<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
WACKENHUT CORRECTIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[WACKENHUT CORRECTIONS LETTERHEAD]
EXECUTIVE OFFICES
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (561) 622-5656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON APRIL 24, 1997
To the Shareholders:
The Annual Meeting of the Shareholders of Wackenhut Corrections Corporation
will be held on Thursday, April 24, 1997, at 9:00 A.M. at the Embassy Suites
Hotel, 4350 PGA Boulevard, Palm Beach Gardens, Florida, for the purpose of
considering and acting on the matters following:
(1) the election of nine directors for the ensuing year;
(2) ratification of the action of the Board of Directors in
appointing the firm of Arthur Andersen LLP to be the
independent certified public accountants of the Corporation
for the fiscal year 1997, and to perform such other services
as may be requested;
(3) the transaction of any other business as may properly come
before the meeting or any adjournment or adjournments thereof.
Only shareholders of Common Stock of record at the close of business March 10,
1997, the record date and time fixed by the Board of Directors, are entitled to
notice and to vote at said meeting.
ALL COMMON STOCK SHAREHOLDERS ARE URGED EITHER TO ATTEND THE MEETING IN PERSON
OR TO VOTE BY PROXY.
You are requested to promptly sign and mail the enclosed proxy, which is being
solicited on behalf of the Board of Directors, regardless of whether you expect
to be present at this meeting. A return envelope which requires no postage is
enclosed for that purpose. If you attend the meeting in person, you may, if
you wish, revoke your proxy and vote in person.
By order of the Board of Directors.
James P. Rowan
Vice President, General Counsel
and Secretary
March 21, 1997
<PAGE> 3
PROXY STATEMENT
March 21, 1997
Wackenhut Corrections Corporation
Executive Offices
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (561) 622-5656
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Wackenhut Corrections Corporation for the
Annual Meeting of Shareholders of the Corporation to be held at the Embassy
Suites Hotel, 4350 PGA Boulevard, Palm Beach Gardens, Florida, April 24, 1997,
and all adjournments thereof. Please note the Proxy Card provides a means to
withhold authority to vote for any individual director-nominee. Also note the
format of the Proxy Card which provides an opportunity to specify your choice
between approval, disapproval or abstention with respect to the proposal to
approve the appointment of Arthur Andersen LLP as independent certified public
accountants of the Corporation. If the enclosed Proxy Card is executed
properly and returned, the shares represented will be voted in accordance with
those instructions. If no instructions are given the Proxy Card will be voted
as follows:
FOR - The election of the Directors nominated by the Board of Directors
FOR - Proposal to approve the appointment of Arthur Andersen LLP as
the independent certified public accountants of the Corporation
Holders of shares of the Common Stock of the Corporation of record as of the
close of business on March 10, 1997, will be entitled to one vote for each
share of stock standing in their name on the books of Wackenhut Corrections
Corporation.
On February 7, 1997, 21,942,892 shares of Common Stock were outstanding. The
Common Stock will vote as a single class for the election of Directors, to
approve the appointment of Arthur Andersen LLP, and on any other matter which
may properly come before the meeting.
Any person giving a proxy has the power to revoke it any time before it is
voted by written notice to the Corporation or attending the meeting and voting
the shares.
The cost of preparation, assembly and mailing this Proxy Statement material
will be borne by the Corporation. It is contemplated that the solicitation of
proxies will be entirely by mail. This Proxy Statement and the accompanying
form of proxy are being mailed to shareholders of the Corporation on or about
March 21, 1997.
2
<PAGE> 4
THE ELECTION OF DIRECTORS
The Board of Directors will be comprised of nine (9) members. Unless instructed
otherwise, the persons named on the accompanying Proxy Card will vote for the
election of the nominees named below to serve for the ensuing year and until
their successors are elected and have qualified. Seven (7) of the nominees are
presently directors of the Corporation who were elected by the shareholders at
their last annual meeting. Two (2) of the nominees, Floretta Dukes McKenzie
and John F. Ruffle were elected by the Board of Directors at its January
meeting to fill vacancies and are to be elected to the Board of Directors of
the Corporation by the shareholders for the first time at the April 24, 1997,
annual meeting of shareholders.
If any nominee for director shall become unavailable (which management has no
reason to believe will be the case), it is intended that the shares represented
by the enclosed Proxy Card will be voted for any such replacement or substitute
nominee as may be nominated by the Board of Directors. A brief biographical
statement for each nominee follows:
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
============================================================================================================================
<S> <C>
NORMAN A. CARLSON Mr. Carlson has served as a Director of the Corporation since April 1994, and had previously
1994 served as a Director of The Wackenhut Corporation since April 1993. Mr. Carlson is Adjunct
AGE 63 Professor in the Department of Sociology, University of Minnesota and retired from the
[PICTURE] Department of Justice in 1987 after serving for 17 years as Director of the Federal Bureau of
Prisons. During his career, Mr. Carlson worked at the United States Penitentiary, Leavenworth,
Kansas, and the Federal Correctional Institution, Ashland, Kentucky. Mr. Carlson was President
of the American Correctional Association from 1978 to 1980, and is a fellow in the National
Academy of Public Administration. Mr. Carlson was a member of the United Nations Committee on
Crime Prevention and Treatment of Offenders and also served as co-chair of the United States
delegation to the committee. (c)
- ----------------------------------------------------------------------------------------------------------------------------
BENJAMIN R. CIVILETTI Mr. Civiletti has served as a Director of the Corporation since April 1994. Mr. Civiletti has
1994 been Chairman of the law firm Venable, Baetjer and Howard since 1993 and was Managing Partner
AGE 61 of the firm from 1987 to 1993. From 1979 to 1980, Mr. Civiletti served as the Attorney General
[PICTURE] of the United States. Mr. Civiletti is Chairman of the Board of Greater Baltimore Medical
Center and the Founding Chairman of the Maryland Legal Services Corporation; a Director of
Bethlehem Steel Corporation, and a Director of MBNA Corporation and MBNA International. Mr.
Civiletti is a Fellow of the American Bar Foundation, the American Law Institute, and the
American College of Trial Lawyers. Mr. Civiletti was Chairman of the Maryland Governor's
Commission on Welfare Policy in 1993, and a member of the Maryland Governor's Task Force on
Alternatives to Incarceration in 1991. (b)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 5
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
- --------------------------------------------------------------------------------
MANUEL J. JUSTIZ Dr. Justiz has been a Director of the Corporation
1994 since June 1994. On January 1, 1990, Dr. Justiz was
AGE 48 appointed Dean of the College of Education at the
University of Texas at Austin, where he holds the A.M.
Aikin Regents Chair in educational leadership. From
1985 to 1989, Dr. Justiz was a chaired professor of
educational leadership and public policies at the
University of South Carolina, and in the academic year
1988-89 was the Martin Luther King-Rosa Parks
Distinguished Scholar-in-Residence at the University of
Michigan. From 1982 to 1985, Dr. Justiz served as the
Director of the National Institute of Education after
being appointed by President Reagan. In this position,
Dr. Justiz served as principal spokesperson for
educational policy and research to the President,
Secretary of Education, Congress and education
associations. Dr. Justiz is on the editorial board for
the Educational Record, serves as a Director of
Steck-Vaughn Publishing Corp. and Voyager Expanded
Learning. (c)
- --------------------------------------------------------------------------------
FLORETTA DUKES MCKENZIE Dr. McKenzie is the president of The McKenzie
1997 Group, an educational consulting firm based in
AGE 61 Washington D.C. She served as the Deputy Assistant
Secretary, Office of School Improvement, U.S.
Department of Education from 1979 to 1981. She then
served as the Chief State School Officer,
Superintendent of Schools for the District of Columbia
Public Schools from 1981 to 1988. Dr. McKenzie serves
on the boards of The Acacia Group, the National
Geographic Society, the Potomac Electric Power
Company, Marriott International Corp., Group
Hospitalization & Medical Services, Inc., White House
Historical Association, Howard University, American
Association of School Administrators Foundation Fund,
Lightspan Partnership, Inc., Impact II-The Teachers
Network, Foundation for Teaching Economics, National
Academy Foundation, Institute for Educational
Leadership, Inc., National Association of Partners in
Education, Inc., Reading is Fundamental, and others.
Dr. McKenzie also served as the Assistant Deputy
Superintendent, Maryland State Department of Education
(1977-78), and prior to that held executive positions
with Montgomery County (MD) and District of Columbia
public school systems. She is a graduate of D.C.
Teachers College and holds an M.A. degree from Howard
University and a Doctor of Education from George
Washington University. She also holds honorary
doctorate degrees from several colleges and
universities. (b)
- --------------------------------------------------------------------------------
JOHN F. RUFFLE Mr. Ruffle is a retired Vice Chairman and Director of
1997 J.P. Morgan & Co., Inc., and Morgan Guaranty Trust
AGE 59 Company of New York since June 1, 1993. He joined
J.P. Morgan in 1970 as Controller and was named CFO in
1980, and elected Vice Chairman in 1985. Earlier, he
was Assistant Treasurer and Director of Accounting for
International Paper Company. Mr. Ruffle also serves
as a Director of Bethlehem Steel Corporation, American
Shared Hospital Services and Trident Corporation. He
is a Trustee of The Johns Hopkins University and of
JPM Series Trust II (mutual funds). He is a past
President of the Board of Trustees of the Financial
Accounting Foundation and a past Chairman of the
Financial Executives Institute, and in 1991 received
the Financial Executive Institute's National Award for
Distinguished Service. Mr. Ruffle is a graduate of
The Johns Hopkins University and earned an M.B.A. in
Finance from Rutgers University. He is also a CPA. (c)
- --------------------------------------------------------------------------------
4
<PAGE> 6
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
============================================================================================================================
<S> <C>
ANTHONY P. TRAVISONO Mr. Travisono has served as a Director of the Corporation since April 1994. Mr. Travisono is
1994 on the faculty at Salve Regina University in Rhode Island. He serves as an international
AGE 71 consultant on correctional issues. From 1974 to 1991, Mr. Travisono was Executive Director of
[PICTURE] the American Correctional Association. His career in the Correctional field extends over 47
years, during which Mr. Travisono has been Director, Rhode Island Department of Corrections;
Director, Rhode Island Department of Mental Health, Retardation and Hospitals; Director, Rhode
Island Department of Social Welfare; Superintendent, Iowa Training School for Boys; and
Superintendent, Rhode Island Training School for Boys. He serves on the Advisory Committee for
Women at the Rhode Island Department of Corrections and on the Advisory Committee for the Rhode
Island Salvation Army Rehabilitation Center. Mr. Travisono is a 1950 graduate of Brown
University and received a Masters Degree in Social Work from Boston University in 1953. (b)
- ----------------------------------------------------------------------------------------------------------------------------
GEORGE R. WACKENHUT Mr. Wackenhut is Chairman of the Board. He is also the Chief Executive Officer of The
1988 Wackenhut Corporation (TWC or Parent). He was President of TWC from the time it was founded
AGE 77 until April 26, 1986. He formerly was a Special Agent of the Federal Bureau of Investigation.
[PICTURE] He is a former member of the Board of Directors of SSJ Medical Development, Inc., Miami,
Florida, and is on the Dean s Advisory Board of the University of Miami School of Business. He
is on the National Council of Trustees, Freedoms Foundation at Valley Forge, the President s
Advisory Council for the Small Business Administration, Region IV, and a member of the National
Board of the National Soccer Hall of Fame. He is a past participant in the Florida Governors
War on Crime and a past member of the Law Enforcement Council, National Council on Crime and
Delinquency, and the Board of Visitors of the U.S. Army Military Police School. He is also a
member of the American Society for Industrial Security. He was a recipient in 1990 of the Labor
Order of Merit, First Class, from the government of Venezuela. Mr. Wackenhut received his B.S.
degree from the University of Hawaii and his M.Ed. degree from Johns Hopkins University. Mr.
Wackenhut is the father of Richard R. Wackenhut, a Director nominee. (a)(b)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
===========================================================================================================================
<S> <C>
RICHARD R. WACKENHUT Mr. Wackenhut, President and Chief Operating Officer of The Wackenhut Corporation (TWC or
1988 Parent) since April 26, 1986, was formerly Senior Vice President, Operations from 1983-1986. He
AGE 49 was Manager of Physical Security from 1973-74. He also served as Manager, Development at TWC
[PICTURE] Headquarters from 1974-76; Area Manager, Columbia, SC from 1976-77; District Manager, Columbia
SC from 1977-79; Director, Physical Security Division at TWC Headquarters 1979-80; Vice
President, Operations from 1981-82; and Senior Vice President, Domestic Operations from 1982-
83. Mr. Wackenhut is a member of the Board of Directors of The Wackenhut Corporation, a
Director of Wackenhut del Ecuador, S.A.; Wackenhut UK, Limited; Wackenhut Dominicana, S.A.; and
a Director of several domestic subsidiaries of the Corporation. He is Vice Chairman of
Associated Industries of Florida. He is also a member of the American Society for Industrial
Security, a member of the International Security Management Association, and a member of the
International Association of Chiefs of Police. He received his B.A. degree from The Citadel in
1969, and completed the Advanced Management Program of the Harvard University School of
Business Administration in 1987. Mr. Wackenhut is the son of George R. Wackenhut, a Director
nominee. (a)
- ----------------------------------------------------------------------------------------------------------------------------
GEORGE C. ZOLEY Dr. Zoley is Vice Chairman and Chief Executive Officer. He had served as President and a
1988 Director of the Corporation since it was incorporated in 1988, and Chief Executive Officer AGE
AGE 47 since April 1994. Dr. Zoley established the Corporation as a division of The Wackenhut
[PICTURE] Corporation in 1984, and continues to be a major factor in the Company's development of its
privatized correctional and detention facility business. Dr. Zoley is also a director of each
of the entities through which the Corporation conducts its international operations. From 1981
through 1988, as manager, director, and then Vice President of Government Services of Wackenhut
Services, Inc. (WSI), Dr. Zoley was responsible for the development of opportunities in the
privatization of government services by WSI. Prior to joining WSI, Dr. Zoley held various
administrative and management positions for city and county governments in South Florida. Dr.
Zoley has a Masters and Doctorate Degree in Public Administration. (a)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Member of Executive Committee
(b) Member of Nominating and Compensation Committee
(c) Member of Audit and Finance Committee
The election of the directors listed above will require the affirmative vote of
the holders of a plurality of the shares present or represented at the
shareholders meeting. Abstentions will be treated as shares represented at the
meeting and therefore will be the equivalent of a negative vote, and broker
non-votes will not be considered as shares represented at the meeting.
6
<PAGE> 8
COMPOSITION AND FUNCTIONS OF SPECIFIC COMMITTEES
OF THE BOARD OF DIRECTORS
Wackenhut Corrections Corporation has an Audit and Finance Committee whose
members were as follows:
Norman A. Carlson, Acting Chairman
Manuel J. Justiz
The Audit and Finance Committee met four times during the past fiscal year.
The Audit and Finance Committee s principal functions and responsibilities are
as follows:
1. Recommend the selection, retention, or termination of the Corporations
independent auditors.
2. Review the proposed scope of the audit and fees.
3. Review the quarterly and annual financial statements and the results
of the audit with management, the internal auditors, and the
independent auditors with emphasis on the quality of earnings in terms
of accounting policies selected; this activity would also entail
assisting in the resolution of problems that might arise in connection
with an audit if and when this becomes necessary.
4. Review with management and independent auditors the recommendations
made by the auditors with respect to changes in accounting procedures
and internal accounting controls as well as other matters of concern
to the independent auditors resulting from their audit activity.
5. Review with management and members of the internal audit team the
activities of and recommendations made by this group.
6. Inquire about and be aware of all work (audit, tax, consulting) that
the independent auditors perform for the C Corporation.
7. Recommend policies to avoid unethical, questionable, or illegal
activities by Corporation personnel.
8. Make periodic reports to the full Board on its activities.
Wackenhut Corrections Corporation also has a Nominating and Compensation
Committee which, in addition to its role in recommending compensation for the
Chief Executive Officer and the other executive officers, evaluates possible
Director nominees and makes recommendations concerning such nominees to the
Board of Directors, and recommends to the Chairman and the Board itself the
composition of Board Committees and nominees for officers of the Corporation.
See the Report of the Compensation Committee later in this Proxy Statement.
Shareholders desiring to suggest qualified nominees for director should advise
the Secretary of the Corporation in writing and include sufficient biographical
material to permit an appropriate evaluation.
A total number of four meetings of the Board of Directors was held during the
1996 fiscal year.
7
<PAGE> 9
SECURITY OWNERSHIP
The following table shows the number of shares of the Corporation s Common
Stock, each with a par value of $.01 per share, that was beneficially owned as
of February 7, 1997, by each director nominee for election as director at the
1997 Annual Meeting of Shareholders, by each named executive officer, by all
director nominees and executive officers as a group, and by each person or
group who was known by the Corporation to beneficially own more than 5% of the
Corporation s outstanding Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK
AMOUNT & NATURE PERCENT
OF BENEFICIAL OF
BENEFICIAL OWNER (1) OWNERSHIP (2) CLASS
=============================================================================================
<S> <C> <C>
DIRECTOR NOMINEES
Norman A. Carlson 4,000 (4) *
Benjamin R. Civiletti 3,000 (4) *
Manuel J. Justiz 3,000 (4) *
Floretta Dukes McKenzie - *
John F. Ruffle 2,500 (4) *
Anthony P. Travisono 3,500 (4) *
George R. Wackenhut (beneficially 12,107,530 (4)(5) 55.18
with wife, Ruth J. Wackenhut)
Richard R. Wackenhut 74,666 (4) *
George C. Zoley 114,666 (4) *
EXECUTIVE OFFICERS
Wayne H. Calabrese 70,000 (4) *
John G. O'Rourke 32,888 (4) *
Robert W. Mianowski 36,882 (4) *
Carol M. Brown 47,774 (4) *
Patricia M. Persante 54,032 (4) *
ALL NOMINEES AND EXECUTIVE 12,563,438 (4) 57.36
OFFICERS AS A GROUP
OTHER
The Wackenhut Corporation (3) 12,000,000 (4) 54.69
</TABLE>
* Beneficially owns less than 1%
8
<PAGE> 10
NOTES
(1) Unless stated otherwise, the address of the beneficial owners is 4200
Wackenhut Drive #100, Palm Beach Gardens, Florida.
(2) Information concerning beneficial ownership was furnished by the
persons named in the table or derived from documents filed with the
Securities and Exchange Commission. Each person named in the table has
sole voting and investment power with respect to the shares
beneficially owned.
(3) Whose address is 4200 Wackenhut Drive #100, Palm Beach Gardens,
Florida. These shares are indirectly held through a wholly owned
subsidiary of The Wackenhut Corporation, Tuhnekcaw, Inc., a Delaware
Corporation.
(4) Total shares include options which are immediately exercisable. Of
the Director Nominees, 107,530 shares shown as owned beneficially by
the Wackenhuts, 3,000 shares shown for Norman A. Carlson, Anthony P.
Travisono, Benjamin R. Civiletti and Manuel J. Justiz, are subject to
such options. All shares shown for Executive Officers are subject to
such options.
(5) George R. Wackenhut and Ruth J. Wackenhut, through trusts over which
they have sole dispositive and voting power, control 50.04% of the
issued and outstanding voting common stock of The Wackenhut
Corporation. The Wackenhut Corporation, through a wholly owned
subsidiary, Tuhnekcaw, Inc., controls the Corporation. By virtue of
their control of The Wackenhut Corporation, George R. Wackenhut and
Ruth J. Wackenhut are deemed beneficial owners of the Corporation
stock owned by The Wackenhut Corporation.
9
<PAGE> 11
EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Corporation
during the fiscal year ended December 29, 1996, and each of the two preceding
fiscal years, to the Chief Executive Officer and to each of the five most
highly compensated executive officers of the Corporation other than the Chief
Executive Officer for services in all capacities while they were employees of
the Corporation, and the capacities in which the services were rendered.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- -----------------------------------------
AWARDS
-----------------------------------------
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPEN-
COMPENSATION OPTIONS/ SATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) ($)(2) SARS(#) ($)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
George C. Zoley 1996 288,000 101,500 20,000 25,906 (4)
Vice Chairman, 1995 249,000 70,000 7,500 (6) 11,755 (4)
Chief Executive Officer 1994 186,000 100,000 180,666 (3) 9,067 (4)
and Director
Wayne H. Calabrese 1996 175,000 52,500 10,000
President and 1995 149,000 36,000 - -
Chief Operating Officer 1994 87,000 25,000 18,000 85,334 3,323 (5)
John G. O'Rourke 1996 115,000 28,750 5,000
Chief Financial Officer, 1995 105,000 21,000 - -
Senior Vice President - 1994 92,000 15,000 42,666
Finance and Treasurer
Robert W. Mianowski 1996 110,000 27,500 5,000
Senior Vice President - 1995 100,000 20,000 - -
Operations 1994 90,000 15,000 42,666
Patricia Persante 1996 104,000 26,000 5,000
Senior Vice-President 1995 94,000 19,000 40,000 -
Contract Compliance 1994 79,000 15,000 6,400 -
Carol M. Brown 1996 103,000 25,750 5,000
Senior Vice President - 1995 94,000 19,000 - -
Health Services 1994 79,000 15,000 42,666 -
</TABLE>
10
<PAGE> 12
NOTES
(1) Includes amounts paid pursuant to the Corporation's Senior Officer
Incentive Plan.
(2) The Corporation made payments on behalf of Mr. Calabrese related to
his relocation to Australia in the amount of $6,000 in fiscal 1994.
The Corporation also provided him with the use of a company car while
in Australia costing $6,000 in fiscal 1994. Other perquisites
included meal allowances and travel benefits which totaled $6,000 in
fiscal 1994. Mr. Calabrese returned to Corporate Headquarters near
the end of fiscal 1994 to assume his current position and
responsibilities.
(3) Includes options to acquire 10,000 shares of Series B Common Stock of
the Parent granted to Dr. Zoley under the Key Employee Long-Term
Incentive Stock Plan of Parent.
(4) In fiscal 1994, George C. Zoley, then President and Chief Executive
Officer of the Corporation, participated in the Executive Retirement
Plan of Parent (the "Parent Retirement Plan"). Parent contributed
$9,067 to the Parent Retirement Plan for fiscal 1994 on behalf of Dr.
Zoley. These amounts represent the cost to Parent of providing its
future liability under the Parent Retirement Plan. For the period of
time that Dr. Zoley participated in the Parent Retirement Plan, the
Corporation reimbursed Parent for all contributions to the Parent
Retirement Plan with respect to Dr. Zoley, together with the expenses
incurred in connection therewith. Neither Dr. Zoley nor any other
employee of the Corporation currently participates in the Parent
Retirement Plan. Commencing on March 31, 1995, Dr. Zoley and the
other Named Executive Officers began participating in the
Corporation's Senior Officer Retirement Plan (the "Corporation
Retirement Plan"). WCC contributed $11,755 and $25,906 in 1995 and
1996, respectively, to the Corporation Retirement Plan on behalf of
Dr. Zoley.
(5) Represents contributions under an Australian government mandated
retirement plan for Mr. Calabrese. Contributions to the government
plan ceased when Mr. Calabrese returned to the United States in fiscal
1994.
(6) Options granted under TWC Key Employee Long-Term Incentive Stock Plan.
11
<PAGE> 13
<TABLE>
<CAPTION>
OPTIONS / SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (3)
----------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
George C. Zoley 20,000 40% 22.625 4/25/06 $284,575 $721,168
Wayne H. Calabrese 10,000 20% 22.625 4/25/06 $142,287 $360,584
John G. O'Rourke 5,000 10% 22.625 4/25/06 $71,144 $180,292
Robert W. Mianowski 5,000 10% 22.625 4/25/06 $71,144 $180,292
Carol M. Brown 5,000 10% 22.625 4/25/06 $71,144 $180,292
Patricia M. Persante 5,000 10% 22.625 4/25/06 $71,144 $180,292
</TABLE>
12
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
SHARES YEAR-END (#) YEAR-END ($)
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/
(#) ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
George C. Zoley - - - E - U - E - U
78,666 E(2) 16,000 U(2) 1,129,323 E(2) - U
7,500 E(3) - U 22,125 E(3) - U
Wayne H. Calabrese 3,766(1) 87,548(1) 12,666 E(1) - U 223,872 E(1) - U
39,334 E(2) 8,000 U(2) 564,828 E(2) - U
John G. O'Rourke 4,000(1) 79,923(1) 4,216 E(1) - U 74,518 E(1) - U
19,666 E(2) 4,000 U(2) 282,323 E(2) - U
Robert W. Mianowski - - 8,216 E(1) - U 145,218 E(1) - U
19,666 E(2) 4,000 U(2) 282,323 E(2) - U
Carol M. Brown - - 16,108 E(1) - U 284,709 E(1) - U
19,666 E(2) 4,000 U(2) 282,323 E(2) - U
Patricia Persante - - 1,232 E(1) - U 21,776 E(1) - U
19,800 E(2) 28,000 U(2) 154,350 E(1) 168,000 - U
</TABLE>
(1) Options under First Option Plan.
(2) Options under the Second Option Plan.
(3) Options under TWC Key Employee Long-Term Incentive Stock Plan
13
<PAGE> 15
The following table sets forth the estimated annual benefits payable under the
Executive Officer Retirement Plan ("Retirement Plan") to an employee upon
retirement at age 65 and reflects an offset by social security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
REMUNERATION YEARS OF SERVICE
- ---------------------- -------------------------------------------------------------------------
(ESTIMATED ANNUAL RETIREMENT BENEFITS
ASSUMED AVERAGE ANNUAL FOR
SALARY FOR FIVE-YEAR YEARS OF CREDITED SERVICE SHOWN BELOW)
PERIOD PRECEDING -------------------------------------------------------------------------
RETIREMENT 10 15 20 25 30 35
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 4,002 $ 12,306 $ 20,141 $ 27,431 $ 22,841 $ 17,520
150,000 8,502 19,056 29,141 38,681 34,091 28,770
175,000 13,002 25,806 38,141 49,931 45,341 40,020
200,000 17,502 32,556 47,141 61,181 56,591 51,270
225,000 22,002 39,306 56,141 72,431 67,841 62,520
250,000 26,502 46,056 65,141 83,681 79,091 73,770
300,000 35,502 59,556 83,141 106,181 101,591 96,270
400,000 53,502 86,556 119,141 151,181 146,591 141,270
450,000 62,502 100,056 137,141 173,681 169,091 163,770
500,000 71,502 113,556 155,141 196,181 191,591 186,270
</TABLE>
Dr. Zoley, the Chief Executive Officer of the Corporation, participated in the
Parent Retirement Plan in fiscal 1994, until the effective date of the
Corporation Retirement Plan on March 31, 1995. No other Named Executive
Officers were participants in the Parent Retirement Plan. Commencing on March
31, 1995, all of the Named Executive Officers (including Dr. Zoley) began
participating in the Corporation Retirement Plan. Dr. Zoley has 15 years of
credited service. Mr. Calabrese has seven years of credited service, each of
Ms. Brown, Ms. Persante and Mr. Mianowski have six years of credited service,
and Mr. O'Rourke has five years of credited service under the Corporation
Retirement Plan.
The Corporation Retirement Plan is a defined benefit plan and, subject to
certain maximum and minimum provisions, bases pension benefits on a percentage
of the employee's final average annual salary, not including bonus (earned
during the employee's last five years of credited service) times the employee's
years of credited service. Benefits under the Corporation Retirement Plan are
offset by social security benefits. Generally, a participant will vest in his
or her benefits upon the completion of ten years of service. The amount of
benefit increases for each full year beyond ten years of service except that
there are no further increases after twenty five years of service.
STOCK OPTION PLANS
On March 1, 1994, the Corporation adopted the First Option Plan covering a
total of 897,600 shares of Common Stock. The First Option Plan was approved by
Parent as the sole shareholder of the Corporation prior to the Corporation's
initial public offering. At the same time, the Board of Directors made a
one-time grant of non-qualified stock options under the First Option Plan to
certain of the Corporation's employees, officers, directors and consultants,
granting them the right to purchase an aggregate of 897,600 shares of its
Common Stock. The Corporation has no right to issue additional options under
the First Option Plan. The options are exercisable, in whole or in part, at
any time after September 1, 1994, and prior to February 29, 2004, at an
exercise price of $1.20 per share, which the Corporation believes represented
the fair market value of such stock at March 1, 1994.
The First Option Plan provides that (i) if a change occurs in the beneficial
ownership of the Corporation involving forty percent or more of the total
shares entitled to vote, or (ii) the Corporation is merged into any other
company
14
<PAGE> 16
or substantially all of its assets are acquired by any other company, or (iii)
three or more directors nominated by the Board of Directors to serve as a
director and who have agreed to serve, fail to be elected in a contested
election of directors (a "Change in Control"), or (iv) in the event of any
change in the Corporation's Common Stock through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination of
shares, or other change in corporate structure, the Board of Directors may make
adjustments in the number and type of shares granted under the First Option
Plan. If a Change of Control occurs, the Board of Directors may vote to cash
out and immediately terminate all options outstanding as of the date of the
Change of Control or may vote to accelerate the expiration of options.
Under the First Option Plan, when an optionee desires to dispose of any shares
of Common Stock acquired by exercise of an option, such optionee shall first
offer such shares to the Corporation by giving the Corporation written notice
of the optionee's intention to dispose of them. The Corporation has the right
to purchase for cash all or part of such option shares so offered at a purchase
price equal to the fair market value of such shares on the date of the
optionee's notice to the Corporation of the optionee's intention to dispose of
such shares.
On May 6, 1994, the Corporation adopted the Second Option Plan (together with
the First Option Plan, the "Stock Option Plans") covering a total of 1,500,000
shares of Common Stock. The Second Option Plan was approved by Parent as the
sole shareholder of the Corporation prior to the Corporation's IPO. At the
same time, the Board of Directors made an initial grant of non-qualified stock
options under the Second Option Plan to the same individuals who received
options under the First Option Plan, granting them the right to purchase an
aggregate of 698,126 shares of Common Stock. These options are exercisable at
any time after November 5, 1994 and prior to November 5, 2004 at an exercise
price or $3.75 per share, which the Corporation believes represented the fair
market value of such stock at May 6, 1994.
On December 19, 1995, the Board of Directors granted non-qualified stock
options under the Second Option Plan to purchase 338,000 shares of Common Stock
to certain employees at an exercise price of $11.88 per share, which
represented the closing market price on December 19, 1995. The options vest
over a five-year period at rate of 20% per annum. Only one executive officer
who participated in the earlier stock option grants received any of the options
granted on December 19, 1995.
On April 25, 1996, the Board of Directors granted non-qualified stock options
under the Second Option Plan to purchase 50,000 shares of Common Stock to
certain employees at an exercise price of $22.63 per share, which represented
the closing market price on April 25, 1996. The options vest over a five-year
period at a rate of 20% per annum.
Participation in the Second Option Plan is limited to officers, consultants and
employees of the Corporation who are qualified to receive options, in the
discretion of the Nominating and Compensation Committee of the Board of
Directors of the Corporation (the "Compensation Committee"). The Compensation
Committee may consider such factors as it deems pertinent in selecting
participants and in determining the amount of awards, including but not limited
to (i) the financial condition of the Corporation, (ii) expected profits for
the current or future years, (iii) the contributions of a prospective
participant to the profitability and success of the Corporation and (iv) the
adequacy of the prospective participant's other compensation.
In the event that shares of Common Stock are affected by a stock dividend,
stock split, a combination of shares, a reorganization or recapitalization, a
merger, a consolidation, an exchange of shares or any other change in the
corporate structure of the Corporation, the Second Option Plan provides that an
appropriate adjustment will be made in the number of shares subject to
unexercised options or available for options and in the exercise price for
shares. In the event that an option expires or is terminated unexercised as to
any shares, the Second Option Plan permits released shares to again be
optioned.
The Second Option Plan provides that in the event of a "change in control of
ownership" occurs, then nonvested options, if any, would vest immediately prior
to such event. A "Change in Control of Ownership" is defined as liquidation or
dissolution of the Corporation, sale of substantially all of the assets of the
Corporation or a merger, consolidation or combination in which the Corporation
is not the survivor or where a 50% or greater change in the ownership of the
Corporation's outstanding shares occurs.
15
<PAGE> 17
The Compensation Committee may amend or discontinue the Second Option Plan at
any time, provided that no such amendment or discontinuance may change or
impair any option previously granted without the consent of the optionee.
Under the Stock Option Plans, in the event of termination of employment because
of death or physical disability, the optionee or the optionee's heirs, legatees
or legal representatives may exercise the option within the shorter of the
option period or one year from the date of the death or disability, as the case
may be. In the event of retirement, an option must be exercised within the
shorter of the option period or a period of three months from the date of
retirement. Options under the First Option Plan immediately terminate if the
optionee leaves the employ of the Corporation for any reason other than death,
physical disability or retirement. Under the Second Option Plan, if the
optionee leaves the employ of the Corporation not by the optionee's volition
and for reasons other than retirement, disability, death or for cause, then
said optionee must exercise the options within the shorter of the option period
or three months from the date of termination. Under the Second Option Plan, if
an optionee's services are terminated for cause, then optionee's options
immediately terminate.
On April 27, 1995, the Corporation retroactively adopted the Non-Employee
Director Stock Option Plan ("the Plan) covering a total of 60,000 shares of
Common Stock. At the same time, the Board of Directors granted non-qualified
stock options to purchase 5,000 shares of Common Stock to non-employee
directors at an exercise price of $13.75, which represented the closing market
price on April 27, 1995. These options vest immediately and expire on the
tenth anniversary date of their grant. On April 25, 1996, the Board of
Directors granted non-qualified stock options to purchase 10,000 shares of
Common Stock to non-employee directors at an exercise price of $22.63, which
represented the closing market price on April 25, 1996. These options also
vest immediately and expire on the tenth anniversary date of their grant.
Participation in the Plan is limited to Non-Employee Directors. A Non-Employee
Director is defined as any individual who is a member of the Corporation's
Board of Directors, but has never otherwise been an employee of the
Corporation.
GENERAL. As a part of the Non-Employee Director's compensation, those
Directors of the Corporation shall be granted an option to purchase up to 1,000
shares of the Common Stock of the Corporation upon his or her election and/or
each re-election to serve on the Board (the "Director Option"). In the event
any change is made to the Common Stock issuable under the Plan (by reason of
any stock split, stock dividend, combination of shares, exchange of shares,
merger, consolidation, reorganization or other change in the capitalization of
the Company), appropriate adjustment will be made to (i) the aggregate number
and/or class of shares of Common Stock available for issuance under the Plan,
(ii) the number of shares of Common Stock to be made the subject of each
subsequent grant, (iii) the exercise price, and (iv) the number and/or class of
shares of Common Stock purchasable under each outstanding Director Option and
the exercise price payable per share so that no dilution or enlargement of
benefits will occur under such Director Option.
ASSIGNABILITY. Director Options are not assignable or transferable
other than by will or the laws of descent and distribution and, during the
optionee's lifetime, the Director Option may be exercised only by such
optionee.
AMENDMENTS. The Board may amend or discontinue the Plan at any time
provided that (i) no such amendment or discontinuance may change or impair any
Director Option previously granted without the consent of the optionee, (ii) the
provisions of the Plan which relate to the amount of shares which may be subject
to grants and/or exercise price may not be amended more than once every six
months, other than to comport with changes in federal income tax laws, and (iii)
stockholder approval is required for any amendment which would materially
increase the benefits to participants in the Plan or the number of shares which
may be issued (except for adjustments due to stock splits, stock dividends and
similar changes made to the Common Stock under the Plan, or which would
materially modify the requirements as to eligibility for participation in the
Plan.
16
<PAGE> 18
TERMINATION. Director Options terminate six months after the optionee
ceases to be a member of the Board of Directors of the Corporation, other than
by reason of death or disability, but in no event after the expiration date of
the Director Options. In the event of the optionee's death or disability, the
personal representative or guardian of the optionee or the optionee's estate,
or the person inheriting the Director Options, will have two years after the
date of the optionee's death or disability to exercise the Director Options in
full. Under no circumstances, however, may the Director Options be exercised
after the termination date of the Director Options. If any Director Options
granted under the Director Option Plan expire or are terminated or canceled
unexercised as to any shares of Common Stock, such released shares may again be
optioned (including a grant in substitution for canceled Director Options).
FEDERAL INCOME TAX ASPECTS
The Director Options do not constitute incentive stock options, within the
meaning of section 422(b) of the Internal Revenue Code of 1986. As a general
rule, no federal income tax is imposed on the holder of options upon the
issuance of options such as the Director Options and the Corporation is not
entitled to a tax deduction by reason of such issuance. Generally, upon the
exercise of options such as the Director Options, the holder of the options
will be treated as receiving compensation taxable as ordinary income in the
year of exercise, which in the case of an option, is an amount equal to the
excess of the fair market value of the shares on the date of exercise over the
exercise price of the options. Upon the exercise of options such as the
Director Options, the Company may claim a deduction for compensation paid at
the same time and in the same amount as compensation income is recognized to
the holder of the options, assuming any federal income tax withholding
requirements are satisfied. Upon a subsequent disposition of the shares
received upon exercise of options such as Director Options, the difference
between the amount realized on the disposition and the basis of the stock
(exercise price plus any ordinary income recognized) should qualify as
long-term or short-term capital gain, depending on the holding period.
CORPORATION INCENTIVE PLAN
In March 1995, the Corporation adopted the Wackenhut Corrections Corporation
Senior Officer Incentive Plan (the "Corporation Incentive Plan") for certain of
its senior officers including all of the Named Executive Officers.
Participants in the Corporation Incentive Plan are assigned a target incentive
award, stated as a percentage of the participant's base salary depending upon
the participant's position with the Corporation. The target incentive award
for 1996 for the Chief Executive Officer, Executive Vice President and Senior
Vice Presidents of the Corporation were 35%, 30% and 25%, respectively, of base
salary. The Compensation Committee's decisions regarding the amount of
incentive compensation payable in a given year and the allocation among the
participants, is based on several factors, including the Corporation's
profitability, the contribution of a particular employee during the fiscal year
and compliance with previously agreed upon goals and objectives as outlined in
the Corporation's strategic plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, Benjamin R. Civiletti (Chairman), George R. Wackenhut and
Anthony P. Travisono served on the Nominating and Compensation Committee of the
Board of Directors. George R. Wackenhut also serves as an officer and director
of Parent and certain of its affiliates.
17
<PAGE> 19
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Board of Directors (the
"Compensation Committee") met two times during 1996. The Compensation
Committee is composed of the Chairman and CEO of TWC and two independent,
non-employee directors who are not eligible to participate in any of the
executive compensation programs. Among its other duties, the Compensation
Committee is responsible for recommending to the full Board the annual
remuneration for all executive officers, including the Chief Executive Officer
and the other officers named in the Summary Compensation Table set forth above,
and to oversee the Corporation's compensation plans for key employees. The
Compensation Committee seeks to provide, through its administration of the
Corporation's compensation program, salaries that are competitive and
incentives that are primarily related to corporate performance. The components
of the compensation program are base salary and annual incentive bonuses.
Base salary is the fixed amount of total annual compensation paid to executives
on a regular basis during the course of the fiscal year. Management of the
Corporation determines a salary for each senior executive position that it
believes is appropriate to attract and retain talented and experienced
executives, and that is generally competitive with salaries for executives
holding similar positions at comparable companies. The starting point for this
analysis is each officer's base salary for the immediately preceding fiscal
year. From time to time, management will obtain reports from independent
organizations concerning compensation levels for reasonably comparable
companies. This information will be used as a market check on the
reasonableness of the salaries proposed by management. The comparator
companies will include a group of competitor companies whose revenue,
performance, and position matches are deemed relevant and appropriate.
Management will then recommend executive salaries to the Compensation
Committee.
The Compensation Committee reviews and adjusts the salaries suggested by
management as it deems appropriate, and generally asks management to justify
its recommendations, particularly if there is a substantial difference between
the recommended salary and an officer's compensation for the prior fiscal year.
In establishing the base salary for each officer (including that of the CEO),
the Compensation Committee will evaluate numerous factors, including the
Corporation's operating results, net income trends, and stock market
performance, as well as comparisons with financial and stock performance of
other companies, including those that are in competition with the Corporation.
In addition, data developed as a part of the strategic planning process, but
which may not directly relate to corporate profitability, will be utilized as
appropriate.
The Summary Compensation Table set forth elsewhere in this Proxy Statement
shows the salaries of the CEO and the other named executive officers.
Beginning in fiscal 1996, the Compensation Committee formally evaluates the
performance of the CEO.
The Corporation has an incentive compensation plan (the "Bonus Plan") for
officers and key employees. The aggregate amount of incentive compensation
payable under the Bonus Plan will be based on the Corporation's consolidated
revenue and income before provision for income taxes. The Bonus Plan is
intended as an incentive for executives to increase both revenue and profit and
uses these as factors in calculating the individual bonuses. The weighing for
these factors are 65% service profit and 35% revenue. An adjustment to the
incentive award (up to 20% upward or 80% downward) may be applied to reflect
individual performance. The Compensation Committee's decisions regarding the
amount of incentive compensation payable in a given year and the allocation
among the participants, will be based on these factors, the contribution of a
particular employee during the fiscal year and compliance with previously
agreed upon goals and objectives as outlined in the Corporation's strategic
plan. The Company also maintains a Stock Option Plan (the Plan) for executive
officers, including the CEO and other key employees. Participants receive
stock option grants based upon their overall contribution to the Corporation.
Such options are granted at market value at the time of grant and have variable
vesting periods in order to encourage retention.
The base salary and Bonus Plan components of compensation, will be implemented
by the above described policies, and will result in a compensation program that
the Compensation Committee believes is fair, competitive, and in the best
interests of the shareholders.
18
<PAGE> 20
By the Nominating and Compensation Committee
Benjamin R. Civiletti
Anthony P. Travisono
George R. Wackenhut
COMPARISON OF CUMULATIVE TOTAL RETURN*
WACKENHUT CORRECTIONS CORPORATION, WILSHIRE 5000 EQUITY,
AND S&P SERVICE (COMMERCIAL AND CONSUMER) INDEXES**
(Performance through December 31, 1996)
<TABLE>
<CAPTION>
July 26, 1994 December 31, 1994 December 31, 1995 December 31, 1996
<S> <C> <C> <C> <C>
Wackenhut Corrections Corporation 100 185 277 438
Wilshire 5000 Equity 100 102 139 168
S&P Services (Commercial and Consumer)** 100 97 131 135
</TABLE>
The above graph compares the performance of Wackenhut Corrections
Corporation with that of the Wilshire 5000 Equity, and the S&P Specialized
Services Index, which is a published industry index.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERVICE AGREEMENTS. The Corporation and Parent entered into a services
agreement (the "1994 Services Agreement") effective January 3, 1994 pursuant to
which Parent agreed to provide certain services to the Corporation through
December 31, 1995. The Corporation and Parent entered into a new services
agreement (the "1996 Services Agreement", and together with the 1994 Services
Agreement, the "Services Agreements") on December 20, 1995 which became
effective January 1, 1996, pursuant to which Parent has agreed to continue to
provide certain of these services to the Corporation through December 31, 1997.
In accordance with the terms of the 1994 Services Agreement, the Corporation
paid Parent a fixed annual fee for services (the "Annual Services Fee") equal
to $1,236,343 in fiscal 1994 and $1,069,073 in fiscal 1995. Under the 1996
Services Agreement as amended, the Corporation has agreed to pay Parent an
Annual Services Fee equal to $1,100,342 in fiscal 1996, and $1,200,342 in
fiscal 1997. Management of the Corporation believes that the Annual Services
Fees under the Services Agreements are on terms no less favorable to the
Corporation than could be obtained from unaffiliated third parties. If the
Corporation determines that it can obtain any of the services to which the
Annual Services Fees relate at a cost less than that specified in the Services
Agreements, the Corporation may obtain such services from another party and
terminate the provision of such services by the Parent with a corresponding
reduction in the Annual Services Fee.
19
<PAGE> 21
Under each of the Services Agreements, the services to be provided by Parent to
the Corporation for the Annual Services Fee include the following:
LEGAL SERVICES. Under each of the Services Agreements, Parent
provides legal advice on all matters affecting the Corporation, including,
among other things, assistance in the preparation of the Corporation's
Securities and Exchange Commission ("SEC") and other regulatory filings,
review and negotiation of joint venture and other contractual arrangements,
and provision of day-to-day legal advice in the operation of the
Corporation's business, including employee related matters.
FINANCIAL, ACCOUNTING, TAX AND GOVERNMENT CONTRACT MANAGEMENT
SERVICES. Under each of the Services Agreements, Parent provides the
Corporation with (i) cash management, (ii) support in the processing of
accounts payable, tax returns and payroll, (iii) conducting periodic
internal field audits, and (iv) purchasing assistance on an as needed basis.
Under the 1994 Services Agreement, Parent also provided the Corporation with
assistance in (i) deployment of new software for accounting and inmate
management, (ii) management and administration of its government contracts,
pricing proposals and responding to government inquiries and audits and
(iii) the preparation of accounting reports, financial projections, budgets,
periodic SEC filings and tax returns.
HUMAN RESOURCES SERVICES. Under Each of the Services Agreements,
Parent provides the Corporation assistance in the identification and
selection of employees and compliance by the Corporation with various equal
employment opportunity and other employment related requirements. Parent
also assists the Corporation in implementing and administering employee
benefit plans which comply with applicable laws and regulations.
Any services provided by Parent to the Corporation beyond the services covered
by the Annual Services Fees are billed to the Corporation at cost or on a cost
plus basis as described in each of the Services Agreements or on such other
basis as the Corporation and Parent agree. The 1994 Services Agreement
provided the Corporation the option to utilize the Parent's Domestic Operations
Group Food Services Division (the "Food Services Division") to (i) provide the
Corporation with technical assistance in the areas of equipment specifications,
kitchen layout and design, menu development, nutritional analysis and field
support and training (for services the Corporation has reimbursed Parent for
direct and indirect costs associated with providing such services), and (ii)
manage and operate the food services at certain of the Corporation's facilities
(for which the Corporation agreed to pay Parent a price established on a
negotiated basis which is no less favorable than the charges for comparable
services from unaffiliated third parties). Commencing in October 1995, the
Corporation ceased contracting with the Food Services Division of Parent to
obtain meals for inmates at all but two of the facilities it managed. Since
October 1995, the Corporation has provided meals for inmates at the facilities
it operates in accordance with regulatory, client and nutritional requirements.
The following table sets forth certain amounts billed to the Corporation during
fiscal 1994, fiscal 1995 and fiscal 1996, for services not covered by the
Annual Services Fee paid under the 1994 and 1996 Services Agreements.
<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1995 FISCAL 1996
=====================================================================================
<S> <C> <C> <C>
Food Services $ 4,146,000 $ 3,903,000 $ 450,000
Casualty Insurance Premiums (1) 1,393,000 2,169,000 3,306,000
Interest Charges (Income) (2) 166,000 (172,000) 40,000
Office Rental (3) 106,000 106,000 269,000
TOTAL $ 5,811,000 $ 6,006,000 $ 4,065,000
</TABLE>
20
<PAGE> 22
(1) Casualty insurance premiums relate to workers' compensation,
general liability and automobile insurance coverage obtained through
Parent's Insurance Program. Substantially, all of the casualty
insurance premiums represented premiums paid to a captive reinsurance
company that is wholly owned by Parent. Under the terms of each of the
Services Agreements, the Corporation also has the option to continue to
participate in certain other insurance policies maintained by Parent
for which the Corporation reimburses Parent for direct and indirect
costs associated in providing such services.
(2) The Corporation is charged interest on intercompany indebtedness
and charges interest on intercompany loans at rates that reflect
Parent's average interest costs on long-term debt, exclusive of
mortgage financing. Prior to the IPO, for purposes of computing
interest expense, it was assumed that debt represented 50% of the
Corporation's total capital.
(3) Effective January 3, 1994, the Corporation entered into a two-year
lease agreement with Parent providing for the rental of approximately
5,361 square feet of office space at its corporate headquarters in
Coral Gables, Florida at an annual rate of $106,400 ($19.84 per square
foot) plus certain common area maintenance charges (on terms which the
Corporation believes to be no less favorable to the Corporation than
could have been obtained from unaffiliated third parties). In 1995, the
Parent sold the office building and relocated its headquarters to Palm
Beach Gardens, Florida, in March 1996. The Corporation has relocated
its corporate offices to Parent's new headquarters. Effective
February 15, 1996, the Corporation entered into a 15-year agreement
with Parent providing for the rental of approximately 13,782 square
feet of office space at its new corporate headquarters in Palm Beach
Gardens, Florida, at an annual rate of $268,580 ($19.50 per square
foot) (on terms which the Corporation believes to be no less favorable
to the Corporation than could have been obtained from unaffiliated
third parties).
Management of the Corporation believes that the services provided for the
Annual Services Fees and the other services that will or may be provided under
each of the Services Agreements are, or will be, on terms no less favorable to
the Corporation than could have been obtained from unaffiliated third parties.
Under the terms of each Services Agreements, Parent has further agreed that for
so long as it provides the Corporation with any services (including those
provided under the Services Agreement) and for a period of two years
thereafter, Parent and its affiliates will not directly or indirectly compete
with the Corporation or any of its affiliates in the design, construction,
development or management of correctional or detention institutions or
facilities in the United States. Additionally, during the period described
above, Parent will not (and will use its best efforts to cause its affiliates
not to) directly or indirectly compete with the Corporation or any of its
affiliates in the design, construction, development or management of
correctional or detention institutions or facilities outside the United States.
Nevertheless, in the United States, Parent's North American Operations Group
may continue to bid for and perform any of the services that it currently
performs. These services include prisoner transit, court security services
and food services. The Corporation has also agreed that it will provide Parent
with the first opportunity to participate on a competitive basis as a joint
venture in the development of facilities outside the United States.
OTHER TRANSACTIONS AND RELATIONSHIPS. Prior to its IPO, the Corporation
borrowed money from time to time from the Parent for working capital and
general corporate purposes and was charged interest on the basis described
above. Upon consummation of its IPO, all outstanding indebtedness of the
Corporation to Parent was repaid.
From time to time, Parent has guaranteed certain obligations of the Corporation
and its affiliates. These guarantees remained in place following the IPO and
may be called upon should there be a default with respect to such obligations.
The Corporation anticipates that it may from time to time use the services of
the law firm of Venable, Baetjer & Howard, of which Mr. Benjamin R. Civiletti,
a Director of the Corporation, is a partner.
George C. Zoley, Vice Chairman of the Board and Chief Executive Officer of the
Corporation, also serves as Senior Vice President of TWC and a Director of each
of Wackenhut Corrections (U.K.) Limited, Wackenhut Corrections Corporation
Australia Pty Limited, Premier Prison Services, Ltd., Premier Custodial
Development, Ltd., Australasian
21
<PAGE> 23
Correctional Services Pty Limited, Australasian Correctional Management Pty
Limited, Wackenhut Corrections Canada, Inc., and WCC RE Holdings, Inc.,
affiliates of the Company. James P. Rowan, Secretary of the Corporation, also
serves as Vice President and General Counsel of the Parent. George R.
Wackenhut is Chairman of the Board of the Corporation, is Chairman of the Board
and Chief Executive Officer of Parent and, together with his wife Ruth J.
Wackenhut, through trusts over which they have sole dispositive and voting
power, control approximately 50.03% of the issued and outstanding voting common
stock of Parent. Parent owns all of the outstanding shares of Tuhnekcaw, Inc.,
a Delaware corporation which in turn owns approximately 54.69% of issued and
outstanding shares of Common Stock of the Corporation. Richard R. Wackenhut,
Chairman of the Board of Directors of the Corporation, also serves as President
and Chief Operating Officer of Parent, and is a Director of Wackenhut del
Ecuador, S.A., Wackenhut U.K. Limited, Wackenhut Dominicana, S.A., and a
Director of several domestic subsidiaries of Parent. He is the son of George
R. Wackenhut.
DIRECTOR'S COMPENSATION
Directors of the Corporation who are not Officers were paid during fiscal year
1996 an annual retainer fee at the rate of $20,000 per year plus $1,250 for
each Board Meeting attended, $500 for each committee meeting attended as
committee members, and $750 for each committee meeting attended as committee
chairmen. Each Director also receives from the Corporation an option to
purchase up to one thousand (1,000) shares of the Common Stock of the
Corporation.
No other compensation was paid to Directors or their affiliates by the
Corporation during 1996.
SECTION 16 FILING VIOLATIONS
All SEC Forms 3, 4 and 5 filings appear to have been made when due. Those
Directors and Officers not required to file a Form 5 for 1996 have furnished
the Corporation with a statement that no filing is due.
PROPOSAL NUMBER 2
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Although not required by the By-Laws, the Board of Directors, in the interest
of accepted corporate practice, asks shareholders to ratify the action of the
Board of Directors in appointing the firm of Arthur Andersen LLP to be the
independent certified public accountants of the Corporation for the fiscal year
1997, and to perform such other services as may be requested. If the
shareholders do not ratify this appointment, the Corporation s Board of
Directors will reconsider its action. Arthur Andersen LLP has advised the
Corporation that no partner or employee of Arthur Andersen LLP has any direct
financial interest or any material indirect interest in the Corporation other
than receiving payment for its services as independent certified public
accountants.
A representative of Arthur Andersen LLP, the principal independent certified
public accountants of the Corporation for the most recently completed fiscal
year, is expected to be present at the shareholders meeting and shall have an
opportunity to make a statement if he or she so desires. This representative
will also be available to respond to appropriate questions raised orally at the
meeting.
SHAREHOLDER PROPOSAL DEADLINE
Shareholder proposals intended to be presented at the April 28, 1998, Annual
Meeting of Shareholders must be received by the Corporation for inclusion in
the Corporation s proxy statement and form of proxy relating to that meeting by
December 1, 1997.
22
<PAGE> 24
OTHER MATTERS
The Board of Directors knows of no other matters to come before the
shareholders meeting. However, if any other matters properly come before the
meeting or any of its adjournments, the person or persons voting the proxies
will vote them in accordance with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS.
James P. Rowan
Vice President, General Counsel
and Secretary
March 21, 1997
================================================================================
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 29, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO, BUT EXCLUDING EXHIBITS THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE WITHOUT CHARGE TO
INTERESTED SHAREHOLDERS UPON WRITTEN REQUEST TO ROBERT P. HARWOOD, VICE
PRESIDENT, INVESTOR/PUBLIC RELATIONS, THE WACKENHUT CORPORATION, 4200 WACKENHUT
DRIVE #100, PALM BEACH GARDENS, FLORIDA, 33410-4243.
23
<PAGE> 25
APPENDIX A
WACKENHUT CORRECTIONS CORPORATION
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints George R. Wackenhut and George C. Zoley
as Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side,
all the shares of Common Stock of Wackenhut Corrections Corporation held of
record by the undersigned on March 10, 1997, at the Annual Meeting of
Shareholders to be held at the Embassy Suites Hotel, 4350 PGA Boulevard, Palm
Beach Gardens, Florida, at 9:00 A.M., April 24, 1997, or at any adjournment
thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE ABOVE INSTRUCTIONS. IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. ON ANY OTHER BUSINESS WHICH MAY
PROPERLY COME BEFORE THE MEETING, THE SHARES WILL BE VOTED IN ACCORDANCE WITH
THE JUDGEMENT OF THE PERSONS NAMED AS PROXIES.
(Continued, and to be signed, on other side.)
<TABLE>
<CAPTION>
The Board of Directors recommends a vote FOR Proposals 1 and 2.
Please Mark [X]
your votes as
indicated on
<S> <C> <C> <C> <C>
2. Proposal to approve for the
1. ELECTION OF DIRECTORS: Nominees: fiscal year 1997 the Appoint-
Norman A. Garrison Anthony P. Travisono ment of ARTHUR ANDERSEN LLP
VOTE FOR all nominees VOTE WITHHELD Benjamin R. Civiletti George R. Wackenhut as the independent certified
listed to the right (except as as to all nominees. Manuel J. Jualiz Richard R. Wackenhut public accountants of the
marked to the contrary). Floretta D. McKenzie George C. Zoley Corporation.
[ ] [ ] John F. Ruffie FOR AGAINST ABSTAIN
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote
for any individual nominee, strike a line 3. In their discretion, the
through the nominee's name in the list Proxies are authorized to vote
above. upon such other business as
may properly come before the
meeting.
Please date and sign exactly as name appears below.
Joint owners should each sign. Attorneys-in-fact,
Executors, Administrators, Trustees, Guardians, or
corporate officers should give full title.
Dated: _______________________________, 1997
____________________________________________
Signature
____________________________________________
Signature if held jointly
Please sign and return this Proxy in the accompanying addressed envelope.
</TABLE>
