<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CORRECTIONS CORPORATION OF AMERICA
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ 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
CORRECTIONS CORPORATION OF AMERICA
102 WOODMONT BOULEVARD
NASHVILLE, TENNESSEE 37205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 14, 1996
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Corrections Corporation of America (the "Company"), will be held at
Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee, on Tuesday, May
14, 1996 at 10:00 a.m. (Central Standard Time) for the following purposes:
(1) To elect a Board of Directors to serve for a term of one (1) year
and until their successors are elected and qualified;
(2) To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to increase the Company's authorized Common
Stock; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 19, 1996 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. A complete list of such stockholders, arranged in
alphabetical order and showing the address of and the number of shares
registered in the name of each such stockholder, will be available at the
Company's principal offices, 102 Woodmont Boulevard, Nashville, Tennessee, for
examination by any stockholder for any purpose germane to the Annual Meeting
during ordinary business hours for a period of at least ten (10) days prior to
the Annual Meeting. The list shall also be produced at the Annual Meeting and
may be inspected by any stockholder who is present.
Your attention is directed to the Proxy Statement accompanying this Notice
for more complete information regarding the matters to be acted upon at the
Annual Meeting.
The Board of Directors recommends that you vote for the director nominees
named in the Proxy Statement and for adoption of the amendment to the Company's
Certificate of Incorporation.
Stockholders are cordially invited to attend the meeting in person.
IMPORTANT
YOUR PROXY IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PERSONALLY PRESENT
AT THE ANNUAL MEETING, PLEASE BE SURE THAT THE ENCLOSED PROXY CARD IS PROPERLY
COMPLETED, DATED, SIGNED, AND RETURNED WITHOUT DELAY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ Darrell K. Massengale
-------------------------
Darrell K. Massengale,
Secretary
March 29, 1996
Nashville, Tennessee
<PAGE> 3
CORRECTIONS CORPORATION OF AMERICA
102 WOODMONT BOULEVARD
NASHVILLE, TENNESSEE 37205
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1996
This proxy statement and the accompanying proxy/voting instruction card
(proxy card) are being furnished in connection with the solicitation of proxies
by the Board of Directors of Corrections Corporation of America (the "Company"
or "CCA") from holders of the Company's shares of $1.00 par value common stock
(the "Shares") to be voted at the 1996 annual meeting of stockholders of the
Company (the "Annual Meeting") to be held at 10:00 a.m. (Central Standard Time)
on Tuesday, May 14, 1996, at Vanderbilt Plaza, 2100 West End Avenue, Nashville,
Tennessee, and at any adjournments or postponements thereof. The mailing address
of the principal executive offices of the Company is 102 Woodmont Boulevard,
Suite 800, Nashville, Tennessee 37205. The Notice of Annual Meeting, this proxy
statement, and the proxy card are being first mailed to stockholders on or about
March 29, 1996.
SOLICITATION OF PROXIES
This solicitation of proxies is made by the Company and the costs of
preparing and mailing proxy solicitation materials will be borne by the Company.
In addition to the solicitation of proxies by mail, certain of the officers,
directors, and employees of the Company may solicit proxies by telephone,
telegraph, and personal interview. The cost of any such solicitation will be
borne by the Company. No additional compensation will be paid to an officer,
director, or employee of the Company in connection with soliciting proxies. Upon
request, the Company will reimburse brokers, dealers, banks, and trustees or
their nominees for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of shares of the Common Stock (as hereinafter
defined).
REVOCATION OF PROXY
Any stockholder returning the accompanying proxy card may revoke such proxy
at any time prior to its exercise by (a) giving written notice to the Company of
such revocation, (b) voting in person at the meeting, or (c) executing and
delivering to the Company a proxy card bearing a later date.
OUTSTANDING COMMON STOCK; QUORUM; VOTING
The only voting securities of the Company are the shares of its Common
Stock, $1.00 par value (the "Common Stock"), each share of which entitles the
holder thereof to one vote. Effective October 31, 1995, the Company initiated a
two-for-one stock split for stockholders of record on October 16, 1995. All
references to Common Stock herein shall be on a post-split basis. Only holders
of record of the 33,796,753 shares of Common Stock outstanding as of the close
of business on March 19, 1996 (the "Record Date"), are entitled to notice of and
to vote on each matter submitted to a vote at the Annual Meeting and any
adjournment(s) thereof. The presence, in person or by proxy, of the holders of a
majority of the outstanding Shares entitled to vote is necessary to constitute a
quorum at the Annual Meeting.
Failure of a quorum to be represented at the Annual Meeting will
necessitate an adjournment and will subject the Company to additional expense.
Regardless of whether a quorum is present or represented at the Annual Meeting,
the stockholders entitled to vote at the Annual Meeting, whether present in
person or represented by proxy, have the power to adjourn the Annual Meeting
from time to time, without notice other than by announcement at the Annual
Meeting. At any such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the original Annual Meeting. If the adjournment is for more than 30 days, or if
after the adjournment a new record date is fixed for
<PAGE> 4
the adjourned meeting, a notice of the adjourned meeting will be given to each
stockholder of record entitled to vote at the Annual Meeting.
A complete list of the stockholders entitled to be present and vote at the
Annual Meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of Shares registered in the name of each stockholder,
shall be made available at least ten days prior to the Annual Meeting. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the Annual Meeting, during ordinary business hours, for a period of at least ten
days prior to the Annual Meeting, at the principal offices of the Company. The
list shall also be produced at the Annual Meeting, and may be inspected by any
stockholder who is present.
Cumulative voting at the Annual Meeting is not permitted.
VOTING OF PROXIES
Proxy cards which are properly executed and returned will be voted at the
Annual Meeting in accordance with the instructions thereon. Any proxy card upon
which no contrary instructions have been indicated will be voted "FOR": (i) the
election to the Board of Directors of all director nominees; and, (ii) the
adoption of the proposed amendment to the Company's Certificate of
Incorporation. The Board of Directors knows of no matters, other than the
matters set forth herein, to be presented for consideration at the Annual
Meeting. However, if other matters properly come before the Annual Meeting, the
persons named in the accompanying proxy card intend to vote such proxy card in
accordance with their judgment on any such matters. The persons named in the
accompanying proxy card may also, if they deem such action advisable, vote such
proxy card to adjourn the Annual Meeting from time to time.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE REQUESTED PROMPTLY TO MARK,
DATE, SIGN, AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual stockholders are kept private by the Company. Such documents
are available for examination only by the inspectors of election and certain
personnel associated with processing proxy cards and tabulating the vote. The
vote of any stockholder is not disclosed except as may be necessary to meet
legal requirements.
PROPOSALS FOR STOCKHOLDER ACTION
PROPOSAL 1. ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Board of Directors
shall consist of not less than three members, and that the actual number of
directors comprising the Board of Directors shall be determined from time to
time by the vote of two-thirds of the entire Board of Directors. The Board of
Directors has the responsibility for establishing broad corporate policies and
for overseeing the overall performance of the Company. However, in accordance
with corporate legal principles, it is not involved in the day-to-day operating
details of the Company. Members of the Board are kept informed of the Company's
business through discussions with the Chairman and other officers, by reviewing
analyses and reports sent to them periodically and by participating in Board and
committee meetings. The current Board of Directors consists of the following
seven members: Messrs. Thomas W. Beasley, Doctor R. Crants, T. Don Hutto,
William F. Andrews, Richard H. Fulton, Samuel W. Bartholomew and Jean-Pierre
Cuny. Messrs. T. Don Hutto and Richard H. Fulton have asked that they not stand
for re-election and thus are not nominees to be elected as directors at the 1996
Annual Meeting of Stockholders. At its March 1996 meeting, the Board of
Directors nominated seven individuals to stand for election at the 1996 Annual
Meeting of Stockholders. Two nominees, Messrs. Clayton McWhorter and Joseph F.
Johnson, have not previously served on the Company's Board of Directors. Each
nominee has consented to be a candidate and to be so named in this proxy
statement and to serve, if elected.
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<PAGE> 5
Each director serves until the next annual meeting of stockholders and
until his successor is elected and qualified, unless such director sooner
resigns or is removed in accordance with the Bylaws of the Company. If any
nominee becomes unable or unwilling to serve, although not anticipated, the
persons named as proxies will have the discretionary authority to vote for a
substitute. The seven nominees for election to the Board of Directors who
receive the greatest number of votes cast at the Annual Meeting will be elected
to the Board of Directors.
NOMINEES FOR THE BOARD
Biographical information concerning each of the nominees is set forth
below. Five of the nominees are presently serving on the Board.
THOMAS W. BEASLEY Age -- 53
Chairman Emeritus Director since 1983
Mr. Beasley, a founder of the Company, was elected Chairman Emeritus of the
Board of Directors of the Company in June 1994. From June 1987 to June 1994, he
served as Chairman of the Board. Mr. Beasley served as President of the Company
from January 1983 to June 1987. He has served as a director since 1983. From
1978 through June 1985, Mr. Beasley was President of Tri Insurance, Inc., a
property and casualty insurance agency, and since June 1985, has served as its
Vice President. Mr. Beasley has served as a director of Tri Insurance, Inc.
since 1978. Mr. Beasley also serves as a director of Dixon Springs Investment
Company, a real estate investment company. From 1974 through 1978, Mr. Beasley
served as Chairman of the Tennessee Republican Party, and he continues to be
active in Tennessee politics. Mr. Beasley graduated from the United States
Military Academy at West Point in 1966 and received a Doctor of Jurisprudence
degree from Vanderbilt University School of Law in 1973.
DOCTOR R. CRANTS Age --51
Chairman and Chief Director since 1983
Executive Officer
Mr. Crants, a founder of the Company, was elected Chief Executive Officer
and Chairman of the Board of the Company in June 1994. From June 1987 to June
1994, he served as President, Chief Executive Officer and Vice Chairman of the
Board of Directors of the Company. From January 1983 through June 1987, Mr.
Crants served as Secretary and Treasurer of the Company. He has served as a
director of the Company since 1983. Mr. Crants served as a director of Sahara
Resorts, a destination resort company from January 1985 through 1990. Mr. Crants
has served as President of Tri Insurance, Inc. since June 1985 and as a director
of that company since January 1985. He served as President and director of
Tennessee Media South, Inc., a consulting firm in the broadcasting industry,
from 1980 through January 1984. Mr. Crants graduated from the United States
Military Academy at West Point in 1966, and received joint Masters in Business
Administration and Juris Doctor degrees from the Harvard Business School and
Harvard Law School, respectively, in 1974.
WILLIAM F. ANDREWS Age -- 64
Director Director since 1986
Mr. Andrews has served as a director of the Company since 1986. Mr. Andrews
currently serves as the Chairman of Schrader, Inc., a manufacturing company and
Chairman of Scovill Fasteners. From January 1992 through December 1994 he was
Chairman, President and Chief Executive Officer of Amdura Corporation, a
manufacturing company and Chairman of Utica Corp. also a manufacturing company.
From April 1990 through January 1992, he served as the President and Chief
Executive Officer of UNR Industries, Inc., a diversified steel processor. From
September 1989 to March 1990, Mr. Andrews was President of Massey Investment
Company, a private investment company. From August 1986 through September 1989,
he was Chairman and Chief Executive Officer of Singer Sewing Machines. He is the
retired Chairman, President and Chief Executive Officer of Scovill, Inc., a
diversified manufacturing company, where he served from 1979 through 1986. Mr.
Andrews serves as a director of Navistar International Corporation, Southern New
England Telephone Company, Johnson Control Corporation, Harley Davidson Company,
Katy Industries, Northwest-
3
<PAGE> 6
ern Steel and Wire Company, Black Box Corporation and Process Technology
Holdings. Mr. Andrews was initially elected to the Board of Directors pursuant
to the Consulting Agreement between the Company and Massey Burch Investment
Group, Inc.
SAMUEL W. BARTHOLOMEW, JR. Age -- 51
Director Director since 1991
Mr. Bartholomew has served as a director of the Company since June 1991.
Mr. Bartholomew is a founder and Chairman of the Nashville law firm of Stokes &
Bartholomew, P.A. which serves as general counsel to the Company. Mr.
Bartholomew is a member of the Nashville, Tennessee, and American Bar
Associations, and was installed in 1985 as a Fellow in the Tennessee Bar
Association. In 1984 he was a Presidential Appointee to the Board of Directors
of the Federal National Mortgage Association (Fannie Mae). He also serves on the
Board of SunTrust National Bank in Nashville and American Pathology Resources,
Inc. Mr. Bartholomew graduated from the United States Military Academy at West
Point in 1966 and received a Doctor of Jurisprudence degree, Order of Coif, from
Vanderbilt University School of Law in 1973 where he subsequently chaired the
Dean's Council and taught seminars on Corporate Strategy and Business Law from
1974 to 1984.
JEAN-PIERRE CUNY Age -- 41
Director Director since 1994
Mr. Cuny has served as a director of the Company since July 1994. Mr. Cuny
serves as the Senior Vice President of the Sodexho Group, a leading supplier of
catering and various services to institutions based in Paris, France. 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
aluminum and other materials integrated producer. Mr. Cuny graduated from Ecole
Polytechnique in Paris in 1977 and from Stanford University Engineering School
in 1978. Mr. Cuny was elected to the Board of Directors pursuant to the 1994
Securities Purchase Agreement between the Company and Sodexho S.A.
R. CLAYTON MCWHORTER Age -- 62
Mr. McWhorter became the Chairman of Columbia/HCA Healthcare Corporation
effective April 1995. He will resign from this position on May 9, 1996, but will
remain a member of the Board of Directors of Columbia/HCA. He is also a
principal in Clayton Associates, a venture capital firm. In September 1987, Mr.
McWhorter participated in the formation of HealthTrust, Inc. and served as its
Chairman, President and Chief Executive Officer until its merger with
Columbia/HCA in April 1995. From 1985 to 1987 he served as President and Chief
Operating Office of Hospital Corporation of America. Mr. McWhorter joined
Hospital Corporation in 1970 and served in various positions with Hospital
Corporation of America until becoming President and Chief Operating Officer in
1985. Mr. McWhorter is a director of SunTrust National Bank in Nashville, Ingram
Industries, Inc., the Metropolitan Nashville Airport Authority and the YMCA. He
is also a member of the Board of Trustees for The University of Tennessee and a
member of the Board of the Foundation for State Legislatures. From 1951 through
1952, Mr. McWhorter attended the University of Tennessee, Knoxville pre-pharmacy
program and earned his B.S. degree in pharmacy in 1955 from Samford University
in Birmingham, Alabama. In 1996, Belmont University of Nashville, Tennessee
named Mr. McWhorter a distinguished professor of entrepreneurship at its Jack C.
Massey Graduate School of Business.
JOSEPH F. JOHNSON Age -- 45
Mr. Johnson serves as Chairman and CEO of The Johnson Companies, a group of
closely held companies involved in government relations and corrections which
includes Johnson & Associates, a government relations and consulting firm. In
1994, Mr. Johnson founded National Corrections & Rehabilitation Corporation
(NCRC), a correctional services company which specializes in providing
education, vocational training, substance abuse treatment and medical care
programs to inmates. In 1992, Mr. Johnson served as National Campaign Manager
and political advisor to Virginia Governor Douglas Wilder. In 1994, Mr. Johnson
served
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<PAGE> 7
as D.C. Councilmember John Ray's top political strategist. Mr. Johnson served as
Secretary of Health under New Mexico Governor Tony Anaya in the mid-1980's and
as Executive Director of Reverend Jesse Jackson's Rainbow Coalition in the late
1980's. Mr. Johnson graduated from New Mexico State University where he received
a M.A. in Public Administration in 1976 and a B.A. in Political Science in 1974.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
ABOVE.
PROPOSAL 2. ADOPTION OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has adopted resolutions approving and recommending
to the stockholders for their approval an amendment to the Company's Certificate
of Incorporation which would increase the number of authorized shares of Common
Stock from 50,000,000 shares to 150,000,000 shares. The text of the proposed
amendment is set forth below.
REASONS FOR AMENDMENT.
In 1995, the stockholders of the Company approved an amendment to the
Company's Certificate of Incorporation increasing the number of authorized
shares of Common Stock from 30,000,000 shares to 50,000,000 shares. The increase
enabled the Company to, among other things, issue shares of its Common Stock in
consideration for certain acquisitions and implement a two-for-one split. The
Board of Directors believes that it is advisable to further increase the
authorized number of shares of Common Stock in order to have shares available
for, among other things, possible issuance in connection with such activities as
stock splits and stock dividends, public offerings of shares for cash,
acquisitions of other companies, conversion of convertible securities or the
implementation of employee benefit plans. As of March 19, 1996, the Company had
a total of 33,796,753 shares of Common Stock outstanding and a total of
3,603,050 shares of Common Stock reserved for issuance under the various stock
option plans of the Company and a total of 4,589,507 shares reserved for
issuance upon conversion of outstanding convertible securities.
Under the provisions of the Delaware General Corporation Law, the Board of
Directors generally may issue authorized but unissued shares of Common Stock
without stockholder approval. Having a substantial number of authorized but
unissued shares of Common Stock that is not reserved for specific purposes would
allow the Company to take prompt action with respect to corporate opportunities
that develop, without the delay and expense of convening a special meeting of
stockholders for the purpose of approving an increase in the Company's
capitalization. The issuance of additional shares of Common Stock may, depending
upon the circumstances under which such shares are issued, reduce stockholder's
equity per share and may reduce the percentage ownership of Common Stock by
existing stockholders. It is not the present intention of the Board of Directors
to seek stockholder approval prior to any issuance of shares of Common Stock
that would become authorized by the amendment unless otherwise required by law
or regulation. Frequently, opportunities arise that require prompt action, and
it is the belief of the Board of Directors that the delay necessitated for
stockholder approval of a specific issuance could be to the detriment of the
Company and its stockholders.
The adoption of the amendment may have an anti-takeover effect because the
Board of Directors would have the ability to issue a significant number of
shares as a defense to an attempted takeover of the Company. The Company's
Certificate of Incorporation does not contain any other provisions that are
generally considered to have an anti-takeover effect. The Company may from time
to time in future proxy solicitations propose other measures which are generally
considered to have an anti-takeover effect.
When issued, the additional shares of Common Stock authorized by the
amendment will have the same rights and privileges as the shares of Common Stock
currently authorized and outstanding. Other than certain contractual rights
granted to Sodexho S.A., there are no preemptive rights attached to these
shares.
5
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TEXT OF THE AMENDMENT.
The proposed amendment in its entirety is as follows:
The second sentence of Article IV of the Certificate of Incorporation of
the Company shall be deleted in its entirety and replaced with the following:
"IV. The total number of shares which the Company shall have the
authority to issue is One Hundred Fifty-One Million (151,000,000) shares,
consisting of One Hundred Fifty Million (150,000,000) shares of Common
Stock having One Dollar ($1.00) par value per share ("Common Stock") and
One Million (1,000,000) shares of Preferred Stock having One Dollar ($1.00)
par value per share ("Preferred Stock")."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
REPORTS OF BENEFICIAL OWNERSHIP
UNDER SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
executive officers and any person holding more than ten percent of the Common
Stock are required to report their ownership of the Common Stock and any changes
in that ownership to the Securities and Exchange Commission ("SEC") and the New
York Stock Exchange ("NYSE"). These persons also are required by SEC regulations
to furnish the Company with copies of these reports. Specific due dates for
these reports have been established and the Company is required to report in
this proxy statement any failure to file by these dates in 1995. Based solely on
a review of the reports furnished to the Company or written representations from
the Company's directors and executive officers, the Company believes that all of
these filing requirements were satisfied by the Company's directors, executive
officers and ten percent holders during the 1995 fiscal year.
SECURITY OWNERSHIP OF DIRECTORS,
OFFICERS AND PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Common Stock held
beneficially, directly or indirectly, as of the Record Date by (i) each person
known by the Company to be the beneficial owner of more than five percent of the
Common Stock, (ii) each director (and nominee for director) of the Company,
(iii) the Company's Chief Executive Officer and the Company's four most highly
compensated executive officers other than the Chief Executive Officer whose
total salary and bonus for 1995 exceeded $100,000 (these executive officers
being hereinafter referred to collectively as the "Named Executive Officers")
and (iv) all directors and officers of the Company as a group, together with the
percentage of the outstanding shares of Common Stock which such ownership
represents. As stated earlier, all references to the Common Stock shall be on a
post-split basis.
According to rules adopted by the SEC, a person is the "beneficial owner"
of securities if such person, directly or indirectly (through any contract,
arrangement, understanding, relationship, or otherwise), has or shares voting
power or investment power with respect to such securities. As used in the
foregoing definition of beneficial ownership, voting power includes the power to
vote or direct the voting of securities, and investment power includes the power
to dispose or direct the disposition of securities. Except as otherwise noted,
each person named in the following table possesses sole voting and investment
power with respect to the shares shown as owned by such person.
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COMMON STOCK
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-----------------------
NAME AND ADDRESS NUMBER PERCENT
- ----------------------------------------------------------------------- --------- -------
<S> <C> <C>
Sodexho S.A............................................................ 6,587,172(1) 17.1%
3 avenue Newton
78180 Montigny-le-Bretonneux
France
Thomas W. Beasley...................................................... 1,889,217(2) 5.5%
Route 2, Box 305
Burns, Tennessee 37029
Doctor R. Crants....................................................... 984,586(3) 2.9%
102 Woodmont Boulevard
Nashville, Tennessee 37205
T. Don Hutto........................................................... 257,519(4) .8%
1013 Ridgecrest Drive
Dickson, Tennessee 37055
William F. Andrews..................................................... 139,666(5) .4%
358 Tranquility Road
Middlebury, Connecticut 06762
Samuel W. Bartholomew, Jr.............................................. 126,300(6) .4%
424 Church Street, Suite 2800
Nashville, Tennessee 37219
Jean-Pierre Cuny....................................................... 30,000(7) .1%
3 avenue Newton
78180 Montigny-le-Bretonneux
France
Richard H. Fulton...................................................... 68,975(8) .2%
511 Union Street
Nashville, Tennessee 37219
David L. Myers......................................................... 100,082(9) .3%
102 Woodmont Boulevard
Nashville, Tennessee 37205
Darrell K. Massengale.................................................. 77,569(10) .2%
102 Woodmont Boulevard
Nashville, Tennessee 37205
R. Clayton McWhorter................................................... 0 0%
4525 Harding Road
Nashville, Tennessee 37205
Joseph F. Johnson...................................................... 0 0%
1140 Connecticut Avenue, N.W.
Suite 508
Washington, D.C. 20036
All officers and directors (and nominees for director) as a group (18
persons)............................................................. 4,034,569(11) 11.4%
</TABLE>
- ---------------
(1) Includes 976,971 shares of Common Stock issuable upon conversion of certain
convertible subordinated notes; 2,200,000 shares issuable upon conversion
of certain warrants and approximately 1,465,200 shares issuable upon
conversion of certain convertible subordinated notes which Sodexho has an
option to purchase. Such information is derived in part from the Schedule
13D, dated December 17, 1995 filed by Sodexho S.A.
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<PAGE> 10
(2) Includes 30,000 shares issuable upon the exercise of options, 2,000 shares
owned by Mr. Beasley's wife, 14,649 shares held in the Company's Employee
Stock Ownership Plan, 358,770 shares issuable upon the exercise of warrants
and 200 shares issuable upon the exercise of warrants owned by Mr.
Beasley's wife. Such information is derived in part from the Schedule 13G,
dated February 12, 1996, filed by Mr. Beasley.
(3) Includes 185,000 shares issuable upon the exercise of options, 24,175
shares held in the Company's Employee Stock Ownership Plan and 99,940
shares issuable upon the exercise of warrants (does not include 3,200
shares held in trust for Mr. Crants' children and 6,640 shares issuable
upon the exercise of warrants held in trust for Mr. Crants' children
beneficial ownership of which is disclaimed).
(4) Includes 45,000 shares issuable upon the exercise of options, 8,589 shares
held in the Company's Employee Stock Ownership Plan, 26,332 shares issuable
upon the exercise of warrants, 64,666 shares owned by Mr. Hutto's wife, and
12,932 shares issuable upon the exercise of warrants owned by Mr. Hutto's
wife.
(5) Includes 89,000 shares issuable upon exercise of options and 2,000 shares
owned of record by children of Mr. Andrews.
(6) Includes 86,500 shares issuable upon the exercise of options, 6,000 shares
owned by children of Mr. Bartholomew, 800 shares issuable upon the exercise
of warrants and 800 shares issuable upon the exercise of warrants owned by
children of Mr. Bartholomew.
(7) Includes 30,000 shares issuable upon the exercise of options.
(8) Includes 45,000 shares issuable upon the exercise of options and 3,400
shares issuable upon the exercise of warrants.
(9) Includes 90,200 shares issuable upon the exercise of options, 400 shares
owned by children of Mr. Myers, 40 shares issuable upon the exercise of
warrants, 80 shares issuable upon the exercise of warrants owned by
children of Mr. Myers and 9,162 shares held in the Company's Employee Stock
Ownership Plan.
(10) Includes 65,200 shares issuable upon the exercise of options, 700 shares
owned jointly by Mr. Massengale and his wife, 140 shares issuable upon the
exercise of warrants owned jointly by Mr. Massengale and his wife and 7,129
shares held in the Company's Employee Stock Ownership Plan.
(11) Includes an aggregate of 230,528 shares issuable upon exercise of options
and warrants (in addition to the options and warrants referenced in
footnotes 2, 3, 4, 5, 6, 7, 8, 9 and 10); 2,000 shares owned by Mr.
Beasley's wife (see footnote 2); 77,598 shares owned by Mr. Hutto's wife
(see footnote 4); 2,000 shares owned by Mr. Andrews' children (see footnote
5); 6,800 shares owned by Mr. Bartholomew's children (see footnote 6); 480
shares owned by Mr. Myer's children (see footnote 9); 840 shares owned
jointly by Mr. Massengale and his wife (see footnote 10); and 51,084 shares
held in the Company's Employee Stock Ownership Plan (in addition to the
shares referenced in footnotes 2, 3, 4, 9 and 10).
In September 1992, the Company issued a warrant dividend to its common
stockholders of record on September 4, 1992 (the "Warrants"). Stockholders
received one Warrant for every five shares of Common Stock held. Each Warrant
entitles the holder thereof to purchase one share of Common Stock at an exercise
price of $8.50 per share. The Warrants initially had a term of four years and in
September, 1993 the term was extended by one year to September 11, 1997. The
Warrants became exercisable after April 30, 1993. Subject to various limitations
imposed by federal and state securities laws, all of the Warrants issued by the
Company are transferable, in whole or in part, at any time. The Warrants are
traded on the NYSE under the symbol CXC/WS. The number of shares of Common Stock
subject to these Warrants and the exercise price per share will be adjusted by
the Company to reflect certain changes in the capitalization of the Company.
In connection with the October 1995 stock split, the terms of the Company's
Warrants to purchase Common Stock were adjusted proportionately. As revised,
each Warrant is convertible into two shares of Common Stock of the Company for a
total conversion price of $8.50. The market trading price of the Warrants was
unaffected by the split.
8
<PAGE> 11
MANAGEMENT
Except as otherwise described under "Management -- Employment Agreements"
herein, the executive officers of the Company are elected annually by the Board
of Directors following the Annual Meeting of Stockholders to serve for a
one-year term and until their successors are elected and qualified. Biographical
information concerning those executive officers of the Company who are also
directors of the Company is set forth under Proposal 1 in this proxy statement.
Biographical information concerning all other executive officers of the Company
is set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- ------------------------------ --- ------------------------------------------------- --------
<S> <C> <C> <C>
Doctor R. Crants.............. 51 Chairman of the Board; Chief Executive Officer; 1983
Director
Thomas W. Beasley............. 53 Director; Chairman Emeritus 1983
T. Don Hutto.................. 60 Director; Vice Chairman Senior Managing Director 1983
of International Operations
David L. Myers................ 52 President
Darrell K. Massengale......... 35 Chief Financial Officer; Secretary and Treasurer;
Vice President, Finance
Dennis E. Bradby.............. 46 Vice President, Education Services
Robert G. Britton............. 55 Vice President, Operations
Linda G. Cooper............... 45 Vice President, Legal Affairs
Peggy W. Lawrence............. 40 Vice President, Investor Relations
John D. Rees.................. 49 Vice President, Business Development
Linda A. Staley............... 51 Vice President, Project Development
Gay E. Vick, III.............. 48 Vice President and Managing Director of
International Operations
</TABLE>
T. Don Hutto, a founder of the Company, became Senior Managing Director of
International Operations of the Company in June 1994. Mr. Hutto has served as
Vice Chairman of the Board of Directors since June 1994. From July 1988 to June
1994, he was engaged by the Company as International Projects Manager to oversee
and supervise the Company's business activities in the United Kingdom, France,
Australia, New Zealand, and Canada, as well as other projects as directed by the
Company's President. From April 1984 to July 1988, Mr. Hutto served as Executive
Vice President of the Company, and from January 1983 to April 1984 he served as
Vice President. He has served as a director of the Company since 1983 but will
not stand for reelection. From January 1982 through January 1983, Mr. Hutto
served as President of H & H Associates, a consulting firm specializing in
corrections and criminal justice. Mr. Hutto served as Commissioner, Department
of Corrections of Virginia, from 1976 through December 1981 and Commissioner of
Corrections of Arkansas from 1971 to 1976. He has also held a management
position in the corrections department of the State of Texas. He is the past
president of the American Correctional Association ("ACA"), and a past president
of both the Association of State Correctional Administrators and the Southern
States Correctional Association. Mr. Hutto is the 1987 recipient of the E.R.
Cass Award, the highest award given by the ACA for lifetime achievement in
corrections. Mr. Hutto graduated from East Texas State University in 1958.
David L. Myers became President of the Company in June 1994. From December
1986 to June 1994, he served as Vice President, Facility Operations of the
Company. From September 1985 to December 1986, he served as Administrator of the
Company's Bay County, Florida facility. From 1968 to 1985, Mr. Myers was
employed with the Texas Department of Corrections, starting as a corrections
officer in 1968 and progressing in 1973 to warden of a maximum security prison.
He graduated from Sam Houston State University in 1969.
Darrell K. Massengale joined the Company in February 1986 and in March 1991
became its Vice President, Finance, Secretary, and Treasurer. In June 1994, he
was also elected Chief Financial Officer of the
9
<PAGE> 12
Company. From February 1986 to March 1991, Mr. Massengale served as Controller
of the Company. He is a certified public accountant who was employed by the
accounting firm of KPMG Peat Marwick from 1982 through 1986. Mr. Massengale
graduated from Middle Tennessee State University in 1982 and became a certified
public accountant in 1985.
Dennis E. Bradby has served as Vice President, Education Services for the
Company since June 1991. From April 1986 through June 1991, Mr. Bradby served as
the Company's Vice President, Operational Support Systems. From January through
April 1986, Mr. Bradby served as the Facility Administrator of the Company's
Hamilton County Work House and, from March 1984 through January 1986, as the
Facility Administrator of the Company's Houston Immigration Detention Facility.
He served as Regional Manager of the Virginia State Department of Corrections
from 1977 through March 1984 and as the Assistant Superintendent of that
department from 1974 through 1978. Mr. Bradby also served as Assistant
Superintendent of the Juvenile Detention Facility in Norfolk, Virginia from 1973
through 1974. Mr. Bradby graduated from Norfolk State University in 1972.
Robert G. Britton was elected Vice President, Operations for the Company in
June 1994. From January 1986 to June 1994, he served as Vice President, Business
Development for the Company. From April 1985 to January 1986, Mr. Britton served
as Vice President, Operations for the Company. From March 1983 to March 1985,
Mr. Britton served as Director of Corrections of Dallas County, Texas and from
August 1981 to March 1983 as the President of Prison Management Systems, Inc., a
subsidiary of American Medical International Corporation (a hospital management
company). From 1979 to 1981, Mr. Britton served as the Director of the Alabama
Department of Corrections. Mr. Britton graduated from Sam Houston State
University in 1965.
Linda G. Cooper joined the Company in April 1987 as Senior Legal Counsel.
In May 1988, she was elected Assistant Secretary for the Company and in January
1989 became its Vice President, Legal Affairs. From December 1981 to March 1987
she served as staff attorney and then deputy general counsel for the Kentucky
Corrections Cabinet. Ms. Cooper received a Juris Doctor degree from the
University of Kentucky in 1979.
Peggy W. Lawrence became Vice President, Investor Relations for the Company
in January 1995. From June 1985 to January 1995 she served as Vice President,
Communications for the Company. From January 1985 to March 1987, she served as
an account executive for Dye, Van Mol and Lawrence Public Relations. From
January 1980 to January 1985, Ms. Lawrence served as Vice President, Research at
Morgan Keegan & Co., an investment banking firm. Ms. Lawrence graduated from the
University of Tennessee at Knoxville in 1977 and became a Chartered Financial
Analyst in 1984.
John D. Rees was elected Vice President, Business Development for the
Company in June 1994. From 1967 until 1986 when he joined the Company, Mr. Rees
served as warden of the Kentucky State Reformatory. Mr. Rees holds a Master of
Science degree from Florida State University and a Bachelor of Arts degree from
the University of Kentucky with majors in criminology, correctional
administration and sociology.
Linda A. Staley was elected Vice President, Project Development for the
Company in June 1994. She joined the Company in 1985 as Director, Project
Development. Prior to joining the Company, Ms. Staley spent 18 years working for
federal governmental agencies, including the Department of Justice and the
Immigration and Naturalization Service (INS) in the contracting and procurement
field. Ms. Staley attended Wayne State College where she studied business
administration.
Gay E. Vick, III was elected Vice President and Managing Director for the
Company's International Operations in June 1994. From January 1987 to June 1994,
he served as Vice President, Project Development for the Company. From April
1984 to December 1986, Mr. Vick served as Vice President, Design and
Construction. From April 1983 to April 1984 he served as President of Vick and
Harris, Ltd., where he master planned correctional and detention facilities. Mr.
Vick serves as a director of Corrections Corporation of Australia and Viccor Pty
Ltd. and as Chairman of Corrections Corporation of New Zealand. Mr. Vick
graduated from Virginia Tech Institute in 1970.
10
<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid or accrued by the
Company during the three fiscal years ending December 31, 1993, 1994 and 1995 to
those persons who, as of December 31, 1995, were the Named Executive Officers.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS(1)
----------------------------------------- ------------------------------------------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ LTIP COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION AWARDS SARS PAYOUTS (2)
- ---------------------- ----- -------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Doctor R. Crants...... 1995 $313,461 0 0 $2,370,000(1) 35,000 0 $7,350
Chairman of the 1994 275,000 $155,375 $ 58,429(3) 0 0 0 7,350
Board and Chief 1993 275,000 100,000 0 0 15,000 0 8,433
Executive Officer
Thomas W. Beasley..... 1995 $175,000 0 0 0 0 0 $4,625
Chairman Emeritus 1994 175,000 $ 15,313 0 0 0 0 4,100
1993 175,000 0 0 0 15,000 0 5,850
T. Don Hutto.......... 1995 $105,133 0 0 0 15,000 0 $4,253
Vice Chairman of the 1994 101,388 $ 7,669 0 0 0 0 2,815
Board and Senior 1993 97,850 0 0 0 15,000 0 1,016
Managing Director of
International
Operations
David Myers........... 1995 $153,715 0 0 $1,000,000(1) 30,000 0 $4,675
President 1994 113,223 $ 9,375 0 0 0 0 3,651
1993 92,000 0 0 0 10,000 0 3,535
Darrell K. 1995 $126,487 0 0 $ 300,000(1) 20,000 0 $4,682
Massengale..........
Chief Financial 1994 105,863 $ 8,250 0 0 0 0 3,662
Officer, Secretary, 1993 92,338 0 0 0 8,000 0 3,658
Treasurer and Vice
President, Finance
</TABLE>
- ---------------
(1) The Company does not currently maintain a formal "Long Term Incentive Plan."
The Company has entered into agreements to issue Deferred Stock to the
executive officers listed above in accordance with the Company's 1988 Stock
Bonus Plan. Generally, under the terms of the agreements with the
executives, the deferred shares do not vest until the earliest of the
following dates: (i) 10 years after the date the shares are awarded to the
executive; (ii) in the event of the death or disability of such executive;
or (iii) in the event of a change in control of the Company as defined in
the Deferred Stock Bonus Agreements. Prior to vesting, the deferred shares
will carry no voting or dividend rights. The values set forth in the table
above are as of the date of grant.
(2) Amounts represent contributions to the Company's Employee Stock Ownership
Plan as calculated on December 31 of each year.
(3) This amount reflects a gross-up for tax reimbursement.
11
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information concerning stock option grants to any Named
Executive Officer who was granted a stock option during 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED(1) YEAR ($/SHARE) DATE 5%($) 10%($)
- ----------------------------- ------------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Crants................... 35,000 shares 5.6% $ 11.38 2/26/2005 $648,504 $1,032,634
Mr. Beasley.................. -- shares -- -- -- -- -0-
Mr. Hutto.................... 15,000 shares 2.4% 11.38 2/26/2005 277,930 442,557
Mr. Myers.................... 30,000 shares 4.8% 11.38 2/26/2005 555,860 885,115
Mr. Massengale............... 20,000 shares 3.2% 11.38 2/26/2005 370,574 590,076
</TABLE>
- ---------------
(1) The exercise price of the options granted is equal to the market value of
the Company's Common Stock on the date of grant. These options vest (become
exercisable) in full one year from the date of grant.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
Set forth below is information with respect to exercises of options by the
Named Executive Officers during 1995 pursuant to the Company's stock option
plans and information with respect to unexercised options held by the Named
Executive Officers as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES HELD AT IN-THE-MONEY OPTIONS
ACQUIRED DECEMBER 31, 1995 AT DECEMBER 31, 1995(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Crants................ -0- $ -0- 390,000 35,000 $13,231,875 $ 901,250
Mr. Beasley............... 120,000 2,422,099 30,000 -0- 991,875 -0-
Mr. Hutto................. 240,000 3,737,760 30,000 15,000 991,875 386,250
Mr. Myers................. 12,000 346,209 60,200 30,000 1,998,425 772,500
Mr. Massengale............ -0- -0- 44,800 20,000 1,499,263 515,000
</TABLE>
- ---------------
(1) Value is calculated as the difference between the closing market price of a
share of Common Stock on December 29, 1995 ($37.13 per share) and the
exercise price of the options. No value is reported if the exercise price
of the options exceeded the market price of a share of Common Stock on
December 29, 1995.
The Company has not awarded stock appreciation rights to any employee and
has no long term incentive plans, as that term is defined in SEC regulations.
The Company has various stock option plans (the "Stock Option Plans"), an
Incentive Compensation Plan (the "Incentive Compensation Plan"), and an employee
stock ownership plan (the "ESOP"). The Company presently has no defined benefit
or actuarial plans covering any employees of the Company.
BOARD COMMITTEES, ATTENDANCE, AND COMPENSATION OF DIRECTORS
COMMITTEES
The Board has established three Committees which include the Audit
Committee, the Compensation Committee and the Nominating Committee, each of
which is briefly described below.
The members of the Audit Committee are designated annually by the Board of
Directors. The Audit Committee currently consists of Messrs. Andrews, Fulton and
Bartholomew with Mr. Bartholomew serving as Chairman. The Audit Committee meets
with management to consider the internal controls and the objectivity
12
<PAGE> 15
of financial reporting; the Committee also meets with the independent auditors
and with the appropriate Company financial personnel and internal auditors about
these matters, recommends each year to the Board of Directors the Company's
independent auditors to audit the annual financial statements of the Company,
reviews the scope of the audit plan, discusses with the Company's auditors the
results of the Company's annual audit and any related matters, and reviews any
transactions posing a potential conflict of interest among the Company and its
directors, officers and affiliates.
The Board of Directors established a Compensation Committee in 1988, which
currently consists of Messrs. Andrews, Bartholomew and Fulton with Mr. Andrews
serving as Chairman. Responsibilities of the Compensation Committee include
approval of remuneration arrangements for executive officers of the Company,
review of compensation plans relating to executive officers and directors,
including grants of stock-based incentives and cash bonuses and general review
of the Company's employee compensation policies. The Compensation Committee also
serves as the plan administrator and Trustee for the Company's Employee Stock
Ownership Plan.
In 1995, the Board of Directors established a Nominating Committee for the
purpose of recommending nominees for election as directors of the Board. The
Nominating Committee currently consists of Messrs. Beasley, Crants and Fulton.
The Nominating Committee makes recommendations to the Board of Directors with
regard to qualified nominees for election as directors of the Company, considers
other matters pertaining to the size and composition of the Board and designates
members of the Board's committees. The Nominating Committee gives appropriate
consideration to qualified persons recommended by stockholders for nomination as
directors, provided such recommendations are accompanied by sufficient
information to permit the Committee to evaluate the qualities and experience of
the nominee.
MEETINGS
During 1995, the Board of Directors of the Company held five regularly
scheduled meetings and one special meeting. All nominees attended all meetings
of the Board of Directors.
During 1995, the Audit Committee held two meetings and the Compensation
Committee held five meetings. All nominees attended all meetings of the
committees of which such nominees were members except that one director was
absent from one Compensation Committee meeting.
COMPENSATION OF DIRECTORS
Each director who is also an officer of the Company receives no additional
compensation for service on the Board or any committee of the Board. Directors
who are not also officers of the Company receive $1,000 plus expenses for each
meeting of the Board they attend. Members of the Audit, Compensation and
Nominating Committees receive $500 plus expenses for each committee meeting they
attend and the Chairman of each committee receives an additional $250 for each
committee meeting he chairs. In addition, each non-employee director
participates in the Non-Employee Directors' Stock Option Plan, which was
approved by the Board on November 6, 1992 and by the stockholders of the Company
at the 1993 Annual Meeting.
EMPLOYMENT AGREEMENTS
The Company currently has an employment agreement with Mr. Crants which
expires on September 28, 1997. The agreement currently provides for an annual
base salary of $275,000. The base salary is subject to increase at the
discretion of the Compensation Committee. In 1995, Mr. Crants' salary was
increased to $325,000. The agreement also provides for bonus compensation based
on Mr. Crants' performance which may be awarded at the discretion of the
Compensation Committee. The agreement also provides that if Mr. Crants'
employment is terminated for certain specified reasons, he will receive a salary
equal to one-half of the amount of his salary at the time he is terminated
through the remaining term of the agreement.
13
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Currently, the Board's Compensation Committee is composed of Messrs.
Andrews, Fulton and Bartholomew. Currently, the Board's Audit Committee is
composed of Messrs. Andrews, Fulton and Bartholomew. None of these persons has
at any time been an officer or employee of the Company or any of its
subsidiaries. Stokes & Bartholomew, P.A., of which Mr. Bartholomew is a partner,
provided legal services to the Company in 1995, and it is anticipated that
Stokes & Bartholomew, P.A. will provide legal services to the Company in 1996.
The Fulton Group, Inc., of which Mr. Fulton is President, provided consulting
services to the Company in 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
This report is submitted by the Company's Compensation Committee at the
direction of the Board of Directors pursuant to the rules established by the
SEC. This report provides certain data and information regarding the
compensation and benefits provided to the Company's Chief Executive Officer and
other executive officers. The Compensation Committee of the Board of Directors
is responsible for all decisions regarding compensation for the Company's
executive officers. The Compensation Committee is composed of three independent
non-employee directors. Because the Compensation Committee believes that each
executive officer has the potential to effect the short-term and long-term
profitability of the Company, the Committee places considerable importance on
the task of creating and implementing the Company's executive compensation
program.
The Company's executive compensation program is focused on stockholder
value, the overall performance of the Company, success of the Company as
impacted by the executive's performance and the performance of the individual
executive.
COMPENSATION PHILOSOPHY
The Compensation Committee's philosophy is to provide competitive levels of
compensation to the Company's executive officers that are integrated with the
Company's annual long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements and assist the
Company in attracting and retaining qualified executives. The compensation
policies and programs utilized by the Compensation Committee and endorsed by the
Board of Directors generally consists of the following:
- Recommend executive officer total compensation in relation to Company
performance;
- Align compensation amounts with comparable levels paid to executive
officers of companies comparable in size and performance to the Company;
and
- Provide incentive compensation in the form of stock option awards,
deferred stock and bonus stock awards and cash bonuses based upon a
percentage of annual salary to motivate and retain high quality executive
officers and to provide compensation in relation to Company performance.
The compensation program of the Company currently consists of base salary,
annual incentive compensation in the form of cash bonuses, deferred stock awards
and options. In 1995, the Company's executive compensation was reviewed by the
Compensation Committee relative to peer group executive compensation. Because
the Company's compensation plan involves incentives contingent upon the
Company's performance and individual performance, an executive officer's actual
compensation level in any particular year may be above or below that of an
officer of a competitor of the Company.
In 1995, the Committee continued to utilize the services of the independent
consulting firm of Arthur Andersen LLP to further develop the compensation
program for the Company's executive officers. In evaluating the Company's
compensation program, the consulting firm assessed the current and planned
compensation of the Company's executive officers as compared to that of certain
of the companies in the index of peer companies which are used in the
performance graph on page 17 (the "1995 Peer Group"). The 1995
14
<PAGE> 17
Peer Group includes those companies in the security business who are direct
competitors of the Company and other regional service organizations with annual
revenues and capitalizations within a reasonable range of the Company's.
The 1995 compensation package for the executive officers continued to
include salary and cash bonuses as well as stock options. Deferred stock awards
were added in 1995 to offer certain key executive officers additional sources of
compensation and greater share ownership of the Company's Common Stock. The
following briefly describes the sources of compensation:
BASE SALARY
In the first quarter of each fiscal year, the Compensation Committee, along
with the CEO of the Company, review and approve an annual salary plan for the
Company's executive officers. This salary plan is developed by the Company's CEO
with the aid of the Company's president. Many subjective factors are included in
determining base salaries such as the responsibilities born by the executive
officer, the scope of the position, length of service with the Company,
corporate and individual performance, and the salaries paid by companies in the
1995 Peer Group to officers in similar positions. While these subjective factors
are then integrated with other objective factors, including net income, earnings
per share, return on equity and growth of the Company, the overall assessment is
primarily a subjective one, intended to reflect the level of responsibility and
individual performance of the particular executive officer.
CASH INCENTIVE PLAN
Another component of the executive compensation package is the cash bonus
paid pursuant to the Company's Incentive Compensation Plan (the "Incentive
Plan") adopted by the Compensation Committee on November 1, 1991. The Incentive
Plan is designed so that the executive officers of the Company receive a cash
bonus based on a percentage of annual base salary, in the event the Company
meets an annual performance target. This means that a significant part of the
compensation package is at risk. Participation in the Incentive Plan is limited
to a select group of management who have a material impact on Company
performance. The participants are selected by the Compensation Committee and
include the executive officers and the wardens.
Short-term performance is emphasized through the Incentive Plan as the
payouts thereunder are a direct function of the growth in the Company's
fully-diluted earnings per share ("EPS") during the most recent fiscal year.
Awards earned under the Incentive Plan are contingent upon employment with the
Company through the end of the year except for payments made in the event of
death, retirement, disability or change in control. The Compensation Committee
annually establishes a minimum target for EPS and the level of attainment of
such goal results in varying payouts. None of the quarterly earnings targets
were met during 1995. Accordingly, no annual bonus amount was earned.
LONG-TERM COMPONENT -- STOCK INCENTIVE PLANS
To date, the Company has relied primarily upon stock option awards to
provide long-term incentives for executives. The Compensation Committee
continues to believe that stock options have been and remain an excellent
vehicle for providing financial incentives for management. The Company's
existing stock option plans and the 1995 Employee Stock Incentive Plan
(collectively, the "Stock Incentive Plans") authorize the issuance of both
incentive and non-qualified stock options to officers, key employees and wardens
of the Company. The members of the Compensation Committee participate in the
Company's Non-Employee Director Stock Option Plan which is administered by the
Board of Directors and no member of the Compensation Committee is eligible for
the grant of an option under any other stock option plan. Subject to general
limits prescribed by the Stock Incentive Plans, the Compensation Committee has
the authority to determine the individuals to whom stock options are awarded and
the terms of the options and the number of shares subject to each option. The
size of any particular stock option award is based upon position and the
individual performance during the related evaluation period. Because the option
exercise price for the employee is the price of stock on the date of grant and
the options generally carry a ten year life, employees
15
<PAGE> 18
benefit only if the value of the Company's Common Stock increases. Thus,
employees with stock options are rewarded for their efforts to improve long-term
stock market performance. In this way, the financial interests of management are
aligned with those of the Company's stockholders.
The Committee has determined that in addition to stock options, the Company
should have the flexibility to issue other stock-based incentives as are
included in the Company's Stock Bonus Plan and 1995 Employee Stock Incentive
Plan, including without limitation, stock appreciation rights, restricted stock,
deferred stock, stock purchase rights and/or other stock-based awards. In 1995,
the Compensation Committee, based on an analysis of the 1995 Peer Group
compensation and the individual performance of certain key employees, awarded an
aggregate of 168,512 shares of deferred stock to certain key employees. The
deferred shares do not vest until ten years from the date of grant. The deferred
stock will carry no voting rights or dividend rights until such time as the
stock is actually issued.
Executive officers of the Company may also participate in the Company's
Amended and Restated Employee Stock Ownership Plan (the "ESOP"). Executive
officers participate in the ESOP on the same terms as non-executive employees
who meet the applicable eligibility criteria, subject to any legal limitations
on the amounts that may be contributed or the benefits that may be payable under
the ESOP. The Company makes contributions to the ESOP on behalf of the employees
and also matches employee contributions up to certain levels. Benefits which
become 40% vested over four years of service and 100% vested over five years of
service are paid on death, retirement or termination. All contributions to the
ESOP are made or invested in the Company's Common Stock. These features tend to
align further the employees' and stockholders' long-term financial interests.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee's basis for compensation of the CEO is derived
from the same considerations addressed above. Mr. Crants participates in the
same executive compensation plans available to the other executive officers. In
1995, the Compensation Committee increased the salary of Mr. Crants by
approximately 18%, and granted Mr. Crants certain incentive stock options and
agreed to issue certain shares of the deferred stock referred to above. The
compensation levels established for Mr. Crants were in response to the
Committee's assessment of the Company's record revenue growth, which increased
by approximately 37% compared to 1994, the Company's pre-tax earnings, the
Company's pre-tax margins and level of cash flow from operations as compared to
prior years, and the Company's success in acquiring and integrating certain
competitors as well as the Committee's continued recognition of Mr. Crants'
leadership of the Company.
FEDERAL INCOME TAX DEDUCTIBILITY LIMITATIONS
The Committee intends to structure future compensation so that executive
compensation paid by the Company is fully deductible in accordance with Section
162(m) of the Internal Revenue Code enacted in 1993, which generally disallows a
tax deduction to public companies for compensation over $1 million paid to
certain executive officers unless certain conditions are met.
SUMMARY
The Committee believes that this mix of base salaries, variable cash
incentives and the potential for equity ownership in the Company represents a
balance that will motivate the management team to continue to produce strong
returns. The Committee further believes this program strikes an appropriate
balance between the interests and needs of the Company in operating its business
and appropriate rewards based on stockholder value.
Submitted by the Compensation Committee of the Company's Board of
Directors.
William F. Andrews, Chairman
Samuel W. Bartholomew, Jr., Member
Richard H. Fulton, Member
16
<PAGE> 19
STOCKHOLDER RETURN PERFORMANCE GRAPH
The SEC requires that the Company include in this proxy statement a
line-graph comparing cumulative stockholder returns as of December 31 for each
of the last five years among the Common Stock, a broad market index and either a
nationally-recognized industry standard or an index of peer companies selected
by the Company, assuming in each case the reinvestment of dividends. The Board
of Directors has selected the Standard & Poor's Composite Index as the relevant
broad market index and the 1995 Peer Group which consists of companies that are
either direct competitors of the Company or other regional service organizations
with similar market capitalization to the Company.(2) The 1995 Peer Group
comparison is included as it was used by the Compensation Committee in
conducting its executive compensation evaluation as set forth in the
Compensation Committee Report included herein, and the Board of Directors
believes that such companies generally possess assets, liabilities and
operations more similar to those of the Company than other publicly-available
indices.
The following line graph is a comparison of the yearly percentage change in
the cumulative total stockholder return on the Company Common Stock with the
cumulative total return of the Standard & Poor's 500 Composite Index, the 1994
Peer Group Index(1),(3) and the 1995 Peer Group Index(2),(3) for the period of
five years commencing December 31, 1991 and ending December 31, 1995.
<TABLE>
<CAPTION>
Measurement Period Corrections 1994 Peer 1995 Peer S&P 500
(Fiscal Year Covered) Corp. Group Group Composite
<S> <C> <C> <C> <C>
12/31/90 100.00 100.00 100.00 100.00
12/31/91 81.82 194.47 213.87 130.34
12/31/92 85.87 214.34 237.19 140.25
12/31/93 112.41 165.58 180.25 154.32
12/31/94 201.40 182.48 199.39 156.42
12/31/95 927.39 301.94 324.43 215.21
</TABLE>
- ------------
(1) The Company's 1994 Peer Group consists of the following companies: AMRESCO
(formerly BEI Holding, Ltd.), Chattem, Inc., Command Security Corporation,
Hospital Staffing Services, Inc., Insituform Technology, Inc., Medalliance,
Inc., Nichols Research Corporation, Phycor, Inc., Pinkertons Inc.,
Profitts, Inc., Ren Corporation-USA, Republic Automotive Parts, Inc. and
Wackenhut Corporation (Brock Candy Company was acquired by a private
company and is not included in the Company's 1994 or 1995 Peer Groups).
(2) The Company's 1995 Peer Group includes the 1994 Peer Group with the addition
of Esmor Corporation and Wackenhut Corrections and the exclusion of
Wackenhut Corporation. (Data is not available for Esmor Corporation and
Wackenhut Corrections until 1995.)
(3) As prepared by Arthur Andersen LLP.
17
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 1994, the Company had a note receivable from Mr. Crants in
the amount of $100,000. Interest on the note was charged annually at the rate of
prime plus 1%. In February 1995, Mr. Crants paid the outstanding amount of the
note.
On June 23, 1994, the Company entered into an International Joint Venture
Agreement (the "Joint Venture Agreement") with Sodexho S.A., a French
conglomerate which, in addition to other businesses, provides contract
management services ("Sodexho"). Simultaneously with the execution of the Joint
Venture Agreement, Sodexho purchased a significant equity stake in the Company
as described in the Beneficial Ownership Table included herein. In consideration
of the placement by Sodexho of the securities, the execution by Sodexho of the
Joint Venture Agreement, and the provision by Sodexho of certain consulting
services to the Company, the Company entered into an International Fee Agreement
(the "Fee Agreement") with Sodexho. Pursuant to the Fee Agreement the Company
will pay Sodexho a total of $3,960,000 over a four-year period, in sixteen
quarterly installments of $247,500 each. In 1995, Sodexho purchased a 50%
interest in the Company's Australian subsidiary for approximately $3,700,000.
Further, in June 1995, as a result of its preemptive right triggered in
connection with the issuance by the Company of shares of its Common Stock in the
acquisition of Concept, Incorporated, Sodexho purchased 545,000 shares of Common
Stock from the Company at a purchase price of $15.25 per share. Also during
1995, the Company and Sodexho amended the Securities Purchase Agreement and
entered into a forward contract whereby Sodexho would purchase up to $20,000,000
of convertible subordinated notes at any time prior to December 1997. The notes
will bear interest at LIBOR plus 1.35% and will be convertible into shares of
Common Stock at a conversion price of $13.65 per share.
Stokes & Bartholomew, P.A., of which Mr. Bartholomew is a partner, provided
legal services to the Company in 1995, and it is anticipated that Stokes &
Bartholomew, P.A. will provide legal services to the Company in 1996. The fees
paid in 1995 by the Company in connection with such legal services exceeded
$60,000.
AUDITORS
The firm of Arthur Andersen LLP has served as the Company's independent
public accountants since August, 1991 and has been selected to serve in such
capacity for the fiscal year ended December 31, 1996. A representative of Arthur
Andersen LLP is expected to attend the Annual Meeting to respond to questions
from stockholders and to make a statement if he so desires.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Stockholders of the Company wishing to submit a proposal for action at the
Company's 1997 annual meeting of stockholders and to have the proposal included
in the Company's proxy materials relating to that meeting, must deliver their
proposals to the Company at its principal offices not later than December 1,
1996. Additional legal requirements apply to any inclusion of stockholder
proposals in proxy materials of the Company.
ANNUAL REPORTS
The Company's 1995 Annual Report to stockholders is being mailed to the
Company's stockholders with this proxy statement. The Annual Report is not part
of the proxy soliciting material.
18
<PAGE> 21
OTHER MATTERS
The management of the Company knows of no other matters to be presented and
acted upon at the Annual Meeting other than those set forth in the accompanying
notice. However, if any other matters requiring a vote of the stockholders
should properly come before the Annual Meeting or any adjournment thereof, each
proxy will be voted with respect thereto in accordance with the best judgment of
the proxy holder.
By Order of the Board of Directors,
/s/ Darrell K. Massengale
-------------------------------
Darrell K. Massengale
Secretary
March 29, 1996
Nashville, Tennessee
YOUR COOPERATION IN GIVING THESE MATTERS YOUR IMMEDIATE ATTENTION
AND IN RETURNING YOUR PROXY CARD PROMPTLY IS APPRECIATED.
19
<PAGE> 22
APPENDIX A
CORRECTIONS CORPORATION OF AMERICA
PROXY
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(PLEASE SIGN AND RETURN IN THE ENCLOSED ENVELOPE.)
The undersigned stockholder(s) of Corrections Corporation of America (the
"Company") hereby acknowledge(s) receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated March 29, 1996, and hereby appoint(s)
Doctor R. Crants and Darrell K. Massengale, 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 14, 1996, at
10:00 a.m., Central Standard Time, at Vanderbilt Plaza, 2100 West End Avenue,
Nashville, Tennessee, and any adjournment(s) thereof.
The Board of Directors recommends a vote "FOR" all of the following
proposals:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS:
/ / FOR all nominees named / / WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary) nominees named
</TABLE>
Names of Nominees:
Thomas W. Beasley, Doctor R. Crants, William F. Andrews
Samuel W. Bartholomew, Jr., Jean-Pierre Cuny, R. Clayton McWhorter, Joseph F.
Johnson
(INSTRUCTION: To withhold authority to vote for one or more individual nominees,
write the name of such nominee(s) on the following lines.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued on reverse side)
2. Approval of amendment to the Company's Certificate of Incorporation to
increase the Company's authorized Common Stock.
/ / FOR / / AGAINST / / ABSTAIN
3. With discretionary authority on any other matter which properly comes before
the meeting.
/ / GRANT AUTHORITY / / WITHHOLD AUTHORITY
PLEASE FULLY COMPLETE, DATE, PROPERLY SIGN, AND RETURN THIS PROXY CARD
PROMPTLY.
This Proxy Card, when properly executed, will be voted in accordance with
the directions given by the undersigned stockholder(s). If no direction is made,
it will be voted in favor of each nominee and each of the proposals.
Date:
------------------------------ ------------------------------
Typed or Printed Name(s)
------------------------------
Signature(s)
------------------------------
NOTE: Please date and sign
exactly as your name appears
on your stock certificate. If
more than one owner or joint
tenancy, each must sign
personally. When signing as
attorney, executor,
administrator, trustee,
guardian, etc., give full
title as such. The proxy shall
be deemed a grant of authority
to vote.
