<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>
PRISON REALTY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Organizational Documents)
- --------------------------------------------------------------------------------
(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
[PRISON REALTY CORPORATION LOGO]
March 31, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Prison Realty Corporation (the "Company") to be held at 10:00 a.m., local
time, on Tuesday, May 11, 1999, at the Loews Vanderbilt Plaza Hotel, 2100 West
End Avenue, Nashville, Tennessee.
The formal Notice of the meeting, as well as the proxy statement and
form of proxy are included with this letter. A copy of the Company's 1998 Annual
Report to Stockholders is also enclosed for your review.
In addition to a discussion of the specific matters to be acted upon,
which are described in detail in the accompanying proxy statement, at the
meeting there will be a review of the commencement of the Company's operations
as the result of the successful mergers of CCA Prison Realty Trust and
Corrections Corporation of America into the Company earlier this year and a
report on the progress of the Company since the completion of the mergers. There
will also be a review of the results of the 1998 fiscal year of both CCA Prison
Realty Trust and Corrections Corporation of America and stockholders will be
given an opportunity to ask management questions of general interest concerning
the Company.
Regardless of the number of shares you own, it is important that your
views be represented. Accordingly, whether or not you plan to attend the meeting
in person, I urge you to complete, sign, date and promptly return the enclosed
proxy card in the envelope provided. If you choose to attend the meeting, you
may revoke your proxy and personally cast your votes.
Your Board of Directors and the Company's management look forward to
greeting those stockholders who are able to attend.
Sincerely,
Doctor R. Crants
Chairman and Chief Executive Officer
<PAGE> 3
PRISON REALTY CORPORATION
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 11, 1999
Notice is hereby given that the annual meeting of stockholders (the
"Annual Meeting") of Prison Realty Corporation (the "Company") will be held at
10:00 a.m., local time, on Tuesday, May 11, 1999, at the Loews Vanderbilt Plaza
Hotel, 2100 West End Avenue, Nashville, Tennessee, for the following purposes:
(1) To consider and elect five (5) Class I directors to serve on the
Company's Board of Directors until the 2002 annual meeting of the
Company's stockholders and until their respective successors are duly
elected and qualified and to consider and elect one (1) Class III
director to serve on the Company's Board of Directors until the 2001
annual meeting of the Company's stockholders and until his respective
successor is duly elected and qualified;
(2) To consider and approve an amendment to the Company's Charter to
change the name of the Company to Prison Realty Trust, Inc.;
(3) To consider and ratify the action of the Company's Board of Directors
in selecting the firm of Arthur Andersen LLP to be the independent
auditors of the Company for the fiscal year ending December 31, 1999, and
to perform such other services as may be requested; and
(4) To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Pursuant to the bylaws of the Company, the Board of Directors of the
Company has fixed the close of business on Friday, March 26, 1999, as the record
date for determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournments or postponements thereof. Only
stockholders of record of the Company's common stock at the close of business on
that date will be entitled to notice of and to vote at the Annual Meeting and at
any adjournments or postponements thereof.
Your attention is directed to the proxy statement accompanying this
Notice of Annual Meeting for more complete information regarding the matters to
be presented and acted upon at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person.
By Order of the Board of Directors,
Vida H. Carroll, Secretary
March 31, 1999
Nashville, Tennessee
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
IN THE POSTAGE-PREPAID ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. IF YOU ATTEND
THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND PERSONALLY CAST YOUR VOTE
AT THE MEETING.
<PAGE> 4
PRISON REALTY CORPORATION
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 11, 1999
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Prison Realty Corporation (the
"Company") for use at the 1999 Annual Meeting of Stockholders of the Company to
be held on Tuesday, May 11, 1999, and at any adjournments or postponements
thereof (the "Annual Meeting"). The Company, which was formed on September 24,
1998, commenced operations on January 1, 1999 after the successful completion of
the mergers of CCA Prison Realty Trust ("Prison Realty") and Corrections
Corporation of America ("CCA") with and into the Company (the "Merger"). At the
Annual Meeting, stockholders will be asked to vote: (i) to elect five (5) Class
I directors and one (1) Class III director; (ii) to approve an amendment to the
Company's Charter to change the name of the Company to Prison Realty Trust, Inc.
(the "Name Change Amendment"); (iii) to ratify the selection of Arthur Andersen
LLP as the independent auditors of the Company for the fiscal year ending
December 31, 1999; and (iv) upon any other matters properly brought before the
Annual Meeting and at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on Friday, March
26, 1999, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting (the "Record Date"). Only
stockholders of record of shares of the Company's common stock, $0.01 par value
per share (the "Common Stock"), at the close of business on the Record Date will
be entitled to notice of and to vote at the Annual Meeting. As of the Record
Date, there were shares of Common Stock outstanding and entitled to vote at
the Annual Meeting. This Proxy Statement and the accompanying Notice of Annual
Meeting and proxy card are being sent to stockholders entitled to notice of and
to vote at the Annual Meeting on or about Wednesday, March 31, 1999. The Company
has 4,300,000 shares of its 8% Series A Cumulative Preferred Stock, $0.01 par
value per share (the "Series A Preferred Stock"), issued and outstanding.
Pursuant to the terms of the Series A Preferred Stock, the holders of such
shares do not possess any voting rights. Holders of the Company's outstanding
Common Stock as of the close of business on the Record Date will be entitled to
one vote for each share of Common Stock held by them.
The presence, in person or by proxy, of the Company's stockholders
entitled to cast a majority of all the votes entitled to be cast at the Annual
Meeting is necessary to constitute a quorum for the transaction of business at
the Annual Meeting. For all proposals, shares that reflect abstentions or
"broker nonvotes" (i.e., shares represented at the meeting that are held by
brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote such shares and, with respect to
one or more but not all issues, such brokers or nominees do not have
discretionary voting power to vote such shares) will be counted for purposes of
determining whether a quorum is present for the transaction of business at the
meeting. However, pursuant to Maryland law, neither abstentions nor broker
nonvotes will have any impact on the outcome of the vote for any proposal voted
on at the Annual Meeting, including the election of directors.
Stockholders of the Company are requested to complete, sign, date and
promptly return the accompanying proxy card in the enclosed, postage-prepaid
envelope. Shares represented by a properly executed proxy received prior to the
vote at the Annual Meeting which are not revoked will be voted at the Annual
Meeting as directed on the proxy. If a properly executed proxy is submitted and
no instructions are given, the proxy will be voted: (i) FOR the election of each
of the five nominees for Class I directors of the Company and the one nominee
for Class III director of the
1
<PAGE> 5
Company, each as named in this Proxy Statement; (ii) FOR approval of the Name
Change Amendment; and (iii) FOR ratification of the Board of Directors'
selection of Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999. It is not anticipated that any matters
other than those set forth in this Proxy Statement will be presented at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the duly appointed proxy holders.
A stockholder of record as of the Record Date may revoke a properly
submitted proxy at any time before it has been exercised by filing a written
revocation with the Secretary of the Company at the address of the Company set
forth herein, by filing a duly executed proxy bearing a later date, or by
appearing in person and voting by ballot at the Annual Meeting. Any stockholder
of record as of the Record Date attending the Annual Meeting may vote in person
whether or not a properly submitted proxy has been previously given, but the
presence (without further action) of a stockholder at the Annual Meeting will
not constitute revocation of a properly executed proxy previously received by
the Company.
The cost of soliciting proxies from stockholders will be borne by the
Company. Such solicitation will initially be made by mail. The Company has
retained Corporate Investor Communications, Inc. to assist in the solicitation
of proxies. It is estimated that the fees of Corporate Investor Communications,
Inc. for such services will be approximately $10,000, plus all out-of-pocket
costs and expenses. In addition, proxy solicitation may be made personally or by
telephone by directors, officers and employees of the Company, none of whom will
receive additional compensation for these services. Forms of proxies and proxy
materials will also be distributed through brokers, custodians and other like
parties to the beneficial owners of shares of Common Stock. The Company will
reimburse such parties for the reasonable out-of-pocket expenses incurred in
connection with such distribution.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company was formed in September 1998 with a Board of Directors
consisting of 13 initial directors (the "Initial Directors"). The Initial
Directors consisted of the same individuals who served as trustees of Prison
Realty immediately prior to the Merger. As set forth in the Charter of the
Company (the "Charter"), the Initial Directors are divided into three classes as
nearly equal as possible, with five of the Initial Directors serving as Class I
directors with their terms expiring at the Annual Meeting, four of the Initial
Directors serving as Class II directors with their terms expiring at the 2000
Annual Meeting, and four of the Initial Directors serving as Class III directors
with their terms expiring at the 2001 Annual Meeting. The Bylaws of the Company,
as amended (the "Bylaws"), provide that the Company's Board of Directors shall
consist of not less than three nor more than 16 members, with the actual number
of directors comprising the board to be set by resolution.
In connection with the completion of the Merger and the future
governance of the Company, the following events occurred in the first quarter of
1999 concerning the composition of the Company's Board of Directors:
- On January 1, 1999, by resolution of the Company's Board of
Directors, the number of seats on the board was increased by
one, from 13 to 14, and Jean-Pierre Cuny, an affiliate of
Sodexho Alliance, S.A., the Company's largest stockholder, was
appointed by the board as a Class III director to fill the
newly created seat.
- In March 1999, Rusty L. Moore, a Class I director, asked that
he not be nominated for re-election to the Company's Board of
Directors at the Annual Meeting. The board subsequently
nominated Ned Ray McWherter to take Mr. Moore's place and
stand for election at the Annual Meeting for a term of three
years as a Class I director.
2
<PAGE> 6
- In March 1999, Monroe J. Carell, Jr. resigned from his
position as a Class III director effective as of the date of
the Annual Meeting. In an effort to return the number of board
seats back to its original number of 13, the Company's Board
of Directors then adopted a resolution decreasing the number
of seats on the board by one, from 14 to 13, also effective as
of the date of the Annual Meeting.
The terms of the Company's five current Class I directors expire at the
Annual Meeting. Therefore, five Class I directors will be elected at the Annual
Meeting to hold office for a term of three years and until their respective
successors are duly elected and qualified. The Company has nominated D. Robert
Crants, III, John W. Eakin, Jr., Ted Feldman, and Jackson W. Moore, each of who
currently serves as a Class I director, for re-election as Class I directors. In
addition, as previously mentioned, the Company has nominated Ned Ray McWherter
to stand for election at the Annual Meeting for a term of three years as the
fifth Class I director. Furthermore, pursuant to the provisions of Maryland law
regarding the election of directors appointed by the Company's Board of
Directors, Jean-Pierre Cuny, as a newly appointed Class III director, must be
nominated by the Company's Board of Directors to stand for election by the
stockholders of the Company to serve the remainder of his term and until his
respective successor is duly elected and qualified. The term of service of
Jean-Pierre Cuny as a Class III director will expire at the 2001 Annual Meeting.
Each nominee has consented to be a candidate and to be so named in this Proxy
Statement and to serve, if elected.
Unless otherwise directed in the proxy, the persons named in the
enclosed proxy, or their substitute, will vote such proxy for the election of
the five nominees listed on the following page as Class I directors and the one
nominee for Class III director. If any nominee at the time of election is
unavailable to serve, a contingency not presently anticipated, it is intended
that the persons named in the proxy, or their substitute, will vote for an
alternative nominee who will be designated by the Company's Board of Directors.
Proxies may be voted only for the nominees named or such alternates.
Under the Bylaws and Maryland law, the affirmative vote of a plurality
of all the votes cast at the Annual Meeting, assuming a quorum is present, is
sufficient to elect a director. Under Maryland law, the Charter and the Bylaws,
proxies marked "withhold authority" will be counted for the purpose of
determining the presence of a quorum but such proxies and failures to vote
(including proxies from brokers or other nominees indicating that such persons
do not have discretionary power to vote shares in the election of Directors)
will not be counted as votes cast in the election of directors and thus will
have no effect on the result of the vote.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
Set forth below is information with respect to each of the 14 current
directors of the Company, including the five nominees standing for election as
Class I directors at the Annual Meeting and the one nominee standing for
election as a Class III director at the Annual Meeting. (Monroe J. Carell, Jr.
has resigned from the board effective as of the date of the Annual Meeting and
at which time the number of directors will be decreased from 14 to 13, assuming
the election of all directors currently standing for election or re-election.)
Additionally, set forth below is information concerning the executive officers
of the Company, all of whom serve as directors of the Company except for Vida H.
Carroll. Independent Directors are those directors who are not employees of the
Company and are not otherwise affiliated with a lessee of the Company's
facilities or the Service Companies, as hereinafter defined (Messrs. Bell and
Rusty L. Moore are not executive officers of the Company but are otherwise
affiliated with the Company. See "Certain Relationships and Related
Transactions" contained herein for a detailed description of these and other
relationships.) Subject to the rights enumerated in the Employment Agreements,
as hereinafter defined, the executive officers of the Company serve at the sole
discretion of the Board of Directors of the Company. Directors' and Executive
Officers' ages are given as of the date of this Proxy Statement.
3
<PAGE> 7
CLASS I NOMINEES STANDING FOR ELECTION AT THE 1999 ANNUAL MEETING DUE TO
EXPIRATION OF TERMS OR INITIAL NOMINATION FOR ELECTION.
(TERMS TO EXPIRE IN 2002)
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
D. Robert Crants, III 30 President; Director
John W. Eakin, Jr. 44 Independent Director
Ted Feldman 45 Independent Director
Ned Ray McWherter 68 Nominee for Independent Director
Jackson W. Moore 50 Independent Director
</TABLE>
CLASS I DIRECTOR NOT STANDING FOR RE-ELECTION
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
Rusty L. Moore 39 Director
</TABLE>
CLASS II CONTINUING DIRECTORS NOT REQUIRING ELECTION AT 1999 ANNUAL MEETING
(TERMS TO EXPIRE IN 2000)
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
Doctor R. Crants 54 Chairman of the Board of Directors;
Chief Executive Officer
Richard W. Cardin 63 Independent Director
J. Michael Quinlan 57 Vice-Chairman of the Board of Directors
Joseph V. Russell 58 Independent Director
</TABLE>
CLASS III NOMINEE STANDING FOR ELECTION AT 1999 ANNUAL MEETING DUE TO
APPOINTMENT BY BOARD OF DIRECTORS
(TERM TO EXPIRE IN 2001)
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jean-Pierre Cuny 44 Director
</TABLE>
CLASS III CONTINUING DIRECTORS NOT REQUIRING ELECTION AT 1999 ANNUAL MEETING
(TERMS TO EXPIRE IN 2001)
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
- ---- --- ----------------
<S> <C> <C>
C. Ray Bell 57 Director
Michael W. Devlin 39 Chief Operating Officer; Director
Charles W. Thomas, Ph.D. 56 Independent Director
</TABLE>
4
<PAGE> 8
CLASS III DIRECTOR NOT STANDING FOR RE-ELECTION DUE TO RESIGNATION
EFFECTIVE AS OF THE DATE OF THE ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Monroe J. Carell, Jr 67 Independent Director
</TABLE>
EXECUTIVE OFFICER WHO IS NOT A DIRECTOR
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Vida H. Carroll 38 Chief Financial Officer; Secretary/Treasurer
</TABLE>
CLASS I NOMINEES STANDING FOR ELECTION AT THE 1999 ANNUAL MEETING
D. ROBERT CRANTS, III is a Director and the President of the Company.
Prior to the Merger Mr. Crants served as a Trustee and as President of Prison
Realty, which he co-founded in 1997. Mr. Crants also serves as a manager of DC
Investment Partners, LLC, which serves as the general partner of private
investment partnerships. From 1990 through 1996, Mr. Crants was associated with
Goldman Sachs & Company ("Goldman Sachs"), most recently serving as an associate
in the Goldman Sachs Special Investments Group. During his tenure with Goldman
Sachs, Mr. Crants was involved in structuring over $3.0 billion in real estate
transactions, including over $1.0 billion in real estate investment trust public
offerings. During this time, he also negotiated triple net leases for shopping
centers, free standing stores and other properties on behalf of several clients.
Mr. Crants graduated from Princeton University in 1990 with an A.B., summa cum
laude, in Economics. Mr. Crants is the son of Doctor R. Crants.
JOHN W. EAKIN, JR. is an Independent Director of the Company and, prior
to the Merger, served as an Independent Trustee for Prison Realty. Mr. Eakin
founded Eakin and Smith, Inc., a real estate development and management company
("Eakin and Smith") in 1987 and served as its President from that time until
1996, when Eakin and Smith was merged with Highwoods Properties, Inc.
("Highwoods"), a self-administered and self-managed, office and industrial real
estate investment trust based in Raleigh, North Carolina that is publicly traded
on the New York Stock Exchange. Mr. Eakin left Highwoods in January 1999 after
serving as a Senior Vice President and Director of Highwoods for three years.
Mr. Eakin is also a member of the Board of Directors of Central Parking
Corporation and a member of the advisory board of First American National Bank
of Nashville. Mr. Eakin is a graduate of the University of North
Carolina.(1)(3)
TED FELDMAN is an Independent Director of the Company and, prior to the
Merger, served as an Independent Trustee for Prison Realty. Mr. Feldman is
currently the Chief Operating Officer of StaffMark, Inc., ("StaffMark") a
provider of diversified staffing services to business, medical, professional and
service organizations and governmental agencies that is publicly traded on the
NASDAQ exchange, a position he has held since October 1996. Prior to joining
StaffMark, Mr. Feldman founded HRA, Inc., a Nashville provider of staffing
services, in 1991, and served as its President and Chief Executive Officer from
that time until it merged with StaffMark in March, 1996. (1 - Chairman)(3)
NED RAY MCWHERTER is the Chairman of the Board of Directors of
Volunteer Distributing Company, Inc. and Eagle Distributors, Inc. in Dresden,
Tennessee. He also serves on the Board of Directors of Coca-Cola Bottling Co.
Consolidated, Phoenix Healthcare Corporation and SunTrust Bank. Mr. McWherter
served as Governor of the State of Tennessee from January 1987 to January 1995
and served as the Speaker of the House of Representatives for the State of
Tennessee prior to his inauguration as Governor in 1987. It is anticipated that
Mr.
(1) Member of the Audit Committee of the Board of Directors. (2) Member of the
Compensation Committee of the Board of Directors. (3) Member of the Independent
Committee of the Board of Directors.
5
<PAGE> 9
McWherter will join the Audit Committee of the Board of Directors, assuming his
election to the board at the Annual Meeting.
JACKSON W. MOORE is an Independent Director of the Company and is the
Chairman of the Independent Committee of the Board of Directors. Prior to the
Merger, Mr. Moore served as an Independent Trustee for Prison Realty and as the
Chairman of the Independent Committee of its Board of Trustees. Mr. Moore is
presently a Director of and is the President and Chief Operating Officer of
Union Planters Corporation, a publicly-traded multi-state bank and savings and
loan holding company headquartered in Memphis, Tennessee, positions he has held
since 1986, 1989, and 1994, respectively, and is President and Chief Executive
Officer of its principal subsidiary, Union Planters Bank, N.A. He is also
Chairman of PSB Bancshares, Inc. and a Vice President and Director of its
subsidiary, the People Savings Bank in Clanton, Alabama. Prior to joining Union
Planters, Mr. Moore practiced law for 16 years. Mr. Moore is a graduate of the
University of Alabama and Vanderbilt University School of Law. Mr. Moore is not
related to Rusty L. Moore. (2)(3-Chairman)
CLASS III NOMINEE STANDING FOR ELECTION AT 1999 ANNUAL MEETING DUE TO
APPOINTMENT BY BOARD OF DIRECTORS
JEAN-PIERRE CUNY is a Director of the Company and, prior to the Merger,
served as a Director of CCA. Mr. Cuny serves as the Senior Vice President of The
Sodexho Group, a French-based, leading supplier of catering and various other
services to institutions and an affiliate of Sodexho Alliance, S.A., a French
societe anonyme ("Sodexho"). From February 1982 to June 1987, he served as Vice
President in charge of Development for the Aluminum Semi-Fabricated Productions
Division of Pechiney, a diversified integrated producer of aluminum and other
materials . Mr. Cuny graduated from Ecole Polytechnique in Paris in 1977 and
from Stanford University Engineering School in 1978.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
LISTED ABOVE.
CLASS I DIRECTOR NOT STANDING FOR RE-ELECTION
RUSTY L. MOORE is a Director of the Company and, prior to the Merger,
served as a Trustee of Prison Realty. Since 1996, Mr. Moore has been a principal
of the Nashville law firm of Moore and Waechter, PLC and the President of its
affiliate, Bankers Title & Escrow Corporation. He is also a principal and an
executive officer of a privately-held real estate investment and property
management company that owns multi-family residential properties throughout the
Southeast. Mr. Moore has over 13 years of experience in negotiating and
structuring real estate transactions, including the development, acquisition,
leasing and financing of various types of property. Prior to forming Moore and
Waechter, Mr. Moore was a partner at Stokes & Bartholomew, P.A. Mr. Moore
graduated from the University of Tennessee, where he received a B.S. in Public
Administration in 1981 and a J.D. in 1985. Mr. Moore is not related to Jackson
W. Moore. (2)
CLASS II CONTINUING DIRECTORS NOT REQUIRING ELECTION AT 1999 ANNUAL
MEETING - TERMS TO EXPIRE IN 2000
DOCTOR R. CRANTS is the Chairman of the Board of Directors and Chief
Executive Officer of the Company. Mr. Crants also serves as a member of the
Board of Directors, Chief Executive Officer, and President of Operating Company,
as hereinafter defined, and serves on the Boards of Directors of Service Company
A and Service Company B, as hereinafter defined. Prior to the Merger, Mr. Crants
served as Chairman, Chief Executive Officer and President of CCA, which he
co-founded in 1983, as well as Chairman of the Board of Trustees of Prison
Realty. Mr. Crants also currently serves on the Board of Directors of Sodexho
Marriott Services, Inc., which is the largest food service and facility
management company in North America. Mr. Crants graduated from the United States
Military Academy at West
(1) Member of the Audit Committee of the Board of Directors. (2) Member of the
Compensation Committee of the Board of Directors. (3) Member of the Independent
Committee of the Board of Directors.
6
<PAGE> 10
Point in 1966 and received a joint Masters in Business Administration and Juris
Doctor degree from the Harvard Business School and the Harvard Law School,
respectively, in 1974.
RICHARD W. CARDIN is an Independent Director of the Company and, prior
to the Merger, served as an Independent Trustee for Prison Realty. Mr. Cardin is
a certified public accountant and is currently a consultant and retired partner
at Arthur Andersen LLP. Prior to his retirement in 1995, Mr. Cardin was
affiliated with, and a partner in, Arthur Andersen LLP, an international firm of
independent public accountants and consultants, for 37 years. From 1980 through
1994, Mr. Cardin served as the managing partner of Arthur Andersen LLP's
Nashville office. Mr. Cardin is a member of the Board of Directors of Atmos
Energy Corporation and United States Lime & Minerals, Inc. (1)(3)
J. MICHAEL QUINLAN is Vice-Chairman of the Board of Directors of the
Company. Prior to the Merger, Mr. Quinlan served as a member of the Board of
Trustees and Chief Executive Officer of Prison Realty. Mr. Quinlan has been
employed in the corrections and detention industry for 28 years. From July 1987
to December 1992, Mr. Quinlan served as the Director of the Federal Bureau of
Prisons. In such capacity, Mr. Quinlan was responsible for the total operations
and administration of a federal agency with an annual budget of more than $2.0
billion, more than 26,000 employees and 75 facilities. In 1988, Mr. Quinlan
received the Presidential Distinguished Rank Award, which is the highest award
given by the United States government to civil servants for service to the
United States. In 1992, he received the National Public Service Award of the
National Academy of Public Administration and the American Society of Public
Administration, awarded annually to the top three public administrators in the
United States. Mr. Quinlan is a 1963 graduate of Fairfield University with a
B.S.S. in History, and he received a J.D. from Fordham University Law School in
1966. He also received an LL.M. from the George Washington University School of
Law in 1970.
JOSEPH V. RUSSELL is an Independent Director of the Company and, prior
to the Merger, served as an Independent Trustee for Prison Realty. Mr. Russell
is the President and Chief Financial Officer of Elan-Polo, Inc., a
Nashville-based, privately-held, world-wide producer and distributor of
footwear. Mr. Russell is also the Vice President of and a principal in RCR
Building Corporation, a Nashville-based, privately-held builder and developer of
commercial and industrial properties. He also serves on the Board of Directors
of Community Care Corp., the Footwear Distributors of America Association and US
Auto Insurance Company. Mr. Russell graduated from the University of Tennessee
in 1963 with a B.S. in Finance. (2-Chairman)(3)
CLASS III CONTINUING DIRECTORS NOT REQUIRING ELECTION AT 1999 ANNUAL
MEETING - TERMS TO EXPIRE IN 2001
MICHAEL W. DEVLIN is a Director and the Chief Operating Officer of the
Company. Prior to the Merger, Mr. Devlin served as a Trustee and as Chief
Operating Officer of Prison Realty, which he co-founded in 1997. Mr. Devlin also
serves as a manager of DC Investment Partners, LLC, which serves as the general
partner of private investment partnerships. From 1993 through 1995, Mr. Devlin
was a Vice President in the business development group of Goldman Sachs.
Immediately prior to joining Goldman Sachs, Mr. Devlin practiced law for four
years at the law firm of Davis, Polk and Wardwell in New York, working on
various corporate transactions, including leveraged leasing. During that time,
he negotiated approximately $1.0 billion in leases, including triple net leases.
Mr. Devlin is a graduate of Yale University and the Duke University School of
Law.
C. RAY BELL is a Director of the Company and, prior to the Merger,
served as a Trustee for Prison Realty. Mr. Bell is the President and owner of
Ray Bell Construction, Inc. ("Ray Bell Construction"). Ray Bell Construction
specializes in the construction of a wide range of commercial buildings, and has
constructed approximately 40 correctional and detention facilities, consisting
of over 15,000 beds in seven states on behalf of various government entities and
private companies, including Operating Company (and prior to the Merger, CCA).
(1) Member of the Audit Committee of the Board of Directors. (2) Member of the
Compensation Committee of the Board of Directors. (3) Member of the Independent
Committee of the Board of Directors.
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<PAGE> 11
Mr. Bell is a founding member of the Middle Tennessee Chapter of Associated
Builders and Contractors. Mr. Bell is a graduate of the University of the South.
(2)
CHARLES W. THOMAS, PH.D is a Director of the Company and, prior to the
Merger, served as a Trustee for Prison Realty. Dr. Thomas is a university
professor who has taught and written on the criminal justice and private
corrections fields for almost 30 years. Currently, he is Professor of
Criminology and the Director of the Private Corrections Project Center for
Studies in Criminology and Law (the "Center") at the University of Florida,
Gainesville, positions he has held since 1980 and 1989, respectively. While
serving as Director of the Center, Dr. Thomas authored the soon to be released
Center's Private Adult Correctional 1998 Facility Census (as well as prior
editions). In connection with the Merger, Dr. Thomas performed certain
consulting services for each of Prison Realty and CCA. Dr. Thomas continues to
perform consulting services for the Company and Operating Company relating to
each of their business objectives. Dr. Thomas graduated from McMurry University
in 1966 with a B.S. in Secondary Education and from the University of Kentucky
with a M.A. in Sociology in 1969, and a Ph.D. in Sociology in 1971. (1)
CLASS III DIRECTOR NOT STANDING FOR RE-ELECTION DUE TO RESIGNATION
EFFECTIVE AS OF THE DATE OF THE ANNUAL MEETING
MONROE J. CARELL, JR. is an Independent Director of the Company and,
prior to the Merger, served as an Independent Trustee for Prison Realty. For the
past 19 years, Mr. Carell has served as Chief Executive Officer and Chairman of
the Board of Directors of Central Parking, a company which provides parking
services nationwide and is publicly traded on the New York Stock Exchange. Since
1991, Mr. Carell has served as a Trustee of Vanderbilt University in Nashville,
and he is currently a member of the Board of Trust of the Urban Land Institute.
Mr. Carell is also a member of the Board of Directors of Vanderbilt University
Medical Center. (1)(3)
EXECUTIVE OFFICER WHO IS NOT A DIRECTOR
VIDA H. CARROLL is Chief Financial Officer, Secretary and Treasurer of
the Company and, prior to the Merger, served as the Chief Financial Officer,
Secretary and Treasurer of Prison Realty. From 1991 to 1996, Ms. Carroll, as a
sole proprietor, worked as a financial consultant, specializing in accounting
conversions and systems design. Prior to this time, she worked in public
accounting, including working as an audit manager with KPMG Peat Marwick. Ms.
Carroll holds a Bachelor of Science Degree from Tennessee Technology University
and is a certified public accountant.
COMMITTEES OF THE BOARD OF DIRECTORS
Pursuant to the authority granted under the Bylaws, the Company's Board
of Directors has designated an Audit Committee, Compensation Committee, and
Independent Committee. Information regarding the members of each committee and
the authority granted to each committee by the Company's Board of Directors is
set forth below. Immediately prior to the Merger, each committee member served
on a committee of the Board of Trustees of Prison Realty which exercised
substantially similar authority.
AUDIT COMMITTEE. The Company's Audit Committee consists of Messrs. Cardin,
Carell, Eakin, Feldman, and Thomas, with Mr. Feldman serving as Chairman. The
Audit Committee makes recommendations concerning the engagement of independent
public accountants by the Company, reviews with the independent public
accountants the plans and results of the audit engagement, approves professional
services provided by the independent public accountants, reviews the
independence of the independent public accountants, considers the range of audit
and non-audit fees and reviews the adequacy of the Company's internal accounting
controls. The Company's Audit Committee has held two meetings to date in 1999
and did not meet in 1998. Prison Realty's Audit Committee held
(1) Member of the Audit Committee of the Board of Directors. (2) Member of the
Compensation Committee of the Board of Directors. (3) Member of the Independent
Committee of the Board of Directors.
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<PAGE> 12
two meetings in 1998. To ensure that all members of the Audit Committee are
independent, it is anticipated that Mr. McWherter, if elected, will be appointed
to replace Dr. Thomas on the Audit Committee following the Annual Meeting. See
"Certain Relationships and Related Transactions" contained herein for a
description of certain services previously rendered by Dr. Thomas in connection
with the Merger and currently being rendered in connection with the Company's
and Operating Company's businesses.
COMPENSATION COMMITTEE. The Company's Compensation Committee consists of Messrs.
Bell, Jackson W. Moore, Rusty L. Moore, and Russell, with Mr. Russell serving as
Chairman. The Compensation Committee determines compensation, including awards
under the Company's Employee Share Incentive Plan, as assumed from Prison Realty
in the Merger (the "Share Incentive Plan"), and the Non-Employee Directors'
Share Option Plan, as amended, as also assumed by the Company from Prison Realty
in the Merger (the "Non-Employee Directors' Plan") (the Share Incentive Plan and
the Non-Employee Directors' Plan, as assumed, are herein collectively referred
to as the "Company's Plans"). The Compensation Committee also administers the
Company's Plans, as well as the Company's Non-Employee Directors' Compensation
Plan, as assumed by the Company from Prison Realty in the Merger. The
Compensation Committee also administers certain former stock option and
incentive plans of CCA, including the 1995 Employee Stock Incentive Plan (the
"1995 Stock Incentive Plan"), assumed by the Company in connection with the
Merger. The Company's Compensation Committee has held one meeting to date in
1999 and did not meet in 1998. Prison Realty's Compensation Committee held two
meetings in 1998.
INDEPENDENT COMMITTEE. The Company's Independent Committee consists of all of
the Company's Independent Directors and currently consists of Messrs. Cardin,
Carell, Eakin, Feldman, Jackson W. Moore and Russell, with Jackson W. Moore
serving as Chairman. Pursuant to the Company's Bylaws, the Independent Committee
must approve of the following actions of the Company's Board of Directors: (i)
the election of the operators for the Company's properties; (ii) the entering
into of any agreement with any tenant of the Company's properties, including
Operating Company, the Company's primary tenant, Service Company A and Service
Company B; and (iii) the consummation of any transaction between the Company and
any of its tenants, including those parties mentioned above; including, but not
limited to, the negotiation, enforcement and renegotiation of the terms of any
lease of any of the Company's properties. For further discussion regarding the
duties and procedures of the Independent Committee, please see the information
provided herein under the heading "Certain Relationships and Related
Transactions." The Company's Independent Committee has held one meeting to date
in 1999 and did not meet in 1998. Prison Realty's Independent Committee held two
meetings in 1998. Mr. McWherter, if elected, will serve as a member of the
Independent Committee following the Annual Meeting.
MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY AND OF THE BOARD OF
TRUSTEES OF PRISON REALTY
The Company's Board of Directors has held one meeting to date in 1999,
with all directors except for Mr. Carell attending either in person or by
teleconference. The Company's Board of Directors held one meeting in 1998, with
all directors except for Mr. Carell attending either in person or by
teleconference. The Board of Trustees of Prison Realty held 11 meetings in 1998
and no trustee, with the exception of Mr. Carell, attended fewer than 75% of the
aggregate of all meetings of the board and the committees, if any, upon which
such trustees served and which were held during the period of time that such
person served on the Board of Trustees or such committee(s).
COMPENSATION OF DIRECTORS
The compensation policy of the Company as its relates to members of the
Company's Board of Directors is a continuation of the policy used by Prison
Realty to compensate its trustees prior to the Merger. Accordingly, the Company
pays its Non-Employee Directors, as hereinafter defined, annual compensation of
$12,000 for their services (the "Annual Retainer"). In addition, Non-Employee
Directors receive a fee of $1,000 for each meeting of the Board of Directors
which they attend and an additional fee of $500 for each meeting they attend of
committees upon which they serve (collectively, the "Meeting Fees") (the Annual
Retainer and Meeting Fees paid to Non-Employee Directors are collectively
referred to herein as the "Fees"). Directors who are not employees of the
Company or one of its lessees or any of their affiliates or subsidiaries (the
"Non-Employee Directors") may elect, on
9
<PAGE> 13
an annual basis, to receive up to 100% of their Fees in shares of the Company's
common stock. Non-Employee Directors are reimbursed for reasonable expenses
incurred to attend Board of Directors and committee meetings. Directors who are
employees of either the Company or one of its lessees or their affiliates are
not compensated for serving as Directors. Non-Employee Directors also
participate in the Non-Employee Directors' Plan, whereby they receive options to
purchase 5,000 shares of the Company's common stock for each year of service
with the Board of Directors. All other directors of the Company are eligible to
participate in the Share Incentive Plan.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL PROVISIONS
Employment Agreements.
Each of Doctor R. Crants, J. Michael Quinlan, D. Robert Crants, III and
Michael W. Devlin are subject to employment agreements with the Company
(collectively, the "Employment Agreements"). Doctor. R. Crants and Mr. Quinlan
are subject to agreements dated January 1, 1999 executed in connection with the
completion of the Merger. Mr. Quinlan's employment agreement with Prison Realty
in effect immediately prior to the Merger was canceled and superseded by the
January 1 agreement, with the consent of Mr. Quinlan, in connection with the
Merger. D. Robert Crants, III and Mr. Devlin are subject to agreements
previously entered into by them with Prison Realty, effective as of June 1,
1997, which were assumed by the Company with their consent in connection with
the Merger.
Doctor R. Crants' employment agreement is for a term of three years
from the date of execution, with an additional three year renewal option. The
employment agreements relating to each of Mr. Quinlan, D. Robert Crants, III and
Mr. Devlin are for terms of four years from the date of their respective
execution. The Employment Agreements generally provide for annual compensation
and incentive compensation as determined by the Company's Compensation Committee
on the terms set forth therein. Since the Company did not commence operations
until completion of the Merger on January 1, 1999, the Company paid no
compensation to Doctor R. Crants, Mr. Quinlan, D. Robert Crants, III, and Mr.
Devlin in 1998. Information concerning actual compensation paid to each of
Doctor R. Crants, Mr. Quinlan, D. Robert Crants, III, and Mr. Devlin in 1998 by
each of CCA and Prison Realty, respectively, can be found herein under the
heading "Executive Compensation." The Employment Agreements also generally
provide for non-cash benefits such as life and health insurance to the extent
the Company makes such benefit plans available to the Company's employees.
Each Employment Agreement includes provisions restricting the officers
from competing, directly or indirectly, with the Company during the term of
their employment and, except in certain circumstances, for three years after
termination of employment, with the exception of Doctor R. Crants, who is
prohibited from competing for a period of one year after the termination of his
employment.
Pursuant to the employment agreement with Doctor R. Crants, the Company
may terminate his employment at any time with or without cause, provided,
however, that if he is terminated without just cause, as defined under the
agreement, he shall be entitled to receive his annual cash and non-cash
compensation for a period ending on the earlier of his death or three years from
his date of termination, subject to off-set for compensation earned and other
benefits obtained by him from other sources during that period. Doctor R. Crants
may terminate his employment with the Company by providing 90 days written
notice to the Company. Pursuant to the employment agreements with Mr. Quinlan,
D. Robert Crants, III and Mr. Devlin, the Company may generally terminate the
employment of each of them with 30 days prior written notice upon the happening
of certain specified events. Each of Mr. Quinlan, D. Robert Crants, III and Mr.
Devlin may terminate his employment upon 30 days' written notice to the Company.
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<PAGE> 14
Change of Control Provisions.
The 1995 Stock Incentive Plan and the Share Incentive Plan each provide
that upon a "change-of-control" or "potential change-in-control" of the Company,
as those terms are defined in the Share Incentive Plan and Incentive Plan, the
value of all outstanding share options granted under the plans, to the extent
vested, shall be cashed out on the basis of a "change-in-control price" which is
generally based on the highest price paid per share of Common Stock on the New
York Stock Exchange at any time during a 60 day period prior to the occurrence
of the "change-in-control" event. Doctor R. Crants has been granted options to
purchase shares of Common Stock under the Incentive Plan, and each of the Named
Executive Officers has been granted options to purchase shares of Common Stock
under the Share Incentive Plan, all as set forth in the table included herein
under "Executive Compensation--Aggregated Options/SAR Exercises in Last Fiscal
Year and Fiscal Year-End Option/SAR Value." In addition, Doctor R. Crants has
been granted deferred shares of Common Stock under the Amended and Restated
Corrections Corporation of America 1989 Stock Bonus Plan, as assumed by the
Company in connection with the Merger, which are subject to accelerated vesting
upon the occurrence of certain "changes of control," as defined pursuant to the
plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Company commenced operations on January 1, 1999 upon the completion
of the Merger. Accordingly, the Company paid no compensation to its directors,
officers, or employees prior to that date. However, the Company's current Chief
Executive Officer received compensation from CCA in 1998, as well as in previous
years, and each of the Company's officers received compensation from Prison
Realty in 1998 and since its commencement of operations in July 1997. The
following table sets forth certain summary information concerning the
compensation paid by CCA to Doctor R. Crants during the three fiscal years ended
December 31 1996, 1997 and 1998, and the compensation paid by Prison Realty to
each of Mr. Quinlan, D. Robert Crants, III, and Mr. Devlin, the three most
highly compensated executive officers of the Company, who were, prior to the
Merger, the three executive officers of Prison Realty whose annualized
compensation in 1998 from Prison Realty exceeded $100,000 (collectively, the
"Named Executive Officers"), for the fiscal years ended December 31, 1997 and
1998.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------
--------------------------------- SECURITIES
BASE UNDERLYING SHARE BONUS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) AWARD(#)
- --------------------------- ---- ------ ----- ---------- --------
<S> <C> <C> <C> <C> <C>
Doctor R. Crants 1998 $ 393,383(1) -- 17,500(2) --
Chief Executive Officer 1997 366,873(3) -- 13,125(2) --
1996 351,580(4) -- 26,250(2) --
J. Michael Quinlan . . . . . . . . . . . 1998 160,625(5) -- -- --
Vice Chairman of the 1997 150,000(6) -- 375,000(7) --
Board of Directors
D. Robert Crants, III . . . . . . . . . 1998 108,750(5) -- -- --
President 1997 100,000(6) -- 225,000(7) 150,000(8)
Michael W. Devlin . . . . . . . . . . . 1998 108,750(5) -- -- --
Chief Operating Officer 1997 100,000(6) -- 225,000(7) 150,000(8)
</TABLE>
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<PAGE> 15
(1) Includes $7,450 contribution to the Corrections Corporation of America
Amended and Restated Employee Stock Ownership Plan (the "CCA ESOP")
(2) These options were granted under Corrections Corporation of America
1995 Stock Incentive Plan. In connection with the Merger, the Company
assumed all of the options outstanding under the Incentive Plan, with
all of such options being converted into options exercisable for shares
of Common Stock, based on the exchange ratio in the Merger pursuant to
which CCA shareholders received 0.875 shares of Common Stock for each
share of CCA common stock owned.
(3) Includes $7,450 contribution to the CCA ESOP.
(4) Includes $7,350 contribution to the CCA ESOP.
(5) Includes $5,000 contribution to the CCA Prison Realty Trust Amended and
Restated Employee Share Ownership Plan.
(6) Amounts are annualized salaries for the fiscal year ended December 31,
1997.
(7) Options to purchase all but 25,000 shares of the shares shown for each
officer above vest in 25% increments over a three-year period with the
first increment having vested on July 15, 1997 and are exercisable at a
price of $21.00 per share, the per share offering price of the Prison
Realty's initial public offering of its common shares in July 1997 (the
"Initial Offering"). The balance of the options vest in 25% increments
over a three-year period with the first increment having vested on
December 2, 1997 and are exercisable at a price of $37.81 per share,
the per share market price of Prison Realty's common shares on the date
of the grant. These options were granted under the Share Incentive
Plan. In connection with the Merger, the Company assumed all of the
options outstanding under the Share Incentive Plan, with all of such
options being converted into options exercisable for shares of Common
Stock.
(8) Represent Prison Realty common shares issued as a development fee and
as reimbursement for actual costs incurred with the promotion and
formation of Prison Realty, the consummation of the Initial Offering
and the closing of the purchase of nine correctional and detention
facilities by Prison Realty from CCA in connection therewith.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company granted no options to purchase shares of Common Stock in
1998. In connection with the Merger, however, options to purchase shares of CCA
common stock and Prison Realty common shares outstanding at the time of the
Merger were converted into the right to purchase shares of Common Stock. Doctor
R. Crants held options to purchase both CCA common stock and Prison Realty
common shares at the time of the Merger which were converted, and each of the
Named Executive Officers and each of the trustees of Prison Realty held options
to purchase Prison Realty common shares at the time of the Merger, which were
converted pursuant to the terms thereof. With the exception of a grant to the
non-employee trustees of Prison Realty in April 1998, Prison Realty did not
grant any options to purchase its common shares during 1998. Doctor R. Crants
was granted options to purchase 20,000 shares of CCA common stock at $35.00 per
share in March 1998, which were converted in the Merger into options to purchase
17,500 shares of Common Stock at $40.00 per share, based on the exchange ratio
in the Merger, pursuant to which C CA shareholders received 0.875 share of
Common Stock for each share of CCA common stock they owned. CCA did not grant
any Named Executive Officers options to purchase shares of its common stock
during 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUE
The following table sets forth information with respect to the value of
options to purchase Common Stock at December 31, 1998. The following information
assumes that the Merger had been completed on December 31, 1998 and that all
options to purchase shares of CCA common stock and Prison Realty common shares
had been converted into the right to purchase shares of Common Stock. In
addition, it assumes that the closing price of the Common Stock on December 31,
1998 would have been the same as that of Prison Realty's common shares.
Doctor R. Crants exercised options to purchase 240,000 shares of CCA
common stock on October 16, 1998, constituting his only option exercise during
the 1998 fiscal year. These purchased shares were converted into 210,000 shares
of Common Stock in the Merger, based on the exchange ratio in the Merger.
Options to purchase shares of CCA common stock held by him on December 31, 1998
were also converted into the right to purchase shares of Common Stock in the
Merger. Neither Doctor R. Crants nor any of the Named Executive Officers
exercised any options to purchase Prison Realty common shares during the 1998
fiscal year.
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<PAGE> 16
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Doctor R. Crants 270,625(1)/100,000(2) $1,115,887(3);0(4)/0(5)
J. Michael Quinlan 187,500(2)/187,500(2) 0(5)/0(5)
D. Robert Crants, III 112,500(2)/112,500(2) 0(5)/0(5)
Michael W. Devlin 112,500(2)/112,500(2) 0(5)/0(5)
</TABLE>
- ----------
(1) Constitutes options to purchase shares of Common Stock obtained as the
result of the Company's assumption of options to purchase 100,000
common shares of Prison Realty and 195,000 shares of CCA common stock,
in the Merger, on a converted basis.
(2) Constitutes options to purchase shares of Common Stock obtained as the
result of the Company's assumption of options to purchase a like number
of Prison Realty common shares in the Merger.
(3) Reflects the value of exercisable options assumed from CCA in the
Merger relating to the purchase 170,625 shares of Common Stock. The
value of the unexercised options at December 31, 1998 is based upon the
closing market price of the Prison Realty's common shares of $20.50 at
such date. The exercise price applicable to the options assumed from
CCA is $13.96, based on the weighted average exercise price of such
options. Thus, the options assumed from CCA had a value of
$1,115,887.50 as of December 31, 1998.
(4) Reflects the value of exercisable options assumed from Prison Realty in
the Merger relating to the purchase of 100,000 shares of Common Stock.
The exercise price applicable to the options assumed from Prison Realty
exceeded the closing market price of $20.50. Thus, the options assumed
from Prison Realty had no value as of December 31, 1998.
(5) The value of the unexercisable options at December 31, 1998 is based
upon the closing market price of Prison Realty's common shares of
$20.50 at such date. The weighted average exercise price applicable to
the options assumed from Prison Realty exceeded the closing market
price of $20.50. Thus, the options had no value as of December 31,
1998.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company, comprised of those members
of the Company's Board of Directors who served on the Compensation Committee of
the Board of Trustees of Prison Realty (the "Prison Realty Compensation
Committee") immediately prior to the Merger, will continue the policies adopted
and implemented by the Prison Realty Compensation Committee in compensating the
Company's executive officers. Accordingly, the following report analyzes the
adopted policy as well as the actions of the Prison Realty Compensation
Committee in 1998.
Objectives of Executive Compensation. The Company's executive
compensation program is designed to attract, retain and reward experienced,
highly motivated executives who are capable of leading the Company effectively
and continuing its growth and profitability. The Company's objective is to
utilize a combination of cash and equity-based compensation to provide
appropriate incentives for executives while aligning their interests with those
of the Company's stockholders.
COMPENSATION COMMITTEE PROCEDURES. Prison Realty's executive
compensation program was administered under the direction of the Prison Realty
Compensation Committee comprised of Joseph V. Russell (Chairman), C. Ray Bell,
Jackson W. Moore and Rusty L. Moore. The compensation determinations for Prison
Realty's executive officers for 1998 were made in April 1998 after audited
financial statements for such year had become available and were filed with the
Securities and Exchange Commission (the "Commission") and upon a review of the
salaries of the executive officers of comparable real estate investment trusts
as disclosed in available SNL Reviews (as hereinafter defined) and publicly
filed documents.
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<PAGE> 17
In determining the executive officers' initial base salaries and the
performance-based incentives granted to the executive officers at the end of the
fiscal year ended December 31, 1998, the Prison Realty Board of Trustees and the
Prison Realty Compensation Committee, as applicable, took into consideration the
above referenced factors and examined comparable executive compensation made by
a peer group of real estate investment trusts of similar size, makeup and
performance as reported in the SNL Executive Compensation Review 1998 -- REITS
(the "SNL Review"). While the companies included in the SNL Review may not be
identical to the companies used to calculate the NAREIT Index, as hereinafter
defined, to which Prison Realty's share performance is compared in this Proxy
Statement, the Prison Realty Compensation Committee believed that the
compensation information in such survey was comparable since it contained data
pertaining to real estate investment trusts of similar size, makeup and
performance to that of Prison Realty.
The Prison Realty Compensation Committee exercised its independent
discretion in determining the compensation of Prison Realty's executive
officers, and its members were permitted to consult by telephone prior to the
meeting at which compensation decisions were made.
Each element of Prison Realty's executive compensation for the fiscal
year ended December 31, 1998, as well as the compensation of the Chief Executive
Officer for such year, is discussed separately below.
BASE SALARY. In April 1998, the Prison Realty Board set the 1998 base
salaries for Prison Realty's executive officers in accordance with the policies
and considerations stated above. For the year ended December 31, 1998, Prison
Realty's executive officers (other than its Chief Executive Officer, who is
discussed separately below) received the following base salaries: D. Robert
Crants, III (President) - $108,750; and Michael W. Devlin (Chief Operating
Officer) - $108,750.
SHARE OPTIONS. Under the Share Incentive Plan, the Prison Realty
Compensation Committee had the discretion to grant share options to its
executives. The Prison Realty Compensation Committee believed that the grant of
such share options could align an executive's long-term objectives with those of
Prison Realty's shareholders. The Share Incentive Plan was administered by the
Prison Realty Compensation Committee, which had the power to determine, among
other things, those individuals to whom options would be granted, the number of
shares issuable, the type of options granted and other terms and conditions of
the options. No options were granted to executives of the Company under the
Share Incentive Plan in 1998.
COMPENSATION OF PRISON REALTY CHIEF EXECUTIVE OFFICER IN 1998
In April 1998, the Prison Realty Board set the 1998 base salary for
Prison Realty's Chief Executive Officer, J. Michael Quinlan, in accordance with
the policies and considerations stated above. For the year ended December 31,
1998, Prison Realty's Chief Executive Officer received a base salary of
$160,625. For fiscal year ended December 31, 1998, the Prison Realty
Compensation Committee did not award any options to purchase common shares of
Prison Realty to Prison Realty's Chief Executive Officer.
COMPENSATION OF CCA EXECUTIVE OFFICER IN 1998
Doctor R. Crants is the current Chief Executive Officer of the Company.
In March 1998, the CCA Compensation Committee set Doctor R. Crants' base salary
in accordance with criteria substantially similar to that used by the Prison
Realty Compensation Committee and set forth herein. For the year ended December
31, 1998, Doctor R. Crants, as CCA's Chief Executive Officer, received a base
salary of $387,608. The committee also awarded Doctor R. Crants incentive stock
options to purchase 20,000 shares of CCA's common stock at a purchase price of
$35.00 per share. The compensation levels established by the CCA Compensation
Committee were based on their judgment that these levels were appropriate and
desirable in light of Mr. Crants' actual and potential contributions to CCA. The
assessment of actual and potential contributions was based on the committee's
subjective evaluation of his abilities, skills, efforts and continued
leadership. Due to Doctor R. Crants' concurrent employment by Operating Company,
14
<PAGE> 18
Doctor R. Crants' 1999 salary as Chief Executive Officer of the Company has been
set at $175,000 for 1999. Doctor R. Crants will also receive an annual salary
from Operating Company in 1999.
TAX DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended, limits the deductibility on the Company's tax
return of compensation over $1.0 million to either the Chief Executive Officer
or any of the Named Executive Officers of the Company unless, in general, the
compensation is paid pursuant to a plan which is performance-related,
non-discretionary and has been approved by the Company's stockholders. The
Compensation Committee's policy with respect to Section 162(m) is to make every
reasonable effort to ensure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance.
Submitted by the Compensation Committee of the Company's Board of Directors:
Joseph V. Russell, Chairman
C. Ray Bell
Jackson W. Moore
Rusty L. Moore
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<PAGE> 19
PERFORMANCE GRAPH
The Common Stock is traded on the New York Stock Exchange under the
symbol "PZN". On March 26, 1999, the last reported sales price of the Common
Stock was $___ per share. The Common Stock, however, did not begin trading on
the New York Stock Exchange until January 4, 1999, after the completion of the
Merger. As such, the information provided below relating to shareholder returns
for the periods indicated relates to each of Prison Realty and CCA.
Prison Realty
The following graph provides a comparison of the cumulative total
shareholder return on Prison Realty's common shares compared to the cumulative
total return of the Standard & Poor's ("S&P") 500 Index and the National
Association of Real Estate Investment Trusts ("NAREIT") Total Return Equity
Index (the "NAREIT Index") for the six months ended December 31, 1997 and the
year ended December 31, 1998. The graph assumes an investment of $100 on June
30, 1997, a reinvestment of distributions and/or dividends and actual increase
of the market value of Prison Realty's common shares relative to the initial
investment of $100. The comparisons in this table are required by the Commission
and are not intended to forecast or be indicative of possible future performance
of the Company's Common Stock as a result of the Merger.
[PRISON REALTY PERFORMANCE GRAPH AS OF DECEMBER 31, 1998 WITH LEGEND]
16
<PAGE> 20
CCA
The following graph provides a comparison, for the period of five years
commencing December 31, 1993 and ending December 31, 1998, of the yearly
percentage change in the cumulative total shareholder return on CCA's common
stock with the cumulative total return of the Standard & Poor's 500 Index and a
Peer Group Index consisting of companies that were either direct competitors of
CCA or other regional service organizations with similar market capitalization
to CCA prior to the Merger. CCA believed that these companies generally
possessed assets, liabilities and operations more similar to those of CCA than
the companies comprising other publicly-available indices. The graph assumes an
investment of $100 on December 31, 1993, a reinvestment of dividends and actual
increase of the market value of CCA's common stock relative to the initial
investment of $100. The comparisons in this table are required by the Commission
and are not intended to forecast or be indicative of possible future performance
of the Company's Common Stock as the result of the Merger.
[CCA PERFORMANCE GRAPH AS OF DECEMBER 31, 1998 WITH LEGEND]
17
<PAGE> 21
COMMON STOCK
The following table sets forth, as of March 17, 1999, certain
information with respect to the beneficial ownership of shares of the Company's
Common Stock by (i) each stockholder of the Company that the Company believes
holds more than a 5% beneficial interest in the Common Stock, (ii) each
director, and each nominee for director, of the Company, (iii) each of the
Company's executive officers, and (iv) all directors, nominees and executive
officers as a group. Except as otherwise indicated, the Company believes that
the beneficial owners of the shares of Common Stock listed below, based on
information furnished by such owners, have sole voting and investment power with
respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
OF COMMON STOCK OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(2)
- ------------------------ --------------------- ---------------------
<S> <C> <C>
Sodexho Alliance, S.A. 10,442,568(3) 9.2%
Port de la Bourdonnais
75007, Paris France
Doctor R. Crants 2,249,057(4) 2.0%
J. Michael Quinlan 229,692(5) *
D. Robert Crants, III 867,517(6) *
Michael W. Devlin 867,517(7) *
C. Ray Bell 143,915(8) *
Richard W. Cardin 15,001(9) *
Monroe J. Carell, Jr. 20,811(9) *
Jean-Pierre Cuny 26,250(10) *
John W. Eakin, Jr. 18,201(9) *
Ted Feldman 21,305(9) *
Ned Ray McWherter 0 *
Jackson W. Moore 31,139(9) *
Rusty L. Moore 14,620(11) *
Joseph V. Russell 95,138(12) *
Charles W. Thomas, Ph.D 58,753(9) *
All executive officers, directors and nominees for
director as a group (16 persons) 4,693,529(13) 4.1%
</TABLE>
- ---------------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Includes shares as to which such person directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise has or shares
voting power and/or investment power as these terms are defined in Rule 13d-3(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Shares
of Common Stock underlying options to purchase shares of Common Stock, which are
exercisable, or become exercisable within sixty days after March 17, 1999, are
deemed to be outstanding for the purpose of computing the outstanding shares of
Common Stock owned by the particular person and by the group, but are not deemed
outstanding for any other purpose.
(2) Based on 113,041,110 shares of Common Stock issued and outstanding.
(3) Includes 59,062 shares of Common Stock issuable upon the exercise of certain
options issued by CCA to Jean-Pierre Cuny and transferred to Sodexho. These
options were assumed by the Company in the Merger. Pursuant to the authority
granted to the Board of Directors of the Company under the Company's Charter,
the Board of Directors of the Company has waived the ownership limit contained
in the Company's Charter after obtaining such representations and undertakings
from Sodexho to assure the Company's status as a REIT would not be adversely
affected by exempting it from such ownership limit.
18
<PAGE> 22
(4) Includes 270,625 shares of Common Stock issuable upon the exercise of vested
options, an aggregate of 238,000 shares of Common Stock held equally in two
trusts for the benefit of Doctor R. Crants' two children other than D. Robert
Crants, III, and 43,163 shares of Common Stock allocated to Doctor R. Crants
pursuant to an ESOP maintained by Operating Company.
(5) Includes 196,250 shares of Common Stock issuable upon the exercise of vested
options, 700 shares of Common Stock owned by Mr. Quinlan's daughters, 21,000
shares of Common Stock owned by Mr. Quinlan's wife and 2,363 shares of Common
Stock held in an Individual Retirement Account ("IRA").
(6) Includes 112,500 shares of Common Stock issuable upon the exercise of vested
options, as well as 592,267 shares of Common Stock held by a private investment
partnership. D. Robert Crants, III serves as a manager of the general partner
of the private investment partnership.
(7) Includes 112,500 shares of Common Stock issuable upon the exercise of vested
options, as well as 592,267 shares of Common Stock held by a private investment
partnership. Mr. Devlin serves as a manager of the general partner of the
private investment partnership.
(8) Includes 10,000 shares of Common Stock issuable upon the exercise of vested
options and 1,000 shares of Common Stock owned jointly by Mr. Bell and his wife.
(9) Includes 10,000 shares of Common Stock issuable upon the exercise of vested
options.
(10) Mr. Cuny serves as the Senior Vice-President of The Sodexho Group, an
affiliate of Sodexho. Mr. Cuny beneficially owns 26,250 shares of Common Stock
issuable upon the exercise of vested options. This number does not
include 10,442,568 shares of Common Stock beneficially owned by Sodexho.
(11) Includes 10,000 shares of Common Stock issuable upon the exercise of vested
options, 1,050 shares of Common Stock owned by Mr. Moore's wife, and 2,200
shares of Common Stock owned by Mr. Moore jointly with his wife.
(12) Includes 10,000 shares of Common Stock issuable upon the exercise of vested
options and 437 shares of Common Stock owned jointly by Mr. Russell and his
daughter.
(13) Includes an aggregate of 840,625 shares of Common Stock issuable upon the
exercise of vested options.
SERIES A PREFERRED STOCK
The following table sets forth, as of March 17, 1999, certain information with
respect to the beneficial ownership of shares of the Company's Series A
Preferred Stock by (i) each director, and each nominee for director, of the
Company, and (ii) the directors and nominees as a group. No executive officers
of the Company owned any shares of Series A Preferred Stock as of March 15,
1999. In addition, the Company is aware of no beneficial holder of more than 5%
of the Series A Preferred Stock.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF SERIES A PERCENTAGE OF SHARES OF
PREFERRED STOCK SERIES A PREFERRED STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(2)
- ------------------------ --------------------- ---------------------
<S> <C> <C>
C. Ray Bell 5,000 *
Monroe J. Carell, Jr. 5,000 *
All directors and nominees for director 10,000 *
as a group (15 persons)
</TABLE>
- ---------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Series A Preferred Stock.
(1) Includes shares as to which such person directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise has or shares
voting power and/or investment power as these terms are defined in Rule 13d-3(a)
of the Exchange Act.
(2) Based on 4,300,000 shares of Series A Preferred Stock issued and
outstanding.
19
<PAGE> 23
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires the Company's executive
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities ("10% Holders"), to file reports of ownership
and changes in ownership with the Commission and the New York Stock Exchange.
Executive officers, directors and 10% Holders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms that
they file. The Company's officers and directors, in their capacity as such with
the Company, became subject to these reporting requirements upon completion of
the Merger, and as such did not file any reports with the Commission in 1998.
The officers and directors, in their capacity as officers and trustees of Prison
Realty in 1998, were subject to these reporting requirements as they related to
Prison Realty. In addition, Doctor R. Crants, in his capacity as an officer and
director of CCA in 1998, and Jean-Pierre Cuny in his capacity as a director of
CCA in 1998, were also subject to these reporting requirements as they related
to CCA. To the Company's knowledge, based solely on review of the copies of such
reports and amendments thereto furnished to Prison Realty and CCA, as the case
may be, prior to the Merger, and on written representations made to the Company
that no other reports were required during or with respect to the fiscal year
ended December 31, 1998, all Section 16(a) filing requirements relating to
Prison Realty and CCA, as the case may be, were timely made.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company commenced operations on January 1, 1999 following the
completion of the Merger. Immediately prior to the Merger, CCA transferred
certain management contracts relating to the operation of correctional and
detention facilities to Correctional Management Services Corporation, a
newly-formed Tennessee corporation and the Company's current primary tenant
("Operating Company"). Also immediately prior to the Merger, CCA transferred its
remaining management contracts to two newly-formed Tennessee corporations,
Prison Management Services, Inc. ("Service Company A") and Juvenile and Jail
Facility Management Services, Inc. ("Service Company B," and, collectively with
Service Company A, the "Service Companies"). Each correctional and detention
facility owned by each of CCA and Prison Realty prior to the Merger was
transferred to the Company in the Merger. As a result of the Merger, the Company
and Operating Company entered into long-term, non-cancellable triple net leases
with respect to each facility leased by the Company to Operating Company. Upon
completion of the Merger and the related transactions, Operating Company became
the lessee of a substantial majority of the Company's facilities. As of March
17, 1999, Operating Company leased 30 of the Company's 47 facilities, and the
Company expects that Operating Company will additionally lease nine of the
Company's 47 facilities which are currently under construction.
Doctor R. Crants serves as the Chairman of the Board of Directors of
the Company and Chief Executive Officer of the Company. Doctor R. Crants is also
a member of Operating Company's Board of Directors and serves as Operating
Company's Chief Executive Officer. D. Robert Crants, III, President of the
Company, is the son of Doctor R. Crants. Charles W. Thomas, a director of the
Company, performed certain consulting services for each of Prison Realty and CCA
in connection with the Merger and received a fee of $3.0 million for the
performance of such services, and currently performs consulting services for
each of the Company and Operating Company relating to their respective business
objectives. Rusty L. Moore, a director of the Company who has not been nominated
for re-election at the Annual Meeting, is the spouse of a shareholder of Stokes
& Bartholomew, P.A., tax and securities counsel to the Company. Stokes &
Bartholomew, P.A. also provides certain legal services to Operating Company.
Samuel W. Bartholomew, Jr., a shareholder of Stokes & Bartholomew, P.A., serves
as Chairman of the Board of Directors of Service Company B. C. Ray Bell, a
director of the Company, is the principal of a construction company which, as a
part of its business, builds correctional and detention facilities, including
facilities for the Company.
The Company owns all of the outstanding non-voting common stock of
Operating Company, which represents approximately 9.5% of the value of all of
the outstanding common stock of Operating Company. D. Robert Crants, III,
Michael W. Devlin, and certain other officers and employees of the Company
collectively own 9.4% of the outstanding capital stock of Operating Company.
Sodexho, the Company's largest stockholder, owns 16% of the outstanding capital
stock of Operating Company and has its right to appoint a member of the Board of
Directors of Operating Company. Jean-Pierre Cuny, an affiliate of Sodexho, is a
member of the Board of Directors of the Company.
20
<PAGE> 24
The remainder of the outstanding capital stock of Operating Company is owned by
an institutional investor and employees of Operating Company other than Doctor
R. Crants.
The terms of certain agreements between Operating Company and the
Company entered into in connection with the Merger, including the Company's
leases with Operating Company, a trade name use agreement between the Company
and Operating Company and a promissory note given by Operating Company in
consideration for CCA's transfer of management contracts, were determined by
Prison Realty and CCA in consultation with their financial advisers in a manner
to reflect fair market values and to meet the requirements applicable to REITs.
There were no arm's-length negotiations regarding these financial terms,
however.
Pursuant to the Bylaws of the Company, the Independent Committee must
approve actions of the Company's Board of Directors regarding the election of
the operators for the Company's properties, including Operating Company or its
affiliates, the entering into of any agreement with Operating Company, the
Service Companies or any of their respective affiliates, and the completion of
any transaction between the Company and Operating Company or its affiliates,
including the negotiation and enforcement of any lease of the Company's
properties and the other agreements between the Company and Operating Company
entered into in connection with the Merger.
The Company has adopted a business conduct policy which provides
guidelines for the Company's Board of Director's assessment of a conflict,
stating that a potential conflict would exist whenever an employee or director
has an interest in or connection with an enterprise with which the Company has
transacted or might transact business or with individuals associated with such
an enterprise, when that interest is of such a nature that it might influence
the independent judgment of such employee or director. The policy will cover
conflicting interests that are direct or indirect, through an enterprise in
which an employee or director has an interest. Whether or not a conflict of
interest exists will be determined by the Independent Committee, on a
case-by-case basis in accordance with the policies and procedures established by
the Board of Directors of the Company. Such procedures may include requiring
Doctor R. Crants to abstain from making management decisions in his capacity as
an officer or director of the Company and Operating Company, with respect to
matters that present a conflict of interest between the companies, and to
abstain from voting as a director of either company, with respect to matters
that present a conflict of interest between the companies.
PROPOSAL 2
APPROVAL OF THE NAME CHANGE AMENDMENT
The Company's Board of Directors has determined that it is in the best
interests of the Company and its stockholders to amend Article SECOND of the
Company's Charter to change the name of the Company from Prison Realty
Corporation to "Prison Realty Trust, Inc." Prior to the Merger, while its actual
name was CCA Prison Realty Trust, Prison Realty did business as Prison Realty
Trust and became commonly known as "Prison Realty Trust" to its customers.
Prison Realty gained a substantial amount of name recognition and market
identity under this name in the course of conducting its business operations.
Therefore, the Company's Board of Directors believes the name "Prison Realty
Trust, Inc." is a more appropriate name for the Company as it reflects this
pre-Merger identity and will enable the Company to continue the reputation
developed under this name prior to the Merger. Therefore, at a meeting on March
4, 1999, the Company's Board of Directors approved a resolution, in accordance
with the Bylaws of the Company and subject to stockholder approval, amending
Article SECOND of the Company's Charter to change the name of the Company to
"Prison Realty Trust, Inc." and recommends a vote for approval of the Name
Change Amendment. The text of the proposed amendment is included as Appendix A
to this Proxy Statement.
21
<PAGE> 25
The affirmative vote of the holders of two-thirds of all the votes
entitled to be cast is required to adopt the proposed Name Change Amendment. If
approved by the required number of stockholders, the amendment to the Charter of
the Company will take effect upon filing with the Department of Assessments and
Taxation of the State of Maryland, which is expected to occur as soon as is
practicable after the Annual Meeting.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS A VOTE FOR APPROVAL OF THE
NAME CHANGE AMENDMENT.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Audit Committee, has selected the accounting firm of Arthur Andersen LLP to
serve as independent auditors of the Company for the fiscal year ending December
31, 1999. Arthur Andersen LLP served as CCA's independent auditors from 1991
until completion of the Merger and as Prison Realty's independent auditors from
its formation in April 1997 until completion of the Merger. Arthur Andersen LLP
also rendered services in connection with the Merger to each of CCA, Prison
Realty and the Company in connection with the Merger. Arthur Anderson LLP has
served as the Company's independent auditors since the Company's formation in
September 1998 and is considered by management of the Company to be well
qualified. The Company has been advised by that firm that neither it nor any
member thereof has any financial interest, direct or indirect, in the Company or
any of its subsidiaries in any capacity. A representative of Arthur Andersen LLP
will be present at the Annual Meeting, will be given the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
Although the Company is not required to submit the ratification and
approval of the selection of its independent auditors to a vote of stockholders,
the Board of Directors believes that it is sound policy to do so. The
affirmative vote of the holders of a majority of the shares of the outstanding
shares of Common Stock cast at the Annual Meeting is required for ratification
of the selection of Arthur Andersen LLP. In the event that the majority of the
votes cast are against the selection of Arthur Andersen LLP, the directors will
consider the vote and the reasons therefor in future decisions on the selection
of independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Under the rules of the Commission, if a stockholder wants the Company
to include a proposal in the Company's proxy statement and form of proxy for
presentation at the Company's 2000 Annual Meeting of stockholders (the "2000
Annual Meeting"), the proposal must be received by the Company, on or before
December 2, 1999, at the following address: Prison Realty Corporation,
Attention: Ms. Vida H. Carroll, Secretary, 10 Burton Hills Boulevard, Suite 100,
Nashville, Tennessee 37215. Such proposal will also need to comply with the
regulations of the Commission regarding the inclusion of stockholder proposals
in Company-sponsored proxy materials.
Under the Bylaws of the Company, and as permitted by the rules of the
Commission, a stockholder may nominate a director or present a stockholder
proposal not included in the Company's proxy statement at the Company's 2000
Annual Meeting. Written notice of such a nomination or proposal, along with
appropriate supporting information and documentation, must be submitted, via
certified mail, return receipt requested, to: Prison Realty Corporation,
Attention: Ms. Vida H. Carroll, Secretary, 10 Burton Hills Boulevard, Suite 100,
Nashville, Tennessee 37215. For a nomination or proposal to be presented at the
Company's 2000 Annual Meeting, it must be received at the Company's principal
executive offices:
- not less than 60 days nor more than 90 days prior to the
anniversary date (May 11, 1999) of this year's meeting (if the
2000 Annual Meeting is scheduled to be held on a date no more
than 30 days
22
<PAGE> 26
before the anniversary date of this year's meeting and no more
than 60 days after the anniversary date of this year's
meeting); or
- not earlier than the 90th day prior to the 2000 Annual
Meeting, and not later than the 60th day prior to the 2000
Annual Meeting or the 10th day following the day on which
public announcement of the date of the 2000 Annual Meeting is
first made (if the 2000 Annual Meeting is scheduled to be held
on a date more than 30 days prior to the anniversary date of
this year's meeting or more than 60 days after the anniversary
date of this year's meeting).
The Company's annual meeting of stockholders will generally be held
during the month of May of each year. Assuming that the 2000 Annual Meeting is
held on schedule, the Company must receive notice of a nomination or proposal
from a stockholder after February 11, 2000 and on or before March 12, 2000. If
the Company does not receive notice during such period, the nomination or
proposal will not be presented at the 2000 Annual Meeting. Additionally persons
named as proxies in the Company's proxy materials relating to the 2000 Annual
Meeting will use their discretion in voting the proxies when any nominations or
proposals from stockholders not received during such period are raised at the
meeting.
ANNUAL REPORT AND FORM 10-K
All stockholders of record on the Record Date will receive with this
Proxy Statement a copy of the Company's 1998 Annual Report to Stockholders. The
Annual Report to Stockholders, however, is not part of the proxy solicitation
materials. Any stockholder who desires a copy of the Company's 1998 Annual
Report to Stockholders, or the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 or Prison Realty's 1998 Annual Report on Form 10-K for
the year ended December 31, 1998, each as filed with the Commission, may obtain
a copy without charge by addressing a request to Prison Realty Corporation,
Attention: Vida H. Carroll, Secretary, 10 Burton Hills Boulevard, Suite 100,
Nashville, Tennessee 37215.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
By Order of the Board of Directors,
Doctor R. Crants
Chairman and Chief Executive Officer
March 31, 1999
Nashville, Tennessee
YOUR COOPERATION IN GIVING THESE MATTERS YOUR IMMEDIATE
ATTENTION AND IN RETURNING YOUR PROXY PROMPTLY IS APPRECIATED.
23
<PAGE> 27
APPENDIX A
PRISON REALTY CORPORATION
ARTICLES OF AMENDMENT
PRISON REALTY CORPORATION, a Maryland corporation (the "Corporation"),
having its principal office in Nashville, Tennessee, hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Article SECOND of the Charter of the Corporation is hereby
amended as follows:
"SECOND: Name.
The name of this corporation shall be Prison Realty Trust,
Inc. (the "Corporation")." ;
SECOND: The amendment does not increase the authorized stock of the
Corporation; and
THIRD: The foregoing amendment to the Charter of the Corporation has
been advised by the Board of Directors of the Corporation and approved by the
stockholders of the Corporation.
IN WITNESS WHEREOF, Prison Realty Corporation has caused these presents
to be signed in its name and on its behalf by its President and witnessed by its
Secretary on _________, 1999.
WITNESS: PRISON REALTY CORPORATION:
_________________________________ By:_________________________________
Vida H. Carroll, Secretary D. Robert Crants, III, President
THE UNDERSIGNED, President of the Corporation, who executed on behalf
of the Corporation the foregoing Articles of Amendment of which this certificate
is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles of Amendment to be the corporate act of said
Corporation and hereby certifies that to the best of his knowledge, information
and belief the matters and facts set forth therein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
___________________________________
D. Robert Crants, III, President
<PAGE> 28
APPENDIX B
PROXY
PRISON REALTY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Prison Realty Corporation (the
"Company") hereby acknowledge(s) receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated March 31, 1999, and hereby appoint(s) D.
Robert Crants, III and Vida H. Carroll, and each of them, proxies of the
undersigned, each with full power of substitution and revocation, and
authorize(s) them, or either of them, to vote the number of shares which the
undersigned would be entitled to cast if personally present at the Annual
Meeting of Stockholders of the Company to be held on Tuesday, May 11, 1999, at
10:00 a.m., local time, at the Loews Vanderbilt Plaza Hotel, 2100 West End
Avenue, Nashville, Tennessee, and any adjournments or postponements thereof.
The Board of Directors recommends a vote "FOR" the election of each of
the nominees for director listed below and "FOR" each of the following
proposals:
1. ELECTION OF DIRECTORS.
[ ] FOR ALL NOMINEES NAMED
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
NOMINEES: D. Robert Crants, III; John W. Eakin, Jr.; Ted Feldman;
Ned Ray McWherter; Jackson W. Moore; and Jean-Pierre Cuny
[ ] ---------------------------------------
FOR ALL NOMINEES EXCEPT AS LISTED ABOVE
2. APPROVAL OF THE NAME CHANGE AMENDMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF THE ACTION OF THE BOARD OF DIRECTORS IN SELECTING THE
FIRM OF ARTHUR ANDERSEN LLP TO BE THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION ON ANY OTHER BUSINESS AS MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENTS AND POSTPONEMENTS THEREOF.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
PLEASE FULLY COMPLETE, DATE, PROPERLY SIGN, AND RETURN THIS PROXY PROMPTLY.
<PAGE> 29
This Proxy, when properly executed, will be voted in accordance with the
directions given by the undersigned stockholder(s). If no direction is made,
this proxy will be voted FOR the election of each nominee and FOR each of the
proposals.
Signature:_______________ Date:________ Signature:_____________ Date:_______
NOTE: PLEASE DATE AND SIGN THE PROXY EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK
CERTIFICATE(S) OR ON THIS PROXY. IF SHARES ARE HELD BY MORE THAN ONE OWNER OR BY
JOINT TENANCY, EACH OWNER MUST SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., PLEASE PROVIDE YOUR FULL TITLE
AS SUCH. IF A CORPORATION IS A STOCKHOLDER, PLEASE HAVE THE PROXY EXECUTED BY AN
AUTHORIZED OFFICER AND USE THE FULL CORPORATE NAME OF THE STOCKHOLDER. IF A
PARTNERSHIP OR LIMITED LIABILITY COMPANY IS A STOCKHOLDER, PLEASE SIGN IN SUCH
ORGANIZATION'S NAME BY AN AUTHORIZED PERSON. THE PROXY SHALL BE DEEMED A GRANT
OF AUTHORITY TO VOTE.
