SERVICE CORP INTERNATIONAL — Proxy Solicitation & Information Statement 2010

Apr 1, 2010

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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. )

Filed by the Registrant þ Filed by a Party other than the Registrant o

Check the appropriate box:

o	Preliminary Proxy Statement
o	Confidential, for Use of the Commission Only (as permitted by Rule 14a- 6(e)(2) )
þ	Definitive Proxy Statement
o	Definitive Additional Materials
o	Soliciting Material Pursuant to §240.14a-12

Service Corporation International

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

þ	No fee required.
o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)	Title of each class of securities to which transaction applies:
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(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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(5)	Total fee paid:

o	Fee paid previously with preliminary materials.
o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.

(1)	Amount Previously Paid:
(2)	Form, Schedule or Registration Statement No.:
(3)	Filing Party:
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Service Corporation International

Proxy Statement and 2010 Annual Meeting Notice

2010 Annual Meeting

Date: Wednesday, May 12, 2010

Time: 9:00 a.m. Houston time

Place: York Distributors Association Auditorium

American Funeral Service Training Center

415 Barren Springs Drive

Houston, Texas 77090

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Service Corporation International

1929 Allen Parkway, P.O. Box 130548

Houston, Texas 77219-0548 April 1, 2010

Dear Shareholder,

As the owner of shares of Service Corporation International, please accept my invitation to attend the Company’s Annual Meeting of Shareholders. It is scheduled for Wednesday, May 12, 2010, at 9:00 a.m. Houston time in the York Distributors Association Auditorium of the American Funeral Service Training Center, 415 Barren Springs Drive, Houston, Texas. During the meeting, we will report on how our Company performed for its shareholders during 2009 and share with you our plans for the future. You will have an opportunity to ask questions, express your views, and meet members of SCI’s executive team and Board of Directors.

On behalf of the Board of Directors and our employees, I would like to express our appreciation for your continuing support. I look forward to greeting in person all shareholders who are able to join us at our Annual Meeting.

Sincerely,

R. L. Waltrip

Chairman of the Board

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Service Corporation International

1929 Allen Parkway, P.O. Box 130548

Houston, Texas 77219-0548

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

May 12, 2010

To Our Shareholders:

The Annual Meeting of Shareholders of Service Corporation International (“SCI” or the “Company”) will be held in the York Distributors Association Auditorium, American Funeral Service Training Center, 415 Barren Springs Drive, Houston, Texas at 9:00 a.m. Houston time on May 12, 2010 for the following purposes:

| 1. | To elect three nominees to the Board of Directors (the
“Board”). |
| --- | --- |
| 2. | To approve the appointment of PricewaterhouseCoopers LLP as
SCI’s independent registered public accounting firm for the
2010 fiscal year. |
| 3. | To transact such other business that may properly come before
the meeting. |

Only shareholders of record at the close of business on March 15, 2010 are entitled to notice of and to vote at the Annual Meeting. A majority of the outstanding shares entitled to vote is required for a quorum.

It is important that your shares be represented at the Annual Meeting regardless of the size of your holdings. Whether or not you expect to attend the Annual Meeting in person, we urge you to vote your shares at your earliest convenience in order to ensure a quorum at the meeting. Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting if you desire to do so, as your proxy is revocable at your option.

By Order of the Board of Directors,

Gregory T. Sangalis

Senior Vice President, General Counsel and Secretary

Houston, Texas

April 1, 2010

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TOC

PROXY STATEMENT	1
ELECTION OF DIRECTORS	4
COMPENSATION DISCUSSION AND ANALYSIS	19
CERTAIN INFORMATION WITH RESPECT TO OFFICERS AND
DIRECTORS	29
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION	46
CERTAIN TRANSACTIONS	46
VOTING SECURITIES AND PRINCIPAL HOLDERS	47
REPORT OF THE AUDIT COMMITTEE	49
PROPOSAL TO APPROVE THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	50
OTHER MATTERS	51

/TOC

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Service Corporation International

1929 Allen Parkway

P.O. Box 130548

Houston, Texas 77219-0548

PROXY STATEMENT

Proxy Voting: Questions & Answers

Q: Who is entitled to vote?

A: Shareholders of record who held common stock of SCI at the close of business on March 15, 2010 are entitled to vote at the 2010 Annual Meeting of Shareholders (the “Annual Meeting”). As of the close of business on that date, there were outstanding 254,751,385 shares of SCI common stock, $1.00 par value (“Common Stock”).

Q: What are shareholders being asked to vote on?

A: Shareholders are being asked to vote on the following items at the Annual Meeting:

•	Election of three nominees to the Board of Directors.
•	Approval of PricewaterhouseCoopers LLP as SCI’s independent
registered public accounting firm for the 2010 fiscal year.

The Company will also transact such other business as may properly come before the meeting. The affirmative vote of a majority of the total shares represented in person or by proxy and entitled to vote at the Annual Meeting is required for approval of each of the proposals.

Q: How do I vote my shares?

A: You can vote your shares using one of the following methods:

| • | Vote through the internet at www.proxyvote.com using the
instructions on the proxy or voting instruction card. |
| --- | --- |
| • | Vote by telephone using the toll-free number shown on the proxy
or voting instruction card. |
| • | Complete, sign and return a written proxy card in the
pre-stamped envelope provided. |
| • | Attend and vote at the meeting. |

Internet and telephone voting are available 24 hours a day, and if you use one of those methods, you do not need to return a proxy card. Unless you are planning to vote at the meeting, your vote must be received on or before May 11, 2010.

Even if you submit your vote by one of the first three methods mentioned above, you may still vote at the meeting if you are the record holder of your shares or hold a legal proxy from the record holder. Your vote at the meeting will constitute a revocation of your earlier voting instructions.

Q: What if I want to vote in person at the Annual Meeting?

A: The Notice of Annual Meeting of Shareholders provides details of the date, time and place of the Annual Meeting, if you wish to vote in person.

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Q: How does the Board of Directors recommend voting?

A: The Board of Directors recommends voting:

| • | FOR each of the three nominees to the Board of Directors.
Biographical information for each nominee is outlined in this
Proxy Statement under “Election of Directors”. |
| --- | --- |
| • | FOR approval of PricewaterhouseCoopers LLP as SCI’s
independent registered public accounting firm for the 2010
fiscal year. |

Although the Board of Directors does not contemplate that any nominee will be unable or unwilling to serve, if such a situation arises, the proxies that do not withhold authority to vote for directors will be voted for a substitute nominee(s) chosen by the Board.

Q: If I give my proxy, how will my stock be voted on other business brought up at the Annual Meeting?

A: By submitting your proxy, you authorize the persons named on the proxy card to use their discretion in voting on any other matters properly brought before the Annual Meeting. At the date hereof, SCI does not know of any other business to be considered at the Annual Meeting.

Q: Why is it important to vote via the internet or telephone, or send in my proxy card so that it is received on or before May 11, 2010?

A: The Company cannot conduct business at the Annual Meeting unless a quorum is present. A quorum will only be present if a majority of the outstanding shares of SCI common stock as of March 15, 2010 is present at the meeting in person or by proxy. It is for this reason that we urge you to vote via the internet or telephone or send in your completed proxy card(s) as soon as possible, so that your shares can be voted even if you cannot attend the meeting.

Q: Can I revoke my proxy once I have given it?

A: Yes. Your proxy, even though executed and returned, may be revoked any time prior to the time that it is voted at the Annual Meeting by a later-dated proxy or by written notice of revocation filed with the Secretary, Gregory T. Sangalis. Alternatively, you can attend the Annual Meeting, revoke your proxy in person, and vote at the meeting itself.

Q: How will the votes be counted?

A: Each properly executed proxy received in time for the Annual Meeting will be voted as specified therein, or if a shareholder does not specify how the shares represented by his or her proxy are to be voted, they will be voted for the nominees listed therein (or for other nominees as provided above) and for approval of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. Holders of SCI common stock are entitled to one vote per share on each matter considered at the Annual Meeting. In the election of directors, a shareholder has the right to vote the number of his or her shares for as many persons as there are to be elected as directors. Shareholders do not have the right to cumulate votes in the election of directors. Abstentions are counted towards the calculation of a quorum. An abstention has the same effect as a vote against a proposal, or in the case of the election of directors, as shares for which voting power has been withheld.

Q: What if my SCI shares are held through a bank or broker?

A: If your shares are held through a broker or bank, you will receive voting instructions from your bank or broker describing how to vote your stock. If you do not vote your shares, your broker or bank does not have the discretion to vote your shares on the election of directors, but does have the discretion to vote your shares for approval of Pricewaterhouse Coopers LLP as SCI’s independent registered public accounting firm for the 2010 fiscal year. A “broker non-vote” refers to a proxy that votes on one matter, but indicates that the holder does not have the authority to vote on other matters. Broker non-votes will have the following effects at our Annual Meeting: for purposes of determining whether a quorum is present, a broker non-vote is deemed to be present at the meeting; for purposes of the election of directors and other matters to be voted on at the meeting, a broker non-vote will not be counted.

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Q: How does a shareholder or interested party communicate with the Board of Directors, committees or individual directors?

A: Any shareholder or interested party may communicate with the Board of Directors, any committee of the Board, the non-management directors as a group or any director, by sending written communications addressed to the Board of Directors of Service Corporation International, a Board committee, the non-management directors or such individual director or directors, c/o Secretary, Service Corporation International, 1929 Allen Parkway, Houston, TX 77019. All communications will be compiled by the Secretary of the Company and submitted to the Board of Directors (or other addressee) at the next regular Board meeting.

Q: What is the Company’s Web address?

A: The SCI home page is www.sci-corp.com. At the website, the following information is available for viewing. The information below is also available in print to any shareholder who requests it.

•	Bylaws of SCI
•	Charters of the Audit Committee, the Compensation Committee and
the Nominating and Corporate Governance Committee
•	Corporate Governance Guidelines
•	Principles of Conduct and Ethics for the Board of Directors
•	Code of Conduct and Ethics for Officers and Employees

Q: How can I obtain a copy of the Annual Report on Form 10-K?

A: A copy of SCI’s 2009 Annual Report on Form 10-K is furnished with this proxy statement to each shareholder entitled to vote at the Annual Meeting. If you do not receive a copy of the Annual Report on Form 10-K, you may obtain one free of charge by writing to Investor Relations, P.O. Box 130548, Houston, Texas 77219-0548.

This Proxy Statement, the Notice of Annual Meeting of Shareholders and the enclosed proxy card are furnished to shareholders beginning on or about April 1, 2010.

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ELECTION OF DIRECTORS

The Board of Directors consists of eleven members and is divided into three classes, each with a staggered term of three years. At this year’s Annual Meeting, shareholders will be asked to elect three directors to the Board. These directors will be elected for three-year terms expiring in 2013. Set forth below are profiles for each of the three candidates nominated by the Nominating and Corporate Governance Committee of the Board of Directors for election by shareholders at this year’s Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE FOLLOWING NOMINEES.

| | Alan
R. Buckwalter — Age: 63 | Director Since: 2003 | Term Expires: 2013 |
| --- | --- | --- | --- |
| ● | Mr. Buckwalter retired in 2003 as Chairman of J.P. Morgan
Chase Bank, South Region after a career of over 30 years
in banking that involved management of corporate, commercial,
capital markets, international, private banking and retail
departments. He served as head of the Banking Division and
Leveraged Finance Unit within the Banking and Corporate Finance
Group of Chemical Bank and Chairman and CEO of Chase Bank of
Texas. Mr. Buckwalter has attended executive management programs
at Harvard Business School and the Stanford Executive Program at
Stanford University. He is a Board member of the National
Association of Corporate Directors (Houston chapter). He is also
an avid community volunteer, serving on the Boards of Texas
Medical Center and the American Red Cross (Houston chapter). The
Board of Directors believes that Mr. Buckwalter should serve as
a Director because of his executive, banking, financial and
business experience as described above. | | |
| | SCI Common Shares Beneficially
Owned (1) :

87,587 Other Directorships in Last Five Years: Plains Exploration and
Production Company | | |
| | Victor
L. Lund | | |
| | Age: 62 | Director Since: 2000 | Term Expires: 2013 |
| ● | Since December 2006, Mr. Lund has served as Chairman of the
Board of DemandTec, Inc., a software company. From May 2002 to
December 2004, Mr. Lund served as Chairman of the Board of
Mariner Healthcare, Inc. From 1999 to 2002, he served as Vice
Chairman of the Board of Albertsons, Inc. prior to which he had
a 22-year career with American Stores Company in various
positions, including Chairman of the Board and Chief Executive
Officer, Chief Financial Officer and Corporate Controller. Prior
to that time, Mr. Lund was a practicing audit CPA for five
years, held a CPA license and received the highest score on the
CPA exam in the State of Utah in the year that he was licensed.
He also holds an MBA and a BA in Accounting. The Board of
Directors believes that Mr. Lund should serve as a Director
because of his accounting expertise as well as his executive,
financial and business experience as described above. | | |
| | SCI Common Shares Beneficially
Owned (1) :

177,886 Other Directorships in Last Five Years: Borders Group, Del Monte
Foods Company, Delta Airlines, Inc., DemandTec, Inc., Mariner
Healthcare, Inc., NCR Corporation and Teradata Corporation | | |

(1) Details are provided in the footnotes to the table of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

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| | John
W. Mecom, Jr. — Age: 70 |
| --- | --- |
| ● | Mr. Mecom has been involved in the purchase, management and sale
of business interests in a variety of industries. He has owned
and managed over 500,000 acres of surface and mineral
interests throughout the U.S. He has been involved in the
purchase, renovation, management and sale of luxury hotels in
the U.S., Peru and Mexico. He purchased the New Orleans Saints
NFL team in 1967 and sold his interest in 1985. He is currently
Chairman of the John W. Mecom Company and principal owner of
John Gardiner’s Tennis Ranch. The Board of Directors
believes that Mr. Mecom should serve as a Director because of
his varied executive, investment and business experience as
described above. |
| | SCI Common Shares Beneficially
Owned (1) :

100,199 Other Directorships in Last Five Years: None |

(1) Details are provided in the footnotes to the table of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

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The following are profiles of the other continuing directors currently serving on the Board of SCI:

| | R.
L. Waltrip — Age: 79 | Director Since: 1962 | Term Expires: 2012 |
| --- | --- | --- | --- |
| ● | Mr. Waltrip is the founder and Chairman of the Board of SCI. He
has provided invaluable leadership to the Company for over
40 years. A licensed funeral director, Mr. Waltrip
grew up in his family’s funeral business and assumed
management of the firm in the 1950s. He began buying additional
funeral homes in the 1960s and achieved significant cost
efficiencies through the “cluster” strategy of sharing
pooled resources among numerous locations. At the end of 2009,
the network he began had grown to include more than 1,600
funeral service locations and cemeteries. Mr. Waltrip took SCI
public in 1969. Mr. Waltrip holds a bachelor’s degree in
business administration from the University of Houston. The
Board of Directors believes that Mr. Waltrip should serve as a
Director because of his extensive knowledge and experience
related to the death care industry and the Company as well as
his executive and business experience as described above. | | |
| | SCI Common Shares Beneficially
Owned (1) :

2,800,246 (2) Other Directorships in Last Five Years: None | | |
| | Thomas
L. Ryan | | |
| | Age: 44 | Director Since: 2004 | Term Expires: 2011 |
| ● | Mr. Ryan was elected Chief Executive Officer of Service
Corporation International in February 2005 and has served as
President of SCI since July 2002. Mr. Ryan joined the Company in
1996 and served in a variety of financial management roles until
November 2000, when he was asked to serve as Chief Executive
Officer of European Operations. In July 2002, Mr. Ryan was
appointed Chief Operating Officer of SCI, a position he held
until February 2005. Before joining SCI, Mr. Ryan was a
certified public accountant with Coopers & Lybrand LLP for
eight years. He holds a bachelor’s degree in business
administration from the University of Texas at Austin. Mr. Ryan
serves on the Board of Directors of the American Diabetes
Association. Mr. Ryan also serves on the Board of Trustees and
the Executive Committee of the United Way of Greater Houston
where he chaired the 2009-2010 Community Campaign. Mr. Ryan also
serves on the Board of Directors of the Greater Houston
Partnership. Mr. Ryan is a member and Chapter Secretary of the
Young Presidents Organization. Mr. Ryan also serves on the
University of Texas McCombs Business School Advisory Council.
The Board of Directors believes that Mr. Ryan should serve as a
Director because of his extensive knowledge and experience
related to the death care industry and the Company as well as
his executive, accounting and business experience as described
above. | | |
| | SCI Common Shares Beneficially
Owned (1) :

2,315,044 (3) Other Directorships in Last Five Years: None | | |

(1) Details are provided in the footnotes to the tables of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

(2) Includes 970,733 shares which may be acquired by Mr. R. L. Waltrip upon exercise of stock options exercisable within 60 days of March 15, 2010.

(3) Includes 1,430,033 shares which may be acquired by Mr. Thomas L. Ryan upon exercise of stock options exercisable within 60 days of March 15, 2010.

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| | Anthony
L. Coelho — Age: 67 | Director Since: 1991 | Term Expires: 2012 |
| --- | --- | --- | --- |
| ● | Mr. Coelho was a member of the U.S. House of Representatives
from 1978 to 1989. After leaving Congress, he joined Wertheim
Schroder & Company, an investment banking firm in New York
and became President and CEO of Wertheim Schroder Financial
Services. From October 1995 to September 1997, he served as
Chairman and CEO of an education and training technology company
that he established and subsequently sold. He served as general
chairman of the presidential campaign of former Vice President
Al Gore from April 1999 until June 2000. Since 1997, Mr. Coelho
has worked independently as a business and political consultant.
Mr. Coelho also served as Chairman of the President’s
Committee on Employment of People with Disabilities from 1994 to
2001. He previously served as Chairman of the Board of the
Epilepsy Foundation. The Board of Directors believes that Mr.
Coelho should serve as a Director because of his political
acumen and contacts as well as his executive, financial and
business experience as described above. | | |
| | SCI Common Shares Beneficially
Owned (1) :

100,727 Other Directorships in Last Five Years: CepTor Corporation,
Cyberonics, Inc., Stem Cell Innovation, Inc., Universal Access
Global Holdings, Inc. and Warren Resources, Inc. | | |
| | A.J.
Foyt, Jr. | | |
| | Age: 75 | Director Since: 1974 | Term Expires: 2012 |
| ● | Mr. Foyt achieved prominence as a racing driver who was the
first four-time winner of the Indianapolis 500. His racing
career spanned four decades and three continents —
North America, Europe and Australia. Since his retirement from
racing in 1994, Mr. Foyt has engaged in a variety of
commercial and entrepreneurial ventures. He is the President and
owner of A. J. Foyt Enterprises, Inc. (assembly, exhibition and
competition with high-speed engines and racing vehicles), and
has owned and operated car dealerships that bear his name. He
has also been involved in a number of commercial real estate
investment and development projects, and has served as a
director of a Texas bank. The Board of Directors believes that
Mr. Foyt should serve as a Director because of his varied
executive, investment and business experience as described above. | | |
| | SCI Common Shares Beneficially
Owned (1) :

195,553 Other Directorships in Last Five Years: None | | |

(1) Details are provided in the footnotes to the tables of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

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| | Malcolm
Gillis — Age: 69 |
| --- | --- |
| ● | Malcolm Gillis, Ph.D., is a University Professor and former
President of Rice University, a position he held from 1993 to
June 2004. He is an internationally respected academician and
widely published author in the field of economics with major
experience in fiscal reform and environmental policy.
Dr. Gillis has taught at Harvard and Duke Universities and
has held named professorships at Duke and Rice Universities. He
has served as a consultant to numerous U.S. agencies and foreign
governments. Additionally, he has held memberships in many
national and international committees, boards, and advisory
councils. He holds Bachelor’s and Master’s degrees
from the University of Florida and a Doctorate from the
University of Illinois. The Board of Directors believes that
Dr. Gillis should serve as a Director because of his
academic, economic, financial and business knowledge as well as
his executive experience as described above. |
| | SCI Common Shares Beneficially
Owned (1) :

54,697 Other Directorships in Last Five Years: AECOM Technology
Corporation, Electronic Data Systems Corp., Halliburton Co. and
Introgen Therapeutics, Inc. |

(1) Details are provided in the footnotes to the table of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

| | Clifton
H. Morris, Jr. — Age: 74 |
| --- | --- |
| ● | Mr. Morris has been Chairman of AmeriCredit Corp. (financing of
automotive vehicles) since May 1988, previously having served as
Chief Executive Officer and President of that company.
Previously, he served as Chief Financial Officer of Cash America
International, prior to which he owned his own public accounting
firm. He is a certified public accountant with 46 years of
certification, a Lifetime Member of the Texas Society of
Certified Public Accountants and an Honorary Member of the
American Institute of Certified Public Accountants. Mr. Morris
was instrumental in the early formulation and initial public
offerings of SCI, Cash America International and AmeriCredit
Corp., all of which are now listed on the New York Stock
Exchange. From 1966 to 1971, he served as Vice President of
treasury and other financial positions at SCI, returning to
serve on the Company’s Board of Directors in 1990. Mr.
Morris was named 2001 Business Executive of the Year by the
Fort Worth Business Hall of Fame. He is also an avid
community volunteer, having served on the Community Foundation
of North Texas, Fort Worth Chamber of Commerce and
Fort Worth Country Day School. The Board of Directors
believes that Mr. Morris should serve as a Director because of
his executive, financial, investment and business experience as
well as his accounting expertise as described above. |
| | SCI Common Shares Beneficially
Owned (1) :

148,227 Other Directorships in Last Five Years: AmeriCredit Corp. |

(1) Details are provided in the footnotes to the tables of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

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| | W.
Blair Waltrip — Age: 55 |
| --- | --- |
| ● | Mr. Waltrip held various positions with SCI from 1977 to 2000,
including serving as Vice President of Corporate Development,
Senior Vice President of Funeral Operations, Executive Vice
President of SCI’s real estate division, Chairman and CEO
of Service Corporation International (Canada) Limited (a
subsidiary taken public on The Toronto Stock Exchange) and
Executive Vice President of SCI. Mr. Waltrip’s experience
has provided him with knowledge of almost all aspects of the
Company and its industry with specific expertise in North
American funeral/cemetery operations and real estate management.
Since leaving SCI in 2000, Mr. Waltrip has been an independent
investor, primarily engaged in overseeing family and trust
investments. Mr. Waltrip is the son of SCI’s founder, R. L.
Waltrip. The Board of Directors believes that Mr. Waltrip should
serve as a Director because of his extensive knowledge and
experience related to the death care industry and the Company as
well as his executive and business experience as described above. |
| | SCI Common Shares Beneficially
Owned (1) :

1,705,828 Other Directorships in Last Five Years: Sanders Morris Harris
Group, Inc. |

| | Edward
E. Williams — Age: 64 |
| --- | --- |
| ● | Dr. Williams holds the Henry Gardiner Symonds Chair (an
endowed professorship) at the Jesse H. Jones Graduate School of
Management at Rice University, where he teaches classes on
entrepreneurship, value creation, venture capital investing,
business valuations, leveraged buyouts and the acquisition of
existing concerns. Dr. Williams has been named by Business
Week as the Number Two Entrepreneurship Professor in the United
States. Dr. Williams holds a PhD with specialization in
Finance, Accounting and Economics. He has taught finance,
accounting, economics and entrepreneurship at the graduate
level, has written numerous articles in finance, accounting,
economics and entrepreneurship journals, has taught courses in
financial statement analysis and continues to do academic
research in his areas of specialty. He is the author or
co-author of over 40 articles and nine books on business
planning, entrepreneurship, investment analysis, accounting and
finance. The Board of Directors believes that Dr. Williams
should serve as a Director because of his academic, economic,
accounting, financial, investment and business knowledge and
experience as described above. |
| | SCI Common Shares Beneficially
Owned (1) :

260,882 Other Directorships in Last Five Years: Equus Total Return,
Inc. |

(1) Details are provided in the footnotes to the table of director and officer shareholdings listed under “Voting Securities and Principal Holders”.

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Board Composition and Meetings

The Board of SCI is comprised of a majority of independent directors. The Audit, Compensation and Nominating and Corporate Governance Committees of the Board are all comprised entirely of directors who are independent within the meaning of Securities and Exchange Commission (“SEC”) regulations and the listing standards of the New York Stock Exchange. The Board of Directors held seven meetings in 2009. Each Board member attended at least 75% of the total number of meetings of the Board and Board committees on which he served. Although the Board does not have a policy on director attendance at annual meetings, ten Board members attended the Company’s 2009 Annual Meeting of Shareholders.

Consideration of Director Nominees

The Nominating and Corporate Governance Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and shareholders. The Committee may also retain a third-party executive search firm to identify candidates. A shareholder who wishes to recommend a prospective nominee for the Board should notify the Company’s Secretary in writing with whatever supporting material the shareholder considers appropriate. To be considered, the written recommendation from a shareholder must be received by the Company’s Secretary at least 120 calendar days prior to the anniversary of the date of the Company’s Proxy Statement for the prior year’s Annual Meeting of Shareholders.

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 then evaluate the prospective nominee against the standards and qualifications set out in the Company’s Corporate Governance Guidelines. Although the Guidelines do not specifically address diversity, the Committee considers diversity of experience, education, skills, background and other factors in the evaluation of prospective nominees. The Guidelines include the following:

| • | the prospective nominee’s integrity, character and
accountability; |
| --- | --- |
| • | the prospective nominee’s ability to provide wise and
thoughtful counsel on a broad range of issues; |
| • | the prospective nominee’s financial literacy and ability to
read and understand financial statements and other indices of
financial performance; |
| • | the prospective nominee’s ability to work effectively as
part of a team with mature confidence; |
| • | the prospective nominee’s ability to provide counsel to
management in developing creative solutions and in identifying
innovative opportunities; and |
| • | the commitment of the prospective nominee to prepare for and
attend meetings and to be accessible to management and other
directors. |

The Committee also considers such other relevant factors as it deems appropriate, including the current composition of the Board, the balance of management and independent directors, the need for Audit Committee expertise and the evaluations of other prospective nominees. After completing this process, the Committee makes a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after considering the recommendation and report of the Committee.

Director Independence

In August 2003, the Board adopted its Corporate Governance Guidelines. The Guidelines incorporate the director independence standards of the New York Stock Exchange. The portion of the Guidelines addressing director independence is as follows:

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“3.1 Board Independence

The majority of the Board of Directors of SCI will be comprised of independent directors, meaning directors who have no material relationship with SCI (either directly or as a partner, shareholder, or officer of an organization that has a material relationship with SCI). In addition, the Audit, Compensation, and Nominating and Corporate Governance Committees of SCI will be comprised entirely of independent directors.

The Nominating and Corporate Governance Committee of SCI will review the independence of SCI’s directors on an ongoing basis to ensure that Board and Board committee composition is consistent with these principles and with the rules of the New York Stock Exchange and/or other applicable rules.”

Pursuant to the Guidelines, the Board undertook a review of director independence in February 2010. For this review, the Board considered the findings and recommendations of the Nominating and Corporate Governance Committee. The Board and the Committee considered transactions and relationships between each director or any member of his immediate family and the Company and its subsidiaries and affiliates, including those reported under “Certain Transactions” below.

As a result of this review, the Board affirmatively determined that all of the directors are independent of the Company and its management under the standards set forth in the Guidelines, with the exception of R. L. Waltrip, Thomas L. Ryan and W. Blair Waltrip. Messrs. R. L. Waltrip and Ryan are considered inside directors because of their employment as senior executives of the Company. Mr. W. Blair Waltrip is considered a non-independent director because he is the son of an executive officer, Mr. R. L. Waltrip.

Leadership Structure

Under the current leadership structure of the Board, the offices of Chairman of the Board and Chief Executive Officer are held by two people — R.L. Waltrip and Thomas L. Ryan, respectively. Prior to 2005, the two offices were held by Mr. R.L. Waltrip. In February 2005, the Board elected Mr. Ryan as Chief Executive Officer in accordance with the Company’s succession plan.

Risk Oversight

The Board of Directors has assigned to the Nominating and Corporate Governance Committee the quarterly oversight responsibility for the Company’s enterprise risk management function. Management has the primary responsibility to identify risks and risk mitigation strategies and provides periodic reports to the Nominating and Corporate Governance Committee. The Audit Committee is responsible for oversight of major financial risks relating to the Company’s accounting matters and financial reporting compliance. The Compensation Committee has oversight of the risk assessment of the Company’s compensation programs. The Investment Committee has oversight of risks relating to the investment of trust funds. The Nominating and Corporate Governance Committee compiles risk assessments of the other committees and of management and periodically provides enterprise risk management reports to the Board.

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Board Committees

| Name
of Committee | |
| --- | --- |
| and Members | Functions of the
Committee |
| Audit Committee Victor L. Lund (Chair) Alan R. Buckwalter, III Malcolm Gillis Clifton H. Morris, Jr. Edward E. Williams Meetings In 2009 Four | • Assists the Board of Directors in
fulfilling its oversight responsibilities to ensure the
integrity of the Company’s financial statements, the
Company’s compliance with legal and regulatory
requirements, the qualifications, independence and performance
of the independent registered public accounting firm and the
performance and effectiveness of the Company’s internal
audit function. • Reviews the annual audited financial
statements with SCI management and the independent registered
public accounting firm, including items noted under
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and any major issues
regarding accounting principles and practices. This includes a
review of analysis by management and discussion with the
independent registered public accounting firm of any significant
financial reporting issues and judgments made by management in
the preparation of the financial statements, including the
effect of alternative GAAP methods. |
| | • Reviews SCI’s quarterly financial
statements with management and the independent registered public
accounting firm prior to the release of quarterly earnings and
the filing of quarterly reports with the SEC, including the
results of the independent registered public accounting
firm’s reviews of the quarterly financial statements. |
| | • Reviews with management and the
independent registered public accounting firm the effect of any
major changes to SCI’s accounting principles and practices,
as well as the impact of any regulatory and accounting
initiatives on SCI’s financial statements. |
| | • Reviews the qualifications, independence
and performance of the independent registered public accounting
firm annually and recommends the appointment or re-appointment
of the independent registered public accounting firm. The Audit
Committee is directly responsible for the engagement,
compensation and replacement, if appropriate, of the independent
registered public accounting firm. |
| | • Meets at least quarterly with the
independent registered public accounting firm without SCI
management present. Reviews with the independent registered
public accounting firm any audit problems or difficulties and
management’s responses to address these issues. |
| | • Meets with SCI management at least
quarterly to review any matters the Audit Committee believes
should be discussed. |
| | • Meets with SCI management to discuss
policies with respect to risk assessment and risk management and
to review SCI’s major financial risks and steps management
has taken to monitor and control such exposures. |
| | • Reviews with the Company’s legal
counsel any legal matters that could have a significant impact
on the Company’s financial statements. |

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| Name
of Committee | |
| --- | --- |
| and Members | Functions of the
Committee |
| Audit
Committee (Cont’d) | • Reviews and discusses summary reports
from SCI’s Careline, a toll-free number available to
Company employees to make anonymous reports of any complaints or
issues regarding infringements of ethical or professional
practice by any SCI employee regarding financial matters;
discusses with SCI management actions taken in response to any
significant issues arising from these summaries. |
| | • In accordance with Section 404 of the
Sarbanes-Oxley Act of 2002, the Audit Committee also reviews
reports relative to the effectiveness of SCI’s internal
control over financial reporting, including obtaining and
reviewing a report by the independent registered public
accounting firm regarding the effectiveness of SCI’s
internal control over financial reporting. The Audit Committee
reviews any material issues raised by the most recent assessment
of the effectiveness of SCI’s internal control over
financial reporting and any steps taken to deal with such issues. |

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| Name
of Committee | |
| --- | --- |
| and Members | Functions of the
Committee |
| Nominating and Corporate Governance Committee Anthony L. Coelho (Chair) Alan R. Buckwalter, III Victor L. Lund John W. Mecom, Jr. Clifton H. Morris, Jr. Edward E. Williams Meetings In 2009 Four | • Oversees the composition of the Board of
Directors of SCI and the Board committees, including the process
for identifying and recruiting new candidates for the Board,
developing a re-nomination review process for current Board
members and considering nominees recommended by shareholders in
accordance with the bylaws. • Makes recommendations to the Board with
respect to the nomination of candidates for Board membership and
committee assignments, including the chairmanships of the Board
committees. • Provides leadership to the Board in the
development of corporate governance principles and practices,
including the development of Corporate Governance Guidelines and
a Code of Business Conduct and Ethics. • Oversees the Company’s enterprise
risk management function. • In conjunction with the full Board,
oversees CEO succession planning and reviews succession plans
for other SCI executives, including the development of both
short-term (emergency) and long-term CEO succession plans, and
leadership development planning. Monitors progress against these
plans and reports to the full Board on this issue at least
annually. |
| | • Develops and leads the annual Board
evaluation of the performance of the CEO and presents the
results of this evaluation to the full Board for discussion and
approval. |
| | • With outside assistance, when needed,
makes recommendations to the full Board with respect to
compensation for Board members. |
| | • Oversees the development of orientation
programs for new Board members in conjunction with SCI’s
Chairman. |
| | • Oversees continuing education sessions
for SCI directors. This includes monitoring various director
education courses offered by universities and other
institutions, making recommendations to the Board as to which of
these might be most useful to attend, and developing other
education initiatives that may be practical and useful to Board
members, including development of a program for Board member
visits to SCI sites and facilities. |
| | • Oversees and implements the annual
process for assessment of the performance of SCI’s Board
and of the Nominating and Corporate Governance Committee, and
coordinates the annual performance assessment of the Board
committees. |
| | • Oversees and implements the individual
peer review process for assessment of the performance of
individual members of the Board. |
| | • The Committee Chair presides at
executive sessions of non-management directors held during every
SCI Board meeting. |

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| Name
of Committee | |
| --- | --- |
| and Members | Functions of the
Committee |
| Investment Committee Edward E. Williams (Chair) Anthony L. Coelho Malcolm Gillis John W. Mecom, Jr. W. Blair Waltrip Meetings In 2009 Four | • Assists the Board of Directors in
fulfilling its responsibility in the oversight management of
internal and external assets. Internal assets are short-term
investments for the Company’s own account. External assets
are funds received by the Company and placed into Trust in
accordance with applicable state laws related to prearranged
sale of funerals, cemetery merchandise and services and
perpetual care funds (“Trusts”) which are deposited
with financial institutions (the “Trustees”). • Works in conjunction with the Investment
Operating Committee of SCI, a committee comprised of senior SCI
officers and other managers, which supports the Investment
Committee by providing day-to-day oversight of the internal and
external assets. The Investment Committee’s policies are
implemented through the Investment Operating Committee of SCI. |
| | • Provides guidance to the Trustees
regarding the management of the SCI U.S. Trust funds. |
| | • Determines that the Trusts’ assets
are prudently and effectively managed in accordance with the
investment policy. |
| | • Reviews, approves and recommends an
investment policy for the Trust funds including (1) asset
allocation, (2) individual consideration of each Trust type, (3)
acceptable risk levels,(4) total return or income objectives and
(5) investment guidelines relating to eligible investments,
diversification and concentration restrictions, and performance
objectives for specific managers or other investments. |
| | • Evaluates performance of the Trustees
and approves changes if needed. |
| | • Monitors adherence to investment policy
and evaluates performance based on achieving stated objectives. |
| | • Oversight responsibility for the
Company’s cash investments on a short term basis. |
| | • Oversight responsibility for the
Company’s prearranged funeral insurance. |
| | • Oversight responsibility for the
Company’s retirement plans. |
| | • By law, the Trustees are ultimately
responsible for all investment decisions. However, the
Investment Committee in conjunction with the Investment
Operating Committee and a consultant, recommends investment
policies and guidelines and investment manager changes to the
Trustees. |

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| Name
of Committee | |
| --- | --- |
| and Members | Functions of the
Committee |
| Compensation Committee Alan R. Buckwalter, III (Chair) Anthony L. Coelho Malcolm Gillis Victor L. Lund John W. Mecom, Jr. | • Oversees the compensation program for
SCI’s executive officers with a view to ensuring that such
program attracts, motivates and retains executive personnel and
relates directly to objectives of the Company and shareholders
as well as the operating performance of the Company. • Sets compensation for the Chairman and
the CEO of SCI, and reviews and approves compensation for all
other SCI executive officers, including base salaries, short and
long-term incentive compensation plans and awards and certain
benefits. |
| Meetings In 2009 Five | • Determines appropriate individual and
Company performance measures, including goals and objectives, to
be used in reviewing performance for the purposes of setting
compensation for the Chairman, CEO and other executive officers
as well as appropriate peer group companies to review for
comparative purposes with respect to compensation decisions. |
| | • Approves any executive employment
contracts for SCI’s officers, including the Chairman and
the CEO. |
| | • Retains, as appropriate, compensation
consultants to assist the Committee in fulfilling its
responsibilities. The consultants report directly to the
Committee, which has sole authority to approve the terms of
their engagement, including their fees. |
| | • Determines SCI stock ownership
guidelines for officers, adjusts such guidelines if necessary
and reviews at least annually officer compliance with such
guidelines. • Assesses the risk of the Company’s
compensation programs. |
| Executive Committee Robert L. Waltrip (Chair) Alan R. Buckwalter, III Victor L. Lund Clifton H. Morris, Jr. Thomas L. Ryan Meetings In 2009 None | • Has authority to exercise many of the
powers of the full Board between Board meetings. • Is available to meet in circumstances
where it is impractical to call a meeting of the full Board and
there is urgency for Board discussion and decision-making on a
specific issue. |

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Director Compensation

The following table sets forth director compensation for 2009. The table and following discussion apply to directors who are not employees (outside directors). Employees who are directors do not receive director fees or participate in director compensation.

2009 Director Compensation Table

			Change in Pension
			Value and
			Nonqualified
	Fees Earned		Deferred
	or Paid	Stock	Compensation	All Other
Name	in Cash	Awards(1)	Earnings(2)	Compensation(3)	Total
Alan R. Buckwalter, III	$ 104,250	$ 52,050	NA	$ 23,059	$ 179,359
Anthony L. Coelho	95,750	52,050	$ 18,459	0	166,259
A.J. Foyt	52,500	52,050	32,393	9,272	146,215
Malcolm Gillis	95,750	52,050	NA	19,116	166,916
Victor L. Lund	103,750	52,050	NA	78,633	234,433
John W. Mecom, Jr.	91,750	52,050	36,428	31,317	211,545
Clifton H. Morris, Jr.	87,000	52,050	16,793	19,026	174,869
W. Blair Waltrip	67,000	52,050	NA	41,452	160,502
Edward E. Williams	103,000	52,050	18,286	0	173,336

| (1) | Amounts in the Stock Awards column represent the fair market
value of each award on the date of grant. Specifically, the
value was calculated by multiplying (i) the average of the
high and low market prices of a share of common stock of SCI on
the date of the grant of the stock award, by
(ii) 10,000 shares, which was the number of SCI shares
per award. |
| --- | --- |
| (2) | Amounts in this column include increases in the actuarial
present values of benefits as discussed under
“Directors’ Retirement Plan” below. |
| (3) | Amounts in this column are discussed under “Use of Company
Aircraft” below. With respect to Mr. W. Blair Waltrip,
the amount in this column consists of a $21,390 premium paid by
the Company for split dollar insurance, plus a tax gross up of
$12,268, to which Mr. Waltrip is entitled in connection
with his service as a former executive officer of the Company. |

Stock Award: Annual Retainer

Under the Amended and Restated Director Fee Plan, all outside directors receive an annual retainer of 10,000 shares of Common Stock of SCI or, at each director’s option, deferred Common Stock equivalents. The award is made once a year on the date of the Annual Meeting of Shareholders and is 100% vested on the date of grant. Accordingly, each outside director received 10,000 shares of Common Stock or deferred Common Stock equivalents on May 13, 2009. The fair market value of the award is set forth in the column “Stock Awards” in the table above. For dividends pertaining to a director’s deferred Common Stock equivalents, the dividends are reinvested in additional deferred Common Stock equivalents based on the fair market value of Common Stock on the dividend record date.

Meeting Fees

In addition to the annual retainer, all outside directors receive $10,000 for each Board meeting attended and receive a further attendance fee for each Committee meeting attended as follows: Audit Committee Chair

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$6,000, each other committee chair $5,000, Audit Committee members $4,000, and each other committee member $3,000. If the Company initiates a telephone Board or Committee meeting, a participating director is entitled to an attendance fee in an amount equal to 25% of the regular fee described in the preceding sentence. The total meeting fees for each director are set forth in column “Fees Earned or Paid in Cash” in the table above.

Directors may elect to defer all or any of their meeting fees by participating in the Executive Deferred Compensation Plan which is described hereinafter under “Certain Information with Respect to Officers and Directors — Executive Deferred Compensation Plan.” There are no Company contributions made for a director’s account in the plan. The director may have deferred fees invested in the funds available under the plan. Any earnings or losses on such deferred fees are not reported in the table above.

Directors’ Retirement Plan

Effective January 1, 2001, the Non-Employee Directors’ Retirement Plan was amended such that only years of service prior to 2001 are considered for vesting purposes. Non-employee directors who served on the Board prior to that time and were participants in the plan are entitled to receive annual retirement benefits of $42,500 per year for ten years, subject to a vesting schedule, based on their years of Board service. Retirement benefits vested in 25% increments at the end of five, eight, eleven and fifteen years of credited service, except that the benefits vest completely in the event of death while the participant is still a member of the Board or in the event of a change of control of SCI (as defined in the plan). The increases in the actuarial present values of benefits under the plan are reflected in the column “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the table above.

Use of Company Aircraft

Each outside director is allowed to use aircraft leased or financed by the Company under cancelable leases or financial arrangements for a maximum of 30 flight hours per year for personal reasons. The director must reimburse the Company for any such usage at an hourly rate pursuant to a time-sharing agreement governed by Federal Aviation Administration (“FAA”) Regulations. The Company also values such usage on the basis of the incremental cost to the Company of such use. The cost includes the average cost of fuel used, direct costs incurred such as flight planning services and food, and an hourly charge for maintenance of engine and airframe. For 2009, the incremental cost of personal use of Company aircraft, less the amounts reimbursed from the directors to the Company, is reflected in the column “All Other Compensation” in the table above.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview

The Company’s executive compensation policies are designed to provide aggregate compensation opportunities for our executives that are competitive in the business marketplace and that are based upon Company and individual performance. Our foremost objectives are to:

| • | align executive pay and benefits with the performance of the
Company and shareholder returns; and |
| --- | --- |
| • | attract, motivate, reward and retain the broad-based management
talent required to achieve our corporate directives. |

Role of the Compensation Committee

The Compensation Committee of the Company reviews the executive compensation program of the Company to ensure that it is adequate to attract, motivate and retain well-qualified executive officers who will maximize shareholder returns and that it is directly and materially related to the short-term and long-term objectives of the Company and its shareholders as well as the operating performance of the Company. To carry out its role, among other things, the Compensation Committee:

| • | reviews appropriate criteria for establishing performance
targets for executive compensation; |
| --- | --- |
| • | determines appropriate levels of executive compensation by
annually conducting a thorough competitive evaluation, reviewing
proprietary and proxy information, and consulting with and
receiving advice from an independent executive compensation
consulting firm; |
| • | ensures that the Company’s executive stock plan, long-term
incentive plan, annual incentive compensation plan and other
executive compensation plans are administered in accordance with
compensation objectives; and |
| • | approves all new equity-based compensation programs. |

Compensation Philosophy and Process

The Company’s compensation philosophy as implemented through the Compensation Committee is to match executive compensation with the performance of the Company and the individual by using several compensation components for our executives. The components of our compensation program for our executives consist of:

•	annual base salaries;
•	annual performance-based incentives paid in cash;
•	long-term performance-based incentives delivered in stock
options, restricted stock and performance units; and
•	retirement plans providing for financial security.

Our overall compensation philosophy is to target our direct compensation for executives within the range of the market median of the Comparison Group or the Reference Group as discussed below, with opportunities to exceed the targeted median compensation levels through annual performance-based incentives paid in cash and through long-term performance-based incentives. We believe these targeted levels are appropriate in order to motivate, reward, and retain our executives, each of whom have leadership talents and expertise that make them attractive to other companies. Because we target the range of the market median for each component, each of the components of compensation is not affected by any decision respecting other components. However, the Compensation Committee does review overall compensation for reasonableness and comparability to the prior year’s compensation.

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Compensation decisions are made by our Compensation Committee, based in part on input from Towers Watson (formerly Towers Perrin), the Compensation Committee’s third-party independent consultant. Towers Watson is retained by and reports directly to the Compensation Committee, which has the authority to approve Towers Watson’s fees and any other terms of engagement. We have replaced Towers Watson as a consultant in 2010 as described under the caption “Compensation Consultants” below. In addition, Clark Consulting is retained by and reports directly to the Compensation Committee and provides advice as to executive benefit programs such as executive life insurance benefits and deferred compensation arrangements. Annually, the Compensation Committee reviews the fee structure and services provided by their compensation and benefits independent consultants in order to affirm their continuation as consultants or to assist the Compensation Committee in the selection of new consultants, if appropriate.

In November of each year, our independent consultant presents to the Compensation Committee comparative data, including benchmarking results discussed below. For the Chairman and the CEO, the Compensation Committee is exclusively responsible for the final determination of all components of compensation but may request input or recommendations from Company management. For other Named Executive Officers (as defined below), the Compensation Committee receives additional recommendations from our CEO and our Vice President of Human Resources for base salary and long-term incentive compensation. In February, the Compensation Committee reviews the data and recommendations and sets the compensation components of annual base salary, annual performance-based incentives and long-term incentives for that year.

After awards of compensation components are made in February each year, the performance components of the officers’ compensation are determined based on corporate performance and not on individual performance, except that annual performance-based incentives for our two senior operational officers (one of whom is a Named Executive Officer) include performance measures focused on the respective divisions under their management. The compensation components are designed to focus senior leadership, which is responsible for the overall performance and results of the Company, to operate as a team with company-wide goals, except that our two senior operational officers do have certain division performance goals. This approach serves to align the compensation of our most senior leadership team with the performance of the Company. The Compensation Committee generally does not retain any discretion to increase or decrease awards absent attainment of the relevant performance goals. However, the Compensation Committee does reserve the right to reduce at its discretion the amounts of annual performance-based incentives paid in cash.

In summary, our direct compensation provides a balanced approach to compensation and consists of the primary components illustrated below. The chart is a general representation and is not to scale for any particular executive:

| Long-Term Incentive Compensation | Restricted Stock | • Objective: Supports
retention and encourages stock ownership |
| --- | --- | --- |
| | Performance Units | • Objective: Rewards for
effective management of Company business over a multi-year period |
| | Stock Options | • Objective: Rewards for
the Company’s stock price appreciation |
| Annual Cash Compensation | Annual Performance- Based Incentives | • Objective: Rewards
achievement of shorter term financial and operational objectives
that we believe are primary drivers of our common stock price
over time |
| | Base Salary | • Objective: Serves to
attract and retain executive talent and may vary with individual
or due to marketplace competition or economic conditions |

Not to scale.

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Named Executive Officers

The summary compensation table in this proxy statement shows total compensation for our chief executive officer, our chief financial officer and the three next most highly compensated executive officers. The term “Named Executive Officers” in this discussion refers to those officers.

Benchmarking Tools

In reviewing the appropriate range of overall compensation and the appropriate ranges of the components of compensation for 2008, the Compensation Committee used benchmarking tools and surveys presented by Towers Watson. The published and private survey sources consisted of Towers Watson 2007 Executive Compensation Database and 2007 Long-Term Incentive Plan Report. Competitive data from the published/private survey sources represented pay rates for similar positions in general industry companies. We refer to those companies as the “Comparison Group.” Where appropriate data are available, Towers Watson uses regression analysis to develop the compensation statistics used for comparison purposes. The names of the companies comprising the Comparison Group are set forth in Annex A attached to this proxy statement.

For periods after 2008, the Compensation Committee decided to limit the source of competitive data to a group of public companies in the Towers Watson executive compensation database having reported revenues of $1-$3 billion (the “Reference Group”). These revenue levels correlate to the size of the Company’s reported annual revenues. In addition, the Compensation Committee considers the overall complexity of the Company’s business model. For example, the Compensation Committee also considers the fact that the Company sells preneed contracts (approximately $600 million in 2009) that build up our backlog but are not initially recognized or reported as revenues. These preneed contracts are administered by the Company over long periods of time and the Company oversees the management of approximately $3 billion in trust funds, the earnings of which are typically deferred. In addition, the Compensation Committee considers that executive management oversees approximately 20,000 employees.

Since the companies comprising the Reference Group change each year, any reference herein to a particular year’s Reference Group is prefaced by the applicable year (for example, the group used for 2009 is called the “2009 Reference Group”). The names of the companies comprising the 2010 Reference Group, the 2009 Reference Group and the 2008 Reference Group are set forth respectively in Annex B, Annex C and Annex D attached to this proxy statement.

For 2008 and 2009, the Compensation Committee utilized the 2008 Reference Group and the 2009 Reference Group, respectively, as the benchmarking group in the Performance Unit Plan. Prior to 2008, the Compensation Committee utilized the companies comprising the Value Line Diversified Companies Index (the “Value Line Group”) as the reference point for the Performance Unit Plan. The names of the companies comprising the Value Line Group are set forth in Annex E attached to this proxy statement.

Annual Base Salaries

We pay annual base salaries to our Named Executive Officers under employment agreements. Each November, we review the list of, and the terms and conditions of employment for, the Named Executive Officers and other officers with employment agreements in effect and determine whether to extend, modify or allow the agreements to expire. See “Certain Information with Respect to Officers and Directors — Executive Employment Agreements” below. These agreements provide that the base salaries of the Named Executive Officers may be increased at the sole discretion of the Compensation Committee.

We target the base salary levels of our Named Executive Officers within range of the 50th percentile because we believe that level is appropriate to motivate and retain our Named Executive Officers, 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 February 2009, management recommended to the Compensation Committee that we suspend salary adjustments for the Named Executive Officers and the other officers in light of the then-current economic

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conditions regardless of relevant target levels. After consideration, the Compensation Committee agreed and no salary adjustments were made for 2009.

Effective January 1, 2010, the Compensation Committee made the following salary adjustments: Mr. Ryan received an increase of $50,000 to $950,000; Mr. Webb received an increase of $25,000 to $625,000; Mr. Tanzberger received an increase of $25,000 to $425,000; and Mr. Waring received an increase of $50,000 to $425,000. The Compensation Committee made these adjustments in recognition of the officers’ strong performance in a difficult economic environment and, in addition with respect to Mr. Waring, an increase in his job responsibilities.

Annual Performance-Based Incentives Paid in Cash

We use annual performance-based incentives paid in cash to focus our executive officers on financial and operational objectives that the Compensation Committee believes are primary drivers of our common stock price over time. In February 2009 when the target annual performance-based incentive awards were established, we used the following performance measures for our Named Executive Officers:

• Normalized Earnings Per Share , which we define as the Company’s fully-diluted earnings per share calculated in accordance with US Generally Accepted Accounting Principles for the measurement period as reported in the Company’s financial results utilizing a 33.5% effective tax rate. The earnings per share for such bonus calculation is adjusted to exclude the following:

1. Special accounting, litigation or restructuring charges

2. The cumulative effect of any changes in accounting principles

3. Any extraordinary gain or loss or correction of an error

4. Any gain or loss recorded in association with the sale of a business or real estate

5. The gain or loss associated with the early extinguishment of debt

6. Accounting charges or expenses relating to acquisitions

7. Currency gains or losses

• Consolidated Free Cash Flow , which we calculate by adjusting Cash Flows from Operating Activities calculated in accordance with US Generally Accepted Accounting Principles by:

(1) Excluding:

| (a) | Cash federal and state income taxes paid relating to gains on
sale of businesses or real estate |
| --- | --- |
| (b) | Cash payments associated with major litigation settlements |
| (c) | Accounting charges or expenses relating to acquisitions |
| (d) | Variances from forecasted cash taxes related to normal operating
earnings |

(2) Deducting capital improvements at existing facilities and capital expenditures to develop cemetery property

| • | Comparable Revenue Growth , which we define as the
percentage change from the prior year in total revenue for
combined funeral and cemetery comparable same-store locations in
North America. |
| --- | --- |
| • | Comparable Sales Production Growth , which we define as
the percentage change from the prior year in combined total
preneed funeral sales production, total preneed cemetery sales
production and total at need cemetery sales production at
comparable same-store locations in North America. |

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In addition to the above performance measures, we established the following performance measures applicable only to Mr. Waring as follows:

| • | Comparable Division Revenue Growth , which we define
as Comparable Revenue Growth of the locations in
Mr. Waring’s division. |
| --- | --- |
| • | Comparable Division Sales Production Growth , which
we define as Comparable Sales Production Growth of the locations
in Mr. Waring’s division. |

For 2009, we weighted each of the performance measures as follows: 25% Normalized Earnings Per Share, 25% Consolidated Free Cash Flow, 25% Comparable Revenue Growth and 25% Comparable Sales Production Growth for all Named Executive Officers except for Mr. Waring. For Mr. Waring, we weighted the performance measures as follows: 25% Normalized Earnings Per Share, 25% Consolidated Free Cash Flow, 25% Comparable Division Revenue Growth and 25% Comparable Division Sales Production Growth. The Compensation Committee established performance targets based on these measures for the performance period from January 1 through December 31, 2009. The targets for these specific performance measures were:

Normalized Earnings Per Share at $0.349

Consolidated Free Cash Flow at $187,001,000

Comparable Revenue Growth at -2.5%

Comparable Sales Production Growth at -2.9%

Division Targets applicable to Mr. Waring:

Comparable Division Revenue Growth at -3.4%

Comparable Division Sales Production Growth at -3.6%

The Compensation Committee established target performance-based incentive award levels for 2009 generally between the 50th and 75th percentile level of the Reference Group for the Named Executive Officers. This is consistent with our overall compensation philosophy to target direct compensation of our Named Executive Officers within the range of the market median of the Reference Group, to recognize achievement for greater levels of performance and to motivate and retain the executive level talent. As such, if SCI achieves the performance targets established by the Compensation Committee, executive officers would receive incentive awards at this targeted level. Actual incentive awards are decreased or increased on the basis of SCI’s performance relative to the performance targets, subject to maximum award amounts of 200% of targeted incentive levels. The maximum individual annual performance-based incentive award that could have been granted for 2009 was $4,000,000. The award is based on base salary on the last day of the measurement period.

For 2009, SCI’s actual performance measured as a percentage of the targets of the performance measures was as follows: 156.9% of Normalized Earnings Per Share, 156.9% of Consolidated Free Cash Flow, 51.7% of Comparable Revenue Growth, 301.6% of Comparable Sales Production Growth and, respecting Division targets applicable to Mr. Waring, 109.9% of Comparable Division Revenue Growth and 307.9% of Comparable Division Sales Production Growth. The payouts for performance exceeding each performance measure were leveraged to reflect the Compensation Committee’s expectation that superior performance would also contribute to increased shareholder values. Accordingly, actual performance measured against the performance measures resulted in (i) a 48.8% payout percentage for the Normalized Earnings Per Share performance measure, (ii) a 48.2% payout percentage for the Consolidated Free Cash Flow performance measure, (iii) a 16.7% payout percentage for the Comparable Revenue Growth performance measure, (iv) a 44.9% payout percentage for the Comparable Sales Production Growth performance measure, (v) a 26.9% payout percentage for the Comparable Division Revenue Growth performance measure applicable to Mr. Waring, and (vi) a 50.0% payout percentage for the Comparable Division Sales Production Growth performance measure applicable to Mr. Waring. As a result of the foregoing and giving effect to the weightings as described above, Messrs. Waltrip, Ryan, Webb and Tanzberger received annual performance-based incentives paid in cash at 158.6% of the target-based incentive award levels, and Mr. Waring received an annual performance-based incentive paid in cash at 173.8% of his target-based incentive award level. The actual dollar amounts of the payouts are set forth in footnote (2) to the Summary Compensation table below.

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The Compensation Committee did not retain any discretion to increase the annual performance-based incentive award or payout absent attainment of the relevant performance goals for the Named Executive Officers. The Compensation Committee did retain the ability to lower the payouts in its sole discretion.

For 2010, the Compensation Committee established in February 2010 target annual performance-based incentives between the 50th and 75th percentile level of the 2010 Reference Group for the Named Executive Officers, which results in target awards as follows:

(% of Base Salary)
R.L. Waltrip	100 %
Thomas L. Ryan	110 %
Michael R. Webb	100 %
Eric D. Tanzberger	60 %
Sumner J. Waring, III	60 %

For 2010, we will use performance measures substantially similar to the performance measures used in 2009. Normalized Earnings Per Share was modified to utilize a 36.0% effective tax rate and to exclude accounting charges or expenses relating to acquisitions. Consolidated Free Cash Flow was modified to exclude cash taxes and interest associated with tax audit settlements.

We will weight each performance measures in the same manner as we did in 2009. The targets for the 2010 performance measures of Normalized Earnings Per Share and Consolidated Free Cash Flow are generally consistent with or within range of the guidance in the financial outlook for 2010 that we set forth in our Form 8-K furnished on February 24, 2010. Actual incentive awards will be decreased or increased on a leveraged basis considering SCI’s performance relative to the performance targets, subject to maximum award amounts of 200% of targeted incentive levels which can only be realized if we exceed the upper ranges of our guidance for 2010.

Long-Term Incentive Compensation

In 2009, our long-term incentive compensation program consisted of three components to provide greater balance and focus for the Named Executive Officers and represents a competitive growing practice of using various types of long-term incentive devices. Each form of long term incentive is designed to ensure that appropriate focus is given to driving the Company’s stock price appreciation, managing the ongoing operations and implementing strategy and ensuring superior total shareholder returns. The program consists of equal targeted expected value delivered for long-term incentives in the form of:

(i) Stock Options;

(ii) Restricted Stock; and

(iii) Performance Units.

The total targeted expected value of the three awards for our Named Executive Officers was generally established within range of the market median of the Reference Group. We believe that the grant of significant annual equity awards further links the interests of senior management and the Company’s shareholders. Therefore, the grant of stock options and the award of restricted stock are important components of annual compensation. Although the Compensation Committee does not consider current stock ownership levels in determining equity awards, we do annually review the ownership levels and progress towards established ownership guidelines, as discussed below.

Stock Options

The purpose of using stock options is to reward executive officers based on an increase in our stock price. In February of each year, the Compensation Committee sets the components of the long-term incentive compensation for that year. 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. The Compensation Committee establishes an economic value of stock options to be awarded and relies on Towers Watson to calculate the number of stock options substantially equivalent to those economic values.

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Restricted Stock

The purpose of using restricted stock with vesting provisions is to assist in retaining our executive officers and encouraging stock ownership. The restricted stock awards are made at the same time as the stock option grants, vest at a rate of one-third per year and are based on the estimated grant date value of the restricted shares.

Performance Units

The purpose of using performance units is to reward executive officers for effective management of the business over a multi-year period. In addition, the performance units allow executive officers to retain or build their SCI stock ownership by providing liquidity that can be applied to taxes associated with option exercises and restricted stock vestings. The performance unit component is settled in cash at the end of a three-year performance period. Each performance unit is valued at $1.00 and the actual payout may vary by a range of 0% to 200% of the targeted award established by the Compensation Committee. The Performance Unit Plan measures the 3 year total shareholder return (“TSR”) relative to the companies in the Reference Group. TSR is defined as $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 companies in the Reference Group, with dividend reinvestment during the same period. For grants in years prior to 2008, the Performance Unit Plan measured TSR relative to the companies in the Value Line Group.

For the 2007 — 2009 performance cycle, the closing stock price determinations as of December 31, 2006 and December 31, 2009 were used to calculate the awards due participants. For this performance cycle, the total SCI shareholder return was negative and the participants did not receive any award payout.

For the 2009 — 2011 performance cycle, the Compensation Committee granted performance units with performance awards ranging from 0% to 200% as set forth below in the “Grants of Plan-Based Awards” table. A target award is earned if SCI’s TSR relative ranking is at the 50th percentile of the TSR of the 2009 Reference Group and total SCI shareholder return is positive.

For the 2010 — 2012 performance cycle, the plan provisions for the grants covering the 2009 — 2011 performance cycle were utilized, except that the reference point is the 2010 Reference Group.

2010 Long-Term Incentive Awards

In February 2010, we awarded grants of stock options, restricted stock and performance units to Named Executive Officers as set forth in the table below. These amounts are not reflected in the compensation tables elsewhere in this proxy statement.

	2010 Grants — Stock Options	Restricted Stock	Performance Units
Name	Grant (Shares)	Grant (Shares)	Grant (Units)
R. L. Waltrip	231,000	69,400	889,000
Thomas L. Ryan	434,000	130,000	1,670,000
Michael R. Webb	202,000	60,700	778,000
Eric D. Tanzberger	79,500	23,800	306,000
Sumner J. Waring, III	79,500	23,800	306,000

Provisions Regarding Claw-Backs

In November 2008, the Board of Directors adopted provisions for seeking the return (claw-back) from executive officers of cash incentive payments and stock sale proceeds in certain circumstances involving fraud. For awards in and after 2009, we added these provisions for the following elements of compensation: annual performance-based incentives paid in cash, stock options, restricted stock and performance units. The provisions would be triggered if the Board of Directors determines that an officer has engaged in fraud that caused, in whole or in part,

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a material adverse restatement of the Company’s financial statements. In such an event, the Company would seek to recover from the offending officer the following:

| • | The actual annual performance-based incentive paid in cash to
the officer, but only if the original payment would have been
lower if it had been based on the restated financial results. |
| --- | --- |
| • | The gains from sales of stock acquired under stock options
realized at any time after the filing of the incorrect financial
statements. (Any remaining vested and unvested stock options
would be cancelled). |
| • | The gains from sales of restricted stock realized at any time
after the filing of the incorrect financial statements. (Any
remaining unvested restricted stock would be forfeited). |
| • | The amount of a performance unit award paid after the ending
date of the period covered by the incorrect financial
statements. (Any unpaid performance unit award would be
forfeited). |

If the officer contests the claw-back, the Company will promptly pay the officer’s reasonable legal fees and expenses; provided however, if the officer does not prevail in such contest, the officer will reimburse the Company for all such legal fees and expenses.

Stock Ownership Guidelines

In 2004, we established stock ownership guidelines for officers. Share ownership is generally achieved through open market purchases of SCI stock, shares acquired in the company sponsored 401(k) plan, vesting of restricted stock and shares retained after exercise of stock options. The table below sets forth our current ownership guidelines for our officers.

	Target Holdings
Title	(# of Shares)
Chairman of the Board	400,000
President and Chief Executive Officer	400,000
Executive Vice President and Chief Operating Officer	200,000
Senior Vice President	100,000
Vice President	40,000

At March 15, 2010, the Named Executive Officers had attained or exceeded their ownership guideline levels.

Employment Agreements; Termination Payment Arrangements

The Company has employment agreements with Messrs. R.L. Waltrip, Thomas L. Ryan, Michael R. Webb, Eric D. Tanzberger and Sumner J. Waring, III. These agreements have current terms expiring December 31, 2010. Annually, the Company may extend each agreement for an additional year unless notice of nonrenewal is given by either party.

For further discussion of these employment agreements, refer to “Certain Information with Respect to Officers and Directors — 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 broad-based management talent required to achieve our corporate directives. In the context of a possible takeover, we believe that change-in-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 concern which could be a distraction for the executive. Our change-in-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 Towers Watson that such features were commonly used by publicly traded companies.

For further discussion of termination arrangements, refer to “Certain Information with Respect to Officers and Directors — Potential Payments Upon Termination” below.

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Retirement Plans

We believe that financial security during retirement can be as important as financial security before retirement. We previously maintained a Cash Balance Plan and a Supplemental Executive Retirement Plan for Senior Officers, both of which ceased accruing benefits in 2000. In 2005, we implemented an Executive Deferred Compensation Plan for our executive officers which includes a Company contribution for retirement.

Our Cash Balance Plan was a defined benefit plan under which our Named Executive Officers accrued benefits until December 31, 2000. No further contributions were made by the Company, but plan accounts continued to accrue interest. In August of 2006, the Board of Directors authorized the termination of the Cash Balance Plan. In 2007, the participant’s account balances were distributed to participants in the form of an annuity or a rollover to the Company’s 401(k) Plan or an IRA at the participant’s election.

Our Supplemental Executive Retirement Plan for Senior Officers is a non-qualified plan under which our Named Executive Officers accrued benefits until December 31, 2000. No additional benefits will accrue after 2000. Each participant is entitled at age 60 to the annual payment of the full amount of his benefit.

To help retain and recruit executive level talent, the Company maintains a supplemental retirement and deferred compensation plan for its executive officers, the Executive Deferred Compensation Plan. This plan allows for an annual retirement contribution of 7.5% and a performance-based contribution targeted at 7.5%, with a range of 0% to 15% based on achievement of Company performance measures established in the first quarter of each year. These are the same performance measures described in the Annual Performance-Based Incentives Paid in Cash above. The percentages are applied to the combined eligible compensation of base salary and annual performance-based incentive paid in cash. The plan allows for individual deferral of base salary, annual performance-based incentives paid in cash, and long-term incentive program components payable in cash (performance unit awards). The plan also allows for the restoration of Company matching contributions that are prohibited in the Company’s 401(k) plan due to tax limits on contributions to qualified plans. In February 2010, the Company made the following contributions under the plan:

Name	7.5% Retirement — Contribution	Performance — Contribution	Total
R.L. Waltrip	NA	NA	N/A
Thomas L. Ryan	$ 174,589	$ 277,014	$ 451,603
Michael R. Webb	116,393	184,676	301,069
Eric D. Tanzberger	58,557	92,910	151,467
Sumner J. Waring, III	57,462	91,173	148,635

We also offer a 401(k) plan to our employees, including our executive officers. In 2001, the Company initiated the 401(k) Retirement Savings Plan for elective contributions by participants and matching contributions by the Company up to prescribed limits established by the Board of Directors and specific IRS limitations as a replacement for the Cash Balance Plan. Participants may elect to defer up to 50% of salary and bonus into the Plan subject to the annual IRS contribution limit of $16,500 excluding the $5,500 catch-up contributions for eligible for participants age 50 and older. The Company’s match ranges from 75% to 125% of employee deferrals based on their years of company service up. The match is applied to a maximum of 6% of an officer’s salary and annual performance-based incentive, subject to the IRS compensation limits.

Perquisites and Personal Benefits

We provide various personal benefits to our executive officers which are generally provided by other companies and become an expected component of the overall remuneration for executive talent, including:

| • | club memberships — For 2010, the Compensation
Committee decided to eliminate reimbursement of monthly dues for
club memberships. Prior to 2010, we reimbursed such monthly dues. |
| --- | --- |
| • | financial and legal planning and tax preparation —
provided to officers to encourage critical document preparation
and financial planning advice for effective tax and retirement
planning |

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| • | supplemental medical reimbursements — provided to
officers and managing directors. The insured benefit product
covers out of pocket medical expenses, exclusive of required
premium contributions by participants in the Company’s
medical and dental plans, and is a valued benefit provided at
modest annual cost per participant. |
| --- | --- |
| • | enhanced long-term disability policy — protects the
officer in the event of a long-term disability determination,
replacing 60% of the executive’s annual cash compensation
in the event of disability. |
| • | enhanced life insurance — executive life insurance
program for officers covering 3.5 times the executive’s
annual salary and bonus. |
| • | funeral and cemetery benefits — provides
funeral/cemetery discounts for directors and officers and their
immediate families, on an atneed or prearranged basis. Under the
policy, the Company provides (i) services free of cost, and
(ii) merchandise, property and interment rights at cost. |
| • | security and transportation services — provided to the
Chairman of the Board as approved by the Compensation Committee |
| • | personal use of Company aircraft — officers are
entitled to certain hours of use of the Company’s leased or
financed aircraft for personal reasons in accordance with the
Company’s usage policy approved by the Board of Directors
and pursuant to a signed time-sharing agreement which is
governed by FAA regulations. Each officer is required to sign
the time-sharing agreement. In accordance with the agreement,
officers are required to reimburse the Company for operating
costs associated with personal aircraft usage which are based on
an hourly rate and include estimates for costs that are
specifically defined by the FAA regulations pursuant to
time-sharing agreements. Catering and pilot travel expenses are
charged as incurred. Hours allowed are based on title and
approved by the Board. Such personal use is treated as taxable
compensation to the executive to the extent the IRS valuation of
the personal aircraft usage exceeds the value submitted to the
Company from the executive pursuant to the time-sharing
agreement. |

Personal benefit amounts are not considered annual salary for bonus purposes, deferred compensation purposes or 401(k) contribution purposes.

Compensation Consultants

In November 2009, the Compensation Committee decided to conduct a process to request proposals from independent consultants in conjunction with the retirement of a long term Towers Watson advisor. The Chairman of the Compensation Committee reviewed proposals from five firms in February 2010, including Towers Watson. He selected two consulting firms who each made a presentation to the entire Compensation Committee in March 2010. The Compensation Committee selected Hewitt Associates to be its independent consultant for the future, thereby replacing Towers Watson. The Compensation Committee intends to continue to retain Clark Consulting for advice as to executive benefit programs.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION COMMITTEE

Alan R. Buckwalter, III (Chairman)

Anthony L. Coelho

Malcolm Gillis

Victor L. Lund

John W. Mecom, Jr.

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CERTAIN INFORMATION WITH RESPECT TO OFFICERS AND DIRECTORS

Compensation

The following table sets forth information for the three years ended December 31, 2009 with respect to the Chief Executive Officer, the Chief Financial Officer and the three other most highly compensated executive officers of the Company. 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 reduced by the amounts in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column.

Summary Compensation Table

						Change in
						Pension Value
						and Nonqualified
			Restricted		Non-Equity	Deferred
Name and			Stock	Option	Incentive Plan	Compensation	All Other
Principal Position	Year	Salary	Awards(1)	Awards(1)	Compensation(2)	Earnings(3)	Compensation(4)	Total
R. L. Waltrip	2009	$ 950,000	$ 493,830	$ 491,652	$ 1,507,175	0	$ 546,161	$ 3,988,818
Chairman of the Board	2008	950,000	$ 567,485	$ 856,080	0	0	$ 596,268	$ 2,969,833
	2007	950,000	605,172	974,400	$ 2,860,650	0	646,402	6,036,624
Thomas L. Ryan	2009	$ 900,000	$ 832,815	$ 829,587	$ 1,427,850	$ 22,001	215,247	4,227,500
President and Chief	2008	900,000	958,573	1,446,480	0	46	822,014	4,127,113
Executive Officer	2007	898,076	1,137,380	1,827,000	2,970,100	5,247	717,409	7,555,212
Michael R. Webb	2009	600,000	385,020	384,119	951,900	54,704	191,351	2,567,094
Executive Vice President	2008	600,000	443,311	669,120	0	4,906	594,601	2,311,938
and Chief Operating Officer	2007	599,519	567,617	913,500	1,859,600	18,343	582,168	4,540,747
Eric D. Tanzberger	2009	400,000	161,541	161,342	380,760	11,857	100,287	1,215,787
Senior Vice President	2008	399,424	186,841	280,932	0	0	261,915	1,129,112
and Chief Financial Officer	2007	373,558	226,403	365,400	571,875	2,939	234,004	1,774,179
Sumner J. Waring, III	2009	375,000	154,008	153,630	391,163	0	152,566	1,226,367
Senior Vice President	2008	375,000	160,149	241,079	0	0	281,907	1,058,135
Operations	2007	375,000	226,403	365,400	741,600	1,017	218,689	1,928,109

| (1) | The Restricted Stock Awards and
Option Awards columns 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 14 to the consolidated financial statements
included in the SCI 2009 Annual Report on Form 10-K. |
| --- | --- |
| (2) | The Non-Equity Incentive Plan
Compensation is composed of the following: |

Year		Annual Performance-Based — Incentive Paid in Cash	Performance Units(a)
R.L. Waltrip	2009	$ 1,507,175	0
	2008	0	0
	2007	1,735,650	$ 1,125,000
Thomas L. Ryan	2009	1,427,850	0
	2008	0	0
	2007	1,644,300	1,325,800
Michael R. Webb	2009	951,900	0
	2008	0	0
	2007	1,096,200	763,400
Eric D. Tanzberger	2009	380,760	0
	2008	0	0
	2007	411,075	160,800
Sumner J. Waring, III	2009	391,163	0
	2008	0	0
	2007	380,000	361,600

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(a) Performance Units for 2009 related to the performance period of 2007-2009, Performance Units payments for 2008 were for the performance period of 2006-2008, and Performance Units payments for 2007 were for the performance period of 2005-2007.

(3) This column sets forth the change in the actuarial present value of each executive’s accumulated benefit in 2009, 2008 and 2007 for the following plans:

			Supplemental Executive
			Retirement Plan for
Year		Cash Balance Plan	Senior Officers
R.L. Waltrip.	2009	0	0
	2008	0	0
	2007	0	0
Thomas L. Ryan	2009	0	$ 22,001
	2008	0	46
	2007	$ 1,410	3,837
Michael R. Webb	2009	0	54,704
	2008	0	4,906
	2007	4,825	13,518
Eric D. Tanzberger	2009	0	11,857
	2008	0	0
	2007	1,081	1,858
Sumner J. Waring	2009	0	0
	2008	0	0
	2007	1,017	0

The assumptions made for quantifying the present value of the benefits are set forth in note 15 to the consolidated financial statements included in the SCI 2009 Annual Report on Form 10-K. Each executive’s account in the Cash Balance Plan was 0 in 2008 and 2009 since the plan was liquidated in 2007. For 2007, Mr. Waltrip’s accounts experienced declines because he received payments under both plans in 2006 (including his last payment under the SERP for Senior Officers) and under the Cash Balance Plan in 2007. The actuarial present value of his account in the Cash Balance Plan decreased $7,875 in 2007.

Regarding Mr. Tanzberger, the actuarial present value of his account in the SERP for Senior Officers decreased $219 in 2008.

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(4) All Other Compensation includes the following:

2009 All Other Compensation

					Perquisites
	Contributions
	To Deferred	Contributions	Life		Personal		Medical	Club
	Compensation	to 401(k)	Insurance	Disability	Use of	Financial	Reimburse-	Member-
Name	Plan(a)	Plan(a)	Related(b)	Insurance(c)	Aircraft(d)	Planning(e)	ment(f)	ships(g)	Other(h)
R. L. Waltrip		$ 18,375	$ 195,462		$ 127,067	$ 28,000	$ 18,107		$ 159,150
Thomas L. Ryan	$ 120,285	18,375	7,786	$ 12,719	37,166	5,686	11,649	$ 1,581
Michael R. Webb	73,549	18,375	10,691	18,232	55,166	3,550	8,548	3,240
Eric D. Tanzberger	43,028	18,375	2,126	0	10,464	1,823	21,079	3,392
Sumner J. Waring, III	38,421	18,375	2,224	4,323	75,700	4,700	7,383	1,440

(a) The amounts represent contributions by the Company to the accounts of executives in the plans identified in the table. The column Contributions to Deferred Compensation Plan also includes associated FICA tax gross up amounts as follows:

	Amount
R.L. Waltrip	0
Thomas L. Ryan	$ 3,660
Michael R. Webb	1,924
Eric D. Tanzberger	1,403
Sumner J. Waring, III	546

| (b) | For Mr. Waltrip the amount in
this column represents $188,262 for reimbursement of life
insurance premium and related taxes for split dollar life
insurance and $7,200 for term life insurance premiums. For the
other executives, the amounts represent payment for term life
insurance premiums or supplemental life insurance. |
| --- | --- |
| (c) | The amounts represent the costs of
premiums for enhanced long-term disability insurance. |
| (d) | The amounts represent the
incremental cost of personal use of Company aircraft to the
extent not reimbursed by the executive to the Company. The cost
includes the average cost of fuel used, direct costs incurred
such as flight planning services and food, and an hourly charge
for maintenance of engine and airframe. For each flight, the
executive must reimburse the Company at an hourly rate pursuant
to a time-sharing agreement governed by FAA Regulations. The
amounts reflected in the table above are the total incremental
costs reduced by the amounts of such executive reimbursements. |
| (e) | The amounts represent payments by
the Company for tax and financial planning services incurred by
the executives. |
| (f) | The amounts represent payments by
the Company to the executive for medical expenses which are
incurred but which are not reimbursed to the executive by the
Company’s health insurance. |
| (g) | The amounts represent the costs of
club memberships, excluding initiation fees, food service and
general assessments. This perquisite has been terminated
effective January 1, 2010. |
| (h) | For Mr. Waltrip, the amount in
this column represents the costs of providing for him an
automobile ($26,587), personal security and driving services of
employees ($53,754) and guard and alarm services at his
residence ($78,809). |

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Grants of Plan-Based Awards

The following table sets forth plan-based awards granted in 2009.

Grants of Plan-Based Awards

		Estimated Future Payouts				All Other — Restricted	All Other — Option Awards:	Exercise — or Base	Closing — Market	Grant Date
		Under Non-Equity Incentive Plan Awards				Stock Awards:	Number of	Price of	Price on	Fair Value
						Number of	Securities	Option	Date of	of Stock
	Grant	Performance	Threshold	Target	Maximum	Shares	Underlying	Awards	Grant	and Option
Name	Date	units (#)	($)	($)	($)	of Stock	Options	($/Sh)	($/Sh)	Awards ($)
R. L. Waltrip	02/10/2009		$ 1	$ 950,000	$ 1,900,000
	02/10/2009	533,300	133,325	533,300	1,066,600
	02/10/2009					118,000				$ 493,830
	02/10/2009						567,400	$ 4.185	$ 4.15	491,652
Thomas L. Ryan	02/10/2009		1	900,000	1,800,000
	02/10/2009	900,000	225,000	900,000	1,800,000
	02/10/2009					199,000				832,815
	02/10/2009						957,400	4.185	4.15	829,587
Michael R. Webb	02/10/2009		1	600,000	1,200,000
	02/10/2009	416,700	104,175	416,700	833,400
	02/10/2009					92,000				385,020
	02/10/2009						443,300	4.185	4.15	384,119
Eric D. Tanzberger	02/10/2009		1	240,000	480,000
	02/10/2009	175,000	43,750	175,000	350,000
	02/10/2009					38,600				161,541
	02/10/2009						186,200	4.185	4.15	161,342
Sumner J. Waring, III	02/10/2009		1	225,000	450,000
	02/10/2009	166,700	41,675	166,700	333,400
	02/10/2009					36,800				154,008
	02/10/2009						177,300	4.185	4.15	153,630

In the table above, the four lines pertaining to each Named Executive Officer relate to the following:

| • | First line — Annual Performance-Based Incentives Paid
in Cash |
| --- | --- |
| • | Second line — Performance Units |
| • | Third line — Restricted Stock |
| • | Fourth line — Stock Options |

The material terms of each such element of compensation are described previously in the “Compensation Discussion and Analysis.”

The performance units are settled in cash at the end of a three-year performance period. In addition, the performance units provide for pro rata vesting 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, 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.

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

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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) 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

The following table provides information concerning unexercised options and restricted stock that has not vested as of the end our last completed fiscal year.

Outstanding Equity Awards at Fiscal Year-End 2009

	Option Awards
						Market
					Number of	Value of
					Shares or	Shares or
	Number of	Number of			Units of	Units of
	Securities	Securities			Stock	Stock
	Underlying	Underlying	Option		That	That
	Unexercised	Unexercised	Exercise	Option	Have Not	Have Not
	Options	Options	Price	Expiration	Vested(4)	Vested
Name	(#)	(#)	($)	Date	(#)	($)
	Exercisable	Unexercisable
R.L. Waltrip					169,400	$ 1,387,386
	102,000			6.8050	02/10/2012
	150,200			6.9000	02/08/2013
	189,400			8.2400	02/07/2014
	149,333	74,667	(1)	10.7300	02/13/2015
	58,000	116,000	(2)	11.6050	02/12/2016
		567,400	(3)	4.1850	02/10/2017
Thomas L. Ryan					289,401	2,370,194
	100,000			2.9250	08/14/2010
	57,500			6.8050	02/10/2012
	177,000			6.9000	02/08/2013
	260,400			8.2400	02/07/2014
	280,000	140,000	(1)	10.7300	02/13/2015
	98,000	196,000	(2)	11.6050	02/12/2016
		957,400	(3)	4.1850	02/10/2017
Michael R. Webb					135,101	1,106,477
	100,000			2.9250	08/14/2010
	46,000			6.8050	02/10/2012
	101,900			6.9000	02/08/2013
	118,400			8.2400	02/07/2014
	140,000	70,000	(1)	10.7300	02/13/2015
	45,333	90,667	(2)	11.6050	02/12/2016
		443,300	(3)	4.1850	02/10/2017

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Outstanding Equity Awards at Fiscal Year-End 2009

	Option Awards
						Market
					Number of	Value of
					Shares or	Shares or
	Number of	Number of			Units of	Units of
	Securities	Securities			Stock	Stock
	Underlying	Underlying	Option		That	That
	Unexercised	Unexercised	Exercise	Option	Have Not	Have Not
	Options	Options	Price	Expiration	Vested(4)	Vested
Name	(#)	(#)	($)	Date	(#)	($)
	Exercisable	Unexercisable
Eric D. Tanzberger						56,368	461,654
	12,500			6.8050	02/10/2012
	41,400			8.2400	02/07/2014
	56,000	28,000	(1)	10.7300	02/13/2015
	19,033	38,067	(2)	11.6050	02/12/2016
		186,200	(3)	4.1850	02/10/2017
Sumner J. Waring, III	25,500			6.8050	02/10/2012	53,034	434,348
	53,200			8.2400	02/07/2014
	56,000	28,000	(1)	10.730	02/13/2015
	16,333	32,667	(2)	11.6050	02/12/2016
		177,300	(3)	4.1850	02/10/2017

| (1) | These unexercisable options expiring on 02/13/2015 vest 100% on
02/13/2010. |
| --- | --- |
| (2) | These unexercisable options expiring 02/12/2016 vest 50% on
02/12/2010 and 50% on 02/12/2011. |
| (3) | These unexercisable options expiring 02/12/2017 vest
33 1 / 3 %
on each of 02/12/2010, 02/12/2011 and 02/12/2012. |
| (4) | The restricted stock for each person in the table vests as
follows: |

Vesting	Vesting	Vesting	Vesting	Vesting
02/15/2010	03/05/2010	02/15/2011	03/05/2011	03/05/2012
R.L. Waltrip	35,100	39,333	16,300	39,333	39,333
Thomas L. Ryan	62,867	66,333	27,534	66,333	66,334
Michael R. Webb	30,367	30,666	12,734	30,667	30,667
Eric D. Tanzberger	12,401	12,866	5,367	12,867	12,867
Sumner J. Waring, III	11,634	12,266	4,600	12,267	12,267

Option Exercises and Stock Vested

The following table provides information concerning each exercise of stock option 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, 2009

	Option Awards — Number of Shares	Value Realized on	Stock Awards — Number of Shares	Value Realized
	Acquired on	Exercise	Acquired on	on Vesting
Name	Exercise (#)	($)	Vesting (#)	($)
R.L. Waltrip	1,000,000	$ 2,027,599	58,500	$ 253,890
Thomas L. Ryan	100,000	246,379	95,032	409,955
Michael R. Webb	100,000	248,668	45,000	193,870
Eric D. Tanzberger	100,000	184,431	17,533	75,295
Sumner J. Waring, III	0	0	18,199	78,681

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Pension Plans

The following table sets forth information regarding the SERP for Senior Officers as of December 31, 2009.

Pension Benefits as of December 31, 2009

		Number of Years — Credited Service	Present Value of — Accumulated Benefit	Payments During — Last Fiscal Year
Name	Plan Name	(#)	($)(1)	($)(2)
R. L. Waltrip	SERP for Sr. Officers	NA	$ 0	0
Thomas L. Ryan	SERP for Sr. Officers	14	92,618	0
Michael R. Webb	SERP for Sr. Officers	20	308,227	0
Eric D. Tanzberger	SERP for Sr. Officers	13	45,795	0
Sumner J. Waring, III	SERP for Sr. Officers	NA	0	0

(1) The assumptions made for calculating the present value of accumulated benefit of the SERP for Sr. Officers are set forth in note 15 to the consolidated financial statements included in the SCI 2009 Annual Report on Form 10-K.

SCI Cash Balance Plan

The SCI Cash Balance Plan is a defined benefit plan which we amended effective January 1, 2001 to provide that the Company would not make any further contributions under the plan after 2000. Each participant in the plan had an account which, until December 31, 2000, was credited each year that a participant qualified with a Company contribution (based on annual compensation and years of benefit service) and interest. Plan accounts continued to accrue interest after 2000.

We terminated the Cash Balance Plan effective October 31, 2006, and all plan assets were liquidated and distributed by December 31, 2007.

Supplemental Executive Retirement Plan for Senior Officers

In 2000, we amended the Supplemental Executive Retirement Plan for Senior Officers (“SERP for Senior Officers”) effective January 1, 2001. Under the amendment, no additional benefits will accrue and no employees shall become eligible to participate in the plan after 2000.

The SERP for Senior Officers is a non-qualified plan which covers certain executive officers and certain regional operating officers, including the Named Executive Officers. Benefits under the SERP for Senior Officers do not consist of compensation deferred at the election of participants. The amounts of benefits under the plan were previously set by the Compensation Committee from time to time. The Compensation Committee previously set guidelines such that the annual benefits would generally equal a percentage (75% for the CEO and lesser percentages for the other officers) of a participant’s 1997 annual base salary and target bonus, with the benefits being reduced to the extent of the participant’s benefits under Social Security and the SCI Cash Balance Plan. The participant will be entitled at age 60 to the annual payment of the full amount of his benefit; if his employment terminates earlier than age 60, he will be entitled to the annual payment of the amount of his benefit multiplied by a fraction of which the numerator is the participant’s years of service and the denominator is the number of years from the participant’s hire date until he reaches age 60.

Benefit payments will be made in the form of 180 monthly installments commencing at the later of severance of employment or the attainment of age 55. Prior to retirement, if a participant dies or in the event of a change of control of the Company (as defined in the SERP for Senior Officers), the Company will promptly pay to each beneficiary or participant a lump sum equal to the present value of the benefit that the participant would have been entitled to receive if he had continued to accrue benefit service from the date of death or the date of the change of control to the date of his 65th birthday. Participants may elect to begin receiving monthly benefits at age 55, while still employed, provided the participant gives written notice at least twelve months prior to the

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attainment of age 55. Such installments will be reduced for early commencement to reasonably reflect the time value of money.

Executive Deferred Compensation Plan

The following table provides information concerning contributions, earnings and other information under the Executive Deferred Compensation Plan.

Nonqualified Deferred Compensation in 2009

	Executive	Registrant	Aggregate	Aggregate	Aggregate
	Contributions	Contributions	Earnings	Withdrawals/	Balance at
	in Last FY(1)	in Last FY(2)	in Last FY(3)	Distributions	Last FYE(4)
Name	($)	($)	($)	($)	($)
R.L. Waltrip	NA	NA	NA	NA	NA
Thomas L. Ryan	$ 90,000	$ 116,625	$ 685,166	0	$ 3,271,506
Michael R. Webb	36,000	71,625	292,783	0	2,416,766
Eric D. Tanzberger	24,000	41,625	142,413	0	753,098
Sumner J. Waring, III	22,500	37,875	144,870	0	794,673

(1) These executive contributions were made in 2009 and are included in the Summary Compensation Table for the year 2009 in the amounts and under the headings as follows:

	Salary
R.L. Waltrip	NA
Thomas L. Ryan	$ 90,000
Michael R. Webb	36,000
Eric D. Tanzberger	24,000
Sumner J. Waring, III	22,500

| (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 Aggregate Balance at Last FYE includes amounts previously
reported as compensation in the Summary Compensation Table for
years prior to 2009 as follows: |

R.L. Waltrip
Thomas L. Ryan	$ 3,278,089
Michael R. Webb	2,347,131
Eric D. Tanzberger	616,568
Sumner J. Waring, III	413,529

The Executive Deferred Compensation Plan is a supplemental retirement and deferred compensation plan for executive officers. The plan allows for Company contributions, including contributions of 7.5% and performance-based contributions targeted at 7.5%, with a range of 0% to 15% based on achievement of Company performance measures established in the first quarter of each year. These are the same performance measures described in “Compensation Discussion and Analysis — Annual Performance-Based Incentives Paid in Cash.” The percentages are applied to the combined eligible compensation of base salary and annual performance-based incentive paid in cash. The plan also allows for the restoration of Company matching contributions that are prohibited in the Company’s 401(k) plan due to tax limits on contributions to qualified plans.

Company contributions to the plan generally vest over three years. If a participant is terminated by the Company not for cause, dies, becomes disabled, retires on or after age 60 with ten years of service or age 55 with 20 years of

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service, or in the event of a change of control of the Company as defined in the plan, the participant immediately vests 100% in the Company’s contributions.

In addition, the plan allows for an individual participant to defer portions of his or her base salary, annual performance-based incentives paid in cash and performance units. The participant may defer up to 80% of salary and up to 90% of the other elements of compensation. All of these amounts are 100% vested.

Each participant may elect measurement funds, which are based on certain mutual funds, for the purpose of crediting or debiting additional amounts to his or her account balance. A participant may change his or her measurement funds election at any time. The Compensation Committee determines which measurement funds will be available for participants. For 2009, the available measurement funds, and their respective returns, were as follows:

	2009 Calendar
Fund Name	Year Return
Davis Value	31.16 %
Fidelity VIP Contrafund	35.71
Fidelity VIP Index 500	26.61
Fidelity VIP Mid Cap	40.09
Fidelity VIP Overseas	26.53
Janus Aspen Enterprise Portfolio	44.83
Janus Aspen Series Forty	46.33
LVIP Baron Growth Opportunities Fund	38.33
MainStay VP Cash Management	0.05
MainStay VP High Yield Corporate Bond	42.82
MainStay VP ICAP Select Equity	29.41
Morgan Stanley UIF Emerging Markets Debt	30.21
NYLIC General Account Fund	4.04
PIMCO VIT Real Return Bond	18.39
PIMCO VIT Total Return bond	14.07
Royce Small-Cap	35.20
T. Rowe Price Equity Income	25.60
T. Rowe Price Limited-Term Bond	8.30

A participant may generally elect to receive distribution at termination in a lump sum or in installments of up to five to fifteen years. With regard to the participant’s contributions, the participant may schedule other distribution dates. For death, disability or change of control of the Company, the participant is entitled to a lump sum payment within 60 days.

Executive Employment Agreements

Current Executive Officers

The Company has employment agreements with the Named Executive Officers. These agreements have current terms expiring December 31, 2010. Annually, the Company may extend each agreement for an additional year unless notice of nonrenewal is given by either party. If such notice of nonrenewal is given by the Company or if notice is not given of the Company’s decision to authorize renewal, the employment agreement will not be extended.

These agreements provide for base salaries which may be increased by the Compensation Committee in its sole discretion, and the right to participate in bonus and other compensation and benefit arrangements. As of March 15, 2010, the base salaries for Messrs. R.L. Waltrip, Ryan, Webb, Tanzberger and Waring were $950,000, $950,000, $625,000, $425,000 and $425,000, respectively.

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Pursuant to the agreements, in the event of termination of employment due to the executive’s voluntary termination, the executive will be entitled to receive (i) salary earned to the date of termination and (ii) any incentive compensation that had been determined by the Compensation Committee but not yet paid. In the event of termination of employment due to disability or death, the executive or his estate will be entitled to receive (i) his salary through the end of his employment term, and (ii) a pro rata portion (based on the portion of the year elapsed at the date of termination) of the annual performance-based incentive bonus the executive would have received if he had remained an employee through his employment term (“Pro Rated Bonus”). In the event of termination by the Company without cause, the executive will be entitled to receive (i) bi-weekly salary continuation payments based on his rate of salary for two years, (ii) Pro Rated Bonus, and (iii) continuation of health benefits for eighteen months. In the event of termination by the Company for cause, the executive will not be entitled to any further payments under the employment agreement. “Cause” includes conviction of a crime involving moral turpitude, failure to follow Company policy or directives, willful and persistent failure to attend to his duties, gross negligence or willful misconduct, and violation of his obligations under the employment agreement.

In the event of a change of control of the Company (as defined below) and the subsequent termination of the executive without cause or voluntary termination by the executive for Good Reason (as defined below) during the two years following the change of control, the executive will be entitled to the following.

| • | A lump sum equal to three, multiplied by the sum of the
executive’s annual salary plus target annual
performance-based incentive bonus (“Target Bonus”). |
| --- | --- |
| • | An amount equal to his target annual performance-based incentive
bonus, prorated to the date of the change of control
(“Partial Bonus”). |
| • | Continuation of health benefits for eighteen months. |

“Good Reason” means relocation of the executive by more than 50 miles, reduction in base salary or bonus or other compensation programs, or reduction in the executive’s aggregate benefits.

If any payments under the employment agreement or under the benefit plans of the Company would subject the executive to any excise tax under the Internal Revenue Code (“IRC”), the executive will also be entitled to receive an additional payment in an amount such that, after the payment of all taxes (income and excise), he will be in the same after-tax position as if no excise tax had been imposed. The agreements have incorporated language requiring compliance with IRC § 409A which could result in delays of certain of the payments discussed above.

Upon termination of his employment, each executive (other than Mr. R.L. Waltrip) will be subject, at the Company’s option, to a non-competition obligation for a period of one year which the Company may extend for one additional year. If the Company elects to have the non-competition provisions apply, the Company will make payments to the executive during the non-competition period at a rate equal to his base salary at the time of termination, unless such termination was for cause or the executive terminates his employment (other than within twenty-four months after a change of control for certain specified reasons), in which case the executive will be bound by the non-competition provisions without the Company making the corresponding payments.

With regard to Mr. R.L. Waltrip, his employment agreement provides that he will be subject to a 10 year non-competition obligation. However, SCI will not be required to make any further payments to Mr. Waltrip for the non-competition obligation.

Change of Control

Under the employment agreements, a change in control would include any of the following:

• Any individual, entity or group acquires 20 percent or more of our common stock or voting securities (excluding certain acquisitions involving SCI or an SCI benefit plan or certain reorganization, merger or consolidation transactions);

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| • | Our incumbent directors cease to constitute a majority of our
directors (our incumbent directors include persons nominated by
the existing Board or Executive Committee); |
| --- | --- |
| • | Our shareholders approve certain reorganizations, mergers or
consolidations; or |
| • | Our shareholders approve certain liquidations, dissolutions or
sales of substantially all assets of SCI. |

However, such a reorganization, merger, consolidation or sale of assets would not constitute a change of control if:

(1) More than 60% of the surviving corporation’s common stock and voting shares is owned by our shareholders (in the same proportion that our shareholders owned shares in SCI before the transaction);

(2) No person (excluding SCI, any benefit plan of SCI or the surviving corporation, and a person owning 20% of SCI common stock or voting securities before the transaction) owns 20% or more of the common stock or voting shares of the surviving corporation; and

(3) A majority of the surviving corporation’s Board members were incumbent SCI directors when the transaction agreement was entered.

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Potential Payments Upon Termination

The Company has entered into certain agreements and maintains certain plans that will 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 will be entitled to receive his benefits described in the preceding tables titled “Pension Benefits” and “Nonqualified Deferred Compensation in 2009.”

R.L. Waltrip

			Change of
			Control:
		Involuntary	Involuntary or
Executive Benefits and Payments	Voluntary	Not for Cause	Good Reason
Upon Termination as of 12-31-09	Termination	Termination	Termination	Disability	Death
Compensation:
Base Salary		$ 1,900,000	$ 2,850,000	$ 950,000	$ 950,000
Annual Performance-Based Incentive Paid in Cash
Target Bonus			2,850,000
Pro Rated Bonus		1,507,175		1,507,175	1,507,175
Partial Bonus			950,000
Long Term Incentives
Performance Units
2007-2009 (performance period)
2008-2010 (performance period)			723,600
2009-2011 (performance period)	355,533	355,533	533,300	355,533	355,533
Stock Options
Unvested and Accelerated	$ 1,686,643	$ 1,686,643	$ 1,686,643	$ 1,686,643	$ 1,686,643
Restricted Stock
Unvested and Accelerated	$ 1,387,386	1,387,386	1,387,386	1,387,386	1,387,386
Other Benefits:
Nonqualified Deferred Compensation
Unvested and Accelerated
Post-retirement Health Care		23,264	23,264
Life Insurance Proceeds					1,450,000
Disability Benefits				234,811
280G Tax Gross-up			0
Total:	$ 3,429,562	$ 6,860,001	$ 11,004,193	$ 6,121,548	$ 7,336,737

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Thomas L. Ryan

			Change of
			Control:
		Involuntary	Involuntary or
Executive Benefits and Payments	Voluntary	Not for Cause	Good Reason
Upon Termination as of 12-31-09	Termination	Termination	Termination	Disability	Death
Compensation:
Base Salary		$ 1,800,000	$ 2,700,000	$ 900,000	$ 900,000
Annual Performance-Based Incentive Paid in Cash
Target Bonus			2,700,000
Pro Rated Bonus		1,427,850		1,427,850	1,427,850
Partial Bonus			900,000
Long Term Incentives
Performance Units
2007-2009 (performance period)
2008-2010 (performance period)			1,221,000
2009-2011 (performance period)		600,000	900,000	600,000	600,000
Stock Options
Unvested and Accelerated		2,809,447	2,809,447	2,809,447	2,809,447
Restricted Stock
Unvested and Accelerated		2,370,194	2,370,194	2,370,194	2,370,194
Other Benefits:
Nonqualified Deferred Compensation
Unvested and Accelerated		222,979	222,979	222,979	222,979
Post-retirement Health Care		28,153	28,153
Life Insurance Proceeds					6,300,000
Disability Benefits				15,019,280
280G Tax Gross-up			0
Total:		$ 9,258,623	$ 13,851,773	$ 23,349,750	$ 14,630,470

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Michael R. Webb

			Change of
			Control:
		Involuntary	Involuntary or
Executive Benefits and Payments	Voluntary	Not for Cause	Good Reason
Upon Termination as of 12-31-09	Termination	Termination	Termination	Disability	Death
Compensation:
Base Salary		$ 1,200,000	$ 1,800,000	$ 600,000	$ 600,000
Annual Performance-Based Incentive Paid in Cash
Target Bonus			1,800,000
Pro Rated Bonus		951,900		951,900	951,900
Partial Bonus			600,000
Long Term Incentives
Performance Units
2007-2009 (performance period)
2008-2010 (performance period)			565,300
2009-2011 (performance period)		277,800	416,700	277,800	277,800
Stock Options
Unvested and Accelerated		1,287,989	1,287,989	1,287,989	1,287,989
Restricted Stock
Unvested and Accelerated		1,106,477	1,106,477	1,106,477	1,106,477
Other Benefits:
Nonqualified Deferred Compensation
Unvested and Accelerated		159,613	159,613	159,613	159,613
Post-retirement Health Care		28,153	28,153
Life Insurance Proceeds					4,310,000
Disability Benefits				7,336,265
280G Tax Gross-up			0
Total:		$ 5,011,932	$ 7,764,232	$ 11,720,044	$ 8,693,779

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Eric D. Tanzberger

			Change of
			Control:
		Involuntary	Involuntary or
Executive Benefits and Payments	Voluntary	Not for Cause	Good Reason
Upon Termination as of 12-31-09	Termination	Termination	Termination	Disability	Death
Compensation:
Base Salary		$ 800,000	$ 1,200,000	$ 400,000	$ 400,000
Annual Performance-Based Incentive Paid in Cash
Target Bonus			720,000
Pro Rated Bonus		380,760		380,760	380,760
Partial Bonus			240,000
Long Term Incentives
Performance Units
2007-2009 (performance period)
2008-2010 (performance period)			237,400
2009-2011 (performance period)		116,667	175,000	116,667	116,667
Stock Options
Unvested and Accelerated		544,612	544,612	544,612	544,612
Restricted Stock
Unvested and Accelerated		461,654	461,654	461,654	461,654
Other Benefits:
Nonqualified Deferred Compensation
Unvested and Accelerated		83,294	83,294	83,294	83,294
Post-retirement Health Care		27,973	27,973
Life Insurance Proceeds					2,240,000
Disability Benefits				5,885,817
280G Tax Gross-up			0
Total:		$ 2,414,960	$ 3,689,933	$ 7,872,804	$ 4,226,987

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Sumner J. Waring, III

			Change of
			Control:
		Involuntary	Involuntary or
Executive Benefits and Payments	Voluntary	Not for Cause	Good Reason
Upon Termination as of 12-31-09	Termination	Termination	Termination	Disability	Death
Compensation:
Base Salary		$ 750,000	$ 1,125,000	$ 375,000	$ 375,000
Annual Performance-Based Incentive Paid in Cash
Target Bonus			675,000
Pro Rated Bonus		391,163		391,163	391,163
Partial Bonus			225,000
Long Term Incentives
Performance Units
2007-2009 (performance period)
2008-2010 (performance period)			203,500
2009-2011 (performance period)		111,133	166,700	111,133	111,133
Stock Options
Unvested and Accelerated		527,409	527,409	527,409	527,409
Restricted Stock
Unvested and Accelerated		434,348	434,348	434,348	434,348
Other Benefits:
Nonqualified Deferred Compensation
Unvested and Accelerated		76,844	76,844	76,844	76,844
Post-retirement Health Care		28,153	28,153
Life Insurance Proceeds					2,100,000
Disability Benefits				5,472,299
280G Tax Gross-up			0
Total:		$ 2,319,050	$ 3,461,954	$ 7,388,196	$ 4,015,897

Below is a description of the assumptions that were used in creating the tables above.

Base Salary and Annual Performance-Based Incentive Paid in Cash

The amounts of these elements of compensation are governed by the employment agreements. See “Executive Employment Agreements” herein above. At December 31, 2009, each of the employment agreements had a term expiring December 31, 2010. In addition, the meaning of “change of control” as used in the tables is set forth in the employment agreements.

Performance Units, Stock Options and Restricted Stock

The amounts pertaining to the performance units, stock options and restricted stock are governed by the terms of their respective awards. See the discussion following the table “Grants of Plan-Based Awards” herein above. With respect to unvested performance units, restricted stock and stock options, the tables assume that

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accelerated vesting for voluntary termination at retirement occurs in the discretion of the Compensation Committee at age 60 with ten years of service or at age 55 with 20 years of service.

As discussed previously, performance units vest 100% upon a change of control and are paid at target. For other terminations (including death, disability, certain retirements and termination not for cause), the performance units become vested pro rata, but are not paid until after the expiration of their three year periods. For purposes of the tables above, these pro rata payments are estimated based upon calculations which assume the performance period of each performance unit ended December 31, 2009. Regarding the performance units for the 2007-2009 performance period, the amounts reported in the columns represent the actual 0 payout of awards at the end of the three year performance period (and therefore do not include any enhancements due to termination of employment).

For stock option amounts, the tables provide values for options which would become vested upon a termination event. The values are based upon the difference between the closing market price of SCI stock of $8.19 per share on December 31, 2009, and the actual exercise prices of the options. The amounts of unvested options and their exercise prices are set forth in the table “Outstanding Equity Awards at Fiscal Year-End 2009” herein above.

For restricted stock amounts, the tables provide values for restricted stock which would become vested upon termination events shown in the tables. The values are calculated by multiplying the unvested amounts of restricted stock by $8.19, the closing market price of SCI stock on December 31, 2009. The amounts of unvested restricted stock are set forth in the table “Outstanding Equity Awards at Fiscal Year-End 2009” herein above.

Other Benefits

In the tables, the amounts of Nonqualified Deferred Compensation are the unvested amounts pertaining to each executive’s interest in the Executive Deferred Compensation Plan. For a discussion of vesting, see the discussion following the table “Nonqualified Deferred Compensation in 2009” herein above.

The amounts of Post-retirement Health Care represent Company estimates of the value of these benefits.

The amounts of Disability Benefits are based upon the present value of the future stream of disability payments the executive would receive from the Company and/or insurance policies if he remained disabled for the maximum period covered. The present value calculations were made using an assumed interest rate of 4.05% per year.

280G Tax Gross-up

Upon a change in control of the Company the executive may be subject to certain excise taxes pursuant to Section 280G of the Internal Revenue Code. The Company has agreed to reimburse the executive for all excise taxes that are imposed on the executive under Section 280G and any income and excise taxes that are payable by the executive as a result of any reimbursements for Section 280G excise taxes. The total 280G tax gross-up amount in the above tables assumes that the executive is entitled to a full reimbursement by the Company of (i) any excise taxes that are imposed upon the executive as a result of the change in control, (ii) any income and excise taxes imposed upon the executives as a result of the Company’s reimbursement of the excise tax amount and (iii) any additional income and excise taxes that are imposed upon executive as a result of the Company’s reimbursement of the executive for any excise or income taxes. For purposes of the 280G calculation it is assumed that no amounts will be discounted as attributable to reasonable compensation and no value will be attributed to executive executing a non-competition agreement.

Compensation of Directors

The compensation of directors is described under “Election of Directors — Director Compensation” herein above.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Board members who served on the Compensation Committee during 2009 were Messrs. Alan R. Buckwalter, III, Anthony L. Coelho, Malcolm Gillis, Victor L. Lund and John W. Mecom, Jr. No member of the Compensation Committee in 2009 or at present was or is an officer or employee of the Company or any of its subsidiaries, or was formerly an officer of the Company or any of its subsidiaries or had any relationships requiring disclosure by the Company.

CERTAIN TRANSACTIONS

For 2009, SCI paid $125,941 in compensation and 401(k) plan contributions to Mr. Kevin Mack in his capacity as an employee of the Company. Mr. Mack is the brother of Mr. Stephen M. Mack, Senior Vice President Middle Market Operations of the Company.

The family of Mr. Sumner J. Waring, III, Senior Vice President Major Market Operations, has had a relationship with SCI since 1996, when the family sold its business to SCI. For 2009, the Company paid $91,500 to Mr. Waring’s parents for services under a consulting agreement, and in February 2010 the Company authorized an extension of the consulting agreement through April 2011. In 2009, the Company leased office space through April 2010 from a company owned by Mr. Waring’s parents and paid rent in the amount of $12,684 in 2009. In February 2010, the Company authorized a twelve month extension of the lease through April 2011. In addition, Mr. Waring’s parents own a company that leases funeral homes to the Company under a lease expiring in 2016 for which the Company paid rent of $200,000 in 2009.

Barrow, Hanley, Mewhinney & Strauss, Inc. (“BHMS”) is a holder of more than 5% of the outstanding shares of Common Stock of the Company. During 2009, BHMS was one of the investment managers of portfolios of independent trusts which hold funds collected from consumers in connection with preneed funeral sales and preneed cemetery sales. The process by which such portfolio managers are chosen and overseen is outlined above under the section entitled “Board of Directors — Board Committees — Investment Committee”. During 2009, BHMS managed on average approximately $177,423,909 for such trusts and was managing approximately $216,568,504 at the end of 2009. Such trusts are prohibited from investing in SCI stock or other SCI securities. For such services, the trusts paid fees of $482,885 to BHMS for 2009. It is expected that BHMS will continue to act as an investment manager for such trusts during 2010.

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 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 Chairman. Then, the committee or the Chairman will make a determination whether the transaction is consistent with the best interests of the Company and our shareholders. In February 2009, the Nominating and Corporate Governance Committee, reviewed and approved the transactions reported above.

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VOTING SECURITIES AND PRINCIPAL HOLDERS

The table below sets forth information with respect to any person who is known to the Company as of March 15, 2010 to be the beneficial owner of more than five percent of the Company’s Common Stock.

Name and Address	Amount — Beneficially	Percent
of Beneficial Owner	Owned	of Class
FMR LLC, Fidelity Management & Research Company,
Fidelity Advisor Leveraged Company Stock Fund, Fidelity Leveraged Company Stock
Fund and Edward C. Johnson, 3d	36,602,714	(1)	14.5 %
82 Devonshire Street Boston, Massachusetts 02109
Barrow, Hanley, Mewhinney & Strauss, Inc.	26,714,591	(2)	10.5 %
2200 Ross Avenue, 31st Floor Dallas, Texas 75201-2761
Vanguard Windsor Funds — Vanguard Windsor II Fund 23-2439132	25,080,100	(3)	9.9 %
(“Windsor II”)
100 Vanguard Blvd Malvern, Pennsylvania 19355
Southeastern Asset Management, Inc., Longleaf Partners Small Cap
Fund and O. Mason Hawkins	14,909,616	(4)	5.9 %
6410 Poplar Ave., Suite 900 Memphis, TN 38119
BlackRock, Inc.	13,780,114	(5)	5.4 %
40 East 52nd Street New York, NY 10022

| (1) | Based on a filing made by the named companies and person on
February 16, 2010, which reported sole voting power for
584,420 shares, shared voting power for no shares, sole
investment power for 36,602,714 shares and shared
investment power for no shares. |
| --- | --- |
| (2) | Based on a filing made by Barrow, Hanley, Mewhinney &
Strauss, Inc. on February 9, 2010, which reported sole
voting power for 1,206,155 shares, shared voting power for
25,508,436 shares, sole investment power for
26,714,591 shares and shared investment power for no
shares. BHMS has informed the Company that the shares reported
in the table as beneficially owned by BHMS include all
25,080,100 shares reported in the table as beneficially
owned by Windsor II, for whom BHMS is an investment manager. |
| (3) | Based on a filing made by the named fund on February 4,
2010, which reported sole voting power for
25,080,100 shares, shared voting power for no shares, sole
investment power for no shares and shared investment power for
no shares. BHMS has informed the Company that the shares
reported in the table as beneficially owned by BHMS include all
25,080,100 shares reported in the table as beneficially
owned by Windsor II, for whom BHMS is an investment manager. |
| (4) | Based on a filing made by the named companies and person on
February 5, 2010, which reported sole voting power for no
shares, shared voting power for 14,909,616 shares, sole
investment power for 300,900 shares and shared investment
power for 14,608,716 shares. |
| (5) | Based on a filing made by the named company on January 29,
2010, which reported sole voting power for
13,780,114 shares, shared voting power for no shares, sole
investment power for 13,780,114 shares and shared
investment power for no shares. |

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The table below sets forth, as of March 15, 2010, the amount of the Company’s Common Stock beneficially owned by each Named Executive Officer, each director and nominee for director, and all directors and executive officers as a group, based upon information obtained from such persons. Securities reported as beneficially owned include those for which the persons listed have sole voting and investment power, unless otherwise noted. Securities that have been pledged are disclosed in the notes.

	Shares	Under Options Exercisable	Percent
Name of Individual or Group	Owned	Within 60 Days	of Class
R. L. Waltrip	1,829,513	(1)	970,733	1.1 %
Thomas L. Ryan	885,011		1,430,033	*
Michael R. Webb	517,862		714,732	*
Eric D. Tanzberger	177,842		238,032	*
Sumner J. Waring, III	291,571		254,466	*
Alan R. Buckwalter	87,587	(2)	—	*
Anthony L. Coelho	100,727		—	*
A. J. Foyt, Jr.	195,553	(3)	—	*
Malcolm Gillis	54,697		—	*
Victor L. Lund	177,886		—	*
John W. Mecom, Jr.	100,199		—	*
Clifton H. Morris, Jr.	148,227	(4)	—	*
W. Blair Waltrip	1,705,828	(5)	—	*
Edward E. Williams	260,882		—	*
Executive Officers and Directors as a Group (24 persons)	6,912,336		5,066,518	4.6 %

*	Less than one percent
(1)	Includes 468,384 shares held in trusts under which
Mr. R. L. Waltrip’s three children, as trustees, share
voting and investment powers; Mr. R.L. Waltrip disclaims
beneficial ownership of such shares. These shares are also
included in the shares owned by Mr. W. Blair Waltrip. See
Footnote (5). Also includes 470,133 shares held by trusts
of which Mr. R. L. Waltrip is the trustee having sole
voting and investment powers.
(2)	Includes 6,400 shares held by Mr. Buckwalter as
custodian for family members. Mr. Buckwalter has sole
voting and investment power for such shares and disclaims
beneficial ownership of such shares.
(3)	Includes 17,885 shares held by Mr. Foyt as custodian
for family members. Mr. Foyt has sole voting and investment
power for such shares and disclaims beneficial ownership of such
shares. Also includes 1,125 shares owned by
Mr. Foyt’s wife.
(4)	Includes 4,034 shares owned by Mr. Morris’ wife.
Mr. Morris disclaims beneficial ownership of such shares.
(5)	Includes 253,438 shares held in trusts for the benefit of
Mr. W. Blair Waltrip, and 468,384 shares held in
trusts under which Mr. W. Blair Waltrip, his brother and
his sister are trustees and have shared voting and investment
power and for which Mr. W. Blair Waltrip disclaims 2/3
beneficial ownership. Also includes 105,357 shares held by
other family members or trusts, of which shares Mr. W.
Blair Waltrip disclaims beneficial ownership. Of the shares
attributable to the trusts, 468,384 shares are also
included in the shares owned by Mr. R. L. Waltrip. See
Footnote (1). Also includes 82,000 shares held by a
charitable foundation of which Mr. W. Blair Waltrip is
President.

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REPORT OF THE AUDIT COMMITTEE

The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities to ensure the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications, independence and performance and the performance of the Company’s internal audit function. The Audit Committee’s functions are detailed in the section entitled “Board of Directors — Board Committees — Audit Committee” above. The Audit Committee Charter is available for viewing on the SCI’s home page, www.sci-corp.com, and is also available in print to any shareholder who requests it.

Each member of the Audit Committee is independent and financially literate, as defined by the New York Stock Exchange rules, and is limited to serving on no more than three audit committees of public companies. The Board of Directors has appointed, and the Audit Committee has acknowledged, Mr. Victor L. Lund, Chairman of the Audit Committee, as the Audit Committee Financial Expert as defined by the rules of the Securities and Exchange Commission.

The Audit Committee has reviewed and discussed the audited financial statements with management of the Company and with the independent registered public accounting firm. Specifically, the Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has also received the written disclosures in the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s independence, and has discussed with the independent registered public accounting firm their independence. The Audit Committee has also reviewed the independence of the independent registered public accounting firm considering the compatibility of non-audit services with maintaining their independence from the Company. Based on the preceding review and discussions contained in this paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE:

Victor L. Lund, Chair

Alan R. Buckwalter, III

Malcolm Gillis

Clifton H. Morris

Edward E. Williams

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PROPOSAL TO APPROVE THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors of the Company has recommended PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) to serve as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2010. PricewaterhouseCoopers and its predecessors have audited the Company’s accounts since 1993. A representative of PricewaterhouseCoopers is expected to be present at the Annual Meeting, and such representative will have the opportunity to make a statement if he or she desires to do so and be available to respond to appropriate questions at such meeting. The Audit Committee wishes to submit the selection of PricewaterhouseCoopers for shareholders’ approval at the Annual Meeting. If the shareholders do not give approval, the Audit Committee will reconsider its selection.

Audit Fees and All Other Fees

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent registered public accounting firm. The policy permits the Audit Committee to grant pre-approval for specifically defined audit and non-audit services. All of the fees set forth below were pre-approved by the Audit Committee.

Audit Fees

Fees for audit services were $4,805,000 in 2009 and $4,800,000 in 2008, including fees associated with the annual audit of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, the reviews of the Company’s quarterly reports on Form 10-Q, and fees related to statutory audits.

Audit- Related Fees

Fees for audit-related services totaled $385,400 in 2009 and $2,074,000 in 2008. Audit-related services in 2009 were primarily related to consulting fees related to the planned Keystone acquisition and certain new accounting pronouncements. Audit-related services in 2008 were primarily related to an effectiveness review of certain financial processes and related controls.

Tax

Fees for tax services, including tax compliance, tax advice and tax planning, were $838,500 in 2009 and $619,200 in 2008. Fees for tax services in 2009 and 2008 primarily related to assistance provided in the completion of a tax basis balance sheet.

All Other Fees

Fees for all other services not described above were approximately $3,200 in 2009 and $3,200 in 2008. Amounts for both years were for research database licensing fees.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” APPROVAL OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY.

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OTHER MATTERS

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal year and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year, and written representations from reporting persons that no Form 5 was required, the Company believes that all required Form 3, 4 and 5 reports for transactions occurring in 2009 were timely filed.

Proxy Solicitation

In addition to solicitation by mail or internet, further solicitation of proxies may be made by mail, facsimile, telephone or oral communication following the original solicitation by directors, officers and regular employees of the Company who will not be additionally compensated therefore, or by its transfer agent. The expense of such solicitation will be borne by the Company and will include reimbursement paid to brokerage firms and other custodians, nominees and fiduciaries for their expenses in forwarding solicitation material regarding the Annual Meeting to beneficial owners.

Other Business

The Board of Directors of the Company is not aware of other matters to be presented for action at the Annual Meeting of Shareholders; however, if any such matters are properly presented for action, it is the intention of the persons named in the enclosed form of proxy to vote in accordance with their judgment.

Submission of Shareholder Proposals

Any proposal to be presented by a shareholder at the Company’s 2011 Annual Meeting of Shareholders must be received by the Company by December 2, 2010, so that it may be considered by the Company for inclusion in its proxy statement relating to that meeting.

Pursuant to the Company’s Bylaws, any holder of Common Stock of the Company desiring to bring business before the Company’s 2011 Annual Meeting of Shareholders in a form other than a shareholder proposal in accordance with the preceding paragraph must give advance written notice in accordance with the Bylaws that is received by the Company, addressed to the Secretary, no earlier than January 13, 2011 and no later than February 2, 2011. Any notice pursuant to this or the preceding paragraph should be addressed to the Secretary, Service Corporation International, 1929 Allen Parkway, P.O. Box 130548, Houston, Texas 77219-0548.

To avoid unnecessary expense, please return your proxy regardless of the number of shares that you own. Simply date, sign and return the enclosed proxy in the enclosed business reply envelope. Thank you.

Service Corporation International

1929 Allen Parkway

P.O. Box 130548

Houston, Texas 77219-0548

April 1, 2010

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Annex A

COMPARISON GROUP COMPANIES From Towers Watson 2007 Executive Compensation Database

3M — AAI Abbott Laboratories Accenture ACH Food Advanced Medical Optics Advanced Micro Devices ADVO Aerojet Air Products and Chemicals Alcatel USA Alcoa Alcon Laboratories Allergan Alliant Techsystems Alstom Power Altana Pharma Altria Group America Online American Airlines American Standard Ameron AMETEK Amgen Ann Taylor Stores Apple Computer Applied Materials ARAMARK ArvinMeritor Ashland AstraZeneca AT&T Austin Industries Automatic Data Processing Avaya Avery Dennison BAE Systems — CNI Division Barnes Group Barrick Baxter International Bayer Bayer CropScience Beckman Coulter BellSouth Best Buy Big Lots Black & Decker Bob Evans Farms Boehringer Ingelheim Boeing Boston Scientific Bracco Diagnostics Brady Brinker International DuPont Eastman Chemical Eaton Purdue Pharma QLT QUALCOMM Qwest Communications Ralcorp Holdings Raytheon Revlon Reynolds American Reynolds and Reynolds Rich Products Rinker Materials Rio Tinto RISO Robert Bosch Roche Diagnostics Roche Palo Alto Rockwell Automation Rockwell Collins Rohm and Haas Russell Corporation S.C. Johnson Sabre Safeway Sanofi-Aventis	eBay Ecolab EDS Elan Pharmaceuticals Eli Lilly EMC EMCOR Group Emdeon Emerson EnCana Oil & Gas USA Engelhard Equifax Fairchild Controls FANUC Robotics America FANUC Robotics America Federated Department Stores Fleetwood Enterprises Fluke Fluor Ford Forest Laboratories Fortune Brands Freightliner G&K Services Gap Gartner GATX Genentech General Dynamics General Mills General Motors Genzyme Georgia Gulf Gilead Sciences GlaxoSmithKline Goodrich Goodyear Tire & Rubber Gorton’s GROWMARK GTECH H.B. Fuller H.J. Heinz Haemonetics Harley-Davidson Harman International Industries Harsco Hasbro Hawaiian Telecom HBO Herbalife International of America Hercules Herman Miller Hershey Foods Hess Hewlett-Packard Hexcel Schering-Plough Schneider Electric Schwan’s Science Applications International Scotts Miracle-Gro Seagate Technology Sherwin-Williams Siemens Sigma-Aldrich Sirius Satellite Radio Sodexho Solvay America Solvay Pharmaceuticals Sonoco Products Sony Electronics Sports Authority Springs Global Sprint Nextel St. Jude Medical St. Lawrence Cement Standard Register Staples Starbucks Starwood Hotels & Resorts	Hilton Hotels HNI Hoffmann-La Roche Honeywell Houghton Mifflin Hovnanian Enterprises AC/InterActive Corp IBM ICI Paints North America IDEX IKON Office Solutions IMS Health Ingersoll-Rand Intel InterContinental Hotels International Flavors & Fragrances International Paper International Truck & Engine Irving Oil Itochu International ITT — Corporate ITT — Defense ITT — Motion and Flow Control J.C. Penney Company J.M. Smucker J.R. Simplot Jack in the Box Jacobs Engineering Jarden Corporation JM Family John Crane Johns-Manville Johnson & Johnson Johnson Controls Jostens Kaman Industrial Technologies KB Home Kellogg Kennametal Kerr-McGee Kimberly-Clark King Pharmaceuticals Kinross Gold Kohler Kraft Foods Lafarge North America Land O’Lakes Lear Lexmark International Lorillard Lucent Technologies Marriott International Martin Marietta Materials Mary Kay Masco McDermott Steelcase Sun Microsystems SunGard Data Systems Sunoco Syngenta TAP Pharmaceuticals Target TDS Telecom Terex Texas Instruments Textron Thomas & Betts Thomson Time Warner Time Warner Cable Toro Tupperware Tyco Electronics UCB Unilever United States Union Pacific Unisys United Parcel Service United States Cellular	McDonald’s McGraw-Hill MDS Laboratory Service MeadWestvaco Medco Health Solutions Media General MedImmune Medtronic Merck Meredith Metaldyne Methode Electronics Microsoft Milacron Millennium Pharmaceuticals Millipore Mine Safety Appliances Mission Foods Modine Manufacturing Molex Molson Coors Brewing Monaco Coach Motorola MSC Industrial Direct Nalco National Semiconductor National Starch & Chemical NCS Pearson Nestle USA NIKE Noranda Aluminum Norfolk Southern Nortel Networks Northrop Grumman Novartis Novartis Consumer Health Novartis Pharmaceuticals Novo Nordisk Pharmaceuticals Occidental Petroleum Omnova Solutions Organon Packaging Corporation of America Panasonic Corporation of North America Par Pharmaceutical Parker Hannifin Parsons PepsiCo PerkinElmer Pernod Ricard USA Pfizer Phelps Dodge Philips Electronics North America Plexus PPG Industries Procter & Gamble ProQuest United Stationers United Technologies USG Valero Energy Verizon Verizon Wireless Vertex Pharmaceuticals Viacom Vistar Visteon Vulcan Materials W.R. Grace Walt Disney Washington Group Waste Management Watson Pharmaceuticals Wendy’s International Westinghouse Savannah River Weyerhaeuser Wm. Wrigley Jr. Wyeth Xerox Yahoo! Yum! Brands

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Annex B

2010 REFERENCE GROUP Companies With Revenue of $1-3 Billion

A.O. Smith Aeropostale American Crystal Sugar AMETEK Armstrong World Industries Arysta LifeScience North America Beckman Coulter Bio-Rad Laboratories Blyth Bob Evans Farms Brady Brown-Forman CACI International Callaway Golf Carlson Companies Carmeuse Lime & Stone Carpenter Technology Catalent Pharma Solutions CDI Celgene Century Aluminum Cephalon CompuCom Systems ConvaTec Convergys Covance Crown Castle Cubic Deluxe Dentsply Donaldson E.W. Scripps EMI Music Endo Pharmaceuticals Equifax Exterran First Solar Frontier Airlines G&K Services GAF Materials Garmin GATX General Atomics GEO Group Getty Images GTECH H.B. Fuller Harland Clarke Hayes-Lemmerz Herman Miller HNI HNTB Horizon Lines Houghton Mifflin Hovnanian Enterprises Hunt Consolidated IDEXX Laboratories IMS Health Intercontinental Hotels International Flavors & Fragrances International Game Technology Irvine Company J. Crew J.M. Smucker Jack in the Box JetBlue Kaman Industrial Technologies Kansas City Southern KB Home Kimco Realty Kinross Gold KLA-Tencor L.L. Bean Life Touch Magellan Midstream Partners Martin Marietta Materials Mary Kay McClatchy Metavante Technologies MetroPCS Communications Millipore Mine Safety Appliances MSC Industrial Direct New York Times Noranda Aluminum Novell Omnova Solutions Papa John’s Parametric Technology Perot Systems Plexus Polaris Industries PolyOne Purdue Pharma Quintiles R.H. Donnelley Ralcorp Holdings Rayonier Reader’s Digest Regal-Beloit RF Micro Devices Safety-Kleen Systems SAS Institute Schreiber Foods Schwan’s Sensata Technologies Shire Pharmaceuticals Stantec* Steelcase Sundt Construction TeleTech Holdings Tellabs Teradata Terra Industries Thomas & Betts Timex Toro Tupperware United Rentals Universal Studios Orlando Viad Virgin Mobile USA W.R.Grace Watson Pharmaceuticals Zale

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Annex C

2009 REFERENCE GROUP Companies With Revenue of $1-3 Billion

Company	Ticke	Company	Ticker
Advanced Medical Optics	EYE	International Game Technology	IGT
Alexander & Baldwin	ALEX	Iron Mountain	IRM
American Crystal Sugar	N/A	Irvine Company	N/A
AMETEK	AME	J.M. Smucker	SJM
Ann Taylor Stores	ANN	Jack in the Box	JACK
Applera	ABI	Jostens	N/A
Appleton Papers	N/A	Kaman Industrial Technologies	N/A
Arby’s Restaurant Group	N/A	Kennametal	KMT
Arysta LifeScience North America	N/A	Kerzner International	N/A
Barr Laboratories	BRL	KLA-Tencor	KLAC
Beckman Coulter	BEC	Magellan Midstream Partners	MMP
BIC	N/A	Makino	N/A
Biogen Idec	BIIB	Martin Marietta Materials	MLM
Bio-Rad Laboratories	BIO	Mary Kay	N/A
Blyth	BTH	McClatchy	MNI
Bob Evans Farms	BOBE	MDS Pharma Services	N/A
Bracco Diagnostics	N/A	Media General	MEG
Brady	BRC	Metavante Technologies	MV
Burger King	BKC	MetroPCS Communications	PCS
Carpenter Technology	CRS	Millipore	MIL
CashNetUSA	N/A	Monaco Coach	MNC
Catalent Pharma Solutions	N/A	Mueller Water Products	MWA
Celgene	CELG	National Semiconductor	NSM
Cephalon	CEPH	New York Times	NYT
Ceridian	CEN	Noranda Aluminum	N/A
Chesapeake	CHK	Nypro	N/A
COACH	COH	PerkinElmer	PKI
Convergys	CVG	PolyOne	POL
Crown Castle	CCI	Purdue Pharma	N/A
Cubic	CUB	Quintiles	N/A
Day & Zimmermann	N/A	Ralcorp Holdings	RAH
Deluxe	DLX	Rayonier	RYN
Dentsply	XRAY	Revlon	REV
Discovery Communications	DISCA	RF Micro Devices	RFMD
Donaldson	DCI	Rich Products	N/A
E.W. Scripps	SSP	Safety-Kleen Systems	N/A
Endo Pharmaceuticals	ENDP	SAS Institute	N/A
Equifax	EFX	Schreiber Foods	N/A
Exterran	EXH	Scotts Miracle Gro	SMG
Fleetwood Enterprises	N/A	Sensata Technologies	N/A
Flint Group USA	N/A	Shire Pharmaceuticals	N/A
G&K Services	GKSRA	Sigma-Aldrich	SIAL
GATX	GMT	Sirius Satellite Radio	SIRI
General Atomics	N/A	Smith & Nephew	N/A
GEO Group	GEO	Springs Global US	N/A
Getty Images	GYI	Stantec	STN
Greif	GEF	Steelcase	SCS
GTECH	GTK	Stewart & Stevenson	N/A
H.B. Fuller	FUL	TeleTech Holdings	TTEC
Harland Clarke	N/A	Teradata	TDC
Hayes-Lemmerz	HAYZ	Terra Industries	TRA
Hercules	HPC	Thomas & Betts	TNB
Herman Miller	MLHR	Toro	TIC
HNI	HNI	Tupperware	TUP
Hospira	HSP	Underwriters Laboratories	N/A
Houghton Mifflin	N/A	Uni-Select USA	N/A
Hunt Consolidated	N/A	Virgin Mobile USA	VM
IDEX	IEX	Vistar	N/A
IMS Health	RX	Vulcan Materials	VMC
International Flavors & Fragrances	IFF	Wendy’s International	WEN

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Annex D

2008 REFERENCE GROUP Companies With Revenue of $1-3 Billion

A.O. Smith Corp.	HNI Corp.
Advanced Medical Optics Inc.	Hospira Inc.
Alexander & Baldwin Inc.	IDEX Corporation
Allergan Inc.	International Flavors & Fragrances Inc.
American Greetings Corp.	International Game Technology
Ann Taylor Stores Corp.	Invitrogen Corp.
Applera Corp-Applied Biosystems Group	Iron Mountain Inc.
Armstrong World Industries Inc.
Beckman Coulter Inc.	J.M. Smucker Co. (The)
Bob Evans Farms Inc.	Jack in the Box Inc.
Brady Corp.	Kaman Corp
Burger King Holdings Inc.	Kennametal Inc.
Callaway Golf Co.	King Pharmaceuticals Inc.
Carpenter Technology Corp.	Level 3 Communications Inc.
Celgene Corp.	Louisiana-Pacific Corp.
Cephalon Inc.	Magellan Midstream Partners LP
Chesapeake Corp.	Martin Marietta Materials Inc.
Cincinnati Bell Inc.	Media General Inc.
Coach Inc.	Millipore Corp.
Comfort Systems USA Inc.	MSC Industrial Direct Co. Inc.
Constar International Inc.	National Semiconductor Corp.
Cooper Tire & Rubber Co.	New York Times Co. (The)
Dade Behring Holdings Inc.	PerkinElmer Inc.
DENTSPLY International Inc.	Plexus Corp.
Discovery Holding Co.	Plum Creek Timber Co. Inc.
Dollar Thrifty Automotive Group Inc.	PolyOne Corp.
Donaldson Co. Inc.	Respironics Inc.
Dow Jones and Co. Inc.	Scotts Miracle Gro Company (The)
Equifax Inc.,	Steelcase Inc.
Fleetwood Enterprises Inc.	Tektronix Inc.
Forest Laboratories Inc.	Tele Tech Holdings Inc.
GATX Corp.	Terra Industries Inc.
Genzyme Corp.	Thomas & Betts Corp.
Gilead Sceiences Inc.	Tiffany & Co.
Global Crossing Ltd.	Toro Co. (The)
Grace (WR) & Co.	Trinity Industries Inc.
H.B. Fuller Co.	Tupperware Brands Corp.
Harman International Industries Inc.	Valmont Industries Inc.
Harsco Corp.	Viad Corp.
Hasbro Inc.	Watson Pharmaceuticals Inc.
Hayes Lemmerz International Inc.	Wendy’s International Inc.
Hercules Inc.	Winnebago Industries Inc.

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Annex E

VALUE LINE GROUP COMPANIES

AMETEK Inc.	McDermott International Inc.
Barnes Group Inc.	Myers Industries Inc.
Brady Corp	National Presto
Carlisle Companies Inc.	Oakley Inc.
Chemed Corp	Parker-Hannifin Corp
Crane Co.	Park Ohio Holdings Corp
Danaher Corp	Pentair Inc.
ESCO Technologies Inc.	SPX Corp
Fortune Brands Inc.	Standex International Corp
GATX Corp	Teleflex Inc.
GenCorp Inc.	Textron Inc.
General Electric	Tyco International Ltd.
Griffon Corp.	United Technologies Corp
Honeywell International Inc.	Valmont Industries Inc.
ITT-Corp	Viad Corp
Kadant Inc.	Walter Industries
Kaman Corp

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Service Corporation International 1929 Allen Parkway P.O. Box 130548 Houston, Texas 77219-0548

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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. 0 0 0 0 0 0 00000565131 R2.09.05.010 For Withhold For All All All Except The Board of Directors recommends that you vote FOR the following: 1. Election of Directors Nominees 01 Alan R. Buckwalter 02 Victor L. Lund 03 John W. Mecom, Jr. SERVICE CORPORATION INTERNATIONAL ATTN: INVESTOR RELATIONS 1929 ALLEN PARKWAY HOUSTON, TX 77019 VOTE BY INTERNET — www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Electronic Delivery of Future PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE — 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR the following proposal(s): For Against Abstain 2 Approval of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal 2010. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. 00000565132 R2.09.05.010

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Form 10-K is/are available at www.proxyvote.com . SERVICE CORPORATION INTERNATIONAL PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS For The Annual Meeting of Shareholders May 12, 2010 The undersigned hereby appoints Thomas L. Ryan, Gregory T. Sangalis and Eric D. Tanzberger, and each or any of them as attorneys, agents and proxies of the undersigned with full power of substitution, for and in the name, place and stead of the undersigned, to attend the annual meeting of shareholders of Service Corporation International (the “Company”) to be held in the York Distributors Association Auditorium, American Funeral Service Training Center, 415 Barren Springs Drive, Houston, Texas 77090 on Wednesday, May 12, 2010, at 9:00 a.m., Houston time, and any adjournment(s) thereof, and to vote thereat the number of shares of Common Stock of the Company which the undersigned would be entitled to vote if personally present as indicated on the reverse side hereof and, in their discretion, upon any other business which may properly come before said meeting. This proxy, when properly executed, will be voted in accordance with your indicated directions. If no direction is made, this proxy will be voted FOR the election of directors and FOR approval of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. Continued and to be signed on reverse side

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