<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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: (561) 622-5656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON APRIL 29, 1997
To the Shareholders:
The Annual Meeting of the Shareholders of The Wackenhut Corporation will be
held on Tuesday, April 29, 1997, at 9:00 A.M. at the Embassy Suites Hotel, 4350
PGA Boulevard, Palm Beach Gardens, Florida, for the purpose of considering and
acting on the matters following:
(1) the election of eight 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
1997, and to perform such other services as may be requested;
(3) approval of an Employee Stock Purchase Plan;
(4) approval of an amendment to 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 14, 1997, 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 25, 1997
<PAGE> 3
PROXY STATEMENT
March 25, 1997
The Wackenhut Corporation
Executive Offices
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (561) 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 the Shareholders of the
Corporation to be held at the Embassy Suites Hotel, 4350 PGA Boulevard, Palm
Beach Gardens, Florida, April 29, 1997, 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 an Employee Stock Purchase Plan; and the proposal
to approve an amendment to the Key Employee Long-Term Incentive 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:
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 an Employee Stock Purchase Plan.
FOR - Proposal to approve an amendment to the Key Employee Long-Term
Incentive Stock Plan.
Holders of shares of the Series A Common Stock of the Corporation of record as
of the close of business on March 14, 1997, will be entitled to one vote for
each share of stock standing in their name on the books of The Wackenhut
Corporation.
On February 17, 1997, 3,856,571 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 certain amendments to the Key Employee Long-Term Incentive Stock Plan,
to approve an Employee Stock Purchase 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 25, 1997.
2
<PAGE> 4
THE ELECTION OF DIRECTORS
The Board of Directors will be comprised of eight (8) 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 their last annual meeting. All are proposed for re-election to the Board of
Directors of the Corporation at the April 29, 1997 Annual Meeting of the
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 is the Chief Executive Officer and
1994 Superintendent of the Washington, D.C. Public School
AGE 70 System. He is a former President of Prairie View A & M
University. He entered the Army as a Private in 1944
and rose to the rank of Lieutenant General. While in
the Army, he commanded the lst Cavalry Division and the
[PICTURE] VII Corps, and was the Deputy Commanding General of
the U.S. Army Training and Doctrine Command. As such,
he 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
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)
- --------------------------------------------------------------------------------
RICHARD G. CAPEN, JR. Ambassador Capen is an author, speaker and independent
1993 corporate director. He was formerly United States
AGE 62 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
[PICTURE] 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 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. Ambassador
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. Ambassador
Capen is a l956 graduate of Columbia University which
he attended on an NROTC scholarship. (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
1993 United States Air Force from September 1989 until
AGE 49 January 1993. 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
[PICTURE] Oversight Board. Mrs. Foreman served in the White
House as Associate Director of Presidential Personnel
for National Security (1985-1987) and 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
1993 Board and Chief Executive Officer of Allied-Signal Inc.
AGE 69 from 1979 to 1991. He was previously Executive Vice
President and member of the Board of Directors and
Executive Committee of United Technologies Corporation,
[PICTURE] Senior Vice President for Administration and Finance
for Heublein, Inc. and Controller with IT&T
Corporation. He is a member of the Board of Directors
of Lockheed Martin, The Bank of New York, Walden
Residential Properties, Inc., and NAI Technologies,
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)
- --------------------------------------------------------------------------------
PAUL X. KELLEY General Kelley is the Vice Chairman of Cassidy and
1988 Associates, Inc., a government relations firm in
AGE 68 Washington, D.C. He is also on the Board of Directors
of Allied-Signal, Inc., an aerospace, automotive
products, and engineered materials company; GenCorp,
[PICTURE] Inc. a propulsion, defense electronics, and ordnance
company; London Life Insurance Company, a Canadian life
insurance company, PHH Corporation, 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 five 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,
1986 a governmental relations and public affairs consulting
AGE 69 firm in Washington, D.C. She currently serves as a
Director of Sears, Roebuck & Co., Allstate Insurance
Company and The Norrell Corporation, a temporary help
[PICTURE] service firm. She is a member of the Board of the
National Park Foundation, The 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)
- --------------------------------------------------------------------------------
GEORGE R. WACKENHUT Mr. Wackenhut is Chairman of the Board and Chief
1958 Executive Officer of the Corporation. He was President
AGE 77 of the 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
[PICTURE] Board of Directors of Wackenhut Corrections
Corporation, a former member of the Board of Directors
of SSJ Medical Development, 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)
- --------------------------------------------------------------------------------
RICHARD R. WACKENHUT Mr. Wackenhut, President and Chief Operating Officer of
1986 the Corporation since April 26, 1986, was formerly
AGE 49 Senior Vice President, Operations from 1983-1986. He
was Manager of Physical Security from 1973-74. He also
served as Manager, Development at the Corporation's
[PICTURE] Headquarters from 1974-76; Area Manager, Columbia, SC
from 1976-77; District Manager, Columbia SC from
1977-79; Director, Physical Security 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 Vice Chairman
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, 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>
5
<PAGE> 7
(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.
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
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
1996 fiscal year.
6
<PAGE> 8
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 17, 1997, by each director nominee for
election as director at the 1997 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)(6) CLASS
========================================================================================================================
<S> <C> <C> <C> <C>
DIRECTOR NOMINEES
Julius W. Becton, Jr. - - 4,656 *
Richard G. Capen, Jr. - - 4,812(3) *
Anne N. Foreman 200 * 4,862 *
Edward L. Hennessy, Jr. 200 * 4,862 *
Paul X. Kelley 1,000 (3) * 6,937(3) *
Nancy Clark Reynolds 1,400 * 5,912 *
George R. Wackenhut 1,929,606 (4) 50.03% 2,204,571(4) 20.39%
Richard R. Wackenhut 65 (5) * 91,457(5) *
EXECUTIVE OFFICERS
Alan B. Bernstein 500 * 70,465 *
Fernando Carrizosa - - 55,606 *
Robert C. Kneip - - 55,583 *
George C. Zoley - - 7,500 *
ALL NOMINEES AND EXECUTIVE 1,932,971 50.12% 2,516,473 23.28%
OFFICERS AS A GROUP
OTHER
Wellington Management Company (7) 261,700 6.79% - -
TCW Group, Inc. and Robert Day (8) - - 720,000 6.66%
</TABLE>
*Beneficially owns less than 1%
(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.
7
<PAGE> 9
(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 50.03% of the issued and
outstanding voting common stock of The Wackenhut Corporation.
(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.
(8) The address of TCW Group, Inc. and Robert Day is 865 South
Figueroa Street, Los Angeles, CA, 90017.
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Corporation
during the fiscal year ended December 29, 1996, 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, 1996 859,000 335,000 - 18,000 - 16,543
Chairman of the Board and 1995 784,000 198,000 - 25,000 - 16,543
Chief Executive Officer 1994 732,000 329,000 - 205,041 - 16,543
Richard R. Wackenhut, 1996 555,000 217,000 36,663 16,000 - 127,500
President and Chief 1995 508,000 128,000 33,330 22,500 - 60,000
Operating Officer 1994 451,000 208,000 29,330 201,916 - 59,000
Alan B. Bernstein, 1996 313,000 150,000 18,598 14,000 - 109,000
Executive Vice President, 1995 287,000 96,000 16,798 16,250 - 51,000
and President, North 1994 253,000 123,000 14,699 151,438 - 51,000
American Operations Group
George C. Zoley 1996 288,000 101,500 - 20,000 - 25,906
Wackenhut Corrections Corp. 1995 249,000 70,000 - 7,500 - 11,755
President and Chief Executive 1994 186,000 100,000 - 180,666 - 9,067
Officer and Director
Fernando Carrizosa 1996 226,000 75,000 11,999 12,000 - 84,000
Senior Vice President and 1995 207,000 55,000 10,932 12,500 - 50,000
President, International 1994 198,000 69,000 10,399 125,416 - 50,000
Group
</TABLE>
8
<PAGE> 10
(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 29, 1996 is as
follows:
<TABLE>
<CAPTION>
RESTRICTED
STOCK PERFORMANCE TOTAL FAIR
UNITS SHARES UNITS/SHARES MARKET VALUE
===========================================================================
<S> <C> <C> <C> <C>
G. R. Wackenhut - 30,601 30,601 $420,764
R. R. Wackenhut 14,150 11,982 26,132 359,315
A. B. Bernstein 6,938 6,057 12,995 178,681
F. Carrizosa 4,396 3,926 8,322 114,428
George C. Zoley - - - -
</TABLE>
[CAPTION]
Restricted stock units and performance shares have been restated to
reflect the 25% stock dividends declared in 1994 and 1995. Restricted
stock units do not vest until 7 years continuous employment from the
date of grant.
(2) Dividends are paid on restricted stock.
(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) the cost of providing
for future liabilities under the Senior Officer Retirement Plan except
for Mr. Zoley who is provided for under the Executive Retirement Plan
in 1994 and the Corrections Subsidiary Senior Officer Retirement Plan
in 1995 and 1996.
(5) There was no payout of awards because return on equity performance
goals were not met.
(6) The following securities underlying options were granted under
stock option plans of Wackenhut Corrections Corporation:
<TABLE>
<CAPTION>
SECURITIES UNDERLYING OPTIONS
NAME 1996 1995 1994
==================== ==================================
<S> <C> <C> <C>
George R. Wackenhut - - 170,666
Richard R. Wackenhut - - 170,666
Alan B. Bernstein - - 128,000
Fernando Carrizosa - - 106,666
George C. Zoley 20,000 - 170,666
</TABLE>
Amounts in 1994 have been restated to reflect the 100% stock dividend
(treated as a split stock) paid on June 4, 1996.
9
<PAGE> 11
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 1996. The Plan is 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.
<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 PAYOUT
NAME (#) (1) PAYOUT (2) ($) ($) ($)
========================================================================================
<S> <C> <C> <C> <C> <C>
George R. Wackenhut 14,207 1996-1998 93,500 187,000 280,500
Richard R. Wackenhut 5,572 1996-1998 36,669 73,337 110,006
Alan B. Bernstein 2,286 1996-1998 18,601 37,202 55,803
George C. Zoley 0 1996-1998 0 0 0
Fernando Carrizosa 1,823 1996-1998 12,001 24,001 36,002
</TABLE>
(1) Performance shares and restricted stock units are awarded under the
Plan, however, only performance shares are reflected above since
restricted stock units are not contingent upon performance and are
reported separately in the Summary Compensation Table, Long-Term
Compensation Restricted Stock Awards Column.
(2) Average return on Equity performance goals are set by the Nominating
and Compensation Committee for all of the three-year
performance cycles.
OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS 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 ($/SHARE) DATE 5% ($) 10% ($)
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
George R. Wackenhut (1) 18,000 8.9% 14.00 30-Jan-06 158,481 401,623
Richard R. Wackenhut (1) 16,000 7.9% 14.00 30-Jan-06 140,872 356,998
Alan B. Bernstein (1) 14,000 6.9% 14.00 30-Jan-06 123,263 312,374
George C. Zoley (2) 20,000 40.0% 22.625 25-Apr-06 284,575 721,168
Fernando Carrizosa (1) 12,000 5.9% 14.00 30-Jan-06 105,654 267,749
</TABLE>
(1) Options granted under the Key Employee Long-Term Incentive Stock
Plan of the Corporation (the "Incentive Stock Plan").
(2) Options granted under Wackenhut Corrections Corporation's Stock
Option Plan (the "Second Plan").
(3) The full option term was used in the 5% and 10% annual growth
projections for the price of the underlying stock.
10
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
SHARES YEAR-END (#) YEAR-END ($)
ACQUIRED VALUE ------------------------------------
ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/
(#) ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
===================================================================================
<S> <C> <C> <C> <C> <C> <C>
George R. Wackenhut (A) NONE NA 59,375 E 334,656 E
18,000 U -
(B) NONE NA 32,864 E 580,871 E
(C) NONE NA 74,666 E 1,129,323 E
Richard R. Wackenhut (A) NONE NA 53,750 E 303,563 E
16,000 U -
(B) 32,864 790,241 - -
(C) NONE NA 74,666 E 1,129,323 E
Alan B. Bernstein (A) NONE NA 39,688 E 225,832 E
14,000 U -
(B) NONE NA 14,188 E 250,773 E
(C) NONE NA 56,000 E 847,000 E
Fernando Carrizosa (A) NONE NA 31,250 E 179,188 E
12,000 U -
(B) 20,540 318,113 39,460 E 697,456 E
(C) NONE NA 46,666 E 705,823 E
George C. Zoley (A) NONE NA 7,500 E 22,125 E
(C) NONE NA 74,666 E 1,129,323 E
4,000 E -
16,000 U -
</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")
11
<PAGE> 13
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
F. Carrizosa 100,000 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 1996. 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 comparisons with financial and stock performance of other companies,
including those that are in competition
12
<PAGE> 14
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 1996 was attributable
to the overall financial performance of the Company, strategic objectives and
the quality of his leadership. In 1996, 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 among 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 l996. 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 1996 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 Company also maintains a Stock Option Plan (the Plan) for executive
officers, including the CEO and other key employees. Participants receive
stock option grants based upon their overall contribution to the Corporation.
Such options are granted at market value at the time of grant.
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.
13
<PAGE> 15
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
Paul X. Kelley, Chairman Nancy Clark Reynolds (1)
Richard G. Capen Anne Newman Foreman (1)
(1) Took part in the Committee meeting which approved this report due to
the absence of a regular member.
COMPARISON OF CUMULATIVE TOTAL RETURN*
THE WACKENHUT CORPORATION, WILSHIRE 5000 EQUITY,
AND S&P SERVICE (COMMERCIAL AND CONSUMER) INDEXES**
(PERFORMANCE THROUGH DECEMBER 31, 1996)
[GRAPH]
Assumes $100 invested on December 31, 1991, in Wackenhut Series A Common Stock
and the Index companies.
* Total return assumes reinvestment of dividends.
** Formerly called "S&P Specialized Srvices." Underlying Companies did not
change.
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
The Wackenhut Corporation 100 105 98 104 178 216
Wilshire 5000 Equity 100 109 122 122 166 201
S&P Services (Commercial and Consumer)** 100 99 96 119 119 123
</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.
14
<PAGE> 16
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 the costs.
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 the WCC, including, among
other things, assistance in the preparation of the 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 the WCC with technical
assistance in the areas of equipment specifications, kitchen layout and design,
menu development, nutritional analysis and field support and training (for
which 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
15
<PAGE> 17
the 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 all but two of 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.
The following table sets forth certain amounts billed to WCC during fiscal
1994, fiscal 1995, and fiscal 1996, for services not covered by the Annual
Services Fee paid under the 1994 and 1996 Services Agreement.
<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1995 FISCAL 1996
======================================================================
<S> <C> <C> <C>
Food Services $4,146,000 $3,903,000 $ 450,000
Casualty Insurance Premiums (1) 1,393,000 1,540,000 3,306,000
Interest Charges (Income) (2) 166,000 (172,000) 40,000
Office Rental (3) 106,000 106,000 269,000
TOTAL $5,811,000 $5,377,000 $4,065,000
</TABLE>
(1) Casualty insurance premiums relate to workers' compensation,
general liability and automobile insurance coverage obtained through
the Company's Insurance Program. Substantially, all of the casualty
insurance premiums represented premiums 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 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. Prior to WCC's IPO, 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 and the Company than could have
been obtained from unaffiliated third parties). In 1995, the Company
sold the office building and relocated its headquarters to Palm Beach
Gardens, Florida, in March 1996. 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 and the
Company than could have been obtained from unaffiliated third parties.
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 Agreements, 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 United States.
16
<PAGE> 18
Nevertheless, in the United States, the Company's North American
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 food services. 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. Upon
consummation of its IPO, all outstanding indebtedness of WCC to the Company was
repaid.
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.
The Company anticipates that it may, from time to time, use the services of the
law firm of Venable, Baetjer and Howard, of which Mr. Benjamin R. Civiletti, a
Director of WCC is a partner.
George C. Zoley, Vice Chairman of the Board and Chief Executive Officer of
WCC, also serves as Senior Vice President of the Corporation, 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, Vice President and General Counsel of the Company also serves
as the Secretary of WCC. George R. Wackenhut is Chairman of the Board and
Chief Executive Officer of the Company, also serves as Chairman of the Board of
WCC and, together with his wife, Ruth J. Wackenhut, through trusts over which
they have sole dispositive and voting power, control approximately 50.03% 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., and a Director of several domestic
subsidiaries of the Company. He is the son of George R. Wackenhut.
DIRECTORS' COMPENSATION
Directors of the Corporation who are not Officers were paid during fiscal year
1996 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 receives from the Corporation annually, an
option to purchase 2,000 shares of Series B Common Stock of the Corporation.
No Directors or their affiliates were compensated for services rendered to the
Corporation during 1996 other than the compensation described above.
SECTION 16 FILING VIOLATIONS
All SEC Forms 3, 4 and 5 filings appear to have been made when due. Those
Directors and Officers not required to file a Form 5 for 1996 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
1997, 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.
17
<PAGE> 19
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
PROPOSAL TO APPROVE AN EMPLOYEE STOCK PURCHASE PLAN
On January 28, 1997, the Board of Directors adopted, subject to shareholder
approval at the Annual Meeting, an Employee Stock Purchase Plan (the "Purchase
Plan") to permit employees to purchase Series B Common Stock of the Corporation
through a payroll deduction program of between 1% and 10% of the employee's
compensation. The purchase price will be the greater of, a) 90 percent of the
average of the closing prices for the last three trading dates of the
applicable calendar quarter or, b) 85 percent of the lesser of, 1) the
closing price on the first trading date of the applicable calendar quarter or,
2) the closing price on the last trading date of the applicable calendar
quarter. Rights granted under the Purchase Plan may not be transferred except
by will or the laws of descent and distribution. No options will be granted to
any individual in excess of $25,000 of fair market value in a calendar year.
The proposal would also set aside for that purpose 1,000,000 shares of
authorized, but unissued Series B Common Stock, and authorize and empower
appropriate officers of the Corporation to do all things necessary or desirable
to implement such a Purchase Plan. It is the intention of the Company to have
the Purchase Plan qualify as an Employee Stock Purchase Plan under Section 423
of the Internal Revenue Code of 1986.
The Purchase Plan will be open to all employees of the Company and its United
States affiliates, excluding Wackenhut Corrections Corporation, who customarily
work more than 20 hours per week and customarily work more than five months per
year. Ownership of stock or options equaling or exceeding 5% of the value of
all classes of stock of the Company would disqualify an employee from
participation in the Purchase Plan. George R. Wackenhut, Chairman and CEO and
certain relatives of his, including Richard R. Wackenhut, President and COO,
are not eligible to participate in the Purchase Plan.
The Purchase Plan is subject to approval by the affirmative vote of the holders
of a majority of the outstanding shares of Series A Common Stock voting in
person or by proxy and entitled to vote thereon. If the Purchase Plan is so
approved, it will become effective on the first day of the calendar quarter
coinciding with or next following the approval of this Plan by the shareholders
and completion of the registration process required under the Securities Act of
1933.
The Board believes that adoption of the Purchase 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 PROPOSAL TO
APPROVE AN EMPLOYEE STOCK PURCHASE PLAN.
18
<PAGE> 20
PROPOSAL NO. 4
PROPOSAL TO APPROVE AN AMENDMENT TO THE KEY EMPLOYEE LONG-TERM INCENTIVE STOCK
PLAN
The success of the Corporation depends, in large measure, on its ability to
recruit and retain key employees with outstanding ability and experience. The
Board of Directors also believes there is a need to align shareholder and
employee interests by encouraging employee stock ownership and to motivate
employees with compensation conditioned upon achievement of the Corporation's
financial goals.
In order to accomplish these objectives, the Board of Directors adopted the Key
Executive Long-Term Incentive Stock Plan (the "Incentive Plan") in 1992 and the
shareholders approved the Incentive Plan.
This Amendment to the Incentive Plan is intended to enhance flexibility under
the Incentive Plan, and to address recent regulatory changes, in particular,
the deductibility limit imposed by Section 162(m) of the Internal Revenue Code
(the "Code"). The revisions do not increase the number of shares of Common
Stock for issuance under the Incentive Plan.
SUMMARY DESCRIPTION OF THE AMENDMENT TO THE INCENTIVE PLAN
The following summarizes the material terms of the Amendment to the Incentive
Plan. If adopted by shareholders, the Amendment will be effective as of
January 28, 1997.
INDIVIDUAL AWARD LIMIT. In order to possibly exempt future awards from the
tax deductibility limitations of Code Section 162(m), the Amendment to the
Incentive Plan provides that no more than one hundred thousand (100,000) shares
under Option may be granted to any participant in any one fiscal year and that
no more than fifty thousand (50,000) shares will be paid out under any
Performance Share or Performance Unit award in any one fiscal year, to any
Participant. This Amendment to the Incentive Plan does not authorize any
additional shares for issuance under the Incentive Plan. Further this
Amendment is not intended to increase future award sizes or otherwise alter the
Nominating Compensation Committee's (the "Committee's") general practices in
determining award sizes.
MINIMUM VESTING PERIOD. As a result of recent revisions to Section 16
of the Securities Exchange Act of 1934, the minimum six-month vesting
requirement on Options, Restricted Stock Units, Performance Units, and
Performance Shares has been removed. Although removal of this provision is not
intended to change the Committee's practice in establishing vesting schedules of
awards, this provision will allow the Committee greater flexibility in designing
future awards.
PERFORMANCE MEASURES. The Performance Measures on which awards
qualifying for an exemption under Section 162(m) are based shall be chosen from
among the following: return on equity, earnings per share, operating cash flow,
gross revenue, income before taxes, net income, return on revenue, and stock
price appreciation. Although this provision is not intended to change the
Committee's practice in establishing certain performance vesting requirements,
this provision will allow the Committee flexibility in establishing performance
goals while maintaining an exemption to the tax deductibility limitations
imposed by Section 162(m).
SUMMARY DESCRIPTION OF THE EXISTING INCENTIVE PLAN. The following
summarizes the material terms of the existing Incentive Plan. The Incentive
Plan shall remain in effect until July 31, 2001, unless terminated earlier by
the Board of Directors.
ADMINISTRATION OF THE PLAN. The Plan is administrated by the Nominating
and Compensation Committee of the Board of Directors (the "Committee"), who has
the authority, among other things, to select employees to whom awards are
granted, to determine the terms and conditions of such awards in a manner
consistent with the Plan.
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ELIGIBILITY UNDER THE PLAN. Key employees of the Corporation are eligible
to participate in the Incentive Plan. Nonemployee directors of the Corporation
are not eligible.
The Incentive Plan provides for broad discretion in selecting Participants and
in making awards, the total number of persons who will participate and the
respective benefits to be awarded to them cannot be determined at this time.
SHARES SUBJECT TO THE PLAN. One million six hundred eighty-one thousand
and fifty (1,681,250) shares of Series B Common Stock of the Corporation
have been authorized as available for grant under the Plan.
STOCK OPTIONS. Stock Options may be granted by the Committee in the
form of Nonqualified Stock Options ("NQSOs"), Incentive Stock Options ("ISOs"),
or a combination thereof. Grants of ISOs must fulfill the requirements of
Section 422 of the Internal Revenue Code.
The purchase price per share under any Option shall be determined by the
Committee in its own discretion. The term of each Option shall be fixed by the
Committee, and it is expected that no Option shall have a term extending beyond
ten years from the date the Option is granted. Options shall be subject to
such terms and conditions and shall be exercisable at such time or times as
determined by the Committee.
Options may be exercised by payment of the purchase price in cash, in
previously acquired shares of Corporation stock, or a combination thereof. Also,
the Committee may allow broker-assisted cashless exercises.
In the event a Participant's employment is terminated, the Participant's rights
in Stock Options shall be determined as follows. If termination is due to
death or Disability, Options shall become fully vested and shall be exercisable
for one (1) year from the date of employment termination. If terminations due
to Retirement, Options shall become fully vested and shall be exercisable for
the remainder of the Option term. If termination is due to Cause, all Options,
including vested and unvested Options, shall be forfeited to the Corporation.
In the event of any other termination, unvested Options will be forfeited and
the vested Options will be exercisable for ninety (90) days from the date of
employment termination. At the Committee's discretion, the exercisability
period following employment termination may be extended, but in no event beyond
the remainder of the Option term.
RESTRICTED STOCK UNITS. A Restricted Stock Unit award consists of a grant
of a right to receive corporate stock equal to the number of Restricted Stock
Units upon the lapse of certain restrictions imposed by the Committee in its
discretion. Upon lapse of the "Restriction Period," payment shall be made to
Participants solely in the form of Series B Common Stock.
During the Restriction Period, a Restricted Stock Unit holder shall receive
payment equal to the dividends paid on an equivalent number of Series B Common
Stock of the Corporation. A Participant shall not receive the stock
certificates until the lapse of the Restriction Period.
In the event a Participant's employment is terminated, the Participant's rights
in Restricted Stock Units shall be determined as follows. If termination is
due to death, Disability, or Retirement, all Restricted Stock Units shall
become fully vested and paid out in the form of Series B Common Stock. In the
event of any other termination, unvested Restricted Stock Units shall be
forfeited to the Corporation; provided, however, that unless such termination
was for Cause, the Committee, in its sole discretion, may waive the automatic
forfeiture provision and apply other restrictions as it deems necessary.
PERFORMANCE UNITS AND PERFORMANCE SHARES. Subject to the terms of the
Plan, Performance Units and Performance Shares may be granted to eligible
employees at any time as determined by the Committee. A Performance Unit shall
have an initial value of one dollar ($1.00) and a Performance Share shall
initially have a fair market value equal to a share of Series B Common Stock on
the date of grant.
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<PAGE> 22
The Committee shall establish performance goals in its discretion which,
depending on the level of performance achieved, will determine the number
and/or value of Performance Units/Shares earned. Payment of earned Performance
Units/Shares shall, at the discretion of the Committee, be paid in the form of
cash and/or shares of Series B Common Stock.
In the event a Participant's employment is terminated, the Participant's
rights in Performance Shares and Performance Units shall be determined as
follows. If termination is due to death, Disability or Retirement, the
Participant shall receive a pro rata payment based on the number of months of
service during the performance period, based on the achievement of performance
goals over the entire performance period. Payment shall be made at the end of
the performance period. In the event of any other termination, unvested
Performance Shares and Performance Units shall be forfeited to the Corporation;
provided, however, that unless such termination was for Cause, the Committee, in
its sole discretion, may waive the automatic forfeiture provisions and pay out a
pro rata payment as described above.
AWARDS NONTRANSFERABLE. No award may be assigned, transferred, pledged,
or otherwise encumbered by a Participant, other than by will or by the laws of
descent and distribution. Each award may be exercised during the Participant's
lifetime only by the Participant or the Participant's legal representative.
CHANGE IN CONTROL. In order to protect the Participant's
rights in the event of a "Change in Control" of the Corporation (as defined in
the Incentive Plan), all outstanding Options shall immediately vest upon the
occurrence of such an event. Also, in the event of a Change in Control, all
Restricted Stock Units shall become vested with payment made in the form of
Series B Common Stock, and all Performance Shares and Performance Units shall
be cashed out at the higher of the actual performance achieved through the date
of the Change in Control or the target award level.
On January 28, 1997, the Board of Directors adopted, subject to shareholder
approval at the Annual Meeting, the above described Amendment to the Incentive
Plan for the foregoing purposes.
The Amendment to the Incentive Plan is subject to approval by the affirmative
vote of the holders of a majority of the outstanding shares of Series A Common
Stock voting in person or by proxy and entitled to vote thereon. If the
Amendment to the Plan is so approved, they will become effective on the date of
adoption by the Board.
The Board believes that the adoption of the Amendment to the Incentive 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 PROPOSAL TO
APPROVE THE AMENDMENT TO THE KEY EMPLOYEE LONG-TERM INCENTIVE STOCK PLAN.
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SHAREHOLDERS PROPOSAL DEADLINE
Shareholder proposals intended to be presented at the April 28, 1998, 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, 1997.
OTHER MATTERS
The Board of 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 21, 1997
================================================================================
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 29, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
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.
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Appendix A
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 14, 1997, at the Annual Meeting of
Shareholders to be held at the Embassy Suites Hotel, 4350 PGA Boulevard, Palm
Beach Gardens, Florida, at 9:00 A.M., April 29, 1997, or at any adjustment
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.)
The Board of Directors recommends a vote FOR Proposals 1,2,3 and 4.
Please mark
your vote as [x]
indicated on
this statement.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS:
Nominees:
VOTE FOR all nominees VOTE withheld Julius W. Becton, Jr. Paul X. Kelley
listed to the right (except as as to all nominees. Richard G. Capen, Jr. Nancy Clark Reynolds
marked to the contrary) Ann Newman Foreman George R. Wackenhut
[ ] [ ] Edward L. Hennessey. Jr. Richard R. Wackenhut
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list above.
2. Proposal to approve for the fiscal year 1997 FOR AGAINST ABSTAIN
the Appointment of ARTHUR ANDERSEN LLP as the
independent certified public accountants of
the Corporation. [ ] [ ] [ ]
3. Proposal to approve the Employee Stock
Purchase Plan. [ ] [ ] [ ]
4. Proposal to approve an amendment to the Key
Employee Long-Term Incentive Stock Plan. [ ] [ ] [ ]
5. In this 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: , 1997
-------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Signature
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Signature if held jointly
PLEASE SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ADDRESSED ENVELOPE.
</TABLE>
