-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RnlPEjuWcU7tqihXUS1xkq5veleNbX6nAWxdoij7ncJgN011Se9V4/Jh7Ka5SRS3 bM2Bj192evK1p58BH120Fg== 0000950144-97-002740.txt : 19970325 0000950144-97-002740.hdr.sgml : 19970325 ACCESSION NUMBER: 0000950144-97-002740 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970429 FILED AS OF DATE: 19970324 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WACKENHUT CORP CENTRAL INDEX KEY: 0000104030 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-DETECTIVE, GUARD & ARMORED CAR SERVICES [7381] IRS NUMBER: 590857245 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05450 FILM NUMBER: 97561201 BUSINESS ADDRESS: STREET 1: 4200 WACKENHUT DRIVE STREET 2: #100 CITY: PALM BEACH GARDEN STATE: FL ZIP: 33410 BUSINESS PHONE: 4026916429 MAIL ADDRESS: STREET 1: 4200 WACKENHUT DR STREET 2: #100 CITY: PALM BEACH GARDEN STATE: FL ZIP: 33410 DEF 14A 1 WACKENHUT CORPORATION N & PS 1 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WACKENHUT CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [ ] Fee paid previously with preliminary materials: [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: 2 [WACKENHUT LOGO] EXECUTIVE OFFICES 4200 Wackenhut Drive #100 Palm Beach Gardens, Florida 33410-4243 Telephone: (561) 622-5656 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON APRIL 29, 1997 To the Shareholders: The Annual Meeting of the Shareholders of The Wackenhut Corporation will be held on Tuesday, April 29, 1997, at 9:00 A.M. at the Embassy Suites Hotel, 4350 PGA Boulevard, Palm Beach Gardens, Florida, for the purpose of considering and acting on the matters following: (1) the election of eight directors for the ensuing year; (2) ratification of the action of the Board of Directors in appointing the firm of Arthur Andersen LLP to be the independent certified public accountants of the Corporation for the fiscal year 1997, and to perform such other services as may be requested; (3) approval of an Employee Stock Purchase Plan; (4) approval of an amendment to the Key Employee Long-Term Incentive Stock Plan; (5) the transaction of any other business as may properly come before the meeting, or any adjournment or adjournments thereof. Only shareholders of Series A Common Stock of record at the close of business March 14, 1997, the record date and time fixed by the Board of Directors, are entitled to notice and to vote at said meeting. ALL SERIES A COMMON STOCK SHAREHOLDERS ARE URGED EITHER TO ATTEND THE MEETING IN PERSON OR TO VOTE BY PROXY. You are requested to promptly sign and mail the enclosed proxy, which is being solicited on behalf of the Board of Directors, regardless of whether you expect to be present at this meeting. A return envelope which requires no postage is enclosed for that purpose. If you attend the meeting in person, you may, if you wish, revoke your proxy and vote in person. By order of the Board of Directors. James P. Rowan Vice President, General Counsel, and Assistant Secretary March 25, 1997 3 PROXY STATEMENT March 25, 1997 The Wackenhut Corporation Executive Offices 4200 Wackenhut Drive #100 Palm Beach Gardens, Florida 33410-4243 Telephone: (561) 622-5656 General Information This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of The Wackenhut Corporation (the "Company" or the "Corporation") for the Annual Meeting of the Shareholders of the Corporation to be held at the Embassy Suites Hotel, 4350 PGA Boulevard, Palm Beach Gardens, Florida, April 29, 1997, and all adjournments thereof. Please note the Proxy Card provides a means to withhold authority to vote for any individual director-nominee. Also note the format of the Proxy Card which provides an opportunity to specify your choice between approval, disapproval or abstention with respect to the proposal to ratify the appointment of Arthur Andersen LLP as independent certified public accountants of the Corporation, and the proposal to approve an Employee Stock Purchase Plan; and the proposal to approve an amendment to the Key Employee Long-Term Incentive Stock Plan. If the enclosed Proxy Card is executed properly and returned, the shares represented will be voted in accordance with those instructions. If no instructions are given the Proxy Card will be voted as follows: FOR - The election of the Directors nominated by the Board of Directors FOR - Proposal to ratify the appointment of Arthur Andersen LLP as the independent certified public accountants of the Corporation. FOR - Proposal to approve an Employee Stock Purchase Plan. FOR - Proposal to approve an amendment to the Key Employee Long-Term Incentive Stock Plan. Holders of shares of the Series A Common Stock of the Corporation of record as of the close of business on March 14, 1997, will be entitled to one vote for each share of stock standing in their name on the books of The Wackenhut Corporation. On February 17, 1997, 3,856,571 shares of Series A Common Stock were outstanding. The Series A Common Stock will vote as a single class for the election of Directors, to ratify the appointment of Arthur Andersen LLP, to approve certain amendments to the Key Employee Long-Term Incentive Stock Plan, to approve an Employee Stock Purchase Plan, and on any other matter which may properly come before the meeting. Any person giving a proxy has the power to revoke it any time before it is voted by written notice to the Corporation or attending the meeting and voting the shares. The cost of preparation, assembly and mailing this Proxy Statement material will be borne by the Corporation. It is contemplated that the solicitation of proxies will be entirely by mail. This Proxy Statement and the accompanying form of proxy are being mailed to shareholders of the Corporation on or about March 25, 1997. 2 4 THE ELECTION OF DIRECTORS The Board of Directors will be comprised of eight (8) members. Unless instructed otherwise, the persons named on the accompanying Proxy Card will vote for the election of the nominees named below to serve for the ensuing year and until their successors are elected and have qualified. All of the nominees are presently directors of the Corporation who were elected by the shareholders at their last annual meeting. All are proposed for re-election to the Board of Directors of the Corporation at the April 29, 1997 Annual Meeting of the Shareholders. If any nominee for director shall become unavailable (which management has no reason to believe will be the case), it is intended that the shares represented by the enclosed Proxy Card will be voted for any such replacement or substitute nominee as may be nominated by the Board of Directors. A brief biographical statement for each nominee follows:
NOMINEE AND YEAR PRESENT AND PAST POSITIONS FIRST BECAME DIRECTOR AND OTHER INFORMATION ================================================================================ JULIUS W. BECTON, JR. General Becton is the Chief Executive Officer and 1994 Superintendent of the Washington, D.C. Public School AGE 70 System. He is a former President of Prairie View A & M University. He entered the Army as a Private in 1944 and rose to the rank of Lieutenant General. While in the Army, he commanded the lst Cavalry Division and the [PICTURE] VII Corps, and was the Deputy Commanding General of the U.S. Army Training and Doctrine Command. As such, he is a veteran of three wars, World War II, the Korean War and Vietnam. After departing the service in 1983, he served as Director of the Office of U.S. Foreign Disaster Assistance, and from 1985 to 1989 was the Director, Federal Emergency Management Agency. He was later chief operating officer for American Coastal Industries, Inc. He is on the Board of Directors of Illinois Tool Works, Inc., a multinational manufacturer of highly engineered assemblies and systems, and the Marine Spill Response Corporation. He is Vice Chairman for the Association of US Army and a member of the Advisory Council to the Board of Visitors at the Citadel. He is a member of the Defense Science Board Readiness Task Force, and the Department of Defense Army Advisory Panel. He serves on the board of several civic public service organizations. He received numerous U.S. Army service and valor awards, including the Distinguished Service Medal; and the Distinguished Service Award for his service as the Director, Federal Emergency Management Agency. He has a B.S. from Prairie View A & M University, and an M.A. in economics from the University of Maryland. He has been awarded honorary Doctor of Laws degrees by three universities. (e)(f) - -------------------------------------------------------------------------------- RICHARD G. CAPEN, JR. Ambassador Capen is an author, speaker and independent 1993 corporate director. He was formerly United States AGE 62 Ambassador to Spain (1992-93), Vice Chairman and Director of Knight Ridder, Inc. (1989-91), and Chairman and Publisher of The Miami Herald (1983-89). During [PICTURE] his years as Publisher of The Miami Herald, the newspaper received five Pulitzer Prizes and was honored twice as one of the top ten dailies in America. Ambassador Capen started his newspaper career in l96l with Copley Newspapers in San Diego, California. From l968-7l, Ambassador Capen was a senior civilian official with the U.S. Department of Defense, where he served first as Deputy Assistant Secretary of Defense for Public Affairs and subsequently as Assistant to the Secretary of Defense for Legislative Affairs. In l97l he was awarded the Defense Department's highest civilian decoration for his leadership. Ambassador Capen has served as director of several public corporations, and as a member of advisory boards at Stanford and Duke Universities. He is a member of the Board of Directors of Carnival Corporation, Freedom Communications, Inc., New Economy Fund, a mutual fund, and Smallcap World Fund, a mutual fund. Ambassador Capen is a l956 graduate of Columbia University which he attended on an NROTC scholarship. (b)(c) - --------------------------------------------------------------------------------
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS FIRST BECAME DIRECTOR AND OTHER INFORMATION ================================================================================ ANNE NEWMAN FOREMAN Mrs. Foreman served as the Under Secretary of the 1993 United States Air Force from September 1989 until AGE 49 January 1993. Prior to her tenure as Under Secretary, she was General Counsel of the Department of the Air Force and a member of the Department's Intelligence [PICTURE] Oversight Board. Mrs. Foreman served in the White House as Associate Director of Presidential Personnel for National Security (1985-1987) and practiced law with the Washington office of the Houston-based law firm of Bracewell and Patterson, and with the British solicitors Boodle Hatfield, Co., in London, England (1979-1985). Mrs. Foreman is a former member of the career Foreign Service, having served in Beirut, Lebanon; Tunis, Tunisia, and the U.S. Mission to the United Nations in New York. She was a U.S. Delegate to the 3lst Session of the U.N. General Assembly and to the 62nd Session of the U.N. Economic and Social Council. Mrs. Foreman received a B.A. degree, Magna Cum Laude, from the University of Southern California and a M.A. (History) from the same institution. She also holds a J.D. from the American University and was awarded an Honorary Doctorate of Laws from Troy State University. Mrs. Foreman is a member of Phi Beta Kappa, has been a member of numerous Presidential delegations, and was twice awarded the Air Force Medal for Distinguished Civilian Service. (c)(d) - -------------------------------------------------------------------------------- EDWARD L. HENNESSY, JR. Mr. Edward L. Hennessy, Jr., served as Chairman of the 1993 Board and Chief Executive Officer of Allied-Signal Inc. AGE 69 from 1979 to 1991. He was previously Executive Vice President and member of the Board of Directors and Executive Committee of United Technologies Corporation, [PICTURE] Senior Vice President for Administration and Finance for Heublein, Inc. and Controller with IT&T Corporation. He is a member of the Board of Directors of Lockheed Martin, The Bank of New York, Walden Residential Properties, Inc., and NAI Technologies, Inc. He is a Trustee of The Catholic University of America, a Director of The Coast Guard Academy Foundation, Inc., founding President of the Tri-County Scholarship Fund and Treasurer of the March of Dimes. He was a member of The President's Private Sector Survey on Cost Control, The (New Jersey) Governor's Management Improvement Plan, Inc., and the Tender Offer Advisory Committee of the Securities & Exchange Commission. He also is a member of The Conference Board, Inc. and the Economic Club of New York. He has numerous honorary degrees and is a graduate of Fairleigh Dickinson University in New Jersey, where he is a Trustee and Chairman of the University's Board. (a)(c) - -------------------------------------------------------------------------------- PAUL X. KELLEY General Kelley is the Vice Chairman of Cassidy and 1988 Associates, Inc., a government relations firm in AGE 68 Washington, D.C. He is also on the Board of Directors of Allied-Signal, Inc., an aerospace, automotive products, and engineered materials company; GenCorp, [PICTURE] Inc. a propulsion, defense electronics, and ordnance company; London Life Insurance Company, a Canadian life insurance company, PHH Corporation, a vehicle and relocation management services company; Saul Centers, Inc. a real estate investment trust; Sturm, Ruger and Co., Inc., a small arms company and UST, Inc., a tobacco products, wine and smoker accessories company. He is the former Commandant of the Marine Corps, having retired as a four-star General in 1987. As a Marine officer, he commanded an infantry battalion in Vietnam during 1966; and during 1970-71, he commanded the 1st Marine Regiment, the last Marine ground combat unit to leave Vietnam. He later commanded the 4th Marine Division, and was the first commander of the Rapid Deployment Joint Task Force, a four service force headquartered in Florida. He is the recipient of numerous awards for valor and distinguished service during over thirty-seven years of active military service. General Kelley has a B.S. in economics from Villanova University and is a graduate of the Air War College. He has been awarded honorary doctoral degrees by five major universities. (b)(e) - --------------------------------------------------------------------------------
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS FIRST BECAME DIRECTOR AND OTHER INFORMATION ================================================================================ NANCY CLARK REYNOLDS Ms. Reynolds is Senior Consultant of The Wexler Group, 1986 a governmental relations and public affairs consulting AGE 69 firm in Washington, D.C. She currently serves as a Director of Sears, Roebuck & Co., Allstate Insurance Company and The Norrell Corporation, a temporary help [PICTURE] service firm. She is a member of the Board of the National Park Foundation, The Central Africa Foundation, and a trustee of the Smithsonian Museum of the American Indian. She is a past president of the Business and Government Relations Council. She was formerly a Director of the Chicago Mercantile Exchange, G.D. Searle & Co., and Viacom International. From 1977-82, she was a Vice President of the Bendix Corporation. She received her B.A. degree in English from Goucher College and an Honorary Degree of Laws from Gonzaga University. (d)(f) - -------------------------------------------------------------------------------- GEORGE R. WACKENHUT Mr. Wackenhut is Chairman of the Board and Chief 1958 Executive Officer of the Corporation. He was President AGE 77 of the Corporation from the time it was founded until April 26, 1986. He formerly was a Special Agent of the Federal Bureau of Investigation. He is a member of the [PICTURE] Board of Directors of Wackenhut Corrections Corporation, a former member of the Board of Directors of SSJ Medical Development, Inc., Miami, Florida, and is on the Dean's Advisory Board of the University of Miami School of Business. He is on the National Council of Trustees, Freedoms Foundation at Valley Forge, the President's Advisory Council for the Small Business Administration, Region IV, and a member of the National Board of the National Soccer Hall of Fame. He is a past participant in the Florida Governor's War on Crime and a past member of the Law Enforcement Council, National Council on Crime and Delinquency, and the Board of Visitors of the U.S. Army Military Police School. He is also a member of the American Society for Industrial Security. He was a recipient in 1990 of the Labor Order of Merit, First Class, from the government of Venezuela. Mr. Wackenhut received his B.S. degree from the University of Hawaii and his M.Ed. degree from Johns Hopkins University. Mr. Wackenhut is married to Ruth J. Wackenhut, Secretary of the Corporation. His son Richard R. Wackenhut, is a director-nominee.(a)(f) - -------------------------------------------------------------------------------- RICHARD R. WACKENHUT Mr. Wackenhut, President and Chief Operating Officer of 1986 the Corporation since April 26, 1986, was formerly AGE 49 Senior Vice President, Operations from 1983-1986. He was Manager of Physical Security from 1973-74. He also served as Manager, Development at the Corporation's [PICTURE] Headquarters from 1974-76; Area Manager, Columbia, SC from 1976-77; District Manager, Columbia SC from 1977-79; Director, Physical Security Division at Corporate Headquarters 1979-80; Vice President, Operations from 1981-82; and Senior Vice President, Domestic Operations from 1982-83. Mr. Wackenhut is a member of the Board of Directors of Wackenhut Corrections Corporation, a Director of Wackenhut del Ecuador, S.A.; Wackenhut UK, Limited; Wackenhut Dominicana, S.A.; and a Director of several domestic subsidiaries of the Corporation. He is Vice Chairman of Associated Industries of Florida. He is also a member of the American Society for Industrial Security, a member of the International Security Management Association, and the International Association of Chiefs of Police. He received his B.A. degree from The Citadel in 1969, and completed the Advanced Management Program of the Harvard University School of Business Administration in 1987. Mr. Wackenhut is the son of George R. Wackenhut, a Director-nominee, and Ruth J. Wackenhut, Secretary of the Corporation. (a)(d) - --------------------------------------------------------------------------------
5 7 (a) Member of Executive Committee (b) Member of Nominating and Compensation Committee (c) Member of Audit and Finance Committee (d) Member of Corporate Planning Committee (e) Member of Operations and Oversight Committee (f) Member of Fair Employment Practices Committee The election of the directors listed above will require the affirmative vote of the holders of a plurality of the shares present or represented at the shareholders meeting. Abstentions will be treated as shares represented at the meeting and therefore will be the equivalent of a negative vote, and broker non-votes will not be considered as shares represented at the meeting. COMPOSITION AND FUNCTIONS OF SPECIFIC COMMITTEES OF THE BOARD OF DIRECTORS The Wackenhut Corporation has an Audit and Finance Committee whose members are as follows: Edward L. Hennessy, Jr., Chairman Anne N. Foreman Richard G. Capen, Jr., Vice Chairman The Audit and Finance Committee met five times during the past fiscal year. The Audit and Finance Committee's principal functions and responsibilities are as follows: 1. Recommend the selection, retention, or termination of the Corporation's independent auditors. 2. Review the proposed scope of the audit and fees. 3. Review the quarterly and annual financial statements and the results of the audit with management, the internal auditors, and the independent auditors with emphasis on the quality of earnings in terms of accounting policies selected; this activity would also entail assisting in the resolution of problems that might arise in connection with an audit if and when this becomes necessary. 4. Review with management and independent auditors the recommendations made by the auditors with respect to changes in accounting procedures and internal accounting controls as well as other matters of concern to the independent auditors resulting from their audit activity. 5. Review with management and members of the internal audit team the activities of and recommendations made by this group. 6. Inquire about and be aware of all work (audit, tax, consulting) that the independent auditors perform for the Corporation. 7. Recommend policies to avoid unethical, questionable, or illegal activities by Corporation personnel. 8. Make periodic reports to the full Board on its activities. The Wackenhut Corporation also has a Nominating and Compensation Committee which, in addition to its role in recommending compensation for the Chief Executive Officer and the other executive officers, evaluates possible Director nominees and makes recommendations concerning such nominees to the Board of Directors, and recommends to the Chairman and the Board itself the composition of Board Committees and nominees for officers of the Corporation. See the Report of the Compensation Committee later in this Proxy Statement. Shareholders desiring to suggest qualified nominees for director should advise the Assistant Secretary of the Corporation in writing and include sufficient biographical material to permit an appropriate evaluation. A total number of four meetings of the Board of Directors was held during the 1996 fiscal year. 6 8 SECURITY OWNERSHIP The following table shows the number of shares of the Corporation's Series A and Series B Common Stock, each with a par value of $.10 per share, that was beneficially owned as of February 17, 1997, by each director nominee for election as director at the 1997 Annual Meeting of Shareholders, by each named executive officer, by all director nominees and executive officers as a group, and by each person or group who was known by the Corporation to beneficially own more than 5% of the Corporation's outstanding Series A or Series B Common Stock.
COMMON STOCK SERIES A-(VOTING) SERIES B-(NON-VOTING) ----------------------------------------------------------------------- BENEFICIAL OWNER (1) AMOUNT & NATURE PERCENT AMOUNT & NATURE PERCENT OF BENEFICIAL OF OF BENEFICIAL OF OWNERSHIP (2) CLASS OWNERSHIP (2)(6) CLASS ======================================================================================================================== DIRECTOR NOMINEES Julius W. Becton, Jr. - - 4,656 * Richard G. Capen, Jr. - - 4,812(3) * Anne N. Foreman 200 * 4,862 * Edward L. Hennessy, Jr. 200 * 4,862 * Paul X. Kelley 1,000 (3) * 6,937(3) * Nancy Clark Reynolds 1,400 * 5,912 * George R. Wackenhut 1,929,606 (4) 50.03% 2,204,571(4) 20.39% Richard R. Wackenhut 65 (5) * 91,457(5) * EXECUTIVE OFFICERS Alan B. Bernstein 500 * 70,465 * Fernando Carrizosa - - 55,606 * Robert C. Kneip - - 55,583 * George C. Zoley - - 7,500 * ALL NOMINEES AND EXECUTIVE 1,932,971 50.12% 2,516,473 23.28% OFFICERS AS A GROUP OTHER Wellington Management Company (7) 261,700 6.79% - - TCW Group, Inc. and Robert Day (8) - - 720,000 6.66%
*Beneficially owns less than 1% (1) Unless stated otherwise, the address of the beneficial owners is 4200 Wackenhut Drive #100, Palm Beach Gardens, Florida. (2) Information concerning beneficial ownership was furnished by the persons named in the table or derived from documents filed with the Securities and Exchange Commission. Except as otherwise indicated below, each person named in the table has sole voting and investment power with respect to the shares beneficially owned. Each person reported as the beneficial owner of stock owned of record by, or in joint tenancy with another person, has only shared voting and investment power over the stock. (3) All shares held jointly with his wife. 7 9 (4) George R. Wackenhut and Ruth J. Wackenhut, his wife and Secretary of the Corporation, through trusts over which they have sole dispositive and voting power, control 50.03% of the issued and outstanding voting common stock of The Wackenhut Corporation. (5) 65 shares of Series A and 137 shares of Series B held in trust for daughter, Jennifer A. Wackenhut, under Florida Gifts to Minors Act and the balance in his own name. (6) Includes Series B shares over which the Executive Officers have options. (7) The address of Wellington Management Company is 75 State Street, Boston, MA, 02109. (8) The address of TCW Group, Inc. and Robert Day is 865 South Figueroa Street, Los Angeles, CA, 90017. EXECUTIVE COMPENSATION The following table shows remuneration paid or accrued by the Corporation during the fiscal year ended December 29, 1996, and each of the two preceding fiscal years, to the Chief Executive Officer and to each of the four most highly compensated executive officers of the Corporation other than the Chief Executive Officer for services in all capacities while they were employees of the Company, and the capacities in which the services were rendered. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION --------------------------- ------------------------------------------------ AWARDS PAYOUTS RESTRICTED SECURITIES ALL OTHER STOCK UNDERLYING LTIP COMPEN- AWARDS OPTIONS/ PAYOUTS SATION NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1)(2) SARS(#)(6) ($)(5) ($)(3)&(4) ================================================================================================================= George R. Wackenhut, 1996 859,000 335,000 - 18,000 - 16,543 Chairman of the Board and 1995 784,000 198,000 - 25,000 - 16,543 Chief Executive Officer 1994 732,000 329,000 - 205,041 - 16,543 Richard R. Wackenhut, 1996 555,000 217,000 36,663 16,000 - 127,500 President and Chief 1995 508,000 128,000 33,330 22,500 - 60,000 Operating Officer 1994 451,000 208,000 29,330 201,916 - 59,000 Alan B. Bernstein, 1996 313,000 150,000 18,598 14,000 - 109,000 Executive Vice President, 1995 287,000 96,000 16,798 16,250 - 51,000 and President, North 1994 253,000 123,000 14,699 151,438 - 51,000 American Operations Group George C. Zoley 1996 288,000 101,500 - 20,000 - 25,906 Wackenhut Corrections Corp. 1995 249,000 70,000 - 7,500 - 11,755 President and Chief Executive 1994 186,000 100,000 - 180,666 - 9,067 Officer and Director Fernando Carrizosa 1996 226,000 75,000 11,999 12,000 - 84,000 Senior Vice President and 1995 207,000 55,000 10,932 12,500 - 50,000 President, International 1994 198,000 69,000 10,399 125,416 - 50,000 Group
8 10 (1) The aggregate number and value of restricted stock holdings (including restricted stock units and performance shares) based upon the Series B Common Stock fair market value at December 29, 1996 is as follows:
RESTRICTED STOCK PERFORMANCE TOTAL FAIR UNITS SHARES UNITS/SHARES MARKET VALUE =========================================================================== G. R. Wackenhut - 30,601 30,601 $420,764 R. R. Wackenhut 14,150 11,982 26,132 359,315 A. B. Bernstein 6,938 6,057 12,995 178,681 F. Carrizosa 4,396 3,926 8,322 114,428 George C. Zoley - - - -
[CAPTION] Restricted stock units and performance shares have been restated to reflect the 25% stock dividends declared in 1994 and 1995. Restricted stock units do not vest until 7 years continuous employment from the date of grant. (2) Dividends are paid on restricted stock. (3) This column represents (for the CEO) the cost of a split-dollar life insurance policy on George R. Wackenhut and Ruth J. Wackenhut. (4) This column represents (except for the CEO) the cost of providing for future liabilities under the Senior Officer Retirement Plan except for Mr. Zoley who is provided for under the Executive Retirement Plan in 1994 and the Corrections Subsidiary Senior Officer Retirement Plan in 1995 and 1996. (5) There was no payout of awards because return on equity performance goals were not met. (6) The following securities underlying options were granted under stock option plans of Wackenhut Corrections Corporation:
SECURITIES UNDERLYING OPTIONS NAME 1996 1995 1994 ==================== ================================== George R. Wackenhut - - 170,666 Richard R. Wackenhut - - 170,666 Alan B. Bernstein - - 128,000 Fernando Carrizosa - - 106,666 George C. Zoley 20,000 - 170,666
Amounts in 1994 have been restated to reflect the 100% stock dividend (treated as a split stock) paid on June 4, 1996. 9 11 LONG-TERM INCENTIVE PLAN - AWARDS IN THE LAST FISCAL YEAR The following table sets forth certain information concerning awards made under the Company's Key Employee Long-Term Incentive Stock Plan to the named executives during 1996. The Plan is a series of successive overlapping three-year periods commencing the first day of each fiscal year. Awards are earned only if certain predetermined criteria are met. Adjustments may be made in performance share awards to consider aspects of performance that may not be reflected in the Company's financial results.
ESTIMATED FUTURE PAYOUTS NUMBER OF PERFORMANCE UNDER NON-STOCK PRICE-BASED PLAN SHARES, OR OTHER UNITS, OR PERIOD UNTIL THRESHOLD TARGET MAXIMUM OTHER RIGHTS MATURATION OR PAYOUT(2) PAYOUT PAYOUT NAME (#) (1) PAYOUT (2) ($) ($) ($) ======================================================================================== George R. Wackenhut 14,207 1996-1998 93,500 187,000 280,500 Richard R. Wackenhut 5,572 1996-1998 36,669 73,337 110,006 Alan B. Bernstein 2,286 1996-1998 18,601 37,202 55,803 George C. Zoley 0 1996-1998 0 0 0 Fernando Carrizosa 1,823 1996-1998 12,001 24,001 36,002
(1) Performance shares and restricted stock units are awarded under the Plan, however, only performance shares are reflected above since restricted stock units are not contingent upon performance and are reported separately in the Summary Compensation Table, Long-Term Compensation Restricted Stock Awards Column. (2) Average return on Equity performance goals are set by the Nominating and Compensation Committee for all of the three-year performance cycles. OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION INDIVIDUAL GRANTS FOR OPTION TERM (3) --------------------------------------------------------------------------------- NUMBER OF % OF TOTAL SECURITIES OPTIONS/SARS UNDERLYING GRANTED TO EXERCISE OR OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION NAME GRANTED (1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($) ============================================================================================================= George R. Wackenhut (1) 18,000 8.9% 14.00 30-Jan-06 158,481 401,623 Richard R. Wackenhut (1) 16,000 7.9% 14.00 30-Jan-06 140,872 356,998 Alan B. Bernstein (1) 14,000 6.9% 14.00 30-Jan-06 123,263 312,374 George C. Zoley (2) 20,000 40.0% 22.625 25-Apr-06 284,575 721,168 Fernando Carrizosa (1) 12,000 5.9% 14.00 30-Jan-06 105,654 267,749
(1) Options granted under the Key Employee Long-Term Incentive Stock Plan of the Corporation (the "Incentive Stock Plan"). (2) Options granted under Wackenhut Corrections Corporation's Stock Option Plan (the "Second Plan"). (3) The full option term was used in the 5% and 10% annual growth projections for the price of the underlying stock. 10 12 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE MONEY OPTIONS/SARS OPTIONS/SARS AT FISCAL AT FISCAL SHARES YEAR-END (#) YEAR-END ($) ACQUIRED VALUE ------------------------------------ ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/ (#) ($) UNEXERCISABLE (U) UNEXERCISABLE (U) =================================================================================== George R. Wackenhut (A) NONE NA 59,375 E 334,656 E 18,000 U - (B) NONE NA 32,864 E 580,871 E (C) NONE NA 74,666 E 1,129,323 E Richard R. Wackenhut (A) NONE NA 53,750 E 303,563 E 16,000 U - (B) 32,864 790,241 - - (C) NONE NA 74,666 E 1,129,323 E Alan B. Bernstein (A) NONE NA 39,688 E 225,832 E 14,000 U - (B) NONE NA 14,188 E 250,773 E (C) NONE NA 56,000 E 847,000 E Fernando Carrizosa (A) NONE NA 31,250 E 179,188 E 12,000 U - (B) 20,540 318,113 39,460 E 697,456 E (C) NONE NA 46,666 E 705,823 E George C. Zoley (A) NONE NA 7,500 E 22,125 E (C) NONE NA 74,666 E 1,129,323 E 4,000 E - 16,000 U -
(A) The Key Employee Long-Term Incentive Stock Plan of the Corporation (the "Incentive Stock Plan"). (B) Wackenhut Corrections Corporation 1994 Stock Option Plan (the "First Plan") (C) Wackenhut Corrections Corporation Stock Option Plan (the "Second Plan") 11 13 SENIOR OFFICER RETIREMENT PLAN The following table sets forth the estimated annual benefits payable under the Retirement Plan for senior officers.
RETIREMENT PLAN TABLE ANNUAL BENEFITS ------------------------------------------------------- OFFICER BENEFICIARIES ------------------------------------------------------- R. R. Wackenhut $175,000 20 years $100,000 10 years A. B. Bernstein 150,000 20 years 100,000 10 years F. Carrizosa 100,000 20 years 50,000 10 years George C. Zoley - - - -
The Retirement Plan for senior officers provides that the Corporation will pay certain sums to the senior officers or their beneficiaries for twenty (20) years beginning on the date of their death or retirement after age 60, or to their beneficiaries for ten (10) years if they die before age 60. The Corporation has purchased life insurance on the lives of such senior officers in amounts that, in the aggregate, will substantially fund its future liability under the Retirement Plan. With respect to the five most highly compensated executive officers of the Corporation, George R. Wackenhut is not a participant in the Retirement Plan, and George C. Zoley participates in an Executive Officer Retirement Plan established by Wackenhut Corrections Corporation. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Nominating and Compensation Committee of the Board of Directors (the "Compensation Committee") met three times in fiscal 1996. The Compensation Committee is composed exclusively of independent, non-employee directors who are not eligible to participate in any of the executive compensation programs. Among its duties, the Compensation Committee is responsible for recommending to the full Board the annual remuneration for all executive officers, including the Chief Executive Officer and the other officers named in the Summary Compensation Table set forth above, and to oversee the Company's compensation plans for key employees. The Compensation Committee seeks to provide, through its administration of the Company's compensation program, salaries that are competitive and incentives that are primarily related to corporate performance. The components of the compensation program are base salary, annual incentive bonuses, and long-term incentive awards. Base salary is the fixed amount of total annual compensation paid to executives on a regular basis during the course of the fiscal year. Management of the Company determines a salary for each senior executive position (exclusive of the CEO and COO) that it believes is appropriate to attract and retain talented and experienced executives, and that is generally competitive with salaries for executives holding similar positions at comparable companies. The starting point for this analysis is each officer's base salary for the immediately preceding fiscal year. From time to time, management obtains reports from independent organizations concerning compensation levels for reasonably comparable companies. This information is used as a market check on the reasonableness of the salaries proposed by management. The comparator companies are composed of a diversified group of service companies whose revenue, performance, and position matches were deemed relevant and appropriate by the outside firm. Management recommends executive salaries to the Compensation Committee. The Compensation Committee reviews and adjusts the salaries suggested by management as it deems appropriate, and generally asks management to justify its recommendations, particularly if there is substantial deviation between the recommended salary and an officer's compensation for the prior fiscal year. In establishing the base salary for each officer (including that of the CEO and COO), the Compensation Committee evaluates numerous factors, including the Company's operating results, net income trends, and stock market performance, as well as comparisons with financial and stock performance of other companies, including those that are in competition 12 14 with the Company. In addition, data developed as a part of the strategic planning process, but which may not directly relate to corporate profitability, is utilized as appropriate. For example, the Compensation Committee may take into consideration an officer's efforts in positioning the Company for future growth. The Summary Compensation Table set forth elsewhere in this Proxy Statement shows the salaries of the CEO and the other named executive officers for the last three years. The increase in the CEO's salary for 1996 was attributable to the overall financial performance of the Company, strategic objectives and the quality of his leadership. In 1996, the Compensation Committee formally evaluated the performance of the CEO. The Company has an incentive compensation plan (the Bonus Plan) for officers and key employees. The aggregate amount of incentive compensation payable under the Bonus Plan is based on the Company's consolidated revenue and income and Business Unit revenues and service profits. The Bonus Plan is intended as an incentive for executives to increase both revenue and profit and uses these as factors in calculating the individual bonuses. The Bonus Plan formula weights these factors depending upon the position of the executive. For example, the President of a Business Unit is measured on factors of 60% Corporate results (30% corporate revenue and 30% corporate income) and 40% Business Unit service profit. All other positions are measured on weighted factors of 30% corporate revenue and 70% corporate income before taxes. An adjustment to the individual incentive award (up to 20% upward or 80% downward) may be applied to reflect individual performance. The Compensation Committee's decisions regarding the amount of incentive compensation payable in a given year and the allocation of same among the participants, are based on these factors, the contribution of a particular employee during the fiscal year and compliance with previously agreed upon goals and objectives as outlined in the Corporation's strategic plan for l996. The Company has elected to comply with Section l62(m) of the Internal Revenue Code to the extent it deems appropriate. The Company also maintains a Key Employee Long-Term Incentive Stock Plan (the Incentive Plan) for all executive officers, including the CEO and the other named officers. Participants in the Incentive Plan are assigned a target incentive award, stated as a percentage of such participant's base salary depending upon the participant's position with the Company. The target incentive award for fiscal 1996 for the CEO, the Chief Operating Officer, Executive Vice Presidents, and Senior Vice Presidents of the Company were 22%, 20%, 18% and 16%, respectively, of base salary. Participants in the Incentive Plan may be granted one or more types of long-term incentive vehicles as awards. Initially, awards have been limited to grants of restricted stock units and/or performance shares. The Compensation Committee determines the percentage of the target incentive award that will be allocated to restricted stock units and the percentage that will be allocated to performance shares. Awards in each category are earned only if certain predetermined criteria are met. In general, restricted stock unit awards are currently earned based on an employee's continued employment with the Company for a period of seven years from the date of grant, although the Compensation Committee can increase or decrease the time period for future grants and may also include performance criteria. Performance shares are earned only if certain three-year return on equity performance goals established by the Compensation Committee are attained. In setting the return on equity goals for each three-year period, the Compensation Committee considers prior years' performance, industry trends, the performance of major financial indicators and the prevailing economic circumstances. In its discretion, the Compensation Committee may make adjustments to performance share awards to consider aspects of performance that may not be reflected in the Company's financial results. The Company also maintains a Stock Option Plan (the Plan) for executive officers, including the CEO and other key employees. Participants receive stock option grants based upon their overall contribution to the Corporation. Such options are granted at market value at the time of grant. The purpose of the Incentive Plan is to reward superior corporate performance with a variable component of pay that can only be earned if performance criteria are met. The Incentive Plan is intended to encourage stock ownership by senior executives; to balance the short-term emphasis of the Bonus Plan with a longer-term perspective; to reinforce strategic goals by linking them to compensation; and to provide retention incentives for employees considered key to the future success of the Company. 13 15 The base salary, Bonus Plan, and Incentive Plan components of compensation, as implemented by the above described policies, have resulted in a compensation program that the Compensation Committee believes is fair, competitive, and in the best interests of the shareholders. By the Nominating and Compensation Committee Paul X. Kelley, Chairman Nancy Clark Reynolds (1) Richard G. Capen Anne Newman Foreman (1) (1) Took part in the Committee meeting which approved this report due to the absence of a regular member. COMPARISON OF CUMULATIVE TOTAL RETURN* THE WACKENHUT CORPORATION, WILSHIRE 5000 EQUITY, AND S&P SERVICE (COMMERCIAL AND CONSUMER) INDEXES** (PERFORMANCE THROUGH DECEMBER 31, 1996) [GRAPH] Assumes $100 invested on December 31, 1991, in Wackenhut Series A Common Stock and the Index companies. * Total return assumes reinvestment of dividends. ** Formerly called "S&P Specialized Srvices." Underlying Companies did not change.
1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- The Wackenhut Corporation 100 105 98 104 178 216 Wilshire 5000 Equity 100 109 122 122 166 201 S&P Services (Commercial and Consumer)** 100 99 96 119 119 123
The above graph compares the performance of The Wackenhut Corporation with that of the Wilshire 5000 Equity, and the S&P Specialized Services Index, which is a published industry index. An outside consulting firm was retained to evaluate the feasibility of constructing a custom peer group or the selection of a comparable peer group. The consultant's conclusion was that there is no appropriate five-year index of large labor-intensive security and protective service companies presently available and the construction of a custom peer group would not be appropriate because of the lack of sufficient data on the other large security companies. The selection of the S&P Specialized Services Index was the closest index the consultants believed appropriate. If there is a published index of large security companies or when sufficient data is available, the Company may consider, in future years, changing to a different index or custom peer group in place of the S&P Specialized Services Index. 14 16 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Corporation has a joint life policy on George R. Wackenhut and Ruth J. Wackenhut in the amount of $800,000. The cost of the policy is $16,543 per year and substantially all of the premium is paid by the Corporation. In this connection, an agreement provides that $760,000 of the proceeds from the policy will be paid to the Corporation as reimbursement of the costs. SERVICE AGREEMENTS. The Company and its consolidated subsidiary, Wackenhut Corrections Corporation ("WCC"), entered into a services agreement (the "1994 Services Agreement") effective January 3, 1994 pursuant to which the Company agreed to provide certain services to WCC through December 31, 1995. The Company and WCC entered into a new services agreement (the "1996 Services Agreement", and together with the 1994 Services Agreement, the "Services Agreements") on December 20, 1995, which became effective January 1, 1996, pursuant to which the Company has agreed to continue to provide certain of these services to WCC through December 31, 1997. In accordance with the terms of the 1994 Services Agreement, WCC paid the Company a fixed annual fee for services (the "Annual Services Fee") equal to $1,236,343 in fiscal 1994 and $1,069,073 in fiscal 1995. Under the 1996 Services Agreement, WCC has agreed to pay the Company an Annual Services Fee equal to $1,100,342 in each of fiscal 1996 and fiscal 1997. Management of WCC believes that the Annual Services Fees under the Services Agreements are on terms no less favorable to the Company and WCC than could be obtained from unaffiliated third parties. If WCC determines that it can obtain any of the services to which the Annual Services Fees relate at a cost less than that specified in the Services Agreements, WCC may obtain such services from another party and terminate the provision of such services by the Company with a corresponding reduction in the Annual Services Fee. Under each of the Services Agreements, the services to be provided by the Company to WCC for the Annual Services Fee include the following: LEGAL SERVICES. Under each of the Services Agreements, the Company provides legal advice on all matters affecting the WCC, including, among other things, assistance in the preparation of the WCC's Securities and Exchange Commission ("SEC") and other regulatory filings, review and negotiation of joint venture and other contractual arrangements, and provision of day-to-day legal advice in the operation of WCC's business, including employee related matters. FINANCIAL, ACCOUNTING, TAX AND GOVERNMENT CONTRACT MANAGEMENT SERVICES. Under each of the Services Agreements, the Company provides WCC with (i) cash management, (ii) support in the processing of accounts payable, tax returns and payroll, (iii) conducting periodic internal field audits, and (iv) purchasing assistance on an as needed basis. Under the 1994 Services Agreement, the Company also provided WCC with assistance in (i) deployment of new software for accounting and inmate management, (ii) management and administration of its government contracts, pricing proposals and responding to government inquiries and audits and (iii) the preparation of accounting reports, financial projections, budgets, periodic SEC filings and tax returns. HUMAN RESOURCES SERVICES. Under Each of the Services Agreements, the Company provides WCC assistance in the identification and selection of employees and compliance by WCC with various equal employment opportunity and other employment related requirements. The Company also assists WCC in implementing and administering employee benefit plans which comply with applicable laws and regulations. Any services provided by the Company to WCC beyond the services covered by the Annual Services Fees are billed to WCC at cost or on a cost plus basis as described in each of the Services Agreements or on such other basis as WCC and the Company agree. The 1994 Services Agreement provided WCC the option to utilize the Company's Domestic Operations Group Food Services Division (the "Food Services Division") to (i) provide the WCC with technical assistance in the areas of equipment specifications, kitchen layout and design, menu development, nutritional analysis and field support and training (for which WCC has reimbursed the Company for direct and indirect costs associated with providing such services), and (ii) manage and operate the food services at certain of 15 17 the WCC's facilities (for which WCC agreed to pay the Company a price established on a negotiated basis which is no less favorable than the charges for comparable services from unaffiliated third parties). Commencing in October 1995, WCC ceased contracting with the Food Services Division of the Company to obtain meals for inmates at all but two of the facilities it managed. Since October 1995, WCC has provided meals for inmates at the facilities it operates in accordance with regulatory, client and nutritional requirements. The following table sets forth certain amounts billed to WCC during fiscal 1994, fiscal 1995, and fiscal 1996, for services not covered by the Annual Services Fee paid under the 1994 and 1996 Services Agreement.
FISCAL 1994 FISCAL 1995 FISCAL 1996 ====================================================================== Food Services $4,146,000 $3,903,000 $ 450,000 Casualty Insurance Premiums (1) 1,393,000 1,540,000 3,306,000 Interest Charges (Income) (2) 166,000 (172,000) 40,000 Office Rental (3) 106,000 106,000 269,000 TOTAL $5,811,000 $5,377,000 $4,065,000
(1) Casualty insurance premiums relate to workers' compensation, general liability and automobile insurance coverage obtained through the Company's Insurance Program. Substantially, all of the casualty insurance premiums represented premiums to a captive reinsurance company that is wholly owned by the Company. Under the terms of each of the Services Agreements, WCC also has the option to continue to participate in certain other insurance policies maintained by the Company for which WCC reimburses the Company for direct and indirect costs associated in providing such services. (2) WCC charged interest on intercompany indebtedness and charges interest on intercompany loans at rates that reflect the Company's average interest costs on long-term debt, exclusive of mortgage financing. Prior to WCC's IPO, for purposes of computing interest expense, it was assumed that debt represented 50% of WCC's total capital. (3) Effective January 3, 1994, WCC entered into a two-year lease agreement with the Company providing for the rental of approximately 5,361 square feet of office space at its corporate headquarters in Coral Gables, Florida at an annual rate of $106,400 ($19.84 per square foot) plus certain common area maintenance charges (on terms which WCC believes to be no less favorable to WCC and the Company than could have been obtained from unaffiliated third parties). In 1995, the Company sold the office building and relocated its headquarters to Palm Beach Gardens, Florida, in March 1996. WCC has relocated its corporate offices to the Company's new headquarters, and has negotiated a lease on terms which WCC believes will be no less favorable to WCC and the Company than could have been obtained from unaffiliated third parties. Management of the Company believes that the services provided for the Annual Services Fees and the other services that will or may be provided under each of the Services Agreements are, or will be, on terms no less favorable to the Company and WCC than could have been obtained from unaffiliated third parties. Under the terms of each Services Agreements, the Company has further agreed that for so long as it provides WCC with any services (including those provided under the Services Agreement) and for a period of two years thereafter, The Company and its affiliates will not directly or indirectly compete with WCC or any of its affiliates in the design, construction, development or management of correctional or detention institutions or facilities in the United States. Additionally, during the period described above, the Company will not (and will use its best efforts to cause its affiliates not to) directly or indirectly compete with WCC or any of its affiliates in the design, construction, development or management of correctional or detention institutions or facilities outside the United States. 16 18 Nevertheless, in the United States, the Company's North American Operations Group may continue to bid for and perform any of the services that it currently performs. These services include prisoner transit, court security services and food services. WCC has also agreed that it will provide the Company with the first opportunity to participate on a competitive basis as a joint venture in the development of facilities outside the United States. OTHER TRANSACTIONS AND RELATIONSHIPS. Prior to its IPO, WCC borrowed money from time to time from the Company for working capital and general corporate purposes and was charged interest on the basis described above. Upon consummation of its IPO, all outstanding indebtedness of WCC to the Company was repaid. From time to time, the Company has guaranteed certain obligations of WCC and its affiliates. These guarantees remained in place following WCC's IPO and may be called upon should there be a default with respect to such obligations. The Company anticipates that it may, from time to time, use the services of the law firm of Venable, Baetjer and Howard, of which Mr. Benjamin R. Civiletti, a Director of WCC is a partner. George C. Zoley, Vice Chairman of the Board and Chief Executive Officer of WCC, also serves as Senior Vice President of the Corporation, and a Director of each of Wackenhut Corrections (U.K.) Limited, Wackenhut Corrections Corporation Australia Pty Limited, Premier Prison Services, Ltd., Premier Custodial Development, Ltd., Australasian Correctional Services Pty Limited, and Australasian Correctional Management Pty Limited, affiliates of the Company. James P. Rowan, Vice President and General Counsel of the Company also serves as the Secretary of WCC. George R. Wackenhut is Chairman of the Board and Chief Executive Officer of the Company, also serves as Chairman of the Board of WCC and, together with his wife, Ruth J. Wackenhut, through trusts over which they have sole dispositive and voting power, control approximately 50.03% of the issued and outstanding voting common stock of the Company. Richard R. Wackenhut, the President and Chief Operating Officer of the Company, is also a Director of WCC, and is a Director of Wackenhut del Ecuador, S.A., Wackenhut U.K. Limited, Wackenhut Dominicana, S.A., and a Director of several domestic subsidiaries of the Company. He is the son of George R. Wackenhut. DIRECTORS' COMPENSATION Directors of the Corporation who are not Officers were paid during fiscal year 1996 an annual retainer fee at the rate of $ 20,000 per year plus $1,250 for each Board Meeting attended, $500 for each committee meeting attended as committee members, and $750 for each committee meeting attended as committee chairmen. Each Director also receives from the Corporation annually, an option to purchase 2,000 shares of Series B Common Stock of the Corporation. No Directors or their affiliates were compensated for services rendered to the Corporation during 1996 other than the compensation described above. SECTION 16 FILING VIOLATIONS All SEC Forms 3, 4 and 5 filings appear to have been made when due. Those Directors and Officers not required to file a Form 5 for 1996 have furnished the Corporation with a statement that no filing is due. PROPOSAL NO. 2 APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Although not required by the By-Laws, the Board of Directors, in the interest of accepted corporate practices, asks shareholders to ratify the action of the Board of Directors in appointing the firm of Arthur Andersen LLP to be the independent certified public accountants of the Corporation for the fiscal year 1997, and to perform such other services as may be requested. If the shareholders do not ratify this appointment, the Corporation's Board of Directors will reconsider its action. Arthur Andersen LLP has advised the Corporation that no partner or employee of Arthur Andersen LLP has any direct financial interest or any material indirect interest in the Corporation other than receiving payment for its services as independent certified public accountants. 17 19 A representative of Arthur Andersen LLP, the principal independent certified public accountants of the Corporation for the most recently completed fiscal year, is expected to be present at the shareholders meeting and shall have an opportunity to make a statement if he or she so desires. This representative will also be available to respond to appropriate questions raised orally at the meeting. PROPOSAL NO. 3 PROPOSAL TO APPROVE AN EMPLOYEE STOCK PURCHASE PLAN On January 28, 1997, the Board of Directors adopted, subject to shareholder approval at the Annual Meeting, an Employee Stock Purchase Plan (the "Purchase Plan") to permit employees to purchase Series B Common Stock of the Corporation through a payroll deduction program of between 1% and 10% of the employee's compensation. The purchase price will be the greater of, a) 90 percent of the average of the closing prices for the last three trading dates of the applicable calendar quarter or, b) 85 percent of the lesser of, 1) the closing price on the first trading date of the applicable calendar quarter or, 2) the closing price on the last trading date of the applicable calendar quarter. Rights granted under the Purchase Plan may not be transferred except by will or the laws of descent and distribution. No options will be granted to any individual in excess of $25,000 of fair market value in a calendar year. The proposal would also set aside for that purpose 1,000,000 shares of authorized, but unissued Series B Common Stock, and authorize and empower appropriate officers of the Corporation to do all things necessary or desirable to implement such a Purchase Plan. It is the intention of the Company to have the Purchase Plan qualify as an Employee Stock Purchase Plan under Section 423 of the Internal Revenue Code of 1986. The Purchase Plan will be open to all employees of the Company and its United States affiliates, excluding Wackenhut Corrections Corporation, who customarily work more than 20 hours per week and customarily work more than five months per year. Ownership of stock or options equaling or exceeding 5% of the value of all classes of stock of the Company would disqualify an employee from participation in the Purchase Plan. George R. Wackenhut, Chairman and CEO and certain relatives of his, including Richard R. Wackenhut, President and COO, are not eligible to participate in the Purchase Plan. The Purchase Plan is subject to approval by the affirmative vote of the holders of a majority of the outstanding shares of Series A Common Stock voting in person or by proxy and entitled to vote thereon. If the Purchase Plan is so approved, it will become effective on the first day of the calendar quarter coinciding with or next following the approval of this Plan by the shareholders and completion of the registration process required under the Securities Act of 1933. The Board believes that adoption of the Purchase Plan is an essential element of the management, growth and financial success of the Company. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE AN EMPLOYEE STOCK PURCHASE PLAN. 18 20 PROPOSAL NO. 4 PROPOSAL TO APPROVE AN AMENDMENT TO THE KEY EMPLOYEE LONG-TERM INCENTIVE STOCK PLAN The success of the Corporation depends, in large measure, on its ability to recruit and retain key employees with outstanding ability and experience. The Board of Directors also believes there is a need to align shareholder and employee interests by encouraging employee stock ownership and to motivate employees with compensation conditioned upon achievement of the Corporation's financial goals. In order to accomplish these objectives, the Board of Directors adopted the Key Executive Long-Term Incentive Stock Plan (the "Incentive Plan") in 1992 and the shareholders approved the Incentive Plan. This Amendment to the Incentive Plan is intended to enhance flexibility under the Incentive Plan, and to address recent regulatory changes, in particular, the deductibility limit imposed by Section 162(m) of the Internal Revenue Code (the "Code"). The revisions do not increase the number of shares of Common Stock for issuance under the Incentive Plan. SUMMARY DESCRIPTION OF THE AMENDMENT TO THE INCENTIVE PLAN The following summarizes the material terms of the Amendment to the Incentive Plan. If adopted by shareholders, the Amendment will be effective as of January 28, 1997. INDIVIDUAL AWARD LIMIT. In order to possibly exempt future awards from the tax deductibility limitations of Code Section 162(m), the Amendment to the Incentive Plan provides that no more than one hundred thousand (100,000) shares under Option may be granted to any participant in any one fiscal year and that no more than fifty thousand (50,000) shares will be paid out under any Performance Share or Performance Unit award in any one fiscal year, to any Participant. This Amendment to the Incentive Plan does not authorize any additional shares for issuance under the Incentive Plan. Further this Amendment is not intended to increase future award sizes or otherwise alter the Nominating Compensation Committee's (the "Committee's") general practices in determining award sizes. MINIMUM VESTING PERIOD. As a result of recent revisions to Section 16 of the Securities Exchange Act of 1934, the minimum six-month vesting requirement on Options, Restricted Stock Units, Performance Units, and Performance Shares has been removed. Although removal of this provision is not intended to change the Committee's practice in establishing vesting schedules of awards, this provision will allow the Committee greater flexibility in designing future awards. PERFORMANCE MEASURES. The Performance Measures on which awards qualifying for an exemption under Section 162(m) are based shall be chosen from among the following: return on equity, earnings per share, operating cash flow, gross revenue, income before taxes, net income, return on revenue, and stock price appreciation. Although this provision is not intended to change the Committee's practice in establishing certain performance vesting requirements, this provision will allow the Committee flexibility in establishing performance goals while maintaining an exemption to the tax deductibility limitations imposed by Section 162(m). SUMMARY DESCRIPTION OF THE EXISTING INCENTIVE PLAN. The following summarizes the material terms of the existing Incentive Plan. The Incentive Plan shall remain in effect until July 31, 2001, unless terminated earlier by the Board of Directors. ADMINISTRATION OF THE PLAN. The Plan is administrated by the Nominating and Compensation Committee of the Board of Directors (the "Committee"), who has the authority, among other things, to select employees to whom awards are granted, to determine the terms and conditions of such awards in a manner consistent with the Plan. 19 21 ELIGIBILITY UNDER THE PLAN. Key employees of the Corporation are eligible to participate in the Incentive Plan. Nonemployee directors of the Corporation are not eligible. The Incentive Plan provides for broad discretion in selecting Participants and in making awards, the total number of persons who will participate and the respective benefits to be awarded to them cannot be determined at this time. SHARES SUBJECT TO THE PLAN. One million six hundred eighty-one thousand and fifty (1,681,250) shares of Series B Common Stock of the Corporation have been authorized as available for grant under the Plan. STOCK OPTIONS. Stock Options may be granted by the Committee in the form of Nonqualified Stock Options ("NQSOs"), Incentive Stock Options ("ISOs"), or a combination thereof. Grants of ISOs must fulfill the requirements of Section 422 of the Internal Revenue Code. The purchase price per share under any Option shall be determined by the Committee in its own discretion. The term of each Option shall be fixed by the Committee, and it is expected that no Option shall have a term extending beyond ten years from the date the Option is granted. Options shall be subject to such terms and conditions and shall be exercisable at such time or times as determined by the Committee. Options may be exercised by payment of the purchase price in cash, in previously acquired shares of Corporation stock, or a combination thereof. Also, the Committee may allow broker-assisted cashless exercises. In the event a Participant's employment is terminated, the Participant's rights in Stock Options shall be determined as follows. If termination is due to death or Disability, Options shall become fully vested and shall be exercisable for one (1) year from the date of employment termination. If terminations due to Retirement, Options shall become fully vested and shall be exercisable for the remainder of the Option term. If termination is due to Cause, all Options, including vested and unvested Options, shall be forfeited to the Corporation. In the event of any other termination, unvested Options will be forfeited and the vested Options will be exercisable for ninety (90) days from the date of employment termination. At the Committee's discretion, the exercisability period following employment termination may be extended, but in no event beyond the remainder of the Option term. RESTRICTED STOCK UNITS. A Restricted Stock Unit award consists of a grant of a right to receive corporate stock equal to the number of Restricted Stock Units upon the lapse of certain restrictions imposed by the Committee in its discretion. Upon lapse of the "Restriction Period," payment shall be made to Participants solely in the form of Series B Common Stock. During the Restriction Period, a Restricted Stock Unit holder shall receive payment equal to the dividends paid on an equivalent number of Series B Common Stock of the Corporation. A Participant shall not receive the stock certificates until the lapse of the Restriction Period. In the event a Participant's employment is terminated, the Participant's rights in Restricted Stock Units shall be determined as follows. If termination is due to death, Disability, or Retirement, all Restricted Stock Units shall become fully vested and paid out in the form of Series B Common Stock. In the event of any other termination, unvested Restricted Stock Units shall be forfeited to the Corporation; provided, however, that unless such termination was for Cause, the Committee, in its sole discretion, may waive the automatic forfeiture provision and apply other restrictions as it deems necessary. PERFORMANCE UNITS AND PERFORMANCE SHARES. Subject to the terms of the Plan, Performance Units and Performance Shares may be granted to eligible employees at any time as determined by the Committee. A Performance Unit shall have an initial value of one dollar ($1.00) and a Performance Share shall initially have a fair market value equal to a share of Series B Common Stock on the date of grant. 20 22 The Committee shall establish performance goals in its discretion which, depending on the level of performance achieved, will determine the number and/or value of Performance Units/Shares earned. Payment of earned Performance Units/Shares shall, at the discretion of the Committee, be paid in the form of cash and/or shares of Series B Common Stock. In the event a Participant's employment is terminated, the Participant's rights in Performance Shares and Performance Units shall be determined as follows. If termination is due to death, Disability or Retirement, the Participant shall receive a pro rata payment based on the number of months of service during the performance period, based on the achievement of performance goals over the entire performance period. Payment shall be made at the end of the performance period. In the event of any other termination, unvested Performance Shares and Performance Units shall be forfeited to the Corporation; provided, however, that unless such termination was for Cause, the Committee, in its sole discretion, may waive the automatic forfeiture provisions and pay out a pro rata payment as described above. AWARDS NONTRANSFERABLE. No award may be assigned, transferred, pledged, or otherwise encumbered by a Participant, other than by will or by the laws of descent and distribution. Each award may be exercised during the Participant's lifetime only by the Participant or the Participant's legal representative. CHANGE IN CONTROL. In order to protect the Participant's rights in the event of a "Change in Control" of the Corporation (as defined in the Incentive Plan), all outstanding Options shall immediately vest upon the occurrence of such an event. Also, in the event of a Change in Control, all Restricted Stock Units shall become vested with payment made in the form of Series B Common Stock, and all Performance Shares and Performance Units shall be cashed out at the higher of the actual performance achieved through the date of the Change in Control or the target award level. On January 28, 1997, the Board of Directors adopted, subject to shareholder approval at the Annual Meeting, the above described Amendment to the Incentive Plan for the foregoing purposes. The Amendment to the Incentive Plan is subject to approval by the affirmative vote of the holders of a majority of the outstanding shares of Series A Common Stock voting in person or by proxy and entitled to vote thereon. If the Amendment to the Plan is so approved, they will become effective on the date of adoption by the Board. The Board believes that the adoption of the Amendment to the Incentive Plan is an essential element of the management, growth and financial success of the Company. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE AMENDMENT TO THE KEY EMPLOYEE LONG-TERM INCENTIVE STOCK PLAN. 21 23 SHAREHOLDERS PROPOSAL DEADLINE Shareholder proposals intended to be presented at the April 28, 1998, Annual Meeting of Shareholders must be received by the Corporation for inclusion in the Corporation's proxy statement and form of proxy relating to that meeting by December 1, 1997. OTHER MATTERS The Board of knows of no other matters to come before the shareholders' meeting. However, if any other matters properly come before the meeting or any of its adjournments, the person or persons voting the proxies will vote them in accordance with their best judgment on such matters. By order of the Board of Directors James P. Rowan Vice President, General Counsel and Assistant Secretary March 21, 1997 ================================================================================ A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 29, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE WITHOUT CHARGE TO INTERESTED SHAREHOLDERS UPON WRITTEN REQUEST TO ROBERT P. HARWOOD, VICE PRESIDENT, INVESTOR/PUBLIC RELATIONS, THE WACKENHUT CORPORATION, 4200 WACKENHUT DRIVE #100, PALM BEACH GARDENS, FLORIDA, 33410-4243. 22 24 Appendix A THE WACKENHUT CORPORATION 4200 Wackenhut Drive #100 Palm Beach Gardens, Florida 33410 This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby appoints George R. Wackenhut and Richard R. Wackenhut as Proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of Series A Common Stock of the Wackenhut Corporation held of record by the undersigned on March 14, 1997, at the Annual Meeting of Shareholders to be held at the Embassy Suites Hotel, 4350 PGA Boulevard, Palm Beach Gardens, Florida, at 9:00 A.M., April 29, 1997, or at any adjustment thereof. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS. IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2,3 AND 4. ON ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING, THE SHARES WILL BE VOTED IN ACCORDANCE WITH THE JUDGEMENT OF THE PERSONS NAMED AS PROXIES. (Continued, and to be signed, on other side.) The Board of Directors recommends a vote FOR Proposals 1,2,3 and 4. Please mark your vote as [x] indicated on this statement. 1. ELECTION OF DIRECTORS: Nominees: VOTE FOR all nominees VOTE withheld Julius W. Becton, Jr. Paul X. Kelley listed to the right (except as as to all nominees. Richard G. Capen, Jr. Nancy Clark Reynolds marked to the contrary) Ann Newman Foreman George R. Wackenhut [ ] [ ] Edward L. Hennessey. Jr. Richard R. Wackenhut INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list above. 2. Proposal to approve for the fiscal year 1997 FOR AGAINST ABSTAIN the Appointment of ARTHUR ANDERSEN LLP as the independent certified public accountants of the Corporation. [ ] [ ] [ ] 3. Proposal to approve the Employee Stock Purchase Plan. [ ] [ ] [ ] 4. Proposal to approve an amendment to the Key Employee Long-Term Incentive Stock Plan. [ ] [ ] [ ] 5. In this discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. Please date and sign exactly as name appears below. Joint owners should each sign. Attorneys-in-fact, Executors, Administrators, Trustees, Guardians, or corporate officers should give full title. Dated: , 1997 ------------------------------------------------------------------------- ----------------------------------------------------------------------------------- Signature ----------------------------------------------------------------------------------- Signature if held jointly PLEASE SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ADDRESSED ENVELOPE.
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