UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 ¨☐
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Preliminary Proxy Statement | ||
Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material Pursuant to |
Corrections Corporation of AmericaCoreCivic, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required. | ||||
Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. | ||||
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Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(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. | ||||
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March 30, 201629, 2018
To our Stockholders:
You are invited to attend the 20162018 Annual Meeting of Stockholders of Corrections Corporation of AmericaCoreCivic, Inc. (the “Company”) to be held at 10:00 a.m., local time, on Thursday, May 12, 2016,10, 2018, at the Company’s corporate headquarters, 10 Burton Hills Boulevard, Nashville, Tennessee. The Notice of Annual Meeting and Proxy Statement, both of which accompany this letter, provide details regarding the business to be conducted at the meeting, as well as other important information about the Company.
Following the formal matters to be addressed at the meeting, stockholders will have the opportunity to ask questions about the Company.
If you wish to attend the meeting, you will need to request an admission ticket in advance. Instructions on how you can request an admission ticket are on page 2 of the Proxy Statement.
Along with the other members of the Board of Directors and management, we look forward to greeting you at the Annual Meeting if you are able to attend.
Sincerely,
Mark A. Emkes
Chairman of the Board of Directors
Damon T. Hininger
President and Chief Executive Officer
CORRECTIONS CORPORATION OF AMERICACORECIVIC, INC.
10 Burton Hills Boulevard
Nashville, Tennessee 37215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 12, 201610, 2018
The Annual Meeting of Stockholders of CoreCivic, Inc. (the “Annual Meeting”) will be held at 10:00 a.m., local time, on Thursday, May 12, 2016,10, 2018, at our corporate headquarters, 10 Burton Hills Boulevard, Nashville, Tennessee. At the Annual Meeting, stockholders will consider and act on the following items of business:
(1) | The election of the |
(2) | The ratification of the appointment by our Audit Committee of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
(3) | An advisory vote to approve the compensation of our |
(4) | Such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
We are pleased to take advantage of Securities and Exchange Commission (“SEC”) rules that allow issuers to furnish proxy materials to their stockholders over the internet. We believe these rules allow us to provide our stockholders with the information they need in a timely and convenient manner, while lowering the costs of delivery and reducing the environmental impact of our annual meeting.the Annual Meeting. Our Proxy Statement and Annual Report to Stockholders (including our Letter to Stockholders and 20152017 Annual Report on Form10-K) are available on our website at www.cca.com.www.corecivic.com. Additionally, and in accordance with SEC rules, you may access our proxy materials athttp://materials.proxyvote.com/22025Y21871N. You canmay request copies of the proxy materials, including our Proxy Statement, without charge by sending a written request to CCA,CoreCivic, Attention: Cameron Hopewell, Managing Director of Investor Relations, 10 Burton Hills Boulevard, Nashville, Tennessee 37215, or by calling Cameron Hopewell at(615) 263-3000.
Your vote is important. You may vote by internet or toll-free telephone. If you receive a copy of theour Proxy Statement and proxy statement and card by mail, you may vote by completing, signing and returning the proxy card in the accompanying postage-paid envelope. Please refer to the proxy card and the accompanying Proxy Statement for additional information regarding your voting options. Even if you plan to attend the Annual Meeting, please take advantage of one of the advance voting options to ensure that your shares are represented at the Annual Meeting. You may revoke your proxy at any time before it is voted by following the procedures described in the accompanying Proxy Statement.
Stockholders of record at the close of business on March 14, 201612, 2018 are entitled to vote at the Annual Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors, |
/s/ Scott D. Irwin |
Scott D. Irwin |
Executive Vice President, General Counsel and Secretary |
March 30, 201629, 2018
Nashville, Tennessee
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CORRECTIONS CORPORATION OF AMERICACORECIVIC, INC.
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 12, 201610, 2018
We are providing this Proxy Statement in connection with the solicitation by the Board of Directors or the Board,(our “Board”) of Corrections Corporation of America,CoreCivic, Inc., a Maryland corporation (the “Company,” “CCA,“CoreCivic,” “we” or “us”), of proxies to be voted at our 20162018 Annual Meeting of Stockholders and any adjournmentadjournments or postponement of the meetingpostponements thereof (the “Annual Meeting”).
On or about March 30, 2016,29, 2018, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be mailed to our stockholders as of the record date containing instructions on how to access this Proxy Statement, and the Annual Report to Stockholders (including our Letter to Stockholders and 20152017 Annual Report on Form10-K) and other proxy materials online, and how to vote. If you prefer to receive the proxy materials in the mail and to vote by mail, the Notice also contains instructions on how to request a printed copy. You will not receive printed copies of the proxy materials in the mail unless you specifically request them.
The Annual Meeting will take place on Thursday, May 12, 2016,10, 2018, at 10:00 a.m., local time, at our corporate headquarters, 10 Burton Hills Boulevard, Nashville, Tennessee. All stockholders who are entitled to vote at the meeting are invited to attend. Seating at the Annual Meeting is limited and will be available on a first come, first served basis.basis to stockholders who obtained an admission ticket in advance of the Annual Meeting. All stockholders of record will need to present an admission ticket and a form of personal photo identification in order to be admitted to the Annual Meeting. Instructions on how stockholders can request an admission ticket are provided on page 2 of the Proxy Statement under the heading “What do I need to attend the Annual Meeting?”. The Notice provides proof of ownership or, if your shares are held in the name of a bank, broker or other holder of record, you may bring a brokerage statement dated on or after March 14, 2016 as proof of ownership with you to the Annual Meeting. To obtain directions to attend the Annual Meeting and vote in person, please contact Cameron Hopewell, our Managing Director, Investor Relations, at 10 Burton Hills Boulevard, Nashville, Tennessee 37215, (615) 263-3000.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON THURSDAY, MAY 12, 2016.10, 2018.
The Company’s Proxy Statement and Annual Report to Stockholders (including our Letter to Stockholders and 20152017 Annual Report on Form10-K) are available on our website at www.cca.com.www.corecivic.com. Additionally, and in accordance with SEC rules, you may access our proxy materials athttp://materials.proxyvote.com/22025Y21871N..
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
What matters will be acted on at the Annual Meeting?
Stockholders are asked to consider and vote on the following matters at the Annual Meeting:
Proposal 1. | The election of | |
Proposal 2. | The ratification of the appointment by our Audit Committee of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, | |
Proposal 3. | An advisory vote to approve the compensation paid to our | |
Proposal 4. | Such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
As of the date of this Proxy Statement, we are not aware of any other matters that will be presented for action at the Annual Meeting.
Who is entitled to vote at the Annual Meeting?
Stockholders of record of our common stock at the close of business on the “record date” are entitled to receive notice of and to vote at the Annual Meeting. TheOur Board of Directors has fixed the close of business on March 14, 201612, 2018 as the record date.
As of the record date, there were 117,460,831118,543,632 shares of common stock outstanding and entitled to vote. Holders of common stock are entitled to one vote for each share of common stock held as of the record date on each matter to be voted on at the Annual Meeting.
What do I need to attend the Annual Meeting?
If you wish to attend the Annual Meeting, you must be a stockholder as of the March 14, 201612, 2018 record date. You must request an admission ticket in advance by visitingwww.proxyvote.com and following the instructions provided (you will need the 12 digit control number included on the Notice, your proxy card or voter instruction form or Notice)form). Tickets will be issued only to registered and beneficial owners.owners as of the record date. Stockholders who own shares as joint-tenants will be issued one ticket with both names on the ticket.
Requests for admission tickets will be processed in the order in which they are received and must be requestedreceived no later than May 11, 2016.9, 2018. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. On the day of the Annual Meeting, each stockholder will be required to present an admission ticket and valid picture identification such as a driver’s license or passport with their admission ticket.passport. No person will be admitted to the Annual Meeting without these credentials. Seating will begin at 9:15 a.m. local time and the Annual Meeting will begin at 10:00 a.m. local time.
Please note that cameras (including cell phones with photographic or video capabilities), recording devices and other electronic devices will not be permitted at the meeting.Annual Meeting.
What areHow does our Board recommend I vote on each of the Board of Directors’ recommendations?proposals?
Our Board of Directors recommends that you vote:
FOR the election of each of the 910 nominees to serve as directors on our Board of Directors.Board.
FOR the ratification of the appointment of Ernst & Young LLP.
FORthe approval, by anon-binding advisory vote, of the compensation paid to our named executive officers.Named Executive Officers.
If you submit a signed proxy card or submit your proxy by telephone or internet and do not specify how you want your shares voted, the proxy holder will vote your shares withaccording to the recommendations of theour Board of Directors set forth above. Further, if any other matter properly comes before the Annual Meeting or any adjournmentadjournments or postponementpostponements thereof, the proxy holders will vote as recommended by theour Board of Directors or, if no recommendation is given, in their own discretion.
Why did I receive athe Notice in the mail instead of a full set of printed proxy materials?
Pursuant to rules adopted by the SEC,Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. Accordingly, we are sending athe Notice regarding the internet availability of the proxy materials to most of our stockholders of record and beneficial
owners. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or to request to receive a printed set of proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice. In addition, stockholders may request receipt of proxy materials in printed form by mail or electronically bye-mail on an ongoing basis by following instructions set forth in the Notice.
You can vote either in person by attending the Annual Meeting or by proxy without attending(whether or not you attend the Annual Meeting.Meeting).
If you are a record holder, you can submit your vote by proxy in any of the following ways:
vote by internet (instructions are in the Notice you received in the mail or are on the proxy card);
vote by toll-free telephone (instructions are on the proxy card); or
if you requested and received printed copies of this Proxy Statement and Annual Report to Stockholders (including our Letter to Stockholders and 20152017 Annual Report on Form10-K) and other proxy materials, fillyou may vote by filling out the proxy card enclosed with the materials, date and sign it, and return it in the accompanying postage-paid envelope.
If a bank, broker or other nominee was the record holder of your stock on the record date, you will be able to instruct your bank, broker or other nominee on how to vote by following the instructions on the voting instruction form or the Notice that you receive from your bank, broker or other nominee. If you wish to vote in person at the Annual Meeting, you will need to present a valid proxy from your broker, bank or other nominee authorizing you to vote your shares at the Annual Meeting.
As a record holder, if you submit voting instructions by telephone or by the internet, you may change your vote by following the same instructions used in originally voting your shares. If your shares are held in the name of a broker, bank, trust or other nominee, you may change your voting instructions by following the instructions of your broker, bank, trust or other nominee. Attendance at the meetingAnnual Meeting will not by itself revoke a previously granted proxy.
Your vote is important. Whether or not you plan to attend the Annual Meeting in person, we urge you to submit your voting instructions to the proxy holders as soon as possible.
A “brokernon-vote” occurs when a broker, bank or other nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the broker, bank or other nominee does not have discretionary authority to vote the shares. Brokers, banks and other nominees do not have discretionary authority to vote on the election of directors to serve on our Board (Proposal 1) or the advisory vote to approve the compensation paid to our executive compensationNamed Executive Officers (Proposal 3). Thus, if you hold your shares in street name and do not provide voting instructions on these proposals to your broker, bank or other nominee, on these proposals, your shares will be considered to be brokernon-votes and will not be voted on such proposal.proposals. Shares that constitute brokernon-votes will be counted as present at the Annual Meeting for the purpose of determining a quorum, but will not be considered entitled to vote on the proposal in question.Proposal 1 or Proposal 3. Brokers, banks and other nominees generally have discretionary authority to vote on Proposal 2, the ratification of the selection of Ernst & Young LLP as our independent registered public accountants.accounting firm.
What vote is required to approve each proposal?
Quorum Requirement. The presence, in person or by proxy, of the Company’s stockholders entitled to cast a majority of the votes entitled to be cast at the Annual Meeting is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and brokernon-votes will be treated as shares present and entitled to vote for purposes of determining the presence of a quorum. Failure of a quorum to be represented at the Annual Meeting will necessitate an adjournment or postponement of the Annual Meeting, and will subject the Company to additional expense.
Election of Directors. Under the Company’s SeventhNinth Amended and Restated Bylaws (the “Bylaws”), adopted by theour Board in January 2016,December 2017, a majority of all of the votes cast at the Annual Meeting is required for the election of each nominee in an uncontested election of directors. A majority of votes cast means the number of shares cast “for” a nominee’s election exceeds the number of votes cast “against” that nominee. Brokers do not have discretionary authority to vote on the election of directors. Abstentions and brokernon-votes will have no effect on the outcome of the vote of the election of directors as they are not considered votes cast.
Director nominees in contested elections will continue to be elected by plurality vote. An election will be considered contested if conducted at a meeting at which a stockholder has nominated an individual for election for director in compliance with the advance notice requirements set forth in the Bylaws, and such stockholder nomination has not been withdrawn on or prior to the tenth day preceding the date the Company first mails its notice of such meeting to the stockholders.
If a director nominee is an incumbent director and does not receive a majority of the votes cast in an uncontested election, that director will continue to serve on theour Board as a “holdover” director, but must tender his or her resignation to theour Board promptly after certification of the election results of the stockholder vote. The Nominating and Governance Committee of theour Board will then recommend to theour Board whether to accept the resignation or whether other action should be taken. TheOur Board will act on the tendered resignation, taking into account the recommendation of theour Nominating and Governance Committee, and theour Board’s decision will be publicly disclosed within 90 days after certification of the election results of the stockholder vote. A director who tenders his or her resignation after failing to receive a majority of the votes cast will not participate in the recommendation of theour Nominating and Governance Committee or the decision of theour Board with respect to his or her resignation.
Ratification of Ernst & Young LLP. The affirmative vote of the holders of a majority of votes castthe shares present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve the ratification of the appointment of Ernst & Young LLP as the Company’sour independent registered public accounting firm for the fiscal year ending December 31, 2016.2018. If the Company’sour stockholders do not ratify the appointment of Ernst & Young LLP, theour Audit Committee will reconsider the appointment and may affirm the appointment or retain another independent accounting firm. If the appointment is ratified, theour Audit Committee may in the future replace Ernst & Young LLP as our independent registered public accounting firm if it is in the Company’sour best interest to do so. Abstentions and broker non-votes will not be counted as “for” or “against” the ratification and thus will have no effect on the proposal. Because brokers have discretionary authority to vote on the ratification of auditor,the selection of Ernst & Young LLP as our independent registered public accountants, we do not expect any brokernon-votes in connection with this proposal. If you abstain from voting on this proposal, your abstention will have the same effect as a vote against the proposal.
Advisory Vote on Executive Compensation. The affirmative vote of the holders of a majority of votes castthe shares present in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve thenon-binding advisory vote of compensation paid to our named executive officers.Named Executive Officers. Because your vote is advisory, it will not be binding on theour Board of Directors or the Company. However, theour Board of Directorsand our Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation paid by the Company to its named executive officers. Abstentions and broker non-votes will not be counted as “for” or “against” the approval of our advisory voteNamed Executive Officers. If you abstain from voting on executive compensation and thusthis proposal, your abstention will have nothe same effect on thisas a vote against the proposal.
Where can I find the Annual Meeting voting results?
We will announce the voting results at the Annual Meeting. We also will report the voting results on a Form8-K, which we expect to file with the SEC within four business days after the Annual Meeting has been held.
How and when may I submit a stockholder proposal for the Company’s 20172019 Annual Meeting?
Our annual meeting of stockholders generally is held in May of each year. Consistent with applicable SEC rules, we will consider for inclusion in our proxy materials for next year’s annual meeting stockholder proposals that are actually received at our executive offices no later than December 2, 2016November 29, 2018 and that comply with other SEC rules regarding form and content. Proposals must be sent to the following address: CCA,CoreCivic, Attention: Secretary, 10 Burton Hills Boulevard, Nashville, Tennessee 37215.
Other stockholder proposals may be raised at next year’s annual meeting (but not considered for inclusion in our proxy materials) if timely received and otherwise in compliance with the advance notice provisions of our Bylaws. In order to be timely, notice must be actually received at our executive offices (the address listed above) between February 13, 20178, 2019 and March 13, 2017.11, 2019.
How can I obtain the Company’s Annual Report on Form10-K?
Any stockholder who desires a copy of our Annual Report on Form10-K for the year ended December 31, 2015,2017, as filed with the SEC, may obtain a copy without charge by visiting our website, www.cca.com.www.corecivic.com. A copy of our Annual Report on Form10-K can also be obtained, free of charge, upon written request to theCoreCivic, Attention: Cameron Hopewell, Managing Director of Investor Relations, Corrections Corporation of America, 10 Burton Hills Boulevard, Nashville, Tennessee 37215.
What are the costs of soliciting these proxies?
The Company pays the cost of soliciting proxies. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, custodians and other like parties to the beneficial owners of shares of our common stock, in which case we will reimburse these parties for their reasonableout-of-pocket expenses. Proxies may also be solicited personally or by telephone,e-mail or faxfacsimile by directors, officers and employees of the Company. No additional compensation will be paid for these services.
How many copies of the Notice and proxy materials should I receive if I share an address with another stockholder?
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single copy of the Notice and, to the extent requested, a single set of proxy materials addressed to those stockholders. This process, which is commonly referred to as
“householding, “householding,” potentially provides extra convenience for stockholders and cost savings for companies. The Company and some brokers household proxy materials unless contrary instructions have been received from the affected stockholders. Once
you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If at any time you no longer wish to participate in householding and would prefer to receive a separate copy of the Notice or, to the extent requested, set of proxy materials, or if you are receiving multiple copies of proxy materials and wish to receive only one, please notify your broker if your shares are held in a brokerage account or our transfer agent, identified below, if you hold registered shares. You canmay also notify us by sending a written request to CCA,CoreCivic, Attention: Cameron Hopewell, Managing Director of Investor Relations, 10 Burton Hills Boulevard, Nashville, Tennessee 37215, or by calling Cameron Hopewell at(615) 263-3000.
Whom should I contact if I have any questions?
If you have any questions about the Annual Meeting or these proxy materials, please contact Cameron Hopewell, our Managing Director of Investor Relations, at 10 Burton Hills Boulevard, Nashville, Tennessee 37215,(615) 263-3000. If you are a registered stockholder and have any questions about your ownership of our common stock, please contact our transfer agent, the American Stock Transfer and Trust Company, at 6201 15th Avenue, Brooklyn, New York 11219,(800) 937-5449, or Cameron Hopewell, Managing Director of Investor Relations, at the address and phone number above. If your shares are held in a brokerage account, please contact your broker.
We believe that effective corporate governance is important to our long-term healthsuccess and our ability to create value for our stockholders. With leadership from our Nominating and Governance Committee, our Board of Directors regularly evaluates regulatory developments and trends in corporate governance to determine whether our policies and practices in this area should be enhanced. TheOur Nominating and Governance Committee also administers an annual self-evaluation process for theour Board of Directors and its standing committees. In addition, our directors are encouraged to attend director education programs, which are reimbursed by the Company.
You can access our current corporate charter, Bylaws, Corporate Governance Guidelines, Board committee charters, Code of Ethics and Business Conduct and certain other corporate governance information on our website, www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
Mr. FergusonMessrs. Hininger and Mr. HiningerLappin are the only members of the Board of Directors who currentlynot independent directors because they are employed by the Company and are thus not independent, and as we announced in February 2015, Mr. Ferguson has announced his intention to retire from the Board and will not stand for re-election at the Annual Meeting. TheCompany. Our Board has determined that all of our other directors are independent. Accordingly, 9eight of our 1110 current directors and 8 of our 9 director nominees are independent and ourindependent. Our Audit, Risk, Compensation and Nominating and Governance Committees are composed entirely of independent directors. In making its independence determinations, theour Board used the requirements and standards for director independence set forth inprescribed by the New York Stock Exchange (“NYSE”) corporate governance listing standards (Section 303A) and with respect to Audit Committee members, Section 10A(m)(3) of the Securities Exchange Act of 1934.SEC, and considers all relevant facts and circumstances.
Separation of Chairman and Chief Executive Officer
We do not have a formal policy regarding the separation of our Chairman of the Board of Directors (our “Chairman”) and Chief Executive Officer (“CEO”) positions. In general, theour Board of Directors believes that the determination depends on the circumstances, including the Board of Directors’our Board’s evaluation of the person or persons available to serve in those positions and the needs of the Company at a particular time.
Pursuant to our Bylaws, theour Chairman presides over meetings of theour Board of Directors and meetings of the stockholders at which he or she is present, and has general oversight responsibility for our business and affairs. TheOur CEO has responsibility for implementation of the policies of the Company, as determined by theour Board, of Directors, and for the administration of our business affairs. TheOur CEO also has responsibility for presiding over any meeting of theour Board of Directors or of the stockholders at which theour Chairman is not present.
Since October 2009, the roles of Chairman and CEO have been held separately. John D. FergusonMark A. Emkes currently serves as executiveour Chairman, of the Board of Directors and is an employee of the Company, while Damon T. Hininger serves as our President and CEO. Prior to October 2009, Mr. Ferguson served as our CEO. Mr. Ferguson has previously announced his intention to retire from theOur Board and is not standing for re-election at the Annual Meeting. The Board reviewed and discussed the Board leadership structure and the specific role and responsibilities of the Chairman of the Board and in February 2016 appointed Mr. Emkes to serve as Chairman of the Board, effective as of Mr. Ferguson’s retirement at the Annual Meeting.
The Board of Directors believes that the Company’s leadership structure is appropriate. Having Mr. Hininger serve as President and CEO, while Mr. Emkes will serveserves as independentour Chairman, helps us achieve important objectives. Mr. Hininger is positioned to fully focus his energies on implementing our business strategy and administering ourday-to-day affairs. Mr. Emkes will beis positioned to draw on his relationships with existing Board members and his past experience to effectively discharge the duties of Chairman, while also serving as a resource to Mr. Hininger. TheOur Board of Directors considers many factors when determining how to best select theour Chairman, including: familiarity with the Company and its business, proximity in location to the Company’s headquarters, experience as a leader and consensus builder, willingness and availability to dedicate sufficient time to the Company and experience working with other public companies.
Executive Sessions of our Board
Executive sessions of our Board, or meetings of our non-managementindependent directors without management present, are held periodically in order to provide an opportunity for the outside directors to discuss openly any and all matters. During 2015, the outside directors met in executive session two (2) times. Our Corporate Governance Guidelines provide that Executiveexecutive sessions of our Board are called and chaired by an independent director appointed from time to time by theour Nominating and Governance Committee. Joseph V. RussellMark A. Emkes currently serves as the Executiveexecutive session chair; Charles L. Overby served in such role until Mr. Russell’s appointment in May 2015.chair.
Board of Directors Meetings and Committees
Our Board of Directors is responsible for establishing the Company’sour broad corporate policies and strategic objectives, reviewing our overall performance and overseeing management’s performance. Among other things, theour Board of Directors selects and evaluates our executive officers, establishes, reviews and approves our corporate objectives and strategies and evaluates and approves major acquisitions and capital commitments.
TheOur Board of Directors currently consists of 11 members, 910 directors, all of whom are standing for re-electionelection at the Annual Meeting and are identified, along with their biographical information, under “Proposal 1—Election of Directors.”Directors” beginning on page16 of this Proxy Statement.
TheIn 2017, our Board of Directors met fivefour times in 2015.regular session, and our independent directors met eight times in executive session. It is customary for our independent directors to meet in executive session prior to, and following the conclusion of, regular meetings of our Board. Each director attended at least 75% of the total number of meetings of theour Board of Directors and of the meetings held by all board committees of our Board on which such director served. The Board of Directors has adopted as its policyOur Corporate Governance Guidelines provide that all directors are strongly encouragedexpected to attend each annual meeting of stockholders. All of the directors attended last year’s annual meeting of stockholders.
Our Board of Directors has five regularly standing committees: the Audit, Compensation, Nominating and Governance, Risk and Executive Committees. The Risk Committee was first established in August 2015. Each regularly standing committee has a written charter that has been approved by the committee, the Nominating and the Board of DirectorsGovernance Committee and thatour Board. Each committee charter is reviewed at least annually. Our Board and its committees may act by unanimous written consent without convening a meeting, and our Board appoints and delegates certain duties to special committees from time to time as permitted by our Bylaws. The table below shows the current composition of each of our regularly standing Boardand special committees as of the date of this Proxy Statement, together with a summary of each committee’s responsibilities and the number of meetings each committee held in 2015. The Board of Directors and its committees also act by unanimous written consent and the Board of Directors appoints and delegates certain duties to special committees of the Board from time to time as permitted by the Bylaws of the Company.2017. A more complete description of theeach standing committeescommittee follows the table.
Committee | Members | Summary of Responsibilities | Meetings | |||
Audit |
Donna M. Alvarado Anne L. Mariucci
| Responsibilities include oversight of the integrity of our financial statements; | 5 | |||
Compensation |
Mark A. Emkes John R. Prann, Jr.
| Responsibilities include setting executive officer compensation and overseeing the evaluation of the executive officers’ performance, and periodically reviewing and approving the Company’s compensation philosophy regarding executive compensation. | 5 | |||
Nominating and Governance | Charles L. Overby (Chair)
Mark A. Emkes Stacia A. Hylton Thurgood Marshall, Jr.
| Responsibilities include identifying and recommending director nominees to the full Board and taking a leadership role in shaping and evaluating the Board’s corporate governance initiatives. | 4 |
Committee | Members | Summary of Responsibilities | 2017 Meetings | |||
Risk | Thurgood Marshall, Jr. (Chair) Donna Alvarado Anne Mariucci Charles L. Overby | Responsibilities include coordinating the Board’s oversight of the Company’s risk assessment and enterprise risk management practices, | ||||
Executive |
Robert J. Dennis Damon T. Hininger
| When necessary, and subject to authority limitations with respect to significant corporate actions, responsible for acting on behalf of the full Board during intervals between Board meetings. | ||||
Special Litigation Committee | Stacia A. Hylton (Chair) Thurgood Marshall, Jr. Charles L. Overby | In response to stockholder demand letters our Board formed a Special Litigation Committee in 2016. | 2 |
Audit Committee
Our Audit Committee is charged with:responsible for:
overseeing the integrity of our financial statements;
reviewing the effectiveness of our internal control over financial reporting;
supervising our relationship with our independent registered public accounting firm, including making decisions with respect to the appointment or removal, fees, scope of audit services, approval of audit andnon-audit services and annual evaluation of the audit firm’s independence;
monitoring preparation by our management of quarterly and annual financial reports and interim earnings releases and the performance of our internal audit function;
reviewing of Management’s Discussion and Analysis of Financial Condition and Results of Operations prior to the filing of our periodic reports with the SEC;
overseeing management’s implementation and maintenance of effective systems of internal accounting and disclosure controls, including review of our internal auditing program;
overseeing and making determinations with respect to our Related Party Transaction policy; and
issuing the Report of the Audit Committee Report in this proxy.Proxy Statement.
TheOur Board has determined that each member of theour Audit Committee is independent as defined by the standards of the NYSE and Rule10A-3 under the Securities Exchange Act of 1934. The1934, as amended (the “Exchange Act”). Our Board also has determined that each member is “financially literate” as defined by the rules of the NYSE, and that Mr. Jacobieach of Ms. Mariucci and Mr. Prann each areis qualified as an “audit committee financial expert” as defined in Item 407(d) of RegulationS-K under the Securities Exchange Act of 1934.Act. The full text of the Audit Committee charter is available on the Company’s website at www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page). The Audit Committee was formerly known as the Audit and Risk Committee. In August 2015, as a result of its regular evaluation of the responsibilities of its committees, our Board amended the responsibilities of the committee in its charter to refine and confirm its leadership role in oversight of audit matters specifically, renamed the committee the Audit Committee to reflect these changes and created a new committee, the Risk Committee, to oversee the coordination of the Board’s oversight of risk assessment and management. The Risk Committee is further discussed below.
Compensation Committee
TheOur Compensation Committee approves the compensation of our CEO and other executive officers, including annually reviewing and approving corporate goals and objectives relevant to their compensation. TheOur Compensation Committee is responsible for ensuring that our compensation programs are designed to encourage high performance, promote accountability and adherence to Company values and align with the interests of our stockholders. TheOur Compensation Committee responsibilities include administration of cash and equity-based incentive compensation plans and stock ownership guidelines, evaluation of the performance of the executive officers and assessment of the material risks of our compensation programs. TheOur Compensation Committee is also responsible for reviewing, and making recommendations to theour Board regarding, the compensation of our Board of Directors.Board.
The Board has determined that each member of the Compensation Committee is independent as defined by the standards of the NYSE. We intend that each member also qualifies as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code and as “non-employee director” within the meaning of the SEC’s Rule 16b-3. The full text of the Compensation Committee charter is available on the Company’s website at www.cca.com (under the “Corporate Governance” section of the Investors page).
TheOur Compensation Committee has retained PricewaterhouseCoopers LLP or PwC,(“PwC”) as its independent compensation consultant since 2000, to provide the committee with advice and guidance on the design and market competitiveness of the Company’sour executive compensation programs. PwC works directly with the chair of theour Compensation Committee and, as directed by the chair of theour Compensation Committee, with our Chief Executive Officer.CEO and other senior executives. In 2015,2017, PwC was retained by the Company to provide certainasset valuation services forwith respect to which PwC was paid an aggregate amount of fees paid for such services equal to approximately $176,000.$75,000. PwC was also paid an aggregate amount of approximately $34,000$22,000 for consulting with theour Compensation Committee on compensation matters. The valuation services were used in connection with the Company’s REIT qualification testing.testing and certain acquisitions. PwC has annually performed valuation services in anticipation of, and since, our initial conversion to a REIT. The decision to hire PwC for these services was made by management based on PwC’s experience and familiarity with the Company. Management reviews and obtains approval fromof the chair of theour Compensation Committee prior to engaging PwC for these services. Each year theour Compensation Committee reviews the independence of the compensation consultants and other advisors who provide advice to theour Compensation Committee, employing the independence factors specified in the NYSE listing standards. In its annual review of the independence of PwC in 2015, the2017, our Compensation
Committee reviewed management’s retention of PwC for the other services. TheOur Compensation Committee has determined that PwC is independent within the meaning of the NYSE listing standards, and the work ofperformed by PwC for the Company does not raise any conflicts of interest. In 2015,2017, PwC assisted theour Compensation Committee by providing the following compensation consulting services:
performing a comprehensive review of our executive compensation program;
assessing our board of directors;current peer group and selection methodology;
recommending companies for inclusion in our 2017 peer group; and
assistance in preparing our annual proxy statement.
Compensation Committee Interlocks and Insider Participation
Our Board has determined that each of Donna Alvarado, (Chair), Robert Dennis, Mark Emkes and John R. Prann, Jr., who comprise all members of our Compensation Committee is independent as defined by the listing standards of the NYSE. In addition, there are no relationships among our executive officers, members of our Compensation Committee or entities whose executives serve on our Board or our Compensation Committee that require disclosure. Each member also qualifies as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and as a“non-employee director” within the meaning of the SEC’sRule 16b-3. The full text of the Compensation Committee charter is available on the Company’s website atwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
Nominating and Governance Committee
TheOur Nominating and Governance Committee is responsible for developing and overseeing theour Board’s Corporate Governance Guidelines, and a code of conduct applicable to members of the Board and for monitoring the independence of theour Board. TheOur Nominating and
Governance Committee also determines Board membership qualifications,qualifications; selects, evaluates and recommends to the Board nominees to fill vacancies as they arise,arise; reviews the performance of theour Board and its committeescommittees; and is responsible for director education. Other responsibilities include oversight of theour Board’s self-evaluation process and leading theour Board’s executive succession planning efforts. TheOur Board has determined that each member of theour Nominating and Governance Committee is independent as defined by the listing standards of the NYSE. The full text of the Nominating and Governance Committee charter is available on the Company’s website at www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
TheOur Nominating and Governance Committee is authorized by our Board to identify director candidates; evaluate and consider candidates proposed by any director, member of management or stockholder; develop and implement screening processes it deems necessary and appropriate; and recommend for selection by our Board director nominees for each annual meeting of stockholders and, when necessary, vacancies on the Board. Our Nominating and Governance Committee is authorized by our Board to exercise sole authority in retaining any third-party search firm our Nominating and Governance Committee deems appropriate to identify and assist with the evaluation of director candidates; and has utilized that authority in past director searches.
Our Nominating and Governance Committee may utilize a variety of methods for identifying nominees for director. Candidates may come to the attention of theour Nominating and Governance Committee through current Board members, stockholders, members of management, director search firms and other persons. A stockholder who wishes to recommend a prospective nominee for theour Board should notify our Secretary in writing, along with any supporting material the stockholder considers appropriate, in accordance with the stockholder proposal provisions of our Bylaws. General information concerning the submission of stockholder proposals is provided above under the caption “How and when may I submit a stockholder proposal for the Company’s 20172019 Annual Meeting?”. Pursuant to Board policy, there are to be no differences in the manner in which theour Nominating and Governance Committee evaluates candidates based on the source of the recommendation.
The Nominating and Governance Committee is authorized by the Board to identify director candidates, evaluate and consider candidates proposed by any director, member of management or stockholder, develop and implement screening processes it deems necessary and appropriate and recommend for selection by the Board director nominees for each annual meeting of stockholders and, when necessary, vacancies on the Board. The Committee is authorized by the Board to exercise sole authority in retaining any third-party search firm the Committee deems appropriate to identify and assist with the evaluation of director candidates and has utilized that authority in past director searches.
TheOur Nominating and Governance Committee evaluates prospective nominees against the criteria in our Corporate Governance Guidelines, which include professional integrity and sound judgment,judgment; sufficient time available to devote to Board activities,activities; a general understanding of marketing, finance and other elements relevant to the success of a publicly-traded company in today’s business environment,environment; an understanding of our businessbusiness; and factors such as diversity, age, skills and educational and professional background. With respect to diversity, theour Nominating and Governance Committee considers diversity in terms of age, gender and ethnicity, as well as diversity of skills, expertise and experience, in its deliberations.
TheOur Nominating and Governance Committee may also consider other factors it deems relevant, including the current composition of theour Board in terms of independence, expertise, experience and special knowledge required for the effective discharge of Board responsibilities,responsibilities; whether there is a need to fill vacancies or expand or contract the size of the Board,Board; the balance of management and independent directors,directors; the structure, membership and need for expertise on our standing committeescommittees; and the qualifications of other prospective nominees. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.
With respect to determining whether current directors should stand forre-election, the our Nominating and Governance Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of theour Board and the Company. With respect to new candidates for Board service, a full evaluation may also include detailed background checks andin-person and telephonic interviews with theour Nominating and Governance Committee and other Board members. TheOur Nominating and Governance Committee evaluation process culminates with a decision as to whether or not to recommend the prospective nominee to the full Board for appointment and/or nomination.
Risk Committee
The Risk Committee was created in August 2015 after the Board had previously combined the responsibilities of risk oversight with the formerly-named Audit and Risk Committee, now called the Audit Committee. TheOur Risk Committee is charged with coordinating theour Board’s oversight of the Company’s riskour assessment and risk management practices (including our enterprise risk management program) and the Company’sour legal, regulatory (including the special rules applicable to REITs) and contract compliance (particularly contracts with government entities). TheOur Risk Committee is also responsible for monitoring and reviewing public policy developments and other trends facing the Company that could impact the Company’s operationour operations and performance. TheOur Risk Committee further assists theour Board of Directors in fulfilling its oversight responsibility with respect to organizational ethics and compliance, and receives regular reports from the Company’sour Corporate Ethics and Compliance Officer, who reports to the Chief Executive OfficerCEO, and to the chair of theour Risk Committee. The full text of the Risk Committee charter is available on the Company’s website at www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
Executive Committee
TheOur Executive Committee is charged with acting on behalf of the full Board when necessary and subject to authority limitations with respect to the transaction of routine, administrative matters that occur between regularly scheduled Board meetings. The full text of the Executive Committee charter is available on the Company’s website at www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
Special Litigation Committee
In response to stockholder demand letters, our Board formed a Special Litigation Committee to take any actions it deems appropriate or necessary to investigate, respond and otherwise properly address the matters alleged in the demand letters. The Special Litigation Committee has retained independent legal counsel to advise the committee in the performance of its duties.
Limitations on Other Board Service
The Audit Committee charter provides that a member of theour Audit Committee may not serve on the audit committee of more than two other public companies without Board approval. Otherwise, we do not believe that our directors should be categorically prohibited from serving on boards and/or board committees of other organizations. However, our Corporate Governance Guidelines instruct theour Nominating and Governance Committee and the fullour Board to take into account the nature of and time involved with respect to a director’s service on other boards, as well as other job responsibilities, in evaluating the suitability of individual directors and in making its recommendations to our stockholders. Service on boards and/or committees of other organizations must also be consistent with our conflicts of interest policy, as set forth in our Code of Ethics and Business Conduct, which, among other things, requiresEthics. Our Corporate Governance Guidelines require a director to provide notice to the BoardChair of our Nominating and Governance Committee of his or her acceptance of a nomination to serve on the board of another public company.company in the case where such nomination has not been previously disclosed.
Stockholders, employees and other interested parties may communicate with members of our Board of Directors (including specific members of theour Board or non-managementour independent directors as a group) by writing to CCA,CoreCivic, Attention: Secretary, 10 Burton Hills Boulevard, Nashville, Tennessee 37215. To the extent such communications are received, our Secretary compiles all substantive communications and periodically submits them to theour Board, the group of directors or the individual directors to whom they are addressed. Communications that the Secretary would not consider “substantive,” and therefore may exercise discretion in submitting to the addressee, may include junk mail, mass mailings, resumes and job inquiries, surveys, business solicitations, advertisements, frivolous communications and other similarly unsuitable communications.
Communications expressing concerns or complaints relating to accounting, internal controls or auditing matters are handled in accordance with procedures established by theour Audit Committee. Under those procedures,
concerns that are improperly characterized as having to do with accounting, internal controls or auditing matters or that are frivolous or clearly inconsequential may be addressed by the Secretary without presentation to theour Audit Committee. However, in all cases the Secretary maintains a log of correspondence addressed to directors that may be reviewed by any director at his or her request.
Certain Relationships and Related Party Transactions
Since the beginning of the last fiscal year, we are aware of no related party transactions between us and any of our directors, executive officers, 5% stockholders or their family members whichthat require disclosure under Item 404 of RegulationS-K under the Securities Exchange Act of 1934.Act.
Pursuant to its written charter, theour Audit Committee has adopted a Related Party Transaction Policy that, subject to certain exceptions, requires theour Audit Committee (or the chair of theour Audit Committee in certain instances) to review and either ratify, approve or disapprove all “Interested Transactions,” which are generally defined to include any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which:
the aggregate amount involved exceeded, or will or may be expected to exceed, $120,000 in any calendar year;
any Related Party had, has or will have a direct or indirect interest.
For purposes of the policy, a “Related Party” is any:
person who is or was (since the beginning of the last fiscal year for which the Company has filed aan Annual Report on Form10-K and proxy statement, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director;
greater than 5% beneficial owner of the Company’s common stock;
immediate family member of any of the foregoing; or
firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner, managing member or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.
In determining whether to approve or ratify an Interested Transaction under the policy, theour Audit Committee is to consider all relevant information and facts available to it regarding the Interested Transaction and take into account factors such as the Related Party’s relationship to the Company and interest (direct or indirect) in the transaction, the terms of the transaction and the benefits to the Company of the transaction. No director is to participate in the approval of an Interested Transaction for which he or she is a Related Party or otherwise has a direct or indirect interest.
In addition, theour Audit Committee is to review and assess ongoing Interested Transactions, if any, on at least an annual basis to determine whether any such transactions remain appropriate or should be modified or terminated.
Since 2007, we have maintainedWe maintain stock ownership guidelines (the “Guidelines”) for our executive officers andnon-executive directors because we believe it is important to align the interests of our management and our Board with the interests of our stockholders. Under theThe guidelines are discussed in detail under “Executive and Director Compensation – Guidelines our executive officers are expected to own a fixed number of shares of Company common stock equal to three times such executive officer’s base salary in effect as of the date of their hiring or promotion, divided by the Company’s closing common stock price on such date. Our non-executive directors are expected to own a fixed number of shares of Company common stock equal to four times their annual Board retainer (excluding any retainer for chairing or serving on a committee) in effect on March 1, 2007 or on the date of their later initial election or appointment to the Board, divided by the Company’s closing common stock price on such date.and Policies – Executive officers and directors serving on the Board at the time these Guidelines were adopted were required to achieve these ownership levels by March 1, 2012 and all others have until five years following their initial hiring or promotion as an executive officer, or election or appointment to the Board, as applicable, to satisfy the Guidelines. The Guidelines are further discussed under “StockOfficer Stock Ownership Guidelines” in the Compensation Discussion and Analysis“Executive and the Director Compensation sections of– Director Compensation – Directors Stock Ownership Guidelines” included in this proxyProxy Statement and are accessible on our website, www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
No Hedging or Pledging Permitted
Our insider trading guidelines include provisions that prohibit members of our Board, executive officers, and other officers and employees from engaging in hedging or pledging transactions involving Company securities. None of the members of our Board or our executive officers are engaged in any hedging or pledging transactions involving Company securities.
Code of Ethics and Business Conduct
All of our directors and employees, including our Chief Executive Officer,CEO, Chief Financial Officer and principal accounting officer, are subject to our Code of Ethics and Business Conduct.Ethics. Our Code of Ethics and Business Conduct and related compliance policies are designed to promote an environment in which integrity is valued, business is conducted in a legal and ethical manner and ethics and compliance issues are raised and addressed. Our Nominating and Governance Committee is responsible for reviewing theour Code of Ethics annually, and our Risk Committee is responsible for addressing any violations or waivers involving our executive officers and directors. We intend to post amendments to or waivers from our Code of Ethics and Business Conduct (to the extent applicable to our directors, chief executive officer,CEO, principal financial officer or principal accounting officer) on our website. Our Code of Ethics and Business Conduct is accessible on our website, www.cca.comwww.corecivic.com (under the “Corporate Governance” section of the Investors page).
Board Oversight of Corporate Strategy and Enterprise Risk Oversight
As discussed above,Our Board engages in proactive oversight and regular review of the development, evaluation and execution of our annual operating plan and long-term growth, diversification and investment strategies. Each regular meeting of our Board includes a comprehensive business update presented by our CEO, which addresses our progress in achieving near-term operational objectives, strategic transactions completed and new opportunities being actively pursued, as well as current and future challenges to our continued success. Each such meeting also includes presentations from members of the executive team who are directly responsible for the implementation of our growth and diversification strategy, the integration of new acquisitions and the financial performance of our business. At our Board’stwo-day retreat in August, 2015, as a result of its regular evaluation of the responsibilities of its committees,management engages our Board createdin a detailed discussion of our growth and investment strategy, target opportunities, risks and challenges, and proposals for modifying our strategies to improve results. At its December meeting, our Board is provided the “Risk Committee” which hasopportunity to challenge management on the details of our annual operating plan prior to its approval. In addition to the opportunity to engage management and independent consultants we retain to assist with the development and execution of our growth strategy, our independent directors set aside time at each meeting to meet in executive session to review and deliberate upon management’s performance in strategy development and execution.
Our Risk Committee performs a leadership role on behalf of theour Board and our Audit Committee in the oversight of our risk assessment and risk management practices, and assists theour Board and Audit Committee with oversight of our financial, legal, contractual and regulatory risks and organizational ethics and compliance. TheOur Risk Committee is also charged with oversight of management’s enterprise risk management (“ERM”) program.
Management’s ERM program entails the identification, prioritization and assessment of a broad range of risks (e.g., financial, operational, business, reputational, governance and managerial), and the formulation of plans to managedevelop and improve controls for managing these risks or mitigatemitigating their effects in an integrated effort involving theour Board, relevant Board committees, management and other personnel. TheOur ERM program is led by our General Counsel, and is a component of management’s strategic planning process and is overseen by theour Risk Committee with periodic reports to the full Board.
The full Board maintains an ongoing, direct role in risk oversight through, among other things, regular reports from the Chair of theour Risk Committee, regular reports from our Chief Executive OfficerCEO on the ERM process and oversight of management’s strategic planning process, which includes an evaluation of opportunities and risks presented by the Company’s current strategies and alternative strategies. TheOur Board also receives regular reports from each of
the executives with respect to their areas of managerial responsibility. These reports include information concerning risks and risk mitigation strategies. For example, theour Board receives quarterlyregular reports from our Chief Corrections Officer with respect to key areas of operational risk; monitors risks relating to our partnership development efforts through quarterlyregular reports from our Chief Development Officer; and receives regular reports from our General Counsel with respect to legal and compliance risks. In addition, theour Board evaluates risk in the context of particular business strategies and transactions. For example, theour Board monitors significant capital expenditures through its annual budget review and quarterly capital expenditure reports from management, and monitors risk relating to our acquisition and financing activities through in depth reviews of proposed acquisition and financing transactions.
In addition to theour Risk Committee, other standing committees of theour Board also have responsibility for risk oversight within their areas of oversight. TheOur Audit Committee focuses on financial risk, including fraud risk and risks relating to our internal controls over financial reporting. It receives an annual risk assessment report from the Company’sour internal auditors, as well as financial risk assessment information in connection with particular events or transactions. TheOur Nominating and Governance Committee addresses certain governance-related risks, such as risks related to Board and executive management succession planning. As discussed in detail below, theour Compensation Committee addresses risks relating to our executive compensation strategies. The full Board receives regular reports from the chairs of these committees and receives reports and othercopies of meeting materials provided to each of the committees.
In setting compensation, our Compensation Committee considers the achievement of CCA’sthe Company’s goals that may be inherent in the compensation program as well as the risks to CCA’sCoreCivic’s stockholders. Although a significant portion of our executives’ compensation is performance-based and “at-risk,“at-risk,” the our Compensation Committee believes our executive compensation plans are appropriately structured and do not pose a material risk to CCA. TheCoreCivic. Our Compensation Committee considered the following elements of our executive compensation plans and policies when evaluating whether such plans and policies encourage our executives to take unreasonable risks:
We set performance goals that we believe are reasonable, but uncertain, in light of past performance and current market and economic conditions.
The financial and strategic business goals used for determining payouts under our incentive compensation plans are aligned with our near-term and long-term operating and strategic growth plans, and are established at challenging, but appropriate, levels that do not encourage unnecessary or excessive risk taking.
We use restricted stock units rather than stock options for equity awards because, unlike options, restricted stock units retain value even in a depressed market.
Performance-based vesting over multiple years for our long-term equity incentive awards promotes the alignment of our executives’ interests with those of our stockholders for the long-term performance of CCA.the Company.
Assuming achievement of at least a minimum level of performance, payouts under our performance-based plans result in some compensation at levels below full target achievement, rather than an “all-or-nothing”“all-or-nothing” approach.
Our executive stock ownership policy requiresguidelines require our executives to hold certainsignificant levels of CCAour stock, which aligns an appropriate portion of their personal wealth to the long-term performance of CCA.the Company.
PROPOSAL 1 - ELECTION OF DIRECTORS
The current term of office of each of our 10 directors expires at the Annual Meeting. Mr. Correnti passed away in August 2015. We currently have 11Our Board has nominated nine directors with 9 current members offorre-election, and has nominated an additionalnon-executive director, Harley G. Lappin, who was recommended by ournon-employee directors for election by our stockholders for the Board of Directors standing for re-electionfirst time, at the Annual Meeting. Mr. Ferguson and Mr. Russell will be retiring as of the Annual Meeting and are not standing for re-election. The
Our Board of Directors has reduced the authorized numberreflects a diverse, highly engaged group of directors from 11 to 9 members effective aswith a wide range of the Annual Meeting.relevant experience:
Independence | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ☐ | ☐ | 80% | |||||||||||||||||||||||||||||||||
CEO / Senior Leadership Experience | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | 100% | |||||||||||||||||||||||||||||||||
Gender / Ethnic Diversity | ∎ | ∎ | ∎ | ∎ | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ | 40% | |||||||||||||||||||||||||||||||||
Other Public Company Board Experience | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ☐ | ☐ | ☐ | ☐ | 60% | |||||||||||||||||||||||||||||||||
Tenure | ||||||||||||||||||||||||||||||||||||||||||||
1 – 4 Years | ∎ | ∎ | ∎ | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ | 30% | |||||||||||||||||||||||||||||||||
5 – 9 Years | ∎ | ∎ | ∎ | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ | 30% | |||||||||||||||||||||||||||||||||
10+ Years | ∎ | ∎ | ∎ | ∎ | ☐ | ☐ | ☐ | ☐ | ☐ | ☐ | 40% |
Based on the recommendation of theour Nominating and Governance Committee, theour Board of Directors has nominated the following 910 nominees, all of whom are currently serving as directors, for re-election for a new termelection to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. We expect each of the 910 nominees to serve if elected. If any of them becomes unavailable to serve as a director, theour Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by theour Board.
The general criteria considered by theour Nominating and Governance Committee with respect to director nominees are discussed beginning on page 910 of this Proxy Statement under the heading “Nominating and Governance Committee.” Based on the evaluation of those criteria, theour Nominating and Governance Committee and the Board believe that each of the nomineesnominee contributes relevant skills, expertise and experience to theour Board, and that the group of nominees collectively has the skills, expertise, experience, independence and other attributes necessary to discharge effectively theour Board’s oversight responsibilities on behalf of the Company’sour stockholders.
Nominees Standing for Election
Information regarding each of the nominees for director, including particular qualifications considered for each nominee, is set forth below. Directors’ ages are given as of the date of this Proxy Statement.
DAMON T. HININGER | Director since 2009 |
Mr. Hininger, age 46,48, has served as a director and our President and Chief Executive Officer since October 2009. From July 2008 until October 2009, Mr. Hiningerhe served as our President and Chief Operating Officer. From 2007 until July 2008, Mr. Hiningerhe served as our Senior Vice President, Federal and Local Customer Relations.Relations, after having served as Vice President, Federal and Local Customer Relations since 2002. Prior to 2002, he held several positions of increasing responsibility with the Company. Mr. Hininger joined the Company in 1992 as a correctional officer at the Leavenworth Detention Center. He serves on the Board of Trustees of the United Way of Metropolitan Nashville and held several positions, including Vice President, Business Analysis and Vice President, Federal Customer Relations before being promoted to Senior Vice President.Belmont University, where he also serves on the Board of Advisors for the Massey School of Business. Mr. Hininger earnedalso serves on the Board of Directors of the Nashville Chamber of Commerce, the Kansas State University Foundation and as a member of the Executive Board of the Middle Tennessee Council of Boy Scouts of America. Mr. Hininger holds a bachelor’s degree from Kansas State University and an M.B.A.a master’s degree in business administration from the Jack Massey School of Business at Belmont University. Mr. Hininger also serves on the board of directors with the United Way of Metropolitan Nashville.
In making the decision to nominate Mr. Hininger to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his current service as our President and Chief Executive OfficerCEO and his comprehensive knowledge of the Company, its business, operations and management team through his current position and past roles with the Company, including roles at the facility operations level, and as Chief OperationsOperating Officer and as Senior Vice President, Federal and Local Customer Relations.
DONNA M. ALVARADO | Director since 2003 |
Ms. Alvarado, age 67,69, has served as a director since December 2003, and serves as Chair of our Compensation Committee. She also serves as a member of our Audit Committee since December 2003, a member of ourand Risk Committee since its formation in August 2015, a member of the Nominating and Governance Committee since December 2014 and is appointed to serve as Chair of the Compensation Committee following the Annual Meeting.Committee. Ms. Alvarado is the founder and current president of Aguila International, an international business-consultingbusiness consulting firm that specializesspecializing in human resources and leadership development. She serves as a director and member of the audit and compensation committees of CSX Corporation, a publicly-traded provider of rail and other transportation services, and as a director and chair of the nominating and corporate governance committee and a member of the audit and risk committee of Park National Corporation, a publicly-held bank holding company. Ms. Alvarado has served as a member and as chair of the Ohio Board of Regents and has held senior management positions in government, including Deputy Assistant Secretary of Defense with the U.S. Department of Defense and Director of ACTION, the federal domestic volunteer agency. Ms. Alvarado earnedserves as a director and member of the audit, compensation and public affairs committees of CSX Corporation, a publicly-traded provider of rail and other transportation services. She serves as a director and chair of the nominating and corporate governance committee, as well as a member of the audit and risk committees, of Park National Corporation, a publicly-traded bank holding company. Ms. Alvarado has served as a member and as chair of both a master’sthe Ohio Board of Regents and the Ohio Workforce Policy Board. She holds both a bachelor’s degree and a master’s degree in Spanish from The Ohio State University, completed doctoral coursework in Latin American Literatureliterature at the University of Oklahoma and earned a postgraduate certificate in Financial Managementfinancial management from the Wharton School of Business at the University of Pennsylvania.
In making the decision to nominate Ms. Alvarado to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, her understanding of government through her public sector experience; her experience as a public company director and member of audit, compensation and nominating and corporate governance committees; her human resources and leadership development expertise; her civic and community involvement; and her contribution to the Board’s gender and cultural diversity.
ROBERT J. DENNIS | Director since 2013 |
Mr. Dennis, age 62, was appointed to the Board of Directors in64, has served as a director since February 2013, and isserves as a member of our Compensation Committee and Executive Committees.Committee. Mr. Dennis is the chairman, presidentPresident, Chief Executive Officer and chief executive officerChairman of the board of directors of Genesco Inc., a diversifiedpublicly-traded retailer of footwear, headwear, sports apparel and accessories, where he has served in an executive capacity since 2004. A 27-year retail veteran,Prior to joining Genesco, Mr. Dennis has held senior management positions with Hat World Corporation and Asbury Automotive, and was a partner and leader of the North American Retail Practice with McKinsey & Company, an international consulting firm.Company. Mr. Dennis holdsserves as a master of business administration degree, with distinction, from the Harvard Business School, with a focus on consumer marketing,director and bachelor’s and master’s degrees from Rensselaer Polytechnic Institute. Mr. Dennis is a member of the Board of Directorsgovernance committee and a member of the Governance Committeefinance and investments committee of HCA Holdings, Inc., a leadingpublicly-traded health care services company that operates hospitals and surgery centers in the United States and London, England. Previously, he served as a member of the board of directors of Teavana Holdings, Inc., a publicly traded purveyor of high quality teas and tea products, until its acquisition by Starbucks in December 2012. Hecompany. Mr. Dennis serves on the boardBoard of directorsTrustees of the United Way of Metropolitan Nashville, the Nashville Symphony, and serves on the Board of Visitors at Vanderbilt University’s Owen School of Management. Mr. Dennis holds a master’s degree in business administration, with distinction, from the Harvard Business School, and bachelor’s and master’s degrees from Rensselaer Polytechnic Institute.
In making the decision to nominate Mr. Dennis to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his leadership experience as chief executive officer of a large public company; his public company director experience; his demonstrated business acumen andacumen; his understanding of corporate finance and business development matters; and his civic and community involvement.
MARK A. EMKES | Director since 2014 |
Mr. Emkes, age 63, was appointed to the Board of Directors in65, has served as a director since August 2014, and isserves as the independent Chairman of the Board. He also serves as a member of our Compensation Committee, and our Nominating and Governance Committee and has been appointed to serve as our independent Chairman of the Board effective as of the 2016 Annual Meeting. For more than five years and until his retirement effective on February 28, 2010, Mr. Emkes was the Chairman and Chief Executive Officer of Bridgestone Americas, Inc. and Bridgestone Americas Holdings, Inc., the world’s largest tire and rubber company. He was also President of Bridgestone Americas, Inc. from January 2009 until his retirement. Mr. Emkes served as a director of Bridgestone Corporation from April 1, 2004 through February 28, 2010.Committee. From 2011 until 2013, Mr. Emkes served as the State of Tennessee’s Commissioner of
Finance and Administration, a state-level cabinet position.Administration. For more than five years until his retirement in 2010, Mr. Emkes holdsserved as Chief Executive Officer and Chairman of the board of directors of Bridgestone Americas, Inc. and Bridgestone Americas Holdings, Inc., a Bachelortire and rubber manufacturing company. He also served as President of Arts degree in economicsBridgestone Americas, Inc. from Indiana’s DePauw University and a master of business administration degree from the Thunderbird School of Global Management, located in Glendale, Arizona.
January 2009 until his retirement. From 2004 until 2010, Mr. Emkes is on the Boardalso served as a director of Directors of: (i) Greif, Inc. (since February 2008), where he isBridgestone Corporation. Mr. Emkes serves as a director and member of the compensation committee (ii)of Greif, Inc., a publicly-traded industrial packaging products and services company, and as a director and chair of the audit committee of First Horizon National Corporation, (since October 2008), where he is the chairman of the audit committee, and (iii) Clarcor, Inc. (since June 2010), where he is a member of the compensation and director affairs/corporate governance committees.publicly-traded regional financial institution. Mr. Emkes has served for the following charitable organizations: as President of the Middle Tennessee Council of the Boy Scouts of America, on the Board of Directors of the Community Foundation of Middle Tennessee onand the Advisory Board of Habitat for Humanity, Nashville Chapter, as a member of CEO’s Against Cancer, Tennessee Chapter, and as Chairman of Nashville’s 2010 Heart Walk.Chapter. Mr. Emkes was the 2011 recipient of the Jennings A. Jones Champion of Free Enterprise Award, and in October 2012 was inducted into the Nashville Business Hall of Fame.Fame in 2012. Mr. Emkes holds a bachelor’s degree in economics from DePauw University and a master’s degree in business administration from the Thunderbird School of Global Management.
In making the decision to nominate Mr. Emkes to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his leadership experience in various management positions, including the chief executive officer and chairman of an international company; his demonstrated business acumen and his understanding of corporate finance and business development matters; and his civic and community involvement.
STACIA A. HYLTON | Director since |
Mr. Jacobi,Ms. Hylton, age 74,57, has served as a director since August 2016, and asis a member of our Nominating and Governance Committee and Chair of our Special Litigation Committee. Since 2016, Ms. Hylton has served as a Principal for LS Advisory, a New Jersey-based business solutions advisory consultancy. In 2010, Ms. Hylton was nominated by U.S. President Barack Obama to serve as Director of the Audit Committee since December 2000. Mr. Jacobi isU.S. Marshals Service (USMS), a federal agency with more than 5,600 employees responsible for federal judiciary security, fugitive operations, asset forfeitures, prisoner operations, transportation and witness security, and served as Director of the owner and president of Stable House, LLC, a private company engagedUSMS until her retirement in residential real estate development. From June 2001 through May 2005, Mr. Jacobi2015. She served as the president and chief executive officer and a directorU.S. Attorney General’s Federal Detention Trustee in the U.S. Department of Katy Industries, Inc., a publicly-traded diversified manufacturing company. He is chairman ofJustice from 2004 to 2010. From 1980 to 2004, Ms. Hylton served in progressively senior leadership positions within the board of Sturm, Ruger and Company, Inc., a publicly-traded maker of firearms, a director of Webster Financial Corporation, a publicly-traded banking and financial services company,USMS. Ms. Hylton serves as a director and member of the audit committee of Kohlberg Capital Corporation,Spok Holdings, Inc., a publicly-traded business developmentprovider of communications solutions. Ms. Hylton is a Fellow for the National Academy for Public Administration, and has served on the Board of Directors of the National Center for Missing and Exploited Children and Law Enforcement Exploring. Ms. Hylton has served on the Executive Committee for the International Chiefs of Police and the Accreditation and Policy Committees for the National Sheriffs Association. Ms. Hylton holds a bachelor’s degree in criminal justice from Northeastern University.
In making the decision to nominate Ms. Hylton to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, her understanding of government through her public sector experience; her experience as a public company specializing in term loans, mezzanine investments and selected equity positions in middle market companies and a director and member of an audit committee; her unique understanding of the audit committeeUSMS; her civic and community involvement; and her contribution to the Board’s gender diversity.
HARLEY G. LAPPIN | Director since 2018 |
Mr. Lappin, age 62, has served as a director since January 2018. From 2011 until his retirement effective January 1, 2018, Mr. Lappin served as our Executive Vice President and Chief Corrections Officer. Prior to joining the Company in 2011, Mr. Lappin served since 2003 as Director of Performance Sports Group Ltd., a publicly-traded sports equipment company.the Federal Bureau of Prisons (BOP). As Director of the BOP, Mr. JacobiLappin had oversight and management responsibility for 116 federal prisons, 14 large, private contract facilities and more than 250 contracts for community corrections facilities, in total comprising more than 215,000 offenders managed by 38,000 employees. Mr. Lappin has received numerous awards throughout his career, including the Associate Warden of the Year award for the BOP’s South Central Region (1992); the BOP’s Excellence in Prison Management Award (2000); the Attorney General’s Award for
Excellence in Management (2001); and the Presidential Rank Award of Meritorious Executive (2004). In 2010, he received the American Correctional Association’s (ACA) E.R. Cass Award for Correctional Achievement, the highest honor bestowed by that organization. In 2015, Mr. Lappin received the Louie L. Wainwright Award from the Association of State Correctional Administrators (ASCA). Mr. Lappin has served as chair of the Standards Committee of the ACA, is a certified public accountantformer board member of both the National Institute of Corrections and the Federal Prison Industry Board, and a former chair of the Prison Industry Committee of ASCA. Mr. Lappin holds a B.S.bachelor’s degree from theIndiana University of Connecticut.and a master’s degree in criminal justice from Kent State University.
In making the decision to nominate Mr. JacobiLappin to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his comprehensive corrections industry experience, including executive leadership experience as chief executive officerof federal and chief financial officerprivate sector correctional system operations; his public company leadership experience; his understanding of agovernment through his public company;sector experience; and his extensive experienceknowledge of the Company, its business, operations, facilities, customers and personnel through his past role as a public company director and audit committee member and chairman; and his financial and accounting experience and expertise.our Chief Corrections Officer.
ANNE L. MARIUCCI | Director since 2011 |
Ms. Mariucci, age 58,60, has served as a director since December 2011, and serves as a member of our Audit Committee since May 2012 and a member of our Risk Committee since its formation in August 2015.Committee. Since 2003, she has been affiliated with private equity firms Hawkeye Partners (Austin, Texas), Inlign Capital Partners (Phoenix, Arizona) and Glencoe Capital (Chicago, Illinois). Prior to 2003, Ms. Mariucci is a private investor who, prior to 2003, served in a variety of senior management capacitiesexecutive roles with Del Webb Corporation, and following its 2001 merger with Pulte Homes, Inc., as President of Del Webb Group and Senior Vice President of Strategy for Pulte Homes, Inc., following its acquisition of Del Webb. Ms. Mariucci received her undergraduateserves as a director and member of the audit committee of Taylor Morrison Home Corporation, a publicly-traded homebuilder. Ms. Mariucci also serves as a director of Southwest Gas Holdings, Inc. a publicly-traded holding company, where she serves as chair of the pension investment committee and as a member of the nominating and corporate governance committee. Ms. Mariucci serves as a director of Banner Health, anon-profit health system, where she serves as a member of the audit and compensation committees. Ms. Mariucci serves as a director of the Arizona State University Foundation. Ms. Mariucci is a past director of the Arizona State Retirement System, Scottsdale Healthcare and Action Performance Companies, as well as a past trustee of the Urban Land Institute. She also served on the Arizona Board of Regents. Ms. Mariucci holds a bachelor’s degree in accounting and finance from the University of Arizona and completed the corporate finance program at the Stanford University Graduate School of Business. She serves as a director of Taylor Morrison Home Corp., where she serves on the Audit Committee, Southwest Gas Company, where she serves on the Nominating and Corporate Governance Committee and is the chair of the Pension Plan Investment Committee, Banner Health, where she serves as a member of the Audit and Compensation Committees, Arizona State University Foundation and the Fresh Start Women’s Foundation. She is a past director of the Arizona State Retirement System, Scottsdale Healthcare and Action Performance Companies, as well as a past Trustee of the Urban Land Institute. She also served on the Arizona Board of Regents.
In making the decision to nominate Ms. Mariucci to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, her public company executive leadership experience; her understanding of and experience with the State of Arizona, a state where a significant portion of our operations is located; her background in accounting and corporate finance; her experience and knowledge with real estate; her experience as a public company director and member of audit and compensation committees; her civic and community involvement; and her contribution to the Board’s gender diversity.
THURGOOD MARSHALL, JR. | Director since 2002 |
Mr. Marshall, age 59,61, has served as a director since December 2002, and serves as Chair of our Risk Committee and as a member of theour Nominating and Governance Committee since December 2002 and as the Chair of the Risk Committee since its formation in August 2015. Mr. Marshallour Special Litigation Committee. He is a partner in the Washington D.C. office of the law firm of Morgan, Lewis & Bockius LLP, in Washington D.C., and a principal in the firm’s Morgan Lewis Consulting Group LLC, a wholly owned subsidiary of Morgan, Lewis & Bockius LLP thatwhich assists business clients with communications, political and legal strategies. Mr. Marshall is a member of the board of directors of Genesco Inc., a diversified retailer of footwear, headwear, sports apparel and accessories. He also serves on the boards of the Ford Foundation and the Supreme Court Historical Society. He serves on the American Bar Association Election Law Committee and the American Bar Association Law and National Security Committee, and he served on the Ethics Oversight Committee of the United States Olympic Committee. Mr. Marshall, the son of the historic Supreme Court Justice Thurgood Marshall, has held appointments in each branchall three branches of the federal government, includinggovernment. Prior to joining a predecessor of Morgan, Lewis & Bockius LLP in 2001, he served as Assistant to the President and Cabinet Secretary from 1997 to President Clinton and2001. Mr. Marshall has served as Director of Legislative Affairs and Deputy Counsel to the Vice President, Al Gore. Mr. Marshalland as counsel to the Senate Judiciary Committee, the Senate Committee on Commerce, Science and Transportation and the Senate Government Affairs Committee. In 2006, he was confirmed by the United States Senate to serve on the Board of Governors of the United States Postal Service, in 2006
and served as Chairman prior to completing his service in 2013. Mr. Marshall earnedserves as a B.A. in 1978director of Genesco Inc., a publicly-traded retailer of footwear, headwear, sports apparel and accessories. He also serves on the Board of Trustees of the Ford Foundation and the Ethics & Compliance Certification Institute. Mr. Marshall holds a bachelor’s degree and a J.D. in 1981juris doctor from the University of Virginia, after which he clerkedand served as a law clerk for United States District Judge Barrington D. Parker.
In making the decision to nominate Mr. Marshall to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his understanding of politics and the public sector through his varied government service and consulting work; his understanding of organizational governance and oversight through his service as a director in the public,non-profit andfor-profit sectors; his understanding of legal, regulatory and compliance issues through his education and experience as a lawyer; and his contribution to the Board’s cultural diversity.
CHARLES L. OVERBY | Director since 2001 |
Mr. Overby, age 69,71, has served as a director since December 2001. Mr. Overby served2001, and serves as Chair of our Nominating and Governance Committee and as a member of the Audit Committee from February 2002 through November 2015,our Special Litigation Committee. He also serves as a member of our Risk Committee since its formation in August 2015 and as the Chair of the Nominating and Governance Committee since the committee was established in December 2002.Committee. From 1997 through1989 until 2011, Mr. Overby served as the chairman and chief executive officerChief Executive Officer of The Freedom Forum, an independent,non-partisan foundation dedicated to the First Amendment and media issues, and its predecessor, The Gannett Foundation. Mr. Overby served from 1997 to 2011 as well as chief executive officerChief Executive Officer of its affiliates, The Diversity Institute and theFreedom Forum’s affiliate, Newseum, aan interactive museum about news and history in Washington, D.C. committed to educating visitors on free expression and the First Amendment. Prior to leading The Freedom Forum, Mr. Overby is a former Pulitzer Prize-winning editor in Jackson, Mississippi. He workedserved for 16 years foras a reporter, editor and corporate executive with Gannett Co., Inc., the nation’s largest newspaper company and publisher of USA TODAY, including roles as a PulitzerPrize-winning editor at The Clarion-Ledger in various capacities, includingJackson, Mississippi. Mr. Overby serves as reporter, editorChairman of the Overby Center for Southern Journalism and corporate executive. He was vice president for newsPolitics at the University of Mississippi and communications for Gannett and served on the management committeesBoard of Gannett and USA TODAY. Mr. Overby currently serves on the boardTrustees of the Andrew Jackson Foundation. Mr. Overby holds a bachelor’s degree from the University of Mississippi.
In making the decision to nominate Mr. Overby to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his executive leadership experience and understanding of corporate governance as chief executive of severalnon-profit organizations; his understanding of media and public relations through his career as a journalist, print media executive and executive with other media relatedmedia-related organizations; his political experience; and his civic and community involvement and leadership.
JOHN R. PRANN, JR. | Director since 2000 |
Mr. Prann, age 65,67, has served as a director and member of the Compensation Committee since December 2000, and serves as Chair of our Audit Committee. He also serves as a member of our Compensation Committee. From 2009 to 2016, Mr. Prann served as Chairman of the Audit Committee since December 2014.board of directors of a privately-held motorsports business. From 2012 to 2014, Mr. Prann’s business experience includes servicePrann served as the presidenta Senior Advisor to The Pritzker Group, a private capital, venture capital and chief executive officerasset management firm. From 1993 to 2001, Mr. Prann served as President, Chief Executive Officer and Chief Operating Officer of Katy Industries, Inc., a publicly-traded manufacturer and distributor of consumer products and maintenance cleaning products. Mr. Prann also served as President and Chief Executive Officer of CRL, Inc., a diversified holding company that held a 25% interest in Katy Industries, Inc. Mr. Prann served as a director of CPAC, Inc., a publicly-traded chemicals and equipment business, and Dynojet Research, Inc. He has served as a partner with the accounting firm of Deloitte & Touche and as a director of several private companies.Touche. Mr. Prann earnedholds a B.A.bachelor’s degree in Biologybiology from the University of California, Riverside, and an M.B.A.a master’s degree in business administration from the University of Chicago.
In making the decision to nominate Mr. Prann to serve as a director, theour Nominating and Governance Committee considered, in addition to the criteria referred to above, his executive leadership experience as president and chief executive of a public company and his understanding of accounting and finance issues through his education and career.
TheOur Board of Directors unanimously recommends a vote “FOR” each of the 910 nominees.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TheOur Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.2018. Services provided to the Company and its subsidiaries by Ernst & Young LLP in fiscal 20152017 are described below under “Audit Matters.”
Representatives of Ernst & Young LLP will be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and we expect that they will be available to respond to questions.
Ratification of the appointment of Ernst & Young LLP requires the affirmative vote of the holders of a majority of the votes cast by the holders of the shares of common stock votingpresent in person or represented by proxy at the Annual Meeting.Meeting and entitled to vote. If you abstain from voting on this proposal, your abstention will have the same effect as a vote against the proposal. If the Company’s stockholders do not ratify the appointment of Ernst & Young LLP, theour Audit Committee will reconsider the appointment and may affirm the appointment or retain another independent accounting firm. If the appointment is ratified, theour Audit Committee may in the future replace Ernst & Young LLP as our independent registered public accounting firm if it is determined that it is in the Company’s best interest to do so.
TheOur Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2016.2018.
The following table presents fees for audit, audit-related, tax and other services rendered by the Company’s principal independent registered public accounting firm, Ernst & Young LLP, for the years ended December 31, 20152017 and 2014.2016:
Fees | 2015 | 2014 | 2017 | 2016 | ||||||||||||
Audit Fees(1) | $ | 1,303,442 | $ | 1,288,906 | $ | 1,320,932 | $ | 1,262,103 | ||||||||
Audit-Related Fees(2) | 589,154 | — | 310,126 | 310,745 | ||||||||||||
Tax Fees(3) | 313,948 | 776,895 | 289,499 | 310,111 | ||||||||||||
All Other Fees(4) | 1,995 | 1,715 | 1,995 | 1,995 | ||||||||||||
|
| |||||||||||||||
Total | $ | 2,208,539 | $ | 2,067,516 | $ | 1,922,552 | $ | 1,884,954 | ||||||||
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(1) | Audit fees for |
(2) | Audit-related fees in |
(3) | Tax fees for |
(4) | All other fees for |
Pre-Approval of Audit andNon-Audit Fees
Consistent with Section 202 of the Sarbanes-Oxley Act of 2002 and SEC rules regarding auditor independence, our Audit Committeepre-approves all audit andnon-audit services provided by our independent registered public accounting firm. In 20152017 and 2014, the2016, our Audit Committee approvedpre-approved all feesamounts disclosed under “audit,” “tax,“audit-related,” “audit-related”“tax” and “all other” fees by Ernst & Young, LLP in accordance with applicable rules.
TheOur Audit Committee’s Auditor Independence Policy prohibits our independent registered public accounting firm from performing certainnon-audit services and any services that have not been approved by theour Audit Committee in accordance with the policy and the Section 202 rules. The policy establishes procedures to ensure that proposed services are brought before theour Audit Committee for consideration and, if determined by theour Audit Committee to be consistent with the auditor’s independence, approved prior to initiation, and to ensure that theour Audit Committee has adequate information to assess the types of services being performed and fee amounts on an ongoing basis. TheOur Audit Committee has delegated to its Chair, Mr. Jacobi,Prann, the authority topre-approve services between meetings when necessary, provided that the full Audit Committee is apprised of the services approved at its next regularly scheduled meeting.
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.
Oversight of Financial Reporting
As part of its oversight of our financial statements, theour Audit Committee reviews and discusses with both management and our independent registered public accounting firm all annual and quarterly financial statements prior to their issuance. With respect to the 20152017 fiscal year, management advised the Audit Committee that each set of financial statements reviewed had been prepared in accordance with generally accepted accounting principles (“GAAP”) and reviewed significant accounting and disclosure issues with theour Audit Committee. These reviews included discussion with the independent registered public accounting firm of matters required to be discussed pursuant toAuditing Standard No. 16 1301 (Communications with Audit Committees), as amended, including the quality of our accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. TheOur Audit Committee also received the written disclosures and a letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding its communications with theour Audit Committee concerning independence, and has discussed with Ernst & Young LLP its independence.
Also with respect to fiscal 2015, the2017, our Audit Committee received periodic updates provided by management, the independent registered public accounting firm and the internal auditors at each regularly scheduled Audit Committee meetingmeetings and provided oversight during the process. At the conclusion of the process, management provided theour Audit Committee with, and theour Audit Committee reviewed a report on, the effectiveness of our internal control over financial reporting. TheOur Audit Committee also reviewed Management’s Report on Internal Control over Financial Reporting and Ernst & Young LLP’s Reports of Independent Registered Public Accounting Firm included in our Annual Report on Form10-K for the year ended December 31, 2015.2017.
Taking all of these reviews and discussions into account, the undersigned Committee members recommended to theour Board of Directors that theour Board approve the inclusion of our audited financial statements in our Annual Report on Form10-K for the fiscal year ended December 31, 2015,2017 for filing with the SEC.
Submitted by the Audit Committee of the Board of Directors:Committee:
C. Michael Jacobi,John R. Prann, Jr., Chair
Donna M. Alvarado
Anne L. Mariucci
John R. Prann, Jr.
PROPOSAL 3 - ADVISORY VOTE TO APPROVE THE
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The Company seeks yournon-binding advisory vote and asks that you support the compensation of our Named Executive Officers as disclosed in the Compensation Discussion and Analysis section (“CD(the “CD&A”) and the accompanying tables contained in this Proxy Statement. OurAt our 2017 Annual Meeting of Stockholders, our stockholders indicated on an advisory basis their preference that advisory votes to approve the compensation of our Named Executive Officers occur every year. Taking into account thenon-binding advisory input of our stockholders and other relevant factors, our Board of Directors has determined to hold this advisory vote every year. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote is required to approve thenon-binding advisory vote of compensation paid to our Named Executive Officers. If you abstain from voting on this proposal, your abstention will have the same effect as a vote against the proposal.
Because your vote is advisory, it will not be binding on theour Compensation Committee or the Company.Committee. However, theour Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation for our Named Executive Officers. We urge you to read the CD&A, which begins on page 2427 of this Proxy Statement, and any other sections of this Proxy Statement forthat provide additional details on our executive compensation, including our compensation philosophy and objectives and the 20152017 compensation of our Named Executive Officers.
As described in detail in the CD&A, our executive compensation programs are designed to ensure that our executive officers are rewarded appropriately for their contributions to us, and that our overall compensation strategy supports the objectives and values of our organization, as well as stockholder interests. Our programs are designed to attract and maintainretain executive leadership who will execute our business strategy, uphold our values and deliver results and long-term value to our stockholders. Our goal is to have a substantial portion of executive compensation contingent upon our performance.
While we experienced a decline in our stock price in 2015 along with other companies in our industry, we continued to have strong operational results in 2015.
Our compensation reflected our performance and reasonable market competitive practices:
The Compensation Committee continually reviews the compensation programs for our Named Executive Officers to ensure our programs achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. TheOur Compensation Committee also has engaged PwC as an independent compensation consultant PricewaterhouseCoopers LLP, to assist it in reviewing and assessing, as well as providing advice and guidance on the Company’sdesign and market competitiveness of, our compensation strategies and plans.
We believe that our executive compensation programs are structured in the best manner possible to supportalign the interests of our company andmanagement team with those of our stockholders in the management of our business, objectives.the pursuit of our strategic objections and the creation of long-term value.
Stockholders are being asked to vote on the adoption of the following resolution:
RESOLVED: That the stockholders of Corrections Corporation of AmericaCoreCivic, Inc. approve the compensation of the Company’s Named Executive Officers, as described in the Compensation Discussion and Analysis section and related compensation tables, notes and narrative in the Proxy Statement for the Company’s 20162018 Annual Meeting of Stockholders.
TheOur Board of Directors unanimously recommends a vote “FOR” the approval, on an advisory basis, of the compensation of our Named Executive Officers.
The following table sets forth our executive officers as of March 14, 2016:29, 2018:
Damon T. Hininger | Chief Executive Officer and President, Director | |
David M. Garfinkle | Executive Vice President and Chief Financial Officer | |
Patrick D. Swindle | Executive Vice President and Chief Corrections Officer | |
Anthony L. Grande | Executive Vice President and Chief Development Officer | |
Scott D. Irwin | Executive Vice President, | |
Lucibeth N. Mayberry | Executive Vice President, Real Estate | |
Kim M. White | Executive Vice President, Human Resources | |
Set forth below are the biographies of each of our current executive officers, except for Mr. Hininger, whose biography is set forth under “Proposal 1 – Election of Directors.”
David M. Garfinkle, age 48,50, has served as the Company’sour Executive Vice President and Chief Financial Officer since May 1, 2014. HeMr. Garfinkle served as the Company’s Vice President of Finance and Controller from February 2001 to May 1, 2014. From 1996 to 2001, Mr. Garfinkle served as Vice President and Controller for Bradley Real Estate, Inc., a publicly traded real estate investment trust. Prior to joining Bradley Real Estate, Inc., Mr. Garfinkle was a Senior Manager at KPMG Peat Marwick, LLP. Mr. Garfinkle is a Certified Public Accountant and graduated summa cum laude withholds a bachelor ofbachelor’s degree in business administration from St. Bonaventure University.
Harley G. LappinPatrick D. Swindle, age 60,42, has served as anour Executive Vice President and our Chief Corrections Officer since June 2011.January 2018. From October 2016 to January 2018, Mr. Swindle served as our Senior Vice President, Operations. From April 2014 to October 2016, Mr. Swindle served as our Vice President, Treasury and Strategic Development. From August 2013 to April 2014, Mr. Swindle served as our Vice President, Strategic Development. From July 2009 to August 2013, Mr. Swindle served as our Vice President and Treasurer. Mr. Swindle joined the Company in 2007 as Managing Director, Treasury. Prior to joining the Company, he spent 10 years in equity research in the equity capital markets divisions of SunTrust Equitable Securities, Raymond James Financial Services, Inc. and since 2003,Avondale Partners, LLC. During his time as an equity analyst, Mr. Lappin served as the Director of the Federal Bureau of Prisons (“BOP”), the nation’s largest correctional system, with oversightSwindle focused his research on outsourced business services, government and management responsibility for 116 federal prisons, 14 large, private contract facilities and more than 250 contracts for community correctional facilities, in total comprising more than 215,000 inmates managed by 38,000 employees. Previously, Mr. Lappin served inhealthcare industries, including partnership corrections. He holds a variety of other roles with the Bureau of Prisons beginning in 1985, including Regional Director, Warden of the United States Penitentiary in Indiana, and Warden of the Federal Correctional Institution in North Carolina, among other positions. Mr. Lappin has a master’sbachelor’s degree in criminal justicefinance from Kent State University and an undergraduate degree from IndianaWestern Kentucky University. Mr. Lappin serves on the boards of Thistle Farms, Inc. and Court Appointed Special Advocates, both non-profit organizations.
Anthony L. Grande, age 46,48, has served as anour Executive Vice President and our Chief Development Officer since July 2008. From September 2007 to July 2008, Mr. Grande served as our Senior Vice President, State Customer Relations. Mr. Grande joined CCAthe Company in 2003 to serve as Vice President, of State Customer Relations. Prior to joining CCA,the Company, Mr. Grande served as the Commissioner of Economic and Community Development for the State of Tennessee. Mr. Grande earned his Masters of Education at Vanderbilt University in Nashville, Tennessee and his Bachelor of Artsholds a bachelor’s degree from The American University and a master’s degree in Washington, D.C.education from Vanderbilt University.
Steven E. GroomScott D. Irwin, age 64,51, has served as anour Executive Vice President, General Counsel and Secretary since June 2016. Previously, Mr. Irwin served as Senior Vice President, General Counsel and Secretary for Associated Estates Realty Corporation, a public REIT specializing in multifamily apartment properties, from 2013 to 2015. From 2010 to 2013, Mr. Irwin served as Executive Vice President, General Counsel and Secretary for Buffets, Inc. Previously, Mr. Irwin served in executive legal roles at International Paper Company and General Counsel since April 2010. From March 2001 to April 2010,Electric Company, as well as a Partner at an AmLaw 100 law firm. Mr. Groom served as our Vice President and Deputy General Counsel with responsibility for litigation and risk management. Previously, Mr. Groom was a partner in the law firm of Stites & Harbison, PLLC in Nashville and served in managing attorney and general counsel roles for SunTrust Bank, Inc. Mr. Groom earnedIrwin holds a bachelor’s degree from LipscombKent State University and his law degreea juris doctor from theThe Ohio State University of Memphis, where he was a member of the Law Review. Mr. Groom serves on the Board of Visitors of Lipscomb University’s College of Business and the Board of Advisors of the University’s Institute for Conflict Management. Mr. Groom has informed the Company that he intends to retire from his position as Executive Vice President and General Counsel in 2016.Law.
Lucibeth N. Mayberry, age 44,46, has served as our Executive Vice President, Real Estate since May 2015. From November 2013 to May 2015, Ms. Mayberry served as our Senior Vice President, Real Estate. From August
2008 to November 2013, Ms. Mayberry served as our Vice President, Deputy Chief Development Officer. From March 2006 to August 2008, Ms. Mayberry served as Vice President, Research, Contract and Proposals. Ms. Mayberry joined CCACoreCivic in May 2003 as Senior Director, State Partnership Relations, and was promoted to Managing Director, State Partnership Relations in 2004. Before joining CCA,CoreCivic, Ms. Mayberry served as a Senior Associate of the Taxation and Estate Planning Practice Group at the Nashville-based law firm Stokes, Bartholomew, Evans and Petree. SheMs. Mayberry holds a bachelor’s degree from the University of Tennessee, a juris doctor from Vanderbilt University, and a Mastermaster of Lawslaws degree in Taxationtaxation from the University of Florida.
Kim M. White, age 55,57, has served as our Executive Vice President, Human Resources since May 2015. From November 2013 to May 2015, Ms. White served as our Senior Vice President, Human Resources. From March 2013 to November 2013, Ms. White served as our Vice President, Correctional Programs, and from August 2012 to March 2013, Ms. White served as Managing Director, Inmate Programs. Prior to joining CCA,CoreCivic, Ms. White served 26 years with the Federal Bureau of Prisons (“BOP”)(BOP) in a wide variety of operational roles in the areas of Institutional Operations, Staffing and Inmate Programs, and more recently,prior to her departure in 2012, as the Assistant Director, Human Resource
Management Division, where she had oversight for the hiring, training and retention of the Bureau’sBOP’s 38,000 employees. In 2007, Ms. White received the Presidential Rank Award of Meritorious Executive for her leadership with the BOP. Ms. White holds a bachelor’s degree in corrections and criminal justice and a master’s degree in correctionalcorrections, criminology and juvenile justice both from Kent State University. She has also completed Harvard University’s Executive Education Program for senior managers in government.
John Ferguson, age 70, has served as a director since August 2000 and also serves as executive Chairman of our Board and chairman of our Executive Committee. Mr. Ferguson formerly served as our Chief Executive Officer from August 2000 to October 2009 and as our President from August 2000 until July 2008. Mr. Ferguson’s career in business and government includes service as the Commissioner of Finance for the State of Tennessee and as the chairman and chief executive officer of Community Bancshares, Inc., the parent corporation of The Community Bank of Germantown (Tennessee), as well as service on the State of Tennessee Board of Education and the Governor’s Commission on Practical Government for the State of Tennessee. Mr. Ferguson has served as a director of various charitable and civic organizations, including the Boy Scouts of America - Middle Tennessee Council, the Nashville Public Education Foundation and the Tennessee Performing Arts Center. Mr. Ferguson graduated from Mississippi State University in 1967. Mr. Ferguson will be resigning his position as executive Chairman of our Board, effective as of the Annual Meeting.
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
This section of the Proxy Statement discusses the philosophy, objectives and elements of our executive compensation programs and the compensation awarded to our named executive officers, or NEOs,Named Executive Officers (“NEOs”), consisting of our Chief Executive Officer, Chief Financial Officer and our next three highest paid executives in 2015.2017. This information should be read in conjunction with the Summary Compensation Table and the related tables and narratives that follow in this Proxy Statement. Based on SEC proxy disclosure rules, the following individuals were our NEOs for the fiscal year ended December 31, 2015:2017:
Damon T. Hininger | Chief Executive Officer and President | |
David M. Garfinkle | Executive Vice President and Chief Financial Officer | |
Harley G. | Executive Vice President and Chief Corrections Officer | |
Anthony L. Grande | Executive Vice President and Chief Development Officer | |
Lucibeth N. Mayberry | Executive Vice President, |
* Mr. Lappin retired from his position as our Executive Vice President and Chief Corrections CorporationOfficer effective January 1, 2018, but continues to be employed by the Company in anon-executive role, and is a nominee for election to our Board at the Annual Meeting.
Our Company and Strategy
CoreCivic is a self-managed, fully integrated equity REIT that is one of America is the nation’s largest ownerowners of privatizedpartnership correctional, detention, and detention facilities andresidential reentry facilities. We are one of the largest prison operators in the United States. States, and we believe we are the largest private owner of real estate used by government agencies. Under our three business offerings, CoreCivic Safety, CoreCivic Community and CoreCivic Properties, we offer multiple solutions that serve the public good by helping our government partners meet unique challenges in cost-effective ways.
The fundamental objectiveskeystone of our compensation policies are to attract and retain executive leadership that will execute our business strategy uphold our values, deliver strong results and createis creating long-term value for our stockholders.
Increased Quarterly Dividends and Return to Our Stockholders.CCA began operating as a real estate investment trust, or a REIT, for federal income tax purposes effective January 1, 2013 andstockholders by pursuing profitable growth in our third full yearprimary CoreCivic Safety correctional and detention business while diversifying our revenues and cash flows by prudently expanding our CoreCivic Community and CoreCivic Properties businesses.
CoreCivic Safety pursues profitable growth by improving performance under contracts with our existing government partners to maintain high renewal rates, marketing available facility capacity to existing and new government partners and providing new facility capacity as a REITappropriate to meet specific partner needs.
CoreCivic Community, the second largest community corrections provider in the United States with 33 residential reentry centers containing 6,261 beds, prudently pursues opportunities to acquire residential reentry centers that will further expand the network of reentry assets we own and reentry services we provide to existing and new government partners.
CoreCivic Properties, which offers government partners and providers an attractive portfolio of facilities that can be leased for delivering mission-critical government services, not only supports CoreCivic Safety and CoreCivic Community by marketing our regular aggregate quarterly dividends per share in 2015 increased 5.9%available facilities for lease (as an alternative to $2.16 in 2015 from $2.04 in 2014.
Solid Operationalcontracting for“turn-key” correctional, detention and Financial Results for 2015. Dueresidential reentry services), but prudently pursues opportunities to expansion of our community-based corrections capabilities through acquisitionsacquire existing government-leased assets and our ability to create unique solutionsdevelop, build and lease new assets to our government partners’ challenges, we experienced meaningfulpartners.
2017 Company Performance Highlights
Facing a challenging operating environment, which included budgetary constraints and political transitions impacting many of our government partners, our management team remained focused on our operational and financial performance while continuing our progress in executing our long-term growth and diversification strategy. Highlights from 2017 include:
Although our financial performance was negatively impacted by the 2016 amendment and extension of the contract for our South Texas Family Residential Center, a decline of inmate populations from the State of California and the expiration of our contracts with the Federal Bureau of Prisons at our Eden Detention Center and our Cibola County Correctional Center, our full year financial results outperformed the high end of our 2017 financial guidance, as set forth in our net income, earnings per share (“EPS”)quarterly earning’s press release dated November 2, 2016, for Net Income, Adjusted EBITDA, Diluted EPS, Adjusted EPS and dividends, while normalized Funds From Operations (“FFO”)Normalized FFO per diluted share experienced a slight increase, as illustrated below ($ in millions, except per share amounts).share:
2015 | 2014 | Change | ||||||||||
Net Income | $ | 221.9 | $ | 195.0 | 13.8 | % | ||||||
Adjusted Net Income(1) | $ | 227.1 | $ | 225.0 | 1.0 | % | ||||||
Dividends per share | $ | 2.16 | $ | 2.04 | 5.9 | % | ||||||
Normalized FFO(2) | $ | 2.69 | $ | 2.65 | 1.5 | % | ||||||
EPS | $ | 1.88 | $ | 1.66 | 13.3 | % | ||||||
Adjusted EPS(3) | $ | 1.93 | $ | 1.92 | 0.5 | % | ||||||
Closing Stock Price at Fiscal Year-End | $ | 26.49 | $ | 36.34 | -27.1 | % |
2017 Financial Guidance (November 2, 2016) | ||||||||||||||||
Low End | Mid-Point | High End | Actual Performance | |||||||||||||
Net Income (in thousands) | $ | 164,000 | $ | 170,000 | $ | 176,000 | $ | 178,040 | ||||||||
Adjusted EBITDA (in thousands)(1) | $ | 368,500 | $ | 376,500 | $ | 384,500 | $ | 387,881 | ||||||||
Diluted EPS | $ | 1.38 | $ | 1.44 | $ | 1.49 | $ | 1.50 | ||||||||
Adjusted EPS(1) | $ | 1.40 | $ | 1.45 | $ | 1.50 | $ | 1.57 | ||||||||
Normalized FFO per diluted share(1) | $ | 2.16 | $ | 2.22 | $ | 2.27 | $ | 2.38 |
(1) | Adjusted |
We completed an offering of $250.0 million principal amount of unsecured notes with a fixed stated interest rate of 4.75%, due October 15, 2027, using the net proceeds to pay down a portion of our revolving credit facility, which reduced our exposure to variable rate debt, extended our weighted average maturity and increased availability under our revolving credit facility to fund future growth opportunities.
Negative one-yearCoreCivic Safety
Expanded contract with State of Ohio for up to an additional 996 offenders at our2,016-bed Northeast Ohio Correctional Center
New three-year contract with City of Mesa, Arizona for up to 200 offenders at our4,128-bed Central Arizona Florence Correctional Complex
New contract with State of Nevada for up to 200 offenders at our1,896-bed Saguaro Correctional Facility in Arizona
New contract with Hamilton County, Tennessee to continue management, operation and maintenance of the1,046-bed Silverdale Detention Center
New contract with Commonwealth of Kentucky Department of Corrections to house offenders at our previously idled816-bed Lee Adjustment Center
CoreCivic Community
Acquired Arapahoe Community Treatment Center, a135-bed residential reentry center in Colorado
Acquired Time to Change, Inc., a community corrections company with three residential reentry facilities in Colorado containing a total of 422 beds
Acquired Oklahoma City Transitional Center, a200-bed residential reentry center in Oklahoma City, Oklahoma
Acquired Oracle Transitional Center, a92-bed residential reentry center in Tucson, Arizona
CoreCivic Properties
Acquired Stockton Female Community Corrections Facility, a100-bed residential reentry center in California leased to a third-party operator
Acquired portfolio of four properties leased to government agencies, including a230-bed residential reentry center leased to the State of Georgia and three properties in North Carolina and Georgia leased to the General Services Administration
Stock Price Performance and TSR ranking between the 25th and Median compared to ourRanking Within Our Peer Group.Group
Despite our solid operational and financial results, ourOur stock price decreased from a closing price of $36.34$24.46 at fiscalyear-end 2014 2016 to $26.49$22.50 for fiscal year end 2015.year-end 2017. We believe our stock price was impaired by the generally negative correlation between rising interest rates and public REIT valuations, stricter immigration and criminal justice policies espoused by the Trump Administration not directly translating into significant new contract awards or further utilization of idle capacity in our portfolio, the renegotiation in the fourth quarter of 2016 of the contract at our South Texas Family Residential Center and uncertainty regarding future utilization ofout-of-state capacity by the California Department of Corrections and Rehabilitation at two of our facilities. Our total stockholder return or TSR,(“TSR”) for 20152017 and the three-year and five-year periods ended December 31, 20152017, and ranking within our peer group, are illustrated below. The decline in our stock price in 2015 was impacted in
part by a decline in inmate population in California due to regulatory changes in California as well as the increased interest rate environment that negatively impacted many REIT stocks. As ofOn March 14, 2016,12, 2018, our closing stock price was $31.22.$21.93.
TSR | Percentile Ranking within Peer Group | |||||||
| )% | st | ||||||
| )% | th | ||||||
| % | th |
Pay for Performance.
Pay for performance is an important component of our longstanding executive compensation philosophy. Our compensation approach is designed to incentivize our executives to substantially contribute individually and collaboratively to our long-term, sustainable growth. We use normalizedNormalized FFO per share as one of the primary performance metrics becauseby which annual cash incentive compensation may be earned, and as the sole performance metric for the determination of vesting of performance-based restricted stock units (“RSUs”). As a REIT, we believe that with the Company’s REIT structure, normalizedNormalized FFO reflects the value deliveredwe deliver to our stockholders, and reflects long term value creation as it measures ourwell as the earnings and cash generatingcash-generating potential fromof our core business,portfolio, and is comparable to performance metrics used by other REITs. In 2017, we added Adjusted EBITDA as a complimentary financial performance metric for our annual cash incentive plan because, unlike FFO, Adjusted EBITDA is not impacted by fluctuations in taxes and short-term financing issues, such as debt refinancing and equity issuances. We also allocated a portion of the total annual bonus opportunity
to the achievement of objective, strategic business goalspre-established by our Compensation Committee that are related to the successful execution of our long-term growth and diversification strategy.
• |
|
2017 Financial Guidance (November 2, 2016) | ||||||||||||||||||||
Low End | Mid-Point | High End | Actual Performance | Bonus % of Base Salary | ||||||||||||||||
Adjusted EPS(1) | $ | 1.40 | $ | 1.45 | $ | 1.50 | $ | 1.57 | — | |||||||||||
Normalized FFO per diluted share(1) | $ | 2.16 | $ | 2.22 | $ | 2.27 | $ | 2.38 | 75.00% | |||||||||||
Adjusted EBITDA (in thousands) (1) | $ | 368,500 | $ | 376,500 | $ | 384,500 | $ | 387,881 | 56.79% | |||||||||||
Strategic Business Goals(2) | 100% | 25.00% | ||||||||||||||||||
Cash Incentive Bonus Earned: |
| 156.79% |
(1) | Adjusted EBITDA, Adjusted EPS, and Normalized FFO per diluted share are measures calculated and presented on the basis of |
(2) | The |
• |
|
Substantial Compensation Tied to Our Objective Performance.Performance
All of our equity is granted in the form of performance-based RSUs that vest only based upon our normalizedNormalized FFO performance, and our annual cash incentives are earned based upon our objective performance againstpre-establishedfinancial performance against pre-establishedand objective, strategic business goals. As a result, a substantial portion of executive compensation is at risk, paid based on our objective performance and tied to the interests of our stockholders and long-term value creation. The following tablechart illustrates the degree to which the actual total direct actual compensation of our CEO for 20152017 was earned (or forfeited) based on our performance.performance, as well as the
value of performance-based RSUs voluntarily surrendered by, or not granted by our Compensation Committee at the request of, our CEO:
All* Base Salary, Annual Cash Incentive and Other Compensation values derive from the Summary Compensation Table for 20152017 for Mr. Hininger. “Other”“Other Compensation” includes “Change in Nonqualified Deferred Compensation Earnings” and “All Other Compensation” as described in the Summary Compensation Table.
At or Below Market Median Compensation. Our independent compensation consultant, PricewaterhouseCoopers LLP, or PwC, conducts competitive analyses from timeIn support of the cost reduction plan we announced in 2016, Mr. Hininger voluntarily forfeited the 70,817 performance-based RSUs awarded to timehim in 2016, and, at theMr. Hininger’s request, of our Compensation Committee did not award him any RSUs in order2017. Our 2017 Normalized FFO performance of $2.38 resulted in the vesting of the 2017 tranche of outstanding performance-based RSUs granted in 2017 and 2016, but the 2017 tranche of performance-based RSUs granted in 2015 did not vest and was forfeited. The table below sets forth the total value of at risk, incentive compensation Mr. Hininger did not receive for 2017 with respect to provide a comparison of our compensation practices against a peer group of companies. performance-based RSUs that were forfeited (voluntarily or based on performance) or not awarded to Mr. Hininger at his request:
Performance-Based RSUs Tranche | Performance- Based RSUs (#) | Disposition | Fair Value on 2018 Vesting Date(1) | Accumulated Dividend Equivalent Rights |
| Total Compensation Value | ||||||||||||||
2017 Tranche of 2015 RSUs | 16,125 | Forfeited (Performance) | $349,429 | $ | 94,815 | $ | 444,244 | |||||||||||||
2017 Tranche of 2016 RSUs | 23,605 | Forfeited (Voluntary) | $511,520 | $ | 87,811 | $ | 599,331 | |||||||||||||
2017 Tranche of 2017 RSUs | 21,882 | Not Awarded (Voluntary) | $474,183 | $ | 36,762 | $ | 510,945 | |||||||||||||
|
| |||||||||||||||||||
$ | 1,554,520 |
(1) | The performance-based RSUs granted in 2017 had a realized value on the date they were earned and vested (February 22, 2018) of $21.67 per share. |
Compensation in Line with Market Median
In February 2014 in connection with our conversion to a REIT,2017, our Compensation Committee, with the assistance of PwC, performed a comprehensive review of our executive compensation program, which included an extensive competitive market analysis. Our peer group as establishedThe PwC competitive market analysis indicated:
Target total direct compensation for our NEOs (consisting of annual base salary, annual cash incentive and long-term equity-based incentive compensation) was in 2014 was 29 companies, including 14 REIT companies. In determiningline with the market median of our peer group for 2014, the Compensation Committee and PwC took into account our REIT status and our then current financial metrics.companies
• | The annual base salaries for several of |
A greater amount of our long-term equity-based incentive compensation is subject to objective performance goals than many of our peer group companies
Significant Compensation Committee Actions in 2017
Prior to 2017, our Compensation Committee last conducted a comprehensive review of our executive compensation program in 2014 in connection with our conversion to a REIT. In 2017, our Compensation Committee, with the assistance of PwC, completed an in depth assessment of our executive compensation policies and practices to evaluate their alignment with our compensation philosophy and objectives, effectiveness and overall competitiveness as compared to market and peer group compensation practices. The 2017 assessment built upon the more targeted review of our incentive compensation programs our Compensation Committee completed, with the assistance of PwC, in 2016. With careful consideration of the analysis and competitive market data provided by PwC in 2016 and 2017, and other information it considered to be relevant, our Compensation Committee took the following actions in 2017:
Updated our peer group selection methodology and composition
Designed and adopted a four-factor formula for the determination of annual cash incentive compensation based on objective performance againstpre-established goals for Adjusted EPS, Normalized FFO, Adjusted EBITDA and strategic business objectives
• | Increased base salaries of our NEOs to bring them closer to, but generally still below, the 50th percentile |
Compensation Best Practices and Governance.Governance
We believe in keepingare committed to managing our Company for the benefit of our stockholders, acting with the upmost integrity and serving as a responsible fiduciary to our stockholders. We are committed to managing the company for the benefit of the stockholders andregarding our executive compensation practices. Further, we are focused on maintainingadopting best practices and practicing good governance and establishing best practicesregarding our executive compensation programs that work within our objectives and which we deemour Compensation Committee deems advisable. PracticesCompensation practices that illustrate that commitmentthese commitments include:
Our Compensation Committee, working with an independent compensation consultant, completed a comprehensive review of our executive compensation program during 2017
More than 74% of the compensation of our executive officers in 2017 was tied to performance
We maintain anstock ownership guidelines for our directors and executive officers
We maintain anti-hedging and anti-pledging policy;policies
We do NOT provide tax gross ups (except in connection with relocations);
Dividend equivalents on our directors and executive officers; and
Favorable Results of 20152017 Advisory Vote to Approve Executive Compensation.
At our 20152017 Annual Meeting of Stockholders, our stockholders overwhelmingly approved the compensation of our NEOs with more than 97%98% of the votes cast voting in favor of our advisory “say on pay” proposal. TheOur Compensation Committee and the Company view these results as an indication that our stockholders support our executive compensation policies, and thus no changes were made to our compensation programs as a result of this vote. Nonetheless, theour Compensation Committee continues to evaluateregularly evaluates our executive
compensation plans and policies, compensation best practices and consider additional performance metricsmarket compensation trends, and meansconsiders alternatives for tying pay to performance.
The fundamental objectivesstrengthening the alignment of our executive compensation policies areprogram with our compensation philosophy and objectives, our business strategy, competitive market practices and long-term stockholder value creation.
Compensation Philosophy and Objectives
The foundational philosophy of our executive compensation programs is to provide a total mix of compensation, comprised of base salary, annual cash incentive compensation and long-term equity-based incentive awards, which enables us to attract and maintainretain executive leadership that will execute our business strategy, uphold our values, deliver positive results and create long-term value tofor our stockholders. Accordingly, theour Compensation Committee develops compensation strategies and programs that will attract, retain and motivate highly qualified and high-performing executives through compensation that is:
• | Performance-based: A significant component of total compensation should be determined based on whether or not we |
• | Competitive: Total compensation should be market competitive relative to our peers, with total direct compensation generally being targeted at or below the 50th percentile of our peer group. We believe targeting total direct compensation at or below the 50th percentile of our peer group enables us to recruit and retain the best talent for the organization, while achieving an appropriate balance between paying for performance and maintaining control of our compensation expense. As a consequence of our full year financial results outperforming the high end of our 2017 financial guidance, the 156.79% of base salary payout under our annual cash incentive plan substantially exceeded the 75% of base salary target, which resulted in 2017 total direct compensation for certain of our NEOs that moderately exceeded the median of our peer group companies: |
NEO | 2017 Total Direct Compensation | Peer Group Median Total Direct Compensation | Variance to Peer Group Median (%) | |||||||||
Damon T. Hininger | $ | 2,277,306 | $ | 5,437,000 | (58.11)% | |||||||
David M. Garfinkle | $ | 2,081,609 | $ | 1,927,000 | 8.02% | |||||||
Harley G. Lappin | $ | 2,123,125 | $ | 2,299,000 | (7.65)% | |||||||
Anthony L. Grande | $ | 2,123,125 | $ | 2,107,000 | 0.76% | |||||||
Lucibeth N. Mayberry | $ | 1,740,150 | $ | 1,707,000 | 1.94% | |||||||
ALL NEOs | $ | 10,345,315 | $ | 13,477,000 | (23.24)% |
• | Balanced: Performance-oriented features and retention-oriented features should be balanced so the entire program accomplishes |
• | Fair: Compensation levels and plan design should fairly reflect competitive practices |
Process for Determining Compensation – Independent Review and Use of Market Data
Role of Compensation Committee
Our Compensation Committee establishes and regularly reviews our compensation philosophy and programs, exercises authority with respect to the determination and payment of base and incentive compensation
to executive officers and administers our Second Amended and Restated 2008 Stock Incentive Plan (the “2008 Plan”). Our Compensation Committee annually reviews executive compensation and our compensation programs to ensure our CEO and the other executive officers are rewarded appropriately for their contributions to our success, and our overall compensation strategy supports the objectives and values of our organization, as well as stockholder interests. Our Compensation Committee conducts this review and makes compensation decisions through a comprehensive process involving a series of meetings primarily occurring in the first and second quarters of each year. Compensation Committee meetings typically are attended by our Compensation Committee members, legal advisors, our Chairman of the Board, our CEO and, upon request, PwC, the Compensation Committee’s independent compensation consultant. As with all Board committees, other Board members also have a standing invitation to attend our Compensation Committee’s meetings. Our CEO generally makes recommendations to our Compensation Committee regarding equity awards for the executive officers other than himself. Our Compensation Committee meets in executive session to the extent the members deem necessary or appropriate to ensure independent analysis and determinations. Additional information regarding our Compensation Committee and its meetings is included above under “Corporate Governance – Board of Director Meetings and Committees.”
In making itsexecutive compensation determinations, theour Compensation Committee performs an overall analysis of the executive’s performance for the year, projected role and responsibilities, impact on execution of Companyour strategy, external pay practices, emerging trends, total cash and total direct compensation positioning relative to our other Company executives, the recommendations of our Chief Executive OfficerCEO and such other factors theour Compensation Committee deems appropriate. Our Compensation Committee also considers employee retention, vulnerability to recruitment by other companies and the difficulty and costs associated with replacing executive talent. Based on these objectives, theour Compensation Committee has determined that our Companywe should provide itsour executives with compensation packages comprised of three primary elements:
1) | annual base salary, which takes individual performance into account and is designed to be competitive with median salary levels in an appropriate peer group; |
2) | annual |
3) | long-term |
Benefits and perquisites play a limited role in our executives’ total compensation packages. TheOur Compensation Committee believes that, as a result of our balance of long- and short-term incentives, our use of performance-based RSUs with dividend equivalents that provide a tie to our stockholders interests and our stock ownership guidelines, our executive compensation programprograms currently servesserve our compensation philosophy and objectives well.
The Compensation Committee annually reviews executive compensation and our compensation policies to ensure that the Chief Executive Officer and the other executive officers are rewarded appropriately for their contributions to our success and that the overall compensation strategy supports the objectives and values of our organization, as well as stockholder interests. The Committee conducts this review and makes compensation decisions through a comprehensive process involving a series of meetings primarily occurring in the first and second quarters of each year. Committee meetings typically are attended by the Committee members, legal advisors, our Chairman of the Board, our Chief Executive Officer and, upon request, the Committee’s compensation consultant. As with all Board committees, other Board members also have a standing invitation to attend the Compensation Committee’s meetings. Our Chief Executive Officer generally makes recommendations to the Committee regarding equity awards for the executive officers other than himself. The Committee meets in executive session to the extent the members deem necessary or appropriate to ensure independent analysis and determinations. Additional information regarding the Compensation Committee and Committee meetings is included above under “Corporate Governance – Board of Director Meetings and Committees.”
UseRole of Independent Compensation Consultant.Consultant
Since 2000, theour Compensation Committee has engaged PwC from time to time to assist it in reviewing compensation strategies and plans and to provide market competitive data. When requested, PwC works directly with the chair of theour Compensation Committee and, as directed by the chair of theour Compensation Committee, with our Chief Executive Officer.CEO and other executive officers. PwC was selected due to its extensive experience in providing compensation consulting services. At theour Compensation Committee’s request, PwC has from time to time performed severalcompensation analyses, including peer and market comparisons, internal pay equity assessments, updating of the executive salary structure and modeling of executive compensation levels at different levels of Companycompany performance. Our Compensation Committee does not use the market data to benchmark our compensation; instead, theseThese analyses and the input from PwC have assisted theour Compensation Committee in determining if itswhether our strategies and plans were advisable based on the Company’s current financial position and strategic business goals, as well as developmentscompetitive with our peers and consistent with best practices, in corporate governance and compensation design. Additional information regarding the engagement and independence of
PwC as independent compensation consultant to our Compensation Committee is included above under “Corporate Governance – Board of Director Meetings and Committees.”
2017 Peer Group Review and Market Data.Update In 2015,
At the request of our Compensation Committee, continuedPwC assessed and recommended adjustments with respect to use the market data analysis provided by PwC in February 2014. This market data analysis employed aour peer group recommended by PwC that reflected updates due to the then recent conversion of the Company to a REIT. In the 2014 updates, the Compensation Committee used a peer group of 23 companies
(including 14 REIT companies)selection methodology and eliminated certain companies that were not dividend paying.composition. Based on the recommendationrecommendations of PwC, we employedour Compensation Committee adopted the following as filterscriteria for determiningidentifying appropriate companies to include in our peer group:
Owners and operators of multi-state facilities delivering services to third parties;and complex operations;
Global Industry Classification Standard (GICS) Code 601010 – Equity REITs;
Revenues of 10,000;$1 billion to $6 billion;
Greater than 10,000 employees;
Market capitalization between $3 billion to $6 billion;
Dividend payout ratio of greater than 60% of net income;
Investment in fixed assets of $2$1.5 billion to $5$6 billion; and
Local competitors for executive talent; and
Future growth heavily dependent upon the acquisition or development of additional facilities.
TheApplying the foregoing selection criteria, the following companies were selectedrecommended by PwC and approved by theour Compensation Committee for inclusion in the 2014our 2017 peer group:
• Brookdale Senior Living, Inc. | • LaSalle Hotel Properties | |||
• CBL & Associates Properties, Inc. | • LifePoint Health, Inc. | |||
• Cinemark Holdings, Inc. | • Packaging Corporation of America | |||
• Duke Realty Corporation | • Penn National Gaming, Inc. | |||
• Federal Realty Investment Trust | �� Piedmont Office Realty Trust | |||
• The Geo Group, Inc. | • | |||
• Encompass Health Corporation | • | |||
(f/k/a Health South Corporation) | • Realty Income Corporation | |||
• Hyatt Hotels Corporation | • | |||
• Iron Mountain Incorporated | • Weingarten Realty Investors |
|
NoneHospitality Properties Trust and Senior Housing Properties Trust, which were included in our 2016 peer group, were not included in our 2017 peer group because they are externally managed REITs.
While none of our peer group companies met all of the filters, and generally theselection criteria, each peer group companiescompany met approximately two or more of the filters. In general,selection criteria. Generally, we were at the 50th percentile of revenuesmarket capitalization among our peers, and between the 25thand 50thpercentile of market capitalizationrevenues and fixed assets of our peers.
Total Direct TargetNEO Compensation Guidelines. Based on the extensive market analysis performed by PwC in 2014 , and based on internal pay equity considerations and a considerationfor 2017
Components of our compensation objectives and philosophies, with a particular emphasis on performance and equity as key drivers for executive compensation, the executive compensation structure set forth in the table below was developed by the Committee in 2014 in consultation with PwC for purposes of providing a point of reference for comparing future compensation decisions, including as a guideline for 2015 compensation decisions. The midpoint amounts are aligned with the 50th percentile of peer group proxy data by rank. References in this Proxy to the Salary Midpoint or the LTIP Fair Value are to the following table valuations.NEO Compensation
Position | Position Titles | Base Salary Structure | Bonus | LTIP Fair Value | Total Comp. Midpoint (1) | |||||||||||||||||||||
Minimum | Midpoint | Maximum | ||||||||||||||||||||||||
A | Chief Executive Officer | $ | 675,000 | $ | 840,000 | $ | 1,005,000 | 75 | % | $ | 2,500,000 | $ | 3,970,000 | |||||||||||||
B | Chief Financial Officer, Chief Corrections Officer and Chief Development Officer | $ | 335,000 | $ | 420,000 | $ | 505,000 | 75 | % | $ | 850,000 | $ | 1,585,000 | |||||||||||||
C | General Counsel | $ | 275,000 | $ | 345,000 | $ | 415,000 | 75 | % | $ | 735,000 | $ | 1,338,750 |
The primary components of our 2015the 2017 compensation program werefor our NEOs were:
Annual base salary;
Annual cash incentive compensation; and
Long-term incentive compensation consisting of a mix of base salary and our annual cash incentive plan compensation, and equity incentives, consisting solely of restricted stock unitsRSU awards with performance-based vesting.
Annual Base Salary
We seek to provide base salaries for our executive officers that provide a secure level of guaranteed cash compensation in accordance with their experience, professional status and job responsibilities. Typically in the second quarter of each year, theour Compensation Committee reviews and, if applicable, approves a revised annual salary plan for our executive officers, taking into account several factors, including prior year’s salary, responsibilities, tenure, individual performance, salaries paid by comparable companies in our peer group for comparable positions, the Company’s overall pay scale and the Company’s recent and projected financial performance. As part of PwC’s 2014 study,a general guideline, our Compensation Committee believes the Committee determined that base salary generallyof each executive officer should be set at or below the 50th percentile of the benchmarks from themarket survey and peer group benchmark data provided by PwC, market analysis, subject to adjustment to account for the individual factors referenced above. This market positioning was based on the Committee’s objective of providingdescribed above, in order to provide competitive base salaries for recruiting and retention purposes.
TheOur Compensation Committee also solicits the views and recommendations of our Chief Executive Officer,CEO, in consultation with our Chairman, when setting the base salaries of the other executive officers, given their respective insight into internal pay equity and positioning issues, as well as executive performance. At a Compensation Committee meeting typically held in the first or second quarter of each year, the Chief Executive Officerour CEO summarizes his assessment of the performance during the previous year of each of the other executive officers. The Chief Executive Officer,Our CEO, in consultation with our Chairman, also provides his recommendations on any compensation adjustments. TheOur Compensation Committee approves any base salary adjustments for these executives based on factors such factors as the competitive compensation analysis, the Chief Executive Officer’sour CEO’s assessment of individual performance, the Company’s performance, and the location in the salary range of the executive’s current salary within the applicable salary range, general market conditions and internal pay equity considerations.
The process is similar for determining any base salary adjustments for the Chief Executive Officer,our CEO, except that the Chief Executive Officerour CEO does not provide theour Compensation Committee with a recommendation. The Chief Executive OfficerOur CEO presents a self-assessment of his performance during the year to theour Compensation Committee, which then approves any base salary adjustment based on the factors described above with respect to theour other executives. To the extent it deems necessary and appropriate, theour Compensation Committee meets in executive session to discuss adjustments to the base salaries of the Company’sour executive officers, including the Chief Executive Officer.our CEO. Such adjustments typically take effect on or about July 1 of each year.
During 2015, after reviewPrior to 2017, our Compensation Committee last engaged PwC in 2014 to provide a market assessment and benchmarking data for the total cash compensation paid to our executive officers. The updated market compensation survey and peer data PwC provided to our Compensation Committee in 2017 indicated the base salaries paid to our NEOs were substantially below the 50th percentile of the 2014 PwC reporttheir peers. After reviewing PwC’s updated peer and consultationmarket data, and consulting with theour CEO regarding the other NEOs’ responsibilities, performance and his recommendations, theour Compensation Committee approved a 2.5% increasethe following increases to the base salaries paid to our NEOs:
Name | 2017 Base Salary | 2016 Base Salary | Percentage Increase | |||||||||
Damon T. Hininger | $ | 912,660 | $ | 861,000 | 6.0% | |||||||
David M. Garfinkle | $ | 429,570 | $ | 387,000 | 11.0% | |||||||
Harley G. Lappin | $ | 436,814 | $ | 412,089 | 6.0% | |||||||
Anthony L. Grande | $ | 436,814 | $ | 412,089 | 6.0% | |||||||
Lucibeth N. Mayberry | $ | 398,394 | $ | 314,600 | 26.6% |
These base salary increases, in our Compensation Committee’s view, correctly positioned each of our NEOs, other than Mr. Garfinkle, who received a 7.5% increase, withNEO’s salary relative to the salaries effective as50th percentile of July 6, 2015. The Committee believed thatour peer group companies. In addition to the raises were appropriate given that, based onaforementioned
factors, in determining the 2014 PwC report, the existing salaries were at or below the Salary Midpoint of their peers. The largerbase salary increase for Mr. Garfinkle reflectsMs. Mayberry, our Compensation Committee considered the larger disparity between his base salaryexpansion of Ms. Mayberry’s role to include direct leadership responsibility for our CoreCivic Properties business and the Salary Midpoint for his position of $420,000our mergers and in recognition of the importance of his role.acquisitions activities.
Name | 2015 Base Salary $ | 2014 Base Salary $ | Percentage Increase | |||||||||
Damon T. Hininger | 861,000 | 840,000 | 2.5 | % | ||||||||
David M. Garfinkle | 387,000 | 360,000 | 7.5 | % | ||||||||
Harley G. Lappin | 412,089 | 402,038 | 2.5 | % | ||||||||
Anthony L. Grande | 412,089 | 402,038 | 2.5 | % | ||||||||
Steven E. Groom | 327,442 | 319,456 | 2.5 | % |
Annual Cash Incentive Plan Compensation
Our annual cash incentive plan compensation provides our executive officers with the potential for significantly enhancedan opportunity to earn cash compensation based on the extent to which financialobjective performance targetsgoals set in advance by theour Compensation Committee are met. Each ofGenerally, our Compensation Committee sets the named executive officers in the annual cash incentive plan can earn between 5% andmaximum bonus opportunity at 200% of his or her actual salary based on our performance against pre-established financial goals, with 75% of base salary payable to each of our NEOs based on target performance against these goals.
The financial goals forpaid during the 2015 cash incentive plan were Adjusted EPS and growth in normalized funds from operations, or normalized FFO per share. In order for cash incentives to be payable, we must first achieve positive Adjusted EPS. If positive Adjusted EPS is not achieved, then no amounts could be earned under the cash incentive plan. Presuming positive Adjusted EPS criteria is met, the actual bonus payable is determined through the Committee’s exercise of negative discretion, based on our normalized FFO per share against pre-established goals as set forth in the table below. As in 2014, the Committee chose normalized FFO per share as the performance metric for 2015 alongyear, with positive Adjusted EPS, because it believes that with the Company operating as a REIT, there is a strong relationship between positive Adjusted EPS coupled with normalized FFO per share growth and growth in stockholder value. Normalized FFO per share is a common metric used to evaluate REITs, as it takes into account earnings from existing properties excluding the impact of depreciation of real estate assets, and thus measures the cash-generating potential of the REIT’s holdings.
Since 2010, the Compensation Committee has employed a target bonus opportunity of 75% of actual base salary, paid duringand exercises negative discretion to determine the yearactual annual cash incentive award for each of the NEOs, including our Chief Executive Officer.
The initial guidanceexecutive officers based on our performance against thepre-established, objective goals. Prior to 2017, our annual cash incentive plan utilized two financial performance metrics for 2015, as set forth in the Company’s earnings news release dated February 11, 2015, ranged from $1.94 to $2.02 for adjusted diluteddetermining annual cash bonus awards: Adjusted EPS and from $2.67 to $2.75 for normalized FFO per share. The Compensation Committee establishes the performance goals based on a target bonus at 75% of base salary, which would be met for 2015 ifNormalized FFO. Provided we achieved positive Adjusted EPS for the year, the annual cash bonus earned by each of our NEOs was determined by our Normalized FFO performance.
In 2016, our Compensation Committee, with the assistance of PwC, completed a comprehensive review of the annual and normalizedlong-term incentive compensation plans for our executive management team. Based on this review, our Compensation Committee concluded the competitiveness of our annual cash incentive plan for attracting, retaining and rewarding high performing executives, as well its alignment with our growth, investment and diversification strategies, would be improved by:
Adding Adjusted EBITDA as a complimentary financial performance metric to Normalized FFO per share
Allocating a portion of $2.73the total incentive compensation opportunity to the achievement of objective, strategic business goals
Providing for 2015. Thea minimum level of annual cash incentive compensation (assuming we achieve positive Adjusted EPS), while reducing the maximum bonus was set at 200%opportunity
Our Compensation Committee added Adjusted EBITDA as a complimentary financial performance goal to Normalized FFO because, unlike FFO, Adjusted EBITDA is not impacted by taxes and short-term financing issues, such as debt refinancing and equity issuances, that are not reflective of operating performance. Objective, strategic business goals were adopted as a performance metric because our Compensation Committee believes achieving meaningful progress in growing and diversifying our business and cash flows is critical to creating long-term value for our stockholders, but such progress may not be immediately reflected in our financial results. Our Compensation Committee believes the additional performance goals strike an appropriate balance in rewarding our executive officers for achieving positive financial results in the near-term, while strengthening their focus on the successful execution of our long-term growth strategy.
After careful consideration of the market data, peer benchmarking and input from PwC, our Compensation Committee adopted a four-factor formula (the“4-Factor Bonus Formula”) for the determination of awards to our executive officers under our annual cash incentive plan:
2017 Bonus Opportunity | ||||||||||||
Performance Metric | Minimum | Target | Maximum | |||||||||
Adjusted EPS* | N/A | N/A | N/A | |||||||||
Normalized FFO | 8.50% | 38.70% | 75.00% | |||||||||
Adjusted EBITDA | 8.50% | 38.70% | 75.00% | |||||||||
Strategic Business Goals | — | — | 25.00% | |||||||||
TOTAL | 17.00% | 77.40% | 175.00% |
* | Positive Adjusted EPS is required as a threshold for incentive awards. |
Under the4-Factor Bonus Formula, no cash incentive compensation is payable unless we generate positive Adjusted EPS for the year. Presuming we generate positive Adjusted EPS, the4-Factor Bonus Formula provides for a minimum cash incentive of 17% of actual base salary, which wouldbut contemplates the maximum bonus awarded will not exceed 175% (rather than 200%) of actual base salary. Whether the actual cash bonus will exceed the 17% minimum bonus principally depends on our objective performance againstpre-established Normalized FFO and Adjusted EBITDA goals. An additional bonus amount not to exceed 25% of actual base salary may be met if we achieved normalized FFO per shareawarded at the discretion of $2.93. Theour Compensation Committee setbased on their assessment of our performance with respect to severalpre-established, strategic business goals related to the normalizedsuccessful execution of our long-term growth, investment and diversification strategy.
Our Compensation Committee established the following goals and corresponding cash bonus amounts under the4-Factor Bonus Formula for Normalized FFO per share bonus range asand Adjusted EBITDA based on the full year financial guidance set forth in the following table so that the target bonus would be met if we achieved positive Adjusted EPS and normalized FFO per share that fell between our initial guidance.earnings press release dated November 2, 2016:
Normalized FFO per share | Bonus % of Actual Salary | |||
$2.60 | 5.00 | % | ||
$2.61 | 10.00 | % | ||
$2.62 | 15.00 | % | ||
$2.63 | 20.00 | % | ||
$2.64 | 25.00 | % | ||
$2.65 | 30.00 | % | ||
$2.66 | 35.00 | % | ||
$2.67 | 40.00 | % | ||
$2.68 | 45.00 | % | ||
$2.69 |
| 51.00 (Actual | % ) | |
$2.70 | 57.00 | % | ||
$2.71 | 63.00 | % | ||
$2.72 | 69.00 | % | ||
$2.73 |
| 75.00 (Target | % ) | |
$2.74 | 80.26 | % | ||
$2.75 | 85.55 | % |
Normalized FFO per share | Bonus % of Actual Salary | |||
$2.76 | 90.84 | % | ||
$2.77 | 96.13 | % | ||
$2.78 | 101.42 | % | ||
$2.79 | 106.71 | % | ||
$2.80 | 112.00 | % | ||
$2.81 | 119.00 | % | ||
$2.82 | 126.00 | % | ||
$2.83 | 133.00 | % | ||
$2.84 | 140.00 | % | ||
$2.85 | 147.00 | % | ||
$2.86 | 154.00 | % | ||
$2.87 | 160.58 | % | ||
$2.88 | 167.15 | % | ||
$2.89 | 173.72 | % | ||
$2.90 | 180.29 | % | ||
$2.91 | 186.86 | % | ||
$2.92 | 193.43 | % | ||
$2.93 | 200.00 | % |
NORMALIZED FFO GOAL | ADJUSTED EBITDA GOAL | |||||||||
Normalized share | Bonus % of Base Salary | Adjusted EBITDA (in thousands) | Bonus % of Base Salary | |||||||
8.50% | Minimum Bonus | 8.50% | Minimum Bonus | |||||||
$2.16 | 11.52% | $368,683 | 11.52% | |||||||
$2.17 | 14.54% | $369,963 | 14.54% | |||||||
$2.18 | 17.56% | $371,244 | 17.56% | |||||||
$2.19 | 20.58% | $372,525 | 20.58% | |||||||
$2.20 | 23.60% | $373,805 | 23.60% | |||||||
$2.21 | 26.62% | $375,086 | 26.62% | |||||||
$2.22 | 29.64% | $376,367 | 29.64% | |||||||
$2.23 | 32.66% | $377,647 | 32.66% | |||||||
$2.24 | 35.68% | $378,928 | 35.68% | |||||||
$2.25 | 38.70% | Target Bonus | $380,209 | 38.70% | Target Bonus | |||||
$2.26 | 41.72% | $381,489 | 41.72% | |||||||
$2.27 | 44.74% | $382,770 | 44.74% | |||||||
$2.28 | 47.76% | $384,051 | 47.76% | |||||||
$2.29 | 50.78% | $385,332 | 50.78% | |||||||
$2.30 | 53.80% | $386,612 | 53.80% | |||||||
$2.31 | 56.82% | $387,893 | 56.82% | |||||||
$2.32 | 59.84% | $389,174 | 59.84% | |||||||
$2.33 | 62.86% | $390,454 | 62.86% | |||||||
$2.34 | 65.88% | $391,735 | 65.88% | |||||||
$2.35 | 68.90% | $393,016 | 68.90% | |||||||
$2.36 | 71.92% | $394,296 | 71.92% | |||||||
$2.37 | 75.00% | Maximum Bonus | $395,577 | 75.00% | Maximum Bonus |
Adjusted EPS, Normalized FFO and normalized FFO per shareAdjusted EBITDA are adjusted for any of the items set forth in Section 11.2 of the Company’s Amended and Restated 2008 Stock Incentive Plan, or the 2008 Plan. For reconciliationAdjusted EPS, Normalized FFO and Adjusted EBITDA are amounts calculated and presented on the basis of EPS and FFO figures, pleasemethodologies other than in accordance with GAAP. Please refer to the reconciliation disclosureAppendix for further discussion and reconciliations of these measures to their most comparable GAAP measures.
For 2017, we generated $1.57 of positive Adjusted EPS, $2.38 of Normalized FFO and $387,881,000 of Adjusted EBITDA, resulting in the Company’s Annual Report on Form 10-Kbonuses being earned under the heading “Management’s Discussion4-Factor Bonus Formula at 75.00% for our Normalized FFO performance and Analysis56.79% for our Adjusted EBITDA performance. Our Compensation
Committee determined a bonus amount of Financial Condition and Results of Operations—Liquidity and Capital Resources—Funds from Operations.”25.00% had been earned for our performance in achieving thepre-established 2017 strategic business goals:
Strategic Goal | Maximum Bonus (%) | 2017 Performance | Actual Bonus Award (%) | |||||||||
Execute contract for CoreCivic Properties real estate-only solution (develop new facility or lease owned facility) | 10% | 100% | 10% | |||||||||
Complete financing transaction that extends weighted average maturity, adds liquidity, reduces leverage, enables use of project-specific financing or lowers overall weighted average cost of capital | 10% | 100% | 10% | |||||||||
Execute new contract(s) that offset(s) EBITDA erosion attributable to reduced Californiaout-of-state populations | 5% | 100% | 5% |
Based on our Adjusted EPS of $1.93 and normalized FFO per share of $2.69 for 2015, bonuses were earned at 51% of salary, below target, and2017 performance, the following annual cash incentive plan compensation was awarded to our NEOs in February 20162018 consistent with such earned amount:the4-Factor Bonus Formula:
Name | 2015 Cash Incentive Compensation | |||
Damon T. Hininger | $ | 450,232 | ||
David M. Garfinkle | $ | 197,547 | ||
Harley G. Lappin | $ | 215,489 | ||
Anthony L. Grande | $ | 215,489 | ||
Steven E. Groom | $ | 171,225 |
For 2016, the Compensation Committee determined to continue the umbrella annual cash incentive plan on substantially the same terms as in 2015, requiring positive Adjusted EPS and updated performance goals for normalized FFO.
Name Damon T. Hininger David M. Garfinkle Harley G. Lappin Anthony L. Grande Lucibeth N. Mayberry Normalized FFO
Goal Adjusted EBITDA
Goal Strategic Business
Goals 2017 Cash Incentive
Compensation 2017
Base
Salary Bonus
(%) Bonus
($) Bonus
(%) Bonus
($) Bonus
(%) Bonus
($) Bonus
(%) Bonus
($) $ 886,830 75.00% $ 665,122 56.79% $ 503,647 25.00% $ 221,707 156.79% $ 1,390,476 $ 408,285 75.00% $ 306,214 56.79% $ 231,872 25.00% $ 102,071 156.79% $ 640,157 $ 424,452 75.00% $ 318,339 56.79% $ 241,054 25.00% $ 106,113 156.79% $ 665,506 $ 424,452 75.00% $ 318,339 56.79% $ 241,054 25.00% $ 106,113 156.79% $ 665,506 $ 346,310 75.00% $ 259,733 56.79% $ 196,675 25.00% $ 86,577 156.79% $ 542,985
Performance-Based Equity Incentive Compensation
One of our keyOur pay mix is shifted toward equity compensation philosophies is thatbecause we believe long-term, stock-basedequity-based incentive compensation strengthens and aligns the interests of our executive officers with our stockholders. Equity incentive awards are generally granted to our executive officers on an annual basis. Our pay mix is shifted toward equity compensation, as we believe equity best ties the compensation of our executive officers with the interest of our stockholders. For 2015, consistent with 2014,2017, we granted all of our equity incentive awards in the form of performance-based RSUs. In 2013, the year of transition to REIT status, we granted only time-based RSUs. Prior to 2013, the Committee employed a compensation strategy utilizing a mix of stock options, with time-based vesting, and restricted stock units, with performance-based vesting based on our Adjusted EPS. In February 2015, in order to continue toRSUs, which align management’s interests with those of our stockholders to tie compensation toby putting a substantial portion of an executive’s pay at risk and dependent upon our performance as a REIT and to put a substantial portion of the executive’s pay at risk based on our performance, the Compensation Committee determined to grant performance-based RSUs in 2015 that are substantially similar to the performance-based RSUs granted in 2014 except that rather than vesting permitted based on cumulative normalized FFO growth as in 2014, if the performance goals in any one year for normalized FFO is not met, the tranche for such year will not vest and be forfeited.REIT.
The value of the performance-based RSUs granted in 2015 was at the same levels awarded in 2014. In making its determinations, theOur Compensation Committee considered many factors in determining whether to grant performance-based RSUs to our NEOs (as well as the value of RSUs granted), including a comparison toour financial performance, our progress in the successful execution of our growth and diversification strategy, competitive market practices, as reflected by the LTIP Fair Value from the 2014 PwC report (discussed above), internal pay equity, executive recruitment and theretention, and our focus on equity compensation in our pay mix to encourage long-term value creation, retention and alignment with stockholder interests.creation. The grant date fair value of performance-based RSUs awarded in 2017 was 5% higher than RSUs awarded in 2016:
Name | 2015 Performance-based RSUs Granted | Grant Date Fair Value | 2014 LTIP Fair Value of Peer Group | 2017 Performance-based RSUs Granted | Grant Date Fair Value | |||||||||||||||
Damon T. Hininger | 48,371 | $ | 1,946,449 | $ | 2,500,000 | — | $ | — | ||||||||||||
David M. Garfinkle | 23,288 | $ | 937,109 | $ | 850,000 | 31,605 | $ | 1,033,167 | ||||||||||||
Harley G. Lappin | 23,288 | $ | 937,109 | $ | 850,000 | 31,605 | $ | 1,033,167 | ||||||||||||
Anthony L. Grande | 23,288 | $ | 937,109 | $ | 850,000 | 31,605 | $ | 1,033,167 | ||||||||||||
Steven E. Groom | 19,179 | $ | 771,763 | $ | 735,000 | |||||||||||||||
Lucibeth N. Mayberry | 26,028 | $ | 850,855 |
(1) | In support of the cost reduction plan we announced in 2016, Mr. Hininger voluntarily forfeited the 70,817 performance-based RSUs awarded to him in 2016, and, at Mr. Hininger’s request, our Compensation Committee did not award him any performance-based RSUs in 2017. |
Terms of Performance-basedPerformance-Based RSUs Granted in 2015.2017. The performance-based RSUs we granted in 20152017 vest based on our achievement of normalizedNormalized FFO per share goals in each year of the three yeara three-year vesting period. Accordingly, theThe amount of performance-based RSUs aregranted is divided into three equal tranches, of 33% of the granted amount that will vest over a three year period, with 1/3rd, or aeach tranche vesting if we achieve thepre-established maximum normalized Normalized FFO per shareperformance goal assigned to the vesting year. If we fail to achieve the Normalized FFO performance goal for that year’s tranche. The yearly goals are based on pre-established annual growth rates. Commencing for 2015 performance-based RSUs, the annual FFO per share performance goals are noncumulative so to the extent the maximum normalized FFO per share performance goal for a particularany vesting year, is missed, the tranche for such year will not vest and will, instead, be forfeited. Normalized FFO per share for purposes of these awards is our normalized FFO per share as reported in our quarterly and annual reports. The normalized FFO per share performance goals were established based on our historical FFO per share and five-year compounding of the maximum growth rates.
The table below sets forth the per shareNormalized FFO performance goalsgoal for each year in the three-year vesting period for the performance-based RSUs granted in 2015.2017:
Period/Tranche | Normalized FFO Required for Vesting of Tranche Each Year | Normalized FFO Required for Vesting of Tranche Each Year | ||||||
2015 | $ | 2.36 | ||||||
2016 | $ | 2.44 | ||||||
2017 | $ | 2.51 | $ | 1.70 | ||||
2018 | $ | 1.74 | ||||||
2019 | $ | 1.78 |
Outstanding Performance-basedPerformance-Based RSUs Granted in 2014.2016.In 2014,2016, we granted performance-based RSUs that vest in accordance withare subject to the same vesting principles as the performance-based RSUs granted in 2015, except that the annual FFO performance goals are cumulative, such that to the extent that the maximum normalized FFO performance goal for a particular year is missed, if in the subsequent year the cumulative maximum normalized FFO performance goal is achieved, the tranche for the year in which the maximum goal is achieved will vest, plus each prior unvested tranche for the prior years (where maximum normalized FFO was not achieved) will also vest. Based on our normalized FFO per share of $2.69 for 2015, the second tranche of the award vested, representing one third of the shares granted, as set forth in the table below.2017. The table below sets forth the performance goalsNormalized FFOperformance goal for each year in the three-year vesting period for the performanceperformance-based RSUs granted in 2014.2016:
Maximum Normalized FFO Required for Vesting of Tranche During the Three-Year Period | Vesting of Tranche at End of Three-Year Period Based on Performance for the Year Specified | |||||||||||||||
Period/Tranche | 50% Vesting | 75% Vesting | 100% Vesting | |||||||||||||
2014 | $ | 2.44 | $ | 2.01 | $ | 2.21 | $ | 2.44 | ||||||||
2015 | $ | 2.56 | $ | 2.01 | $ | 2.24 | $ | 2.51 | ||||||||
2016 | $ | 2.69 | $ | 2.01 | $ | 2.26 | $ | 2.59 |
Period/Tranche | Normalized FFO Required for Vesting of Tranche Each Year | |||
2016 | $ | 2.25 | ||
2017 | $ | 2.31 | ||
2018 | $ | 2.38 |
Outstanding Performance-Based RSUs Granted in 2015.In 2013, given our transition to REIT status,2015, we granted only time-based RSUs.performance-based RSUs that are subject to the same vesting principles as the performance-based RSUs granted in 2017. The table below sets forth the Normalized FFOperformance goal for each year in the three-year vesting period for the performance-based RSUs granted in 2015:
Period/Tranche | Normalized FFO Required for Vesting of Tranche Each Year | |||
2015 | $ | 2.36 | ||
2016 | $ | 2.44 | ||
2017 | $ | 2.51 |
Vested Performance-basedVesting of Performance-Based RSUs Based on 20152017 Performance.Based on our normalized FFO per share of $2.69 for 2015, the tranche of the 2015 and 2014 performance-based RSUs that could vest based on 2015 performance, all vested, representing one third of the shares granted, as As set forth in the table below.below, our Normalized FFO of $2.38 for 2017 resulted in the vesting of the 2017 tranche for outstanding performance-based RSUs granted in 2017 and 2016, but the 2017 tranche of performance-based RSUs granted in 2015 did not vest and was forfeited. In accordance with the terms of the awards, the vesting occurs and shares are issued on the later of (i) delivery of the audited financial statements by the Company’s certified independent registered public accountants for the applicable fiscal year (in the Company’s filing of the Annual Report on Form10-K) and
(ii) the applicable anniversary of the grant date. Thus, the tranche of the 20142017 and 2015 Performance- based2016 performance-based RSUs that vested based on 20152017 performance were deemed vested, and the shares were issued, on February 25, 2016.22, 2018.
Name | 2015 Performance-based RSUs that Vested based on 2015 Performance and Issued in 2016 | 2014 Performance-based RSUs that Vested based on 2015 Performance and Issued in 2016 | 2017 Performance-Based RSUs that Vested based on 2017 Performance and Issued in 2018 | 2016 Performance-Based RSUs that Vested based on 2017 Performance and Issued in 2018 | 2015 Performance-Based RSUs that Vested based on 2017 Performance and Issued in 2018 | |||||||||||||||
Damon T. Hininger | 16,123 | 20,031 | — | — | — | |||||||||||||||
David M. Garfinkle | 7,762 | 9,632 | 10,535 | 11,365 | — | |||||||||||||||
Harley G. Lappin | 7,762 | 9,644 | 10,535 | 11,365 | — | |||||||||||||||
Anthony L. Grande | 7,762 | 9,644 | 10,535 | 11,365 | — | |||||||||||||||
Steven E. Groom | 6,393 | 7,942 | ||||||||||||||||||
Lucibeth N. Mayberry | 8,676 | 9,359 | — |
(1) | In support of the cost reduction plan we announced in 2016, Mr. Hininger voluntarily forfeited the 70,817 performance-based RSUs awarded to him in 2016, and, at Mr. Hininger’s request, our Compensation Committee did not award him any performance-based RSUs in 2017. |
Dividend Equivalent Rights. The performance-based RSUs and time-based RSUs have associated dividend equivalent rights that are earned based on cash dividends paid by the Company while the award is unvested and outstanding. The Dividend Equivalent Rightsdividend equivalent rights are paid in cash, and do not vest and are not paid until, and then only to the extent, the associated performance-based RSUs or time-based RSUs vest and the underlying shares are issued. This further aligns the executive officer’s interests with our stockholders, encourages dividend growth performance and does not result in any unearned compensation.
|
Severance and Change in Control Benefits
We believe that reasonable severance and change in control benefits are necessary in order to recruit and retain effective senior managers. These severance benefits reflect the fact that it may be difficult for such executives to find comparable employment within a short period of time and are a product of a generally competitive recruiting environment within our industry. We also believe that a change in control arrangement will provide an executive security that will likely reduce any reluctance of an executive to pursue a change in control transaction that could be in the best interests of our stockholders. In addition, we have sought to maintain a high level of consistency in the contractual terms applicable to all members of the executive team. We maintain employment agreements with each of our executive officers that provide cash severance equal to their currentthen-current annual base salary for terminationstermination of employment by the Company without cause,“cause” or resignation for “good reason,” and a double trigger payment of 2.99 times their base salary, plus certain other benefits, in the event of termination of employment by the Company (other than forwithout “cause”) or resignation for “good reason” in connection with a “change in control”.control.”
The executive employment agreements and the potential costs in the event of a change in control are reviewed periodically by theour Compensation Committee, and the Committeewhich stays abreast of developments and suggested best practices in compensation structure and design. The executive employment agreements with our executive officers other than Mr. Swindle were set to expire in December 2014.2017. In 2014,2017, we undertook a comprehensive review of the provisions of the executive employment agreements (including protections provided in the event of a change in control, and compliance with applicable law)law and on December 30, 2014provisions related to post-terminationnon-competition,non-solicitation, confidentiality andnon-disclosure) and, effective January 1, 2018, we entered into new or revised employment agreements with each of our executives on substantially similar economic terms, updatingsenior executives. The new employment agreements provide for an initial term of two years, with automatic renewal for an additional year absent notice of nonrenewal by the minimumCompany or the executive, update the base salary payable underof the agreementexecutive to equal the salary levels in effect for 2014,current amount, eliminate the accrual of paid vacation benefits and updatingupdate post-termination covenants to enhance protections to the provisions toCompany and ensure compliance with applicable law, including Section 409A of the Internal Revenue Code.law.
Under our equity award agreements, all outstanding equity awards would accelerate upon a change in control. TheOur Compensation Committee believes that the single trigger equity acceleration encourages management to stay committed towards any potential transaction that may be in the best interests of our stockholders. For a detailed discussion of potential severance and change in control benefits, see “Potential Payments Upon Termination or Change in Control,” beginning on page 4051 of this Proxy Statement.
Perquisites and Other Benefits
The Company has previously paid relocation expenses, either in the form of reimbursement or a lump sum payment, to the NEOs who have relocated to Nashville, Tennessee in order to assume their positions with the Company. We permit limited tax gross up payments to our executives to cover the income tax associated with the taxable portions (if any) of such relocation reimbursement payments. No such relocation and tax gross up payments were made to the named executive officers during 2015.
The named executive officersNEOs are also eligible for benefits generally available to and on the same terms as the Company’s employees who are exempt for purposes of the Fair Labor Standards Act, including health insurance, short-term disability insurance dental insurance and group lifedental insurance. Additionally, the Company pays supplemental life and long-term disability insurance premiums for the named executive officers.NEOs. Pursuant to their employment agreements and in order to encourage community involvement, the named executive officers are also eligible for reimbursement for certain civic and professional memberships that are approved in advance. We also pay for physicals for executive officers up to $2,000 per individual on an annual basis.
Retirement Plans
The Company maintains a qualified 401(k) plan. The Company matches a percentage of eligible employee contributions to our qualified 401(k) Plan. Employer matching contributions are made in cash on adollar-for-dollar basis up to 5% of the employee’s base salary and are 100% vested immediately.
The Company also hasmaintains a nonqualified deferred compensation plan covering our executive officers and certain key employees.employees (the “Executive Deferred Compensation Plan”). Under the terms of the deferred compensation plan,Executive Deferred Compensation Plan, participants are allowedeligible to defer up to 50% of their annual base salary and 100% of their incentive cash bonus each plan year. The Company, in its discretion, may make matching contributions to the plan. Currently, the Company makes matching contributions equal to 100% of amounts deferred up to 5% of total cash compensation. The matching contribution is credited on a monthly basis, but is reduced at the end of the plan year for any matching amounts contributed to the participant’s 401(k) account. Any compensation deferred and matching contributions, if any, earn a return based on a fixed rate that is established by the Company based on the return received by the Company on certain investments designated as a funding mechanism for meeting its obligations under the plan. Participants are 100% vested in amounts deferred under the deferred compensation planExecutive Deferred Compensation Plan and earnings on those amounts, while the matching contributions vest 20% after two years of service, 40% after three years of service, 80% after four years of service and 100% after five years of service, subject to accelerated vesting in the event of a change in control, death, disability or retirement (age 62).
Executive Officer Stock Ownership Guidelines
Since March 1, 2007, we have maintainedWe maintain stock ownership guidelines applicable to our executive officers andnon-executive directors. The stock ownership guidelines are designed to align the economic interests of executive officers and directorsour Board with those of stockholders, and to discourage excessive risk-taking by management and directors.
The original Under these guidelines, provided thateach of our executive officers areis expected to own a fixed number of shares of the Company’s common stock of the Company, as set forth in the table below. This fixed number equalsequal to three times such executive officer’s base salary on theirhis or her hire or promotion date divided by the Company’s closing common stock price, as reported onby the NYSE, on such date. The original guidelines also provided that the Company’s non-executive directorsExecutive officers are expected to own a fixed number of shares of common stock of the Company equal to four times such director’s annual retainer (excluding any retainer for chairing or serving as a member of a committee) in effect as of March 1, 2012 or their later date of initial election or appointment to the Board, divided by the Company’s closing common stock price, as reported on the NYSE, on such date.
The stock ownership guidelines applicable to our executive officers and our non-executive directors were amended by our Board in May 2013 to increase the number of shares the directors and officers of the Company are expected to own to give effect to the REIT conversion special dividend.
Executive officers and non-executive directors are required to achieve these ownership levels, subject to a limited hardship exemption, within five years following their date of hire or promotion, or initial appointment or election, as applicable, or (in the case of those serving at the time the guidelines were adopted) by March 1, 2012.
The following may berules are used in determining share ownership:ownership of our executive officers and directors under the guidelines:
shares of common stock owned outright by the executive officer or non-executive director and his or her immediate family members who share the same household, whether held individually or jointly;
shares of restricted stock or restricted stock unitsRSUs where the restrictions have lapsed, even though such shares may be subject to an election made by the holder to defer receipt of the shares; and
shares held in trusts or other legal entities established for estate planning purposes with respect to which the executive officer or non-executive director retains beneficial ownership (due to complexities of these arrangements, requests to include shares held in such arrangements must be reviewed and approved by theour Compensation Committee).
The guidelines were based, in part, on information provided by PwC that summarized the frequencyexistence of such programs at Fortune 500 companies and reported on the most common types of such programs. Based on such research, theour Board of Directors determined thatthe ownership requirements were fair, yet challenging, ownership requirements and that five years was a reasonable time period during which executives and directors would be able to comply. The CommitteeOur Board believes that these ownership guidelines encourage executive officers and directors of the Company to act in the long-term interests of our stockholders, while discouraging excessive risk-taking.
Our guidelines and the compliance status of the Company’s named executive officersour NEOs as of the last quarterly review date of February 2, 201621, 2018 are shown in the table below.below:
Name | Shares Required by Guidelines | Number of Shares Held | Compliance Date | Shares Required by Guidelines | Number of Shares Held | Compliance Deadline | ||||||||||||||||||
Damon T. Hininger | 87,138 | 162,245 | 10/15/2014 | 87,138 | 224,758 | 10/15/2014 | ||||||||||||||||||
David M. Garfinkle | 32,777 | 48,927 | 5/1/2019 | 32,777 | 84,106 | 5/1/2019 | ||||||||||||||||||
Harley G. Lappin | 47,759 | 61,177 | 6/1/2016 | — | — | — | ||||||||||||||||||
Anthony L. Grande | 35,671 | 39,856 | 8/21/2013 | 35,671 | 39,510 | 8/21/2013 | ||||||||||||||||||
Steven E. Groom | 39,751 | 61,967 | 4/22/2015 | |||||||||||||||||||||
Lucibeth N. Mayberry | 22,340 | 45,615 | 11/01/2018 |
(1) | Mr. Lappin retired from his position as our Executive Vice President and Chief Corrections Officer effective January 1, 2018. Effective January 1, 2018, Mr. Lappin was appointed to our Board and became subject to the stock ownership guidelines applicable to ournon-executive directors. |
Grant Timing Policy
To ensure that our equity compensation awards are granted appropriately, we have the following practices regarding the timing of equity compensation grants and for stock option exercise price determinations:
Grants of equity awards for executive officers are typically made on the date of the February Compensation Committee meeting, after theour Compensation Committee has had the opportunity to review full year results for the prior year and consider anticipated results for the current year.
Our Compensation Committee occasionally approves additional equity awards in certain special circumstances, such as upon an executive officer’s initial employment with the Company, the promotion of an executive officer to a new position or in recognition of special contributions made by an executive officer. For grants to executive officers, all such grants are approved by theour Compensation Committee with an effective date of grant on or after the date of such approval. If the grant date is after the date of approval, it is on a date that is specified by theour Compensation Committee at the time of approval.
The Company strives to ensure that equity grants are made following the public release of important information such asyear-end results or anticipated results for the succeeding year.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility on the Company’s tax returndeductibility of compensation over $1.0 million paid to the Chief Executive Officer or any ofand the other four most highlythree highest compensated executive officers (excluding the Chief Executive Officer) serving at the end of each fiscal year. Prior to the fiscal year unless, in general, a significant portionenactment of the Tax Cuts and Jobs Act (H.R. 1) (the “TCJA”) on December 22, 2017, which is effective for tax years beginning after December 31, 2017, the Section 162(m) limit on deductible compensation did not apply to compensation that constituted “qualified performance-based compensation” or that was paid to our Chief Financial Officer. To meet this exception for performance-based compensation, all of the following criteria must have been met:
the compensation is contingent on the attainment of one or morepre-established, objective performance goals;
the performance goals are set by our Compensation Committee;
the plan pursuant to a plan which the performance-based compensation is performance-related, non-discretionary,determined are disclosed to and has been approved by our stockholders. Thestockholders before the compensation is paid; and
our Compensation Committee’sCommittee certifies in writing that the performance goals and any other material terms of the performance-based compensation were satisfied.
All Compensation Committee actions with respectin 2017 were taken prior toSection 162(m) in 2015 were the enactment of the TCJA and prior to makeNovember 2, 2017, and our Compensation Committee made reasonable efforts to ensure that compensation was deductible to the extent permittedCompany’s performance-based awards constituted “qualified performance-based compensation” under Section 162(m) while simultaneously providing appropriate rewards for performance. The Committee intends to structure performance-based compensation awarded in the future to executive officers who may be subject to Section 162(m) in a manner that satisfies the relevant requirements. The Committee,actual performance; however, reserves the authority to award non-deductible compensation as deemed appropriate. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and related regulations, no assurance can be given that compensation intended to satisfy the requirements for deductibility under Section 162(m) will in fact do so.
As a result of the enactment of the TCJA, the exception of allowing the full deductibility of “qualified performance-based compensation” will no longer apply to compensation paid after January 1, 2018, unless paid pursuant to a written binding contract, such as certain long-term equity incentive compensation awards that the Compensation Committee granted in 2017 in effect on or before November 7, 2017. The Compensation Committee will continue to retain the flexibility to design and maintain the Company’s executive compensation programs in a manner that is most beneficial to the Company’s stockholders, including the payment of compensation that may not be deductible under Section 162(m).
Report of the Compensation Committee
The following Report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with our management. Taking this review and discussion into account, the undersigned Committee members recommended to theour Board of Directors that theour Board approve the inclusion of the Compensation Discussion and Analysis in our Proxy Statement on Schedule 14A for filing with the SEC.
Submitted by the Compensation Committee of the Board of Directors:Committee:
Joseph V. Russell,Donna M. Alvarado, Chair
Robert J. Dennis
Mark A. Emkes
John R. Prann, Jr.
The following table summarizes the compensation earned or paid to our named executive officersNamed Executive Officers for service in the fiscal years ended December 31, 2015, 20142017, 2016 and 2013,2015, with the exception of Mr. Garfinkle,Ms. Mayberry, who first became a named executive officerNamed Executive Officer in 2014.2017:
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Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Change in Nonqualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) (4) | Total ($) | |||||||||||||||||||||
Damon T. Hininger | 2017 | $ | 886,830 | $ | — | $ | 1,390,476 | $ | 32,303 | $ | 64,048 | $ | 2,373,657 | |||||||||||||||
President and Chief Executive Officer | | 2016 | | $ | 861,000 | | $ | 2,043,779 | | $ | 86,100 | | $ | 29,355 | | $ | 80,964 | | $ | 3,101,198 | | |||||||
2015 | $ | 882,807 | $ | 1,946,449 | $ | 450,232 | $ | 25,148 | $ | 100,681 | $ | 3,405,317 | ||||||||||||||||
David M. Garfinkle | 2017 | $ | 408,285 | $ | 1,033,167 | $ | 640,157 | $ | 7,688 | $ | 37,312 | $ | 2,126,609 | |||||||||||||||
Executive Vice President and Chief Financial Officer | | 2016 | | $ | 387,000 | | $ | 983,982 | | $ | 38,700 | | $ | 6,930 | | $ | 42,145 | | $ | 1,458,757 | | |||||||
2015 | $ | 387,347 | $ | 937,109 | $ | 197,547 | $ | 5,697 | $ | 41,738 | $ | 1,569,438 | ||||||||||||||||
Harley G. Lappin | 2017 | $ | 424,452 | $ | 1,033,167 | $ | 665,506 | $ | 4,010 | $ | 35,134 | $ | 2,162,269 | |||||||||||||||
Executive Vice President and Chief Corrections Officer | | 2016 | | $ | 412,089 | | $ | 983,982 | | $ | 41,209 | | $ | 5,677 | | $ | 53,076 | | $ | 1,496,033 | | |||||||
2015 | $ | 422,527 | $ | 937,109 | $ | 215,489 | $ | 4,347 | $ | 55,789 | $ | 1,635,261 | ||||||||||||||||
Anthony L. Grande | 2017 | $ | 424,452 | $ | 1,033,167 | $ | 665,506 | $ | 18,368 | $ | 36,492 | $ | 2,177,985 | |||||||||||||||
Executive Vice President and Chief Development Officer | | 2016 | | $ | 412,089 | | $ | 983,982 | | $ | 41,209 | | $ | 16,901 | | $ | 44,588 | | $ | 1,498,769 | | |||||||
2015 | $ | 422,527 | $ | 937,109 | $ | 215,489 | $ | 14,793 | $ | 49,941 | $ | 1,639,859 | ||||||||||||||||
Lucibeth N. Mayberry | 2017 | $ | 346,310 | $ | 850,855 | $ | 542,985 | $ | 7,667 | $ | 22,999 | $ | 1,770,816 | |||||||||||||||
Executive Vice President, Real Estate |
(1) |
The amounts shown in this column represent the aggregate grant-date fair value of |
The amounts shown in this column reflect cash incentive plan compensation earned pursuant to the Company’s |
The amounts shown in this column represent above-market earnings on amounts that the |
The amounts shown as All Other Compensation for |
Name | 401(k) Plan Matching Contributions | DCP Matching Contributions | Life Insurance Premiums | Long Term Disability Premiums (a) | 401(k) Plan Matching Contributions | DCP Matching Contributions | Life Insurance Premiums | Long-Term Disability Premiums (a) | ||||||||||||||||||||||||||||||
Damon T. Hininger | $ | 13,250 | $ | 72,028 | $ | 2,399 | $ | 13,004 | $ 13,250 | $ 35,396 | $ 2,398 | $ 13,004 | ||||||||||||||||||||||||||
David M. Garfinkle | $ | 13,250 | $ | 20,471 | $ | 2,764 | $ | 5,253 | $ 13,250 | $ 9,099 | $ 3,091 | $ 11,872 | ||||||||||||||||||||||||||
Harley G. Lappin | $ | 13,250 | $ | 25,876 | $ | 7,412 | $ | 9,251 | $ 13,250 | $ — | $ 7,607 | $ 14,277 | ||||||||||||||||||||||||||
Anthony L. Grande | $ | 13,250 | $ | 27,016 | $ | 2,273 | $ | 7,402 | $ 13,250 | $ 10,033 | $ 2,273 | $ 10,936 | ||||||||||||||||||||||||||
Steven E. Groom | $ | 13,250 | — | $ | 8,529 | $ | 7,323 | |||||||||||||||||||||||||||||||
Lucibeth N. Mayberry | $ 13,250 | $ — | $ 1,788 | $ 7,961 |
(a) | The Company pays the long term disability premiums of its executive officers and certain other employees, but does not pay such premiums for all employees. |
Grants of Plan-Based Awards in 20152017
The following table sets forth the grants of plan-based awards that were made to the named executive officersNamed Executive Officers during the fiscal year ended December 31, 2015. No options were granted to our named executive officers in 2015.2017:
Estimated Possible Payouts Under Non- Equity Incentive Plan Awards (1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Estimated Possible Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | Grant Date Fair Value of Stock Awards ($)(3) | Grant Date | Minimum | Target | Maximum | Threshold | Target | Maximum | Grant Date Fair Value of RSU Awards ($) (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Damon T. Hininger | 2/19/2015 | 16,124 | (2 | ) | 48,371 | $ | 1,946,449 | 2/16/2017 | $ | 150,761 | $ | 686,406 | $ | 1,551,953 | — | (2) | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||
2/19/2015 | $ | 44,140 | $ | 662,105 | $ | 1,765,614 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David M. Garfinkle | 2/19/2015 | 7,763 | (2 | ) | 23,288 | $ | 937,109 | 2/16/2017 | $ | 69,408 | $ | 316,013 | $ | 714,499 | 10,535 | (2) | 31,605 | $ | 1,033,167 | |||||||||||||||||||||||||||||||||||||||||||
2/19/2015 | $ | 19,367 | $ | 290,510 | $ | 774,694 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harley G. Lappin | 2/19/2015 | 7,763 | (2 | ) | 23,288 | $ | 937,109 | 2/16/2017 | $ | 72,157 | $ | 328,526 | $ | 742,791 | 10,535 | (2) | 31,605 | $ | 1,033,167 | |||||||||||||||||||||||||||||||||||||||||||
2/19/2015 | $ | 21,126 | $ | 316,895 | $ | 845,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Anthony L. Grande | 2/19/2015 | 7,763 | (2 | ) | 23,288 | $ | 937,109 | 2/16/2017 | $ | 72,157 | $ | 328,526 | $ | 742,791 | 10,535 | (2) | 31,605 | $ | 1,033,167 | |||||||||||||||||||||||||||||||||||||||||||
2/19/2015 | $ | 21,126 | $ | 316,895 | $ | 845,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven E. Groom | 2/19/2015 | 6,393 | (2 | ) | 19,179 | $ | 771,763 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/19/2015 | $ | 16,787 | $ | 251,802 | $ | 671,472 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lucibeth N. Mayberry | 2/16/2017 | $ | 58,873 | $ | 268,044 | $ | 606,043 | 8,676 | (2) | 26,028 | $ | 850,855 |
(1) | The amounts shown in these columns reflect the |
(2) | The amounts shown in these columns |
(3) | The amounts shown in this column represent the aggregate grant-date fair value of the performance–based RSUs granted in |
On December 30, 2014,Effective January 1, 2018, the Company entered into new employment agreements with each of our named executive officers,NEOs, which replaced the existing employment agreements, thatmost of which were scheduled to expire on December 31, 2014.2017. Each agreement is effective as of January 1, 2015 and has anatwo-year initial term, that expires on December 31, 2015,and is subject to twoone automaticone-year renewals renewal unless either party provides notice ofnon-renewal at least 60 days in advance of the expiration of the then currentinitial term. Each of the employment agreements for our named executed officers has automatically renewed. Each of these agreements provides for a minimum annual salary that is consistent with the base salary in effect on December 30, 2014.salary. In addition, during the term, the executives are eligible to participate in all compensation or employee benefit plans or programs maintained by the Company for the benefit of its salaried employees or senior executives from time to time. These plans and programs may include health and life insurance. In addition, during the term, these agreements provide for reimbursement for certain professional and civic memberships that are approved in advance by the Company. Each of the employment agreements, continued theprovides for severance benefits and provisions that were in effect under the previous agreements and which are more fully discussed under “Potential Payments Upon Termination or Change in Control.”Control” in the “Compensation Discussion and Analysis” included in this Proxy Statement.
Outstanding Equity Awards at 20152017 FiscalYear-End
The following table sets forth information concerning (1) options (2) unvested time-based RSUs and (3) unearned performance-based RSUs for each of the named executive officersNamed Executive Officers that were outstanding as of December 31, 2015. The following awards reflect (a) the equitable and proportionate adjustments made to our outstanding options as a result of the REIT conversion special dividend of $6.66 per share paid in May 2013, resulting in an increase in the outstanding number of options and a corresponding reduction in the exercise price, and (b) the dividend equivalents that were awarded as a result of the REIT conversion special dividend on the then outstanding RSUs.2017:
Option Awards | Stock Awards | Option Awards(1) | RSU Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares, Units or Other Rights That Have Not Vested(2) | Market Value of Shares, Units or Other Rights That Have Not Vested(2) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | ||||||||||||||||||||||||||||||||||||||||||
Time-based RSUs | Performance-based RSUs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Damon T. Hininger | 13,409 | $ | 22.57 | 2/16/2017 | 19,588 | $ | 518,886 | 40,064 | (3) | $ | 1,061,295 | (3) | 38,112 | $ | 22.72 | 2/20/2018 | ||||||||||||||||||||||||||||||||||||||||
38,112 | $ | 22.72 | 2/20/2018 | 48,371 | (3) | $ | 1,281,348 | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||
14,027 | $ | 24.00 | 8/14/2018 | 14,027 | $ | 24.00 | 8/14/2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
35,324 | $ | 17.38 | 8/13/2019 | 35,324 | $ | 17.38 | 8/13/2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
126,924 | $ | 17.57 | 2/18/2020 | 126,924 | $ | 17.57 | 2/18/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
107,298 | $ | 20.78 | 2/23/2021 | 107,298 | $ | 20.78 | 2/23/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
139,273 | $ | 22.34 | 3/16/2022 | 139,273 | $ | 22.34 | 3/16/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
David M. Garfinkle | 11,345 | $ | 12.14 | 2/15/2016 | 2,979 | $ | 78,914 | 19,264 | (3) | $ | 510,303 | (3) | 10,020 | $ | 9.13 | 2/18/2019 | ||||||||||||||||||||||||||||||||||||||||
13,409 | $ | 22.57 | 2/16/2017 | 23,288 | (3) | $ | 616,899 | (3) | 19,385 | $ | 17.57 | 2/18/2020 | ||||||||||||||||||||||||||||||||||||||||||||
16,008 | $ | 22.72 | 2/20/2018 | 16,314 | $ | 20.78 | 2/23/2021 | 22,730 | $ | 511,425 | ||||||||||||||||||||||||||||||||||||||||||||||
24,012 | $ | 9.13 | 2/18/2019 | 21,175 | $ | 22.34 | 3/16/2022 | 31,605 | $ | 711,113 | ||||||||||||||||||||||||||||||||||||||||||||||
Harley G. Lappin | 22,730 | $ | 511,425 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
19,385 | $ | 17.57 | 2/18/2020 | 31,605 | $ | 711,113 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Anthony L. Grande | 22,730 | $ | 511,425 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
16,314 | $ | 20.78 | 2/23/2021 | 31,605 | $ | 711,113 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Lucibeth N. Mayberry | 21,175 | $ | 22.34 | 3/16/2022 | 18,719 | $ | 421,178 | |||||||||||||||||||||||||||||||||||||||||||||||||
15,881 | 5,294 | $ | 22.34 | 3/16/2022 | 26,028 | $ | 585,630 | |||||||||||||||||||||||||||||||||||||||||||||||||
Harley G. Lappin | 9,432 | $ | 249,854 |
| 19,289 23,288 | (3) (3) | $ $ | 510,966 616,899 | (3) (3) | |||||||||||||||||||||||||||||||||||||||||||||||
Anthony L. Grande | 9,432 | $ | 249,854 |
| 19,289 23,288 | (3) (3) | $ $ | 510,966 616,899 | (3) (3) | |||||||||||||||||||||||||||||||||||||||||||||||
Steven E. Groom | 4,907 | $ | 22.34 | 3/16/2022 | 7,768 | $ | 205,774 |
| 15,885 19,179 | (3) (3) | $ $ | 420,794 508,052 | (3) (3) |
(1) | Option awards reflect the equitable and proportionate adjustments made to our outstanding options |
Performance-based RSUs granted in |
Option Exercises and Stock Vested in 20152017
The following table sets forth information regarding the exercise of stock options and the vesting of RSUs and performance-based RSUs during the fiscal year ended December 31, 20152017 for each of the named executive officers.Named Executive Officers.
Option Awards | Stock Awards | Option Awards | RSU Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | ||||||||||||||||||||||||
Damon T. Hininger | 6,612 | $ | 189,500 | 52,744 | $ | 2,117,736 | 13,409 | $ | 119,916 | 36,156 | $ | 1,229,304 | ||||||||||||||||||||
David M. Garfinkle | —�� | — | 14,606 | $ | 585,913 | 43,409 | $ | 467,006 | 28,759 | $ | 977,806 | |||||||||||||||||||||
Harley G. Lappin | 67,053 | $ | 1,299,487 | 25,393 | $ | 1,019,560 | — | $ | — | 28,772 | $ | 978,248 | ||||||||||||||||||||
Anthony L. Grande | 22,351 | $ | 384,198 | 25,393 | $ | 1,019,560 | — | $ | — | 28,772 | $ | 978,248 | ||||||||||||||||||||
Steven E. Groom | 13,500 | $ | 119,753 | 20,912 | $ | 839,642 | ||||||||||||||||||||||||||
Lucibeth N. Mayberry | 6,236 | $ | 60,000 | 21,739 | $ | 739,126 |
(1) | The value realized upon exercise of stock options reflects the price at which shares acquired upon exercise of the stock options were sold or valued for income tax purposes, net of the exercise price for acquiring such shares. |
(2) | The value realized on vesting of |
Nonqualified Deferred Compensation in 20152017
The following table sets forth information concerning contributions made by the named executive officersNamed Executive Officers and the Company pursuant to the Company’s Executive Deferred Compensation Plan as well as aggregate individual account balances as of December 31, 2015.2017:
Name | Executive Contributions In 2015(1) | Registrant Contributions in 2015(2) | Aggregate Earnings In 2015 (3) | Aggregate Withdrawals/ Distributions In 2015 | Aggregate Balance at 12/31/2015(4) | Executive Contributions in 2017(1) | Company Contributions in 2017(2) | Aggregate Earnings in 2017 (3) | Aggregate Withdrawals/ Distributions in 2017 | Aggregate Balance at 12/31/2017(4) | ||||||||||||||||||||||||||||
Damon T. Hininger | $ | 76,450 | $ | 72,028 | $ | 60,965 | — | $ | 1,206,991 | $ | 39,778 | $ | 35,396 | $ | 70,840 | $ | — | $ | 1,531,227 | |||||||||||||||||||
David M. Garfinkle | $ | 33,721 | $ | 20,471 | $ | 13,810 | — | $ | 284,612 | $ | 10,101 | $ | 9,099 | $ | 16,859 | $ | — | $ | 366,674 | |||||||||||||||||||
Harley G. Lappin | $ | 21,126 | $ | 25,876 | $ | 10,539 | — | $ | 232,594 | $ | — | $ | — | $ | 8,794 | $ | (188,359) | $ | 105,108 | |||||||||||||||||||
Anthony L. Grande | $ | 40,266 | $ | 27,016 | $ | 35,863 | — | $ | 703,759 | $ | 23,283 | $ | 10,033 | $ | 40,280 | $ | — | $ | 866,566 | |||||||||||||||||||
Steven E. Groom | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Lucibeth N. Mayberry | $ | — | $ | — | $ | 16,813 | $ | — | $ | 353,071 |
(1) | Of the amounts shown in this column, the following amounts are included in the “Salary” column of the Summary Compensation Table for |
(2) | Of the amounts shown in this column, the following amounts are also reported in the “All Other Compensation” column of the Summary Compensation Table for |
(3) | Of the amounts shown in this column, the following amounts are reported in the “Change in Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table for |
(4) | Of the amounts shown in this column, the following amounts were reported as compensation to the |
Since 2002, we have maintained a non-qualified deferred compensation plan for certain senior executives, including the named executive officers (the “Executive Deferred Compensation Plan”).
The Executive Deferred Compensation Plan is an unfunded,non-qualified deferred compensation plan maintained by the Company for certain of its senior executives and other key employees, including the purpose of providing participating executives withNEOs. Eligible employees who participate in the opportunity toExecutive Deferred Compensation Plan may defer a portion of their compensation.compensation by electing to contribute such compensation to the plan.
Pursuant to the Executive Deferred Compensation Plan, participating executives may elect to contribute on apre-tax basis up to 50% of their base salary and up to 100% of their annual cash bonus. The Company matches 100% of contributions up to 5% of total cash compensation. The matching contribution is credited on a monthly basis, but is reduced at the end of the plan year for any matching amounts contributed to the participant’s 401(k) account. The Company also contributes a fixed rate of return on balances in the Executive Deferred Compensation Plan, determined at the beginning of each plan year. Participants are 100% vested in amounts deferred under the plan and earnings on those amounts, while the matching contributions vest 20% after two years of service, 40% after three years of service, 80% after four years of service and 100% after five years of service, which is the same vesting for discretionary matching contributions under the 401(k) Plan.service. Each Participant,participant, however, shall become 100% vested in the matching contribution amounts upon termination of employment by reason of death, Disabilitydisability or Retirementretirement or upon the occurrence of a Changechange in Control;control; provided, however, that the Participant shall not become vested upon the occurrence of a Changechange in Controlcontrol to the extent such vesting would cause any portion of his Deferred Compensation Benefitsor her deferred compensation benefits to constitute an “excess parachute payment” under Internal Revenue Code Section 280G.280G of the Code.
Distributions to senior executives are generally payable no earlier than five years subsequent to the date an executive becomes a participant in the Plan, or upon termination of employment, at the election of the participant, but not later than the 15th day of the month following the month the individual attains age 65.
During 2015,2017, the Company provided a fixed return of 5.6%5.00% to participants in the Executive Deferred Compensation Plan, which rate was based on the return received by the Company on the life insurance policies the Company has purchased on the lives of certain participating executives, including each of the named executive officers.Named Executive Officers. The life insurance policies are intended to partially fund distributions from the Executive Deferred Compensation PlanPlans, and the Company is the sole beneficiary of such policies. The Company has established an irrevocable Rabbi Trust to secure the plan’s obligations. However, assets in the Executive Deferred Compensation Plan are subject to creditor claims in the event of bankruptcy.
Potential Payments Upon Termination or Change in Control
The following benefits are providedEach of our NEOs is eligible to receive certain payments upon termination of employment under the employment agreements with each of our Named Executive Officers dated December 30, 2015. Our employment agreements were renewed in December 2014 on substantially similar terms as under the then existing agreements that were set to expire on December 31, 2014. The updated agreements were revised to reflect the updated base salaries of the executives.circumstances described below:
Retirement. In the event of a termination of employment due to retirement (generally after attaining age 62), our equity award agreements provide that that:
vested options would be exercisable for the remaining stated term of the option (as opposed to a voluntary or for cause“cause” termination, in which case the Named Executive Officer willNEO would generally only have three months following termination to exercise their vested options); and
if the retirement is effective after December 31 of any fiscal year but prior to the applicable performance-based RSU vesting date with respect to such year (which typically occurs in February of the immediately following fiscal year), the applicable portion of unvested performance-based RSUs, if any, that would vest on such vesting date but for the NEO’s termination of employment would vest and be issued to the NEO despite the fact that the NEO is no longer an employee of the Company on such vesting date.
Furthermore, in the event of an NEO’s retirement, matching contributions under the Executive Deferred Contribution Plan would become 100% vested. Mr. Groom is the only named executive officer who is retirement eligible. In August 2015, Mr. Groom announced his intention to retire from his position as Executive Vice President and General Counsel in 2016.
Death or Disability. In the event of death or disability, benefits under our disability plan and payments under our life insurance plan, as applicable, would be payable, which, in the event of death, would equal twice the executive’s compensation subject to certain caps. In addition, matching contributions under the Executive Deferred Contribution Plan would become 100% vested.
In accordance with the terms of our equity award agreements, in the event of the death or disability of a named executive officerNamed Executive Officer (1) all RSUs, including performance-based RSUs will become immediately and fully vested andnon-forfeitable and (2) all unvested options that have not earlier terminated or expired in accordance with their terms will automatically vest in full and will be exercisable until the expiration of their stated term.
Termination Without Cause or for Good Reason. In accordance with the effective employment agreements with our current executive officers, if we terminate the employment of the executive without “cause”“cause,” or if the executive terminates the employment for “good reason”reason,” we generally are required to pay a cash severance amount equal to the executive’s annual base salary then in effect, payable in instalments in accordance with the terms of the agreements.
Change in Control. In accordance with the terms of our equity award agreements, in the event of a change of control (1) all RSUs, including performance-based RSUs will become immediately and fully vested andnon-forfeitable and (2) all unvested options that have not earlier terminated or expired in accordance with their terms will automatically vest in full and will be exercisable until the expiration of their stated term.
Our Amended and Restated 1997 Employee Share Incentive Plan (pursuant to which certain options remain outstanding, but no further options are being granted) provides that upon a “change in control” or “potential change in control,” as defined in the plan, the value of all outstanding share options granted under the plan, to the extent vested, will be cashed out on the basis of a “change incontrol price,” which is generally based on the highest price paid per share of common stock on the NYSE at any time during a 60-day period prior to the occurrence of the “change in control” event.
Our Executive Deferred Compensation Plan provides that upon a change in control, the matching contributions would become 100% vested, unless such vesting would cause any portion of his Deferred Compensation Benefitsthe deferred compensation benefits to constitute an “excess parachute payment” under Internal Revenue Code Section 280G.280G of the Code.
Qualifying Termination Within 180 days of a Change in Control. Pursuant to each of our effectivethe employment agreements with our current executive officers, in the event of a termination by the Company (other than for “cause”) or subject(subject to certain procedural requirements,requirements) termination by the executive for “good reason”reason,” withinone-hundred eighty (180) days following a change in control, the executive willeach NEO would be entitled to receive a lump sum cash payment equal to 2.99 times his or her base salary then in effect, and the executive willNEO would continue to be covered under existing life, medical, disability and health insurance plans for a period of one year. All severance payments are made up front promptly after the time of termination in a lump sum payment in order to make a clean separation from, and avoid continued entanglement with, the executive.NEO.
Definitions. Our effective employment agreements with our namedcurrent executive officers and our equity plans generally provide for the following definitions:
The definition of “Good Reason” means when the executive terminates employment with the Company due to (i) a material reduction in the duties, powers or authority of the executive as an officer or employee of the Company.Company or (ii) relocation of the Company’s headquarters to a location more than 30 miles outside of the Nashville, Tennessee metropolitan area, in either case without the executive’s consent. A termination under these circumstances shall be due to Good Reason only if (A) the executive notifies the Company of the existence of the condition that otherwise constitutes Good Reason within thirty (30) days of the initial existence of the condition, (B) the Company fails to remedy the condition within thirty (30) days following its receipt of executive’s notice of the condition constituting Good Reason (the “Cure Period”) and (C) if the Company fails to remedy the condition constituting Good Reason during the Cure Period, the executive terminates employment with the Company due to the condition within thirty (30) days of the expiration of the Cure Period.
The definition of “Cause” includes, among other things, the death or permanent disability of the executive, conviction of certain felonies or criminal acts, willful or material wrongdoing (including dishonesty or fraud), material breach by the executive of his employment agreement or of his fiduciary duty to the Company or its stockholders, andmaterial violations of the Company’s Code of Conduct or intentional violation of any applicable
law or regulation affecting the Company in a material respect, as determined by the board of directors, in each case, if thewhich event, action or breach canmay be cured, is not cured within 20 days.subject to a right of the executive to cure under certain conditions.
The definition of “Change in Control” generally means:
a “change in the ownership of the Company”;
a “change in the effective control of the Company”; or
a “change in the ownership of a substantial portion of the assets of the Company,”Company”,
as such terms are defined inSection 1.409A-3(i)(5) of the Internal Revenue Treasury Regulations.
Table of Potential Payments Upon Termination or Change in Control
The table below reflects the amount of compensation payable to each of the named executive officersNEOs in the event of termination of such executive’s employment. The amount of compensation payable to each named executive officerNEOs upon a change of control, qualifying termination in connection with a change in control, involuntary termination not for cause, and in the event of disability or death of the executive is shown below. The amounts assume that such event was effective as of December 31, 2015,2017, and thus do not include amounts earned through such time, and are estimates of the awards and amounts that would be paid out to the executivesNEOs upon their termination. The amounts shown do not include: (i) benefits earned during the term of our named executive officers’NEOs’ employment that are available to all salaried employees, such as accrued vacation, and (ii) 20152017 cash incentives whichthat were earned as of December 31, 2015.2017. The actual awards and amounts to be paid out can only be determined at the time of such executive’s separation from the Company. ReferencesReference below to RSUs includesmeans our performance-based RSUs, and includes all dividend equivalent rights.
Name | Change in Control Only | Qualifying Termination upon a Change in Control | Involuntary Termination Without Cause | Death or Disability | Change in Control Only | Qualifying Termination upon Change in Control | Involuntary Termination Without Cause | Death or Disability | ||||||||||||||||||||||||
Damon T. Hininger | ||||||||||||||||||||||||||||||||
Accelerated Vesting of Options(1) | $ | — | $ | — | — | — | ||||||||||||||||||||||||||
Accelerated Vesting of RSUs(1) | $ | 3,253,620 | $ | 3,253,620 | — | $ | 3,253,620 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Cash Severance (2) | — | $ | 2,574,390 | $ | 861,000 | — | $ | — | $ | 2,728,853 | $ | 912,660 | $ | — | ||||||||||||||||||
Insurance Benefits (3) | — | $ | 29,433 | — | $ | 1,500,000 | $ | — | �� | $ | 31,181 | $ | — | $ | 1,500,000 | |||||||||||||||||
Total: | $ | 3,253,620 | $ | 5,857,443 | $ | 861,000 | $ | 4,753,620 | $ | — | $ | 2,760,034 | $ | 912,660 | $ | 1,500,000 | ||||||||||||||||
David M. Garfinkle | ||||||||||||||||||||||||||||||||
Accelerated Vesting of Options(1) | $ | 21,970 | $ | 21,970 | — | $ | 21,970 | |||||||||||||||||||||||||
Accelerated Vesting of RSUs(1) | $ | 1,348,766 | $ | 1,348,766 | — | $ | 1,348,766 | $ | 1,360,190 | $ | 1,360,190 | $ | — | $ | 1,360,190 | |||||||||||||||||
Cash Severance (2) | — | $ | 1,157,130 | $ | 387,000 | — | $ | — | $ | 1,284,414 | $ | 429,570 | $ | — | ||||||||||||||||||
Insurance Benefits(3) | — | $ | 23,073 | — | $ | 1,210,000 | $ | — | $ | 30,214 | $ | — | $ | 1,305,000 | ||||||||||||||||||
Total: | $ | 1,370,736 | $ | 2,550,939 | $ | 387,000 | $ | 2,580,736 | $ | 1,360,190 | $ | 2,674,818 | $ | 429,570 | $ | 2,665,190 | ||||||||||||||||
Harley G. Lappin | ||||||||||||||||||||||||||||||||
Accelerated Vesting of Options(1) | — | — | — | — | ||||||||||||||||||||||||||||
Accelerated Vesting of RSUs(1) | $ | 1,566,506 | $ | 1,566,506 | — | $ | 1,566,506 | $ | 1,360,190 | $ | 1,360,190 | $ | — | $ | 1,360,190 | |||||||||||||||||
Cash Severance (2) | — | $ | 1,232,146 | $ | 412,089 | — | $ | — | $ | 1,306,074 | $ | 436,814 | $ | — | ||||||||||||||||||
Insurance Benefits(3) | — | $ | 18,351 | — | $ | 1,358,000 | $ | — | $ | 9,240 | $ | — | $ | 1,358,000 | ||||||||||||||||||
Total: | $ | 1,566,506 | $ | 2,817,003 | $ | 412,089 | $ | 2,924,506 | $ | 1,360,190 | $ | 2,675,504 | $ | 436,814 | $ | 2,718,190 | ||||||||||||||||
Anthony L. Grande | ||||||||||||||||||||||||||||||||
Accelerated Vesting of Options(1) | — | — | — | — | ||||||||||||||||||||||||||||
Accelerated Vesting of RSUs(1) | $ | 1,566,502 | $ | 1,566,502 | — | $ | 1,566,502 | $ | 1,360,190 | $ | 1,360,190 | $ | — | $ | 1,360,190 | |||||||||||||||||
Cash Severance(2) | — | $ | 1,232,146 | $ | 412,089 | — | $ | — | $ | 1,306,074 | $ | 436,814 | $ | — | ||||||||||||||||||
Insurance Benefits (3) | — | $ | 24,732 | — | $ | 1,415,000 | $ | — | $ | 29,114 | $ | — | $ | 1,415,000 | ||||||||||||||||||
Total: | $ | 1,566,502 | $ | 2,823,380 | $ | 412,089 | $ | 2,981,502 | $ | 1,360,190 | $ | 2,695,378 | $ | 436,814 | $ | 2,775,190 | ||||||||||||||||
Steven E. Groom | ||||||||||||||||||||||||||||||||
Accelerated Vesting of Options(1) | — | — | — | — | ||||||||||||||||||||||||||||
Lucibeth N. Mayberry | ||||||||||||||||||||||||||||||||
Accelerated Vesting of RSUs(1) | $ | 1,290,092 | $ | 1,290,092 | — | $ | 1,290,092 | $ | 1,120,169 | $ | 1,120,169 | $ | — | $ | 1,120,169 | |||||||||||||||||
Cash Severance(2) | — | $ | 979,052 | $ | 327,442 | — | $ | — | $ | 1,191,198 | $ | 398,394 | $ | — | ||||||||||||||||||
Insurance Benefits(3) | — | $ | 21,767 | — | $ | 1,126,000 | $ | — | $ | 27,392 | $ | — | $ | 1,052,000 | ||||||||||||||||||
Total: | $ | 1,290,092 | $ | 2,290,911 | $ | 327,442 | $ | 2,416,092 | $ | 1,120,169 | $ | 2,338,759 | $ | 398,394 | $ | 2,172,169 |
(1) | Represents the value of accelerated vesting of |
Accelerated vesting of |
(2) | In the event of an involuntary termination absent a change in control and without cause, represents an amount equal to |
(3) | In the event of a qualifying termination upon a change in control, represents the premiums expected to be paid based upon the types of insurance coverage the Company carried for such executive as of December 31, |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and RegulationS-K under the Exchange Act, we are disclosing the ratio of CEO pay to the median employee pay of all our employees (other than the CEO) in 2017, calculated in accordance with Item 402(u) of RegulationS-K.
The ratio of the annual total compensation of our CEO to the median total compensation of all employees (other than our CEO) for 2017 was 62 to 1. This ratio was based on the following:
the annual total compensation of our CEO, determined as described in the Summary Compensation Table included in this Proxy Statement, was $2,373,657; and
the median of the total compensation of all employees (other than our CEO), determined in accordance with SEC rules, was $38,236.
To calculate our CEO pay ratio, we are required to identify a median employee based on our total workforce, without regard to their location, compensation arrangements or employment status (i.e., full-time or part-time). The methodology, as well as the material assumptions and estimates, we used to determine the median of the total compensation of our employee population were as follows:
• | Total Employee Population: We determined that, as of November 30, 2017, the date we selected to identify the median employee, our employee population consisted of approximately 12,600 individuals. As permitted by Item 402(u) of Regulation S-K, we excluded from our total employee population those individuals who became our employees as the result of our acquisition during the 2017 calendar year of Arapahoe Community Treatment Center Inc., Center Point, Inc., New Beginnings Treatment Center, Inc. and Time to Change, Inc., which comprised approximately 139 employees. |
• | Compensation Measure Used to Identify the Median Employee: For purposes of measuring the total compensation of our employees to identify the median employee, we used base salary, including overtime pay, for the period beginning December 1, 2016 and ending November 30, 2017. We used base salary, including overtime pay, as our consistently applied compensation measure as it represents the primary compensation component paid to all of our employees. As a result, we believe base salary, including overtime pay, provides an accurate depiction of total earnings for the purpose of identifying our median employee. Compensation for employees hired during the period was annualized as permitted by SEC rules. |
• | Total Compensation of Median Employee: In order to determine the total compensation of the median employee, we identified and calculated that employee’s base salary, including overtime pay, for the period beginning December 1, 2016 and ending November 30, 2017 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in total compensation of $38,236. |
• | Annual Total Compensation of CEO: With respect to the annual total compensation of our CEO, in accordance with SEC rules, we used the amount reported for Mr. Hininger in the “Total” column for 2017 in the Summary Compensation Table included in this Proxy Statement. |
• | Special Circumstances for 2017: In support of the cost reduction plan we announced in 2016, at Mr. Hininger’s request, our Compensation Committee did not award him any RSUs in 2017. Consequently, Mr. Hininger’s annual total compensation (and the resulting pay ratio) for 2017 is lower than it would have been had our Compensation Committee not taken such action. If our Compensation Committee had awarded RSUs to Mr. Hininger in 2017, our CEO’s annual total compensation for 2017 would have been approximately $4,519,625, and the resulting pay ratio would have been 118 to 1. |
Our reported pay ratio information is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K. The SEC rules for identifying the median employee and calculating pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions. As a result, our pay ratio may not be comparable to the pay ratio reported by other companies.
Non-employee directors (i.e., all directors other than Mr.Messrs. Hininger and Mr. Ferguson)Lappin) are compensated pursuant to ourNon-Employee Directors’ Compensation Plan and the 2008 Stock Plan, which for 20152017 provided for the following:
Annual equity grants;
Annual Board, committee and committee chair retainers; and
Board and committee unscheduled meeting fees.
Non-employee directors may elect to receive all or a portion of their retainers in the form of common stock rather than cash. Non-employeeNon-executive directors may also defer all or a portion of their retainer and meeting fees pursuant to ourNon-Employee Directors’ Deferred Compensation Plan. In addition,non-employee directors are reimbursed for reasonable expenses incurred to attend Board and committee meetings, as well as director education programs.
The retainers and meeting fees paid to ournon-employee directors for 20152017 are as follows:
Retainers and Fees | 2015 | |||
Board retainer | $ | 53,500 | ||
Board meeting fee | $ | 3,250 | ||
Audit and Risk chair retainer | $ | 20,000 | ||
Audit and Risk member retainer | $ | 2,200 | ||
Compensation and Nominating & Governance chair retainer | $ | 5,350 | ||
Committee chair meeting fee (excluding Executive) | $ | 2,700 | ||
Non-chair committee meeting fee | $ | 2,200 |
Retainers and Fees | 2017 | |||
Independent Board Chairman retainer | $ | 100,000 | ||
Non-Chair Board retainer | $ | 80,000 | ||
Audit Committee member retainer | $ | 8,000 | ||
Special Litigation Committee member retainer | $ | 20,000 | ||
Other committee member retainer | $ | 4,000 | ||
Audit Committee chair retainer | $ | 20,000 | ||
Special Litigation Committee chair retainer | $ | 28,000 | ||
Other committee chair retainer | $ | 10,000 | ||
Board and committee unscheduled meeting fee | $ | 1,000 |
In addition to cash compensation,non-employee directors are granted RSUs with a grant date fair market value of approximately $105,000$120,000 per year, generally on the same date as grants of equity awards are made to our
executive officers and other employees. TheseSubject to certain exceptions contained in the award agreement, these RSUs vest on theone-year anniversary of the grant date, subject to continued service through such date.
Compensation Changes Effective January 1, 2016. In August 2015, PwC prepared a report for the Compensation Committee analysing and providing market data regarding board compensation packages and trends for non-employee board compensation among our peer group companies. PwC found that our non-employee director total compensation was at the median of our peer group, but was difficult to administer and the per meeting fees was not common among our peers. After detailed review and discussion, the Compensation Committee recommended to the Board of Directors and the Board approved a revised non-employee director compensation package that was effective as of January 1, 2016. The revisions for 2016 include
Mr. Ferguson’s Compensation. John D. Ferguson is currently employed by the Company as our executive Chairman of the Board; however, Mr. Ferguson will be retiring from his position as of the Annual Meeting. Mr. Ferguson formerly served as our Chief Executive Officer from 2000 to 2009. Mr. Ferguson is paid cash compensation for his services as our employee, based largely on reductions to the cash compensation paid to him in 2009 (as approved by the Compensation Committee from time to time). Mr. Ferguson does not currently receive any equity award compensation for his services, nor does Ferguson receive any non-executive director compensation for his services as a director. In connection with his retirement, pursuant to Mr. Ferguson’s employment agreement (as amended by the letter agreement between Mr. Ferguson and the Company, dated August 14, 2009), Mr. Ferguson will become entitled to receive severance benefits and payments consisting of (i) two times his base salary (or a total of $1,121,536), payable over a two-year period, plus (ii) a one time lump sum cash payment of approximately $19,000 for Mr. Ferguson’s use toward securing continued insurance, including medical, health, and disability insurance for two years following his retirement.
20152017 Director Compensation Table
The following table summarizes the compensation paid with respect to the fiscal year ended December 31, 20152017 to each of the Company’s directors except Damon T.Messrs. Hininger our Chief Executive Officer,and Lappin whose compensation is reflected in the Summary Compensation Table. C. Michael Jacobi did not stand forre-election at the 2017 Annual Meeting of Stockholders:
Name | Fees Earned or Paid in Cash | Stock Awards (2) (5) | Change in Nonqualified Deferred Compensation Earnings(3) | All Other Compensation | Total | Fees Earned or Paid in Cash | Stock Awards(2) (4) | Change in Nonqualified Deferred Compensation Earnings(3) | All Other Compensation | Total | ||||||||||||||||||||||||||||||
Donna M. Alvarado | $ | 96,150 | $ | 104,986 | — | — | $ | 201,136 | $ | 103,000 | $ | 120,005 | $ | — | $ | — | $ | 223,005 | ||||||||||||||||||||||
John D. Correnti(1) | $ | 52,424 | $ | 104,986 | — | — | $ | 157,410 | ||||||||||||||||||||||||||||||||
Robert J. Dennis | $ | 80,750 | $ | 104,986 | — | — | $ | 185,736 | $ | 85,000 | $ | 120,005 | $ | — | $ | — | $ | 205,005 | ||||||||||||||||||||||
Mark A. Emkes | $ | 89,550 | $ | 104,986 | — | — | $ | 194,536 | $ | 139,000 | $ | 170,005 | $ | — | $ | — | $ | 309,005 | ||||||||||||||||||||||
John D. Ferguson | — | — | $ | 85,537 | $ | 902,182 | (4) | $ | 987,719 | |||||||||||||||||||||||||||||||
C. Michael Jacobi | $ | 102,950 | $ | 104,986 | $ | 310 | — | $ | 208,246 | |||||||||||||||||||||||||||||||
Stacia A. Hylton | $ | 112,000 | $ | 120,005 | $ | — | $ | — | $ | 232,005 | ||||||||||||||||||||||||||||||
C. Michael Jacobi(1) (5) | $ | 31,912 | $ | — | $ | — | $ | 15,000 | $ | 46,912 | ||||||||||||||||||||||||||||||
Anne L. Mariucci | $ | 87,350 | $ | 104,986 | 763 | — | $ | 193,099 | $ | 92,000 | $ | 120,005 | $ | 2,989 | $ | — | $ | 214,994 | ||||||||||||||||||||||
Thurgood Marshall, Jr. | $ | 83,950 | $ | 104,986 | — | — | $ | 188,936 | $ | 114,000 | $ | 120,005 | $ | — | $ | — | $ | 234,005 | ||||||||||||||||||||||
Charles L. Overby | $ | 103,500 | $ | 104,986 | — | — | $ | 208,486 | $ | 114,000 | $ | 120,005 | $ | — | $ | — | $ | 234,005 | ||||||||||||||||||||||
John R. Prann, Jr. | $ | 93,950 | $ | 104,986 | $ | 366 | — | $ | 199,302 | $ | 105,000 | $ | 120,005 | $ | 21 | $ | — | $ | 225,026 | |||||||||||||||||||||
Joseph V. Russell | $ | 94,150 | $ | 104,986 | $ | 28,106 | — | $ | 227,242 |
(1) | Mr. |
(2) | The amounts shown in this column represent the aggregate grant-date fair value of RSUs based on the closing stock price of |
(3) | The amounts shown in this column represent above-market earnings on fees |
(4) |
As of December 31, |
Name | Aggregate Stock Awards Outstanding as of December 31, 2015 | Aggregate Option Awards Outstanding as of December 31, 2015 | Aggregate RSU Awards Outstanding as of December 31, 2017 | Aggregate Option Awards Outstanding as of December 31, 2017 | ||||||||||||
Donna M. Alvarado | 2,609 | 87,742 | 3,671 | 59,532 | ||||||||||||
Robert J. Dennis | 2,609 | — | 3,671 | — | ||||||||||||
Mark A. Emkes | 2,609 | — | 5,195 | — | ||||||||||||
John D. Ferguson | — | — | ||||||||||||||
C. Michael Jacobi | 2,609 | 43,535 | ||||||||||||||
Stacia A. Hylton | 3,671 | — | ||||||||||||||
Anne L. Mariucci | 2,609 | 10,952 | 3,671 | 10,952 | ||||||||||||
Thurgood Marshall, Jr. | 2,609 | 87,742 | 3,671 | 59,532 | ||||||||||||
Charles L. Overby | 2,609 | 59,532 | 3,671 | 59,532 | ||||||||||||
John R. Prann, Jr. | 2,609 | 43,535 | 3,671 | 29,430 | ||||||||||||
Joseph V. Russell | 2,609 | 57,817 |
(5) | On February 16, 2017, the Compensation Committee approved a retirement gift to Mr. Jacobi with a value of up to $15,000, including a tax gross up. |
Director Stock Ownership Guidelines
We maintain stock ownership guidelines applicable to our executive officers andnon-executive directors. The Company’s original stock ownership guidelines were adopted by our Board of Directors on March 1, 2007. The stock ownership guidelines are designed to align the economic interests of executive officers and directorsthe Board with those of stockholders, and to discourage excessive risk-taking by management and directors. The guidelines as applied to our directors provide that the Company’snon-executive directors are expected to own a fixed number of shares of common stock of the Company equal to four times such director’s annual retainer (excluding any retainer for chairing or serving as a member of a committee) in effect as of the later of March 1, 2012 or their laterthe date of their initial election or appointment to the Board, divided by the Company’s closing common stock price, as reported on the NYSE, on such date. The stock ownership guidelines were amended by our Board of Directors in May 2013 to increase the number of shares theour executive officers andnon-executive directors and officers are expected to own to give effect to the REIT conversion special dividend.Non-executive directors are requiredexpected to achieve these ownership levels, subject to a limited hardship exemption, five years following their initial election or appointment to the Board, or (in the case of directors serving on the Board at the time the guidelines were adopted) by March 1, 2012. See “Stock“Executive Officer Stock Ownership Guidelines” in the Compensation“Compensation Discussion and Analysis sectionAnalysis” included in this Proxy Statement for a description of this proxy for the shares counted in determining share ownership.
Our guidelines and the compliance status of the Company’s currentnon-executive directors as of the last quarterly review date of February 2, 201621, 2018 are shown in the table below.
Name | Shares Required by Guidelines | Number of Shares Held (1) | Compliance Date | |||||||||
Donna M. Alvarado | 9,105 | 31,153 | 3/1/2012 | |||||||||
Robert J. Dennis | 7,112 | 11,096 | 2/21/2018 | |||||||||
Mark A. Emkes | 6,050 | 2,484 | 8/14/2019 | |||||||||
John D. Ferguson (2) | 95,597 | 181,410 | 3/1/2012 | |||||||||
C. Michael Jacobi | 9,105 | 74,519 | 3/1/2012 | |||||||||
Anne L. Mariucci | 11,909 | 20,747 | 12/8/2016 | |||||||||
Thurgood Marshall, Jr. | 9,105 | 16,195 | 3/1/2012 | |||||||||
Charles L. Overby | 9,105 | 23,671 | 3/1/2012 | |||||||||
John R. Prann, Jr. | 9,105 | 27,066 | 3/1/2012 | |||||||||
Joseph V. Russell | 9,105 | 271,697 | 3/1/2012 |
Name | Shares Required by Guidelines | Number of Shares Held | Compliance Date | |||||||||
Donna M. Alvarado | 9,105 | 53,133 | 3/1/2012 | |||||||||
Robert J. Dennis | 7,112 | 21,534 | 2/21/2018 | |||||||||
Mark A. Emkes | 6,050 | 44,426 | 8/14/2019 | |||||||||
Stacia A. Hylton | 12,353 | 5,877 | 8/11/2021 | |||||||||
Harley G. Lappin | 14,222 | 47,846 | 1/1/2023 | |||||||||
Anne L. Mariucci | 11,909 | 37,142 | 12/8/2016 | |||||||||
Thurgood Marshall, Jr. | 9,105 | 31,083 | 3/1/2012 | |||||||||
Charles L. Overby | 9,105 | 35,709 | 3/1/2012 | |||||||||
John R. Prann, Jr. | 9,105 | 38,504 | 3/1/2012 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
MANAGEMENT
Ownership of Common Stock – Directors and Executive Officers
The following table contains information regarding the beneficial ownership of our common stock as of March 14, 201612, 2018 by (i) each current director and nominee, (ii) our named executive officers, and (iii) all of our current directors and executive officers as a group.
Name of Beneficial Owner | Number of Shares Beneficially Owned(1) | Shares Acquirable Within 60 Days(2) | Total Beneficial Ownership | Percent of Common Stock Beneficially Owned(3) | Number of Shares Beneficially Owned(2) | Shares Acquirable Within 60 Days(3) | Total Beneficial Ownership | Percent of Common Stock Beneficially Owned(4) | ||||||||||||||||||||||||
John D. Ferguson(4) | 181,410 | — | 181,410 | * | ||||||||||||||||||||||||||||
Damon T. Hininger | 197,461 | 474,367 | 671,828 | * | 224,758 | 422,846 | 647,604 | * | ||||||||||||||||||||||||
Donna M. Alvarado | 33,762 | 87,742 | 121,504 | * | 53,133 | 59,532 | 112,665 | * | ||||||||||||||||||||||||
Robert J. Dennis | 13,705 | — | 13,705 | * | 21,534 | — | 21,534 | * | ||||||||||||||||||||||||
Mark A. Emkes | 5,093 | — | 5,093 | * | 49,426 | 1,524 | 50,950 | * | ||||||||||||||||||||||||
David M. Garfinkle | 63,727 | 110,303 | 174,030 | * | ||||||||||||||||||||||||||||
C. Michael Jacobi | 77,128 | 43,535 | 120,663 | * | ||||||||||||||||||||||||||||
Stacia A. Hylton | 5,877 | — | 5,877 | * | ||||||||||||||||||||||||||||
Anne L. Mariucci | 37,142 | 10,952 | 48,094 | * | ||||||||||||||||||||||||||||
Thurgood Marshall, Jr. | 26,020 | 73,637 | 99,657 | * | 31,083 | 59,532 | 90,615 | * | ||||||||||||||||||||||||
Anne L. Mariucci | 23,356 | 10,952 | 34,308 | * | ||||||||||||||||||||||||||||
Charles L. Overby | 26,280 | 59,532 | 85,812 | * | 35,709 | 59,532 | 95,241 | * | ||||||||||||||||||||||||
John R. Prann, Jr. | 29,675 | 43,535 | 73,210 | * | 38,504 | 29,430 | 67,934 | * | ||||||||||||||||||||||||
Joseph V. Russell (5) | 274,306 | 57,817 | 332,123 | * | ||||||||||||||||||||||||||||
David M. Garfinkle | 100,072 | 66,894 | 166,966 | * | ||||||||||||||||||||||||||||
Anthony L. Grande | 41,689 | — | 41,689 | * | 55,438 | — | 55,438 | * | ||||||||||||||||||||||||
Steven E. Groom | 78,023 | 4,907 | 82,930 | * | ||||||||||||||||||||||||||||
Harley G. Lappin | 69,260 | — | 69,260 | * | 63,443 | — | 63,443 | * | ||||||||||||||||||||||||
All current directors and executive officers as | 1,195,427 | 993,738 | 2,189,165 | 1.8 | % | |||||||||||||||||||||||||||
Lucibeth N. Mayberry | 59,258 | 21,175 | 80,433 | * | ||||||||||||||||||||||||||||
All current directors and executive officers as a group (16 persons) | 832,609 | 731,417 | 1,564,026 | 1.3% |
* | Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. |
(1) | The address for each listed person is our corporate headquarters. |
(2) | Each person in the table has sole voting and investment power over the shares listed. |
Reflects the number of shares that could be purchased upon exercise of stock options that are exercisable |
The percentages in this column are based on |
Ownership of Common Stock – Principal Stockholders
The following table sets forth certain information with respect to the beneficial ownership of our voting securities as of March 14, 201612, 2018 by each person who is known by CCAthe Company to own beneficially more than 5% of any class of our outstanding voting securities of CCA:the Company:
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Common Stock Beneficially Owned (1) | ||||||
The Vanguard Group, Inc.(2) | 16,868,942 | 14.4 | % | |||||
Vanguard Specialized Funds | 8,436,925 | 7.2 | % | |||||
BlackRock, Inc.(4) | 8,837,191 | 7.5 | % | |||||
Epoch Investment Partners, Inc.(5) | 7,283,290 | 6.2 | % | |||||
Managed Account Advisors LLC(6) | 7,078,039 | 6.0 | % | |||||
Lazard Asset Management LLC(7) | 6,812,164 | 5.8 | % | |||||
The London Company(8) | 6,203,255 | 5.3 | % |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Common Stock Beneficially Owned (1) | ||||||
The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | 20,150,432 | 17.00% | ||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055 | 10,766,519 | 9.08% | ||||||
Vanguard Specialized Funds(4) Vanguard REIT Index Fund 100 Vanguard Blvd. Malvern, PA 19355 | 7,957,900 | 6.71% | ||||||
FMR LLC(5) 245 Summer Street Boston, MA 02210 | 6,433,882 | 5.44% |
(1) | The percentages in this column are based on |
(2) | Based on the Schedule 13G/A filed with the SEC on February |
(3) | Based on the Schedule 13G/A filed with the SEC on January 29, 2018 by Blackrock, Inc., which reported sole voting power over 10,491,988 shares and sole dispositive power over 10,766,519 shares. |
(4) | Based on the Schedule 13G/A filed with the SEC on February |
Based on the |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors to file reports of ownership and changes in ownership with the SEC and the NYSE. Based on our records and other information, all Section 16(a) filing requirements were satisfied by our executive officers and directors in 2015,2017, except for the following:
A Form 4 for Mr. RussellJacobi was filed late on August 31, 2015March 2, 2017 to report the acquisition an aggregatedisposition of 20,0005,058 shares of Company stock on February 14, 2017.
A Form 5 was filed on January 24, 2018 to report the issuance of 1,524 RSUs on May 11, 2017 to Mr. Emkes, which 9,500 shares are directly owned and an aggregate of 10,500 shares are indirectly owned through trusts establishedhe elected to receive as compensation for the benefit50% of his grandchildren.annual independent Board Chairman retainer, but with respect to which a Form 4 had not been timely filed.
To the extent that this proxy statementProxy Statement is incorporated by reference into any other filing by us under the Securities Act of 1933 or the Exchange Act, the sections of this proxy statementProxy Statement entitled “Audit Committee Report”“Report of the Audit Committee” or “Compensation Committee Report”“Report of the Compensation Committee” will not be deemed incorporated, unless specifically provided otherwise in such filing.
In addition, references to our website are not intended to function as a hyperlink and the information contained on our website is not intended to be part of this proxy statement.Proxy Statement. Information on our website, other than our proxy statement,this Proxy Statement, Notice of Annual Meeting of Stockholders and form of proxy, is not part of the proxy soliciting material and is not incorporated herein by reference.
This proxy statementProxy Statement contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those set forth in the statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements involve significant risks and uncertainties, including those mentioned in the risk factors in Item 1A of our Annual Report on Form10-K for the year ended December 31, 20152017 and in our most recent periodic reports on Form10-Q and Form8-K filed with the SEC, and actual results may vary materially.
By Order of the Board of Directors, |
/s/ Scott D. Irwin |
Scott D. Irwin |
Executive Vice President, General Counsel and Secretary |
APPENDIX: RECONCILIATION OFNON-GAAP DISCLOSURES
APPENDIX A TO 2018 PROXY STATEMENT
Reconciliation ofNon-GAAP Disclosures
($ in thousands, except per share amounts)
For the Years Ended December 31, | ||||||||
2017 | 2016 | |||||||
Net Income | $ | 178,040 | $ | 219,919 | ||||
Special items: | ||||||||
Charges associated with adoption of tax reform | 4,548 | — | ||||||
Expenses associated with mergers and acquisitions | 2,530 | 1,586 | ||||||
Gain on settlement of contingent consideration | — | (2,000 | ) | |||||
Restructuring charges | — | 4,010 | ||||||
Asset impairments | 614 | — | ||||||
Income tax benefit for special items | — | (215 | ) | |||||
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Adjusted net income | $ | 185,732 | $ | 223,300 | ||||
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Weighted average common shares outstanding - basic | 118,084 | 117,384 | ||||||
Effect of dilutive securities: | ||||||||
Stock options | 310 | 306 | ||||||
Restricted stock-based awards | 71 | 101 | ||||||
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Weighted average shares and assumed conversions - diluted | 118,465 | 117,791 | ||||||
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Diluted Earnings Per Share | $ | 1.50 | $ | 1.87 | ||||
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Adjusted Diluted Earnings Per Share | $ | 1.57 | $ | 1.90 | ||||
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For the Years Ended December 31, | ||||||||
2017 | 2016 | |||||||
Net income | $ | 178,040 | $ | 219,919 | ||||
Depreciation of real estate assets | 95,902 | 94,346 | ||||||
Impairment of real estate assets | 355 | — | ||||||
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Funds From Operations | $ | 274,297 | $ | 314,265 | ||||
Charges associated with adoption of tax reform | 4,548 | — | ||||||
Expenses associated with mergers and acquisitions | 2,530 | 1,586 | ||||||
Gain on settlement of contingent consideration | — | (2,000 | ) | |||||
Restructuring charges | — | 4,010 | ||||||
Goodwill and other impairments | 259 | — | ||||||
Income tax benefit for special items | — | (215 | ) | |||||
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Normalized Funds From Operations | $ | 281,634 | $ | 317,646 | ||||
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FUNDS FROM OPERATIONS PER DILUTED SHARE: | $ | 2.32 | $ | 2.67 | ||||
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NORMALIZED FUNDS FROM OPERATIONS PER DILUTED SHARE: | $ | 2.38 | $ | 2.70 | ||||
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APPENDIX TO 2018 PROXY STATEMENT
Reconciliation ofNon-GAAP Disclosures
($ in thousands, except per share amounts)
For the Years Ended December 31, | ||||||||
2017 | 2016 | |||||||
Net Income | $ | 178,040 | $ | 219,919 | ||||
Interest expense, net | 68,535 | 67,755 | ||||||
Depreciation and amortization | 147,129 | 166,746 | ||||||
Income tax expense | 13,911 | 8,253 | ||||||
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EBITDA | $ | 407,615 | $ | 462,673 | ||||
Expenses associated with mergers and acquisitions | 2,530 | 1,586 | ||||||
Gain on settlement of contingent consideration | — | (2,000 | ) | |||||
Restructuring charges | — | 4,010 | ||||||
Depreciation expense associated with STFRC lease | (16,453 | ) | (38,678 | ) | ||||
Interest expense associated with STFRC lease | (6,425 | ) | (10,040 | ) | ||||
Asset impairments | 614 | — | ||||||
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Adjusted EBITDA | $ | 387,881 | $ | 417,551 | ||||
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Adjusted Net Income, Adjusted EPS, EBITDA, Adjusted EBITDA, Funds From Operations (FFO), Normalized FFO and, where appropriate, their corresponding per share metrics, arenon-GAAP financial measures. CoreCivic believes these measures are important operating measures that supplement discussion and analysis of the Company’s results of operations and are used to review and assess operating performance of the Company and its correctional facilities and their management teams. CoreCivic believes it is useful to provide investors, lenders and security analysts disclosures of its results of operations on the same basis that is used by management. FFO, in particular, is a widely acceptednon-GAAP supplemental measure of REIT performance, grounded in the standards for FFO established by the National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate. EBITDA, Adjusted EBITDA and Normalized FFO are useful as supplemental measures of the performance of the Company’s properties because such measures do not take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company’s tax provisions and financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this accounting presentation assumes the value of real estate assets diminishes at a level rate over time. Due to the unique structure, design and use of the Company’s properties, management believes assessing performance of the Company’s properties without the impact of depreciation or amortization is useful. However, a portion of the rental payments for the South Texas Family Residential Center (STFRC) is classified as depreciation and interest expense for financial reporting purposes. Adjusted EBITDA includes such depreciation and interest expense in order to more properly reflect the cash flows associated with this lease. CoreCivic may make adjustments to FFO from time to time for certain other income and expenses it considersnon-recurring, infrequent or unusual, even though such items may require cash settlement, because such items do not reflect a necessary component of the ongoing operations of the Company. Normalized FFO excludes the effects of such items. CoreCivic calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt refinancing, mergers and acquisitions (M&A) activity, restructuring charges, and certain impairments and other charges that the Company believes are unusual or nonrecurring to provide an alternative measure of comparing operating performance for the periods presented. Even though expenses associated with M&A activity may be recurring, the magnitude and timing fluctuate based on the timing and scope of M&A activity, and therefore, such expenses, which are not a necessary component of the ongoing operations of the Company, may not be comparable from period to period. Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited. Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO and Normalized FFO and their corresponding per share measures are not measures of
performance under GAAP, and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company’s operating performance or any other measure of performance derived in accordance with GAAP. This data should be read in conjunction with the Company’s consolidated financial statements and related notes included in its filings with the Securities and Exchange Commission.
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The Board of Directors recommends you vote FOR the election of the following nominees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1. |
Election of Directors | |||||||||||||||||||||||||||||||||||||||||||||||||||
Nominees: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||||||||||||
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1b. Robert J. Dennis | ☐ | ☐ | ☐ | For | Against | Abstain | ||||||||||||||||||||||||||||||||||||||||||||||
1c. Mark A. Emkes | ☐ | ☐ | ☐ | 1i. Charles L. Overby | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||||||
1d. Damon T. Hininger | ☐ | ☐ | ☐ | 1j. John R. Prann, Jr. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||||||
1e. Stacia A. Hylton | ☐ | ☐ | ☐ | The Board of Directors recommends you vote FOR proposals 2 and 3. | ||||||||||||||||||||||||||||||||||||||||||||||||
1f. Harley G. Lappin | ☐ | ☐ | ☐ | 2. Ratification of the appointment by our Audit Committee of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||||||
1g. Anne L. Mariucci | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||||||||||
1h. Thurgood Marshall, Jr. | ☐ | ☐ | ☐ | 3. Advisory vote to approve the compensation of our Named Executive Officers. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||||||
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If you plan to attend the meeting on May 12, 2016,10, 2018, you must request an admission ticket in advance by following the instructions set forth in the Proxy Statement. Tickets will be issued only to registered and beneficial owners as of March 14, 2016.
Requests for admission tickets will be processed in the order in which they are received and must be requested no later than May 11, 2016.9, 2018. On the day of the meeting, each shareholderstockholder will be requestedrequired to present a valid picture identification such as a driver’s license or passport with theirhis or her admission ticket.
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M83051-P61230 E37128-P00730
PROXY
CORRECTIONS CORPORATION OF AMERICACORECIVIC, INC.
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 12, 201610, 2018
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Damon T. Hininger and David M. Garfinkle, and each of them with full power of substitution and revocation, as proxies of the undersigned, and hereby authorize(s) them to represent and to vote, as designated, all of the voting common stock of Corrections Corporation of America,CoreCivic, Inc., a Maryland corporation (the “Company”), held by the undersigned at the close of business on Monday, March 14, 2016,12, 2018, at the Annual Meeting of Stockholders of the Company to be held on Thursday, May 12, 2016,10, 2018, at 10:00 a.m., CDT,local time, at the Company’s corporate headquarters, 10 Burton Hills Boulevard, Nashville, Tennessee, 37215, and at any adjournments or postponements thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side