STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

STOCKHOLDERS' EQUITY

13. STOCKHOLDERS’ EQUITY

Common Stock Dividend

On February 27, 2012, CCA announced its Board of Directors approved a plan to initiate an annual dividend of $0.80 per common share payable quarterly and commencing in the second quarter of 2012 of $0.20 per common share. During 2012, CCA’s Board of Directors declared the following dividends on its common stock:

Declaration Date	Record Date	Payable Date	Per Share
May 11, 2012	June 8, 2012	June 22, 2012	$	0.20
August 20, 2012	September 14, 2012	September 28, 2012	$	0.20
November 6, 2012	November 30, 2012	December 14, 2012	$	0.20

Future dividends will depend on CCA’s distribution requirements as a REIT, future earnings, capital requirements, financial condition, opportunities for alternative uses of capital, and on such other factors as the Board of Directors of CCA may consider relevant. During the year ended December 31, 2011 CCA did not pay any dividends on its common stock. Pursuant to the terms of the indentures governing CCA’s senior notes, and CCA’s amended and restated revolving credit facility depending on its leverage ratio, CCA is limited in the amount of dividends it can declare or pay on outstanding shares of common stock.

Stock Repurchase Programs

During 2008 and 2009, CCA purchased 10.7 million shares of its common stock at an aggregate cost of $125.0 million, or an average price of $11.72 per share, pursuant to a stock repurchase program approved by the Board of Directors in November 2008. In August 2011, the Board of Directors approved an increase in the aggregate amount under an additional stock repurchase program from $350.0 million to $500.0 million after expanding the authorization in May 2011 by $100.0 million from the $250.0 million originally approved by the Board in February 2010. During 2010 and 2011, CCA completed the purchase of 17.7 million shares at a cost of $383.2 million, or an average price of $21.63 per share. Combining both stock repurchase programs, CCA purchased a total of 28.4 million shares of its common stock at an aggregate cost of $508.2 million, or an average price of $17.91.

CCA utilized cash on hand, net cash provided by operations, and borrowings available under the Revolving Credit Facility to fund the repurchases. In February 2012, the additional share repurchase program was terminated in conjunction with the announcement to commence a quarterly cash dividend beginning in the second quarter of 2012. There were no share repurchases in 2012.

Common Stock

Restricted shares. During 2012, CCA issued approximately 349,000 shares of restricted common stock and common stock units to certain of CCA’s employees and non-employee directors, with an aggregate value of $9.2 million, including 290,000 restricted shares or units to employees and non-employee directors whose compensation is charged to general and administrative expense and 59,000 restricted shares to employees whose compensation is charged to operating expense. During 2011, CCA issued approximately 265,000 shares of restricted common stock and common stock units to certain of CCA’s employees, with an aggregate value of $6.5 million, including 227,000 restricted shares or units to employees whose compensation is charged to general and administrative expense and 38,000 restricted shares to employees whose compensation is charged to operating expense.

CCA established performance-based vesting conditions on the shares of restricted common stock and common stock units awarded to CCA’s officers and executive officers. Unless earlier vested under the terms of the agreements, shares or units issued to officers and executive officers are subject to vesting over a three-year period based upon the satisfaction of certain performance criteria. No more than one-third of such shares or units may vest in the first performance period; however, the performance criteria are cumulative for the three-year period. Unless earlier vested under the terms of the agreements, the shares of restricted stock issued to other employees of CCA vest after three years of continuous service. Shares of restricted stock and common stock units issued to non-employee directors vest on a date approximately following the one-year anniversary of the grant date.

Nonvested restricted common stock transactions as of December 31, 2012 and for the year then ended are summarized below (in thousands, except per share amounts).

	Shares of restricted common stock and units			Weighted average grant date fair value
Nonvested at December 31, 2011		768		$	20.47
Granted		349		$	26.36
Cancelled		(18	)	$	21.96
Vested		(319	)	$	16.81
Nonvested at December 31, 2012		780		$	24.59

During 2012, 2011, and 2010, CCA expensed $7.6 million ($1.2 million of which was recorded in operating expenses and $6.4 million of which was recorded in general and administrative expenses), $6.1 million ($1.1 million of which was recorded in operating expenses and $5.0 million of which was recorded in general and administrative expenses), and $5.5 million ($1.1 million of which was recorded in operating expenses and $4.4 million of which was recorded in general and administrative expenses), net of forfeitures, relating to the restricted common stock and common stock units, respectively. As of December 31, 2012, CCA had $9.1 million of total unrecognized compensation cost related to restricted common stock and common stock units that is expected to be recognized over a remaining weighted-average period of 1.8 years.

Preferred Stock

CCA has the authority to issue 50.0 million shares of $0.01 par value per share preferred stock (the “Preferred Stock”). The Preferred Stock may be issued from time to time upon authorization by the Board of Directors, in such series and with such preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or other provisions as may be fixed by CCA’s Board of Directors.

Stock Option Plans

CCA has equity incentive plans under which, among other things, incentive and non-qualified stock options are granted to certain employees and non-employee directors of CCA by the compensation committee of CCA’s Board of Directors. The options are granted with exercise prices equal to the fair market value on the date of grant. Vesting periods for options granted to employees generally range from three to four years. Options granted to non-employee directors vest on a date approximately following the first anniversary of the grant date. The term of such options is ten years from the date of grant.

Stock option transactions relating to CCA’s non-qualified stock option plans are summarized below (in thousands, except exercise prices):

	No. of options			Weighted- Average Exercise Price of options		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2011		3,653		$	18.63
Granted		787			26.44
Exercised		(366	)		13.46
Cancelled		(27	)		20.42
Outstanding at December 31, 2012		4,047		$	20.61		6.0	$	60,160
Exercisable at December 31, 2012		2,726		$	18.81		4.8	$	45,396

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between CCA’s stock price as of December 31, 2012 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2012. This amount changes based on the fair market value of CCA’s stock. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011, and 2010 was $5.5 million, $4.5 million, and $11.4 million, respectively.

The weighted average fair value of options granted during 2012, 2011, and 2010 was $7.50, $9.66, and $7.76 per option, respectively, based on the estimated fair value using the Black-Scholes option-pricing model. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2012			2011			2010
Expected dividend yield		3.0	%		0.0	%		0.0	%
Expected stock price volatility		42.2	%		42.1	%		38.8	%
Risk-free interest rate		1.0	%		2.1	%		2.4	%
Expected life of options		5 years			5 years			5 years

CCA estimates expected stock price volatility based on actual historical changes in the market value of CCA’s stock. The risk-free interest rate is based on the U.S. Treasury yield with a term that is consistent with the expected life of the stock options. The expected life of stock options is based on CCA’s historical experience and is calculated separately for groups of employees that have similar historical exercise behavior.

Nonvested stock option transactions relating to CCA’s non-qualified stock option plans as of December 31, 2012 and changes during the year ended December 31, 2012 are summarized below (in thousands, except exercise prices):

	Number of options			Weighted average  grant date fair value
Nonvested at December 31, 2011		1,189		$	7.89
Granted		787		$	7.50
Cancelled		(25	)	$	7.64
Vested		(630	)	$	7.35
Nonvested at December 31, 2012		1,321		$	7.91

As of December 31, 2012, CCA had $6.1 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a remaining weighted-average period of 2.1 years.

At CCA’s 2011 annual meeting of stockholders held in May 2011 CCA’s stockholders approved an amendment to the 2008 Stock Incentive Plan that increased the authorized limit on issuance of new awards to an aggregate of up to 18.0 million shares. In addition, during the 2003 annual meeting the stockholders approved the adoption of CCA’s Non-Employee Directors’ Compensation Plan, authorizing CCA to issue up to 225,000 shares of common stock pursuant to the plan. As of December 31, 2012, CCA had 11.1 million shares available for issuance under the Amended and Restated 2008 Stock Incentive Plan and 0.2 million shares available for issuance under the Non-Employee Directors’ Compensation Plan.