Service Corp International

The advisory 'say-on-pay' proposal asks shareholders to endorse the compensation programs for the Named Executive Officers as disclosed in the CD&A and tables. Management seeks affirmation to validate its compensation philosophy linking pay to performance and to obtain shareholder feedback; while non-binding, a strong 'for' vote signals shareholder support and informs the Compensation Committee's future decisions. The company highlights that a high percentage of CEO and NEO compensation is performance-based and that pay structures align with corporate metrics (normalized EPS, free cash flow per share, comparable preneed production, customer satisfaction modifier, and long-term TSR with ROE modifier). The Compensation Committee points to historical shareholder support (e.g., ~88% in 2025) and ongoing shareholder engagement. Key contextual considerations include the firm's demonstrated TSR outperformance, updates to clawback and change-in-control provisions, and the use of a broad peer comparator group for benchmarking; criticisms common to 'say-on-pay' votes—such as concerns over quantum, use of discretion, change-in-control severance, or perquisites—are noted implicitly but the company's disclosures stress alignment and governance safeguards. The board recommends a 'FOR' vote to reaffirm support for the NEO compensation program and to allow the Compensation Committee to continue its design.

This management proposal seeks shareholder approval to amend the Articles and Bylaws to reduce the Board's minimum size from nine to three directors and to remove outdated transitional language. Management frames the change as a flexibility measure to manage vacancies and retirements without immediate replacement, aligning corporate governance documents with modern practices and allowing the Board to function efficiently. The amendment keeps the maximum board size at fifteen and requires a majority shareholder vote to take effect. The change is not unusual for Delaware/Texas corporations seeking governance agility, but reducing minimum board size to three is at the extreme low end of public company practice and could, in the absence of strong safeguards, raise concerns about entrenchment, shareholder access to board representation, and potential diminution of independent oversight if the board were temporarily shrunk. However, SCI retains a large current board (10 directors) and a history of high independence (9 of 10 independent), which management cites to alleviate concerns. The board's recommendation to approve the amendment is justified primarily on operational flexibility; skeptics would weigh that benefit against governance risk and monitor whether additional governance safeguards (e.g., proxy access, committee independence) remain robust.

This management proposal would amend governing documents to allow the Board to increase its size and fill newly created vacancies without waiting for a shareholder meeting, harmonizing corporate documents with the Texas Business Organizations Code. Management argues this change enables timely appointments to address strategic needs and succession planning without incurring the costs and delays of a special shareholder meeting. The amendment reduces procedural friction, but investors often evaluate such changes for potential entrenchment risk and concentration of appointment power; the board's existing practice of majority independent committees and proxy access mitigates some concerns. The proposal is routine in many jurisdictions, and the board recommends a 'FOR' vote for operational flexibility and alignment with statutory norms.

Management seeks to add language to the Articles of Incorporation to limit officer liability to the maximum extent allowed by recent amendments to the Texas Business Organizations Code, mirroring existing director protections. Management argues this aligns incentives, reduces litigation risk and costs, and aids recruitment/retention of senior executives. The proposed limitation excludes acts involving disloyalty, bad faith, intentional misconduct, improper personal benefit, and liabilities required by statute, which aligns with typical legal carve-outs. Investors may view exculpation as reasonable where coupled with strong governance, but some may be wary that exculpation could reduce recourse for shareholder harms; the board argues statutory safeguards and existing fiduciary duties mitigate that concern. The board recommends a 'FOR' vote to implement parity between directors and officers regarding exculpation under Texas law.

This management proposal requests shareholder approval of the 2026 Equity Incentive Plan, which replaces the 2016 plan and requests a refreshed share reserve of 8.2 million shares to support equity-based awards for employees and directors. Management frames the plan as necessary to recruit, retain and incentivize talent and to align pay with performance. The plan includes governance protections: a one-year minimum vesting (with limited exceptions for up to 5% of the reserve), prohibition on repricing without shareholder approval, no evergreen provision, limits on director awards ($900k/year), clawback provisions, and double-trigger change-in-control vesting. Approval would increase potential dilution from ~3.9% to ~8.6% overhang; management estimates the reserve will last approximately ten years based on historical grant levels. For sophisticated analysis, key considerations include the plan's dilution impact, burn rate (~0.35% three-year average), alignment of award types to long-term incentives (mix of options, restricted stock, performance units), governance features that mitigate potential abuse, and lack of evergreen provision. The Board recommends a 'FOR' vote.