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Exhibit 10.1

EMPLOYMENT AGREEMENT

        THIS AGREEMENT, made effective as of the 7th day of May, 2002, is
between CARRIAGE SERVICES, INC., a Delaware corporation (the "Company"), and
GEORGE J. KLUG, a resident of Kingwood, Texas (the "Employee").

        1.    Employment Term.    The Company hereby continues the employment of
the Employee for a term commencing effective on the date first above written
and, subject to earlier termination as provided in Section 7 hereof, continuing
until December 31, 2004 (such term being herein referred to as the "term of this
Agreement"). The Employee agrees to accept such employment and to perform the
services specified herein, all upon the terms and conditions hereinafter stated.

        2.    Duties.    The Employee shall serve the Company and shall report
to, and be subject to the general direction and control of the Chief Executive
Officer of the Company or any other officer designated by him. The Employee
shall perform the management and administrative duties of Vice President of
Information Systems and Chief Information Officer of the Company. It is
anticipated that the Employee shall be responsible for the operation and
management of Company's information systems, networks and communications
infrastructure. The Employee shall also serve as Vice President of Information
Systems and Chief Information Officer of any subsidiary of the Company as
requested by the Company, and the Employee shall perform such other duties as
are from time to time assigned to him by the Chief Executive Officer as are not
inconsistent with the provisions hereof.

        3.    Extent of Service.    The Employee shall devote his full business
time and attention to the business of the Company, and, except as may be
specifically permitted by the Company, shall not be engaged in any other
business activity during the term of this Agreement. The foregoing shall not be
construed as preventing the Employee from making passive investments in other
businesses or enterprises, provided, however, that such investments will not
require services on the part of the Employee which would in any way impair the
performance of his duties under this Agreement.

        4.    Compensation.    During the term of this Agreement, the Company
shall pay the Employee a salary of $12,500.00 per full calendar month of service
completed, appropriately prorated for partial months at the commencement and end
of the term of this Agreement. The salary set forth herein shall be payable in
bi-weekly installments in accordance with the payroll policies of the Company in
effect from time to time during the term of this Agreement. The Company shall
have the right to deduct from any payment of all compensation to the Employee
hereunder (x) any federal, state or local taxes required by law to be withheld
with respect to such payments, and (y) any other amounts specifically authorized
to be withheld or deducted by the Employee.

        5.    Benefits.    In addition to the base salary under Section 4, the
Employee shall be entitled to participate in the following benefits during the
term of this Agreement:

        (a)  Consideration for an annual performance-based bonus within the sole
discretion of the Company, as may be recommended by the Chief Executive Officer
and, if applicable, approved by the Compensation Committee of the Company's
Board of Directors.

        (b)  Eligibility for consideration of incentive stock options under the
terms of one or more of the Company's stock option plans.

        (c)  Such other employee benefits as are available generally to
employees of the Company.

        6.    Certain Additional Matters.    The Employee agrees that at all
times during the term of this Agreement and for the two-year period specified in
Section 8:

        (a)  The Employee will not knowingly or intentionally do or say any act
or thing which will or may impair, damage or destroy the goodwill and esteem for
the Company of its suppliers, employees, patrons, customers and others who may
at any time have or have had business relations with the Company.

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        (b)  The Employee will not reveal to any third person any difference of
opinion, if there be such at any time, between him and the management of the
Company as to its personnel, policies or practices.

        (c)  The Employee will not knowingly or intentionally do any act or
thing detrimental to the Company or its business.

        7.    Termination.    

        (a)    Death.    If the Employee dies during the term of this Agreement
and while in the employ of the Company, this Agreement shall automatically
terminate and the Company shall have no further obligation to the Employee or
his estate except that the Company shall pay the Employee's estate that portion
of the Employee's base salary under Section 4 accrued through the date on which
the Employee's death occurred. Such payment of base salary to the Employee's
estate shall be made in the same manner and at the same times as they would have
been paid to the Employee had he not died.

        (b)    Disability.    If during the term of this Agreement, the Employee
shall be prevented from performing his duties hereunder by reason of disability,
and such disability shall continue for a period of six months, then the Company
may terminate this Agreement at any time after the expiration of such six-month
period. For purposes of this Agreement, the Employee shall be deemed to have
become disabled when the Company, upon the advice of a qualified physician,
shall have determined that the Employee has become physically or mentally
incapable (excluding infrequent and temporary absences due to ordinary illness)
of performing his duties under this Agreement. In the event of a termination
pursuant to this paragraph (b), the Company shall be relieved of all its
obligations under this Agreement, except that the Company shall pay to the
Employee (or his estate in the event of his subsequent death) the Employee's
base salary under Section 4 through the date on which such termination shall
have occurred, reduced during such period by the amount of any benefits received
under any disability policy maintained by the Company. All such payments to the
Employee or his estate shall be made in the same manner and at the same times as
they would have been paid to the Employee had he not become disabled.

        (c)    Discharge for Cause.    Prior to the end of the term of this
Agreement, the Company may discharge the Employee for Cause and terminate this
Agreement. In such case this Agreement shall automatically terminate and the
Company shall have no further obligation to the Employee or his estate other
than to pay to the Employee (or his estate in the event of his subsequent death)
that portion of the Employee's salary accrued through the date of termination.
For purposes of this Agreement, the Company shall have "Cause" to discharge the
Employee or terminate the Employee's employment hereunder upon (i) the
Employee's commission of any felony or any other crime involving moral
turpitude, (ii) the Employee's failure or refusal to perform all of his duties,
obligations and agreements herein contained or imposed by law, including his
fiduciary duties, to the reasonable satisfaction of the Company, (iii) the
Employee's commission of acts amounting to gross negligence or willful
misconduct to the material detriment of the Company, or (iv) the Employee's
breach of any provision of this Agreement or uniformly applied provisions of the
Company's employee handbook.

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        (d)    Discharge Without Cause.    Prior to the end of the term of this
Agreement, the Company may discharge the Employee without Cause (as defined in
paragraph (c) above) and terminate this Agreement. In such case this Agreement
shall automatically terminate and the Company shall have no further obligation
to the Employee or his estate, except that the Company shall continue to pay to
the Employee (or his estate in the event of his subsequent death) the Employee's
base salary under Section 4, and shall continue to include the Employee in any
group health and hospitalization insurance program for a period of 12 months
following the date of discharge. All such payments to the Employee or his estate
shall be made in the same manner and at the same times as they would have been
paid to the Employee had he not been discharged.

        8.    Restrictive Covenants.    If the employment of the Employee is
terminated for any reason (including voluntary resignation), then the Employee
agrees that for a period of two (2) years thereafter, he will not, directly or
indirectly:

          (i)  alone or for his own account, or as a officer, director,
shareholder, partner, member, trustee, employee, consultant, advisor, agent or
any other capacity of any corporation, partnership, joint venture, trust, or
other business organization or entity, encourage, support, finance, be engaged
in, interested in, or concerned with (x) any of the companies and entities
described on Schedule I hereto, except to the extent that any activities in
connection therewith are confined exclusively outside the Continental United
States, or (y) any other business having an office or being conducted within a
radius of fifty (50) miles of any funeral home, cemetery or other death care
business owned or operated by the Company or any of its subsidiaries at the time
of such termination;

        (ii)  induce or assist anyone in inducing in any way any employee of the
Company or any of its subsidiaries to resign or sever his or her employment or
to breach an employment contract with the Company or any such subsidiary; or

        (iii)  own, manage, advise, encourage, support, finance, operate, join,
control, or participate in the ownership, management, operation, or control of
or be connected in any manner with any business which is or may be in the
funeral, mortuary, crematory, cemetery or burial insurance business or in any
business related thereto (x) as part of any of the companies or entities listed
on Schedule I, or (y) otherwise within a radius of fifty (50) miles of any
funeral home, cemetery or other death care business owned or operated by the
Company or any of its subsidiaries at the time of such termination.

        Notwithstanding the foregoing, the above covenants shall not prohibit
the passive ownership of not more than one percent (1%) of the outstanding
voting securities of any entity. The foregoing covenants shall not be held
invalid or unenforceable because of the scope of the territory or actions
subject hereto or restricted hereby, or the period of time within which such
covenants respectively are operative, but the maximum territory, the action
subject to such covenants and the period of time they are enforceable are
subject to any determination by a final judgment of any court which has
jurisdiction over the parties and subject matter.

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        9.    Confidential Information.    The Employee acknowledges that in the
course of his employment by the Company he has received and will continue to
receive certain trade secrets, lists of customers, management methods, operating
techniques, prospective acquisitions, employee lists, training manuals and
procedures, personnel evaluation procedures, financial reports and other
confidential information and knowledge concerning the business of the Company
and its affiliates (hereinafter collectively referred to as "Information") which
the Company desires to protect. The Employee understands that the Information is
confidential and he agrees not to reveal the Information to anyone outside the
Company so long as the confidential or secret nature of the Information shall
continue. The Employee further agrees that he will at no time use the
Information in competing with the Company. Upon termination of this Agreement,
the Employee shall surrender to the Company all papers, documents, writings and
other property produced by his or coming into his possession by or through his
employment or relating to the Information and the Employee agrees that all such
materials will at all times remain the property of the Company. The Employee
acknowledges that a remedy at law for any breach or attempted breach of the
foregoing provisions of this Section 9 or under Section 8 above will be
inadequate, and agrees that the Company shall be entitled to specific
performance and injunctive and other equitable relief in case of any such breach
or attempted breach.

        10.    Notices.    All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be deemed to
have been delivered on the date personally delivered or three business days
after the date mailed, postage prepaid, by certified mail, return receipt
requested, or when sent by telex or telecopy and receipt is confirmed, if
addressed to the respective parties as follows:

    If to the Employee:   Mr. George J. Klug
5918 Spring Lodge
Kingwood, Texas 77345
 
 
If to the Company:
 
Carriage Services, Inc.
1900 St. James Place, 4th Floor
Houston, Texas 77056
Attn: President

Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.

        11.    Severability.    Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such provision or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

        12.    Assignment.    This Agreement may not be assigned by the
Employee. Neither the Employee nor his estate shall have any right to commute,
encumber or dispose of any right to receive payments hereunder, it being agreed
that such payments and the right thereto are nonassignable and nontransferable.

        13.    Binding Effect.    Subject to the provisions of Section 12 of
this Agreement, this Agreement shall be binding upon and inure to the benefit of
the parties hereto, the Employee's heirs and personal representatives, and the
successors and assigns of the Company.

        14.    Captions.    The section and paragraph headings in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

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        15.    Complete Agreement.    This Agreement represents the entire
agreement between the parties concerning the subject hereof and supersedes all
prior agreements and arrangements between the parties concerning the subject
thereof.

        16.    Governing Law.    A substantial portion of the Employee's duties
under this Agreement shall be performed at the Company's corporate headquarters
in Houston, Texas, and this Agreement has been substantially negotiated and is
being executed and delivered in the State of Texas. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Texas.

        17.    Counterparts.    This Agreement may be executed in multiple
original counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.

    CARRIAGE SERVICES, INC.
 
 
By:
 
/s/  MELVIN C. PAYNE      

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MELVIN C. PAYNE, Chief Executive Officer
 
 
CARRIAGE SERVICES, INC.
 
 
/s/  GEORGE J. KLUG      

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GEORGE J. KLUG

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SCHEDULE I
TO
EMPLOYMENT AGREEMENT
(GEORGE J. KLUG)

1.The following entities, together with all Affiliates thereof:

Service Corporation International
The Loewen Group Inc.
Stewart Enterprises, Inc.
Keystone Group Holdings, Inc.
Meridian Mortuary Group, Inc.
Cornerstone Family Services, Inc.
Prime Succession, Inc.
Hamilton Group, Inc.
Century Group
Saber Group
Thomas Pierce & Co.

For purposes of the foregoing, an "Affiliate" of an entity is a person that
directly or indirectly controls, is under the control of or is under common
control with such entity.

2.Any new entity which may hereafter be established which acquires any
combination of ten or more funeral homes and/or cemeteries from any of the
entities described in 1 above.

3.Any funeral home, cemetery or other death care enterprise which is managed by
any entity described in 1 or 2 above.

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QuickLinks

Exhibit 10.1

EMPLOYMENT AGREEMENT