DEF 14A of Service Corp International
Filed Mar 27, 2024 · FY20230000089089-24-000077
Director Nominees
Director Nominees
Director Nominees
| Name Occupation | Independent | Director Since | Age | Other Public Boards(1) | Board Committee Composition | | Alan R. Buckwalter Former Chairman and CEO, Chase Bank of Texas | YES | 2003 | 77 | None | | | Anthony L. Coelho Former Majority Whip of the U. S. House of Representatives Independent business and political consultant | YES | 1991 | 81 | 3 | | | Jakki L. Haussler Founder and Chairwoman of the Board and former CEO, Opus Capital Management | YES | 2018 | 66 | 3 | | | Victor L. Lund Former CEO and Executive Chairman of the Board, Teradata Corporation | YES | 2000 | 76 | None | | | Ellen Ochoa Former Director, NASA Johnson Space Center Independent Director and Speaker | YES | 2015 | 65 | None | | | Thomas L. Ryan Chairman and CEO, Service Corporation International | NO | 2004 | 58 | None | | | C. Park Shaper CEO of Seis Holdings LLC, a private investment holding company | YES | 2022 | 55 | 2 | | | Sara Martinez Tucker Former CEO, National Math + Science Initiative, a non-profit organization to improve student performance in STEM subjects | YES | 2018 | 68 | 1 | | | W. Blair Waltrip Independent consultant, family and trust investments, and former Senior Executive of the Company | NO | 1986 | 69 | None | | | Marcus A. Watts, Lead Independent Director President, The Friedkin Group, an umbrella company overseeing various business interests that include a variety of branded automotive, hospitality, and entertainment companies | YES | 2012 | 65 | 1 | |
Director Nominees
| | Audit Committee | | Executive Committee | | Nominating & Corporate Governance Committee | | | | | Compensation Committee | | Investment Committee | | Member | | Chair |
Director Nominees
(1)See Director profiles beginning on page 16, which include other public boards for each Director.
Director Nominees
Director Nominees
Director Nominees
| | Alan R. Buckwalter INDEPENDENT Director Since: 2003 Age: 77 Committees: Executive, Investment, Nominating and Corporate Governance | Occupation: Former Chairman and CEO, Chase Bank of Texas Education: Fairleigh Dickinson University |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Human Capital Management •Investments/Financial Services •Real Estate/Business Development/M&A •Risk Management PRIOR BUSINESS EXPERIENCE •Chairman and CEO, Chase Bank of Texas (1998-2003) •President of Texas Commerce Bank (1990-1998) •Held various positions at Chemical Bank in corporate division (1970-1990) | OTHER POSITIONS •Board Member, Texas Medical Center •Chairman Emeritus and Board Member, Central Houston, Inc. PAST PUBLIC COMPANY BOARDS •Freeport-McMoRan, Inc. (2013-2015) •Plains Exploration and Production (2003-2013); subsequently acquired by Freeport-McMoRan Inc. FORMER POSITIONS •Former Board of Directors, Federal Reserve Bank of Dallas (Houston Branch) | DIRECTOR SUMMARY: Alan Buckwalter’s extensive corporate finance and banking experience provides the Board with valuable financial and investment management insights. He is a strong resource for relevant strategy and risk management gained from his many years in senior executive roles. His tenure on the Board has allowed him to develop a robust understanding of our unique industry. Furthermore, he possesses significant corporate governance knowledge developed by past service on the boards of other publicly traded companies. |
Director Nominees
| | Anthony L. Coelho INDEPENDENT Director Since: 1991 Age: 81 Committees: Compensation, Executive, Nominating and Corporate Governance | Occupation: Former Majority Whip of the U.S. House of Representatives Independent business and political consultant Education: Loyola University Los Angeles |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Government/Regulatory •Human Capital Management •Investments/Financial Services •Marketing/Brand Management PRIOR POLITICAL EXPERIENCE •Chairman of the President’s Committee on Employment of People with Disabilities (1994-2001) •General Chairman of Al Gore’s Presidential campaign (1999-2000) •Majority Whip (1987-1989) •Member of U.S. House of Representatives (1978-1989); original sponsor/author of the Americans With Disabilities Act | PRIOR BUSINESS EXPERIENCE •President/CEO of Wertheim Schroder Financial Services, grew $800 million firm to $4.5 billion over 6 years (1990-1995) CURRENT PUBLIC COMPANY BOARDS •Board Chairman, Esquire Financial Holdings, Inc. •AudioEye, Inc. •EVO Transportation & Energy Services, Inc. SELECT PAST PUBLIC COMPANY BOARDS •Chairman, Cyberonics •Chairman, Circus Circus Enterprises (now MGM Mirage) •Chairman, ICF Kaiser International, Inc. •Warren Resources, Inc. FORMER POSITIONS •Former Chairman and current Board Member of the Epilepsy Foundation | DIRECTOR SUMMARY: Tony Coelho’s successful role as President and CEO of a multi-billion financial services company provides the Board with financial, investing, and senior leadership expertise. His experience on the Board has allowed him to develop a robust understanding of our unique industry. His political experience and expertise provide unique insights into government, public policy matters, and regulatory issues. Additionally, he has significant corporate governance knowledge developed by current and past service on the boards of other publicly traded companies. |
Director Nominees
| | Jakki L. Haussler INDEPENDENT Director Since: 2018 Age: 66 Committees: Audit, Investment (Chair) | Occupation: Founder and Chairwoman of the Board, Opus Capital Management (since 1996), an independent registered investment advisor, providing investment solutions to institutions and high-net worth individuals Education: University of Cincinnati Salmon P. Chase College of Law, Northern Kentucky University |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Government/Regulatory •Investments/Financial Services •Marketing/Brand Management •Real Estate/Business Development/M&A PRIOR BUSINESS EXPERIENCE •CEO Opus Capital Management (1996-2019) •Managing Director, Capvest Venture Fund, LP (2000-2011) a private equity fund for growth and expansion stage companies •Partner, Adena Ventures, LP (1999-2010) a private equity fund targeting underserved markets | CURRENT PUBLIC BOARD POSITIONS •Barnes Group Inc. •Morgan Stanley Funds •Vertiv Holding Co. OTHER POSITIONS •Member, Board of Directors, The Victory Funds •Member/Founder, Chase College of Law, Transaction Law Practice Center •Board of Visitors, Chase College of Law •Member, Northern Kentucky University Foundation Investment Committee PAST PUBLIC COMPANY BOARDS •Cincinnati Bell, Inc. •Best Transport, Inc. (now Descartes Systems Group, Inc.) | DIRECTOR SUMMARY: Jakki Haussler has expertise in finance, portfolio management, and senior leadership experience as founder and Chairwoman of Opus Capital Management. Her expertise and experience provides background in investments and equity funds. Her experience as Partner in Adena Ventures provides insight into business development and M&A activity. Her other board positions have given her exposure to different industries and varying approaches to governance and issue resolution. |
Director Nominees
| | Victor L. Lund INDEPENDENT Director Since: 2000 Age: 76 Committees: Audit, Executive, Nominating and Corporate Governance | Occupation: Former President, CEO, and Executive Chairman of the Board, Teradata Corporation Education: The University of Utah MBA, The University of Utah |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Human Capital Management •Marketing/Brand Management •Real Estate/Business Development/M&A •Technology or e-Commerce PRIOR BUSINESS EXPERIENCE •Executive Chairman (2019-2020) & President and CEO (2016-2018), Interim CEO (2019-2020), Teradata Corporation •Chairman, DemandTec, a software company (2006-2012) •Chairman, Mariner Healthcare, Inc. (2002-2004) •Vice Chairman, Albertsons, Inc. (1999-2002) •22-year career with American Stores Company in various positions including Chairman, CEO, CFO and Corporate Controller (1977-1999) •Audit CPA, Ernst & Ernst (1972-1977) | PAST PUBLIC COMPANY BOARDS •Teradata Corporation •DemandTec •Delta Airlines •Del Monte Foods, Inc. •Mariner Healthcare, Inc. •Albertsons, Inc. •American Stores Company •NCR Corporation | DIRECTOR SUMMARY: Victor Lund’s years of senior executive experience and leadership such as his former position of CEO and Executive Chairman of Teradata provide the Board with invaluable experience in technology and technological processes. His tenure on the Board has allowed him to develop a robust understanding of our unique industry. As a former auditor who also worked in various corporate finance positions, he possesses an extensive understanding of financial reporting and auditing practices. Furthermore, his service on other boards provide SCI with valuable corporate governance expertise. |
Director Nominees
| | Ellen Ochoa INDEPENDENT Director Since: 2015 Age: 65 Committees: Compensation (Chair), Investment | Occupation: Former Director of NASA and Independent Director and Speaker Education: San Diego State University MS, PhD (Electrical Engineering), Stanford University |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Government/Regulatory •Human Capital Management •Risk Management •Technology or e-Commerce PRIOR BUSINESS EXPERIENCE •Director of NASA Johnson Space Center (2013-2018); Astronaut at NASA Johnson Space Center (1990-2012), first Hispanic female astronaut with nearly 1,000 hours in space •Branch Chief and Research Engineer, NASA Ames Research Center (1988-1990) •Researcher, Sandia National Laboratories (1985-1988) | OTHER POSITIONS •Member, Board of Directors, SRI International •Member, National Academy of Engineering •Member, Board of Directors, Mutual of America •Member, Board of Directors, Gordon and Betty Moore Foundation •Fellow, American Institute of Aeronautics and Astronautics •Fellow, American Association for the Advancement of Science •Director Emerita (former Vice Chair) Manned Space Flight Education Foundation FORMER POSITIONS •Former Chair Board Governance, National Science Board (Special Government Employee) •Former Chair, Nomination Evaluation Committee, National Medal of Technology & Innovation •Former Member, Board of Directors, Federal Reserve Bank of Dallas •Former Member Board of Trustees, Stanford University | DIRECTOR SUMMARY: Ellen Ochoa’s background with NASA and other governmental entities provides the Board with extensive technology and government/regulatory experience and insight. The senior leadership experience gained through her role as Director of NASA’s Johnson Space Center provides the Board with strategic planning, management of large projects, personnel development, and capital allocation expertise. Her many other positions include oversight activities such as financial stewardship and organizational governance. |
Director Nominees
| | Thomas L. Ryan NON-INDEPENDENT Director Since: 2004 Age: 58 Committees: Executive (Chair) | Occupation: Chairman (since 2016) and CEO (since 2005) of SCI Education: The University of Texas at Austin |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Human Capital Management •Industry •Investments/Financial Services •Risk Management PRIOR BUSINESS EXPERIENCE •CEO European Operations, SCI (2000-2002) •Variety of financial management roles, SCI (1996-2000) | OTHER POSITIONS •Board Member, University of Texas McCombs Business School Advisory Council •Senior Member, University of Texas MD Anderson Cancer Center Board of Visitors PAST PUBLIC COMPANY BOARDS •Texas Industries •Chesapeake Energy •Weingarten Realty Investors FORMER POSITIONS •Former Chairman and Member of the Board of Trustees, United Way of Greater Houston •Former Board Member, Genesys Works | DIRECTOR SUMMARY: Thomas L. Ryan’s 28-year career with SCI has instilled a deep understanding of our industry and strategic insights as well as strong leadership skills. He has demonstrated operational execution and long-term strategic direction, including leadership of significant acquisitions and capital allocation decision-making, as well as risk management. His service with other publicly traded company boards has given him valuable insight into corporate governance and diverse approaches to key issues. |
Director Nominees
| | C. Park Shaper INDEPENDENT Director Since: 2022 Age: 55 Committees: Audit, Compensation | Occupation: CEO of Seis Holdings LLC, a private investment holding company (2013‑present) Education: Stanford University MBA, J.L. Kellogg Graduate School of Management, Northwestern University |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Government/Regulatory •Investments/Financial Services •Real Estate/Business Development/M&A •Risk Management PRIOR BUSINESS EXPERIENCE •President, Kinder Morgan, Inc. (2005-2013) •Variety of financial management roles, Kinder Morgan, Inc. (2000-2005) •President and Director, Altair Corporation (1999) •VP and CFO First Data Analytics (1997-1999) | CURRENT PUBLIC COMPANY BOARDS •Sunnova Energy International, Inc. •Kinder Morgan, Inc. OTHER BOARD POSITIONS •Chair, Texas Children's Board of Trustees •Member, Board of Overseers of the Hoover Institution at Stanford University •Member, Board of Advisors of the Baker Institute at Rice University PAST PUBLIC COMPANY BOARDS •Weingarten Realty •Star Peak Energy Transition Corp. •Star Peak Corp. II | DIRECTOR SUMMARY: C. Park Shaper’s extensive leadership background includes his role as CEO of Seis Holdings LLC, a private investment holding company, a position he has held since 2013; as well as positions of increasing responsibility at Kinder Morgan from 2000-2013, including Vice President and CFO in 2000, a member of the Office of the Chairman in 2003, Executive Vice President in 2004, and President from 2005 to 2013. Prior to Kinder Morgan, Mr. Shaper held positions as President of Altair Corporation and Vice President and CFO of First Data Analytics. His broad experience provides the Board with invaluable leadership and financial experience, as well as strategy and management expertise. He has also served on the board of directors of various public companies with service on audit, compensation, and nominating and corporate governance committees. |
Director Nominees
| | Sara Martinez Tucker INDEPENDENT Director Since: 2018 Age: 68 Committees: Audit (Chair), Nominating and Corporate Governance | Occupation: Former CEO, National Math & Science Initiative, a non-profit organization to improve student performance in STEM (Science, Technology, Engineering, and Math) subjects Education: The University of Texas at Austin MBA, McCombs School of Business, The University of Texas at Austin |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Government/Regulatory •Human Capital Management •Risk Management •Technology or e-Commerce PRIOR BUSINESS EXPERIENCE •Vice President, AT&T (1997-2006) CURRENT PUBLIC COMPANY BOARDS •American Electric Power | OTHER POSITIONS •Member, University of Notre Dame’s Board of Fellows and Board of Trustees •Board Member, Nationwide Mutual Insurance Company •PAST PUBLIC COMPANY BOARDS •Cornerstone OnDemand, Inc. •Xerox Corporation •Sprint Corporation FORMER POSITIONS •CEO, National Math & Science Initiative (2013-2015) •Former Chair (2017-2018), University of Texas System Board of Regents (2015-2019) •Under Secretary of Education in the U.S. Department of Education (2006-2008) | DIRECTOR SUMMARY: Sara Martinez Tucker has extensive knowledge and experience gained through her various executive leadership roles. Her most recent executive experience and her role as the chair of a board business and technology committee provides the Board with invaluable experience and expertise in technology. She also provides strong leadership and executive experience through her previous role as Vice President with AT&T. Her background serving as the Department of Education’s undersecretary has given her specific insight into governmental processes and human capital management, as well as exposure to a variety of regulatory issues. Further, she possesses significant corporate governance knowledge developed by current and past service on the boards of other publicly traded companies. |
Director Nominees
| | W. Blair Waltrip NON-INDEPENDENT Director Since: 1986 Age: 69 Committees: Investment | Occupation: Independent Consultant, Family and Trust Investments, and Former Senior Executive of SCI Education: Sam Houston State University |
Director Nominees
| SKILLS & QUALIFICATIONS: •Financial •Industry •Investments/Financial Services •Real Estate/Business Development/M&A •Risk Management PRIOR BUSINESS EXPERIENCE •Various positions at SCI including VP of Corporate Development, SVP of Funeral Operations, EVP of SCI’s real estate division, Chairman and CEO of SCI Canada, and EVP of SCI (1977-2000) | OTHER POSITIONS •Treasurer, National Museum of Funeral History •Active real estate broker PAST PUBLIC COMPANY BOARDS •Sanders Morris Harris Group, Inc. (Edelman Financial) | DIRECTOR SUMMARY: Blair Waltrip's experience includes various corporate finance roles at SCI, demonstrating a solid understanding of mergers and acquisitions, real estate, and investment management. His tenure as EVP/COO at SCI allowed him to develop a robust understanding of our unique industry. Further, he possesses corporate governance knowledge developed by past service on the board of another publicly traded company. |
Director Nominees
| | Marcus A. Watts LEAD INDEPENDENT Director Since: 2012 Age: 65 Committees: Compensation, Executive, Nominating and Corporate Governance (Chair) | Occupation: President, The Friedkin Group (since 2011), which includes a variety of branded automotive, hospitality, and entertainment companies Education: Texas A&M University Harvard Law School |
Director Nominees
| SKILLS & QUALIFICATIONS: •Government/Regulatory •Human Capital Management •Industry •Marketing/Brand Management •Risk Management PRIOR BUSINESS EXPERIENCE •Vice Chair and Managing Partner-Houston, Locke Lord LLP (1984-2010) with a focus on corporate and securities law, governance, and related matters | CURRENT PUBLIC COMPANY BOARDS •Coterra Energy, Inc. CURRENT OTHER BOARD POSITIONS •Board Member, Highland Resources, Inc. (private real estate company) PAST OTHER BOARD POSITIONS •Former Chairman, Greater Houston Partnership •Former Chairman, Board of Trustees, United Way of Greater Houston •Former Board Chair, Federal Reserve Bank of Dallas (Houston Branch) PAST PUBLIC COMPANY BOARDS •Complete Production Services, Inc. (2007-2012), acquired by Superior Energy Services •Cornell Companies (2001-2005) | DIRECTOR SUMMARY: Marcus Watts’ executive role as President of The Friedkin Group provides the Board with senior leadership expertise and experience from oversight of various branded business interests. His previous role as Vice Chair and Managing Partner-Houston of Locke Lord LLP, provides the Board with extensive regulatory and government experience. Additionally, he possesses significant marketing, brand management, and corporate governance knowledge developed by current and past service on the boards of other private and publicly traded companies. Uniquely, Mr. Watts also possesses rare and valuable industry experience through his extensive prior service as independent counsel to the Company as well as other entities engaged in the deathcare industry. |
Consideration of Director Nominees
Consideration of Director Nominees The Nominating and Corporate Governance Committee understands the Board member recruitment process is critical to providing strategic perspective while also bringing specific experience and expertise to a broad range of issues. A diverse Board, with members who embrace inclusive behaviors, provides keen insights and creates a decision-making environment that is more likely to take into account the various risks, consequences, and implications of potential solutions. In discharging its responsibilities, the Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and shareholders. In the past, the Committee has also retained a third-party executive search firm to identify candidates. The Committee considers many factors when evaluating a potential candidate including the current composition of the Board, the balance of independent Directors, the diversity of its Directors, and the need for particular areas of expertise. The Committee considers how a candidate's personal factors such as gender, ethnicity, and age; professional characteristics such as education, areas of expertise, and professional experience; and core competencies align with the corporate strategy of SCI and the needs of the Board as a whole. Currently the collective competencies include:
Consideration of Director Nominees
| •Accounting and finance •Industry knowledge •Strategic insight | •Understanding and fostering leadership •Business judgment and executive/senior management expertise •Diverse experiences and backgrounds |
Consideration of Director Nominees
Once the Nominating and Corporate Governance Committee has identified a prospective nominee, the Committee will consider the available information concerning the nominee, including the Committee’s own knowledge of the prospective nominee, and may seek additional information or an interview. If the Committee determines that further consideration is warranted, the Committee will evaluate the prospective nominee against the standards and qualifications set out in the Company’s Corporate Governance Guidelines. The Company’s Corporate Governance Guidelines include personal characteristics and collective core competencies. The personal characteristics sought in prospective candidates include the following:
Consideration of Director Nominees
| •Integrity, character, and accountability •Ability to provide wise and thoughtful counsel on a broad range of issues •Financial literacy and ability to read and understand financial statements and other indices of financial performance •Ability to work effectively with mature confidence as part of a team •Ability to provide counsel to management in developing creative solutions and in identifying innovative opportunities •Commitment to prepare for and attend meetings and to be accessible to management and other Directors |
Consideration of Director Nominees
After completing this evaluation process, the Committee makes nomination recommendations to the full Board. The Board determines the nominees after considering the recommendation and report of the Committee. In 2023, the Service Corporation International Board of Directors adopted a bylaw change that provides shareholders a proxy access right (see page 37 for more information).
Director Compensation
Director Compensation Our Corporate Governance Guidelines provide for compensation for our non-employee Directors’ services. Thomas L. Ryan, who is also a paid executive Officer of the Company, does not receive additional compensation for serving on the Board. Annual compensation for our non-employee Directors includes cash and stock-based equity compensation. Maintaining a market-based compensation program for our non-employee Directors enables the Company to attract and retain qualified members to serve on the Board. With the assistance of Meridian Compensation Partners, LLC (“Meridian”), the Nominating and Corporate Governance Committee periodically reviews our non-employee Director compensation levels and practices and compares them to comparable general industry companies in a revenue size range similar to SCI to ensure they are aligned with market practices. Specifically, comparisons are made to the companies included in the Peer Comparator Group used for benchmarking the compensation of our executives, as well as to data presented in the annual NACD Director Compensation Report. Components of Board Compensation: •The annual Board cash retainer is $90,000. •Additional cash retainers for leadership positions on the Board are as follows: •Lead Independent Director - $30,000 •Audit Committee Chair - $25,000 •Compensation Committee Chair - $20,000 •Investment Committee Chair - $15,000 •Nominating and Corporate Governance Committee (NCGC) Chair - $15,000 •Annual stock grants are based on a target value of $180,000 per Director. The Compensation Committee believes our total Director compensation package is competitive with market practices and is fair and appropriate in light of the responsibilities and obligations of our non-employee Directors. The following table sets forth non-employee Director compensation for 2023, which was approved by the Nominating and Corporate Governance Committee.
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Total | | Alan R. Buckwalter | $90,000 | $180,043 | $270,043 | | Anthony L. Coelho | 105,000 | 180,043 | 285,043 | | Jakki L. Haussler(2), Investment Committee Chair | 101,250 | 180,043 | 281,293 | | Victor L. Lund | 102,500 | 180,043 | 282,543 | | Ellen Ochoa, Compensation Committee Chair | 110,000 | 180,043 | 290,043 | | C. Park Shaper | 90,000 | 180,043 | 270,043 | | Sara Martinez Tucker(2), Audit Committee Chair | 108,750 | 180,043 | 288,793 | | W. Blair Waltrip | 97,500 | 180,043 | 277,543 | | Marcus A. Watts(2), NCGC Committee Chair and Lead Independent Director | 127,500 | 180,043 | 307,543 |
2023 DIRECTOR COMPENSATION
(1)Amounts in the Stock Awards column represent the annual stock grants based on a target value of $180,000 per Director. (2)In 2023, Marcus A. Watts was named as Lead Independent Director, Sara Martinez Tucker was named as the Audit Committee Chair, and Jakki L. Haussler was named as Investment Committee Chair.
Our Strategy: Grow Revenue, Leverage Scale, and Invest Capital
| | | GROW REVENUE: We plan to grow revenue by remaining relevant to our customers as their preferences evolve through a combination of price, product, and service differentiation strategies. Growing our preneed sales will drive future revenue growth. In 2023, revenue was $4.1 billion and we sold over $2.6 billion in preneed funeral and cemetery sales production. | | | | LEVERAGE SCALE: We leverage our scale by optimizing our network through the use of technology, which benefits our preneed backlog. Our scale also enables us to achieve cost efficiencies by maximizing our purchasing power and utilizing economies of scale through our supply chain channel. | | IMPLEMENTING OUR CORE STRATEGY ALLOWS US TO CREATE SHAREHOLDER VALUE | Growing revenue and leveraging our scale increases cash flow, which enables us to: | | | | | INVEST CAPITAL: We continue maximizing capital investment opportunities in a disciplined and balanced manner to deliver the highest relative return. Our priorities for investing our capital are: 1) investing in acquisitions and building new funeral service and cemetery locations, 2) managing debt, and 3) returning excess cash to shareholders. In 2023, we invested $167 million in acquisitions and new build opportunities and returned $713 million to shareholders through dividends and share repurchases. |
Performance Compensation Measures
Performance Compensation Measures Annual Performance-Based Incentive Plan: •Normalized Earnings Per Share: Growth is the result of growing revenue and leveraging our scale, which in turn, enhances shareholder value. •Normalized Free Cash Flow Per Share: Growth in normalized free cash flow per share is tied directly to our strategy to increase our cash flow and effectively invest capital. Growth in this metric reflects current performance of the Company and enhances shareholder value. •Comparable Preneed Production: Comparable preneed production is the percentage of growth over prior year in combined total preneed funeral sales production and total preneed cemetery sales production at comparable same-store locations in US and Canadian currency. Preneed sales production is driving current and future market share growth, adding stability to our future revenue stream and creating future value for our shareholders. •ESG Modifier - Customer Satisfaction Ratings: Inclusion of our customer satisfaction rating, specifically Google stars, aligns our NEOs’ compensation with our operational performance and success in remaining relevant with our customers. Long-Term Incentive Plan: •Total Shareholder Return: As we grow revenue and leverage our scale, we increase our cash flow allowing the Company to invest capital and deliver superior total shareholder return. •Modifier - Normalized Return on Equity: Growth in return on equity is the long-term result of effectively implementing our core strategy of growing revenue and investing capital as described above.
2023 Company Performance Measures
2023 Company Performance Measures Earnings Per Share (EPS) Operating Cash Flow (OPCF) (in millions) Preneed Sales Production (in millions) GAAP - Generally Accepted Accounting Principles Adjusted Earnings Per Share and Adjusted Operating Cash Flow are non-GAAP financial measures. Please see Annex A in this Proxy Statement for disclosures and reconciliations to the appropriate GAAP measure.
Key Features of Our Compensation Programs
| What We Do | What We Don't Do | | We pay for performance. A significant portion of the compensation of our Named Executive Officers is directly linked to the Company’s performance, as demonstrated by the historical payouts related to our annual and long-term incentive plans. (see page 45 for compensation breakdown) We require stock ownership. Our stock ownership guidelines require each of the Company Officers to hold Company stock with a value linked to a multiple of their respective salaries and to retain all SCI stock acquired from grants of restricted stock and stock options (net of acquisition and tax costs and expenses) until stock ownership guidelines are met. We have claw-back provisions. Our claw-back provisions may be triggered in certain circumstances. If triggered, the provisions allow the Company to recoup annual performance-based incentives, stock options, restricted stock, and performance units. (see page 52 for further details) We seek independent advice. We engage independent consultants to review executive compensation and provide advice to the Compensation Committee. We have an ongoing shareholder outreach program. As part of our commitment to effective corporate governance practices, we regularly engage with shareholders. We specifically discuss executive compensation along with other important governance topics regularly as part of our outreach program. In 2023, we engage with shareholders representing approximately 57% of the Company's common stock as part of our Proxy Outreach program. (see page 8 for further details) | We do not allow tax gross-ups. We do not provide tax gross-ups in our compensation programs, and we do not have provisions in our executive employment agreements that provide for tax gross-ups in the event of a change of control of the Company. We do not allow hedging or pledging. Our policies prohibit Officers and Directors from hedging or pledging their SCI stock ownership. We do not allow the repricing of stock options. Our policies prohibit subsequent alterations of stock option pricing without shareholder approval. Starting with our 2022 grants, we do not provide single-trigger equity vesting upon a change-in-control. |
CEO PAY AND PERFORMANCE ALIGNMENT
| • | Other Compensation | | • | Long-Term Incentive Compensation | | • | Annual Performance-Based Incentive Compensation | | • | Annual Base Salary | | — | SCI TSR | | -- | S&P 500 TSR |
OTHER NEO DIRECT COMPENSATION
| • | 11% | Annual Base Salary | | • | 13% | Annual Performance-Based Incentive Compensation | | • | 66% | Long-Term Incentive Compensation | | • | 10% | Other Compensation |
OTHER NEO DIRECT COMPENSATION
| • | 20% | Annual Base Salary | | • | 17% | Annual Performance-Based Incentive Compensation | | • | 50% | Long-Term Incentive Compensation | | • | 13% | Other Compensation |
Annual Base Salary
Annual Base Salary We target the base salary levels of our Named Executive Officers ("NEOs") within a competitive range of benchmark pay levels defined in the competitive benchmarking study described on page 54. We believe these levels are appropriate to motivate and retain our NEOs, who each have leadership talents and business expertise that make them attractive to other companies. In addition, when adjusting salaries, we may also consider the individual performance of the executive. In the first quarter of 2023, the Compensation Committee made the adjustments reflected below based on consideration of benchmark pay levels for each executive and in recognition of the officers’ strong performance during 2022.
Annual Performance-Based Incentives Paid in Cash
Annual Performance-Based Incentives Paid in Cash We use annual performance-based incentives paid in cash to focus our NEOs on financial and operational objectives that the Compensation Committee believes are primary drivers of shareholder value over time. In the first quarter of 2023, the Compensation Committee established the performance measures as the basis for annual performance-based incentive awards for our NEOs.
Performance Measures
Performance Measures We believe normalized earnings per share and free cash flow per share drive the performance of the Company and enhance shareholder value. Comparable preneed cemetery property production is a key driver of current performance, as we are generally able to recognize this revenue at the time of sale when the property is ready and available for use and the receivable from the customer is deemed collectible. While recognition of all other comparable preneed funeral and cemetery production is generally deferred and does not have an immediate impact on earnings, such production is driving future market share growth, adding stability to our future revenue stream, and creating future value for our shareholders over the long term. The 2023 performance measures were similar to the performance measures utilized in 2022 and are outlined below: •Normalized Earnings per Share, which we calculated by applying a 2023 targeted 24.5% effective tax rate to the Company’s calculation of its reported diluted earnings per share and further adjusting to exclude certain non-routine items as described below. The targeted effective tax rate is held constant for calculating our incentive compensation and therefore does not change throughout the year. •Normalized Free Cash Flow per Share, which we calculated by beginning with our cash flows from operating activities and (1) deducting 2023 forecasted capital improvements at existing facilities and capital expenditures to develop cemetery property, (2) utilizing the forecasted amounts of cash taxes paid in 2023 related to normal operating activities, and (3) dividing the result by the reported weighted average diluted number of shares outstanding in 2023. •Comparable Preneed Production is the percentage of growth over prior year of combined total preneed funeral sales production and total preneed cemetery sales production at comparable same-store locations in US and Canadian dollars with no currency impact. •ESG Modifier - Inclusion of customer satisfaction ratings, specifically Google stars, aligns our NEOs’ compensation with our operational performance and success in remaining relevant with our customers. The Compensation Committee believes it is appropriate to exclude certain non-routine items from the performance measures to encourage appropriate decision-making regarding operations and capital investments. For 2023, the Compensation Committee approved the exclusion of net gains or losses on dispositions, currency gains/losses, losses associated with the early extinguishment of debt, and estimates of certain legal matters. The Compensation Committee also considered a level of share repurchases in 2023 consistent with our historical experience in setting the targets. The difference between the target and actual repurchases did not materially affect the attainment of the normalized earnings per share or normalized free cash flow per share performance measures. For 2023, we weighted each of the performance measures at one-third. The Compensation Committee established ranges for performance measures and their related payouts as a percentage of the target award for the performance period from January 1 through December 31, 2023. We calculated awards for performance levels between threshold and target or target and maximum using straight-line interpolation. As part of the 2023 plan, the annual performance-based incentive also included an ESG modifier based on a non-financial measure related to online customer satisfaction ratings, specifically Google stars, aligning our NEOs’ compensation with our operational performance and success in remaining relevant with our customers. This modifier allows the Compensation Committee to adjust the annual performance-based incentive downward if our online customer satisfaction ratings fall below an average of 4.25. For 2023, we exceeded the target with an average rating of 4.65; therefore, the annual performance-based award payout was not modified. The 2023 performance targets, SCI’s actual performance, and resulting payout percentages are set forth below.
2023 PERFORMANCE TARGETS AND ACTUAL PERFORMANCE
| Performance Measure | Threshold(1) | Target(2) | Max(3) | Payout Percentage | | | Normalized Earnings Per Share | | | | 41% | 92% 2023 Total Payout Percentage (of Target) | | Normalized Free Cash Flow Per Share | | | | 198% | | | Comparable Preneed Production(4) | | | | 37% | |
Long-Term Incentive Compensation
Long-Term Incentive Compensation We believe that the grant of annual equity-based awards further aligns the interests of our NEOs with those of the Company’s shareholders. To best align these interests, we grant our NEOs a mix of equity awards, which include stock options, restricted stock, and performance units. These long-term incentive ("LTI") award vehicles are important components of total compensation. In February 2023, the Compensation Committee set each NEO’s 2023 total target value of long-term incentive compensation. In developing this total target value, the Compensation Committee considered several factors including Peer Comparator Group benchmark LTI pay levels, the individual performance of each NEO, the job responsibilities of each NEO, and the overall Company performance in light of the then current economic environment. Once the target value was established for each NEO, we calculated and granted to the NEO (i) the number of stock options that had a value equal to one-third of the total target value, (ii) the number of shares of restricted stock that had a value equal to one-third of the total target value, and (iii) the number of performance units that had a value equal to one-third of the total target value. The grants were made in February 2023. This mix of equity awards is designed to focus our NEOs on driving an appropriate culture and healthy operating platform for the Company, managing our on-going risk profile, and implementing strategies to generate superior total long-term shareholder returns.
Stock Options
Stock Options Stock options provide NEOs a reward value that is directly attributable to their ability to increase the value of the business and our stock price. Stock options are granted at an exercise price equal to 100% of the fair market value of SCI common stock on the grant date. Stock options vest at a rate of one-third per year and have an eight-year term.
Restricted Stock
Restricted Stock Restricted stock with service-based vesting provisions promotes retention of our NEOs and encourages stock ownership. The restricted stock awards vest at a rate of one-third per year.
Performance Units
Performance Units Performance units reward NEOs for the delivery of shareholder returns that compare favorably to similarly available public company investments over a multi-year period. Effective for the 2022 performance unit awards, the performance unit plan measures the three-year total shareholder return (“TSR”) relative to the constituents of the S&P MidCap 400 index. SCI does not have many direct performance peers; the Compensation Committee determined that the S&P MidCap 400 is an appropriate comparator set for measuring Relative TSR as it reflects our broad competition for investor capital. Prior to 2022, SCI’s relative TSR was measured against a set of public companies having strong share price correlation with SCI. Performance units are denominated in shares, which improves shareholder alignment as the underlying unit value fluctuates with stock price. Relative TSR is defined as the percentage computed from $100 invested in SCI common stock on the first day of the performance cycle, with dividends reinvested, compared to $100 invested in each of the public companies in the S&P MidCap 400 index, with dividend reinvestment during the same period. Relative TSR is an appropriate metric because it (i) aligns the interests of management with the interests of shareholders and (ii) provides a useful means of comparing Company performance relative to the broader market. The performance units also apply a normalized return on equity (ROE) modifier to the TSR metric. The normalized ROE modifier reduces the indicated performance unit payout by 25% if SCI's average normalized ROE over the three-year performance period does not outperform the three-year ROE average of the S&P MidCap 400® companies. For the 2021-2023 performance period, the average normalized ROE for SCI was 32.2%; therefore, the performance unit award payout was not modified. Starting with the 2021 performance unit grants, the ROE modifier threshold requires SCI to outperform the three-year ROE average of the S&P MidCap 400® companies for the relative performance period instead of the prior threshold of 15%. The S&P MidCap 400® (of which SCI is included) provides a benchmark of our performance to companies with which we compete for investor capital at the time the performance units are granted. We cap performance unit payments at the Target amount if our absolute TSR is negative.
PERFORMANCE UNIT RANGE OF PAYOUTS
PERFORMANCE UNIT RANGE OF PAYOUTS
PERFORMANCE UNIT RANGE OF PAYOUTS
| Award Payout Level | SCI Weighted Average Total Shareholder Return Ranking Relative to Comparator Group at End of Performance Cycle | % of Target Award Paid as Incentive(1) | | Maximum | 75th Percentile or greater | 200% | | Target | 50th Percentile | 100% | | Threshold | 25th Percentile | 25% | | Below Threshold | Less than 25th Percentile | —% |
PERFORMANCE UNIT RANGE OF PAYOUTS
(1)Calculation of awards for performance levels between threshold and target or target and maximum are calculated using straight-line interpolation.
Other Officers
Other Officers In addition, we have provisions for seeking the return (clawback) from our Officers (who are not executive officers) of cash incentive payments and stock sale proceeds in certain circumstances involving fraud. These provisions cover the following elements of compensation: annual performance-based incentives paid in cash, stock options, restricted stock, and performance units. The provisions are triggered if the Board of Directors determines that an Officer has engaged in fraud that caused, in whole or in part, a material adverse restatement of the Company’s financial statements. In such an event, the Company could seek to recover from the offending Officer the following: •The actual annual performance-based incentive paid in cash to the Officer must be returned, but only if the original payment would have been lower if it had been based on the restated financial results. •Vested and unvested options are cancelled and gains from sales of exercised stock options at any time after the filing of the incorrect financial statements must be returned. •The gains from sales of restricted stock realized at any time after the filing of the incorrect financial statements must be returned and any remaining unvested restricted stock awards are forfeited. •Any unpaid performance unit award is forfeited and Officer must repay the entire amount of the performance unit award payment if the award is paid after the ending date of the period covered by the incorrect financial statements.
Employment Agreements and Termination Payment Arrangements
Employment Agreements and Termination Payment Arrangements The Company has employment agreements with Thomas L. Ryan, Eric D. Tanzberger, Sumner J. Waring, Steven A. Tidwell, and Elisabeth G. Nash. These agreements have current terms expiring December 31, 2024. Annually, the Company may extend each agreement for an additional year unless notice of nonrenewal is given by either party. The employment agreements articulate the terms and conditions of the NEOs’ employment with the Company including termination provisions and noncompetition obligations. Each November, we review the list of the Named Executive Officers and other officers with employment agreements in effect and the terms and conditions of their employment and determine whether to extend, modify, or allow the agreements to expire. Consistent with this review, our executive employment agreements do not include any obligation to pay tax gross-ups in the event of a change in control of the Company. In 2021, we replaced our executive employment agreements with updated terms (see page 61 for more information). For further discussion of these employment agreements, refer to “Executive Compensation Tables - Executive Employment Agreements” below. Our employment agreements and compensation plans have historically incorporated arrangements for certain payments upon change of control of the Company and for other terminations. We believe that these arrangements have been and are necessary to attract, motivate, reward, and retain the executive management talent required to achieve our corporate strategy. In the context of a possible acquisition or merger of the Company, we believe that change of control provisions (i) help focus our executives on strategic alternatives that would maximize shareholder value, and (ii) provide for personal financial security, thereby reducing a potential distraction for the executive. Our change of control and other termination payment arrangements do not affect decisions regarding other compensation elements. We structured the terms and payout of our arrangements based upon our historical practice and competitive considerations, including advice from an independent consultant and features that are commonly used by other publicly traded companies. We removed automatic single-trigger vesting upon change in control effective for equity awards granted in 2022. For further discussion of termination arrangements, refer to “Executive Compensation Tables - Potential Payments Upon Termination” below.
Role of Compensation Consultants
Role of Compensation Consultants Compensation decisions are made by our Compensation Committee, based in part on input from independent consultants. Meridian has served as our independent advisor on executive compensation since 2010. Meridian is retained by and reports directly to the Compensation Committee, which has the authority to approve Meridian’s fees and other terms of engagement. Services performed by Meridian for the Compensation Committee during 2023 included preparation of competitive benchmarking reviews regarding the executive and Director compensation, evaluation of proposed compensation programs or changes to existing programs, provision of information on current trends in executive compensation, and updates regarding applicable legislative and governance activity. Annually, the Compensation Committee reviews the fee structure, services, and performance of their independent consultants.
Compensation Benchmarking Tools
Compensation Benchmarking Tools In November 2022, in its consideration of 2023 compensation for the NEOs, the Compensation Committee reviewed a competitive benchmarking study prepared by Meridian. The benchmarking study provided market data for each of the NEOs, reflecting pay rates for similar positions among a group of general industry companies (the “Peer Comparator Group”). The Compensation Committee used the competitive benchmark study as a reference point for assessing the overall competitiveness of our executive compensation program. At the request of the Compensation Committee, Meridian developed the Peer Comparator Group for 2023 by reviewing a diversified group of companies that participated in the Equilar Executive Compensation Survey. Meridian developed the Peer Comparator Group based on company size parameters. The Compensation Committee believes this approach reflects an objective and credible methodology and results in an effective working range of competitive compensation benchmarks that appropriately considers the overall complexity of SCI’s business model. For example, the Company sells preneed contracts (approximately $2.6 billion in 2023) that are substantially deferred into its growing backlog that will be recognized as future revenue at the time of need or when the services and merchandise are provided. These preneed contracts are administered by the Company over long periods of time, and the Company oversees the management and administration of approximately $8.1 billion in trust assets and related receivables, the earnings of which are typically deferred under GAAP. In addition, executive management oversees a people-centric business of 25,000 employees, including approximately 3,800 preneed sales personnel whose production may not initially impact revenue under GAAP. The Compensation Committee reviews the methodology and composition of the Peer Comparator Group annually and may consider modification to the methodology or source of data, as warranted. The Peer Comparator Group used to inform 2023 pay decisions comprised 166 companies set forth in Annex B in this Proxy Statement, against which SCI is positioned near or above the median in terms of revenue, market capitalization, and enterprise value. The Peer Comparator Group does not include two direct industry competitors, Park Lawn Corporation and Carriage Services, Inc., as neither company met the relevant financial criteria for inclusion.
Summary Compensation Table
Summary Compensation Table The following table sets forth information for each year in the three-year period ended December 31, 2023 with respect to NEOs. The determination as to which executive Officers were most highly compensated was made with reference to the amounts required to be disclosed under the “Total” column in the table.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compensation(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) | All Other Compensation(4) | Total | | Thomas L. Ryan | 2023 | $1,200,000 | $5,155,621 | $2,292,620 | $1,489,914 | $— | $1,118,573 | $11,256,728 | | Chairman of the Board | 2022 | 1,200,000 | 4,483,147 | 2,203,060 | 3,120,000 | — | 1,729,976 | 12,736,183 | | Chief Executive Officer | 2021 | 1,200,000 | 4,257,796 | 1,763,440 | 3,120,000 | — | 1,366,799 | 11,708,035 | | Eric D. Tanzberger | 2023 | 650,000 | 1,310,454 | 584,955 | 597,805 | — | 486,410 | 3,629,624 | | Senior Vice President | 2022 | 630,000 | 1,047,747 | 515,516 | 1,260,000 | — | 672,506 | 4,125,769 | | Chief Financial Officer | 2021 | 620,000 | 994,901 | 411,219 | 1,116,000 | — | 563,099 | 3,705,219 | | Sumner J. Waring, III | 2023 | 650,000 | 1,232,241 | 549,555 | 597,805 | — | 468,236 | 3,497,837 | | Senior Vice President | 2022 | 630,000 | 987,299 | 484,673 | 1,260,000 | — | 677,640 | 4,039,612 | | Chief Operating Officer | 2021 | 620,000 | 913,143 | 377,451 | 1,116,000 | — | 565,029 | 3,591,623 | | Steven A. Tidwell | 2023 | 580,000 | 852,353 | 379,294 | 426,741 | — | 333,852 | 2,572,240 | | Senior Vice President | 2022 | 560,000 | 732,919 | 360,200 | 896,000 | — | 494,628 | 3,043,747 | | Sales and Marketing | 2021 | 550,000 | 690,166 | 285,152 | 880,000 | — | 413,314 | 2,818,632 | | Elisabeth G. Nash | 2023 | 540,000 | 727,852 | 325,350 | 397,310 | — | 317,068 | 2,307,580 | | Senior Vice President | | | | | | | | | | Operations Services | | | | | | | | |
SUMMARY COMPENSATION TABLE
(1)The Stock Awards column, which includes the Performance Unit Plan denominated in shares, and the Option Awards column set forth the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The assumptions made for the valuation of the awards are set forth in Note 11 to the consolidated financial statements included in the SCI 2023 Annual Report on Form 10-K. (2)The Non-Equity Incentive Plan (EIP) column includes annual performance incentive paid in cash. (3)This column previously set forth the change in the actuarial present value of each executive’s accumulated benefit in 2022, and 2021 for the Supplemental Executive Retirement Plan for Senior Officers (Senior SERP). During the year ended December 31, 2021, Thomas L. Ryan's pension value declined $11,113, and Eric D. Tanzberger's declined $8,348. During the year ended December 31, 2022, Thomas L. Ryan's pension value declined $29,190, and Eric D. Tanzberger's declined $23,055. The assumptions made for quantifying the present value of the benefits are set forth in Note 12 to the consolidated financial statements included in the SCI 2023 Annual Report on Form 10-K. In December 2022, we amended the Senior SERP to terminate the participation of all our active employees, which resulted in the payment of a discounted lump sum of the future benefits payable to Thomas L. Ryan and Eric D. Tanzberger in the amount of $192,806 and $95,685, respectively; these amounts are included in all other compensation column. As a result of the termination, in 2023, the value of the Senior SERP for our NEOs is zero. (4)See 2023 All Other Compensation table below for more information.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth plan-based awards granted in 2023 with the four lines pertaining to: •First line - Annual Performance-Based Incentives Paid in Cash •Second line - Performance Units, granted February 15, 2023 •Third line - Restricted Stock, granted February 15, 2023 •Fourth line - Stock Options, granted February 15, 2023
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Restricted Stock Awards: Number of Shares of Stock | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/Sh) | Closing Market Price on Date of Grant ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | Name | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | | Thomas L. Ryan | — | 1,620,000 | 3,240,000 | | | | | | | | | | | | | | 8,075 | 32,300 | 64,600 | | | | | 2,883,639 | | | | | | | | | 32,300 | | | | 2,271,982 | | | | | | | | | | 136,000 | 70.34 | 70.34 | 2,292,620 | | Eric D. Tanzberger | — | 650,000 | 1,300,000 | | | | | | | | | | | | | | 2,053 | 8,210 | 16,420 | | | | | 732,963 | | | | | | | | | 8,210 | | | | 577,491 | | | | | | | | | | 34,700 | 70.34 | 70.34 | 584,955 | | Sumner J. Waring, III | — | 650,000 | 1,300,000 | | | | | | | | | | | | | | 1,930 | 7,720 | 15,440 | | | | | 689,217 | | | | | | | | | 7,720 | | | | 543,025 | | | | | | | | | | 32,600 | 70.34 | 70.34 | 549,555 | | Steven A. Tidwell | — | 464,000 | 928,000 | | | | | | | | | | | | | | 1,335 | 5,340 | 10,680 | | | | | 476,738 | | | | | | | | | 5,340 | | | | 375,616 | | | | | | | | | | 22,500 | 70.34 | 70.34 | 379,294 | | Elisabeth G. Nash | — | 432,000 | 864,000 | | | | | | | | | | | | | | 1,140 | 4,560 | 9,120 | | | | | 407,102 | | | | | | | | | 4,560 | | | | 320,750 | | | | | | | | | | 19,300 | 70.34 | 70.34 | 325,350 |
GRANTS OF PLAN-BASED AWARDS
The material terms of each element of compensation are described in the “Compensation Discussion and Analysis.” In the table above, the performance unit grants are valued using a Monte Carlo valuation at the grant date. In addition, the 2023 performance units provide for pro-rata vesting in the event of (i) death, (ii) disability, (iii) at the discretion of the Compensation Committee, retirement at age 60 with ten years of service or retirement at age 55 with 20 years of service, or (iv) termination by the Company not for cause. The pro-rata vesting is determined by the number of months of service by the executive during the three-year performance period, divided by 36 (which is the number of months in a performance period). For a change of control of the Company, the performance units vest 100% and will be paid at target if the executive is terminated without cause or resigns for good reason within the time period that begins 60 days before a change in control and ends two years after a change in control, or if the acquiring company fails to assume or replace the outstanding equity upon the change of control. The restricted stock grants and stock option grants vest one-third per year. In addition, the restricted stock grants and stock option grants vest 100% in the event of (i) death, (ii) disability, (iii) in the discretion of the Compensation Committee, retirement at age 60 with ten years of service or retirement at age 55 with 20 years of service, (iv) termination by the Company not for cause, or (v) upon a change of control of the Company. Holders of restricted stock receive dividend payments at the same rate as holders of outstanding shares of SCI common stock.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table provides information concerning unexercised options, restricted stock awards, and performance unit plan share awards that have not vested as of the end of our last completed fiscal year.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
| | Option Awards | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested(4) (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(5) (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | | Name | Exercisable | Unexercisable | | | | | | | | Thomas L. Ryan | 472,000 | — | $29.25 | 2/7/2025 | 69,400 | 4,750,498 | 216,000 | 14,785,200 | | | 355,000 | — | 37.53 | 2/13/2026 | | | | | | | 289,000 | — | 42.63 | 2/20/2027 | | | | | | | 352,000 | — | 50.82 | 2/19/2028 | | | | | | | 156,666 | 78,334(1) | 49.59 | 2/17/2029 | | | | | | | 66,666 | 133,334(2) | 59.76 | 2/16/2030 | | | | | | | — | 136,000(3) | 70.34 | 2/15/2031 | | | | | | Eric D. Tanzberger | 66,200 | — | 42.63 | 2/20/2027 | 16,880 | 1,155,573 | 51,800 | 3,545,710 | | | 80,800 | — | 50.82 | 2/19/2028 | | | | | | | 36,533 | 18,267(1) | 49.59 | 2/17/2029 | | | | | | | 15,600 | 31,200(2) | 59.76 | 2/16/2030 | | | | | | | — | 34,700(3) | 70.34 | 2/15/2031 | | | | | | Sumner J. Waring, III | 72,200 | — | 50.82 | 2/19/2028 | 15,813 | 1,082,468 | 48,320 | 3,307,504 | | | 33,533 | 16,767(1) | 49.59 | 2/17/2029 | | | | | | | 14,666 | 29,334(2) | 59.76 | 2/16/2030 | | | | | | | — | 32,600(3) | 70.34 | 2/15/2031 | | | | | | Steven A. Tidwell | 45,995 | — | 37.53 | 2/13/2026 | 11,387 | 779,440 | 35,320 | 2,417,654 | | | 43,700 | — | 42.63 | 2/20/2027 | | | | | | | 55,000 | — | 50.82 | 2/19/2028 | | | | | | | 25,333 | 12,667(1) | 49.59 | 2/17/2029 | | | | | | | 10,900 | 21,800(2) | 59.76 | 2/16/2030 | | | | | | | — | 22,500(3) | 70.34 | 2/15/2031 | | | | | | Elisabeth G. Nash | 56,100 | — | 29.25 | 2/7/2025 | 9,620 | 658,489 | 29,460 | 2,016,537 | | | 42,400 | — | 37.53 | 2/13/2026 | | | | | | | 34,500 | — | 42.63 | 2/20/2027 | | | | | | | 44,700 | — | 50.82 | 2/19/2028 | | | | | | | 20,133 | 10,067(1) | 49.59 | 2/17/2029 | | | | | | | 9,366 | 18,734(2) | 59.76 | 2/16/2030 | | | | | | | — | 19,300(3) | 70.34 | 2/15/2031 | | | | |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
(1)These unexercisable options expiring 02/17/2029 vest 100% on 02/17/2024. (2)These unexercisable options expiring 02/16/2030 vest 50% each on 02/16/2024 and 02/16/2025. (3)These unexercisable options expiring 02/15/2031 vest 33% each on 02/15/2023, 02/15/2025, and 02/15/2026. (4)The restricted stock for each person in the table vests as follows:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
| | Shares Vesting 03/05/2024 | Shares Vesting 03/05/2025 | Shares Vesting 03/05/2026 | Total Shares Vesting | | Thomas L. Ryan | 36,000 | 22,633 | 10,767 | 69,400 | | Eric D. Tanzberger | 8,633 | 5,510 | 2,737 | 16,880 | | Sumner J. Waring, III | 8,053 | 5,187 | 2,573 | 15,813 | | Steven A. Tidwell | 5,887 | 3,720 | 1,780 | 11,387 | | Elisabeth G. Nash | 4,910 | 3,190 | 1,520 | 9,620 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
(5)These unearned performance unit plan share units vest as indicated below upon attainment of certain performance goals based on our three-year TSR as discussed in the Compensation Discussion and Analysis. Based on our 2023 performance exceeding the target goals, the share unit amounts and fair values disclosed in this table and the vesting schedule below represent the maximum awards, which could change over the remaining performance period.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2023
| | PUP Share Units Vesting 02/19/2024 | PUP Share Units Vesting 02/17/2025 | PUP Share Units Vesting 02/16/2026 | Total PUP Share Units Vesting | | Thomas L. Ryan | 80,200 | 71,200 | 64,600 | 216,000 | | Eric D. Tanzberger | 18,740 | 16,640 | 16,420 | 51,800 | | Sumner J. Waring, III | 17,200 | 15,680 | 15,440 | 48,320 | | Steven A. Tidwell | 13,000 | 11,640 | 10,680 | 35,320 | | Elisabeth G. Nash | 10,320 | 10,020 | 9,120 | 29,460 |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table provides information concerning each exercise of stock options and each vesting of restricted stock during the last fiscal year on an aggregated basis.
OPTION EXERCISES AND STOCK VESTED FOR THE YEAR ENDED DECEMBER 31, 2023
OPTION EXERCISES AND STOCK VESTED FOR THE YEAR ENDED DECEMBER 31, 2023
OPTION EXERCISES AND STOCK VESTED FOR THE YEAR ENDED DECEMBER 31, 2023
| | 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 ($)(1) | | Thomas L. Ryan | 533,062 | $23,117,321 | 38,967 | $2,622,089 | | Eric D. Tanzberger | — | — | 9,046 | 608,705 | | Sumner J. Waring, III | 29,200 | 760,392 | 8,294 | 558,103 | | Steven A. Tidwell | — | — | 6,251 | 420,630 | | Elisabeth G. Nash | 63,500 | 2,482,554 | 5,134 | 345,467 |
OPTION EXERCISES AND STOCK VESTED FOR THE YEAR ENDED DECEMBER 31, 2023
(1)Includes the shares and value of restricted stock that were deferred into the Executive Deferred Compensation Plan, described hereinafter under the caption “Executive Deferred Compensation Plan”, as follows: 38,967 shares with a value of $2,622,089 for Thomas L. Ryan, 4,523 shares with a value of $304,353 for Eric D. Tanzberger and 3,419 shares with a value of $230,065 for Elisabeth G. Nash.
NONQUALIFIED DEFERRED COMPENSATION IN 2023
NONQUALIFIED DEFERRED COMPENSATION IN 2023
NONQUALIFIED DEFERRED COMPENSATION IN 2023
| Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Distributions/ Withdrawals ($) | Aggregate Balance at Last FYE(4) ($) | | Thomas L. Ryan | $3,305,133 | $688,412 | $4,142,303 | $2,656,371 | $65,847,133 | | Eric D. Tanzberger | 401,945 | 287,702 | 405,718 | 4,086,542 | 10,545,827 | | Sumner J. Waring, III | 291,231 | 287,702 | 1,176,168 | 107,863 | 8,098,692 | | Steven A. Tidwell | 506,595 | 230,044 | 855,797 | — | 8,905,603 | | Elisabeth G. Nash | 1,251,364 | 213,476 | 2,709,348 | — | 25,659,534 |
NONQUALIFIED DEFERRED COMPENSATION IN 2023
(1)These executive contributions were made in 2023 and are included in the Summary Compensation Table for the year 2023 in the amounts and in the table titled Executive Contributions in 2023 below. (2)The registrant contributions are included in the Summary Compensation Table under the “All Other Compensation” column. (3)The earnings reflect the returns of the measurement funds selected by the executives and are not included in the Summary Compensation Table. (4)The amounts below include reported contributions included in the Summary Compensation Table for years prior to 2023 and are included in the table titled Cumulative Contributions from Previous Years below.
Potential Payments Upon Termination
Potential Payments Upon Termination The Company has entered into certain agreements and maintains certain plans that require the Company to provide compensation to Named Executive Officers in the event of a termination of employment. The amount of compensation payable to each Named Executive Officer in each situation is listed in the tables below. In addition, each Named Executive Officer is entitled to receive his benefits described in the preceding tables titled “Pension Benefits” and “Nonqualified Deferred Compensation in 2023.”
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of our employees (excluding the CEO) and the annual total compensation of our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We used December 31, 2023 as our determination date and identified the median employee by examining total gross wages for all full-time, part-time, and seasonal employees who were employed at that date. After identifying the median employee, we calculated annual 2023 compensation for the median employee using the same methodology used to calculate the CEO’s total compensation as reflected in the Summary Compensation Table on page 55 of this Proxy Statement. The median employee’s 2023 total compensation was $41,600. The CEO’s 2023 annual total compensation was $11,256,728, which is 271 times the annual total compensation of the median employee (excluding the CEO). We believe that the above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Pay Versus Performance
Pay Versus Performance As discussed in the Compensation Discussion and Analysis beginning on page 41, our Compensation Committee has implemented an executive compensation program designed to link our NEOs’ compensation to the achievement of SCI’s financial, operational, and strategic objectives, and to align our executive pay with changes in the value of our shareholders’ investments. The following table sets forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2023, 2022, 2021, and 2020.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table (SCT) Total Compensation for CEO(1) | Compensation Actually Paid to CEO(1),(2),(4) | Average SCT Total Compensation for Other NEOs(1) | Average Compensation Actually Paid to Other NEOs(1),(3),(4) | Cumulative TSR | Peer Group Cumulative TSR(5) | Post-Tax Net Income (In thousands) | Normalized Earnings Per Share(6) | | 2023 | $11,256,728 | $11,187,121 | $3,001,820 | $2,971,933 | $158.90 | $126.90 | $537,317 | $3.44 | | 2022 | 12,736,183 | 14,191,951 | 3,528,998 | 4,193,758 | 157.70 | 116.00 | 565,338 | 3.85 | | 2021 | 11,708,035 | 29,259,594 | 3,229,307 | 6,124,407 | 159.40 | 155.30 | 802,939 | 4.53 | | 2020 | 11,529,920 | 13,218,050 | 2,920,816 | 3,233,364 | 108.60 | 109.00 | 515,907 | 2.86 |
Pay Versus Performance
(1)For each year presented, Thomas L. Ryan was our CEO. For years 2022, 2021 and 2020, Eric D. Tanzberger, Sumner J. Waring, III, Steven A. Tidwell, and Gregory T. Sangalis were the individuals comprising the Other NEOs. Gregory T. Sangalis effectively retired on March 22, 2023 and was replaced by Elisabeth G. Nash. For year 2023, Eric D. Tanzberger, Sumner J. Waring, III, Steven A. Tidwell, and Elisabeth G. Nash were the individuals comprising the Other NEOs. (2)To calculate the amounts in the "Compensation Actually Paid to CEO" column in the table above, the following amounts were deducted from and added to (as applicable) our CEO's "Total" compensation as reported in the SCT:
Pay Versus Performance
| Compensation Actually Paid to CEO | 2023 | 2022 | 2021 | 2020 | | Total Compensation as Reported in SCT | $11,256,728 | $12,736,183 | $11,708,035 | $11,529,920 | | Pension and Equity Values Reported in SCT | (7,448,241) | (6,879,013) | (6,021,236) | (7,318,678) | | Fair Value of Equity Compensation Granted in Current Year - Value at Year End | 6,644,691 | 9,821,155 | 12,367,931 | 6,744,257 | | Dividends Paid on Unvested Restricted Share Awards | 77,728 | 77,588 | 73,011 | 69,654 | | Change in the Fair Value of Awards Made in Prior Fiscal Years That Were Unvested at End of Current Fiscal Year | (194,998) | 2,187,970 | 10,527,347 | 1,233,016 | | Change in the Fair Value of Awards Made in Prior Fiscal Years That Vested During Current Fiscal Year | 851,213 | (3,751,932) | 604,506 | 959,881 | | Compensation Actually Paid to CEO | $11,187,121 | $14,191,951 | $29,259,594 | $13,218,050 |
Pay Versus Performance
(3)To calculate the amounts in the "Average Compensation Actually Paid to Other NEOs" column in the table above, the following amounts were deducted from and added to (as applicable) our Other NEOs "Total" compensation as reported in the SCT for that year:
Pay Versus Performance
| Average Compensation Actually Paid to Other NEOs | 2023 | 2022 | 2021 | 2020 | | Total Compensation as Reported in SCT | $3,001,820 | $3,528,998 | $3,229,307 | $2,920,816 | | Pension and Equity Values Reported in SCT | (1,490,513) | (1,317,879) | (1,154,731) | (1,373,938) | | Fair Value of Equity Compensation Granted in Current Year - Value at Year End | 1,329,663 | 1,900,629 | 2,013,352 | 1,267,017 | | Dividends Paid on Unvested Restricted Share Awards | 15,036 | 14,891 | 13,840 | 12,994 | | Change in the Fair Value of Awards Made in Prior Fiscal Years That Were Unvested at End of Current Fiscal Year | (39,400) | 772,621 | 1,972,241 | 228,765 | | Change in the Fair Value of Awards Made in Prior Fiscal Years That Vested During Current Fiscal Year | 155,327 | (705,502) | 50,398 | 177,710 | | Average Compensation Actually Paid to Other NEOs | $2,971,933 | $4,193,758 | $6,124,407 | $3,233,364 |
Pay Versus Performance
(4)The weighted average key assumptions utilized to determine the equity awards adjustments in the Compensation Actually Paid tables above were as follows:
Pay Versus Performance
| Weighted Average Assumptions | 2023 | 2022 | 2021 | 2020 | | Dividend Yield | 1.5% | 1.6% | 1.7% | 1.7% | | Expected Volatility | 27.4% | 26.2% | 24.2% | 21.8% | | Risk-Free Interest Rate | 4.2% | 2.9% | 0.4% | 0.8% | | Expected Holding Period (Years) | 2.6 | 2.1 | 2.1 | 2.1 | | Market Price of Stock | $70.10 | $63.95 | $60.74 | $48.93 | | Exercise Price | $56.64 | $50.53 | $45.67 | $40.06 |
Pay Versus Performance
(5)The Peer Group Cumulative TSR set forth in this table utilizes a custom group of peer companies (the “Peer Group”), which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The Peer Group comprises Carriage Services, Inc., Hillenbrand Inc., Matthews International Corp., and Park Lawn Corporation. TSR is determined based on the value of an initial fixed investment of $100. Total return data assumes reinvestment of dividends. (6)We believe normalized earnings per share drives the performance of the Company and enhances shareholder value. Normalized Earnings per Share is calculated by applying a targeted effective tax rate of approximately 24% to the Company’s calculation of its reported diluted earnings per share and further adjusting to exclude certain non-routine items as described in the Performance Measures section of the Compensation Discussion and Analysis (CD&A) on page 47. The following is the list of the metrics used by the Company to link the compensation of our NEOs to Company performance.
Pay Versus Performance
| 2023 Compensation Metrics (discussed in detail in the Compensation Discussion & Analysis section) | | | Normalized Earnings Per Share | Customer Satisfaction Ratings | | Normalized Free Cash Flow Per Share | Total Shareholder Return | | Comparable Preneed Production | Normalized Return on Equity |
COMPENSATION ACTUALLY PAID AND NORMALIZED EPS ALIGNMENT
COMPENSATION ACTUALLY PAID AND NORMALIZED EPS ALIGNMENT
COMPENSATION ACTUALLY PAID AND NORMALIZED EPS ALIGNMENT
| • | Compensation Actually Paid to CEO (in millions) | | • | Average Compensation Actually Paid to Other NEOs (in millions) | | — | Normalized Earnings Per Share |
COMPENSATION ACTUALLY PAID AND POST-TAX NET INCOME ALIGNMENT
COMPENSATION ACTUALLY PAID AND POST-TAX NET INCOME ALIGNMENT
COMPENSATION ACTUALLY PAID AND POST-TAX NET INCOME ALIGNMENT
| • | Compensation Actually Paid to CEO (in millions) | | • | Average Compensation Actually Paid to Other NEOs (in millions) | | — | Post-Tax Net Income (in millions) |
COMPENSATION ACTUALLY PAID AND TSR ALIGNMENT
COMPENSATION ACTUALLY PAID AND TSR ALIGNMENT
COMPENSATION ACTUALLY PAID AND TSR ALIGNMENT
| • | Compensation Actually Paid to CEO (in millions) | | • | Average Compensation Actually Paid to Other NEOs (in millions) | | — | SCI TSR | | — | Peer Group TSR |
COMPENSATION ACTUALLY PAID AND TSR ALIGNMENT
| Certain Transactions |
COMPENSATION ACTUALLY PAID AND TSR ALIGNMENT
In February 2007, the Company adopted a written policy regarding “related person transactions”, which are required to be disclosed under SEC rules. Generally, these are transactions that involve (i) the Company, (ii) a Director, Officer, or 5% shareholder, or their family member or affiliates, and (iii) an amount over $120,000. Under the policy, our General Counsel will review any related person transaction with our Nominating and Corporate Governance Committee or its Chair. Then, the Committee or the Chair will make a determination whether the transaction is consistent with the best interests of the Company and our shareholders. The Nominating and Corporate Governance Committee reviewed and approved the following reported transactions: In 2023, SCI Shared Resources, LLC, a subsidiary of the Company, paid $425,702 in compensation to Mr. Bryan Bentley in his capacity as an employee. Mr. Bentley is the son-in-law of Alan R. Buckwalter, a Director of the Company. Mr. R. L. Waltrip was the Founder and Chairman Emeritus of the Company. He was also the father of Mr. W. Blair Waltrip, a Director of the Company. Mr. R. L. Waltrip passed away on February 27, 2023. During 2023, he was paid $183,177 as part of his base salary, participated in the Company’s retirement, health and welfare benefit plans on the same basis as other similarly situated employees, and was provided with certain additional insurance and perquisites, which amounted to $94,596. Pursuant to the terms of his employment agreement, Mr. R. L. Waltrip’s Estate is entitled to receive $768,823, which is the remainder of his 2023 base salary as well as a pro rated bonus of $69,564. As approved by the Committee in 2023, the family of Sumner J. Waring, III, Senior Vice President Chief Operating Officer, has had a relationship with SCI that began in 1996, when the family sold its business to SCI. Sumner Waring’s mother owns a company that leases funeral homes to the Company under a lease expiring in 2026 for which the Company paid rent of $200,000 in 2023. The total amount of real estate rent paid annually to Mrs. Waring's company is approximately 1% of the total rent paid by the Company for leasing real estate.
COMPENSATION ACTUALLY PAID AND TSR ALIGNMENT
| Voting Securities and Principal Holders |