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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 [ ]
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
THE WACKENHUT CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] 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:
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WACKENHUT
EXECUTIVE OFFICES
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4243
Telephone: (561) 622-5656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON MAY 4, 2001
To the Shareholders:
The Annual Meeting of the Shareholders of The Wackenhut Corporation will be held
on Friday, May 4, 2001, at 9:00 A.M. at the Four Seasons Resort Palm Beach, 2800
South Ocean Boulevard, Palm Beach, Florida, for the purpose of considering and
acting on the matters following:
(1) the election of twelve 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 2001, and
to perform such other services as may be requested;
(3) approval of a proposal to set aside a total of 400,000 shares of
Series B Common Stock of the Corporation to be utilized for issuance
under the Key Employee Long-Term Incentive Stock Plan (the "Plan");
(4) approval of a proposal to amend the Key Employee Long-Term Incentive
Stock Plan;
(5) approval of a proposal to set aside a total of 150,000 shares of
Series B Common Stock of the Corporation to be utilized for issuance
under the Nonemployee Director Stock Option Plan; and
(6) 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 16, 2001, the record date 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.
If you are a registered shareholder, you can ensure that your shares are
represented at the Annual Meeting in one of two ways:
(1) by completing, signing, dating and mailing the enclosed proxy card in
the enclosed postage-paid envelope; or
(2) by calling the toll-free number indicated on the enclosed proxy card
to vote by phone.
If you attend the meeting in person, you may, if you wish, revoke your proxy and
vote in person.
If your shares are held in the name of a broker, bank or other holder of record,
you may attend the Annual Meeting, but may not vote at the meeting unless you
have first obtained a proxy, executed in your favor, from the owner of record.
By order of the Board of Directors.
James P. Rowan
March 30, 2001 Executive Vice President, General Counsel,
and Assistant Secretary
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PROXY STATEMENT
March 30, 2001
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 Four Seasons Resort Palm Beach, 2800 South Ocean Boulevard, Palm
Beach, Florida, May 4, 2001, and all adjournments thereof. Please note the
enclosed 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, the
proposal to set aside 400,000 shares of Series B Common Stock of the Corporation
to be utilized for issuance under the Key Employee Long-Term Incentive Stock
Plan, the proposal to amend the Key Employee Long-Term Incentive Stock Plan, and
the proposal to set aside a total of 150,000 shares of Series B Common Stock of
the Corporation to be utilized for issuance under the Nonemployee Director Stock
Option Plan. If the enclosed Proxy Card is executed properly and returned, the
shares represented will be voted in accordance with those instructions.
A Proxy Card which is properly executed, returned and not revoked will be voted
in accordance with the instructions indicated. A proxy voted by telephone and
not revoked will be voted in accordance with the shareholder's instructions. If
no instructions are given, proxies which are signed and returned or voted by
telephone will be voted as follows:
FOR - the slate of Directors proposed by the Board of Directors;
FOR - the proposal to ratify the appointment of Arthur Andersen LLP as
the independent certified public accountants of the Corporation;
FOR - the proposal to set aside 400,000 shares of Series B Common Stock
of the Corporation to be utilized for issuance under the Key Employee
Long-Term Incentive Stock Plan;
FOR - the proposal to amend the Key Employee Long-Term Incentive Stock
Plan; and
FOR - the proposal to set aside of 150,000 shares of Series B Common
Stock of the Corporation to be utilized for issuance under the
Nonemployee Director Stock Option Plan.
The enclosed proxy gives discretionary authority as to any matters not
specifically referred to therein. Management is not aware of any other matters
to be presented for action by shareholders before the Annual Meeting. If any
such matter or matters properly come before the Annual Meeting, it is understood
that the designated proxy holders have discretionary authority to vote thereon.
Holders of shares of the Series A Common Stock of the Corporation of record as
of the close of business on March 16, 2001, will be entitled to one vote for
each share of stock standing in their name on the books of The Wackenhut
Corporation.
On March 16, 2001, 3,855,582 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 set
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aside 400,000 shares of Series B Common Stock to be utilized for issuance under
the Key Employee Long-Term Incentive Stock Plan, the proposal to amend the Key
Employee Long-Term Incentive Stock Plan, and the proposal to set aside 150,000
shares of Series B Common Stock of the Corporation to be utilized for issuance
under the Nonemployee Director Stock Option Plan and on any other matter which
may properly come before the meeting.
The presence, in person or by proxy, of at least a majority of the total number
of shares of Series A Common Stock outstanding on the record date will
constitute a quorum for purposes of the Annual Meeting. With the exception of
the election of directors which requires a plurality of the votes cast, the
affirmative vote of a majority of the shares of Series A Common Stock
represented at the Meeting is required to approve any other proposals. Shares of
Series A Common Stock represented by proxies that reflect abstentions or "broker
non-votes" (i.e., shares held by a broker or nominee which are represented at
the Annual Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Neither abstentions nor broker non-votes are counted as voted either for
or against a proposal. If less than a majority of the outstanding shares of
Series A Common Stock are represented at the Annual Meeting, a majority of the
shares so represented may adjourn the Annual Meeting from time to time without
further notice.
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 30,
2001.
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THE ELECTION OF DIRECTORS
The Board of Directors will be comprised of twelve (12) 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. Twelve (12) of the
nominees are presently directors of the Corporation who were elected by the
shareholders at their last annual meeting.
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
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JULIUS W. BECTON, JR.
1994
AGE 74
General Becton's most recent position was
Chief Executive Officer/Superintendent of
the Washington, D.C. Public School System.
He is also 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
VII Corps, and was the Deputy Commanding
General of the U.S. Army Training and
Doctrine Command. 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 Boards of
Directors of General Dynamics Corporation,
NSC Discovery Center, Inc., and the Marine
Spill Response Corporation. He is a member
of the Defense Science Board Readiness Task
Force. He is a trustee of the George C.
Marshall Foundation, and serves on the
boards 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 Director, Federal Emergency Management
Agency. He has a B.S. from Prairie View A&M
University; an M.A. in Economics from the
University of Maryland, and has been awarded
honorary Doctor of Laws degrees by four
universities. (d)(e)(f)
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
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ALAN B. BERNSTEIN
1998
AGE 53
Mr. Bernstein has been Chief Operating
Officer since March, 2000 and has been
Executive Vice President of the Corporation
since 1991, and is also President of the
Corporation's Global Security Group. Mr.
Bernstein has been with the Corporation
since 1976, except for a period in 1982 when
he was a partner in a family-owned security
alarm business in New York State. He was
appointed President, Wackenhut Systems
Corporation in 1983, and subsequently was
named Vice President, Corporate Business
Development in 1984; Vice President,
Domestic Operations in 1985; and was Senior
Vice President, Domestic Operations from
1986-91. He also serves on the Boards of
several subsidiaries of the Corporation. He
is a member of the American Society for
Industrial Security. He has a B.S.E.E.
degree from the University of Rochester, and
an M.B.A. degree from Cornell University.
(d)(f)
CARROLL A. CAMPBELL, JR.
1997
AGE 60
Governor Campbell served two terms as the
Governor of South Carolina (1987-95), and
four terms representing South Carolina's
fourth district in the U.S. House of
Representatives (1979-86). He also served in
the South Carolina House of Representatives
(1970-74) and was elected to the South
Carolina Senate in 1976. While serving as
Governor, he was also Chairman of the
National Governors Association (1993-94) and
co-chair of the National Governors
Association Task Force on Education. He is
recognized as a leader in promoting
initiatives for excellence in education at
the state and national levels, and has
served as chairman of the National Education
Goals Panel and co-chair of the National
Council on Education Standards and Testing.
Governor Campbell is currently the President
and Chief Executive Officer of the American
Council of Life Insurance. His business
career began at age 19, when he co-founded a
business which eventually developed a chain
of 13 restaurants. He remains active today
in several small business enterprises and
serves on the Board of Directors for the
Fluor Corporation, AVX Corporation, Norfolk
Southern Corporation, and the Boy Scouts of
America. He is EX OFFICIO board chairman for
the Huntington Society, an arts foundation.
He has an M.A. degree from American
University, is a member of three national
honor societies, and holds nine honorary
doctorate degrees. (b)(e)
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
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BENJAMIN R. CIVILETTI
1998
AGE 65
Mr. Civiletti has been Chairman of the law
firm Venable, Baetjer and Howard since 1993
and was Managing Partner of the firm from
1987 to 1993. From 1979 to 1980, Mr.
Civiletti served as the Attorney General of
the United States. Mr. Civiletti is former
Chairman of the Board of Greater Baltimore
Medical Center and the Founding Chairman of
the Maryland Legal Services Corporation; a
Director of Bethlehem Steel Corporation, and
a Director of MBNA Corporation and MBNA
International. Mr. Civiletti has served as a
Director of Wackenhut Corrections
Corporation since April 1994. Mr. Civiletti
is a Fellow of the American Bar Foundation,
the American Law Institute, and the American
College of Trial Lawyers. Mr. Civiletti was
Chairman of the Maryland Governor's
Commission on Welfare Policy in 1993, and a
member of the Maryland Governor's Task Force
on Alternatives to Incarceration in 1991.
(b)(c)
ANNE NEWMAN FOREMAN
1993
AGE 53
Mrs. Foreman served as Under Secretary of
the United States Air Force from September
1989 until 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
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
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. Mrs. Foreman
is a member of the Board of Directors of
Ultra Electronics Defense, Inc. of Advanced
Programming Concepts, Inc., and of Trust
Securities, Inc. She also serves as a
trustee of The National Gypsum Company
Settlement Trust and as Director and
Treasurer of the Asbestos Claims Management
Corporation. (d)(e)
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
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EDWARD L. HENNESSY, JR.
1993
AGE 73
Mr. Hennessy served as Chairman of the Board
and Chief Executive Officer of AlliedSignal
Inc. from 1979 to 1991. He was previously
Executive Vice President and member of the
Board of Directors and Executive Committee
of United Technologies Corporation, 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 Avanir Pharmaceuticals
Corp. 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 Vice-Chairman 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 former Trustee and
Chairman of the University's Board. (a)(c)
PAUL X. KELLEY
1988
AGE 72
General Kelley is a Partner with J.F.
Lehman, Inc., a New York private investment
firm. He served as Vice Chairman, Cassidy &
Associates, Inc., a government relations
firm from 1989 to 1998. Prior to that, he
was Commandant of the Marine Corps and
Member of the Joint Chiefs of Staff from
1983 until his retirement in 1987. He
currently serves on the Board of Directors
of London Life Reinsurance Company, a
reinsurance company; Park Place
Entertainment Corporation, a gaming company;
Saul Centers, Inc., a real estate investment
trust; Sturm, Ruger & Company, Inc., a
firearms company; and UST, Inc., a smokeless
tobaco, cigar and wine company. He is the
recipient of numerous awards for valor and
distinguished service during thirty-seven
years of active military service. General
Kelley has a B.S. in Economics from
Villanova University and is a Distinguished
Graduate of the Air War College. He is the
recipient of five honorary doctorate degrees
from major universities. (b)(c)(e)
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
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NANCY CLARK REYNOLDS
1986
AGE 73
Ms. Reynolds is Senior Consultant of The
Wexler Group, a governmental relations and
public affairs consulting firm in
Washington, D.C. She is a member of the
Board of the National Park Foundation and a
trustee of the Smithsonian Museum of the
American Indian. She is a past President of
the Business and Government Relations
Council. Ms. Reynolds is also currently
Chairman of Crow Canyon Archaeological
Center in Cortez, Colorado. She was formerly
a Director of the Chicago Mercantile
Exchange, G.D. Searle & Co., Sears, Roebuck
& Co., Allstate Insurance Company 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
Law from Gonzaga University. (b)(f)
JOHN F. RUFFLE
1998
AGE 63
Mr. Ruffle is a retired Vice Chairman and
Director of J.P. Morgan & Co., Inc. and
Morgan Guaranty Trust Company of New York.
He joined J.P. Morgan in 1970 as Controller
and was named CFO in 1980, and elected Vice
Chairman in 1985. Earlier, he was Assistant
Treasurer and Director of Accounting for
International Paper Company. Mr. Ruffle also
serves as a Director of Bethlehem Steel
Corporation, American Shared Hospital
Services and Trident Corporation, and
Wackenhut Corrections Corporation. He is a
Trustee of the Johns Hopkins University and
of JPM Series Trust II (mutual funds). He is
a past President of the Board of Trustees of
the Financial Accounting Foundation and a
past Chairman of the Financial Executives
Institute, and in 1991 received the
Financial Executive Institute's National
Award for Distinguished Service. Mr. Ruffle
is a graduate of the Johns Hopkins
University and earned an M.B.A. in Finance
from Rutgers University. He is also a CPA.
(c)(d)
THOMAS P. STAFFORD
1991
AGE 70
General Stafford is a Consultant for the
firm of General Technical Services, Inc.,
which he joined in 1984. He is also Vice
Chairman and co-founder of Stafford, Burke
and Hecker, Inc., a Washington-based
consulting firm. After serving as an
astronaut for a number of years, he retired
in 1979 from the Air Force as Deputy Chief
of Staff for Research, Development and
Acquisition and served as Vice Chairman of
Gibraltar Exploration Limited until 1984.
Gen. Stafford is also Chairman of the Board
of Omega Watch Corporation of America and is
a Director of CMI Corporation; Cycomm
International, Inc.; Seagate Technology,
Inc.; Timet, Inc.; and Tremont Corporation.
General Stafford served as a Director of the
Corporation from 1991 to 1996. (b)(c)(e)
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NOMINEE AND YEAR PRESENT AND PAST POSITIONS
FIRST BECAME DIRECTOR AND OTHER INFORMATION
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GEORGE R. WACKENHUT
1958
AGE 81
Mr. Wackenhut is Chairman of the Board and
was Chief Executive Officer of the
Corporation until February 17, 2000. He was
President 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. Mr. Wackenhut is
Chairman of the Board of Directors of
Wackenhut Corrections Corporation, a member
of the Board of Trustees of Correctional
Properties Trust, 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. Mr. Wackenhut was a recipient in
1990 of the Labor Order of Merit, First
Class, from the government of Venezuela;
and, in 1999 was awarded the distinguished
Ellis Island Medal of Honor by the National
Ethnic Coalition of Organizations. He has
been designated a "distinguished alumnus" by
West Chester University, the University of
Hawaii, and Johns Hopkins University. He was
inducted into the West Chester University
Hall of Fame; the Athlete's Hall of Fame in
his home county, Delaware County, PA; and
the "Wall of Fame", consisting of prominent
graduates of Upper Darby (PA) High School.
He 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, the
Secretary of the Corporation. His son,
Richard R. Wackenhut, is Vice Chairman of
the Board, President and Chief Executive
Officer of the Corporation and is a nominee
for Director. (a)(f)
RICHARD R. WACKENHUT
1986
AGE 53
Mr. Wackenhut has been Vice Chairman of the
Board since August 1999, and President and
Chief Executive Officer since February 17,
2000. He was President and Chief Operating
Officer of the Corporation from April, 1986
to February 2000. He was formerly 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
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
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of Wackenhut Corrections Corporation, a
Director of Wackenhut del Ecuador, S.A.;
Wackenhut UK, Limited; Wackenhut Dominicana,
S.A.; Wackenhut Resources, Inc.; the Board
of Trustees of Correctional Properties
Trust; 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 Citadel Advisory Council, 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)
(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 ON THE PREVIOUS PAGES 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 John F. Ruffle, Vice Chairman
Paul X. Kelley Benjamin R. Civiletti
Thomas P. Stafford
The Audit and Finance Committee met four times during the past fiscal year.
The Audit and Finance Committee's principal functions and responsibilities are
set forth in the Audit and Finance Committee Charter which has been adopted by
the Board of Directors and is included with this Proxy Statement as Appendix I.
The Report of the Audit and Finance Committee is included later in this Proxy
Statement.
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 biographical
material to permit an appropriate evaluation.
A total number of four meetings of the Board of Directors was held during the
2000 fiscal year.
Mr. Carroll A. Campbell attended less than 75% of Board and assigned Committee
meetings during the fiscal 2000.
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AUDIT FEES
The aggregate fees billed by Arthur Andersen LLP, the Corporation's independent
certified public accountant, for professional services rendered for the audit of
the Corporation's annual consolidated financial statements (Form 10-K) for the
most recently completed fiscal year and the reviews of the consolidated
financial statements included in the Corporation's quarterly condensed
consolidated financial statements (Forms 10-Q) for the most recently completed
fiscal year were $730,000.
FINANCIAL INFORMATION SYSTEMS DESIGN
The aggregate fees billed by Arthur Andersen LLP, the Corporation's independent
certified public accountant, for professional services such as directly or
indirectly operating, or supervising the operation of the Corporation's
information system or managing the Corporation's local area network or designing
or implementing a hardware or software system that aggregates source data
underlying the consolidated financial statements or generates information that
is significant to the Corporation's consolidated financial statements taken as a
whole for the most recently completed fiscal year were $0.
ALL OTHER FEES
The aggregate fees billed for services rendered by Arthur Andersen LLP, the
Corporation's independent certified public accountant, other than services
covered in the proceeding paragraphs for the most recently completed fiscal year
were $341,526.
No engagement hours were attributed to work performed by persons other than
full-time employees of Arthur Andersen LLP.
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.
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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 March 7, 2000, by each Director-Nominee for election as
director at the 2001 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 & AMOUNT &
NATURE PERCENT NATURE PERCENT
OF BENEFICIAL OF OF BENEFICIAL OF
OWNERSHIP (2) CLASS OWNERSHIP (2)(6) CLASS
DIRECTOR NOMINEES
Julius W. Becton 0 - 20,656 *
Alan B. Bernstein 500 * 281,444 2.52
Carroll A. Campbell 0 - 16,000 *
Benjamin R. Civiletti 0 - 14,000 *
Ann Newman Foreman 200 * 20,550 *
Edward L. Hennessey, Jr. 200 * 20,862(3) *
Paul X. Kelley 1,000(3) * 22,937(3) *
John F. Ruffle 500 * 15,000 *
Nancy Clark Reynolds 1,400 * 21,912 *
Thomas P. Stafford 0 - 16,500 *
George R. Wackenhut 1,929,606(4) 50.05 2,456,506 22.00
Richard R. Wackenhut 65 * 963,086(5) 8.63
NAMED EXECUTIVE OFFICERS
George C. Zoley 0 - 0
Philip L. Maslowe 0 - 156,761 1.4
ALL NOMINEES & EXECUTIVE 1,933,471 50.15 4,562,529 40.50
OFFICERS AS A GROUP
OTHER
Dimensional Fund Advisor, Inc. (7) 260,200 6.75
FleetBoston Financial Corporation (8) 195,800 5.08
Eagle Asset Management, Inc. (9) 989,915 8.87
Neuberger Berman, Inc. (10) 681,587 6.10
*Beneficially owns less than 1%
(1) Unless stated otherwise, the address of the beneficial owners is 4200
Wackenhut Drive #100, Palm Beach Gardens, Florida 33410.
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(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.
(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 50.05% 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 698,155 Series B shares held in an irrevocable family trust for
the benefit of Richard R. Wackenhut and the balance held directly by
him.
(6) Includes Series B shares over which the Executive Officers and
Director Nominees have options.
(7) The principal business address of Dimensional Fund Advisors, Inc. is
1299 Ocean Avenue, 1st Floor, Santa Monica, CA 90401.
(8) The principal business address of FleetBoston Financial is 100
Federal Street, Boston, MA 02110.
(9) The principal business address of Eagle Asset Management, Inc. is 880
Carillon Pkwy, St. Petersburg, FL 33716.
(10) Persons Filing: Neuberger Berman, Inc. and Neuberger Berman, LLC both
with principal business addresses of 605 Third Avenue, New York, NY
10158-3698.
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EXECUTIVE COMPENSATION
The following table shows remuneration paid or accrued by the Corporation during
the fiscal year ended December 31, 2000, 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 ($)(1) Bonus ($) ($)(2) SARs (#) (3) ($) ($)(4)(5)(6)
- -----------------------------------------------------------------------------------------------------------------
George R. Wackenhut, 2000 1,584,000 620,000 269,500 100,000 83,565 16,543
Chairman of the Board 1999 1,316,000 620,000 231,000 30,000 152,830 16,543
1998 1,154,000 537,000 - 30,000 344,363 16,543
Richard R. Wackenhut, 2000 1,050,000 411,000 69,993 100,000 32,222 87,706
Vice Chairman of the Board 1999 872,000 411,000 58,328 25,000 58,820 95,000
and Chief Executive Officer 1998 772,000 410,000 46,662 25,000 135,069 517,664
Alan B. Bernstein, 2000 600,000 258,500 35,996 75,000 17,611 202,945
Executive Vice President, COO 1999 500,000 235,000 29,997 20,000 31,260 82,000
and President, Global 1998 456,000 260,000 25,497 20,000 68,519 297,040
Security
George C. Zoley 2000 575,000 - - 70,000 - -
Wackenhut Corrections 1999 500,000 195,500 - 33,000 - -
Corporation, Vice Chairman 1998 436,000 227,000 - 30,000 - -
Chief Executive Officer
and Director
Philip L. Maslowe 2000 380,000 147,700 20,265 50,000 11,054 229,706
Executive Vice President - 1999 325,000 145,000 17,598 15,000 6,330 48,000
Finance and Chief 1998 316,000 176,000 15,998 10,000 - 141,842
Financial Officer
(1) George R. Wackenhut also received $375,000 in salary and $98,559 in
bonus for 2000 and $375,000 in salary and $127,000 in bonus for 1999
from Wackenhut Corrections Corporation in addition to the amounts
reported above.
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(2) 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 31, 2000 is as follows:
RESTRICTED
STOCK PERFORMANCE TOTAL FAIR
UNITS SHARES UNITS/SHARES MARKET VALUE
G. R. Wackenhut 41,114 41,114 82,228 $709,217
R. R. Wackenhut 29,796 21,167 50,963 439,556
A. B. Bernstein 15,107 10,886 25,993 224,190
P. L. Maslowe 4,202 6,210 10,412 89,804
G. C. Zoley - - - -
Restricted stock units do not vest until seven years of continuous
employment from the date of grant.
(3) The following securities underlying options were granted under stock
option plans of Wackenhut Corrections Corporation:
Securities Underlying Options (#)
Name 2000 1999 1998
---------------------------- -----------------------------------------
George R. Wackenhut - - -
Richard R. Wackenhut - - -
Alan B. Bernstein - - -
Philip L. Maslowe - - -
George C. Zoley 70,000 33,000 30,000
(4) The cost of a split-dollar life insurance policy covering G.R.
Wackenhut and R. J. Wackenhut.
(5) This column represents (except for the Chairman of the Board) the cost
of providing for liabilities under the Senior Officer Retirement Plan
except for G.C. Zoley who is provided for under the Corrections
Subsidiary Senior Officer Retirement Plan.
(6) This column includes early distributions of deferred compensation in
1998 for R. Wackenhut $244,664, A. Bernstein $63,040 and F. Carrizosa
$140,161.
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LONG-TERM INCENTIVE PLAN - AWARDS IN THE LAST FISCAL YEAR
The following table sets forth certain information concerning awards made under
the Company's Key Employee Long-Term Incentive Stock Plan to the named
executives during fiscal 2000. The Plan is a series of successive overlapping
three-year periods commencing the first day of each fiscal year. Awards are
earned only if certain predetermined criteria are met. Adjustments may be made
in awards to consider aspects of performance that may not be reflected in the
Company's financial reports.
Estimated Future Payouts
Number of Performance Under Non-stock Price-based Plan (1)
Shares, or Other
Units, or Period Until Threshold Target Maximum
Other Maturation Payout Payout Payout
Rights or
Name (#) (1) Payout (2) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
George R. Wackenhut 27,819 2000-2002 134,750 269,500 404,250
Richard R. Wackenhut 14,452 2000-2002 70,004 140,007 210,011
Alan B. Bernstein 7,433 2000-2002 36,002 72,004 108,006
George C. Zoley - - - - -
Philip L. Maslowe 4,184 2000-2002 20,268 40,535 60,803
(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) Earnings per share performance goals are set by the Nominating and
Compensation Committee for all of the three-year performance cycles.
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OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR
Individual Grants
- -------------------------------------------------------------------------------
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options/SARs of Stock Price Appreciation
Underlying Granted to Exercise or for Option Term (3)
Options/SARs Employees in Base Price Expiration ----------------------------------
Name Granted Fiscal Year ($/Share) Date 5% ($) 10% ($)
- -------------------- ---------------------------------------------------------------------------------------------
George R. Wackenhut (1) 90,000 17.0% 9.750 Feb, 2010 552,046 1,399,103
10,000 17.3% 9.375 May, 2010 58,959 149,413
Richard R. Wackenhut (1) 90,000 17.0% 9.750 Feb, 2010 552,045 1,399,103
10,000 17.3% 9.375 May, 2010 58,959 149,413
Alan B. Bernstein (1) 67,500 12.8% 9.750 Feb, 2010 414,034 1,049,327
7,500 13.0% 9.375 May, 2010 44,219 112,060
George C. Zoley (2) 70,000 24.1% 8.438 Feb, 2010 371,441 941,304
Philip L. Maslowe (1) 45,000 8.5% 9.750 Feb, 2010 276,023 699,552
5,000 8.7% 9.375 May, 2010 29,479 74,707
(1) Options granted under the Key Employee Long-Term Incentive Stock Plan
of the Corporation (the "Incentive Stock Plan").
(2) Options granted under Wackenhut Corrections Corporation's Stock Option
Plan (the "Second Plan").
(3) The full option term was used in the 5% and 10% annual growth
projections for the price of the underlying stock.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the Money
Options/SARs Options/SARs
at Fiscal At Fiscal
Year-end (#) Year-End ($)
Shares ----------------------------------------------
Acquired Value
on Exercise Realized Exercisable (E)/ Exercisable (E)/
(#) ($) Unexercisable (U) Unexercisable (U)
- ------------------------------ ----------------------------------------------------------------------------
George R. Wackenhut (A) NONE NA 259,375 E 84,734 E
(B) NONE NA 32,864 E 202,935 E
(C) NONE NA 74,666 E 270,664 E
Richard R. Wackenhut (A) NONE NA 214,500 E 14,790 E
(C) NONE NA 74,666 E 270,664 E
Alan B. Bernstein (A) NONE NA 167,788 E 55,556 E
(C) NONE NA 46,000 E 166,750 E
George C. Zoley (C) NONE NA 194,000 E 90,625 E
4,000 U 0 U
Philip L. Maslowe (A) NONE NA 105,000 E 0 E
(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")
EMPLOYMENT AND SEVERANCE AGREEMENTS
EMPLOYMENT AGREEMENT WITH GEORGE R. WACKENHUT
The Corporation entered into a three-year employment agreement with George R.
Wackenhut who is the Chairman of the Board of Directors, effective as of March
17, 2000. The employment agreement provides that George Wackenhut will receive
an initial annual base salary of $1,584,000, subject to possible increases from
time to time in the sole discretion of the Board of Directors or the
Compensation Committee. In addition, George Wackenhut will be eligible for an
annual bonus of a minimum of 35% of his base salary, based on the achievement of
certain targets and incentives. The employment agreement also provides for
certain benefits to George Wackenhut including life and health insurance, an
automobile allowance, and other benefits generally available to executive
officers.
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The Corporation or George Wackenhut may terminate the employment agreement for
any reason. Upon such termination of employment, George Wackenhut will be
entitled to receive the following: (1) the unpaid portion of his salary payable
through the date of termination of employment; (2) all vested accrued benefits
as of the date of termination of employment that he is entitled to under the
Corporation's benefit plans; (3) all of the Corporation's interest in any
automobile used by George Wackenhut and the payment of the balance of any
outstanding loan or lease on such automobile; and (4) the Retirement Benefit
described below.
In the event of termination of George Wackenhut's employment for any reason, he
and his spouse will be entitled to receive, on an annual basis, for the
remainder of George Wackenhut's life, and upon his death, for the remainder of
his spouse's life, any benefits or perquisites requested by him (or in the event
of his death, his spouse), not to exceed $250,000 per year (the "Retirement
Benefit").
The employment agreement provides that if any payment to George Wackenhut
thereunder would be subject to federal excise taxes imposed on certain severance
payments, the Corporation will make an additional payment to him to cover any
such tax payable by him and the taxes on such gross-up payment.
EMPLOYMENT AGREEMENT WITH RICHARD R. WACKENHUT
The Corporation entered into a ten year employment agreement with Richard R.
Wackenhut to act as the Chief Executive Officer of the Corporation, effective as
of March 17, 2000. The employment agreement provides that Richard Wackenhut will
receive an initial annual base salary of $1,050,000, subject to possible
increases from time to time in the sole discretion of the Board of Directors or
the Compensation Committee. In addition, Richard Wackenhut will be eligible for
an annual bonus of a minimum of 35% of his base salary, based on the achievement
of certain targets and incentives. The employment agreement also provides for
certain benefits to Richard Wackenhut including life and health insurance, an
automobile allowance and other benefits generally available to executive
officers.
If the Corporation terminates Richard Wackenhut's employment for any reason
other than death, or if he elects to terminate his employment for "good reason",
as defined in his employment agreement, he will be entitled to the following:
(1) a lump sum payment equal to the number of years remaining under the
employment agreement multiplied by the sum of his annual salary and the greater
of his most recent target or actual annual bonus payment (the "Special
Termination Payment"); (2) the continuation of his employee benefits for the
remainder of the term of the employment agreement; (3) immediate vesting of
awards granted pursuant to the Corporation's Employee Long-Term Incentive Stock
Plan and other stock options, without regard to restrictions on restricted stock
and performance targets with respect to performance units or shares; (4) all of
the Corporation's interest in any automobile used by Richard Wackenhut and the
payment of the balance of any outstanding loan or lease on such automobile; (5)
the present value of all cash payments pursuant to the amended Retirement
Agreement (as described in the "Senior Officer Retirement Plan") as if he had
remained employed until the Retirement Date defined therein; and (6) the dollar
value of the sum of vacation time had he remained employed and accrued vacation
time.
If Richard Wackenhut's employment is terminated due to his death, his estate
will be entitled to the following: (1) earned and unpaid base salary; and (2)
the Special Termination Payment.
If, more than 18 months after a Change in Control (as defined below), Richard
Wackenhut terminates his employment, he would be entitled to receive the
benefits described in the previous paragraph regarding termination for good
reason. A Change in Control for purposes of Richard Wackenhut's employment
agreement generally includes the occurrence of any of the following: (1) any
person, other than exempt persons (including the Controlling Shareholder Group
[as defined below], becomes a beneficial owner of 30% or more of the combined
voting power of the Corporation's outstanding securities; (2) the approval by
shareholders of a merger or consolidation, except a merger or consolidation
where existing shareholders would own more than 80% of the combined voting power
of the voting securities of the Corporation or the surviving company; (3) the
approval by shareholders of a liquidation or the sale or disposition of all or
substantially all of the Corporation's assets; or (4) the
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Controlling Shareholder Group (as defined below) owns 30% or less of the
combined voting stock of the Corporation. A Change in Control will not be deemed
to occur if Richard Wackenhut is part of the purchasing group which consummates
a transaction causing a Change in Control. The Controlling Shareholder Group
includes George Wackenhut, his spouse and lineal descendants, trusts formed for
the benefit of such persons, and affiliates of such persons.
The employment agreement provides that if any payment to Richard Wackenhut
thereunder would be subject to federal excise taxes imposed on certain severance
payments, the Corporation will make an additional payment to him to cover any
such tax payable by him and the taxes on such gross-up payment.
SEVERANCE AGREEMENTS
The Corporation entered into severance agreements with Alan Bernstein, Philip
Maslowe and certain other officers, effective as of March 17, 2000. The
severance agreements provide that if an officer's employment ceases for any
reason during the 12 month period following a Change in Control (as defined
above in the employment agreement for Richard Wackenhut), he or she will be
entitled to the following: (1) a lump sum payment equal to three times the sum
of his or her annual salary and the greater of his or her most recent target or
actual annual bonus payment; (2) the continuation of his or her employee
benefits for three years, or at the election of the officer, an amount equal to
the present value of the cost of providing such benefits; (3) immediate vesting
of awards granted pursuant to the Corporation's Employee Long-Term Incentive
Stock Plan and other stock options, without regard to restrictions on restricted
stock and performance targets with respect to performance units or shares; (4)
all of the Corporation's interest in any automobile used by the officer and the
payment of the balance of any outstanding loan or lease on such automobile; (5)
the present value of all cash payments pursuant to the Retirement Agreements (as
described in the "Senior Officer Retirement Plan") as if he or she had remained
employed until the retirement date defined therein; and (6) the dollar value of
the sum of vacation time had he or she remained employed and accrued vacation
time.
The severance agreements include a non-competition agreement for a period of 12
months after the termination of the officer's employment.
The severance agreements provide that if any payment to the officer thereunder
would be subject to federal excise taxes imposed on certain severance payments,
the Corporation will make an additional payment to him or her to cover any such
tax payable by him or her and the taxes on such gross-up payment.
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 25 years $ 100,000 12.5 years
A.B. Bernstein 250,000 25 years 100,000 12.5 years
P. L. Maslowe 200,000 25 years 50,000 12.5 years
The retirement benefits for senior officers are contained in deferred
compensation agreements and senior officer retirement agreements between the
Corporation, Richard Wackenhut, Alan Bernstein, Philip Maslowe, and certain
other senior officers (the "Retirement Agreements"). The Retirement Agreements
provide that the Corporation will pay certain sums to the senior officers or
their beneficiaries for twenty five (25) years beginning on the date of their
death or retirement after age 60, or to their beneficiaries for twelve and one
half (12.5) years if they die before age 60.
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On March 17, 2000, the Corporation amended the Retirement Agreements as follows:
(1) upon a Change of Control (as defined under "Employment Agreement with
Richard R. Wackenhut"), the senior officers will be entitled to receive the
payments disclosed in the Retirement Plan Table at the age of 55, rather than 60
years (the "Retirement Date"); (2) upon a Change of Control, they will be
entitled to receive the present value of such payments as if they had been
employed through the Retirement Date; and (3) the amounts payable to the senior
officers and the duration of payments, other than payments to Richard Wackenhut,
were increased.
With respect to the five most highly compensated executive officers of the
Corporation, George Wackenhut is not a party to a Retirement Agreement, and
George Zoley participates in an Executive Officer Retirement Plan established by
Wackenhut Corrections Corporation. Philip Maslowe, Richard Wackenhut and Alan
Bernstein are parties to Retirement Agreements and are vested in all benefits
contained therein.
The following table sets forth the estimated annual benefits payable under the
Executive Officer Retirement Plan to Dr. George Zoley:
PENSION PLAN TABLE
REMUNERATION (1)
ASSUMED AVERAGE ESTIMATED ANNUAL RETIREMENT BENEFITS (2)
ANNUAL SALARY
FOR FIVE-YEAR PERIOD
PRECEDING YEARS OF SERVICE
RETIREMENT 10 15 20 25 30 35
400,000 46,835 78,112 108,502 137,840 129,927 120,529
500,000 64,835 105,112 144,502 182,840 174,927 165,529
600,000 82,835 132,112 180,502 227,840 219,927 210,529
(1) The Retirement Plan is a defined benefit plan which bases benefits
upon the participants final average annual salary earned during the
last five years of credited service. Benefits under the Retirement
Plan are offset by social security benefits.
(2) Dr. Zoley is fully vested in the Retirement Plan with 19 years of
service at the end of 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Board of Directors (the
"Compensation Committee") met three times in fiscal 2000. 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, retirement plans (as noted earlier in this section of the Proxy
Statement), 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
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the COB 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 COB and
CEO), 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 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 COB, CEO and the other named executive officers for the last
three years. The increase in the CEO's salary for 2000 was attributable to the
overall financial performance of the Company, strategic objectives and the
quality of his leadership. In 2000, 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 Company exceeded target on
revenues and fell short on the target for profit. 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 50% upward or 100% 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
2000. The Company has elected to comply with Section 162(m) of the Internal
Revenue Code to the extent it deems appropriate and has a bonus plan for the COB
and the CEO that is based upon the Company's consolidated revenue (30%) and
consolidated service profits (70%). Accordingly, there was no discretionary
adjustment upward to the award.
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 2000 for the COB, the CEO, Executive Vice Presidents of
Security Services, and Senior Vice Presidents of the Company were 35%, 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
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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 earnings per share performance goals established by the Compensation
Committee are attained. In setting these 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.
By the Nominating and Compensation Committee:
Paul X. Kelley, Chairman Benjamin R. Civiletti, Vice Chairman
Nancy Reynolds Thomas P. Stafford
Carroll A. Campbell
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT OR FUTURE FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF
THE AUDIT AND FINANCE COMMITTEE SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER
SUCH ACTS.
AUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee of the Board of Directors of The Wackenhut
Corporation met four (4) times during 2000. All members of the Audit and Finance
Committee are independent as independence is defined in the applicable standard
of the New York Stock Exchange.
The Audit and Finance Committee has adopted a written charter which sets forth
its powers and duties. A copy of that charter is attached as an appendix to this
Proxy Statement. In accordance with those powers and duties, the Audit and
Finance Committee has:
1. Reviewed and discussed the audited financial statements for the fiscal
year with management;
2. Discussed with the independent accountants the matters required to be
discussed by SAS 61 (codification of Statements on Auditing Standards,
AU sec 380) as then modified or supplemented;
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3. Received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit and Finance Committees," as then
modified or supplemented, and has discussed with the independent
accountant the independent accountants independence;
4. Based on the review and discussions referred to in paragraphs 1 through
3 above, the Audit and Finance Committee recommends to the Board of
Directors that the audited consolidated financial statements be included
in the Company's Annual Report on Form 10-K for the fiscal year for
filing with the Securities and Exchange commission; and
5. Reviewed its Charter and made such recommendations as it deems necessary
to the Board of Directors.
By the Audit and Finance Committee
Edward L. Hennessy, Jr., Chairman John F. Ruffle, Vice Chairman
Paul X. Kelley Benjamin R. Civiletti
Thomas P. Stafford
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Comparison of Five-year Cumulative Total Return*
The Wackenhut Corporation, Wilshire 5000 Equity,
and S&P Services (Commercial and Consumer) Indexes
(Performance through December 31, 2000)
----------------------- --------------- ------------------- -----------------------
S&P SERVICE
WACKENHUT WILSHIRE 5000 (COMMERCIAL AND
DATE CORPORATION EQUITY CONSUMER)
----------------------- --------------- ------------------- -----------------------
December 1995 $100.00 $100.00 $100.00
December 1996 $145.57 $121.22 $103.26
December 1997 $200.24 $159.14 $141.63
December 1998 $218.57 $196.43 $114.87
December 1999 $120.42 $242.72 $100.72
December 2000 $106.56 $216.58 $67.52
----------------------- --------------- ------------------- -----------------------
Assumes $100 invested on December 31, 1995 in Wackenhut Corporation Common Stock
and the Index companies.
*Total Return Assumes Reinvestment of Dividends.
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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.
SERVICES AGREEMENT. The Company and its consolidated subsidiary, Wackenhut
Corrections Corporation ("WCC"), entered into a services agreement (the
"Services Agreement") on December 20, 1995, which became effective January 1,
1996, pursuant to which the Company agreed to continue to provide certain of
these services to WCC through January 2, 2000. This agreement is being renewed
on a year-to-year basis.
In accordance with the terms of the Services Agreement, WCC paid the Company a
fixed annual fee for services (the "Annual Services Fee") equal to $718,100 in
fiscal 1998, $2,944,000 in fiscal 1999 and $3,468,000 in fiscal 2000. Management
of WCC believes that the Annual Services Fees under the Services Agreement 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 Agreement, 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 the Services Agreement, the services to be provided by the Company to WCC
for the Annual Services Fee include the following:
FINANCIAL, ACCOUNTING, TAX AND GOVERNMENT CONTRACT MANAGEMENT SERVICES. Under
the Services Agreement, the Company provides WCC with (i) treasury
operations, (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 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 tax returns.
HUMAN RESOURCES SERVICES. Under the Services Agreement, 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.
The following table sets forth certain amounts billed to WCC during fiscal 1998,
fiscal 1999, and fiscal 2000, for services not covered by the Annual Services
Fee paid under the 1996 Services Agreement.
Fiscal 1998 Fiscal 1999 Fiscal 2000
Food Services $839,000 - -
Casualty Insurance Premiums (1) 7,423,000 $9,454,000 $13,588,000
Interest Charges (Income) (2) (122,000) (492,000) 65,000
Office Rental (3) 361,000 286,000 315,000
---------------- ----------------- -----------------
Total $8,501,000 $9,248,000 $13,968,000
================ ================= =================
(1) Casualty insurance premiums relate to workers' compensation, general
liability and automobile insurance coverage obtained through the
Corporation's Insurance Program. Substantially, all of the casualty
insurance premiums represented premiums paid to a captive reinsurance
company that is wholly owned by the Corporation. Under the terms of each of
the Services Agreement, the Corporation also has the option
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to continue to participate in certain other insurance policies maintained
by the Corporation for which the Corporation reimburses the Corporation for
direct and indirect costs associated in providing such services.
(2) WCC is charged interest on intercompany indebtedness and charges interest
on intercompany loans at rates that reflect the Corporation's average
interest costs on long-term debt, exclusive of mortgage financing.
(3) Effective February 15, 1996, the WCC entered into a 15-year agreement with
the Corporation providing for the rental of approximately 14,672 square
feet of office space at its corporate headquarters in Palm Beach Gardens,
Florida, at an annual rate of $315,328 ($19.50 per square foot) on terms
which the Corporation believes to be no less favorable to the Corporation
than could have been obtained from unaffiliated third parties. In 1998, the
Corporation increased the space it rents by approximately 1,600 square feet
and paid common area maintenance charges related to 1997 and 1998.
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 the
Services Agreement 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 the Services Agreement, 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.
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 RELATIONSHIPS AND TRANSACTIONS
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 Nominee of The Wackenhut Corporation is a partner. George C. Zoley,
Vice Chairman of the Board and Chief Executive Officer of WCC, also served until
February 9, 2001 as Senior Vice President of the Corporation, and serves as a
Director of Wackenhut Correction Corporation Australia Pty Limited, Australasian
Correctional Services Pty Limited, Australasian Correctional Management Pty
Limited, Canadian Correctional Management, Inc., WCC RE Holdings, Inc., Atlantic
Shores Healthcare and Wackenhut Corrections Corporation, N.V., affiliates of the
Company. George R. Wackenhut, Chairman of the Board 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 50.05% of the issued and outstanding voting common stock of the
Company. Richard R. Wackenhut, Vice Chairman, President and Chief Executive
Officer of the Company, is also a Director of WCC. He is the son of George R.
and Ruth J. Wackenhut.
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DIRECTORS' COMPENSATION
Directors of the Corporation who are not Officers were paid during the fiscal
year 2000 an annual retainer fee at the rate of $20,000 per year plus $1,500 or
75 shares of Series B Common Stock for each Board meeting attended; $1,000 or 50
shares for each committee meeting attended as committee members; and $1,500 or
75 shares for each committee meeting attended as committee chairperson for
committees. Each Non-Employee Director also has received from the Corporation
upon each election or re-election to the Board of Directors, an option to
purchase 2,000 shares of Series B Common Stock of the Corporation. For the
fiscal year 2000 election only, the number of option shares was increased to
10,000 shares of Series B Common Stock. Each Non-Employee Director is also
eligible for stock option grants in subsidiaries when such grants are made to
Company management. Commencing August 5, 1999, the Fees for attendance at
meetings of the Operations and Oversight Committee became $2,000 for attendance
as a committee member are $3,000 for attendance as committee chairperson.
Commencing February 9, 2001, the annual retainer fee became $30,000 per year and
the fee for each committee meeting attended as chairperson for the committee
other than the Operations and Oversight Committee became $2,500. Also, the
number of shares of Series B Common Stock which each Non-Employee Director shall
receive an option to purchase upon election or re-election to the Board became
5,000.
No Directors or their affiliates were compensated for services rendered to the
Corporation during fiscal 2000 other than the compensation described above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 fiscal 2000 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
2001, 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.
PROPOSAL NO. 3
PROPOSAL TO SET ASIDE 400,000 SHARES OF SERIES B COMMON STOCK OF THE CORPORATION
TO BE UTILIZED FOR ISSUANCE UNDER THE KEY EMPLOYEE LONG-TERM INCENTIVE STOCK
PLAN (THE "PLAN").
The Plan was previously approved by the shareholders of the Corporation at the
1992 Annual Meeting. The Nominating and Compensation Committee of the Board of
Directors of the Corporation (the "Committee") is responsible for the
administration and governance of the Plan. Actions requiring Committee approval
include final
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determination of plan eligibility and participation, identification of
performance goals, and final award determination. The decisions of the Committee
are conclusive and binding on all participants.
The purpose of the Plan is to reward superior performance with a variable
component of pay which can only be earned if predetermined performance criteria
are met. The Plan is intended to encourage stock ownership by senior executives;
to balance the short-term emphasis of the annual incentive 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 Corporation. Initially, participants were limited
to the senior officers, but beginning in 1994, stock options were awarded to a
much broader segment of management employees.
Participants may be granted one or more types of long-term incentive vehicles as
awards. Initially, awards to participants were limited to Restricted Stock Units
(RSUs) and/or performance shares. The Plan also provides for the granting of
stock options and/or performance units.
Participants "earn" the RSU and performance share awards based on (1) continued
employment and/or (2) Company performance measured over a three-year performance
category. The Target Incentive Award is allocated among the possible types of
long-term incentive vehicles as determined by the Committee. For any Performance
Shares awarded, a greater or lesser amount, based on a preset schedule, may be
earned at the end of the plan year based on the attainment of predetermined
goals. Annual grants have been made for each type of long-term incentive.
Vesting periods and/or performance measurement periods vary according to the
type of long-term incentive awarded. The CEO will nominate participants to be
approved by the Committee. Participation is reevaluated and determined on an
annual basis. Total awards to be granted are calculated by multiplying the
appropriate percentage by the participant's base salary at the time of grant.
The appropriate number of units or shares is determined by dividing the amount
of the award by the stock price at the date of grant, calculated as the average
closing price of the stock for the last five business days preceding the date of
grant.
Stock Options and Restricted Stock vest based upon continued employment. Vesting
periods are as follows:
Type of Award Vesting Period
------------- --------------
Stock Options As set by the Committee
Restricted Stock 7 years
Based on performance achieved during the year, an individual's Performance Share
award payout will be a function of performance against pre-established
objectives. Threshold, Target, and Outstanding performance levels are defined at
the beginning of each year for each performance measure.
The Plan's initial performance measure for Performance Share awards was Return
on Equity (ROE). The Committee subsequently adopted growth in Earnings Per Share
(EPS) as the performance measure in 1996. Compounded growth rate in EPS for each
three-year measurement period is compared with preset goals, as described above,
to determine award payouts.
The Committee may, in its discretion, make an adjustment to Performance Share
awards to consider aspects of performance that may not be reflected in the
financial results of the Corporation.
Payments of Performance Share awards are made in stock, cash or a combination of
both as soon as practicable after the end of the three-year measurement period,
and after approval by the Committee. Thus far, the only payout of performance
shares was for the period 1991 - 1993, 1996 - 1998 and 1997 - 1999. No awards
were earned for the 1992 - 1994, 1993 - 1995, 1994 - 1996 or 1995 - 1997
periods. In the event that a participant changes positions between award grant
dates, whether due to promotion, demotion or lateral move, at the discretion of
the Committee, awards are granted or modified as appropriate. An employee hired
into an eligible position during the year may participate in the Plan for the
balance of the year on a pro rata basis at the discretion of the Committee.
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In the event a participant voluntarily terminated employment or is terminated
involuntarily before Stock Option or Restricted Stock awards have been vested,
or before Performance Share awards have been earned for a performance period,
any award will be forfeited. In the event of death, permanent disability, or
normal retirement, or upon the occurrence of a defined "change in control" of
the Corporation, all Stock Option and Restricted Stock awards will vest
immediately.
Annual grants of Restricted Stock Units (RSUs) have been made to participants
since Plan inception. At the time of grant, a vesting schedule is established
for each RSU award, which need not be the same for each participant, and which
may be based upon the passage of time, the achievement of pre-establised
performance goals or a combination thereof. The RSUs may not be sold, pledged or
transferred until fully vested and until any other applicable restrictions have
lapsed. During the vesting period, participants are paid dividend equivalents on
the RSUs granted to them. When vested, payment for RSUs is made in shares of the
Common Stock of the Corporation on a one for one basis. The Plan is intended to
remain in effect for ten years, unless terminated earlier by the Board of
Directors of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO SET ASIDE 400,000
SHARES OF SERIES B COMMON STOCK OF THE CORPORATION FOR ISSUANCE UNDER THE KEY
EMPLOYEE LONG-TERM INCENTIVE STOCK PLAN FOR KEY EMPLOYEES OF THE CORPORATION.
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 the flexibility of
the Incentive Plan. The Incentive Plan currently states that where employment
terminates for reasons other than death, disability, retirement or for Cause (as
defined in the Incentive Plan), the Participant shall have the right to exercise
any vested options held at termination within 90 days of such termination.
The Amendment would allow the Nominating and Compensation Committee of the Board
of Directors (the "Committee") which has authority to administer the Incentive
Plan the discretion in such cases to extend this 90 day period up to the date of
the original expiration of the Options. The current terms of the Incentive Plan
only allow the Committee to extend the 90 day period to a period of up to one
(1) year after the date of termination.
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 February 9,
2001.
Section 6.9 of the Incentive Plan would be amended to read as follows:
"TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If the employment of the
Participant shall terminate for any reason other than death,
disability, retirement or for Cause, the Participant shall have the
right to exercise Options that were vested in the Participant at the
date of termination within 90 days after the date
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of termination, but in no event beyond the expiration of the term of
the Option and only to the extent that the Participant was entitled to
exercise the Option at the date of termination of employment the
Committee, in its sole discretion, shall have the right to extend the
90 days up to the expiration date of the Options."
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 administered 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.
ELIGIBILITY UNDER THE PLAN. Key employees of the Corporation are eligible to
participate in the Incentive Plan. Non-Employee 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 two
hundred fifty (1,681,250) shares of Series B Common Stock of the Corporation
have been authorized as available for the 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 termination is 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.
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.
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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.
PROPOSAL NO. 5
PROPOSAL TO SET ASIDE 150,000 SHARES OF SERIES B COMMON STOCK OF THE CORPORATION
TO BE UTILIZED FOR ISSUANCE UNDER THE NONEMPLOYEE DIRECTOR STOCK OPTION PLAN.
On April 28, 1995, the Board of Directors (the "Board") adopted, subject to
Shareholder approval at the Annual Meeting, the Nonemployee Director Stock
Option Plan (the "Plan"). The purpose of the Plan is to make service on the
Board more attractive to present and prospective members of the Board of
Directors of the Corporation who are not employees or officers of, or
consultants to, the Corporation ("Non-Employee Directors"), since the continued
service of qualified Non-Employee Directors is considered essential to the
management, growth and financial success of the Corporation.
DESCRIPTION OF THE DIRECTOR OPTION PLAN
GENERAL. As a part of the Non-Employee Directors compensation, those
Directors of the Corporation shall be granted an option to purchase up to 5,000
shares of the Series B Common Stock of the Corporation upon his or her election
and/or each re-election to serve on the Board (the "Director Option").
Currently, the total number of shares of Common Stock which may be issued under
the Plan is 125,000 shares. In the event any change is made to the Common Stock
issuable under the Plan (by reason of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, split-up, share
combination or other change in the corporate structure of the Company),
appropriate adjustment will be made to (i) the aggregate number and/or class of
shares of Common stock available for issuance under the Plan, (ii) the exercise
price, and (iii) the number and/or class of shares of Common Stock purchasable
under each outstanding Director Option and the exercise price payable per share
so that no dilution or enlargement of Benefits will occur under such Director
Option.
PRICE; EXERCISABILITY. The exercise price of Director Options shall be
100% of the fair market value of Series B Common Stock at the date the Director
Option is granted. Generally, the Director Options will be for a term of ten
years from the date of grant.
ASSIGNABILITY. Director Options are not assignable or transferable
other than by will or the laws of descent and distribution and, during the
optionee's lifetime, the Director Option may be exercised only by such optionee.
AMENDMENTS. The Board may amend or discontinue the Plan at any time
provided that no such amendment or discontinuance may change or impair any
Director Option previously granted with the consent of the optionee.
TERMINATION. In the event of the optionee's death or disability, the
personal representative or guardian of the optionee or the optionee's estate, or
the person inheriting the Director Options, will have two years after the date
of the optionee's death or disability to exercise the Director Options in full.
Under no circumstances, however, may the Director Options be exercised after the
termination date of the Director Options. If any Director Options granted under
the Director Option Plan expire or are terminated or canceled unexercised as to
any shares of Common Stock, such released shares may again be optioned
(including a grant in substition for canceled Director Options).
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FEDERAL INCOME TAX ASPECTS
The Director Options do not constitute incentive stock options, within the
meaning of section 422(b) of the Code. As a general rule, no federal income tax
is imposed on the holder of options upon the issuance of options such as the
Director Options and the Corporation is not entitled to a tax deduction by
reason of such issuance. Generally, upon the exercise of options such as the
Director Options, the holder of the options will be treated as receiving
compensation taxable as ordinary income in the year of exercise, which in the
case of an option, is an amount equal to the excess of the fair market value of
the shares on the date of exercise over the exercise price of the options. Upon
the exercise of options such as the Director Options, the Company may claim a
deduction for compensation paid at the same time and in the same amount as
compensation income is recognized to the holder of the options, assuming any
federal income tax withholding requirements are satisfied. Upon a subsequent
disposition of the shares received upon exercise of options such as Director
Options, the difference between the amount realized on the disposition and the
basis of the stock (exercise price plus any ordinary income recognized) should
qualify as long-term or short-term capital gain depending on the holding period.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO SET ASIDE 150,000
SHARES OF COMMON STOCK OF THE CORPORATION FOR ISSUANCE UNDER THE NONEMPLOYEE
DIRECTOR STOCK OPTION PLAN.
SHAREHOLDERS' PROPOSAL DEADLINE
Shareholder proposals intended to be presented at the 2002 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, 2001.
OTHER MATTERS
The Board of Directors knows of no other matters to come before the
shareholders' meeting. However, if any other matters properly come before the
meeting or any of its adjournments, the person or persons voting the proxies
will vote them in accordance with their best judgement on such matters.
By order of the Board of Directors
James P. Rowan, Executive Vice President
General Counsel and Assistant Secretary
March 30, 2001
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A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2000, 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
PATRICK F. CANNAN, DIRECTOR, CORPORATE RELATIONS, THE WACKENHUT CORPORATION,
4200 WACKENHUT DRIVE, #100, PALM BEACH GARDENS, FLORIDA, 33410-4243.
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THE WACKENHUT CORPORATION
AUDIT COMMITTEE CHARTER
APPENDIX I
I. PURPOSE
The primary function of the Audit Committee of the Wackenhut
Corporation ("the Committee") is to assist the Board of Directors in fulfilling
its oversight responsibilities relating to:
(1) the quality, reliability and integrity of the Company's external
financial reporting process;
(2) the adequacy of the Company's internal accounting and
administrative controls including compliance with corporate
policies, legal and regulatory requirements; and
(3) the performance of the Company's independent accountants, who
are accountable to the Board of Directors and the Committee.
II. RESPONSIBILITIES
The Audit Committee's responsibilities shall include:
o Recommending to the Board of Directors the appointment of the
Company's independent accountants to conduct the annual audit.
o Evaluating together with the Board of Directors the performance of
the independent accountants and, if so determined by the
Committee, recommending that the Board of Directors replace the
independent accountants.
o Ensuring that the independent accountants submit, at least
annually, to the Committee a formal, written statement delineating
all relationships between the independent accountants and the
Company. The Committee is responsible for actively engaging in a
dialogue with the independent accountants with respect to any
disclosed relationships or services that may impact their
objectivity and independence, and for recommending that the Board
take appropriate action in response to the independent
accountants' report to satisfy itself of the independent
accountants' independence.
o Conferring with the independent accounts and internal auditors
concerning the scope and nature of their examinations of the books
and records of the Company. Such matters may include but are not
limited to an examination of the Company's internal audit charter,
annual audit plans and budgets, and authorization of supplemental
reviews or audits.
o Reviewing the audited financial statements to be included in the
Company's Annual Report on Form 10-K prior to filing such reports
with the Securities and Exchange Commission. Such reviews shall
include discussions with the independent accountants, concerning
such matters as the nature and extent of any significant changes
in accounting principles or their application.
o Providing a report (see exhibit attached) disclosing the
Committee's oversight with respect to financial reporting.
o Reviewing the Company's financial information to be included in
its quarterly reports on Form 10-Q prior to filing such reports
with the Securities and Exchange Commission. Such review shall
include discussions with the independent accountants concerning
such matters as the nature and extent of any significant changes
in accounting principles or their application.
o Reviewing the costs of audit services performed by the independent
accountants.
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o Meeting periodically with management, the independent accountants
and internal auditors to review the Company's major financial risk
exposures and the steps management has to take to monitor and
control such exposures.
o Obtaining from the independent accountants and internal auditors
their recommendations regarding internal controls and the matters
relating to the accounting procedures and the books and records of
the Company and the corrective actions implemented.
o Reviewing the performance of the internal audit function.
o Providing an open avenue of communication with the independent
accountants, financial and senior management, the internal
auditors, and the Board of Directors.
o Reviewing the Audit Committee Charter on an annual basis and
recommending changes, if any, to the Board of Directors.
II. COMPOSITION
The Committee shall be comprised of at least three independent
directors each of whom shall meet the independence and experience requirements
of the New York Stock Exchange.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board. The members of the Committee shall
serve until their successors shall be duly elected and qualified.
III. MEETINGS
The Committee shall meet at least four times annually. The Committee
shall meet at least once a year with management, the Director, Internal Audit
and the independent accountants. Meetings may be held in separate executive
sessions to discuss any matters that the Committee or each of these groups
believes should be discussed privately.
The Committee shall report through its Chairperson to the Board of
Directors on the results of its meetings and activities.
The Committee shall maintain minutes or other records as appropriate of
all meetings and activities.
IV. LIMITATION OF DUTIES
While the Committee has the responsibilities and powers set forth in
the Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete, accurate and in
accordance with generally accepted accounting principles. This is the
responsibility of management and the independent accountants. Neither is it the
duty of the Audit Committee to investigate or resolve disagreements, if any,
between management and the independent accountants.
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37
The Board of Directors recommends a vote FOR Proposals 1, 2, 3, 4 and 5.
Please mark your votes as indicated in this example [X]
1. ELECTION OF DIRECTORS:
VOTE FOR all nominees listed to the right (except as marked to the contrary).
[ ]
VOTE WITHHELD as to all nominees.
[ ]
Nominees:
01 Julius W. Becton, Jr. 07 Paul X. Kelley
02 Alan B. Bernstein 08 Nancy Clark Reynolds
03 Carroll A. Campbell, Jr. 09 John F. Ruffle
04 Benjamin R. Civiletti 10 Thomas P. Stafford
05 Anne Newman Foreman 11 George R. Wackenhut
06 Edward L. Hennessy, Jr. 12 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 2001 the Appointment of ARTHUR
ANDERSEN LLP as the independent certified public accountants of the
Corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the setting aside of a total of 400,000 Series B shares
for the Key Employee Long-Term Incentive Stock Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to amend the Key Employee Long-Term Incentive Stock Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Proposal to approve the setting aside of 150,000 Series B shares for the
Nonemployee Director Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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 _________________________________ , 2001
______________________________________________
Signature
______________________________________________
Signature if held jointly
Please sign and return this Proxy in the accompanying addressed envelope.
VOTE BY TELEPHONE OR MAIL
24 Hours a Day, 7 Days a Week
YOUR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE SAME
MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
TELEPHONE MAIL
1-800-840-1208
Use any touch-tone telephone to vote your proxy. Have Mark, sign and date
your proxy card in hand when you call. You will be OR your proxy card
prompted to enter your control number, located in the and
box below, and then follow the directions given. return it in the
enclosed postage-paid
envelope.
If you vote your proxy by telephone,
you do NOT need to mail back your proxy card.
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THE WACKENHUT CORPORATION
4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410
The undersigned hereby appoints George R. Wackenhut and Richard R.
Wackenhut as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and 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 16, 2001, at the Annual Meeting of
Shareholders to be held at the Four Seasons Resort, Palm Beach, 2800 South Ocean
Boulevard, Palm Beach, Florida, at 9:00 A.M., May 4, 2001, or at any adjournment
thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE ABOVE INSTRUCTIONS. IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5. 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.)