CARRIAGE SERVICES INC appointed new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


As also described in the February 21st Press Release, on February 22, 2024 (the "Transition Date"), Melvin C. Payne, the Company's founder and former Chief Executive Officer, will cease to serve as Executive Chairman of the Board of the Company. Beginning on the Transition Date, Mr. Payne will begin serving as a special advisor to the Board of Directors of the Company (the "Board") and senior management in a consulting role. In addition, Mr. Payne will remain on the Board until the Company's 2024 annual meeting of stockholders, when the term for the Class I directors is scheduled to expire.


In connection with Mr. Payne's termination of employment, the employment-related provisions of his Employment Agreement, dated as of November 5, 2019, with the Company (as amended prior to the date hereof, the "Employment Agreement") will terminate on the Transition Date. On February 21, 2024, Mr. Payne and the Company entered into a Transition Agreement (the "Transition Agreement"), setting forth the terms of his severance benefits and his consulting arrangement. Under the Transition Agreement, Mr. Payne is entitled to receive the following benefits, subject to the timely execution and non-revocation by Mr. Payne and his spouse of waiver and release agreements in connection with the Transition Date and the end of the 12-month consulting term set forth in the Transition Agreement (the "Releases"):


- A prorated payment of his 2024 $1.25 million annual target bonus (approximately $181,500), payable in a lump sum on the first payroll date after any applicable revocation periods have expired ("Initial Payment Date"); 


- Payment of his 2023 $1,250,000 annual bonus (which had been previously awarded at target), payable in a lump sum at such time 2023 annual bonus payments are paid to similarly situated employees of the Company, currently scheduled for February 23, 2024; 


- Salary continuation severance payments totaling $2 million, payable on regular payroll dates over 24 months; 


1


- Cash settlement of Mr. Payne's 140,476 share Good to Great performance award on an 83.33% prorated basis (117,063.33 shares of the Company's common stock), payable in cash based on the closing price of the Company's common stock on the Transition Date (the "Good to Great Settlement Amount"), as follows: 


- $1 million on the Initial Payment Date; 


- 1/24th of the remaining Good to Great Settlement Amount at the end of each month from March 2024 until February 2025; and 


- The balance of the remaining Good to Great Settlement Amount will be paid on March 14, 2025; 


- Reimbursement or equivalent cash payments for the monthly cost of maintaining health benefits for Mr. Payne and his spouse as of the date of his termination for a period of up to 36 months; and 


- Reimbursement of Mr. Payne's reasonable legal expenses in connection with the negotiation and implementation of the Transition Agreement and actions contemplated by that agreement, up to a maximum of $35,000. 


All of the payments and benefits provided under the Transition Agreement are subject to Mr. Payne's continued compliance with certain confidentiality, non-competition, non-solicitation and non-disparagement provisions of the Employment Agreement, as well as to compliance by Mr. Payne and his spouse with their respective Releases.


Under the Transition Agreement, Mr. Payne has also agreed to serve as a special advisor to the Board and senior management for a transition period of 12 months, commencing on the Transition Date. In consideration for those services, the Company has agreed to pay Mr. Payne a consulting fee equal to $83,333 per month. The Transition Agreement may be terminated by the Company upon the material breach of the Transition Agreement, the Employment Agreement or either of the Releases. Upon Mr. Payne's death, any consulting fee payments would be paid to his estate.


This summary is qualified in its entirety by reference to:


- the Employment Agreement dated as of November 5, 2019, which was filed as Exhibit 10.6 to that Current Report on Form 8-K filed by the Company on November 8, 2019 and incorporated by reference herein; 


- the First Amendment to Employment Agreement dated as of February 17, 2021, which was filed as Exhibit 10.1 to that Current Report on Form 8-K filed on February 17, 2021 and incorporated by reference herein; 


- the Second Amendment to Employment Agreement dated as of June 21, 2023, which was filed as Exhibit 10.1 to the Quarter Report on 10-Q filed by the Company on August 7, 2023 and incorporated by reference herein; and 


- the Transition Agreement, which is attached hereto as Exhibit 99.2 and incorporated by reference herein.