<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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] 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
EXECUTIVE OFFICES
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (561) 622-5656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON MAY 7, 1999
To the Shareholders:
The Annual Meeting of the Shareholders of The Wackenhut Corporation will be held
on Friday, May 7, 1999, at 9:00 A.M. at the Ritz-Carlton, Palm Beach, 100 South
Ocean Blvd., Manalapan, Florida, for the purpose of considering and acting on
the matters following:
(1) the election of twelve 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 1999, and
to perform such other services as may be requested;
(3) approval of the setting aside of additional shares for the Key
Employee Long-Term Incentive Stock Plan; and
(4) 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 17, 1999, 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.
If you are a registered shareholder, you can ensure that your shares are
represented at the Annual Meeting in one of two ways:
1) by completing, signing, dating and mailing the enclosed proxy card
in the enclosed postage-paid envelope;
2) by calling the toll-free number indicated on the enclosed proxy card
to vote by phone.
If you attend the meeting in person, you may, if you wish, revoke your proxy and
vote in person.
If your shares are held in the name of a broker, bank or other holder of record,
you may attend the Annual Meeting, but may not vote at the meeting unless you
have first obtained a proxy, executed in your favor, from the owner of record.
By order of the Board of Directors.
James P. Rowan
Senior Vice President, General Counsel,
and Assistant Secretary
March 31, 1999
<PAGE> 3
PROXY STATEMENT
March 31, 1999
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 Ritz-Carlton, Palm Beach, 100 South Ocean Blvd., Manalapan,
Florida, May 7, 1999, 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 setting aside of additional shares for 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. A Proxy Card which is properly executed, returned and not revoked
will be voted in accordance with the instructions indicated. A proxy voted by
telephone and not revoked will be voted in accordance with the shareholder's
instructions. If no instructions are given, proxies which are signed and
returned or voted by telephone will be voted as follows:
FOR - the slate of Directors proposed by the Board of Directors;
FOR - the proposal to ratify the appointment of Arthur Andersen LLP
as the independent certified public acountants of the
Corporation; and
FOR - the proposal to approve the setting aside of additional shares
for the Key Employee Long-Term Incentive Stock Plan.
The enclosed proxy gives discretionary authority as to any matters not
specifically referred to therein. Management is not aware of any other matters
to be presented for action by shareholders before the Annual Meeting. If any
such matter or matters properly come before the Annual Meeting, it is understood
that the designated proxy holders have discretionary authority to vote thereon.
Holders of shares of the Series A Common Stock of the Corporation of record as
of the close of business on March 17, 1999, will be entitled to one vote for
each share of stock standing in their name on the books of The Wackenhut
Corporation.
On March 17, 1999, 3,855,582 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
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 31,
1999.
2
<PAGE> 4
THE ELECTION OF DIRECTORS
The Board of Directors will be comprised of twelve (12) 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. Eleven (11) of the
nominees are presently directors of the Corporation who were elected by the
shareholders at their last annual meeting. Thomas P. Stafford served as a
Director of the Corporation from 1991 to 1996 and was re-elected by the Board of
Directors at its meeting of February 19, 1999.
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:
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
JULIUS W. BECTON, JR. General Becton's most recent position was Chief
1994 Executive Officer/Superintendent of the Washington, D.C.
AGE 72 Public School System. He is also 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 VII Corps, and was the Deputy
Commanding General of the U.S. Army Training and
Doctrine Command. 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 General Dynamics Corporation, NSC Discovery Center,
Inc., and the Marine Spill Response Corporation. He is a
member of the Defense Science Board Readiness Task
Force. He is a trustee of the George C. Marshall
Foundation, and 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 Director, Federal
Emergency Management Agency. He has a B.S. from Prairie
View A & M University; an M.A. in economics from the
University of Maryland, and has been awarded honorary
Doctor of Laws degrees by four universities. (d)(e)(f)
- --------------------------------------------------------------------------------
3
<PAGE> 5
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECOME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
ALAN B. BERNSTEIN Mr. Bernstein has been Executive Vice President of the
1998 Corporation since 1991, and is also President of the
AGE 51 Corporation's North American Operations Group. Mr.
Bernstein has been with the Corporation since 1976,
except for a period in 1982 when he was a partner in a
family-owned security alarm business in New York State.
He was appointed President, Wackenhut Systems
Corporation in 1983, and subsequently was named Vice
President, Corporate Business Development in 1984; Vice
President, Domestic Operations in 1985; and was Senior
Vice President, Domestic Operations from 1986-91. He
also serves on the Board of Directors of Ranger
Security Detectors, Inc., El Paso, Texas; and several
subsidiaries of the Corporation. He is on the Board of
Directors of the Miami Museum of Science and
Planetarium, and is a member of the American Society
for Industrial Security. He has a B.S.E.E. degree from
the University of Rochester, and an M.B.A. degree from
Cornell University. (d)(f)
- --------------------------------------------------------------------------------
CARROLL A. CAMPBELL, JR. Governor Campbell served two terms as the Governor of
1997 South Carolina (1987 - 95), and four terms representing
AGE 58 South Carolina's fourth district in the U.S. House of
Representatives (1979-86). He also served in the South
Carolina House of Representatives (1970-74) and was
elected to the South Carolina Senate in 1976. While
serving as Governor, he was also Chairman of the
National Governors Association (1993-94) and co-chair
of the National Governors Association Task Force on
Education. He is recognized as a leader in promoting
initiatives for excellence in education at the state
and national levels, and has served as chairman of the
National Education Goals Panel and co-chair of the
National Council on Education Standards and Testing.
Gov. Campbell is currently the President and Chief
Executive Officer of the American Council of Life
Insurance. His business career began at age 19, when he
co-founded a business which eventually developed a
chain of 13 restaurants. He remains active today in
several small business enterprises and serves on the
boards of directors for the Fluor Corporation, AVX
Corporation, Norfolk Southern Corporation, and the Boy
Scouts of America. He is EX OFFICIO board chairman for
the Huntington Society, an arts foundation. He has an
M.A. degree from the American University, is a member
of three national honor societies, and holds nine
honorary doctorate degrees. (b)(e)
- --------------------------------------------------------------------------------
BENJAMIN R. CIVILETTI Mr. Civiletti has been Chairman of the law firm
1998 Venable, Baetjer and Howard since 1993 and was Managing
AGE 63 Partner of the firm from 1987 to 1993. From 1979 to
1980, Mr. Civiletti served as the Attorney General of
the United States. Mr. Civiletti is Chairman of the
Board of Greater Baltimore Medical Center and the
Founding Chairman of the Maryland Legal Services
Corporation; a Director of Bethlehem Steel Corporation,
and a Director of MBNA Corporation and MBNA
International. Mr. Civiletti has served as a Director
of Wackenhut Corrections Corporation since April 1994.
Mr. Civiletti is a Fellow of the American Bar
Foundation, the American Law Institute, and the
American College of Trial Lawyers. Mr. Civiletti was
Chairman of the Maryland Governor's Commission on
Welfare Policy in 1993, and a member of the Maryland
Governor's Task Force on Alternatives to Incarceration
in 1991. (b)(c)
4
<PAGE> 6
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECOME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
ANNE NEWMAN FOREMAN Mrs. Foreman served as Under Secretary of the United
1993 States Air Force from September 1989 until January
AGE 51 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 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 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. She also serves as a
member of the Board of Directors of Ultra Electronics
Defense, Inc. (d)(e)
- --------------------------------------------------------------------------------
EDWARD L. HENNESSY, JR. Mr. Hennessy, Jr. served as Chairman of the Board and
1993 Chief Executive Officer of Allied-Signal Inc. from 1979
AGE 71 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 Directors of 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 Vice-Chairman 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 former Trustee and Chairman of
the University's Board. (a)(c)
- --------------------------------------------------------------------------------
5
<PAGE> 7
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECOME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
PAUL X. KELLEY General Kelley is a Partner with J.F. Lehman, Inc., a
1988 New York private investment firm. He served as Vice
AGE 70 Chairman, Cassidy & Associates, Inc., a government
relations firm from 1989 to 1998. Prior to that, he was
Commandant of the Marine Corps and Member of the Joint
Chiefs of Staff from 1983 until his retirement in 1987.
He currently serves on the Board of Directors of Allied
Signal, Inc., an aerospace, automotive and engineered
materials company; GenCorp, Inc., a propulsion,
electronics and polymers company; Saul Centers Inc., a
real estate investment trust; Sturm Ruger & Co., Inc.,
a small arms company; and UST, Inc., a tobacco products
and wine company. He is the recipient of numerous
awards for valor and distiguished service during
thirty-seven years of active military service. General
Kelley has a B.S. in Economics from Villanova
University and is a Distiguished Graduate of the Air
War College. He is the recipient of five honorary
doctorate degrees from major universities. (b)(c)(e)
- --------------------------------------------------------------------------------
NANCY CLARK REYNOLDS Ms. Reynolds is Senior Consultant of The Wexler Group,
1986 a governmental relations and public affairs consulting
AGE 71 firm in Washington, D.C. She currently serves as a
Director of The Norrell Corporation, a temporary help
service firm. She is a member of the Board of the
National Park Foundation and a trustee of the
Smithsonian Museum of the American Indian. She is a
past President of the Business and Government Relations
Council. Ms. Reynolds is also currently Chairman of
Crow Canyon Archaeological Center in Cortez, Colorado.
She was formerly a Director of the Chicago Mercantile
Exchange, G.D. Searle & Co., Sears, Roebuck & Co.,
Allstate Insurance Company 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 Law from
Gonzaga University. (b)(f)
- --------------------------------------------------------------------------------
JOHN F. RUFFLE Mr. Ruffle is a retired Vice Chairman and Director of
1998 J.P. Morgan & Co., Inc. and Morgan Guaranty Trust
AGE 61 Company of New York since June 1, 1993. He joined J.P.
Morgan in 1970 as Controller and was named CFO in 1980,
and elected Vice Chairman in 1985. Earlier, he was
Assistant Treasurer and Director of Accounting for
International Paper Company. Mr. Ruffle also serves as
a Director of Bethlehem Steel Corporation, American
Shared Hospital Services and Trident Corporation, and
Wackenhut Corrections Corporation. He is a Trustee of
the Johns Hopkins University and of JPM Series Trust
II(mutual funds). He is a past President of the Board
of Trustees of the Financial Accounting Foundation and
a past Chairman of the Financial Executives Institute,
and in 1991 received the Financial Executive
Institute's National Award for Distinguished Service.
Mr. Ruffle is a graduate of the Johns Hopkins
University and earned an M.B.A. in Finance from Rutgers
University. He is also a CPA. (c)(d)
- --------------------------------------------------------------------------------
6
<PAGE> 8
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECOME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
THOMAS P. STAFFORD General Stafford is a Consultant for the firm of
1991 General Technical Services, Inc., which he joined in
AGE 68 1984. He is 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 Chairman of Gibraltar
Exploration Limited until 1984. Gen. Stafford is also
Chairman of the Board of Omega Watch Corporation of
America and is a Director of Allied Signal; CMI
Corporation; Cycomm International, Inc.; Seagate
Technology, Inc.; Timet, Inc.; and Tremont Corporation.
General Stafford served as a Director of the
Corporation from 1991 to 1996.
- --------------------------------------------------------------------------------
GEORGE R. WACKENHUT Mr. Wackenhut is Chairman of the Board and Chief
1958 Executive Officer of the Corp-oration. He was President
AGE 79 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. Mr. Wackenhut is
Chairman of the Board of Directors of Wackenhut
Corrections Corporation, a member of the Board of
Trustees of Correctional Properties Trust, 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)
- --------------------------------------------------------------------------------
7
<PAGE> 9
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
RICHARD R. WACKENHUT Mr. Wackenhut, President and Chief Operating Officer of
1986 the Corporation since April 26, 1986, was formerly
AGE 51 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
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.; Wackenhut Resources, Inc.; the Board
of Trustees of Correctional Properties Trust; 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. Mr.
Wackenhut currently volunteers to serve on the Police
Advisory Board for the Town of Sewall's Point, FL. 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)
(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 on the previous pages 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.
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<PAGE> 10
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 Benjamin R. Civiletti
John F. Ruffle, Vice Chairman Paul X. Kelley
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
1998 fiscal year.
9
<PAGE> 11
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 24, 1999, by each Director-Nominee for
election as director at the 1999 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. 0 * 8,500 *
Alan B. Bernstein 500 * 95,710 *
Carroll A. Campbell, Jr. 0 -- 4,000 *
Benjamin R. Civiletti 0 -- 2,000 *
Anne Newman Foreman 200 * 8,550 *
Edward L. Hennessy, Jr. 200 * 8,862 (3) *
Paul X. Kelley 1,000 (3) * 10,937 (3) *
Nancy Clark Reynolds 1,400 * 9,912 *
John F. Ruffle 500 * 3,000 *
Thomas P. Stafford 0 -- 4,500 *
George R. Wackenhut 1,929,606 50.05% 2,234,571 (4) 20.16%
Richard R. Wackenhut 65 * 816,547 (5) 7.27%
EXECUTIVE OFFICERS
George C. Zoley 0 -- 0 --
Philip L. Maslowe 0 -- 55,000 *
ALL NOMINEES AND EXECUTIVE 1,933,627 50.15% 3,563,289 31.73%
OFFICERS AS A GROUP
OTHER
Eagle Asset Management, Inc. (7) -- -- 1,301,577 11.59%
Mellon Bank Corporation (8) 212,706 5.52 -- --
</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 33410.
(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.
10
<PAGE> 12
(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 50.05% 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 698,155 Series B shares held in an irrevocable family trust for
the benefit of Richard R. Wackenhut and the balance held directly by
him.
(6) Includes Series B shares over which the Executive Officers and
Director Nominees have options.
(7) The address of Eagle Asset Management, Inc. is 880 Carillon Parkway,
St. Petersburg, FL 33716.
(8) The address of Mellon Bank Corporation is One Mellon Bank Center,
Pittsburgh, PA 15258.
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Corporation during
the fiscal year ended January 3, 1999, 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(#)(3) ($) ($)(4)(5)& (6)
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
George R. Wackenhut, 1998 1,154,000 537,000 - 30,000 344,363 16,543
Chairman of the Board and 1997 1,006,000 250,000 - 22,000 - 16,543
Chief Executive Officer 1996 859,000 335,000 - 18,000 - 16,543
Richard R. Wackenhut, 1998 772,000 410,000 46,662 25,000 135,069 517,664
President and Chief 1997 643,000 200,000 42,329 20,000 - 78,500
Operating Officer 1996 555,000 217,000 36,663 16,000 - 127,500
Alan B. Bernstein, 1998 456,000 260,000 22,497 20,000 68,519 297,040
Executive Vice President, 1997 382,000 165,000 22,498 15,000 - 67,000
and President, North 1996 313,000 150,000 18,598 14,000 - 109,000
American Operations Group
George C. Zoley 1998 436,000 227,000 - 30,000 - 35,000
Wackenhut Corrections Corp. 1997 366,000 122,500 - 20,000 - 32,004
President and Chief Executive 1996 288,000 101,500 - 20,000 - 25,906
Officer and Director
Philip L. Maslowe 1998 316,000 176,000 15,998 10,000 - 141,842
Senior Vice President, 1997 95,000 50,000 14,665 30,000 - 65,000
Finance and Chief Financial 1996 - - - - - -
Officer
</TABLE>
11
<PAGE> 13
(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 January 3, 1999 is as follows:
<TABLE>
<CAPTION>
RESTRICTED
STOCK PERFORMANCE TOTAL FAIR
UNITS SHARES UNITS/SHARES MARKET VALUE
=======================================================================================================
<S> <C> <C> <C> <C>
G. R. Wackenhut -- 26,589 26,589 $583,296
R. R. Wackenhut 18,039 10,243 28,282 620,436
A. B. Bernstein 9,130 5,513 14,643 321,231
P. L. Maslowe 1,766 3,532 5,298 116,225
G. C. Zoley -- -- -- --
</TABLE>
Restricted stock units do not vest until after 7 years continuous employment
from the date of grant. Restricted stock units in the amounts of 1,175 and
535 granted in 1991 to R. R. Wackenhut and A.B. Bernstein vested in 1998.
(2) Dividends are paid on restricted stock.
(3) The following securities underlying options were granted under stock option
plans of Wackenhut Corrections Corporation:
SECURITIES UNDERLYING OPTIONS(#)
---------------------------------
NAME 1998 1997 1996
==============================================================
George R. Wackenhut ------- ------- -------
Richard R. Wackenhut ------- ------- -------
Alan B. Bernstein ------- ------- -------
Fernando Carrizosa ------- ------- -------
George C. Zoley 30,000 20,000 20,000
(4) This column represents (for the CEO) the cost of a split-dollar life
insurance policy covering George R. Wackenhut and Ruth J. Wackenhut.
(5) 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 Corrections Subsidiary Senior Officer
Retirement Plan.
(6) This column includes early distributions of deferred compensation for R. R.
Wackenhut and A. B. Bernstein of $244,664 and $63,040, respectively, and
relocation expense allowance of $92,842 for Philip L. Maslowe.
12
<PAGE> 14
LONG-TERM INCENTIVE PLAN - AWARDS IN THE LAST FISCAL YEAR
The following table sets forth certain information concerning awards made under
the Company's Key Employee Long-Term Incentive Stock Plan to the named
executives during fiscal 1998. The Plan is a series of successive overlapping
three-year periods commencing the first day of each fiscal year. Awards are
earned only if certain predetermined criteria are met. Adjustments may be made
in performance share awards to consider aspects of performance that may not be
reflected in the Company's financial results.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE UNDER NON-STOCK PRICE-BASED PLAN
SHARES, OR OTHER
UNITS, OR PERIOD UNTIL THRESHOLD TARGET MAXIMUM
OTHER RIGHTS MATURATION OR PAYOUT PAYOUT PAYOUT
NAME (#) (1) PAYOUT (2) ($) ($) ($)
==================================================================================================================
<S> <C> <C> <C> <C> <C>
George R. Wackenhut 12,044 1998-2000 121,000 242,000 363,000
Richard R. Wackenhut 4,645 1998-2000 46,669 93,338 140,007
Alan B. Bernstein 2,538 1998-2000 25,502 51,003 76,505
George C. Zoley 0 1998-2000 0 0 0
Philip L. Maslowe 1,593 1998-2000 16,001 32,002 48,003
</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) Earnings per share 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>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM (3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
George R. Wackenhut (1) 30,000 11.8% 19.75 27-Jan-08 372,620 944,292
Richard R. Wackenhut (1) 25,000 9.8% 19.75 27-Jan-08 310,517 786,910
Alan B. Bernstein (1) 20,000 7.8% 19.75 27-Jan-08 248,413 629,528
George C. Zoley (2) 30,000 16.6% 25.06 23-Jan-08 472,850 1,198,295
Philip L. Maslowe (1) 10,000 3.9% 19.75 27-Jan-08 124,207 314,764
</TABLE>
(1) Options granted under the Key Employee Long-Term Incentive Stock Plan
of the Corporation (the "Incentive Stock Plan").
(2) Options granted under Wackenhut Corrections Corporation's Stock
Option Plan (the "Second Plan").
(3) The full option term was used in the 5% and 10% annual growth
projections for the price of the underlying stock.
13
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
SHARES YEAR-END (#) YEAR-END ($)
ACQUIRED VALUE -----------------------------------------------
ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/
(#) ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
==============================================================================================================
<S> <C> <C> <C> <C>
George R. Wackenhut (A) NONE NA 129,375 E 1,176,414 E
(B) NONE NA 32,864 E 901,295 E
(C) NONE NA 74,666 E 1,857,317 E
Richard R. Wackenhut (A) NONE NA 114,750 E 1,059,078 E
(C) NONE NA 74,666 E 1,857,317 E
Alan B. Bernstein (A) NONE NA 73,688 E 705,652 E
(C) NONE NA 56,000 E 1,393,000 E
George C. Zoley (C) 25,000 509,244 75,000 E 857,750 E
20,000 U 133,500 U
Philip L. Maslowe (A) NONE NA 30,000 E 90,000 E
10,000 E 21,875 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")
14
<PAGE> 16
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
P. L. Maslowe - - - -
G. 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. Philip L. Maslowe is a
participant in the Plan, but has no vested benefits at the fiscal year ended
January 3, 1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Board of Directors (the
"Compensation Committee") met three times in fiscal 1998. 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, retirement plans (as noted earlier in this section of the Proxy), 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 with the Company. In addition, data
developed
15
<PAGE> 17
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 1998 was attributable to the
overall financial performance of the Company, strategic objectives and the
quality of his leadership. In 1998, 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 Company exceeded target on both
revenues and 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 1998. The
Company has elected to comply with Section 162(m) of the Internal Revenue Code
to the extent it deems appropriate and has a bonus plan for the CEO that is
based upon the Company's consolidated revenue (30%) and consolidated service
profits (70%). Accordingly, there was no discretionary adjustment upward to the
award.
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 1998 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 earnings per share performance goals established by the Compensation
Committee are attained. In setting the performance 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.
By the Nominating and Compensation Committee
General Paul X. Kelley, Chairman Governor Carroll A. Campbell
Benjamin R. Civiletti, Vice Chairman Nancy Clark Reynolds
16
<PAGE> 18
COMPARISON OF CUMULATIVE TOTAL RETURN*
THE WACKENHUT CORPORATION, WILSHIRE 5000 EQUITY,
AND S&P SERVICES (COMMERCIAL AND CONSUMER) INDEXES
(PERFORMANCE THROUGH DECEMBER 31, 1998)
(PERFORMANCE GRAPH)
THE S&P SERVICE
WACKENHUT WILSHIRE 5000 (COMMERCIAL AND
DATE CORPORATION EQUITY CONSUMER)
- -------------------------------------------------------------------------
December 1993 $100.00 $100.00 $100.00
December 1994 $105.51 $ 99.94 $ 91.58
December 1995 $175.83 $136.37 $123.66
December 1996 $210.62 $165.31 $127.69
December 1997 $289.71 $217.03 $175.14
December 1998 $316.23 $267.88 $142.06
* Total return assumes reinvestment of dividends.
The above graph compares the performance of The Wackenhut Corporation with that
of the Wilshire 5000 Equity, and the S&P 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 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 Services Index.
17
<PAGE> 19
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.
SERVICES AGREEMENT. The Company and its consolidated subsidiary, Wackenhut
Corrections Corporation ("WCC"), entered into a services agreement (the
"Services Agreement") on December 20, 1995, which became effective January 1,
1996, pursuant to which the Company agreed to continue to provide certain of
these services to WCC through January 3, 1999.
In accordance with the terms of the Services Agreement, WCC paid the Company a
fixed annual fee for services (the "Annual Services Fee") equal to $1,100,342 in
fiscal 1996, $1,200,342 in fiscal 1997 and $1,718,100 in fiscal 1998. Management
of WCC believes that the Annual Services Fees under the Services Agreement 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 Agreement, 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 the Services Agreement, the services to be provided by the Company to WCC
for the Annual Services Fee include the following:
LEGAL SERVICES. Under the Services Agreement, the Company provides
legal advice on all matters affecting WCC, including, among other things,
assistance in the preparation of 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 the Services Agreement, the Company provides WCC with (i) treasury
operations, (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 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 the Services Agreement, 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 the Services Agreement or on such other basis as WCC and the
Company agree. The 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 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
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
servies from unaffiliated third parties).
18
<PAGE> 20
The following table sets forth certain amounts billed to WCC during fiscal 1996,
fiscal 1997, and fiscal 1998, for services not covered by the Annual Services
Fee paid under the 1996 Services Agreement.
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997 FISCAL 1998
==========================================================================================================
<S> <C> <C> <C>
Food Services $450,000 $ 461,000 $ 839,000
Casualty Insurance Premiums (1) 3,306,000 4,957,000 7,423,000
Interest Charges (Income) (2) 40,000 10,000 (122,000)
Office Rental (3) 269,000 285,000 360,000
TOTAL $4,065,000 $5,713,000 $8,500,000
</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 Agreement, 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.
(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.
In 1998, WCC increased the amount of space it rents by approximately
1600 square feet and paid common area maintenance charges related to
1997 and 1998.
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 the
Services Agreement 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 the 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 United States.
19
<PAGE> 21
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.
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 Nominee of The Wackenhut Corporation 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, Senior Vice
President and General Counsel of the Company also serves as the General Counsel
and Secretary of WCC. George R. Wackenhut, 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 50.05% 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. He is the son of George R. and Ruth J. Wackenhut.
DIRECTORS' COMPENSATION
Directors of the Corporation who are not Officers were paid during fiscal year
1998 an annual retainer fee at the rate of $20,000 per year plus $1,500 or 75
shares of Series B Common Stock for each Board Meeting attended, $1,000 or 50
shares for each committee meeting attended as committee members, and $1,500 or
75 shares 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 and is eligible for
stock option grants in wholly owned subsidiaries when such grants are made to
company management.
No Directors or their affiliates were compensated for services rendered to the
Corporation during fiscal 1998 other than the compensation described above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 fiscal 1998 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
1999, 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.
20
<PAGE> 22
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 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 measured over a three-year performance
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
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 upon continued employment. Vesting
periods are as follows:
TYPE OF AWARD VESTING PERIOD
------------- --------------
Stock Options As set by the Committee
Restricted Stock 7 years
21
<PAGE> 23
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 was Return
on Equity (ROE). The Committee subsequently adopted growth in Earnings Per Share
(EPS) as the performance measure in 1996. Compounded growth rate in EPS 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 for the period
1991 - 1993 and 1996 - 1998. No awards were earned for the 1992 - 1994, 1993 -
1995, 1994 - 1996 or 1995 - 1997 periods. 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 preestablised
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 is made in shares of the
Common Stock of the Corporation on a one for one basis. 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 A TOTAL
OF 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.
22
<PAGE> 24
SHAREHOLDERS PROPOSAL DEADLINE
Shareholder proposals intended to be presented at the 2000, 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, 1999.
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
Senior Vice President, General Counsel
and Assistant Secretary
March 31, 1999
================================================================================
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 3, 1999, 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
PATRICK F. CANNAN, DIRECTOR, CORPORATE RELATIONS, THE WACKENHUT CORPORATION,
4200 WACKENHUT DRIVE #100, PALM BEACH GARDENS, FLORIDA, 33410-4243.
23
<PAGE> 25
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 17, 1999, at the Annual Meeting of
Shareholders to be held at the Ritz-Carlton, Palm Beach, 100 South Ocean Blvd.,
Manalapan, Florida, at 9:00 A.M., May 7, 1999, 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> 26
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
Please mark your votes as
indicated in this example [ X ]
1. ELECTION OF DIRECTORS:
VOTE FOR all nominees VOTE WITHHELD
listed to the right (except as as to all nominees.
marked to the contrary).
[ ] [ ]
Nominees:
01 Julius W. Becton, Jr. 07 Paul X. Kelley
02 Alan B. Bernstein 08 Nancy Clark Reynolds
03 Carroll A. Campbell, Jr. 09 John F. Ruffle
04 Benjamin R. Civiletti 10 Thomas P. Stafford
05 Ann Newman Foreman 11 George R. Wackenhut
06 Edward L. Hennessey, Jr. 12 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 1999 the Appointment of ARTHUR
ANDERSEN LLP as the independent certified public accountants of the
Corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to approve a New Stock Option Plan and the setting aside of 550,000
shares for issuance under the plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. 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.
Date , 1999
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Signature if held jointly
Please sign and return this Proxy in the accompanying addressed envelope.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone
24 hours a day - 7 days a week.
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number,
which is located in the box in the lower right hand corner of this form.
- --------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals press 1.
- --------------------------------------------------------------------------------
When asked, please confirm by Pressing 1.
- --------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each Proposal separately, press 0. You will
hear these instructions.
- --------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9. To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen
to the instructions.
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked, please confirm by Pressing 1.
The instructions are the same for all remaining proposals.
OR
2. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly
in the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
THANK YOU FOR VOTING.
