<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
The Wackenhut Corporation
- --------------------------------------------------------------------------------
(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):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
(4) Date Filed:
<PAGE> 2
[WACKENHUT LOGO]
EXECUTIVE OFFICES
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (407) 622-5656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON APRIL 30, 1996
To the Shareholders:
The Annual Meeting of the Shareholders of The Wackenhut Corporation will be
held on Tuesday, April 30, 1996, at 9:00 A.M. at PGA National Resort & Spa, 400
Avenue of the Champions, Palm Beach Gardens, Florida, for the purpose of
considering and acting on the matters following:
(1) the election of nine directors for the ensuing year;
(2) ratification of the action of the Board of Directors in appointing
the firm of Arthur Andersen LLP to be the independent certified public
accountants of the Corporation for the fiscal year 1996, and to
perform such other services as may be requested;
(3) approval of a Non-Employee Director Stock Option Plan.
(4) approval of the setting aside of additional shares for the Key
Employee Long-Term Incentive Stock Plan;
(5) the transaction of any other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Only shareholders of Series A Common Stock of record at the close of business
March 15, 1996, the record date and time fixed by the Board of Directors, are
entitled to notice and to vote at said meeting.
ALL SERIES A COMMON STOCK SHAREHOLDERS ARE URGED EITHER TO ATTEND THE MEETING
IN PERSON OR TO VOTE BY PROXY.
You are requested to promptly sign and mail the enclosed proxy, which is being
solicited on behalf of the Board of Directors, regardless of whether you expect
to be present at this meeting. A return envelope which requires no postage is
enclosed for that purpose. If you attend the meeting in person, you may, if you
wish, revoke your proxy and vote in person.
By order of the Board of Directors.
James P. Rowan
Vice President, General Counsel,
and Assistant Secretary
March 28, 1996
<PAGE> 3
PROXY STATEMENT
March 28, 1996
The Wackenhut Corporation
Executive Offices
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (407) 622-5656
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Wackenhut Corporation (the "Company"
or the "Corporation") for the Annual Meeting of Shareholders of the Corporation
to be held at PGA National Resort & Spa, 400 Avenue of the Champions, Palm
Beach Gardens, Florida, April 30, 1996, and all adjournments thereof. Please
note the Proxy Card provides a means to withhold authority to vote for any
individual director-nominee. Also note the format of the Proxy Card which
provides an opportunity to specify your choice between approval, disapproval or
abstention with respect to the proposal to ratify the appointment of Arthur
Andersen LLP as independent certified public accountants of the Corporation,
and the proposal to approve the Non-Employee Director Stock Option Plan and the
proposal to approve the setting aside of additional shares for the Key Employee
Long-Term Inventive Stock Plan. If the enclosed Proxy Card is executed
properly and returned, the shares represented will be voted in accordance with
those instructions. If no instructions are given the Proxy Card will be voted
as follows:
<TABLE>
<S> <C>
FOR - The election of the Directors nominated by the Board of Directors
FOR - Proposal to ratify the appointment of Arthur Andersen LLP as the independent certified public
accountants of the Corporation.
FOR - Proposal to approve the Non-Employee Director Stock Option Plan.
FOR - Proposal to approve the setting aside of additional shares for the Key Employee Long-Term
Incentive Stock Plan.
</TABLE>
Holders of shares of the Series A Common Stock of the Corporation of record as
of the close of business on March 15, 1996, will be entitled to one vote for
each share of stock standing in their name on the books of The Wackenhut
Corporation.
On March 15, 1996, 3,858,885 shares of Series A Common Stock were outstanding.
The Series A Common Stock will vote as a single class for the election of
Directors, to ratify the appointment of Arthur Andersen LLP, to approve the
Stock Option grant to Directors and the proposal to approve the setting aside
of additional shares for the Key Employee Long-Term Incentive Stock Plan and on
any other matter which may properly come before the meeting.
Any person giving a proxy has the power to revoke it any time before it is
voted by written notice to the Corporation or attending the meeting and voting
the shares.
The cost of preparation, assembly and mailing this Proxy Statement material
will be borne by the Corporation. It is contemplated that the solicitation of
proxies will be entirely by mail. This Proxy Statement and the accompanying
form of proxy are being mailed to shareholders of the Corporation on or about
March 28, 1996.
2
<PAGE> 4
THE ELECTION OF DIRECTORS
The Board of Directors will be comprised of nine (9) members. Unless instructed
otherwise, the persons named on the accompanying Proxy Card will vote for the
election of the nominees named below to serve for the ensuing year and until
their successors are elected and have qualified. All of the nominees are
presently directors of the Corporation who were elected by the shareholders at
the 1995 annual meeting. All are proposed for re-election to the Board of
Directors of the Corporation at the April 30, 1996 annual meeting of
shareholders.
If any nominee for director shall become unavailable (which management has no
reason to believe will be the case), it is intended that the shares represented
by the enclosed Proxy Card will be voted for any such replacement or substitute
nominee as may be nominated by the Board of Directors. A brief biographical
statement for each nominee follows:
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
<S> <C>
JULIUS W. BECTON, JR. General Becton, former President of Prairie View A & M
1994 University, Texas, has a public service career that includes
AGE 69 two key government positions preceded by service in the U.S.
Army during which he attained the rank of Lieutenant
General. While in the Army, he commanded the lst Cavalry
Division and the VII Corp, and was the Deputy Commanding
General of the U.S. Army Training and Doctrine Command. He
[PHOTO] is a veteran of three wars, World War II, the Korean War and
Vietnam. After departing the service in 1983, he served as
Director of the Office of U.S. Foreign Disaster Assistance,
and from 1985 to 1989 was the Director, Federal Emergency
Management Agency. He was later chief operating officer for
American Coastal Industries, Inc. He is on the Board of
Directors of Illinois Tool Works, Inc., a multinational
manufacturer of highly engineered assemblies and systems,
and the Marine Spill Response Corporation. He is Vice
Chairman (elect) for the Association of US Army
and a member of the Advisory Council to the Board of
Visitors at the Citadel. He is a member of the Defense
Science Board Readiness Task Force, and the Department of
Defense Army Advisory Panel. He serves on the board of
several civic public service organizations. He received
numerous U.S. Army service and valor awards, including the
Distinguished Service Medal; and the Distinguished Service
Award for his service as the Director, Federal Emergency
Management Agency. He has a B.S. from Prairie View A & M
University, and an M.A. in economics from the University of
Maryland. He has been awarded honorary Doctor of Laws
degrees by three universities. (e)(f)
Management Agency. He has a B.S. from Prairie View A & M
University, and an M.A. in economics from the University of
Maryland. He has been awarded honorary Doctor of Laws
degrees by three universities. (e)(f)
- ---------------------------------------------------------------------------------------------
RICHARD G. CAPEN, JR. Ambassador Capen is an author, speaker and independent
1993 corporate director. He was formerly United States
AGE 61 Ambassador to Spain (1992-93), Vice Chairman and Director of
Knight Ridder, Inc. (1989-91), and Chairman and Publisher of
The Miami Herald (1983-89). During his years as Publisher
of The Miami Herald, the newspaper received five Pulitzer
Prizes and was honored twice as one of the top ten dailies
[PHOTO] in America. Ambassador Capen started his newspaper career
in l96l with Copley Newspapers in San Diego, California.
From l968-7l, Ambassador Capen was a senior civilian
official with the U.S. Department of Defense, where he
served first as Deputy Assistant Secretary of Defense for
Public Affairs and subsequently as Assistant to the
Secretary of Defense for Legislative Affairs. In l97l he
was awarded the Defense Department's highest civilian
decoration for his leadership. Capen has served as director
of several public corporations, and as a member of advisory
boards at Stanford and Duke Universities. He is a member of
the Board of Directors of Carnival Corporation, Freedom
Communications, Inc., New Economy Fund, a mutual fund, and
Smallcap World Fund, a mutual fund. Mr. Capen is a l956
graduate of Columbia University which he attended on an
NROTC scholarship. (a)(b)(c)
- ---------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
<S> <C>
ANNE NEWMAN FOREMAN Mrs. Foreman served as the Under Secretary of the United
1993 States Air Force from September 1989 until January 1993.
AGE 48 Prior to her tenure as Under Secretary, she was General
Counsel of the Department of the Air Force and a member of
the Department's Intelligence Oversight Board. Mrs. Foreman
served in the White House as Associate Director of
Presidential Personnel for National Security (1985-1987) and
[PHOTO] practiced law with the Washington office of the
Houston-based law firm of Bracewell and Patterson, and with
the British solicitors Boodle Hatfield, Co., in London,
England (1979-1985). Mrs. Foreman is a former member of the
career Foreign Service, having served in Beirut, Lebanon;
Tunis, Tunisia, and the U.S. Mission to the United Nations
in New York. She was a U.S. delegate to the 3lst Session of
the U.N. General Assembly and to the 62nd Session of the
U.N. Economic and Social Council. Mrs. Foreman received a
B.A. degree, Magna Cum Laude, from the University of
Southern California and a M.A. (History) from the same
institution. She also holds a J.D. from the American
University and was awarded an Honorary Doctorate of Laws
from Troy State University. Mrs. Foreman is a member of Phi
Beta Kappa, has been a member of numerous Presidential
delegations, and was twice awarded the Air Force Medal for
Distinguished Civilian Service. (c)(d)
- ---------------------------------------------------------------------------------------------
EDWARD L. HENNESSY, JR. Mr. Edward L. Hennessy, Jr., served as Chairman of the Board
1993 and Chief Executive Officer of Allied-Signal Inc. from 1979
AGE 68 to 1991. He was previously Executive Vice President and
member of the Board of Directors and Executive Committee of
United Technologies Corporation, Senior Vice President for
Administration and Finance for Heublein, Inc. and Controller
with IT&T Corporation. He is a member of the Board of
[PHOTO] Directors of Lockheed Martin, The Bank of New York,, and
Walden Residential Properties, Inc. He is a Trustee of The
Catholic University of America, a Director of The Coast
Guard Academy Foundation, Inc., founding President of the
Tri-County Scholarship Fund and Treasurer of the March of
Dimes. He was a member of The President's Private Sector
Survey on Cost Control, The (New Jersey) Governor's
Management Improvement Plan, Inc., and the Tender Offer
Advisory Committee of the Securities & Exchange Commission.
He also is a member of The Conference Board, Inc. and the
Economic Club of New York. He has numerous honorary
degrees and is a graduate of Fairleigh Dickinson University
in New Jersey, where he is a Trustee and Chairman of the
University's Board.(a)(c)(d)
- ---------------------------------------------------------------------------------------------
PAUL X. KELLEY General Kelley is the Vice Chairman of Cassidy and
1988 Associates, Inc., a government relations firm in Washington,
AGE 67 D.C. He is also on the Board of Directors of Allied-Signal,
Inc., an aerospace, automotive products, and engineered
materials company; GenCorp, Inc. a propulsion, defense
electronics, and ordnance company; London Life Insurance
Company, a Canadian life insurance company, PHH Corporation,
[PHOTO] a vehicle and relocation management services company; Saul
Centers, Inc. a real estate investment trust; Sturm, Ruger
and Co., Inc., a small arms company and UST, Inc., a tobacco
products, wine and smoker accessories company. He is the
former Commandant of the Marine Corps, having retired as a
four-star General in 1987. As a Marine officer, he commanded
an infantry battalion in Vietnam during 1966; and during
1970-71, he commanded the 1st Marine Regiment, the last
Marine ground combat unit to leave Vietnam. He later
commanded the 4th Marine Division, and was the first
commander of the Rapid Deployment Joint Task Force, a four
service force headquartered in Florida. He is the recipient
of numerous awards for valor and distinguished service
during over thirty-seven years of active military service.
General Kelley has a B.S. in economics from Villanova
University and is a graduate of the Air War College. He has
been awarded honorary doctoral degrees by four major
universities.(b)(e)
- ---------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
<S> <C>
NANCY CLARK REYNOLDS Ms Reynolds is Senior Consultant of The Wexler Group, a
1986 governmental relations and public affairs consulting firm in
Age 68 Washington, D.C. She currently serves as a Director of
Sears, Roebuck & Co., Allstate Insurance Company and The
Norrell Corporation, a temporary help service firm. She is a
member of the Board of the National Park Foundation, The
[PHOTO] Central Africa Foundation, and a trustee of the Smithsonian
Museum of the American Indian. She is a past president of
the Business and Government Relations Council. She was
formerly a Director of the Chicago Mercantile Exchange, G.D.
Searle & Co., and Viacom International. From 1977-82, she
was a Vice President of the Bendix Corporation. She received
her B.A. degree in English from Goucher College and an
Honorary Degree of Laws from Gonzaga University. (d)(f)
- ---------------------------------------------------------------------------------------------
THOMAS P. STAFFORD General Stafford is a Consultant for the firm of General
1991 Technical Services, Inc., which he joined in 1984. He is
Age 65 also Vice Chairman and co-founder of Stafford, Burke and
Hecker, Inc., a Washington-based consulting firm. After
serving as an astronaut for a number of years, he retired in
1979 from the Air Force as Deputy Chief of Staff for
Research, Development and Acquisition and served as Vice
[PHOTO] Chairman of Gibraltar Exploration Limited until 1984. Lt.
Gen. Stafford is also Chairman of the Board of Omega Watch
Corporation of America and is a Director of Allied Signal;
CMI Corporation; Fisher Scientific International, Inc.;
Pacific Scientific Company; Seagate Technology, Inc.;
Tracor, Inc.; Tremont Corporation; and Wheelbrator
Technologies, Inc.(b)(e)
- ---------------------------------------------------------------------------------------------
GEORGE R. WACKENHUT Mr. Wackenhut is Chairman of the Board and Chief Executive
1958 Officer of the Corporation. He was President of the
Age 76 Corporation from the time it was founded until April 26,
1986. He formerly was a Special Agent of the Federal Bureau
of Investigation. He is a member of the Board of Directors
of Wackenhut Corrections Corporation, a former
member of the Board of Directors of SSJ Medical Development,
[PHOTO] Inc., Miami, Florida, and is on the Dean's Advisory Board of
the University of Miami School of Business. He is on the
National Council of Trustees, Freedoms Foundation at Valley
Forge, the President's Advisory Council for the Small
Business Administration, Region IV, and a member of the
National Board of the National Soccer Hall of Fame. He is a
past participant in the Florida Governor's War on Crime and
a past member of the Law Enforcement Council, National
Council on Crime and Delinquency, and the Board of Visitors
of the U.S. Army Military Police School. He is also a member
of the American Society for Industrial Security. He was a
recipient in 1990 of the Labor Order of Merit, First Class,
from the government of Venezuela. Mr. Wackenhut received his
B.S. degree from the University of Hawaii and his M.Ed.
degree from Johns Hopkins University. Mr. Wackenhut is
married to Ruth J. Wackenhut, Secretary of the Corporation.
His son Richard R. Wackenhut, is a director-nominee.(a)(f)
- ---------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
<S> <C>
RICHARD R. WACKENHUT Mr. Wackenhut, President and Chief Operating Officer of the
1986 Corporation since April 26, 1986, was formerly Senior Vice
Age 49 President, Operations from 1983-1986. He was Manager of
Physical Security from 1973-74. He also served as Manager,
Development at the Corporation's Headquarters from 1974-76;
Area Manager, Columbia, SC from 1976-77; District Manager,
Columbia SC from 1977-79; Director, Physical Security
[PHOTO] Division at Corporate Headquarters 1979-80; Vice President,
Operations from 1981-82; and Senior Vice President, Domestic
Operations from 1982-83. Mr. Wackenhut is a member of the
Board of Directors of Wackenhut Corrections Corporation, a
Director of Wackenhut del Ecuador, S.A.; Wackenhut UK,
Limited; Wackenhut Dominicana, S.A.; and a Director of
several domestic subsidiaries of the Corporation. He is a
member of the Board of Trustees of St. Thomas University
and a Director of Associated Industries of Florida. He is
also a member of the American Society for Industrial
Security, a member of the International Security Management
Association, The Association of Governing Boards of
Universities and Colleges, and the International Association
of Chiefs of Police. He received his B.A. degree from The
Citadel in 1969, and completed the Advanced Management
Program of the Harvard University School of Business
Administration in 1987.Mr. Wackenhut is the son of George R.
Wackenhut, a Director-nominee, and Ruth J. Wackenhut,
Secretary of the Corporation. (a)(d)
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Member of Executive Committee
(b) Member of Nominating and Compensation Committee
(c) Member of Audit and Finance Committee
(d) Member of Corporate Planning Committee
(e) Member of Operations and Oversight Committee
(f) Member of Fair Employment Practices Committee
The election of the directors listed above will require the affirmative vote of
the holders of a plurality of the shares present or represented at the
shareholders meeting. Abstentions will be treated as shares represented at the
meeting and therefore will be the equivalent of a negative vote, and broker
non-votes will not be considered as shares represented at the meeting.
6
<PAGE> 8
COMPOSITION AND FUNCTIONS OF SPECIFIC COMMITTEES
OF THE BOARD OF DIRECTORS
The Wackenhut Corporation has an Audit and Finance Committee whose members are
as follows:
Edward L. Hennessy, Jr., Chairman Anne N. Foreman
Richard G. Capen, Jr., Vice Chairman Robert Q. Marston
The Audit and Finance Committee met five times during the past fiscal year.
The Audit and Finance Committee's principal functions and responsibilities are
as follows:
1. Recommend the selection, retention, or termination of the
Corporation's independent auditors.
2. Review the proposed scope of the audit and fees.
3. Review the quarterly and annual financial statements and the
results of the audit with management, the internal auditors, and the
independent auditors with emphasis on the quality of earnings in terms
of accounting policies selected; this activity would also entail
assisting in the resolution of problems that might arise in connection
with an audit if and when this becomes necessary.
4. Review with management and independent auditors the recommendations
made by the auditors with respect to changes in accounting procedures
and internal accounting controls as well as other matters of concern to
the independent auditors resulting from their audit activity.
5. Review with management and members of the internal audit team the
activities of and recommendations made by this group.
6. Inquire about and be aware of all work (audit, tax, consulting)
that the independent auditors perform for the Corporation.
7. Recommend policies to avoid unethical, questionable, or illegal
activities by Corporation personnel.
8. Make periodic reports to the full Board on its activities.
The Wackenhut Corporation also has a Nominating and Compensation Committee
which, in addition to its role in recommending compensation for the Chief
Executive Officer and the other executive officers, evaluates possible Director
nominees and makes recommendations concerning such nominees to the Board of
Directors, and recommends to the Chairman and the Board itself the composition
of Board Committees and nominees for officers of the Corporation. See the
Report of the Compensation Committee later in this Proxy Statement.
Shareholders desiring to suggest qualified nominees for director should advise
the Assistant Secretary of the Corporation in writing and include sufficient
biographical material to permit an appropriate evaluation.
A total number of four meetings of the Board of Directors was held during the
1995 fiscal year.
7
<PAGE> 9
SECURITY OWNERSHIP
The following table shows the number of shares of the Corporation's Series A
and Series B Common Stock, each with a par value of $.10 per share, that was
beneficially owned as of February 16, 1996, by each director nominee for
election as director at the 1996 Annual Meeting of Shareholders, by each named
executive officer, by all director nominees and executive officers as a group,
and by each person or group who was known by the Corporation to beneficially
own more than 5% of the Corporation's outstanding Series A or Series B Common
Stock.
<TABLE>
<CAPTION>
Common Stock
Series A-(Voting) Series B-(Non-Voting)
-------------------------------------------------------------------------
Beneficial Owner (1) Amount & Nature Percent Amount & Nature Percent
of Beneficial of of Beneficial of
Ownership (2) Class Ownership (2) Class
============================================================================================================
<S> <C> <C> <C> <C>
DIRECTOR NOMINEES
Julius W. Becton, Jr. - - 156 *
Richard G. Capen, Jr. - - 312(3) *
Anne N. Foreman 200 * 362 *
Edward L. Hennessy, Jr. 200 * 362 *
Paul X. Kelley 1,000 (3) * 2,437(3) *
Nancy Clark Reynolds 1,400 * 1,412 *
Thomas P. Stafford 300 * 387 *
George R. Wackenhut 1,929,606 (4) 50.00% 4,105,196(4)(6) 49.51%
Richard R. Wackenhut 65 (5) * 59,946(5)(6) *
EXECUTIVE OFFICERS
Alan B. Bernstein 500 * 44,778(6) *
Timothy P. Cole 500 * 43,740(6) *
George C. Zoley - * 14,000(6) *
ALL NOMINEES AND
EXECUTIVE OFFICERS
AS A GROUP 1,933,771 50.11% 4,273,088 51.53%
OTHER
Wellington Management Company (7) 258,400 6.70%
*Beneficially owns less than 1%
</TABLE>
(1) Unless stated otherwise, the address of the beneficial owners is
4200 Wackenhut Drive #100, Palm Beach Gardens, Florida.
(2) Information concerning beneficial ownership was furnished by the
persons named in the table or derived from documents filed with the
Securities and Exchange Commission. Except as otherwise indicated
below, each person named in the table has sole voting and investment
power with respect to the shares beneficially owned. Each person
reported as the beneficial owner of stock owned of record by, or in
joint tenancy with another person, has only shared voting and
investment power over the stock.
(3) All shares held jointly with his wife.
(4) George R. Wackenhut and Ruth J. Wackenhut, his wife and Secretary
of the Corporation, through trusts over which they have sole
dispositive and voting power, control 50.00% of the issued and
outstanding voting common stock of The Wackenhut Corporation.
8
<PAGE> 10
(5) 65 shares of Series A and 137 shares of Series B held in trust for
daughter, Jennifer A. Wackenhut, under Florida Gifts to Minors Act and
the balance in his own name.
(6) Includes Series B shares over which the Executive Officers have
options.
(7) The address of Wellington Management Company is 75 State Street,
Boston, MA 02109
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Corporation during
the fiscal year ended December 31, 1995 and each of the two preceding fiscal
years, to the Chief Executive Officer and to each of the four most highly
compensated executive officers of the Corporation other than the Chief Executive
Officer for services in all capacities while they were employees of the Company,
and the capacities in which the services were rendered.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------- ------------------------------------------------
Awards Payouts
Restricted Securities All Other
Stock Underlying LTIP Compen-
Awards Options/ Payouts sation
Name and Principal Position Year Salary($) Bonus($) ($)(1)(2) SARs(#)(6) ($)(5) ($)(3)&(4)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
George R. Wackenhut, 1995 $784,000 $198,000 - 25,000 - $16,543
Chairman of the Board and 1994 732,000 329,000 - 112,833 - 16,543
Chief Executive Officer 1993 650,000 - - - $32,162 16,543
Richard R. Wackenhut, 1995 508,000 128,000 $33,332 22,500 - 60,000
President and Chief 1994 451,000 208,000 29,341 110,333 - 59,000
Operating Officer 1993 390,000 55,000 13,006 - 10,553 59,000
Alan B. Bernstein, 1995 287,000 96,000 16,796 16,250 - 51,000
Executive Vice President, 1994 253,000 123,000 14,710 82,750 - 51,000
and President, Domestic 1993 225,000 40,000 5,999 - 4,809 51,000
Operations Group
Timothy P. Cole 1995 279,000 67,000 16,494 16,250 - 74,000
Executive Vice President, 1994 242,000 125,000 14,405 104,083 - 74,000
and President, Government 1993 215,000 45,000 5,730 - 4,557 74,000
Services Group
George C. Zoley 1995 249,000 70,000 - 7,500 - 11,755
Wackenhut Corrections 1994 186,000 100,000 - 95,333 - 9,067
Corporation 1993 149,000 40,000 - - - 9,067
President, Chief Executive
Officer and Director
N/A - Not applicable
</TABLE>
9
<PAGE> 11
(1) The aggregate number and value of restricted stock holdings
(including restricted stock units and performance shares) based upon
the Series B Common Stock fair market value at December 31, 1995 is as
follows (performance shares and restricted stock units have been
adjusted for a 25% stock dividend in the form of a stock split declared
in 1995):
<TABLE>
<CAPTION>
Restricted
Stock Performance Total Fair
Units Shares Units/Shares Market Value
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G. R. Wackenhut - 34,727 34,727 $430,615
R. R. Wackenhut 9,092 13,154 22,246 275,850
A. B. Bernstein 4,420 6,610 11,030 136,772
T. P. Cole 4,292 6,483 10,775 133,610
G. C. Zoley - - - -
</TABLE>
The restricted stock units vest after 7 years of continuous
employment from date of grant.
(2) Dividends are paid on restricted stock units.
(3) This column represents (for the CEO) the cost of a split-dollar
life insurance policy on George R. Wackenhut and Ruth J. Wackenhut.
(4) This column represents (except for the CEO and except for Dr. Zoley
who is provided for under the Executive Retirement Plan in 1993 and
1994 and the Corrections Subsidiary Senior Officer Retirement Plan in
1995) the cost of providing for future liabilities under the Senior
Officer Retirement Plan
(5) There was no payout of awards for the 1992-1994 or the 1993-1995
performance cycles because return on equity performance goals were not
met.
(6) Of the securities underlying stock options granted in 1994, the
following amounts were granted under stock option plans of Wackenhut
Corrections Corporation:
<TABLE>
<CAPTION>
Securities Underlying
Name Options (#)
---- -----------
<S> <C>
George R. Wackenhut 85,333
Richard R. Wackenhut 85,333
Alan B. Bernstein 64,000
Timothy P. Cole 85,333
George C. Zoley 85,333
</TABLE>
LONG TERM INCENTIVE PLAN - AWARDS IN THE LAST FISCAL YEAR
The following table sets forth certain information concerning awards made under
the Company's Key Employee Long-Term Incentive Stock Plan to the named
executives during 1995. The Plan is for a series of successive overlapping
three year periods commencing the first day of each fiscal year. Awards are
earned only if certain predetermined criteria are met. Adjustments may be made
in performance share awards to consider aspects of performance that may not be
reflected in the Company's financial results.
10
<PAGE> 12
<TABLE>
<CAPTION>
Estimated Future Payouts
Number of Performance Under Non-Stock Price-Based Plan
Shares, or Other
Units, or Period Until Threshold Target Maximum
Other Rights Maturation or Payout (2) Payout (2) Payout (2)
Name (#) Payout (1) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George R. Wackenhut 16,394 1995-1997 $85,250 $170,500 $255,750
Richard R. Wackenhut 6,410 1995-1997 50,000 100,000 150,000
Alan B. Bernstein 3,231 1995-1997 25,200 50,400 75,600
Timothy P. Cole 3,173 1995-1997 24,750 49,500 74,250
George C. Zoley 0 - 0 0 0
</TABLE>
(1) Average Return on Equity performance goals are set by the
Nominating and Compensation Committee for all of the three-year
performance cycles.
(2) As set by the Compensation Committee.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term (3)
-----------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (1) Fiscal Year ($/Share)(2) Date 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George R. Wackenhut 25,000 11.4% $10.80 28-Jan-05 $169,802 $430,310
Richard R. Wackenhut 22,500 10.3% 10.80 28-Jan-05 152,821 387,279
Alan B. Bernstein 16,250 7.4% 10.80 28-Jan-05 110,371 279,702
Timothy P. Cole 16,250 7.4% 10.80 28-Jan-05 110,371 279,702
George C. Zoley 7,500 3.4% 10.80 28-Jan-05 50,940 129,093
</TABLE>
(1) Options were granted under the Key Employee Long-Term Incentive
Stock Plan of the Corporation (the "Incentive Stock Plan")
(2) The number of Incentive Stock Plan options granted and base price
have been adjusted to reflect the effect of a 25% stock dividend in
1995.
(3) The full option term was used in the 5% and 10% annual growth
projections for the price of the underlying stock.
11
<PAGE> 13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the Money
Options/SARs Options/SARs
at Fiscal at Fiscal
Shares Year-End (#) Year-End ($)
Acquired Value ----------------------------------------
on Exercise Realised Exercisable (E)/ Exercisable (E)/
(#) ($) Unexercisable (U)(1) Unexercisable (U)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
George R. Wackenhut (A) NONE NA 34,375 E $214,500 E
25,000 U 40,000 U
(B) 31,568 $757,104 16,432 E 375,471 E
(C) NONE NA 37,333 E 662,661 E
Richard R. Wackenhut (A) NONE NA 31,250 E 195,000 E
22,500 U 36,000 U
(B) 31,568 757,104 16,432 E 375,471 E
(C) NONE NA 37,333 E 662,661 E
Alan B. Bernstein (A) NONE NA 23,438 E 146,253 E
16,250 U 26,000 U
(B) 28,906 713,228 7,094 E 162,098 E
(C) NONE NA 28,000 E 497,000 E
Timothy P. Cole (A) NONE NA 23,438 E 146,253 E
16,250 U 26,000 U
(B) 31,568 757,104 16,432 E 375,471 E
(C) NONE NA 37,333 E 662,661 E
George C. Zoley (A) 10,000 55,500 7,500 U 46,800 U
(B) 48,000 1,123,044 - E - E
(C) NONE NA 37,333 E 662,661 E
</TABLE>
(A) The Key Employee Long-Term Incentive Stock Plan of the Corporation (the
"Incentive Stock Plan")
(B) Wackenhut Corrections Corporation 1994 Stock Option Plan (the
"First Plan")
(C) Wackenhut Corrections Corporation Stock Option Plan (the "Second
Plan")
12
<PAGE> 14
SENIOR OFFICER RETIREMENT PLAN
The following table sets forth the estimated annual benefits payable under the
Retirement Plan for senior officers.
<TABLE>
<CAPTION>
Retirement Plan Table
Annual Benefits
------------------------------------------------------
Officer Beneficiaries
------------------------------------------------------
<S> <C> <C> <C> <C>
R. R. Wackenhut $175,000 20 years $100,000 10 years
A. B. Bernstein 150,000 20 years 100,000 10 years
T. P. Cole 125,000 20 years 50,000 10 years
George C. Zoley - - - -
</TABLE>
The Retirement Plan for senior officers provides that the Corporation will pay
certain sums to the senior officers or their beneficiaries for twenty (20)
years beginning on the date of their death or retirement after age 60, or to
their beneficiaries for ten (10) years if they die before age 60.
The Corporation has purchased life insurance on the lives of such senior
officers in amounts that, in the aggregate, will substantially fund its future
liability under the Retirement Plan.
With respect to the five most highly compensated executive officers of the
Corporation, George R. Wackenhut is not a participant in the Retirement Plan,
and George C. Zoley participates in an Executive Officer Retirement Plan
established by Wackenhut Corrections Corporation
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Board of Directors (the
"Compensation Committee") met three times in fiscal 1995. The Compensation
Committee is composed exclusively of independent, non-employee directors who
are not eligible to participate in any of the executive compensation programs.
Among its duties, the Compensation Committee is responsible for recommending to
the full Board the annual remuneration for all executive officers, including
the Chief Executive Officer and the other officers named in the Summary
Compensation Table set forth above, and to oversee the Company's compensation
plans for key employees. The Compensation Committee seeks to provide, through
its administration of the Company's compensation program, salaries that are
competitive and incentives that are primarily related to corporate performance.
The components of the compensation program are base salary, annual incentive
bonuses, and long-term incentive awards.
Base salary is the fixed amount of total annual compensation paid to executives
on a regular basis during the course of the fiscal year. Management of the
Company determines a salary for each senior executive position (exclusive of
the CEO and COO) that it believes is appropriate to attract and retain talented
and experienced executives, and that is generally competitive with salaries for
executives holding similar positions at comparable companies. The starting
point for this analysis is each officer's base salary for the immediately
preceding fiscal year. From time to time, management obtains reports from
independent organizations concerning compensation levels for reasonably
comparable companies. This information is used as a market check on the
reasonableness of the salaries proposed by management. The comparator
companies are composed of a diversified group of service companies whose
revenue, performance, and position matches were deemed relevant and appropriate
by the outside firm. Management recommends executive salaries to the
Compensation Committee.
The Compensation Committee reviews and adjusts the salaries suggested by
management as it deems appropriate, and generally asks management to justify
its recommendations, particularly if there is substantial deviation between the
recommended salary and an officer's compensation for the prior fiscal year. In
establishing the base salary for each officer (including that of the CEO and
COO), the Compensation Committee evaluates numerous factors, including the
Company's operating results, net income trends, and stock market performance,
as well as
13
<PAGE> 15
comparisons with financial and stock performance of other companies, including
those that are in competition with the Company. In addition, data developed as
a part of the strategic planning process, but which may not directly relate to
corporate profitability, is utilized as appropriate. For example, the
Compensation Committee may take into consideration an officer's efforts in
positioning the Company for future growth.
The Summary Compensation Table set forth elsewhere in this Proxy Statement
shows the salaries of the CEO and the other named executive officers for the
last three years. The increase in the CEO's salary for 1995 was attributable
to the overall financial performance of the Company, strategic objectives and
the quality of his leadership. In 1995, the Compensation Committee formally
evaluated the performance of the CEO.
The Company has an incentive compensation plan (the Bonus Plan) for officers
and key employees. The aggregate amount of incentive compensation payable
under the Bonus Plan is based on the Company's consolidated revenue and income
and Business Unit revenues and service profits. The Bonus Plan is intended as
an incentive for executives to increase both revenue and profit and uses these
as factors in calculating the individual bonuses The Bonus Plan formula
weights these factors depending upon the position of the executive. For
example, the President of a Business Unit is measured on factors of 60%
Corporate results (30% corporate revenue and 30% corporate income) and 40%
Business Unit service profit. All other positions are measured on weighted
factors of 30% corporate revenue and 70% corporate income before taxes. An
adjustment to the individual incentive award (up to 20% upward or 80% downward)
may be applied to reflect individual performance. The Compensation Committee's
decisions regarding the amount of incentive compensation payable in a given
year and the allocation of same along the participants, are based on these
factors, the contribution of a particular employee during the fiscal year and
compliance with previously agreed upon goals and objectives as outlined in the
Corporation's strategic plan for l995. The Company has elected to comply with
Section l62(m) of the Internal Revenue Code to the extent it deems appropriate.
The Company also maintains a Key Employee Long-Term Incentive Stock Plan (the
Incentive Plan) for all executive officers, including the CEO and the other
named officers. Participants in the Incentive Plan are assigned a target
incentive award, stated as a percentage of such participant's base salary
depending upon the participant's position with the Company. The target
incentive award for fiscal 1995 for the CEO, the Chief Operating Officer,
Executive Vice Presidents, and Senior Vice Presidents of the Company were 22%,
20%, 18% and 16%, respectively, of base salary.
Participants in the Incentive Plan may be granted one or more types of
long-term incentive vehicles as awards. Initially, awards have been limited to
grants of restricted stock units and/or performance shares. The Compensation
Committee determines the percentage of the target incentive award that will be
allocated to restricted stock units and the percentage that will be allocated
to performance shares. Awards in each category are earned only if certain
predetermined criteria are met. In general, restricted stock unit awards are
currently earned based on an employee's continued employment with the Company
for a period of seven years from the date of grant, although the Compensation
Committee can increase or decrease the time period for future grants and may
also include performance criteria. Performance shares are earned only if
certain three-year return on equity performance goals established by the
Compensation Committee are attained. In setting the return on equity goals for
each three-year period, the Compensation Committee considers prior years'
performance, industry trends, the performance of major financial indicators and
the prevailing economic circumstances. In its discretion, the Compensation
Committee may make adjustments to performance share awards to consider aspects
of performance that may not be reflected in the Company's financial results.
The purpose of the Incentive Plan is to reward superior corporate performance
with a variable component of pay that can only be earned if performance
criteria are met. The Incentive Plan is intended to encourage stock ownership
by senior executives; to balance the short-term emphasis of the Bonus Plan with
a longer-term perspective; to reinforce strategic goals by linking them to
compensation; and to provide retention incentives for employees considered key
to the future success of the Company.
14
<PAGE> 16
The base salary, Bonus Plan, and Incentive Plan components of compensation, as
implemented by the above described policies, have resulted in a compensation
program that the Compensation Committee believes is fair, competitive, and in
the best interests of the shareholders.
By the Nominating and Compensation Committee
Robert Q. Marston, Chairman
Thomas P. Stafford, Vice Chairman
Richard G. Capen
Paul X. Kelley
Comparison of Five-Year Cumulative Total Return(*)
The Wackenhut Corporation, 500 Wilshire Equity, and S&P Specialized Services
Indices
Performance through December 31, 1995
[GRAPH]
<TABLE>
<CAPTION>
The Wackenhut Corporation Wilshire 5000 Equity S&P Specialized Services
------------------------- -------------------- ------------------------
<S> <C> <C>
1990 100 100 100
1991 125 134 109
1992 131 146 108
1993 123 163 104
1994 130 163 95
1995 222 222 129
</TABLE>
The above graph compares the performance of The Wackenhut Corporation with that
of the Wilshire 5000 Equity, and the S&P Specialized Services Index, which is a
published industry index. An outside consulting firm was retained to evaluate
the feasibility of constructing a custom peer group or the selection of a
comparable peer group. The consultant's conclusion was that there is no
appropriate five-year index of large labor-intensive security and protective
service companies presently available and the construction of a custom peer
group would not be appropriate because of the lack of sufficient data on the
other large security companies. The selection of the S&P Specialized Services
Index was the closest index the consultants believed appropriate. If there is a
published index of large security companies or when sufficient data is
available, the Company may consider, in future years, changing to a different
index or custom peer group in place of the S&P Specialized Services Index.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Corporation has a joint life policy on George R. Wackenhut and Ruth J.
Wackenhut in the amount of $800,000. The cost of the policy is $16,543 per year
and substantially all of the premium is paid by the Corporation. In this
connection, an agreement provides that $760,000 of the proceeds from the policy
will be paid to the Corporation as reimbursement of costs.
15
<PAGE> 17
Service Agreements. The Company and its consolidated subsidiary, Wackenhut
Corrections Corporation ("WCC"), entered into a services agreement (the "1994
Services Agreement") effective January 3, 1994 pursuant to which the Company
agreed to provide certain services to WCC through December 31, 1995. The
Company and WCC entered into a new services agreement (the "1996 Services
Agreement", and together with the 1994 Services Agreement, the "Services
Agreements") on December 20, 1995 which became effective January 1, 1996,
pursuant to which the Company has agreed to continue to provide certain of these
services to WCC through December 31, 1997.
In accordance with the terms of the 1994 Services Agreement, WCC paid the
Company a fixed annual fee for services (the "Annual Services Fee") equal to
$1,236,343 in fiscal 1994 and $1,069,073 in fiscal 1995. Under the 1996
Services Agreement, WCC has agreed to pay the Company an Annual Services Fee
equal to $1,100,342 in each of fiscal 1996 and fiscal 1997. Management of WCC
believes that the Annual Services Fees under the Services Agreements are on
terms no less favorable to the Company and WCC than could be obtained from
unaffiliated third parties. If WCC determines that it can obtain any of the
services to which the Annual Services Fees relate at a cost less than that
specified in the Services Agreements, WCC may obtain such services from another
party and terminate the provision of such services by the Company with a
corresponding reduction in the Annual Services Fee.
Under each of the Services Agreements, the services to be provided by the
Company to WCC for the Annual Services Fee include the following:
Legal Services. Under each of the Services Agreements, the Company
provides legal advice on all matters affecting WCC, including, among other
things, assistance in the preparation of WCC's Securities and Exchange
Commission ("SEC") and other regulatory filings, review and negotiation of
joint venture and other contractual arrangements, and provision of day-to-day
legal advice in the operation of WCC's business, including employee related
matters.
Financial, Accounting, Tax and Government Contract Management Services.
Under each of the Services Agreements, the Company provides WCC with (i) cash
management, (ii) support in the processing of accounts payable, tax returns and
payroll, (iii) conducting periodic internal field audits, and (iv) purchasing
assistance on an as needed basis. Under the 1994 Services Agreement, the
Company also provided WCC with assistance in (i) deployment of new software for
accounting and inmate management, (ii) management and administration of its
government contracts, pricing proposals and responding to government inquiries
and audits and (iii) the preparation of accounting reports, financial
projections, budgets, periodic SEC filings and tax returns.
Human Resources Services. Under Each of the Services Agreements, the
Company provides WCC assistance in the identification and selection of
employees and compliance by WCC with various equal employment opportunity and
other employment related requirements. The Company also assists WCC in
implementing and administering employee benefit plans which comply with
applicable laws and regulations.
Any services provided by the Company to WCC beyond the services covered by the
Annual Services Fees are billed to WCC at cost or on a cost plus basis as
described in each of the Services Agreements or on such other basis as WCC and
the Company agree. The 1994 Services Agreement provided WCC the option to
utilize the Company's Domestic Operations Group Food Services Division (the
"Food Services Division") to (i) provide WCC with technical assistance in the
areas of equipment specifications, kitchen layout and design, menu development,
nutritional analysis and field support and training (for services WCC has
reimbursed the Company for direct and indirect costs associated with providing
such services), and (ii) manage and operate the food services at certain of
WCC's facilities (for which WCC agreed to pay the Company a price established on
a negotiated basis which is no less favorable than the charges for comparable
services from unaffiliated third parties). Commencing in October 1995, WCC
ceased contracting with the Food Services Division of the Company to obtain
meals for inmates at the facilities it managed. Since October 1995, WCC has
provided meals for inmates at the facilities it operates in accordance with
regulatory, client and nutritional requirements.
16
<PAGE> 18
The following table sets forth certain amounts billed to WCC during fiscal 1993
(for allocated amounts of overhead costs related to services provided by the
Company to WCC) and fiscal 1994 and fiscal 1995 for services not covered by the
Annual Services Fee paid under the 1994 Services Agreement.
FISCAL 1993 FISCAL 1994 FISCAL 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Food Services $3,772,000 $4,146,000 $3,903,000
Casualty Insurance Premiums (1) 1,829,000 1,393,000 1,540,000
Interest Charges (Income) (2) 544,000 166,000 (172,000)
Office Rental (3) 106,000 106,000 106,000
General and Administrative (4) 1,314,000 - -
Total $7,565,000 $5,811,000 $5,377,000
</TABLE>
(1) Casualty insurance premiums relate to workers' compensation, general
liability and automobile insurance coverage obtained through the
Company's Insurance Program. Of such casualty insurance premiums,
approximately $1.3 million, $1.3 million and $1.5 million represented
premiums paid in fiscal 1993, fiscal 1994 and fiscal 1995, respectively,
to a captive reinsurance company that is wholly owned by the Company.
Under the terms of each of the Services Agreements, WCC also has the
option to continue to participate in certain other insurance policies
maintained by the Company for which WCC reimburses the Company for
direct and indirect costs associated in providing such services.
(2) WCC is charged interest on intercompany indebtedness and charges
interest on intercompany loans at rates that reflect the Company's
average interest costs on long-term debt, exclusive of mortgage
financing. For purposes of computing interest expense it was assumed
that debt represented 50% of WCC's total capital.
(3) Effective January 3, 1994, WCC entered into a two-year lease
agreement with the Company providing for the rental of approximately
5,361 square feet of office space at its corporate headquarters in Coral
Gables, Florida at an annual rate of $106,400 ($19.84 per square foot)
plus certain common area maintenance charges (on terms which WCC
believes to be no less favorable to WCC than could have been obtained
from unaffiliated third parties). The Company has sold the office
building and has relocated its headquarters to Palm Beach Gardens,
Florida. WCC has relocated its corporate offices to the Company's new
headquarters, and has negotiated a lease on terms which WCC believes
will be no less favorable to WCC than could have been obtained from
unaffiliated third parties.
(4) Prior to WCC's IPO, WCC was a wholly owned subsidiary of the Company.
As such, the Company provided various services to WCC, including legal,
accounting, financial, data processing, auditing, treasury, cash
management and insurance services. The Company also provided WCC with
services of a number of its executives and employees. In consideration
for these services, the Company annually allocated a portion of its
overhead costs related to such services to WCC. In fiscal 1994 and
fiscal 1995, these services were provided under the Services Agreements.
Management of the Company believes that the services provided for the Annual
Services Fees and the other services that will or may be provided under each of
the Services Agreements are, or will be, on terms no less favorable to the
Company and WCC than could have been obtained from unaffiliated third parties.
Under the terms of each Services Agreement, the Company has further agreed that
for so long as it provides WCC with any services (including those provided
under the Services Agreement) and for a period of two years thereafter, the
Company and its affiliates will not directly or indirectly compete with WCC or
any of its affiliates in the design, construction, development or management of
correctional or detention institutions or facilities in the United States.
Additionally, during the period described above, the Company will not (and will
use its best efforts to cause its affiliates not to) directly or indirectly
compete with WCC or any of its affiliates in the design, construction,
development or management of correctional or detention institutions or
facilities outside the
17
<PAGE> 19
United States. Nevertheless, in the United States, the Company's Domestic
Operations Group may continue to bid for and perform any of the services that
it currently performs. These services include prisoner transit, court security
services and foodservices. WCC has also agreed that it will provide the
Company with the first opportunity to participate on a competitive basis as a
joint venture in the development of facilities outside the United States.
Other Transactions and Relationships. Prior to its IPO, WCC borrowed money
from time to time from the Company for working capital and general corporate
purposes and was charged interest on the basis described above. The amount of
indebtedness to the Company at the end of fiscal 1993 was $9.6 million. Upon
consummation of its IPO, all outstanding indebtedness of WCC to the Company was
repaid. At the end of fiscal 1994, the amount due to the Company was $127,000.
At October 1, 1995, WCC had no indebtedness to the Company.
From time to time, the Company has guaranteed certain obligations of WCC and
its affiliates. These guarantees remained in place following WCC's IPO and may
be called upon should there be a default with respect to such obligations.
In January 1994, WCC increased its holdings in ACM from 50% to 100% at a cost
of approximately $2.5 million. In January 1994, WCC entered into an Australian
$3.5 million (approximately U.S. $2.6 million at December 31, 1995) credit
facility with a bank. The credit facility bears interest at the bank bill
rate, as defined, plus 0.40% and matures in January 1997. The credit facility
is secured by an irrevocable standby letter of credit guaranteed by the
Company. WCC has agreed to pay the annual letter of credit fee of Australian
$26,250 (approximately U.S. $19,515 at December 31, 1995). The Company has not
charged and will not charge WCC any fee or other amounts for its guarantee of
the letter of credit. Approximately U.S. $2.0 million of the credit facility
was utilized to purchase 100% ownership of ACM.
WCC anticipates that it may from time to time use the services of the law firms
of Winston & Strawn and Venable, Baetjer and Howard, of which James R. Thompson
and Benjamin R. Civiletti, Directors of WCC, respectively, are partners.
George C. Zoley, President, Chief Executive Officer and Director of WCC, also
serves as Vice President of WSI and a Director of each of Wackenhut Corrections
(U.K.) Limited, Wackenhut Corrections Corporation Australia Pty Limited,
Premier Prison Services, Ltd., Premier Custodial Development, Ltd.,
Australasian Correctional Services Pty Limited, and Australasian Correctional
Management Pty Limited, affiliates of the Company. James P. Rowan, Senior Vice
President and General Counsel of the Company also serves as the Secretary of
WCC. Timothy P. Cole, President of the Government Services Group and Executive
Vice President of the Company also serves as Chairman of the Board of Directors
of WCC. George R. Wackenhut, Chairman of the Board and Chief Executive Officer
of the Company, also serves as a Director of WCC and, together with his wife
Ruth J. Wackenhut, through trusts over which they have sole dispositive and
voting power, control approximately 50.0% of the issued and outstanding voting
common stock of the Company. Richard R. Wackenhut, the President and Chief
Operating Officer of the Company, is also a Director of WCC, and is a
Director of Wackenhut del Ecuador, S.A., Wackenhut U.K. Limited, Wackenhut
Dominicana, S.A., affiliates of the Company, and a Director of several domestic
subsidiaries of the Company. He is the son of George R. Wackenhut.
18
<PAGE> 20
DIRECTORS' COMPENSATION
Directors of the Corporation who are not Officers were paid during fiscal year
1995 an annual retainer fee at the rate of $20,000 per year plus $1,250 for
each Board Meeting attended, $500 for each committee meeting attended as
committee members, and $750 for each committee meeting attended as committee
chairmen. Each Director also will receive from the Corporation an option to
purchase 2,000 shares of Series B Common Stock of the Corporation subject to
the approval by the Shareholders of Proposal #3 as described in this proxy.
No Directors or their affiliates were compensated for services rendered to the
Corporation during 1995 other than the compensation described above.
SECTION 16 FILING VIOLATIONS
All SEC Forms 4 and 5 filings appear to have been made when due. Those
Directors and Officers not required to file a Form 5 for 1995 have furnished
the Corporation with a statement that no filing is due.
PROPOSAL NO. 2
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Although not required by the By-Laws, the Board of Directors, in the interest
of accepted corporate practices, asks shareholders to ratify the action of the
Board of Directors in appointing the firm of Arthur Andersen LLP to be the
independent certified public accountants of the Corporation for the fiscal year
1996, and to perform such other services as may be requested. If the
shareholders do not ratify this appointment, the Corporation's Board of
Directors will reconsider its action. Arthur Andersen LLP has advised the
Corporation that no partner or employee of Arthur Andersen LLP has any direct
financial interest or any material indirect interest in the Corporation other
than receiving payment for its services as independent certified public
accountants.
A representative of Arthur Andersen LLP, the principal independent certified
public accountants of the Corporation for the most recently completed fiscal
year, is expected to be present at the shareholders meeting and shall have an
opportunity to make a statement if he or she so desires. This representative
will also be available to respond to appropriate questions raised orally at the
meeting.
PROPOSAL NO. 3
APPROVAL OF NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On April 29, 1995, the Board of Directors (the "Board") adopted, subject to
stockholder approval at the Annual Meeting, the Non-Employee Director Stock
Option Plan (the "Plan"). The purpose of the Plan is to make service on the
Board more attractive to present and prospective members of the Board of
Directors of the Corporation who are not officers or employees of the
Corporation ("Non-Employee Directors"), since the continued service of
qualified Non-Employee Directors is considered essential to the management,
growth and financial success of the Corporation.
DESCRIPTION OF THE DIRECTOR OPTION PLAN
GENERAL. As a part of Non-Employee Directors compensation, those Directors of
the Company shall be granted an option to purchase 2,000 shares of the Series B
Common Stock of the Company (the "Stock") upon his or her election and/or each
re-election to serve on the Board (the "Director Option"). The total number of
shares of Stock which may be issued under the Plan is 100,000 shares. In the
event any change is made to the Stock issuable under the Plan (by reason of any
stock split, stock dividend, combination of shares, exchange of shares, merger,
consolidation, reorganization or other change in the capitalization of the
Company), appropriate adjustment will
19
<PAGE> 21
be made to (i) the aggregate number and/or class of shares of Stock available
for issuance under the Plan, (ii) the number of shares of Stock to be made the
subject of each subsequent grant, (iii) the exercise price, and (iv) the number
and/or class of shares of Stock purchasable under each outstanding Director
Option and the exercise price payable per share so that no dilution or
enlargement of benefits will occur under such Director Option.
PRICE; EXERCISABILITY. The exercise price of Director Options shall be l00% of
the fair market value of the Stock at the date the Director Option is granted.
Generally, the Director Options will be for a term of ten years from the date
of grant.
ASSIGNABILITY. Director Options are not assignable or transferable other than
by will or the laws of descent and distribution and, during the optionee's
lifetime, the Director Option may be exercised only by such optionee.
AMENDMENTS. The Board may amend or discontinue the Plan at any time provided
that (i) no such amendment or discontinuance may change or impair any Director
Option previously granted without the consent of the optionee, (ii) the
provisions of the Plan which relate to the amount of shares which may be
subject to grants and/or the exercise price may not be amended more than once
every six months, other than to comport with changes in federal income tax
laws, and (iii) stockholder approval is required for any amendment which would
materially increase the benefits to participants in the Plan or the number of
shares which may be issued (except for adjustments due to stock splits, stock
dividends and similar changes made to the Stock) under the Plan, or which would
materially modify the requirements as to eligibility for participation in the
Plan.
TERMINATION. Director Options terminate six months after the optionee ceases
to be a member of the Board, other than by reason of death or disability, but
in no event after the expiration date of the Director Options. In the event of
the optionee's death or disability, the personal representative or guardian of
the optionee or the optionee's estate, or the person inheriting the Director
Options, will have two years after the date of the optionee's death or
disability to exercise the Director Options in full. Under no circumstances,
however, may the Director Options be exercised after the termination date of
the Director Options. If any Director Options granted under the Director
Option Plan expire or are terminated or canceled unexercised as to any shares
of Stock, such released shares may again be optioned (including a grant in
substitution for canceled Director Options).
FEDERAL INCOME TAX ASPECTS
The Director Options do not constitute incentive stock options, within the
meaning of section 422(b) of the Internal Revenue Code. As a general rule, no
federal income tax is imposed on the holder of options upon the issuance of
options such as the Director Options and the Company is not entitled to a tax
deduction by reason of such issuance. Generally, upon the exercise of options
such as the Director Options, the holder of the options will be treated as
receiving compensation taxable as ordinary income in the year of exercise,
which in the case of an option, is an amount equal to the excess of the fair
market value of the shares on the date of exercise over the exercise price of
the options. Upon the exercise of options such as the Director Options, the
Company may claim a deduction for compensation paid at the same time and in the
same amount as compensation income is recognized to the holder of the options,
assuming any federal income tax withholding requirements are satisfied. Upon a
subsequent disposition of the shares received upon exercise of options such as
Director Options, the difference between the amount realized on the disposition
and the basis of the stock (exercise price plus any ordinary income recognized)
should qualify as long-term or short-term capital gain, depending on the
holding period.
The Board believes that the adoption of the Plan is an essential element of the
management, growth and financial success of the Company. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF THE
PROPOSED DIRECTOR OPTION PLAN.
20
<PAGE> 22
PROPOSAL NO. 4
PROPOSAL TO SET ASIDE A TOTAL OF 900,000 SHARES OF SERIES B COMMON STOCK OF THE
CORPORATION TO BE UTILIZED FOR FUTURE ISSUANCE UNDER THE KEY EMPLOYEE LONG-TERM
INCENTIVE STOCK PLAN (THE "PLAN").
The Plan was previously approved by the shareholders of the Corporation at the
1992 Annual Meeting. The Nominating and Compensation Committee of the Board of
Directors of the Corporation (the "Committee") is responsible for the
administration and governance of the Plan. Actions requiring Committee
approval include final determination of plan eligibility and participation,
identification of performance goals, and final award determination. The
decisions of the Committee are conclusive and binding on all participants.
The purpose of the Plan is to reward superior performance with a variable
component of pay which can only be earned if predetermined performance criteria
are met. The Plan is intended to encourage stock ownership by senior
executives; to balance the short-term emphasis of the annual incentive plan
with a longer-term perspective; to reinforce strategic goals by linking them to
compensation; and to provide retention incentives for employees considered key
to the future success of the Corporation. Initially, participants were limited
to the senior officers, but beginning in 1994, stock options were awarded to a
much broader segment of management employees.
Participants may be granted one or more types of long-term incentive vehicles
as awards. Initially, awards to participants were limited to Restricted Stock
Units (RSUs) and/or performance shares. The Plan also provides for the
granting of stock options and/or performance units.
Participants "earn" the RSU and performance share awards based on (1) continued
employment and/or (2) Company performance with respect to average Return on
Equity (ROE) measured over a three-year performance period. Participants are
assigned a Target Incentive Award, stated as a percent of base salary based on
participant category. The Target Incentive Award is allocated among the
possible types of long-term incentive vehicles as determined by the Committee.
For any Performance Shares awarded, a greater or lesser amount, based on a
preset schedule, may be earned at the end of the plan year based on the
attainment of predetermined ROE goals. Annual grants have been made for each
type of long-term incentive. Vesting periods and/or performance measurement
periods vary according to the type of long-term incentive awarded. The CEO
will nominate participants to be approved by the Committee. Participation is
reevaluated and determined on an annual basis. Total awards to be granted are
calculated by multiplying the appropriate percentage by the participant's base
salary at the time of grant. The appropriate number of units or shares is
determined by dividing the amount of the award by the stock price at the date
of grant, calculated as the average closing price of the stock for the last ten
business days preceding the date of grant.
Stock Options and Restricted Stock vest based on continued employment.
Vesting periods are as follows:
<TABLE>
<CAPTION>
<S> <C>
TYPE OF AWARD VESTED PERIOD
Stock Options One to three years
Restricted Stock 7 years
</TABLE>
Based on performance achieved during the year, an individual's Performance
Share award payout will be a function of performance against pre-established
objectives. Threshold, Target, and Outstanding performance levels are defined
at the beginning of each year for each performance measure.
The Plan's initial performance measure for Performance Share awards has been
Return on Equity (ROE). Initially, ROE has been calculated at the corporate
level only. Average ROE for each three-year measurement period is compared
with preset goals, as described above, to determine award payouts.
The Committee may, in its discretion, make an adjustment to Performance Share
awards to consider aspects of performance that may not be reflected in the
financial results of the Corporation.
Payments of Performance Share awards are made in stock as soon as practicable
after the end of the three-year measurement period, and after approval by the
Committee. Thus far the only payout of performance shares was
21
<PAGE> 23
for the period 1991-1993. No awards have been earned for the 1992-1994 or
1993-1995 period. In the event that a participant changes positions
between award grant dates, whether due to promotion, demotion, or lateral move,
at the discretion of the Committee, awards are granted or modified as
appropriate. An employee hired into an eligible position during the year may
participate in the Plan for the balance of the year on a pro rata basis at the
discretion of the Committee.
In the event a participant voluntarily terminated employment or is terminated
involuntarily before Stock Option or Restricted Stock awards have been vested,
or before Performance Share awards have been earned for a performance period,
any award will be forfeited. In the event of death, permanent disability, or
normal retirement, or upon the occurrence of a defined "change in control" of
the Corporation, all Stock Option and Restricted Stock awards will vest
immediately.
Annual grants of Restricted Stock Units (RSUs) have been made to participants
since Plan inception. At the time of grant, a vesting schedule is established
for each RSU award, which need not be the same for each participant, and which
may be based upon the passage of time, the achievement of preestablished
performance goals or a combination thereof. The RSUs may not be sold, pledged
or transferred until fully vested and until any other applicable restrictions
have lapsed. During the vesting period, participants are paid dividend
equivalents on the RSUs granted to them. When vested, payment for RSUs will be
made in shares of the Common Stock of the Corporation on a one for one basis.
No RSUs have been paid since the Plan has only been in effect for approximately
five years. The Plan is intended to remain in effect for ten years, unless
terminated earlier by the Board of Directors of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO SET ASIDE
900,000 SHARES OF SERIES B COMMON STOCK OF THE CORPORATION FOR FUTURE ISSUANCE
UNDER THE KEY EMPLOYEE LONG-TERM INCENTIVE STOCK PLAN FOR KEY EMPLOYEES OF THE
CORPORATION.
SHAREHOLDERS PROPOSAL DEADLINE
Shareholder proposals intended to be presented at the April 29, 1997, Annual
Meeting of Shareholders must be received by the Corporation for inclusion in
the Corporation's proxy statement and form of proxy relating to that meeting by
December 1, 1996.
OTHER MATTERS
The Board of Directors knows of no other matters to come before the
shareholders' meeting. However, if any other matters properly come before the
meeting or any of its adjournments, the person or persons voting the proxies
will vote them in accordance with their best judgment on such matters.
By order of the Board of Directors.
James P. Rowan
Vice President, General Counsel
and Assistant Secretary
March 28, 1996
- --------------------------------------------------------------------------------
A copy of the Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 including the financial statements and the schedules
thereto, but excluding exhibits thereto, required to be filed with the
Securities and Exchange Commission, will be made available without charge to
interested shareholders upon written request to Robert P. Harwood, Vice
President, Investor/Public Relations, The Wackenhut Corporation, 4200 Wackenhut
Drive #100, Palm Beach Gardens, Florida 33410-4243.
22
<PAGE> 24
APPENDIX A
THE WACKENHUT CORPORATION
NONEMPLOYEE DIRECTOR STOCK
OPTION PLAN
(Effective April 28, 1995)
<PAGE> 25
THE WACKENHUT CORPORATION
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(Effective April 28, 1995)
CONTENTS
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE I. THE PLAN
1.1 Establishment of the Plan 1
1.2 Purpose of the Plan 1
1.3 Duration of the Plan 1
ARTICLE II. DEFINITIONS
2.1 Award Agreement 2
2.2 Board 2
2.3 Code 2
2.4 Company 2
2.5 Disability 2
2.6 Exchange Act 2
2.7 Fair Market Value 2
2.8 Nonemployee Director 2
2.9 Option 3
2.10 Participant 3
2.11 Plan Administrator 3
2.12 Shares 3
ARTICLE III. ADMINISTRATION
3.1 The Plan Administrator 4
3.2 Authority of the Plan Administrator 4
3.3 Decisions Binding 4
ARTICLE IV. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares 5
4.2 Lapsed Option Grants 5
4.3 Adjustments in Authorized Shares 5
</TABLE>
i
<PAGE> 26
THE WACKENHUT CORPORATION
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(Effective April 28, 1995)
CONTENTS
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE V. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility 6
5.2 Actual Participation 6
ARTICLE VI. NONQUALIFIED STOCK OPTIONS
6.1 Grants of Options 7
6.2 Limitation on Grant of Options 7
6.3 Award Agreement 7
6.4 Option Price 7
6.5 Duration of Options 7
6.6 Vesting of Shares Subject to Option 7
6.7 Payment 8
6.8 Termination of Service on Board Due to Death 8
6.9 Termination of Service on Board Due to Disability 8
6.10 Termination of Service on Board for Other Reasons 8
6.11 Nontransferability of Options 9
6.12 Restrictions on Share Transferability 9
ARTICLE VII. AMENDMENT, MODIFICATION, AND TERMINATION
7.1 Amendment, Modification, and Termination 10
7.2 Options Previously Granted 10
ARTICLE VIII. MISCELLANEOUS
8.1 Indemnification 11
8.2 Beneficiary Designation 11
8.3 Successors 11
8.4 Severability 11
8.5 Requirements of Law 11
8.6 Governing Law 12
</TABLE>
ii
<PAGE> 27
ARTICLE I. THE PLAN
1.1 ESTABLISHMENT OF THE PLAN
The Wackenhut Corporation, (the "Company"), hereby establishes an incentive
compensation plan providing for the grant of nonqualified stock options to
Nonemployee Directors, subject to the terms and provisions set forth herein.
This plan shall be known as the Wackenhut Corporation Nonemployee Director
Stock Option Plan (the "Plan").
Subject to ratification by an affirmative vote of a majority of Shares present
and entitled to vote at the 1996 Annual Meeting at which a quorum is present,
the Plan shall become effective as of April 28, 1995 (the "Effective Date").
1.2 PURPOSE OF THE PLAN
The purpose of the Plan is to promote the achievement of long-term objectives
of the Company by linking the personal interests of Nonemployee Directors to
those of Company shareholders, and to attract and retain Nonemployee Directors
of outstanding competence.
1.3 DURATION OF THE PLAN
The Plan shall commence on April 28, 1995 and shall remain in effect, subject
to the right of the Board to amend or terminate the Plan at any time pursuant
to section 7.1, until all Shares subject to the Plan have been purchased or
acquired according to the Plan's provisions. However, in no event may an Option
be granted under the Plan on or after April 27, 2005.
1
<PAGE> 28
ARTICLE II. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below unless otherwise expressly provided. When the defined meaning is
intended, the term is capitalized. The definition of any term in the singular
shall also include the plural.
2.1 AWARD AGREEMENT
Award Agreement means an agreement entered into by the Company and each
Participant setting forth the terms and provisions applicable to Options
granted under this Plan.
2.2 BOARD
Board means the Board of Directors of The Wackenhut Corporation.
2.3 CODE
Code means the Internal Revenue Code of 1986, as amended from time to time.
2.4 COMPANY
Company means The Wackenhut Corporation and any successor organization as
provided in section 8.3.
2.5 DISABILITY
Disability means any disabling condition which entitles the Participant to
disability benefits under the federal Social Security Act.
2.6 EXCHANGE ACT
Exchange Act means the Securities Exchange Act of 1934, as amended from time to
time.
2.7 FAIR MARKET VALUE
Fair Market Value means the last closing sale price of a Share on or prior to
the relevant date that is reported by the principal securities exchange on
which the Shares are publicly traded.
2.8 NONEMPLOYEE DIRECTOR
Nonemployee Director means any individual who is a member of the Board, but who
has never otherwise been an employee of the Company.
2
<PAGE> 29
2.9 OPTION
Option means an option to purchase Shares granted under Article VI. Such
Options are not intended to meet the requirements of Code section 422.
2.10 PARTICIPANT
Participant means a Nonemployee Director of the Company who has one or more
outstanding Options under the Plan.
2.11 PLAN ADMINISTRATOR
Plan Administrator means the Compensation Committee of the Company's Board.
2.12 SHARES
Shares mean the series B common stock of the Company.
3
<PAGE> 30
ARTICLE III. ADMINISTRATION
3.1 THE PLAN ADMINISTRATOR
The Plan shall be administered by the Plan Administrator subject to the
restrictions set forth in this Plan. The Plan Administrator may delegate to one
or more individuals or a committee any of its powers and duties as Plan
Administrator that it deems desirable. In this case, every reference in the
Plan to the Plan Administrator shall be deemed to include these individuals or
the committee as to matters within their jurisdiction.
3.2 AUTHORITY OF THE PLAN ADMINISTRATOR
The Plan Administrator shall have the full power, discretion, and authority to
administer this Plan in a manner which is consistent with its provisions.
Except as provided below, the Plan Administrator shall have the exclusive right
to interpret the terms and provisions of the Plan and to determine any and all
questions arising under the Plan or in connection with the administration
thereof, including, without limitation, the right to remedy or resolve possible
ambiguities, inconsistencies, or omissions, by general rule or particular
decision.
However, in no event shall the Plan Administrator have the power to determine
Plan eligibility, or to determine the number, the purchase price, the vesting
period, or the frequency and timing of Options to be granted under the Plan to
any Participant. All such determinations are automatic pursuant to the
provisions of this Plan.
3.3 DECISIONS BINDING
All determinations and decisions made by the Plan Administrator pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
including the Company, its stockholders, employees, Participants, and their
estates and beneficiaries.
4
<PAGE> 31
ARTICLE IV. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES
Subject to adjustment as provided in section 4.3, no more than 100,000 Shares
shall be eligible for purchase by Participants pursuant to Options granted
under this Plan.
4.2 LAPSED OPTION GRANTS
If any Option granted under this Plan terminates, expires, or lapses for any
reason, any Shares subject to purchase pursuant to such Option shall again be
available for the grant of an Option under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES
In the event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, split-up, Share combination, or other
change in the corporate structure of the Company affecting the Shares, such
adjustment shall be made in the number and class of and/or price of Shares
subject to outstanding Options granted under this Plan, as may be determined to
be appropriate and equitable by the Board, in its sole discretion, to prevent
dilution or enlargement of rights.
5
<PAGE> 32
ARTICLE V. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY
Nonemployee Directors shall be eligible to become Participants in accordance
with section 5.2.
5.2 ACTUAL PARTICIPATION
Subject to the provisions of Article VI, all Nonemployee Directors shall become
Participants by receiving grants of Options upon election and/or reelection to
serve on the Board.
6
<PAGE> 33
ARTICLE VI. NONQUALIFIED STOCK OPTIONS
6.1 GRANTS OF OPTIONS
Subject to the limitation on the number of Shares subject to this Plan, each
Nonemployee Director shall be granted an Option to purchase 2,000 Shares upon
his or her election and/or reelection to serve on the Board.
6.2 LIMITATION ON GRANT OF OPTIONS
Other than those grants of Options set forth in section 6.1, no additional
Options shall be granted under this Plan.
6.3 AWARD AGREEMENT
Each Option grant shall be evidenced by an Award Agreement that shall specify
the Option Price (as defined in section 6.4), the duration of the Option, and
the number of Shares available for purchase under the Option as set forth in
this Plan.
6.4 OPTION PRICE
The purchase price per Share available for purchase under an Option shall be
equal to the Fair Market Value of such Share on the date the Option is granted.
6.5 DURATION OF OPTIONS
Each Option shall expire on the tenth (10th) anniversary date of its grant.
6.6 VESTING OF SHARES SUBJECT TO OPTION
Options granted under the Plan shall be 100 percent vested at all times.
Participants shall be entitled to exercise Options at any time and from time to
time, within the time period beginning on the date on which the Option is
granted, and ending ten (10) years after grant of the Option.
6.7 PAYMENT
Options shall be exercised by the delivery of a written notice of exercise to
the Secretary of the Company, setting forth the number of Shares with respect
to which the Option is to be exercised. The Option Price (as defined in section
6.4) of any Option shall be payable to the Company in full in cash or its
equivalent upon exercise.
As soon as practicable after receipt of a written notification of exercise and
full payment, the Company shall deliver to the Participant, in the
Participant's name,
7
<PAGE> 34
Share certificates in an appropriate amount based upon the number of Shares
purchased pursuant to the exercise of the Option.
6.8 TERMINATION OF SERVICE ON BOARD DUE TO DEATH
If a Participant dies while he or she is actively serving as a Nonemployee
Director, any outstanding Options may be exercised by the Participant's legal
representative or beneficiary any time before the earlier of--
(a) the expiration date of such Options; or
(b) the second anniversary of the Participant's death.
6.9 TERMINATION OF SERVICE ON BOARD DUE TO DISABILITY
If a Participant incurs a Disability while he or she is actively serving as a
Nonemployee Director, the Participant may exercise any Options that are
outstanding at the time of such Disability before the earlier of--
(a) the expiration date of such Options; or
(b) the second anniversary of the date of Disability.
(If the Participant dies after incurring a Disability, but before the
expiration of the exercise period described above, the Participant's legal
representative or beneficiary may exercise any outstanding Options before the
expiration of such period.)
6.10 TERMINATION OF SERVICE ON BOARD FOR OTHER REASONS
If the service of the Participant on the Board shall terminate for any reason
other than for death or Disability, any outstanding Options held by the
Participant shall remain exercisable at any time prior to their expiration
date, or for six months after the date the Participant's service on the Board
terminates, whichever period is shorter.
6.11 NONTRANSFERABILITY OF OPTIONS
No Option granted under this Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all Options granted to a Participant under
this Plan shall be exercisable during his or her lifetime only by such
Participant.
6.12 RESTRICTIONS ON SHARE TRANSFERABILITY
The Board may impose such restrictions on any Shares acquired pursuant to the
exercise of an Option under this Plan, as it may deem advisable, including,
without limitation, restrictions under applicable Federal securities laws,
under the requirements of any Stock exchange or market upon which such Shares
are then listed and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
8
<PAGE> 35
ARTICLE VII. AMENDMENT, MODIFICATION, AND TERMINATION
7.1 AMENDMENT, MODIFICATION, AND TERMINATION
The Board may at any time alter, amend, suspend, or terminate the Plan in whole
or in part. However, no amendment which fails to comply with the exemptions
available under Rule 16b-3 of the Exchange Act, including any successor to the
Rule, shall be effective.
7.2 OPTIONS PREVIOUSLY GRANTED
Unless required by law, no termination, amendment, or modification of this Plan
shall in any manner adversely affect any Option previously granted under this
Plan, without the written consent of the Participant holding the Option.
9
<PAGE> 36
ARTICLE VIII. MISCELLANEOUS
8.1 INDEMNIFICATION
The Company shall indemnify each person against any and all claims, losses,
damages, and expenses (including counsel fees) incurred by such individual for
the exercise of any duties as Plan Administrator, whether singly or as a member
of committee, and against any liability, including any amounts paid in
settlement with the Company's approval, arising from the individual's action or
failure to act, except when the same is judicially determined to be
attributable to the gross negligence or willful misconduct of the individual.
8.2 BENEFICIARY DESIGNATION
Each Participant under this Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to exercise
the rights described in sections 6.8 and 6.9. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by
the Plan Administrator and will be effective only when filed by the Participant
in writing with the Plan Administrator during his or her lifetime. In the
absence of any such designation, such rights may be exercised by the executor
of the Participant's estate.
8.3 SUCCESSORS
All obligations of the Company under this Plan, with respect to Options granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
8.4 SEVERABILITY
If a provision of this Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining parts of the Plan. The Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included herein.
8.5 REQUIREMENTS OF LAW
The granting of Options under this Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
8.6 GOVERNING LAW
To the extent not preempted by Federal law, this Plan, and all Award Agreements
hereunder, shall be construed in accordance with the laws of the State of
Florida.
10
<PAGE> 37
IN WITNESS WHEREOF, the authorized officers of the Company have signed this
document and have affixed the corporate seal on ________________, 1996, but
effective as of April 28, 1995.
THE WACKENHUT CORPORATION
ATTEST:
By
---------------------------
George R. Wackenhut
Its
----------------------
By
-------------------------------------
Its (Corporate Seal)
---------------------------------
11
<PAGE> 38
APPENDIX B
THE WACKENHUT CORPORATION
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints George R. Wackenhut and Richard R.
Wackenhut as Proxies, each with the power to appoint his or her substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side, all the shares of Series A Common Stock of The Wackenhut Corporation held
of record by the undersigned on March 15, 1996, at the Annual Meeting of
Shareholders to be held at the PGA National Resort & Spa, 400 Avenue of the
Champions, Palm Beach Gardens, Florida, at 9:00 A.M., April 30, 1996, or at any
adjournment thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE ABOVE INSTRUCTIONS. IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. ON ANY OTHER BUSINESS WHICH
MAY PROPERLY COME BEFORE THE MEETING, THE SHARES WILL BE VOTED IN ACCORDANCE
WITH THE JUDGEMENT OF THE PERSONS NAMED AS PROXIES.
(Continued, and to be signed, on other side.)
- FOLD AND DETACH HERE -
<PAGE> 39
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PLEASE MARK YOUR
PROPOSALS 1, 2, 3 AND 4. VOTES AS INDICATED [ X ]
IN THIS EXAMPLE
<TABLE>
<S> <C> <C>
ELECTION OF DIRECTORS:
Nominees:
VOTE FOR all nominees listed VOTE WITHHELD Julius W. Becton, Jr. Nancy Clark Reynolds
to the right (except as as to all nominees Richard G. Capen, Jr. Thomas P. Stafford
marked to the contrary). Ann N. Foreman George R. Wackenhut
Edward L. Hennessy, Jr. Richard R. Wackenhut
[ ] [ ] Paul X. Kelley
INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name in the list above.
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Proposal to approve for the fiscal year 1996 the
Appointment of ARTHUR ANDERSEN LLP as the
independent certified public accountants of the [ ] [ ] [ ]
Corporation.
3. Proposal to approve the Non-Employee Director [ ] [ ] [ ]
Stock Option Plan.
4. Proposal to approve the setting aside of [ ] [ ] [ ]
additional shares for the Key Employee Long-Term
Incentive Stock Plan.
5. In their discretion, the Proxies are authorized to vote upon such other business as
may properly come before the meeting.
Please date and sign exactly as name
appears below. Joint owners should each
sign. Attorneys-in-fact, Executors,
Administrators, Trustees, Guardians, or
corporate officers should give full title.
Dated: , 1996
-------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
</TABLE>
PLEASE SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ADDRESSED ENVELOPE
- FOLD AND DETACH HERE -
