
As aforementioned, our last completedcompensation program is best understood within the context of our business and leadership strategy and the exceptional return to shareholders achieved in recent years. Over the course of our continuing Good To GreatJourney, Carriage has evolved into a “High Performance Culture Company” that just happens to be in the deathcare sector. Our evolution is apparent in the significant improvement in our financial and operating performance since 2012 which has led to a total shareholder return (“TSR”) of 342% over the past four years vs. a 141% TSR among our peer companies. Peer selection is discussed more fully on page 19 of this report. Carriage TSR is also favorable to a broader group of companies as represented by the Russell 3000 index, which Carriage joined in June 2012. The Carriage Services TSR of 342% over the past four years far exceeds the Russell 3000 index TSR of 76% for the comparable period.

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Much of our success emanates from being highly selective about leadership of the Company at all levels. We cannot stress enough that high performance quantitative results are not sustainable without establishing the qualitative foundation of the High Performance Culture first. We utilize a 4E Leadership Model (Energy, Energizes Others, Edge, Execute), initially developed by Jack Welch at General Electric, but tailored and evolved specifically to Carriage Services’ needs and culture, to select and continuously assess our leaders. Our compensation practices support and reinforce our ability to attract, retain and motivate these leaders.
4E Leaders have an entrepreneurial, winning, competitive spirit and want to make a difference in Carriage Services’ high performance and reputation within the funeral and cemetery industry. 4E Leaders are motivated by the recognition and rewards related to achievement of our Being The Best High Performance Standards. We expect our leaders to produce superior results and maximize long-term returns to our stockholders. Their compensation can vary based on the Company’s results and their contributions.
2015 Performance Highlights
Our fiscal year 2015 financial and one executive officer who would have been oneoperational results were outstanding, as we achieved record performance in terms of revenue growth, Adjusted Consolidated EBITDA, Adjusted Diluted Earnings per Share and Adjusted Free Cash Flow. For further discussion, see our see our Earnings release discussing 2015 annual results reported on February 16, 2016 as filed on Form 8-K. Highlights of our three other highly-compensated executive officers for our last completed fiscal year but whose employment terminatedare as follows:
Acquisitions. During 2015, we acquired two funeral home businesses. We acquired a funeral home business in 2013. (together, our “Named Executive Officers”),Clarksville, Tennessee in February 2015 and is intended to placeanother funeral home business in perspectiveWake Forest, North Carolina in November 2015.
Construction of New Funeral Homes. During the information contained in the executive compensation tables that follow this discussion.
The following individuals were our Named Executive Officers for the fiscal year ended December 31, 2013:2015, we completed the construction of and began operating three new funeral homes, two funeral homes in Texas and one funeral home in Florida. The funeral home constructed in Florida previously leased its facility and upon completion, moved operations to the newly constructed facility.
Credit Facility. On May 20, 2015, we entered into a sixth amendment (the “Sixth Amendment”) to our secured bank credit facility with Bank of America, N.A. as administrative agent (the “Credit Agreement”), comprised of a $200 million revolving credit facility and a $125 million term loan (collectively, the “Credit Facility”). The Sixth Amendment provides that, among other things, we may repurchase our common stock so long as at the time of such repurchase there have been no defaults under the Credit Agreement, we have at least $15.0 million of unrestricted cash and undrawn borrowing capacity under the Credit Agreement and the senior leverage ratios is less than 3.25 to 1.00.
On February 9, 2016, we entered into a seventh amendment (the “Seventh Amendment”) to our Credit Facility. The Seventh Amendment resulted in, among other things, (i) reducing our LIBOR based variable interest rate 37.5 basis points, (ii) extending the maturity so that the Credit Agreement will mature at the earlier of (a) any date that is 91 days prior to the maturity of any subordinated debt (including the $143.75 million in principal amount of 2.75% Convertible Subordinated Notes issued on or about March 19, 2014 and due March 15, 2021 or (b) February 9, 2021, (iii) increasing and funding the term loan so that $150 million was outstanding upon the effectiveness of the Seventh Amendment, (iv) reducing the size of the revolver to $150 million, (v) increasing the accordion to $75 million and (vi) updating the amortization payments for the term loan facility with payments beginning with the fiscal quarter ending March 31, 2016 through the fiscal quarter ending December 31, 2020.
Share Repurchase Program. On May 19, 2015, our Board approved a share repurchase program authorizing us to purchase up to an aggregate of $25.0 million of our common stock in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. On September 28, 2015, our Board authorized additional repurchases of $20.0 million of our common stock bringing the total authorized repurchase amount to $45.0 million. During 2015, we purchased 1,927,665 shares of our common stock for a total cost of $45.0 million, representing the entire authorized repurchase amount, at an average cost of $23.34 per share. Our shares were purchased in the open market or in privately negotiated transactions. Purchases were at times and in amounts as management determined appropriate based on factors such as market conditions, legal requirements and other business considerations. Shares purchased pursuant to the repurchase program are currently held as treasury shares.
Executive Leadership Changes. On May 21, 2015, L. William Heiligbrodt, as a result of his announced retirement as of March 4, 2016 from the Company, resigned as Executive Vice President, Principal Financial Officer and Secretary. Effective May 21, 2015, Carl B. Brink became the Company’s Principal Financial Officer and Viki K. Blinderman became the Company's Secretary. On August 4, 2015, the Board appointed Viki K. Blinderman and Carl B. Brink as Co-Chief Financial Officers.

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The following table reflects our 2015 financial performance:
NameMeasure Position
Melvin C. Payne2015 Result Chairman of our Board and our Chief Executive OfficerChange Versus FY 2014
Total Revenue$242.5 million7.2% increase
L. William HeiligbrodtAdjusted Consolidated EBITDA(1)

$71.1 million15.4% increase
Adjusted Consolidated EBITDA Margin(1)
 Vice Chairman of our Board, Executive Vice President and Secretary
Mark R. Bruce

29.3%		 Regional Partner - East200 basis point increase
Paul D. Elliott Regional Partner - West
Shawn R. Phillips

 Regional Partner - Central
George J. KlugAdjusted Diluted EPS(1) (2)
 Former Senior Vice President and Chief Information Officer$1.48/share10.4% increase
Adjusted Free Cash Flow(1)
$43.7 million13.0% increase

(1)Adjusted Consolidated EBITDA, Adjusted Consolidated EBITDA Margin, Adjusted Diluted EPS and Adjusted Free Cash Flow are non-GAAP financial measures that management believes are important measures for understanding the Company's overall operational and financial results. For a reconciliation of Adjusted Consolidated EBITDA, Adjusted Consolidated EBITDA Margin, Adjusted Diluted EPS and Adjusted Free Cash Flow, see our Earnings Release discussing 2015 annual results reported on February 16, 2016 as filed on Form 8-K.
Since we launched the Carriage Good To Great Journey at the end of 2011, our performance has been extraordinary and produced market beating shareholder returns as summarized below:
  Carriage Good To Great Journey
  Years Ending December 31  
  (in Millions Except Per Share and Percentage Amounts) CAGR
  2011 2012 2013 2014 2015 % 
             
Total Revenue $182.3
 $198.2
 $213.1
 $226.1
 $242.5
 7.4%
             
Adjusted Consolidated EBITDA $48.6
 $52.6
 $56.0
 $61.7
 $71.1
 10.0%
             
Adjusted Consolidated EBITDA Margin 26.6% 26.5% 26.3% 27.3% 29.3% 
 
             
Adjusted Diluted Earnings Per Share $0.64
 $0.80
 $0.98
 
$ 1.24(1)
 $1.48
 23.3%
             
Adjusted Free Cash Flow $29.1
 $22.9
 $36.2
 $38.6
 $43.7
 10.7%
             
Share Price at December 31 $5.60
 $11.87
 $19.53
 $20.95
 $24.10
 44.0%
             
             
(1) Adjusted for one time tax benefit of 10 cents per share  
Consideration of Previous Shareholder Advisory Vote
At our 2015 Annual Meeting of Stockholders, held on May 19, 2015, management’s proposal to ratify our Named Executive Officer compensation programs for 2014 narrowly failed to pass, with 49% of all votes cast supporting it.
In 2015, we have taken a number of steps to resolve stockholder concerns, including:
1.
(1)We added to our
On March 3, 2014, L. William Heiligbrodt resigned from the Board. Mr. Heiligbrodt served as the Vice Chairman of the Board, Executive Vice PresidentTen Year Vision this past year a third element related to long-term shareholder value creation to become recognized by institutional investors and Secretary of the Company since September 2011 and servedthose in our industry as a non-employee directorsuperior Consolidation, Operating and Value Creation Investment Platform by consistently allocating our precious capital, especially our growing Free Cash Flow, with disciplined savviness and flexibility among various investment options so as to maximize the intrinsic value of Carriage per share over the Company from February 2009 to September 2011. Mr. Heiligbrodt will continue to serve as the Executive Vice President and Secretary of the Company.next ten years.
(2)2.Retired effective August 9, 2013.Our Chairman and CEO and our Co-CFOs continue to conduct stockholder outreach efforts with stockholders in several private meetings and conferences.
3.We adopted executive stock ownership guidelines that further align the interests of our leadership with shareholder interests.
4.We adopted a clawback policy, designed to recoup any compensation improperly paid prior to an accounting restatement.
5.
We learned that our stockholders did not favorably view the acceleration of the Good to Great Payout in early 2014 and adjusted our compensation practices in an effort to avoid those types of situations in the future.
6.
We drafted this Compensation Discussion and Analysis to better explain the quantitative measures included in our Incentive Plan as it relates to the uniqueness of our Company culture.

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7.We have not requested additional shares for use in our long-term incentive plans.
While the stockholder vote to ratify our executive compensation is non-binding and advisory, we will continue to strive to understand and respond to stockholder feedback. However, we also invite and encourage our stockholders to learn more about what makes Carriage Services and its High Performance Culture so unique and transparent in its culture, practices and operations.
Compensation Philosophy and Practices
Our executive compensation program is designed to attract, motivate and retain talented executives so that we can produce superior total shareholder returns over the long-term. Overall, we believe our executive compensation programs align our executive pay with Company performance and support our short and long-term superior results and maximize long-term returns to our stockholders. Ourbusiness objectives. The Compensation Committee consists entirely of independent Board members and is responsible for the approval and oversight of compensation and benefit plans and employment agreements affecting Carriage Services’ executive management.officers.
To achieveThe Committee reviews its compensation philosophy annually, including determining whether this philosophy supports our compensationbusiness objectives ourand is consistent with the Committee’s charter.
In 2015, the Compensation Committee has structuredcontinued to implement our annual incentive-based cash and long-term non-cash executive compensation programsphilosophy (the “Philosophy”), which was developed to motivateformalize the strategy behind our executive officerscompensation practices and to achieve the business goals set by us and reward those executivesserve as an on-going reference point for achieving such goals.
Executive Summary
2013 Performance
Our fiscal year 2013 financial and operational results were outstanding, as we achieved record performance in terms of both revenue and adjusted earnings per share. Our record performance was driven by substantially higher revenue growth and margin expansion in each of our four major profit segments relative to our fiscal year 2012 performance. Highlights of our financial performance are shown below:
Measure2013 ResultChange Versus FY 2012
Total Revenue$214.0 million7.3%
Adjusted Basic EPS(1)
$1.00/share23.5%
GAAP Diluted EPS$0.82/share41.4%
(1)
Adjusted Basic EPS is a non-GAAP financial measures that management believes is an important measure for understanding the Company's overall operational and financial results.For a reconciliation of Adjusted BasicEPS to the GAAP measure of Diluted EPS from continuing operations, see “Executive Compensation - Annual Cash Incentive Bonuses.”

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On November 4, 2011, twenty years after Carriage was founded, we finalized a major Board and Executive Management reorganization, which we refer to asexecutive compensation decisions. The Philosophy has been developed based on our Good To GreatTransition Date, then launched a five year Good To Great JourneyBeing The Best Mission Statement to take Carriage from a "Good" deathcare and consolidation company in 2012 to one considered "Great" by the end of 2016, using equity market valuation as a benchmark. We assigned 2012 the theme of Carriage Services 2012 - A NEW BEGINNING!, and challenged and empowered our entire field and home office support teams "to own" the five year Good To Great JourneyFive Guiding Principles with broadly higher and sustainable operating and financial performance. We assigned 2013 the theme of Carriage Services 2013 - Raising the Standard - ALL IN!  Our record 2013 performance was the result of strong performance and higher sustainable earning power:may be summarized in this manner:

Achieved $1.02 per share in Non-GAAP Adjusted EPS ($1.00 Basic plus $0.02 from divested operations).

We closed one transaction in November 2013 but recently announced our agreement with SCI to acquire six businesses in two new strategic markets: New Orleans and Washington, D.C.

Total Shareholder Return for Carriage was up 902.1% for the five years ended December 31, 2013 while the Russell 3000 Index was up 135.6% over the same time period. Moreover, approximately 80% of Carriage's Total Shareholder Return over the last five plus years has been realized since we launched our Good To Great Journey on January 1, 2012, as our stock price increased 249% from $5.60 per share on December 31, 2011 to $19.53 per share on December 31, 2013.
Alignment of Company Performance and Executive Pay
To achieve our compensation objectives, our Compensation Committee has structured our annual incentive-based cash and long-term equity compensation programs to motivate our executive officers to achieve the business goals recommended by management and approved by the Board and to reward our executive officers for achieving such goals.
Over the past several years the growth in the Company's total shareholder return ("TSR") has aligned with or exceeded the changes in our CEO's compensation, as shown in the following graph:             
As the graph displays, $100 invested in our Common Stock on December 31, 2010 grew to $416 by the end of fiscal year end 2013.

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Executive Compensation Practices
Our executive compensation program is designed to attract, motivate, and retain talented executives soexceptional 4E Leadership talent that are also a cultural fit (“First Who”) in order to lead value creation strategies such as sustainably increasing revenue, growth and profitability that leads to total shareholder returns (“Then What”);
to outline the transparency between pay, commensurate with individual and team contribution, and our annual and long-term Company performance;
to reward and reinvest in 4E Leadership that has established a proven record of success over time; and
to align senior leadership interests with what is best for the Company and thus, what is best for our stockholders over time.

In addition, the Philosophy outlines compensation practices (See “What We Do” and “What We Do Not Do” below), specifies compensation elements, defines the purpose of each element and expresses the target positioning of compensation levels that we can produce long-term superior results and maximize long-term returnsdesire to our stockholders. Overall, we believe our executive compensation programs support our short- and long-term business objectives and align our executive pay with Company performance.achieve over time.
Our Compensation Committee consists entirely of independent Board members and is responsible for the approval and oversight of compensation and benefit plans and employment agreements affecting Carriage's executive officers.
Compensation Program Objectives
We compete for executive talent in a highly competitive industry. We believe that our executive compensation program, which is a key component in our ability to attract and retain talented, qualified executives, should be designed to provide a meaningful level of total compensation that is aligned with organizational and individual performance.
The principal objectives of our executive compensation program are to:
pay competitive levels of salary and total compensation;
reward Named Executive Officers for our strong performance and successful execution of our strategic operating models; and
align incentives with the long-term interests of our stockholders.
Executive Compensation Philosophy and Elements of Compensation
Best Practices
What We Do
Pay for Performance Philosophy:
A significant portion of executive compensation is performance-based and is tied to our financial performance and/or the performance of our stock price.price over the intermediate to long-term period.
Mitigate Risk
Carriage Services is principle-based in its unwavering beliefs and every day practices as reflected in our Five Guiding Principles. Our first Guiding Principle of “Honesty, Integrity and Quality in all that we do” requires that we hire and hold all employees, at all levels, accountable to this first Guiding Principle (as well as the other four Guiding Principles) at all times.
Mitigation of Undue Risk: Our compensation plansWe have share ownership and trading guidelines for officers.
We have anti-hedging provisions to mitigate undue risk, including caps on the maximum level of payouts and Board and management processes to identify risk. We do not believe anyas part of our insider trading policy, prohibiting our officers from hedging the risk of stock ownership by purchasing, selling or writing options on Company stock.
We have clawback provisions that permit the Board to pursue recovery of incentive payments if the payment would have been lower based on restated financial results.
We have double-trigger vesting of equity awards upon change in control.
We have very limited executive perquisites.
We primarily began utilizing internal, historical trend compensation programs create risks thatdata over four full years as compared to individual and Company performance measures when making compensation decisions which are reasonably likely to havegrounded in our belief of continued investment in the “Right Who’s” over time. We consider peer group market data merely as a material adverse impact on the Company.benchmark.

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Regular Review of Share Utilization:

Manage Dilution
We regularly evaluate share utilization levels bywithin our long-term incentive plans. By reviewing overhang levels and run rates, to ensurewe manage the dilutive impact of stock-based compensation remains atto appropriate levels.
What We Don'tDo Not Do
No Excise Tax Gross-Ups Upon Change in Control.
supplemental retirement plans.
No Excessive Executive Perquisites: We provide only standard benefits and nominal perquisites that are consistent with orrepricing of underwater stock options.
No grants below competitive practices.
No Repricing of Underwater Stock Options; No Grants Below 100% of Fair Market Value.
fair market value.
No Inclusioninclusion of Long-term Incentive Awardslong-term incentive awards in Cash Severance Calculations.cash severance calculations.
No excise tax gross-ups upon change in control.
ExecutiveElements of Compensation Philosophy
In 2013, the Compensation Committee continued to implement our executive compensation philosophy (the “Philosophy”), which was developed to formalize the strategy behind our executive compensation practices and to serve as an ongoing reference point for executive compensation decisions. The Philosophy specifies compensation elements, defines the purpose of each element and expresses the target positioning of compensation levels that we desire to achieve over time.
Each year we consider our executive compensation in lightelement of the Philosophy and the fact that we compete for executive talent in a highly competitive industry. We believe that our executive compensation program which is a key component in our ability to attract and retain talented, qualified executives, should befor Named Executive Officers has been designed to provide a market-competitivealign with our Philosophy and meaningful level of total compensation that is aligned with organizational and individual performance. The Philosophy is summarized in the table below and has been developed based on the following guiding principles.

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to create a clear link between pay and our annual and long-term performance;
desire to attract, retain, motivate and motivate exceptional talentreward leaders consistently with our 4E Leadership Model.
In our Philosophy, which first begins with our belief in the Good To Great concept of “First Who, Then What,” we define the “Right Who” to drivebe someone who inherently “already possesses 4E Leadership characteristics as a starting point and that believes in and is completely aligned with our revenue, growth, profitability,Mission Statement and total stockholder return;Five Guiding Principles. In this 4E leader’s continued learning journey with Carriage Services, these beliefs are then translated into a consistent high performance way of thinking and ultimately, consistent high performance way of executing that is then assessed and measured through the individual and team contribution to the shared success and continuously improving and consistent performance of the Company over time.
to focus executives on a common setA significant portion of critical corporate-wide business objectives;
to provide competitive pay opportunities; and
to align executive interests with thosethe 2015 compensation of our stockholders.Named Executive Officers is considered at-risk and was directly affected by our financial results and stock price, both in the amount of total cash compensation earned and the value of outstanding long-term equity awards. For 2015, compensation designed for our executive officers consisted of:
Pay Element  Purpose
Target Positioning to
Market
Base Salary  
Provide competitive base pay to hire and retain key talent, the “Right Who’s,” with the desired leadership4E Leadership qualities.
Market median

Short-Term Incentives  
Provide market competitive awardcash incentive opportunities that will motivate our executives to achieve and exceed corporate financial goals that support our overall strategy.
Market median for target companyBeing The Best High PerformanceStandards. For Mr. Payne and Mr. DeCarlo, these awards are conditioned upon achieving objective performance level adjusted for individual responsibilitiestargets.

Long-Term Incentives  
Provide market competitive equity award opportunities that will align executive interests with our stockholders, and allow executives to build share ownership.
Market median for target company
performance level
Ownership GuidelinesEncourage long-term ownership and encourage retention of company stock and alignment of executive interestsexecutives who enhance our High Performance Culture consistent with our stockholders.Mirror typical market practices
Peer Group Companies and Benchmarking
Our Compensation Committee, with the assistance of compensation consultants, developed a peer group consisting of 14 companies across the broader services industries to reflect a holistic view of our markets and services in which we operate. The peer group is periodically adjusted to reflect certain members being acquired, ceasing operations or otherwise ceasing to operate as a public company. The peer group is used as one component in evaluating the competitiveness of the compensation levels of certain of our Named Executive Officers (which, in 2013, were Messrs. Payne and Heiligbrodt).
Almost Family, Inc.Hillenbrand, Inc.
Assisted Living Concepts, Inc.Mac-Gray Corporation
Capital Senior Living CorporationStewart Enterprises
CPI CorporationStonemor Partners, LP.
Diversicare Healthcare Services, Inc.Good To Great Journey.

Sunlink Health Systems, Inc.
Ensign Group, Inc.Town Sports International Holdings
Healthcare Services GroupUS Physical Therapy, Inc.
In addition, we offer the same group health and welfare benefit programs and tax-qualified retirement plans that are available to reviewingall of our employees, except that our Named Executive Officers cannot participate in our Employee Stock Purchase Program.
In order to attract, motivate, retain and reward our entrepreneurial 4E Leaders, the Company aligns compensation datawith actual Company and team performance contributions while utilizing market competitive levels only as a guideline for each element of compensation.

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Management’s Role in Determining Executive Compensation
Our Compensation Committee has final approval regarding recommendations of executive officer compensation. Mr. Payne’s role as our Chairman of the peer group detailed above,Board and Chief Executive Officer in determining executive compensation is to make compensation recommendations for those other than himself based on his assessment of the individual performance of each executive officer in relation to our overall Company performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting information and analyses to enable our Compensation Committee also reviews compensation datato execute its responsibilities, as well as addressing specific requests for information from published compensation surveys of other similarly-sized organizations acrossour Compensation Committee;
attending our Compensation Committee’s meetings as requested in order to provide information, respond to questions and otherwise assist our Compensation Committee;
developing recommendations for individual executive officer bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the general industry. It iscash incentive bonus plans; and
preparing long-term incentive award recommendations for our Compensation Committee’s approval.
Compensation Evaluation Process
Given our unique organizational culture and the Committee's desire to not only analyze compensation trends within our industry, but more broadly as well.
It hasparticular sector in which we belong, there are few direct, public company peers or few highly correlated job matches among any potential proxy peers. In the past, it had been our practice to review market compensation and peer group data annually and to combine the results of the market analysis with our review of the roles and responsibilities of each of our executive positions in order to determine the appropriatecompetitive pay levels for each Named Executive Officer of the company. Company.
In the first half of 2015, senior leadership actively restructured itself along with functional Houston Support reporting responsibilities. These events allowed for management to further learn and approach the Company’s corresponding compensation program with a fresh perspective.
In 2015, the Compensation Committee did not engage an independent, third party compensation consultant. However, the Committee retains the right to hire a compensation consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement. Instead, we augmented our 4E talent internally by hiring an experienced and seasoned Director of Compensation & Benefits to work with senior leadership and the Committee on a compensation program that is aligned with and tailored to the uniqueness of Carriage Services’ High Performance Culture.
We frequently review, revisebegan with a re-examination into the same market analysis and amendpeer group data that had been provided by Paradox Compensation Advisors (“Paradox”) from the prior year. Details about Paradox’s findings, peer group determinations, and analyses may be referenced in our 2014 Proxy Statement. In our consideration of this market data however, we believe that this market data provided only some roughly right guidelines and was not primarily utilized to achieve our targets due to our culture’s uniqueness in the deathcare sector or industry.
To further our own learning and understanding of how to better approach a simple and transparent compensation policies, practices and programs to ensure they remain bothplan that was appropriate and responsivecommensurate with our own identity of high performance, we reviewed internal, historical compensation trend data for executive and senior leadership over four full years, from 2012 through 2015, as compared to the performance of the Company in each of these corresponding years. This introspective analysis confirmed that our business needs.
beliefs in Good To Great concepts such as “First Who, Then What,” “Right People in the Right Seats on the bus,” and the “Flywheel Effect” were being fully and consistently practiced and were evolutionary from 2012 through 2015. The compensation decisions for Messrs. Bruce, Phillipsresults were that our executive and Elliott were made taking into accountsenior leadership team, known as the Philosophy,Operational Strategic Growth & Leadership Team (OSGLT), became smaller during this time, but improved in its leadership and using broader market survey data as appropriate but withoutqualitative effectiveness which we believe had a direct comparison againstcorrelation with the peer group set forth above.Company’s continuously improving quantitative performance results over this same time period.
Our internal analysis and recommendations, along with published executive compensation data from some of our sector peers such as SCI and Matthews International Corporation, was then presented to the Compensation Committee for review and approval.

2619


Elements of the 2013Performance-based Compensation Program
Our executiveCarriage maintains compensation program consists of the following basic elements:
Base salaries;
Annual cash incentive bonuses;
Long-term, share-based incentives; and
Other benefits.
Allocationprograms in full alignment with our High Performance Culture. We regularly review how our levels of compensation among these elements is designed to provide the appropriatealign with performance and how our mix of short-termpay (base salary versus annual cash incentives and long-term incentives,incentives) will allow us to attract and retain 4E Leaders, while motivating these leaders to execute upon both annual and long-term goals.
The chart below shows the four-year trend between our CEO’s compensation and TSR:
            
As the graph displays, $100 invested in our Common Stock on December 31, 2011 grew to $430 by the end of fiscal year 2015, which constitutes a 342% total return.
The table below depicts 2015 mix of total direct compensation (base salary, cash incentive bonus and long-term equity-based compensation. The pay mixincentives) for Mr. Payne's 2013 reported compensation is shown below:our CEO and Chairman and other Named Executive Officers as a whole.    
Total Direct Compensation


20


Base Salaries
The base salary for each of our executive officers is determined on an individual basis, taking into account such factors as the duties, experience and levels of responsibility of the executive as well as the compensation levels within companies in the peer group for Messrs. Payne and Heiligbrodt.executive. Base salaries for our Named Executive Officers, are evaluated annually and adjustments are approved by our Compensation Committee based on its evaluation of individual performance and the market. performance.
Our Compensation Committee made the following changes to the annual base salaries of our Named Executive Officers during 2013: an increase from $575,000 to $625,025 for Mr. Payne, an increase from $500,000 to $543,500 for Mr. Heiligbrodt, an increase from $240,000 to $260,000 for Mr. Bruce, an increase from $230,000 to $240,000 for Mr. Phillips and an increase from $240,000 to $250,000 for Mr. Elliott.2015:
Named Executive Officers 2014 2015
Melvin C. Payne $625,000
 $645,000
David J. DeCarlo $545,000
 $560,000
L. William Heiligbrodt $545,000
 $560,000
Mark R. Bruce $280,000
 $290,000
Paul D. Elliott $260,000
 $275,000
Shawn R. Phillips $250,000
 $270,000
Viki K. Blinderman $230,000
 $240,000
Carl B. Brink $150,000
 $170,000
Annual Cash Incentive Bonuses
The annual cash bonus for Messrs. Payne, DeCarlo and Heiligbrodt is generally based upon achievement of specific performance targets, with our Board and our Compensation Committee retaining discretion to increase or decrease the payout. For such individuals, the 2013
These Employment Agreements also provide annual incentive targets for these Named Executive Officers:
  Target Payout (% of Base Salary)
  Threshold Target Maximum
Melvin C. Payne 45% 90% 180%
David J. DeCarlo 40% 80% 160%
L. William Heiligbrodt 40% 80% 160%
The annual cash incentive bonus for performance during fiscal year 2015 for Messrs. Payne and DeCarlo was considered based upon attainmentpreviously established quantitative and qualitative performance metrics determined by our Compensation Committee in February 2015. The target quantitative metrics are Adjusted Basic EPS (weighted 40%) of the objective and quantitative goal of earnings$1.55 per share from continuing operations (“EPS”), with such adjustments as described below (“and Adjusted EPS”Consolidated EBITDA Margin (weighted 40%) of 27.8%. The qualitative measures (weighted 20%) include executive team self-assessments regarding team cohesion and collaboration.  The actual achieved metric during 2015 was Adjusted Basic EPS of $1.52 per share and Adjusted Consolidated EBITDA Margin of 29.3%. Adjusted EPS is aand Adjusted EBITDA Margin are non-GAAP financial measure that is calculated by adjusting EPS to exclude special items, including withdrawable trust income, acquisition expenses, severance costsmeasures and other non-recurring expenses. For 2013,addressed fully in our Earnings Release reported on February 16, 2016 as filed on Form 8-K.
Mr. Payne recommended a reduced annual cash incentive payout for himself citing the Board reviewed Basic EPS from continuing operations to eliminate the diluted effectunderperformance of the convertible junior subordinated debt.
EPS is usedtrust fund and especially when compared to the record performance of the Company as a supplemental financial measurement by managementwhole. The Compensation Committee reviewed management’s recommendations and investors to compare our current financial performanceagreed with our previous resultstheir proposal. The Compensation Committee approved annual cash incentives for 2015 for Mr. Payne at the recommended reduced amount and withMr. DeCarlo at approximately 100% of his respective achieved value. At the performance of other deathcare companies. The adjustment of special items in Adjusted EPS allows management to focus on the evaluation of operating performance as it primarily relates to our operating expenses. We do not intend for this information to be considered in isolation or as a substitute for other measures of performance prepared in accordance with GAAP.

27


We are providing below a reconciliation of EPS (a GAAP measure) to Adjusted EPS (a non-GAAP measure):
  December 31, 2013
Basic EPS from continuing operations $0.83
Effect of special items $0.17
Adjusted Basic EPS from continuing operations $1.00
EPS from discontinued operations (earnings only) $0.02
Total adjusted EPS $1.02
Messrs. Payne and Heiligbrodt did not receive bonuses for 2013 per the discretion and approval of the Compensation Committee.  Messrs. Payne andCommittee along with agreement from the Board, it was determined that Mr. Heiligbrodt recommended that due to the acceleration of the performance-based stock awards (as discussed herein this section under “Performance-based Stock Awards”) and therefore, the resultingwould not receive a cash out payment, no ordinary cash bonus would be appropriate for 2013. The cash out payment occurred approximately a year and a half into a five year plan themed Good To Great to reward certain employees and directors for their contribution toward transforming Carriage into a high performance culture company while making a five year journey from Good To Great, using equity market valuation as a benchmark. As such, Mr. Payne and the Compensation Committee believed that the more rapid increase in the value of the Company's shares, which wasn't anticipated at the time the PBS Awards were granted, and the early payouts of such awards, provided adequate compensation in light of the Company's 2013 strong performance.
Moreover, Mr. Payne felt that as the co-founder and largest individual shareholder of Carriage with almost 1.6 million shares, equal to 8.6% of Carriage's common stock ownership, the substantial increase in his net worth because of the rapid share price increase over the last two years was much more relevant and personally meaningful than an annual performanceincentive bonus for a 4E Leader who mentors and coaches by example an "ownership mindset" in all other leaders and employees across Carriage.2015 after review of his Employment Agreement.
ForThe 2015 cash incentive bonus for Messrs. Bruce, Elliott, Phillips, Brink and Phillips, the 2013 cash incentive bonusMs. Blinderman was determined by their respective supervisors on a qualitative and quantitative basis based upon a previously established bonus target as a percentage of base salary in addition to individual contribution and company-wideCompany financial and operational performance results during 2013. 2015. The Compensation Committee approved annual cash incentives for 2015 for these individuals.


21


2015 Annual Cash Incentive Bonuses
The table below sets forth the 20132015 base salary for each of our Named Executive Officers,Messrs. Payne, DeCarlo and Heiligbrodt, the threshold, target and maximum and actual incentive bonus payments for each of Messrs. Payne, DeCarlo and Heiligbrodt during 2013 and the 2013 bonus payout for each of our other Named Executive Officers.

28


2013 Annual Cash Incentive Bonuses2015.
 
Earnings per share achievement   $0.89
 $1.01
 $1.13
   
Named Executive Officers 
Annual Base
Salary
 
Threshold(1)
 
Target(1)
 
Maximum(1)
  Individual  2013 Bonus
Melvin C. Payne $625,025
 $281,261
 $562,523
 $1,000,000
 $
—(2)
L. William Heiligbrodt $543,500
 $217,400
 $434,800
 $869,600
 $
—(2)
George J. Klug(4)
 $240,000
 n/a
 n/a
 n/a
 $—
Mark R. Bruce $260,000
 n/a
 n/a
 n/a
 $
104,000(3)
Paul D. Elliott $250,000
 n/a
 n/a
 n/a
 $
75,000(3)
Shawn R. Phillips $240,000
 n/a
 n/a
 n/a
 $
60,000(3)
Named Executive Officers 
Annual Base
Salary
 
Threshold(1)
 
Target(1)
 
Maximum(1)
 
Calculated Bonus(2)
  
Individual  2015 Bonus Paid(3)
Melvin C. Payne $645,000
 $290,250
 $580,500
 $1,000,000
 $551,162
 $450,000
David J. DeCarlo $560,000
 $224,000
 $448,000
 $896,000
 $425,358
 $425,000
L. William Heiligbrodt(4)
 $560,000
 $224,000
 $448,000
 $896,000
 n/a
  n/a

(1)Refer to "Employment Agreements"“Employment Agreements” section within the Compensation Discussion and Analysis above for respective percentages of base salary payable to Mr.Messrs. Payne, DeCarlo and Mr. Heiligbrodt under their Employment Agreements at threshold, target and maximum performance levels. Maximum is subject to a maximum payout of $1,000,000 pursuant to the terms of our Second Amended and Restated 2006 Long-Term Incentive Plan.
(2)Amount is based on the actual quantitative and qualitative performance metrics that was achieved for Messrs. Payne and Heiligbrodt did not receive cash bonuses for 2013 per the discretion of the Compensation Committee.DeCarlo.
(3)As described above,Actual cash incentive bonus paymentspaid in 2016 for Messrs. Bruce, Elliott and Phillips were based on qualitative and quantitative factors and determined by their respective supervisors based on both individual and company-wide performance for 2013.in 2015.
(4)Named Executive Officer retired effective August 9, 2013 and thusAt the discretion of the Compensation Committee, no bonus was not eligiblepaid to Mr. Heiligbrodt.
The table below sets forth the 2015 base salary, the incentive bonus targets and the actual incentive bonus payments, and as a percentage of base salary, for Messrs. Bruce, Elliott, Phillips, Brink and Ms. Blinderman during 2015.
      
Individual  2015 Bonus Paid(2)
Named Executive Officers 
Annual Base
Salary
 
Target(1)
 Amount Paid % of Salary
Mark R. Bruce $290,000
 50% $145,000
 50%
Paul D. Elliott $275,000
 50% $140,000
 51%
Shawn R. Phillips $270,000
 50% $135,000
 50%
Viki K. Blinderman $240,000
 45% $110,000
 46%
Carl B. Brink $170,000
 35% $80,000
 47%

(1)Target is based on a 2013 annualpercentage of base salary in effect in 2015.
(2)Actual cash incentive bonus.bonus paid in 2016 for performance in 2015.
Our Compensation Committee has established quantitative and qualitative performance metrics for purposes of 2014 annual cash incentive bonuses. The quantitative metrics are Adjusted EPS (weighted 40%) of $1.18 per share and Adjusted Consolidated EBITDA Margin (weighted 40%) of 26.8%.  The qualitative measures (weighted 20%) include assessments from senior leadership and executive team self-assessments of cohesion and collaboration.
Long-Term Equity-Based Incentives
Long-Term Incentive Plan
We maintain the Carriage Services, Inc. Second Amended and Restated 2006 Long-Term Incentive Plan (the “2006 LTIP”), pursuant to which we have previously granted our Named Executive Officers restricted stock, stock options, cash-based performance units and performance-based stock awards.
Annual Long-Term Incentive Grants
Restricted stock and stock options are awarded by our Compensation Committee after consideration of each individual's performance toward our recent goals, as well as expected contributions to our long-term success. Outstanding restricted stock awards to our Named Executive Officers vest at either 331/3% or 25% annually beginning one year after the date the award is granted, as established for each grant by the Compensation Committee. Outstanding stock options to our Named Executive Officers vest in 331/3% increments over a three year period and expire after five to ten years, as established for each grant by the Compensation Committee. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rates; expected dividend yield for each year; expected termination rate; expected lives; and expected volatility. Outstanding stock options to our Named Executive Officers vest in 331/3% increments over a three year period and expire after five or ten years, as established for each grant by the Compensation Committee. Our Compensation Committee believes that these forms of equity ownership help align the executive'sexecutive’s interests closely with those of our stockholders and incentivize our executives to contribute to the long-term growth and success of Carriage as a whole.Carriage.
On May 22, 2013,February 24, 2015, our Named Executive Officers were granted stock options under the 2006 LTIP. The stock optionsoption awards vest 331/3% over three years on May 22, 2014, May 22, 2015February 24, 2016, February 24, 2017 and May 22, 2016.February 24, 2018 and have a five-year term. The exercise price of the optionsoption awards was the closingclose price on May 22, 2013,February 24, 2015, which was $16.73.$22.58. The option value used was $4.04. The assumptions made in the valuation of

22


$5.64. More detailed information regarding the stock option award areawards is set forth in Note 17,18, Stockholder's Equity, to the Consolidated Financial Statements in our 20132015 Annual Report on Form 10-K. The stock options have a ten-year term.

29


The following table sets forth information regarding the long-term incentive grant of stock options to our Named Executive Officers in 2013:2015:
Name Stock Options
Melvin C. Payne100,000
David J. DeCarlo 100,000
L. William Heiligbrodt 100,000
Mark R. Bruce 30,00040,000
Paul D. Elliott38,000
Shawn R. Phillips 30,00035,000
Paul D. ElliottViki K. Blinderman 25,000
Carl B. Brink22,000

23
Performance-based Stock Awards


2016 Compensation
In August 2012,The 2016 compensation decisions for Messrs. Payne, DeCarlo, Bruce, Elliott, Phillips, Brink and Ms. Blinderman were made primarily by taking into account the Philosophy and our internal compensation historical trend data, as further discussed in our “Compensation Discussion and Analysis” section above. Target amounts for the annual cash incentive bonuses and long-term incentive grants are used as guidelines and may not ultimately be indicative of actual payout or grant value.
2016 Base Salaries
Our Compensation Committee of our Board granted performance-based stock awards (the “PBS Awards”) pursuantmade the following changes to the 2006 LTIP to select employees, including our Named Executive Officers, and outside directors. No PBS awards were granted during fiscal year 2013.
The PBS Awards were intended to further align the interests of these employees, directors and Named Executive Officers with the interests of our stockholders by rewarding them for their contributions toward transforming Carriage from a “good” deathcare operating and consolidation company to a “great” high-performance service and sales company. To the extent vested, each PBS Award represented the right to receive a specified number of shares of our Common Stock, subject to the grantee's payment, with respect to each share of Common Stock subject to such PBS Award, of an amount equal to the greater of (a) the then-current market price per share of our Common Stock on the date such PBS Award was granted plus $0.50 or (b) $9.00. Each PBS Award would have vested if on or before the fifth anniversary of the applicable grant date, the closing price of our Common Stock was greater than or equal to $21.50 on any three days, whether or not consecutive, within a period of 30 consecutive calendar days, subject to the applicable grantee's continuous employment or service relationship with us through such date (the “Price Vesting Date”). However, if the Price Vesting Date occurred prior to the first anniversary of the grant date, then each PBS Award would not vest until the first anniversary of such grant date, subject to the applicable grantee's continued employment or service relationship with us through the first anniversary of the grant date.
On January 3, 2014, the Company offered its employees, directors and Named Executive Officers who held outstanding PBS Awards an opportunity to surrender their PBS Awards to the Company in exchange for cash payments equal to the product of (i) the difference between (x) $19.00 and (y) the applicable purchase price under their PBS Awards and (ii) the number of shares of the Company’s common stock subject to their PBS Awards (the “Cash Out Payments”).All outstanding PBS Awards have been surrendered to the Company and canceled in exchange for cash out payments of approximately $16.1 million in the aggregate, or $10.00 per PBS Award ($9.54 for Mr. Elliott), of which $3.2 million was paid to our Directors. The decision by the Compensation Committee to offer the cash out payment at that time was predicated on three areas:
Save the Company at least $4 million in cash outlay, assuming that all awards would otherwise have become vested and been exercised. (Vesting criteria did occur effective January 16, 2014);
Minimize the dilutive impact resulting from the vesting of the PBS Awards; and
Facilitate execution of the Company's operational, growth and capital structure models in a way that maximizes the creation of shareholder value over time.
During 2014, our Named Executive Officers received the following cash payment with respect to the termination of their PBS Awards:
Name PBS Award Size (in shares)Cash Out Payment
Melvin C. Payne 400,000
$4,000,000
L. William Heiligbrodt 320,000
$3,200,000
Mark R. Bruce 80,000
$800,000
Shawn R. Phillips 50,000
$500,000
Paul D. Elliott 50,000
$477,000

Severance Benefits.
Eachannual base salaries of our Named Executive Officers during 2016:
Named Executive Officers 
2016 Annual Base
Salary

Melvin C. Payne $670,000
David J. DeCarlo $580,000
Mark R. Bruce $310,000
Paul D. Elliott $290,000
Shawn R. Phillips $280,000
Viki K. Blinderman $250,000
Carl B. Brink $210,000
2016 Annual Cash Incentive Bonuses
Our Compensation Committee has established quantitative and qualitative performance metrics for purposes of 2016 annual cash incentive bonuses for Messrs. Payne and DeCarlo. The quantitative metrics are Adjusted Basic EPS (weighted 40%) of $1.70 per share and Adjusted Consolidated EBITDA Margin (weighted 40%) of 29.0%.  The qualitative measures (weighted 20%) include executive team self-assessments of team cohesion and collaboration.
The table below sets forth the 2016 base salary for Messrs. Payne and DeCarlo, the threshold, target and maximum annual cash incentive bonus proposed for 2016.
Named Executive Officers 
Annual Base
Salary
 
Threshold(1)
 
Target(1)
 
Maximum(1)
Melvin C. Payne $670,000
 $301,500
 $603,000
 $1,000,000
David J. DeCarlo $580,000
 $232,000
 $464,000
 $928,000
(1)Refer to “Employment Agreements” section within the Compensation Discussion and Analysis above for respective percentages of base salary payable to Messrs. Payne and DeCarlo under their Employment Agreements at threshold, target and maximum performance levels. Maximum is subject to a maximum payout of $1,000,000 pursuant to the terms of our Second Amended and Restated 2006 Long-Term Incentive Plan.
The table below sets forth the 2016 base salary and annual cash incentive bonus targets for Messrs. Bruce, Elliott, Phillips, Brink and Ms. Blinderman.
  
2016 Annual Base
Salary
 2016 Annual Cash Incentive Bonus Target
Named Executive Officers  % of base salary Target amount
Mark R. Bruce $310,000
 50% $155,000
Paul D. Elliott $290,000
 50% $145,000
Shawn R. Phillips $280,000
 50% $140,000
Viki K. Blinderman $250,000
 40% $100,000
Carl B. Brink $210,000
 40% $84,000






24


2016 Long-Term Incentive Grants
Our Compensation Committee has established 2016 long term incentive targets for our Named Executive Officers, as shown in the table below.
  
2016 Annual Base
Salary
 2016 Annual Long-Term Incentive Target
Named Executive Officers  % of base salary Target amount
Melvin C. Payne $670,000
 110% $737,000
David J. DeCarlo $580,000
 100% $580,000
Mark R. Bruce $310,000
 75% $232,500
Paul D. Elliott $290,000
 75% $217,500
Shawn R. Phillips $280,000
 75% $210,000
Viki K. Blinderman $250,000
 60% $150,000
Carl B. Brink $210,000
 60% $126,000
Severance Benefits
Certain of our Named Executive Officers are party to an employment agreement with us pursuant to which he will be entitled to severance payments upon his termination without cause during the term of the agreement (or his resignation for “good reason” during the twenty-four month period following a “corporate change,” as defined in theirthe respective employment

30


agreements). For a further description of the severance benefits payable under these agreements, see “Executive Compensation-Potential Payments Upon Termination or Change-in-Control” below.
Other Benefits and Perquisites
We sponsor a defined contribution 401(k) plan under which we match 100% of elective deferrals with respect to the first one percent of the participant's eligible compensation and 50% with respect to the next five percent of the participant's eligible compensation. Additionally, we sponsor an employee stock purchase planEmployee Stock Purchase Plan that provides the participants the ability to purchase Common Stock at the lower of the grant date fair value or the purchase date fair value with a discount of 15%. Our health and related plans include medical, dental, life and disability coverage. The benefits provided to our executive officersNamed Executive Officers are offered through broad-based plans applicable to all employees. Ouremployees, except that our Named Executive Officers cannot participate in our Employee Stock Purchase Program. Mr. Payne, our Chief Executive Officer is reimbursed annually for life insurance premiums of up to $25,000 and for executive physical and club dues, the combined cost of which totaled $36,930$27,150 in 2013.2015. In addition, we paid $37,790 in rental fees for a residence that Mr. DeCarlo, our President, occupied in 2015 and other benefits totaling $3,862. Otherwise, we provide no other perquisites to any of our Named Executive Officers.
Management’s Role in Determining Executive Compensation
Our Compensation Committee makes all final decisions regarding executive officer compensation. Mr. Payne’s role as our Chairman of the Board and Chief Executive Officer in determining executive compensation is to make recommendations on compensation decisions for those other than himself based on the individual performance of each executive officer and our overall performance. Management’s role in determining executive compensation includes:
developing, summarizing and presenting information and analyses to enable our Compensation Committee to execute its responsibilities, as well as addressing specific requests for information from our Compensation Committee;
attending our Compensation Committee’s meetings as requested in order to provide information, respond to questions and otherwise assist our Compensation Committee;
developing recommendations for individual executive officer bonus plans for consideration by our Compensation Committee and reporting to our Compensation Committee regarding achievement against the bonus plans; and
preparing stock award recommendations for our Compensation Committee’s approval.

31


Consultant’s Role in Determining Executive Compensation
In 2013 the Compensation Committee (the “Committee”) retained Pearl Meyer & Partners, LLC. as its executive compensation consultant. The Compensation Consultant reports directly to the Committee and the Committee may replace the Compensation Consultant or hire additional consultants at any time. A representative of the Compensation Consultant attends meetings of the Committee, as requested, and communicates with the Committee Chair between meetings; however, the Committee makes all decisions regarding the compensation of our executive officers.
The Compensation Consultant provides various executive compensation services to the Committee pursuant to a written consulting agreement with the Committee. Generally, these services include advising the Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relationship to its performance.
During 2013, the Compensation Consultant performed the following specific services:

Completed a market analysis of compensation levels for our executive pay levels;
Assisted with the development of a potential new long-term incentive plan; and
Reviewed the 2013 Compensation Discussion and Analysis in the 2013 Proxy Statement.
The Committee retains sole authority to hire the Compensation Consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement.
Consideration of Previous Shareholder Advisory Vote
Our 2013 Annual Meeting of Stockholders was held on May 22, 2013. Our stockholders expressed their approval of our Named Executive Officer compensation programs with 95% of all votes cast being in favor of approval of such programs. Our Compensation Committee and our Board were very appreciative of the positive vote. The strong stockholder support has reaffirmed our Compensation Committee’s approach to executive compensation philosophy and programs. Accordingly, for 2013, our Compensation Committee has continued to administer similar reward programs and to demonstrate the same pay philosophies that have been in place historically.
Executive Compensation Policies and Practices as they relate to our Risk Management
Our Compensation Committee considers, among other things, in establishing and reviewing our executive compensation program, whether the program pays the executives for performance and whether the program encourages unnecessary or excessive risk taking. Our Compensation Committee reviews annually the principal components of executive compensation. Base salaries are reviewed annually and fixed in amount. Annual incentive pay is focused on achievement of certain specific overall financial goals and may be determined using singular or multiple performance criteria. Our Compensation Committee believes that these cash incentive plans appropriately balance risk, payment for performance and the desire to focus executives on specific financial and leadership measures and that they do not encourage unnecessary or excessive risk taking. We believepromote long-term value creation per share. As a result, our Compensation Committee has made a determination that ourthe risks arising from the Company’s compensation policies and practices for all employees, including non-executive officers, are reasonable and do not create any risk orreasonably likely to have a material adverse effect on Carriage.the Company.

32


Tax and Accounting Considerations
For compensation in excess of $1 million, Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) generally limits our ability to take a federal income tax deduction for compensation paid to our Chief Executive Officer and the next three most highly compensated executive officers other than our principal financial officer, except for qualified performance-based compensation. While ourOur Compensation Committee considers the deductibility of compensation when making compensation decisions, it does not believe that compensation decisions should be made solely to maintain the deductibility of compensation for federal income tax purposes.
We recognize compensation expense in an amount equal to the fair value of the share-based awards over the period of vesting. Fair value is determined on the date of the grant. The fair value of options or awards containing options is determined using the Black–Scholes valuation model. The fair value of performance-based stock awards is determined using the Monte-Carlo pricing method.


3325


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2015, Messrs. Scott, Patteson, Fingerhut and Leibman served on our Compensation Committee. None of Messrs. Scott, Patteson, Fingerhut or Leibman has at any time been an officer or employee of our company nor had any substantial business dealings with us. None of our named executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of Carriage Services, Inc. has reviewed and discussed Carriage Services, Inc.’s Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation Committee has recommended to the Board of Directors of Carriage Services, Inc. that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the fiscal year ended December 31, 2013.2015.
Compensation Committee
David J. DeCarlo, Chairman through March 3, 2014
Richard W. Scott, Chairman as of March 3, 2014
Barry K. Fingerhut
Donald D. Patteson, Jr.
Bryan D. Leibman

April 9, 20145, 2016

3426


EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding the compensation for the fiscal years ended December 31, 2013, 20122015, 2014 and 2011,2013, with respect to our Named Executive Officers.
Name and Principal Position Year Salary ($) Bonus ($) 
Stock
Awards  ($)
 
Option
Awards  ($)(1)
 
Non-Equity
Incentive
Plan
Compensation ($)
 
All Other
Compensation ($)
 Total ($) Year Salary ($) 
Bonus
($)
 
Stock
Awards 
($)
 
Option
Awards ($)(1)
 
All Other
Compensation ($)
 
Total
($)
Melvin C. Payne 2013 $625,025
 $—
 $—
 $403,990
$—
$
52,227(3)

 $1,081,242
 2015 $645,000
 $450,000
 $—
 $563,810
$
37,183(2)

 $1,695,993
Chairman of the Board and 2012 $575,000
 $—
 $907,000
 $—
$1,000,000
$50,924
 $2,532,924
Chief Executive Officer 2011 $500,000
 $—
 $315,198
 $109,802
$
 825,000(2)

$284,429
 $2,034,429
Chief Executive Officer and 2014 $625,000
 $563,000
 $1,021,000
 $520,110
$4,051,791
 $6,780,901
Chairman of the Board 2013 $625,025
 $—
 $—
 $403,990
$52,227
 $1,081,242
David J. DeCarlo 2015 $560,000
 $425,000
 $—
 $563,810
$
57,320(3)

 $1,606,130
President and Vice Chairman of the Board

 2014 $545,000
 $436,000
 $2,042,000
 $520,110
$40,729
 $3,583,839


 2013 $—
 $—
 $—
 $—
$—
 $—
L. William Heiligbrodt 2013 $543,500
 $—
 $—
 $403,990
$—
$
—(4)

 $947,490
 2015 $560,000
 $—
 $—
 $563,810
$—
 $1,123,810
Executive Vice President 2012 $500,000
 $—
 $715,600
 $—
$794,363
$—
 $2,009,963
and Secretary 2011 $134,600
 $—
 $170,725
 $—
$
276,250(2)

$74,000
 $655,575
Executive Vice President and Secretary(4)
 2014 $545,000
 $436,000
 $1,021,000
 $520,110
$4,200,000
 $6,722,110
 2013 $543,500
 $—
 $—
 $403,990
$—
 $947,490
Mark R. Bruce

 2013 $260,000
 $104,000
 $—
 $121,197
$—
$
—(4)

 $485,197
 2015 $290,000
 $145,000
 $—
 $225,524
$—
 $660,524
Regional Partner 2014 $280,000
 $105,000
 $—
 $206,084
$813,892
 $1,404,976
 2013 $260,000
 $104,000
 $—
 $121,197
$—
 $485,197
Paul D. Elliott 2015 $275,000
 $140,000
 $—
 $214,248
$—
 $629,248
Regional Partner 2012 $240,000
 $120,000
 $126,400
 $60,000
$—
$—
 $546,400
 2014 $260,000
 $104,000
 $—
 $180,324
$477,000
 $1,021,324
 2011 $—
 $—
 $—
 $—
$—
$—
 $—
 2013 $250,000
 $75,000
 $—
 $121,197
$11,117
 $457,314
Shawn R. Phillips

 2013 $240,000
 $60,000
 $—
 $100,998
$—
$
—(4)

 $400,998
 2015 $270,000
 $135,000
 $—
 $197,334
$—
 $602,334
Regional Partner 2012 $230,000
 $40,000
 $93,250
 $51,750
$—
$—
 $415,000
 2014 $250,000
 $100,000
 $—
 $154,563
$520,923
 $1,025,486
 2011 $—
 $—
 $—
 $—
$—
$—
 —
 2013 $240,000
 $60,000
 $—
 $100,998
$—
 $400,998
Paul D. Elliott 2013 $250,000
 $75,000
 $—
 $121,197
$—
$
11,117(5)

 $457,314
Regional Partner 2012 $—
 $—
 $—
 $—
$—
$—
 $—
Viki K. Blinderman 2015 $240,000
 $110,000
 $—
 $140,952
$—
 $490,952
Co-Chief Financial Officer, 2014 $230,000
 $78,000
 $—
 $128,803
$250,000
 $686,803
Chief Accounting Officer and Secretary 2013 $230,000
 $64,400
 $—
 $60,599
$—
 $354,999
Carl B. Brink 2015 $170,000
 $80,000
 $—
 $124,038
$—
 $374,038
Co-Chief Financial Officer and Treasurer 2014 $150,000
 $42,000
 $—
 $92,738
$300,000
 $584,738
 2011 $—
 $—
 $—
 $—
$—
$—
 $—
 2013 $150,000
 $40,000
 $—
 $60,599
$—
 $250,599
George J. Klug(6)
 2013 $140,000
 $—
 $125,696
 $257,926
$—
$40,000
 $563,622
Former Senior Vice President and 2012 $240,000
 $29,789
 $54,000
 $54,000
$—
$—
 $377,789
Chief Information Officer 2011 $240,000
 $—
 $73,000
 $48,000
$213,000
$3,850
 $577,850
 
(1)Reflects the grant date fair value of the options granted in the respective fiscal year, computed in accordance with FASB ASC Topic 718. The value of the stock options granted during 20132015 was $4.04$5.64 per share calculated using the Black–Scholes pricing method on May 22, 2013,February 24, 2015, the date of grant. The assumptions made in the valuation of these awards are set forth in Note 17,18, Stockholder’s Equity, to the Consolidated Financial Statements in our 20132015 Annual Report on Form 10-K.
(2)Reflects payments pursuant to performance units awarded under our Amended and Restated 2006 Long-Term Incentive Plan for the period of January 1, 2009 through December 31, 2011.
(3)Reflects reimbursement of life insurance premiums for Mr. Payne where Carriage was not named the beneficiary totaling $25,000, reimbursement of executive physical totaling $9,780, reimbursement of club dues totaling $2,150, fringe benefits of $2,909,$4,793, 401(k) matching contributions totaling $3,096$3,365 and $9,292$1,875 of dividends on unvested restricted stock.
(4)(3)All other compensation was less than $10,000Reflects fringe benefits of $6,505, 401(k) matching contributions of $9,275, dividends on unvested restricted stock of $3,750 and $37,790 in rental fees for a condo that Mr. DeCarlo occupies paid for by the other Named Executive Officers in 2013.Company.
(5)(4)Reflects fringe benefits of $6,049, 401(k) matching contributions of $4,023 and $1,045 of dividends on unvested restricted stock.
(6)Mr. Klug retired effective August 9, 2013. The amounts disclosed under “Stock Awards” and “Option Awards” represent the incremental charge upon accelerationOn May 21, 2015, L. William Heiligbrodt, as a result of his Awardsannounced retirement as of March 4, 2016 from the Company, resigned as Executive Vice President, Principal Financial Officer and “All Other Compensation” amounts represent payments under his SeparationSecretary. Effective May 21, 2015, Carl B. Brink became the Company’s Principal Financial Officer and Consulting Agreement filed on July 31, 2013 on Form 8-K.Viki K. Blinderman became the Company's Secretary.

3527


Grants of Plan-Based Awards in 20132015
 
   
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
 
Estimated Future Payouts Under
Equity Incentive Plan Awards
 
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
 
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(1)
 
Exercise
Price of
Option
Awards
($)
 
Grant
Date Fair
Value of
Stock and
Option
Awards
($)
   
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
 
Estimated Future Payouts Under
Equity Incentive Plan Awards
 
All Other
Stock
Awards:
Number of
Shares of
Stock (#)
 
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(1)
 
Exercise
Price of
Option
Awards
($)
 
Grant
Date Fair
Value of
Stock and
Option
Awards
($)
Name 
Grant
Date
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
($)
 
Maximum
($)
  
Grant
Date
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
($)
 
Maximum
($)
 
Melvin C. Payne 5/22/2013 —
 —
 —
 —
 —
 —
 —
 100,000
 $16.73
 $403,900
 2/24/2015 —
 —
 —
 —
 —
 —
 —
 100,000
 $22.58
 $563,810
David J. DeCarlo 2/24/2015             —
 100,000
 $22.58
 $563,810
L. William Heiligbrodt 5/22/2013 —
 —
 —
 —
 —
 —
 —
 100,000
 $16.73
 $403,990
 2/24/2015 —
 —
 —
 —
 —
 —
 —
 100,000
 $22.58
 $563,810
Mark R. Bruce

 5/22/2013 —
 —
 —
 —
 —
 —
 —
 30,000
 $16.73
 $121,197
 2/24/2015 —
 —
 —
 —
 —
 —
 —
 40,000
 $22.58
 $225,524
Paul D. Elliott 2/24/2015 —
 —
 —
 —
 —
 —
 —
 38,000
 $22.58
 $214,248
Shawn R. Phillips

 5/22/2013 —
 —
 —
 —
 —
 —
 —
 25,000
 $16.73
 $100,998
 2/24/2015 —
 —
 —
 —
 —
 —
 —
 35,000
 $22.58
 $197,334
Paul D. Elliott 5/22/2013 —
 —
 —
 —
 —
 —
 —
 30,000
 $16.73
 $121,197
Viki K. Blinderman 2/24/2015 —
 —
 —
 —
 —
 —
 —
 25,000
 $22.58
 $140,952
Carl B. Brink 2/24/2015 —
 —
 —
 —
 —
 —
 —
 22,000
 $22.58
 $124,038

(1)These are stock options that vest over three years. Grant date fair value for the stock options is the number of options, multiplied by the option value on the grant date (calculated in accordance with FASB ASC 718), which was $4.04.$5.64 per share on February 24, 2015, the date of grant. The assumptions made in the valuation of these awards are set forth in Note 17,18, Stockholder's Equity, to the Consolidated Financial Statements in our 20132015 Annual Report on Form 10-K.
Employment Agreements
On March 14, 2012, we entered into Second AmendedDuring 2015, Messrs. Payne, DeCarlo and Restated Employment Agreements with Mr. Payne as well as a First Amended and Restated Employment Agreement with Mr. Heiligbrodt (which, in each case, replaced and superseded their existing employment agreements) for terms expiring on March 14, 2016 for Mr. Payne and Mr. Heiligbrodt (subject, in each instance,were party to earlier termination or extension). These agreements (together, the “2012 Employment Agreements”) will automatically be renewed on an annual basis thereafter, unless terminated by either party thereto upon 60 days written notice prior to the end of the term then in effect. Mr. Payne’s employment was subsequently amended and Mr. Heiligbrodt’s employment agreement was amended and restated during 2014. For a description(collectively, the “Employment Agreements”) with us that generally governed the terms of the amendment to Mr. Payne’s employment agreement and Mr. Heiligbrodt’s current employment agreement, see “Executive Compensation-Recent Events” below.

their employment. These Employment Agreements generally establish, among other things, (a) a minimum base salary, (b) target bonus payouts (expressed as a percentage of base salary), and (c) post-termination payments in certain scenarios. In addition, Messrs. Bruce, PhillipsElliot and ElliottPhillips are each party to an employment agreement which establishes, among other things, (a) a minimum base salary of $240,000 for each individual and (b) post-termination payments in certain scenarios. These Employment Agreements also provide annual incentive targets for the following Named Executive Officers:
  Target Payout (% of Base Salary)
  Threshold Target Maximum
Melvin C. Payne 45% 90% 180%
L. William Heiligbrodt 40% 80% 160%
Mr. Brink and Ms. Blinderman are not party to an employment agreement. For a description of the post-termination benefits provided for under these agreementsthe Agreements and the 2012 Employment Agreements, see “Executive Compensation-Potential Payments Upon Termination or Change-in-Control” below.
Klug Separation and Consulting Agreement
In connection with his retirement effective August 9, 2013, Mr. Klug was entitled to receive, among other things, consulting fees and accelerated vesting of certain stock options and restricted shares. For a detailed description of this agreement, see “Executive Compensation-Potential Payments Upon Termination or Change-in-Control” below., further discussed herein.
Long-Term Incentive Plan
We maintain the 2006 LTIP, pursuant to which during 20132015 we granted our Named Executive Officers stock options.

3628


Outstanding Equity Awards at Fiscal Year-End
Awards Outstanding at December 31, 2013:2015:
 
 Option Awards Stock Awards Option Awards Stock Awards
Name 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Un-
Exercisable (1)
 
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
 
Option
Exercise
Price
 
Option
Expiration
Date
 
Number of
Shares or
Units of
Stock that
Have Not
Vested (#)
 
Market
Value of
Shares or
Units of
Stock that
Have Not
Vested(4)
 
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that Have
Not Vested(3)
 
Equity
Incentive
Plan
Awards:
Market or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
that Have
Not Vested
($)(3)
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Un-
Exercisable (1)
 
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
 
Option
Exercise
Price
 
Option
Expiration
Date
 
Number of
Shares of
Stock that
Have Not
Vested (#)(2)
 
Market
Value of
Shares of
Stock that
Have Not
Vested(3)
Melvin C. Payne 21,200
 —
 —
 $4.78
 5/18/2020
 
82,968(2)

 $1,620,346
 —
 —
 27,419
 —
 —
 $5.70
 2/28/2021 37,500
 $903,750
 26,518
 14,901
 —
 $5.70
 2/28/2021
 —
 —
 —
 —
 66,666
 33,334
 —
 $16.73
 5/22/2018 —
 —
 —
 100,000
 —
 $16.73
 5/22/2018
 —
 —
 —
 —
 33,334
 66,666
 —
 $20.49
 3/3/2019 —
 —
 —
 —
 —
 —
 —
 —
 —
 400,000
 $4,000,000
 —
 100,000
 —
 $22.58
 2/24/2022 —
 —
David J. DeCarlo 33,334
 66,666
 —
 $20.49
 3/3/2019 75,000
 $1,807,500
 —
 100,000
 —
 $22.58
 2/24/2022 —
 —
L. William Heiligbrodt —
 100,000
 —
 $16.73
 5/22/2018
 
58,005(2)

 $1,132,838
 —
 —
 66,666
 33,334
 —
 $16.73
 5/22/2018 37,500
 $903,750
 —
 —
 —
 —
 —
 —
 —
 320,000
 $3,200,000
George J. Klug 21,036
 —
 —
 $4.78
 5/18/2020
 —
 —
 —
 —
 19,542
 —
 —
 $5.70
 2/28/2021
 —
 —
 —
 —
 33,334
 66,666
 —
 $20.49
 3/3/2019 —
 —
 23,660
 —
 —
 $5.94
 3/5/2022
 —
 —
 —
 —
 —
 100,000
 —
 $22.58
 2/24/2022 —
 —
Mark R. Bruce

 17,530
 —
 —
 $4.78
 5/18/2020
 
9,307(2)

 $181,766
 —
 —
 17,530
 —
 —
 $4.78
 5/18/2020 —
 —
 11,942
 5,971
 —
 $5.70
 2/28/2021
 —
 —
 —
 —
 17,913
 —
 —
 $5.70
 2/28/2021 —
 —
 8,763
 17,526
 —
 $5.94
 3/5/2022
 —
 —
 —
 —
 26,289
 —
 —
 $5.94
 3/5/2022 —
 —
 —
 30,000
 —
 $16.73
 5/22/2018
 —
 —
 —
 —
 20,000
 10,000
 —
 $16.73
 5/22/2018 —
 —
 —
 —
 —
 —
 —
 —
 —
 80,000
 $800,000
 13,334
 26,666
 —
 $20.26
 2/25/2019 —
 —
 —
 40,000
 —
 $22.58
 2/24/2022 —
 —
Paul D.Elliott 20,000
 10,000
 —
 $16.73
 5/22/2018 —
 —
 11,666
 23,334
 —
 $20.26
 2/25/2019 —
 —
 —
 38,000
 —
 $22.58
 2/24/2022 —
 —
Shawn R. Phillips

 19,283
 —
 —
 $4.78
 5/18/2020
 8,381
 $163,681
 —
 —
 19,283
 —
 —
 $4.78
 5/18/2020 —
 —
 11,942
 5,971
 —
 $5.70
 2/28/2021
 —
 —
 —
 —
 17,913
 —
 —
 $5.70
 2/28/2021 —
 —
 7,558
 15,116
 —
 $5.94
 3/5/2022
 —
 —
 —
 —
 22,674
 —
 —
 $5.94
 3/5/2022 —
 —
 —
 25,000
 —
 $16.73
 5/22/2018
 —
 —
 —
 —
 16,666
 8,334
 —
 $16.73
 5/22/2018 —
 —
 —
 —
 —
 —
 —
 —
 —
 50,000
 $500,000
 10,000
 20,000
 —
 $20.26
 2/25/2019 —
 —
Paul D.Elliott —
 30,000
 —
 $16.73
 5/22/2018
 8,000
 $156,240
 —
 —
 —
 —
 —
 —
 —
 —
 $—
 50000
 $477,000
 —
 35,000
 —
 $22.58
 2/24/2022 —
 —
Viki K. Blinderman 10,000
 5,000
 —
 $16.73
 5/22/2018 —
 —
 8,334
 16,666
 —
 $20.26
 2/25/2019 —
 —
 —
 25,000
 —
 $22.58
 2/24/2022 —
 —
Carl B. Brink 5,000
 5,000
 —
 $16.73
 5/22/2018 —
 —
 —
 12,000
 —
 $20.26
 2/25/2019 —
 —
 —
 22,000
 —
 $22.58
 2/24/2022 —
 —
 
(1)
The unexercisable stock options expiring February 28, 2021 vest 331/3% on February 28, 2014, the unexercisable stock options expiring March 5, 2022 vest 331/3% on each March 5, 2014, and March 5, 2015, the unexercisable stock options expiring May 22, 2018 vest 331/3%in full on each May 22, 2014, May 22, 20152016, the unexercisable stock options expiring March 3, 2019 vest one third on March 3, 2016 and May 22, 2016.
March 3, 2017, the unexercisable stock options expiring February 25, 2019 vest one third on February 25, 2016 and February 25, 2017, the unexercisable stock options expiring February 24, 2022 vest one third each on February 24, 2016, February 24, 2017 and February 24, 2018.
(2)The shares of restricted stock vest on the following dates:

(2)The shares of restricted stock vest on the following dates:
  Mr. Payne Mr. Heiligbrodt Mr. Bruce Mr. Phillips Mr. Elliott
2/28/2014 18,434
 —
 2,573
 2,573
 —
9/1/2014 —
 7,500
 —
 —
 —
3/5/2014 32,267
 25,252
 3,367
 2,904
 —
3/5/2015 32,267
 25,253
 3,367
 2,904
 —
8/31/2014 —
 —
 —
 —
 4,000
8/31/2015 —
 —
 —
 —
 4,000
  82,968
 58,005
 9,307
 8,381
 8,000
  Mr. Payne Mr. DeCarlo Mr. Heiligbrodt
3/3/2016 12,500
 25,000
 12,500
3/3/2017 12,500
 25,000
 12,500
3/3/2018 12,500
 25,000
 12,500
  37,500
 75,000
 37,500

37


(3)These are performance-based stock award grants that would have vested if on or beforeCalculated using the fifth anniversary of the applicable grant date, the closing price of our Common Stock was greater than or equal to $21.50 on any three days, whether or not consecutive, within a period of 30 consecutive calendar days. For a more detailed description of these awards, see “Compensation Discussion and Analysis-Performance-Based Stock Award Grants.” On January 3, 2014,the Company offered its employees, directors and Named Executive Officers who held outstanding PBS Awards an opportunity to surrender their PBS Awards to the Company in exchange for cash payments equal to the product of (i) the difference between (x) $19.00 and (y) the applicable purchase price under their PBS Awards and (ii) the number of shares of the Company’s common stock subject to their PBS Awards (the “Cash Out Payments”). All outstanding PBS Awards have been surrendered to the Company and canceled. All holders of these PBS Awards surrendered their shares in exchange for cash out payments of approximately $16.1 million in the aggregate. Amounts reported in the table are estimated using a value of $10 per award ($9.54 for Mr. Elliott).
(4)The closing price of our Common Stock on December 31, 20132015, which was $19.53$24.10 per share. Amounts reflected for performance-based stock awards have been adjusted to reflect the purchase price required to be paid pursuant to such awards.

29


Option Exercises and Stock Vested During 20132015
 
 Option Awards Stock Awards Option Awards Stock Awards
Name 
Number of
Shares  Acquired
on Exercise
 
Value Realized on
Exercise
 
Number of Shares
Acquired on Vesting(1)
 
Value Realized on
Vesting(2)
 
Number of
Shares  Acquired
on Exercise
 
Value Realized on
Exercise
 
Number of Shares
Acquired on Vesting(3)
 
Value Realized on
Vesting(4)
Melvin C. Payne —
 —
 95,716
 $1,670,543
 
27,692(1)

 $668,240
 44,767
 $1,065,088
David J. DeCarlo —
 —
 25,000
 $596,750
L. William Heiligbrodt —
 —
 32,752
 $618,440
 —
 —
 37,753
 $897,664
George J. Klug —
 —
 25,351
 $441,247
Mark R. Bruce

 —
 —
 9,980
 $177,100
 —
 —
 3,367
 $80,370
Paul D. Elliott —
 —
 4,000
 $92,760
Shawn R. Phillips

 —
 —
 12,921
 $217,064
 —
 —
 2,904
 $69,318
Paul D. Elliott —
 —
 4,000
 $70,480
Viki K. Blinderman —
 —
 1,667
 $39,791
Carl B. Brink 
2,338(2)

 $67,150
 1,000
 $23,870
 

(1) Includes vested shares withheld to pay taxes as follows:
(1)Mr. Payne exercised 35,200 options on November 6, 2015 and surrendered 7,508 already-owned shares to cover payment of the option exercise price.
(2)Mr. Brink exercised 11,000 options on March 26, 2015 and surrendered 8,662 options to cover payment of the option exercise price and taxes.
(3)Includes vested shares withheld to pay taxes as follows:
  Mr. Payne Mr. Heiligbrodt Mr. Klug Mr. Bruce
  
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
1/29/2013 18,750
 —
 —
 —
 4,375
 —
 1,250
 409
2/28/2013 18,432
 5,097
 —
 —
 4,269
 1,393
 2,573
 841
3/5/2013 32,267
 13,537
 25,252
 6,914
 3,030
 802
 3,367
 908
5/18/2013 26,267
 10,889
 —
 —
 3,348
 1,310
 2,790
 1,035
8/9/2013 —
 —
 —
 —
 10,329
 4,241
 —
 —
8/31/2013 —
 —
 —
 —
 —
 —
 —
 —
9/13/2013 —
 —
 7,500
 3,024
 —
 —
 —
 —
Total 95,716
 29,523
 32,752
 9,938
 25,351
 7,746
 9,980
 3,193
  Mr. Payne Mr. DeCarlo Mr. Heiligbrodt Mr. Bruce
  
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
3/3/2015 12,500
 5,143
 —
 —
 12,500
 5,143
 —
 —
3/5/2015 32,267
 13,438
 25,000
 10,389
 25,253
 10,494
 3,367
 1,294
Total 44,767
 18,581
 25,000
 10,389
 37,753
 15,637
 3,367
 1,294

  Mr. Phillips Mr. Elliott
  
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
1/29/2013 4,375
 1,582
 —
 —
2/28/2013 2,573
 836
 —
 —
3/5/2013 2,904
 870
 —
 —
5/18/2013 3,069
 1,356
 —
 —
8/9/2013 —
 —
 —
 —
8/31/2013 —
 —
 4,000
 1,528
9/13/2013 —
 —
 —
 —
Total 12,921
 4,644
 4,000
 1,528
  Mr. Elliott Mr. Phillips Ms. Blinderman Mr. Brink
  
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
 
Acquired
Shares
 
Shares
Withheld
For Taxes
3/5/2015 —
 —
 2,904
 1,270
 1,667
 613
 1,000
 396
8/31/2015 4,000
 1,572
 —
 —
 —
 —
 —
 —
Total 4,000
 1,572
 2,904
 1,270
 1,667
 613
 1,000
 396

(2) Value realized on vesting is calculated using the closing market price on the date that the shares vested.

38
(4)Value realized on vesting is calculated using the average of the high and low market price on the date that the shares vested.


Pension Benefits
We do not sponsor a pension plan.
Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
We do not sponsor any nonqualified defined contribution or other nonqualified deferred compensation plans.

30


Potential Payments Upon Termination or Change-in-Control
The following table sets forth the amounts that would have been payable to eachcertain of our Named Executive Officers under the scenarios for death, disability, retirement, termination without cause or good reason or a corporate change of Carriage had such scenarios occurred on December 31, 2013 or, in the case of Mr. Klug, amounts payable in connection with his actual termination of employment during 2013.2015. This table does not include accrued vacation. Amounts reported with respect to equity-based awards are reported assuming the closing price of our Common Stock on December 31, 20132015 of $19.53$24.10 per share.
 
Event 
Melvin C.
Payne
 
L. William
Heiligbrodt
 
Mark R. Bruce

 
Shawn R. Phillips

 Paul D. Elliott 
George J. Klug(11)
 
Melvin C.
Payne
 David J. DeCarlo 
L. William
Heiligbrodt
 
Mark R. Bruce

 Paul D. Elliott 
Shawn R. Phillips

Death, Disability or Retirement                        
Annual incentive award(1)
 $562,523
 $434,800
 $104,000
 $60,000
 $75,000
 n/a
 $580,500
 $448,000
 $—
 $145,000
 $137,500
 $135,000
Equity awards(2)
 5,826,426
 4,332,838
 1,302,523
 951,686
 633,240
 n/a
 1,542,086
 2,220,164
 939,586
 318,042
 317,463
 261,408
Consulting and non-compete payments(3)
 —
 —
 1,548,000
 —
 —
 —
Total $6,388,949
 $4,767,638
 $1,406,523
 $1,011,686
 $708,240
   $2,122,586
 $2,668,164
 $2,487,586
 $463,042
 $454,963
 $396,408
Termination without cause (without a Corporate Change)                        
Salary(3)
 $1,812,573
 $1,250,050
 $390,000
 $360,000
 $375,000
 $200,000
Benefit continuation(4)
 66,997
 n/a
 32,856
 32,181
 33,498
 n/a
Annual incentive award(5)
 —
 —
 104,000
 60,000
 75,000
 n/a
Equity awards n/a
 n/a
 n/a
 n/a
 n/a
 n/a
Cash severance(4)
 $1,875,500
 $1,288,000
 $—
 $435,000
 $412,500
 $405,000
Benefit continuation(5)
 72,477
 1,360
 —
 35,544
 36,238
 34,802
Annual incentive award(6)
 —
 —
 —
 145,000
 137,500
 135,000
Total $1,879,570
 $1,250,050
 $526,856
 $452,181
 $483,498
 $200,000
 $1,947,977
 $1,289,360
 $—
 $615,544
 $586,238
 $574,802
Corporate Change (without termination of employment)                        
Equity awards(6)(7)
 $5,620,346
 $4,332,838
 $981,766
 $663,681
 $633,240
 n/a
 $903,750
 $1,807,500
 $—
 $81,145
 $96,400
 $69,986
Total $5,620,346
 $4,332,838
 $981,766
 $663,681
 $633,240
 

 $903,750
 $1,807,500
 $—
 $81,145
 $96,400
 $69,986
Termination without cause or for good reason in connection with a Corporate Change            
Salary(7)
 $3,562,643
 $2,934,900
 $390,000
 $360,000
 $375,000
 n/a
Termination following a Corporate Change            
Cash severance(8)
 $3,676,500
 $3,024,000
 $—
 $435,000
 $412,500
 $405,000
Benefit continuation(8)(9)
 66,997
 n/a
 65,711
 64,362
 66,697
 n/a
 72,477
 2,719
 —
 71,088
 72,477
 69,604
Annual incentive award(9)
 n/a
 n/a
 104,000
 60,000
 75,000
 n/a
Equity awards(10)
 5,826,426
 4,332,838
 1,302,523
 951,686
 633,240
 n/a
Annual incentive award(10)
 —
 —
 —
 145,000
 137,500
 135,000
Equity awards(11)
 1,542,086
 2,200,164
 —
 318,042
 317,463
 261,408
Total $9,456,066
 $7,267,738
 $1,862,234
 $1,436,048
 $1,149,937
 

 $5,291,063
 $5,226,883
 $—
 $969,130
 $939,940
 $871,012

(1)Reflects pro rata payment of annual bonus (determined at the target level of performance for Messrs. Payne and HeiligbrodtDeCarlo and at actual performance for Messrs. Bruce, PhillipsElliot and Elliott)Phillips) pursuant to the terms of their employment agreements in effect on December 31, 2013.2015. These amounts are not payable upon retirement. The amounts reflected above represent 100% of the target or actual bonus payout (as applicable) due to the assumption that such Named Executive Officer's employment terminated on the last day of the year. However, during 2013, annual bonuses for 2013 were discretionarily not paid to Messrs. Payne and Heiligbrodt and, accordingly, no executive officers would have been entitled to pro rata annual bonuses upon their termination due to death or disability on December 31, 2013.
(2)Reflects accelerated vesting of options and shares of restricted stock and performance-based stock awards pursuant to the terms of employment agreements in effect on December 31, 20132015 and related award agreements. Performance-based stock awards do not vest upon retirement. Only Mr. PayneHeiligbrodt is entitled to accelerated vesting of options upon retirement.
(3)On May 21, 2015, L. William Heiligbrodt, as a result of his announced retirement as of March 4, 2016 from the Company, resigned as Executive Vice President, Principal Financial Officer and Secretary. Amounts reflect payments in connection with a consulting agreement between Mr. Heiligbrodt and Carriage that includes (1) a 24-month term commencing on the effective date of the termination of his employment with Carriage, (2) a consulting fee of $25,000 per complete calendar month during the term of the consulting agreement and (3) during the five-year period following the termination of his employment with Carriage, non-compete payments at the rate of $15,000 per calendar month and reimbursement of up to $800 per month of premiums he pays to obtain health care coverage under an individual health insurance policy. In the event of his death, Mr. Heiligbrodt’s estate will also be entitled to all payments he would have received under his consulting agreement which will be paid at the same time and in the same manner as they would have been paid to Mr. Heiligbrodt. These amounts are not payable upon Mr. Heiligbrodt's disability.
(4)Amounts with respect to Messrs. Payne, Heiligbrodt,DeCarlo, Bruce, PhillipsElliott and ElliottPhillips reflect cash severance payable under the terms of employment agreements in effect on December 31, 2013 equal2015. Mr. Payne's represents 90% of his base salary (pro rated to reflect the number of days he was employed during the year of his termination) and two years base salary continuation, for Mr. PayneDeCarlo’s represents 80% of his base salary (pro rated to reflect the number of days he was employed during the year of his termination) and 18 months base salary continuation forand Messrs. Heiligbrodt, Bruce, PhillipsBruce’s, Elliott’s and Elliott. Amounts with respect to Mr. Klug reflect post-retirement consulting fees and cash severance payable pursuant to his separation agreement.Phillips’ represents 18 months base salary continuation.

39


(4)(5)Amounts reflect estimated cost of benefit continuation for 36 months in the case of Mr. Payne and 18 months in the case of Messrs. Bruce, PhillipsElliot and ElliottPhillips in each case, pursuant to the terms of employment agreements in effect on December 31, 2013. No amount is reflected for2015. Mr. Heiligbrodt as heDeCarlo was not a participant in our medical plan, but was a participant in our dental plan as of December 31, 2013.2015.
(5)(6)Amounts reflect pro rata payment of annual bonus (determined at actual performance) pursuant to the terms of employment agreements in effect on December 31, 2013.2015. The amounts reflected above represent 100% of the actual bonus payout due to the assumption that such Named Executive Officer's employment terminated on the last day of the year.
(6)(7)Amounts reflect accelerated vesting of shares of restricted stock and performance-based stock awards pursuant to the terms of the respective award agreements.

31


(7)(8)Amounts reflect lump sum cash severance payable under the terms of employment agreements in effect on December 31, 20132015 equal to (a) three times the sum of base salary and target annual bonus for Messsr.Messrs. Payne and HeiligbrodtDeCarlo and (b) 1.5 times base salary for Messrs. Bruce, PhillipsElliott and Elliott.Phillips.
(8)(9)Amounts reflect estimated cost of benefit continuation for 36 months, in each case, pursuant to the terms of employment agreements in effect on December 31, 2013. No amount is reflected for2015. Mr. Heiligbrodt as heDeCarlo was not a participant in our medical plan, but was a participant in our dental plan as of December 31, 2013.2015.
(9)(10)Amounts reflect payout of 100% actual bonus for the year of termination under the terms of employment agreements in effect on December 31, 2013.2015.
(10)(11)Amounts reflect accelerated vesting of shares of restricted stock performance-based stock awards and stock options pursuant to our Amended and Restated 2006 Long-Term Incentive Plan.
(11)As Mr. Klug's employment terminated effective August 9, 2013, the amounts reflected in the table above only reflect the actual amounts payable in connection with such termination pursuant to the terms of his separation agreement.
Employment Agreements in Effect as of December 31, 2013
Mr. Payne. Pursuant to the terms of Mr. Payne’s secondSecond Amended and Restated Employment Agreement, as amended, and restated employment agreement entered into on March 14, 2012, if we discharge Mr. Payne without cause during(as defined in the termemployment agreement), then, so long as he executes (and does not revoke) a release of the agreement,claims, Mr. Payne will be entitled to receivereceive: (a) an amount equal to 90% of his base salary, pro rated to reflect the number of days he was employed during the year of his termination, (b) continued payment of his base salary for a period of 24 months and (c) reimbursement for medical benefit continuation premiums under COBRA for a period of up to 36 months (or such time Mr. Payne ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer’s group health plan). If,following his termination. In addition, if, within 24 months following a corporate change of Carriage,(as defined in the Employment Agreement), Mr. Payne voluntarily terminates his employment for good reason or he is discharged without cause, in either case, within 24 months following the corporate change, Mr. Paynehe will be entitled to receivereceive: (i) a lump sum payment equal to three times the sum of his base salary and target annual bonus and (ii) reimbursement for medical benefit continuation premiums under COBRA for a period of up to 36 months (or such time Mr. Payne ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer’s group health plan).following his termination.
Mr. HeiligbrodtDeCarlo.. Pursuant to the terms of Mr. Heiligbrodt’s first amended and restated employment agreementMr DeCarlo’s Employment Agreement entered into on March 14, 2012,3, 2014, if we discharge Mr. HeiligbrodtDeCarlo without cause during(as defined in the termemployment agreement), then, so long as he executes (and does not revoke) a release of the agreement,claims, Mr. HeiligbrodtDeCarlo will be entitled to receivereceive: (a) an amount equal to 80% of his base salary, pro rated to reflect the number of days he was employed during the year of his termination, (b) continued payment of his base salary for a period of 18 months and (c) reimbursement for medical benefit continuation premiums under COBRA for a period of up to 18 months (or such time Mr. Heiligbrodt ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer’s group health plan). If,following his termination. In addition, if, within 24 months following a corporate change of Carriage,(as defined in the employment agreement), Mr. HeiligbrodtDeCarlo voluntarily terminates his employment for good reason or he is discharged without cause, in either case, within 24 months following the corporate change, Mr. Heiligbrodthe will be entitled to receivereceive: (i) a lump sum payment equal to three times the sum of his base salary and target annual bonus and (ii) reimbursement for medical benefit continuation premiums under COBRA for a period of up to 36 months (or such time Mr. Heiligbrodt ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer’s group health plan).following his termination.
Messrs. Bruce, Phillips and Elliott.Mr. Heiligbrodt. Pursuant to the terms of the employment agreements with Messrs. Bruce and Phillips (as amended March 14, 2012), if we discharge the executive without cause during the term of the employment agreement, he will be entitled to receive (a) a pro rated bonus for the year of termination, (b) continued payment of his base salary for a period of 18 months and (c) reimbursement for medical benefit continuation premiums under COBRA for a period of up to 18 months (or such time the executive ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer's group health plan). If following a corporate change of Carriage, the executive voluntarily terminates his employment for good reason or he is discharged without cause, in either case, within 24 months following the corporate change, the executive will be entitled to receive (i) a lump sum payment equal to one and a half times his base salary, (ii) a full year annual bonus and (iii) reimbursement for medical benefit continuation premiums under COBRA for a period of up to 36 months (or such time the executive ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer's group health plan).

40


In addition, under each Named Executive Officer's employment agreement and the related award agreements, upon the executive's termination due to death or disability, such executive would be entitled to receive (a) a pro rata amount of the annual target incentive award for the year of termination, and (b) full vesting of all stock options, performance-based stock awards and shares of restricted stock (unless otherwise provided for in the applicable plan pursuant to which the award was granted). If the executive terminated his employment due to retirement on terms approved by the board, he would be entitled to full vesting of all stock options and shares of restricted stock (unless otherwise provided for in the applicable plan pursuant to which the award was granted).
Each of the employment agreements provides that if any amounts payable under the agreement would be subject to the excise tax under Sections 280G and 4999 of the Code, such amounts will be reduced to the maximum amount that would be not be subject to such excise tax.
The employment agreements also each contain a covenant prohibiting the executive from competing with us while he is employed by us and, if his employment is terminated for any reason, then for a period of two years thereafter.
Klug Separation and Consulting Agreement
On July 31, 2013, we entered into Separation and Release Agreements with Mr. Klug pursuant to which he retired from Carriage effective as of August 9, 2013. Pursuant to this agreement, Mr. Klug received (a) a consulting fee in the amount of $10,000 per complete calendar month during the Consulting Period beginning on August 10, 2013 and ending on August 9, 2015 and (b) accelerated vesting of 100% of his outstanding unvested options and shares of restricted stock.
Recent events
We entered into a Second Amended and Restated Employment Agreement with Mr. Heiligbrodt and an Employment Agreement with Mr. DeCarlo (collectively, the “Agreements”) effective as of March 3, 2014 and, unless terminated earlier in accordance with their terms, the Agreements will continue for initial terms of four years. In addition, on each anniversary of the effective date, unless the Agreements have been terminated, the term of the Agreements will automatically be extended for an additional year unless either party provides written notice of non-renewal at least 60 days prior to such anniversary.
Pursuant to Mr. Heiligbrodt’s Second Amended and Restated Employment Agreement entered into on March 3, 2014, he received a special one-time bonus equal to $1,000,000 in connection with the execution of the agreement and his annualized base salary was increased to $545,000. In addition, if Mr. Heiligbrodt’s employment with Carriage is terminated (a) by Carriage without cause (as defined in the employment agreement) or (b) as a result of his voluntary resignation following the second anniversary of the effective date after he has given Carriage six months’ prior written notice of his intent to resign, then (i) the prohibited period under the non-compete and non-solicitation covenants under Mr. Heiligbrodt’s Employment Agreement will continue for five years following such termination, (ii) all equity awards granted to Mr. Heiligbrodt that remain unvested will generally become immediately vested (except that, in the case of Mr. Heiligbrodt’s resignation under the circumstances described above, all restricted stock and other stock-based awards granted on or after March 3, 2014 that remain unvested will be forfeited) and (iii) Mr. Heiligbrodt and Carriage will enter into a consulting agreement in a form mutually acceptable to Mr. Heiligbrodt and Carriage that includes (1) a 24-month term commencing on the effective date of the termination of his employment with Carriage, (2) a consulting fee of $25,000 per complete calendar month during the term of the consulting agreement and (3) during the five-year period following the termination of his employment with Carriage, non-compete payments at the rate of $15,000 per calendar month and reimbursement of up to $800 per month of premiums he pays to obtain health care coverage under an individual health insurance policy. In the event of his death, Mr. Heiligbrodt’s estate will also be entitled to all payments he would have received under his consulting agreement (collectively, the “Consulting and Non-Compete Payments”) which will be paid at the same time and in the same manner as they would have been paid to Mr. Heiligbrodt.
In addition, if Mr. Heiligbrodt voluntarily terminates his employment or his employment is terminated by Carriage without cause, in either case, within 24 months following a corporate change in control (as defined in his Employment Agreement)employment agreement), then so long as Mr. Heiligbrodthe executes (and does not revoke) a release of claims, in a form acceptableMr. Heiligbrodt will be entitled to the Company, Carriage will pay Mr. Heiligbrodtreceive (i) a lump sum payment equal to the sum of (x) three times the sum of his then-current annualized base salary and 100% of his target annual bonus for the year in which such termination occurs and (y) the Consulting and Non-Compete Payments (regardless of whether Mr. Heiligbrodt provides any consulting services to Carriage, its successor or any of their respective affiliates), and (ii) if Mr. Heiligbrodt elects to receive continued coveragereimbursement for medical benefit continuation premiums under a group health plan of Carriage, Carriage will reimburse him for the premiums he pays for such coverageCOBRA for a period of up to 36 months following such termination. The other
On May 21, 2015, L. William Heiligbrodt, as a result of his announced retirement as of March 4, 2016 from the Company, resigned as Executive Vice President, Principal Financial Officer and Secretary. On March 4, 2016, we entered into a consulting agreement with Mr. Heiligbrodt under the terms of Mr. Heiligbrodt’s Second  Amendeddescribed above.

32


Messrs. Bruce, Phillips and Restated Employment Agreement are substantially the same asElliott. Pursuant to the terms of his First Amendedthe employment agreements with Messrs. Bruce and Restated Employment Agreement described above.

Mr. DeCarlo’s Employment Agreement provides that he will receive an annualized base salary of $545,000. In addition, Mr. DeCarlo is (1) entitled to annual discretionary bonuses based onPhillips (as amended March 14, 2012), if we discharge the achievement of specified performance goals established

41


at the beginning of the year by the Compensation Committee of the Board and (2) eligible to receive equity-based compensation awards under Carriage’s equity-based compensation plans in effect from time to time. Pursuant to Mr. DeCarlo’s Employment Agreement, in the event Carriage terminates his employmentexecutive without cause (as defined in the Employment Agreement) and not dueapplicable employment agreement) during the term of the employment agreement, he will be entitled to receive, subject to his disability, so long as Mr. DeCarlo executesexecution (and does not revoke)non revocation) of a release of claims, in(a) a form acceptable to Carriage, (a) Carriage will continue to pay Mr. DeCarlopro rated bonus for the year of termination, (b) continued payment of his then-current annualized base salary for a period of 18 months following such termination and an additional pro rata portion of his base salary(c) reimbursement for the year of termination and (b) if Mr. DeCarlo elects to receive continued coveragemedical benefit continuation premiums under a group health plan of Carriage, Carriage will reimburse him for the premiums he pays for such coverageCOBRA for a period of up to 18 monthsmonths. If following such termination. In addition, Mr. DeCarlo’s Employment Agreement will provide that if hea corporate change (as defined in the applicable employment agreement), the executive voluntarily terminates his employment for good reason (as defined in the applicable agreement) or his employmenthe is terminated by Carriagedischarged without cause, in either case, within 24 months following athe corporate change in control (as defined in the Employment Agreement)applicable agreement), then so long as Mr. DeCarlo executes (and does not revoke) a release of claims in a form acceptablethe executive will be entitled to Carriage, Carriage will pay Mr. DeCarloreceive (i) a lump sum payment equal to threeone and a half times the sum of his then-current annualized base salary, and 100% of his(ii) a full year target annual bonus and (iii) reimbursement for the year in which such termination occurs, and (ii) if Mr. DeCarlo elects to receive continued coveragemedical benefit continuation premiums under a group health plan of Carriage, Carriage will reimburse him for the premiums he pays for such coverageCOBRA for a period of up to 36 months following(or such termination. Mr. DeCarlo’s Employment Agreementtime the executive ceases to be eligible to elect to continue such benefits under COBRA or becomes eligible to participate in another employer's group health plan).
In addition, under each Named Executive Officer’s employment agreement and the related award agreements, upon the executive’s termination due to death or disability, such executive would be entitled to receive (a) a pro rata amount of the annual target incentive award for the year of termination, and (b) full vesting of all stock options, performance-based stock awards and shares of restricted stock (unless otherwise provided for in the applicable plan pursuant to which the award was granted). If the executive terminated his employment due to retirement on terms approved by the board, he would be entitled to full vesting of all shares of restricted stock (unless otherwise provided for in the applicable plan pursuant to which the award was granted).
The employment agreements also includes certain confidentiality, non-competitioneach generally contain a covenant prohibiting the executive from competing with us while he is employed by us and, non-solicitation covenants that apply during theif his employment is terminated for any reason, then for a period of his employment with the Company and forat least two years thereafter.

In addition, effective March 3, 2014, the Company amended the employment agreement of Mr. Payne to provide for a base salary of $625,000 and an initial four year term from the effective date of the amendment subject to automatic renewal so that the term is always between three and four years.
Long-Term Incentive Plan Awards
Pursuant to the terms of the award agreements governing outstanding restricted stock and performance-based stock awards, upon the consummation of a corporate change, of Carriage, all restrictions on such restricted shares will lapse and all such performance-based stock awards will be fully vested.lapse.
In addition, pursuant to the terms of our Second Amended and Restated 2006 Long-Term Incentive Plan,LTIP, except as otherwise provided in an award agreement, if a participant’s employment with us is terminated for any reason other than death, for cause, inability to perform or due to such participant’s termination of his or her employment for good reason within the one-year period following a corporate change, of Carriage, then any time periods, conditions or contingencies (including vesting conditions) relating to the exercise or realization of, or lapse of restrictions under, any award will be automatically accelerated or waived so that the award may be realized in full (if no exercise of the award is required) or exercised in full (if exercise of the award is required) upon the termination of such participant’s employment.

33
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION


PROPOSAL NO. 2:
NoneADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the members who servedExchange Act, as amended, require that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
At our 2015 Annual Meeting of Stockholders, held on May 19, 2015, management’s proposal to ratify our executive compensation in 2014 narrowly failed to pass, with approximately 49% of all votes cast supporting it. We were very disappointed that a majority of our stockholders did not support our plans. Since the 2015 Annual Meeting of Stockholders, we have taken a number of steps to address stockholder perceptions of our compensation program further discussed herein under “Compensation Discussion and Analysis”.
We urge our stockholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes in more detail how our named executive officer compensation policies and programs operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing under “Executive Compensation,” which provide detailed information on the compensation of our Named Executive Officers. Our Compensation Committee during 2013 has at any time been an officer or employeebelieves that the policies and programs articulated in the “Compensation Discussion and Analysis” section are effective in achieving our goals and that the compensation of our company nor hadNamed Executive Officers reported in this Proxy Statement has contributed to our High Performance Culture and Being The Best Mission.
Accordingly, we are asking our stockholders to indicate their support for our Named Executive Officer compensation as described in this Proxy Statement by voting “FOR” the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of Carriage’s Named Executive Officers, as disclosed in the Proxy Statement for the 2016 Annual Meeting of Stockholders of Carriage pursuant to the compensation disclosure rules of the Securities and Exchange Commission (including, but not limited to, the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables, notes and narrative).”
This vote is not intended to address any substantial business dealings with our company. Nonespecific item of compensation, but rather the overall compensation of our executive officers serves as a member ofNamed Executive Officers and the board of directors or compensation committee of any entity that has one or more executive officers serving as a member ofphilosophy, policies and practices described in this Proxy Statement. This vote is advisory, and therefore not binding on us, our Board or our Compensation Committee. Although the resolution is non-binding, our Board and our Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the advisory vote on named executive officer compensation when making future compensation decisions.
Our Board unanimously recommends that you vote “FOR” the advisory vote to approve named executive officer compensation, as disclosed in this Proxy Statement.


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PROPOSAL NO. 3:
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP
General
Our Audit Committee has selected Grant Thornton to audit our consolidated financial statements. Grant Thornton has served as our independent registered public accounting firm since 2014.
Representatives of Grant Thornton are expected to be present at our Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders.
Although ratification is not required by Delaware law, our bylaws or otherwise, our Board is submitting our Audit Committee’s appointment of Grant Thornton to our stockholders for ratification as a matter of good corporate practice. Even if the appointment is ratified, our Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders. If the appointment of Grant Thornton is not ratified, our Audit Committee will evaluate the basis for the stockholders’ vote when determining whether to continue the firm’s engagement.
Our Board unanimously recommends that you vote “FOR” the ratification of the appointment of Grant Thornton as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
Audit and Other Fees
Fees billed to us by Grant Thornton and KPMG during 2015 and 2014 were as follows:
  Year Ended December 31,
  2015 2014
Audit fees(1) (2)
 $811,275
 $793,055
Audit-related fees(3) (4)
 75,000
 15,000
All other fees(5) (6)
 37,001
 45,209
Total $923,276
 $853,264
(1)During 2015, audit fees paid to Grant Thornton were $811,275.
(2)During 2014, audit fees paid to Grant Thornton were $793,055
(3)During 2015, services were performed by KPMG in relation to the 2014 audit.
(4)During 2014, services were performed by KPMG in relation to the auditor change letters.
(5)During 2015, services were performed by Grant Thornton in relation to property tax compliance.
(6)During 2014, services were performed by Grant Thornton in relation to property tax compliance. The non-audit services were not pre-approved by the audit committee due to the fact that Grant Thornton was not engaged as Carriage’s independent registered public accounting firm at the time these services begun.
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm
As part of its duties, our Audit Committee is required to annually pre-approve audit and non-audit services performed by the independent registered public accounting firm in order to ensure that the provision of such services does not impair the audit firm’s independence. Our Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent auditors. All audit fees and audit-related fees for 2015 and 2014 were pre-approved by our Audit Committee.

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AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the “Audit Committee”) of Carriage Services, Inc. (“Carriage”) has reviewed and discussed the audited financial statements of Carriage for the fiscal year ended December 31, 2015 with Carriage management. The Audit Committee has discussed with Grant Thornton LLP, Carriage's independent registered public accounting firm for the fiscal year ended December 31, 2015, the matters required to be discussed by Statement on Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. Additionally, the Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Grant Thornton LLP's communications with the Audit Committee concerning independence, and has discussed with Grant Thornton LLP their independence.
Based on the Audit Committee’s review and discussions with management and Grant Thornton LLP referred to above, the Audit Committee recommended to the Board of Directors of Carriage that the audited consolidated financial statements be included in Carriage's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the Securities and Exchange Commission.
Audit Committee
Donald D. Patteson, Jr., Chairman
Barry K. Fingerhut
Richard W. Scott
Bryan D. Leibman


April 5, 2016


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SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
Stock Ownership of Management
The following table sets forth, as of March 24, 2016, the number of shares beneficially owned and the percentage of the Common Stock held by: (1) each of our directors and director nominees, (2) our Principal Executive Officer and Principal Financial Officer, (3) our other executive officers named in the Summary Compensation Table set forth under “Executive Compensation,” and (4) all our current executive officers and directors as a group. Under the rules of the SEC, on any day, a person is deemed to own beneficially all securities as to which that person owns or shares voting or investment power, as well as all securities which such person may acquire within 60 days of such date through the exercise of currently available conversion rights or options. Except as otherwise stated in the notes to the table, each person named in the table below has sole voting and investment power with respect to the shares indicated.
Beneficial Owner Common Stock 
Stock  Options(1)
 
Number of Shares
Beneficially
Owned
 Percent of
Common Stock
Melvin C. Payne(2)(3)
 1,353,179
 227,420
 1,580,599
 9.5%
L. William Heiligbrodt(4)(5)
 266,968
 300,000
 566,968
 3.4%
David J. DeCarlo(6)
 106,376
 100,001
 206,377
 1.2%
Shawn R. Phillips(7)

 52,450
 116,536
 168,986
 1.0%
Mark R. Bruce

 33,740
 131,732
 165,472
 1.0%
Richard W. Scott(8)
 106,445
 —
 106,445
 *
Paul D. Elliott 32,537
 65,999
 98,536
 *
Donald D. Patteson, Jr. 47,138
 —
 47,138
 *
Viki K. Blinderman 2,654
 40,001
 42,655
 *
Carl B. Brink 4,799
 23,334
 28,133
 *
Bryan D. Leibman(9)
 13,413
 —
 13,413
 *
Barry K. Fingerhut —
 —
 —
 *
All current directors and executive officers as a group (12 persons) 2,019,699
 1,005,023
 3,024,722
 18.2%
*Indicates less than 1%.
(1)The ownership of stock options shown in the table includes shares which may be acquired within 60 days upon the exercise of outstanding stock options granted under our stock option plans. For unexercisable stock options, see “Executive Compensation – Outstanding Equity Awards at Fiscal Year-End” in this Proxy Statement.
(2)Mr. Payne’s holdings include 80,270 shares of Common Stock held by Mr. Payne’s minor daughter and 3,518 shares of Common Stock held by Mr. Payne’s spouse.
(3)Mr. Payne has pledged 68,566 shares of his Common Stock pursuant to a margin account which was opened in October 2012.
(4)Mr. Heiligbrodt’s holdings include 65,711 shares of Common Stock held by the Agent for Corinne C. Heiligbrodt Separate Property.
(5)Mr. Heiligbrodt has pledged 140,550 shares of his Common Stock pursuant to a margin account which was opened on June 27, 2013.
(6)Mr. DeCarlo’s holdings include 60,329 shares of Common Stock held by the Peggy J. DeCarlo 2012 Irrevocable Trust.
(7)Mr. Phillips has pledged 50,000 shares of his Common Stock pursuant to a margin account which was opened November 2015.
(8)Mr. Scott’s holdings include 1,000 shares of Common Stock held by Mr. Scott’s minor daughter and son.
(9)Mr. Leibman's holdings include 2,576 shares of Common Stock held by Mr. Leibman's minor children.

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Stock Ownership of Certain Beneficial Owners
As of April 5, 2016, the persons named below were, to our knowledge, the only beneficial owners of more than 5% of our outstanding Common Stock, determined in accordance with Rule 13d-3 of the Exchange Act, other than directors and executive officers whose beneficial ownership is described in the previous table.
Beneficial Owner 
Number of Shares
Beneficially
Owned
 Percent of Common Stock
FMR LLC(1)
245 Summer Street
Boston, MA 02210
 2,830,349
 16.6%
Dimensional Fund Advisors LP(2)
Building One,
6300 Bee Cave Road
Austin, TX 78746
 1,556,372
 9.4%
Zazove Associates, LLC(3)
1001 Tahoe Blvd.
Incline Village, NV 89451
 1,123,433
 6.3%
BlackRock Inc.(4)
55 East 52nd Street
New York, NY 10055
 952,939
 5.7%
(1)
Based solely on Schedule 13G/A filed with the SEC on February 12, 2016. FMR LLC has sole voting power as to 1,191,852 shares and sole dispositive power as to 2,830,349 shares, of which, 488,372 shares are issuable upon the conversion of Carriage 2.75% Convertible Notes due March 15, 2021.
(2)Based solely on Schedule 13G/A filed with the SEC on February 9, 2016. Dimensional Fund Advisors LP has sole voting power as to 1,513,270 shares and sole dispositive power as to 1,556,372 shares.
(3)Based solely on Schedule 13G/A filed with the SEC on February 8, 2016. Zazove Associates, LLC, Zazove Associates, Inc. and Gene T. Pretti have sole voting and dispositive power as to 1,123,433 shares, of which 1,123,433 shares are issuable upon the conversion of Carriage 2.75% Convertible Notes due March 15, 2021.
(4)Based solely on Schedule 13G filed with the SEC on January 28, 2016. BlackRock Inc. has sole voting power as to 917,759 shares and sole dispositive power as to 952,939 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities to file with the SEC and the NYSE reports of ownership and changes in ownership of Common Stock and other of our equity securities on Forms 3, 4 and 5. Executive officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Forms 3, 4 and 5 they file.
To our knowledge, based solely on our review of the copies of such reports furnished to us or written representations from reporting persons, we believe that all filings required to made under Section 16(a) of the Exchange Act were timely made for the fiscal year ended December 31, 2015.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policies and Procedures for Review and Approval of Related Party Transactions
We have established procedures to identify, review, approve, and ratify transactions with related persons and bring them to the attention of our Board for consideration. These procedures include formal written questionnaires to our directors and executive officers. Each year, we require our directors and executive officers to complete a questionnaire that requires them to identify and describe any transactions with Carriage that they or their respective related parties may have been involved in, whether or not material.
Our Corporate Governance Committee has the responsibility to review and discuss with management and approve any transactions or courses of dealing with related parties. During this process, related party transactions are disclosed to all Board members. To the extent such transactions are ongoing business relationships, the transactions are reviewed annually and such relationships will be on terms not materially less favorable than what would be usual and customary in similar transactions between unrelated persons dealing at arm’s length. Our Corporate Governance Committee intends to approve only those related party transactions that are in the best interest of us and our stockholders. The policies and procedures for related party transactions are documented in our Code of Business Conduct and Ethics, a copy of which is available free of charge on our website at www.carriageservices.com.
Related Party Transactions
Other than as described below, since January 1, 2013,2015, there were no reportable transactions between Carriage and related persons, and there are no such currently proposed transactions. All transactions described below were reviewed and approved as required by our policies and procedures for the review and approval of related party transactions described above.
Robert Prescott, Director of Corporate Finance though May 11, 2015, who is the brother-in-law to our Chief Executive Officer and Chairman of the Board, and Chief Executive Officer, received approximately $207,000$260,130 in total compensation during 2013.2015.
OTHER BUSINESS
Management does not intend to bring any other business before our Annual Meeting and has not been informed that any other matters are to be presented at our Annual Meeting by others. If other matters properly come before our Annual Meeting or any adjournment or postponement thereof, the persons named in the accompanying proxy and acting thereunder will vote in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR THE 20152017 ANNUAL MEETING
Pursuant to rules promulgated by the SEC, stockholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at our 20152017 Annual Meeting of Stockholders may do so by following the procedures set forth under Rule 14a-8 of the Exchange Act. In general, to be eligible for inclusion in our proxy materials, stockholder proposals must be received by our Corporate Secretary at 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056 no later than December 22, 2014. However, if the date of our 2015 Annual Meeting of Stockholders is changed by more than 30 days from May 21, 2015, the deadline is a reasonable time prior to our printing and mailing of the proxy materials, which deadline will be communicated to our stockholders in our public filings.2, 2016.
In addition, pursuant to our bylaws, a stockholder may recommend nominees for director not for inclusion in our proxy materials, by givingas further discussed herein in our Corporate Secretary a written notice not less than 90 days prior to the anniversary date of the immediately preceding annual meeting. For our 2015 Annual Meeting of Stockholders, the deadline will be February 20, 2015, based upon this year's meeting occurring on May 21st. The notice must include the name and address of the stockholder giving notice and the number of shares of Common Stock beneficially owned by the stockholder. The notice must also include the full name, age, business address, principal occupation or employment of the nominee, the number of shares of Common Stock that the nominee beneficially owns, any other information about the nominee that must be disclosed in proxy solicitations under Regulation 14A of the Exchange Act, and the nominee's written consent to the nomination and to serve, if elected. Any such nomination when submitted must be in full compliance with applicable law and our bylaws.“Corporate Governance – Direction Nomination Process” section.
Under Rule 14a-4(c) of the Exchange Act, our Board may exercise discretionary voting authority under proxies solicited by it with respect to any matter properly presented by a stockholder at our 20152017 Annual Meeting of Stockholders that the stockholder does not seek to have included in our proxy statement if (except as described in the following sentence) the proxy statement discloses the nature of the matter and how our Board intends to exercise its discretion to vote on the matter, unless we

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are notified of the proposal on or before March 7, 2015February 17, 2017 and the shareholderstockholder satisfies the other requirements of Rule 14a-4(c)(2). If we first receive notice of the matter after March 7, 2015,February 17, 2017, and the matter nonetheless is permitted to be presented at our 20152017 Annual Meeting of Stockholders, our Board may exercise discretionary voting authority with respect to the matter without including any discussion of the matter in the proxy statement for the meeting. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above and other applicable requirements.

4439



ADDITIONAL INFORMATION
Annual Report
Our Annual Report to Stockholders for the year ended December 31, 20132015 (our “Annual Report”) is being mailed to all stockholders entitled to vote at our Annual Meeting. Our Annual Report does not form any part of the proxy soliciting materials.
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013,2015, but not including exhibits, is also available at www.carriageservices.com. A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013,2015, excluding exhibits, will be furnished at no charge to each person to whom a proxy statement is delivered upon the request of such person. Exhibits to the Annual Report on Form 10-K for the fiscal year ended December 31, 20132015 are available upon payment of a reasonable fee, which is limited to our expenses in furnishing the requested exhibit.exhibit(s). Such requests should be directed to the Corporate Secretary of Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056.
Householding
We are sending only one copy of this Proxy Statement and our Annual Report to stockholders who share the same last name and address, unless they have notified us that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs. If you received a householded mailing this year and you would like to have additional copies of this Proxy Statement and/or our Annual Report mailed to you or you would like to opt out of this practice for future mailings, we will promptly deliver such additional copies to you if you submit your request to our Corporate Secretary in writing at Carriage Services, Inc., 3040 Post Oak Boulevard, Suite 300, Houston, Texas 77056, or call our Corporate Secretary at 713-332-8400. You may also contact us in the same manner if you received multiple copies of this Proxy Statement and our Annual Report and would prefer to receive a single copy in the future.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, AND YOU ARE RESPECTFULLY REQUESTED TO VOTE VIA THE INTERNET OR COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.

By Order of the Board of Directors,
    
L. William Heiligbrodt
Executive Vice President and Secretary
Viki K. Blinderman

Co-Chief Financial Officer, Chief Accounting Officer and Secretary
 

Houston, Texas
April 9, 20145, 2016

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