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 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box:
(B&W WCC LOGO) WACKENHUT CORRECTIONS CORPORATION 4200 Wackenhut Drive Palm Beach Gardens, Florida 33410-4243 Telephone: (561) 622-5656 April 1, 2002 Dear Shareholder: You are cordially invited to attend the 2002 Annual Meeting of the Shareholders of Wackenhut Corrections Corporation. We will hold the meeting on Thursday, May 2, 2002, at 9:00 A.M. (EST) at the PGA National Resort, 1100 Avenue of the Champions, Palm Beach Gardens, Florida. We hope that you will be able to attend. Enclosed you will find a notice setting forth the business expected to come before the meeting, the Proxy Statement, a form of proxy and our 2001 Annual Report. In addition to the specific proposals we are requesting shareholders to act upon, we will report on our business and provide our shareholders an opportunity to ask questions of general interest. Our Board of Directors recommends that you vote FOR each of the proposals on the Proxy Card. Your vote is very important to us. Whether or not you plan to attend the meeting in person, your shares should be represented and voted. After reading the enclosed Proxy Statement, please complete, sign, date and promptly return the proxy in the self-addressed envelope that we have included for your convenience. No postage is required if it is mailed in the United States. Alternatively, you may wish to submit your proxy by touch-tone phone as indicated on the Proxy Card. Submitting the Proxy Card before the Annual Meeting will not preclude you from voting in person at the Annual Meeting should you decide to attend. Sincerely, /s/G. R. Wackenhut George R. Wackenhut Chairman of the Board
WACKENHUT CORRECTIONS CORPORATION 4200 Wackenhut Drive Palm Beach Gardens, Florida 33410-4243 Telephone: (561) 622-5656 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ON MAY 2, 2002 April 1, 2002 The Annual Meeting of the Shareholders of Wackenhut Corrections Corporation ("WCC") will be held on Thursday, May 2, 2002, at 9:00 A.M. at PGA National Resort, Palm Beach Gardens, Florida, for the purpose of considering and acting on the following proposals: (1) To elect directors for the ensuing year; (2) To ratify the appointment of Arthur Andersen LLP as our independent certified public accountants for the fiscal year 2002, and to perform such other services as may be requested; and (3) To transact any other business as may properly come before the meeting or any adjournment or adjournments thereof. Only shareholders of WCC's Common Stock of record at the close of business on February 26, 2002, the record date and time fixed by the Board of Directors, are entitled to notice of and to vote at said meeting. Additional information regarding the proposals to be acted on at the Annual Meeting can be found in the accompanying Proxy Statement. By Order of the Board of Directors, /s/John J. Bulfin John J. Bulfin Senior Vice President, General Counsel and Corporate Secretary
PROXY STATEMENT WACKENHUT CORRECTIONS CORPORATION 4200 Wackenhut Drive Palm Beach Gardens, Florida 33410-4243 Telephone: (561) 622-5656 April 1, 2002 General Information: We are furnishing this Proxy Statement in connection with the solicitation of proxies by our Board of Directors for use at our Annual Meeting of Shareholders to be held at PGA National Resort, Palm Beach Gardens, Florida, May 2, 2002. Please note the Proxy Card provides a means to withhold authority to vote for any individual director-nominee. Also, note the format of the Proxy Card, which provides an opportunity to specify your choice between approval, disapproval or abstention with respect to the proposals indicated on the Proxy Card. 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 that are signed and returned or voted by telephone will be voted as follows: FOR - The election of directors for the ensuing year; and FOR - The proposal to ratify the appointment of Arthur Andersen LLP as the independent certified public accountants of WCC. 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 WCC common stock, par value $0.01 per share (the "Common Stock") of record as of the close of business on February 26, 2002, will be entitled to one vote for each share of Common Stock standing in their name on the books of WCC. On February 26, 2002, WCC had 20,977,224 shares of Common Stock outstanding. The presence, in person or by proxy, of at least a majority of the total number of shares of 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 Common Stock represented at the Annual Meeting is required to approve any other proposals. Shares of 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 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 WCC, by executing and delivering a later dated proxy, or by attending the meeting and voting the shares. The cost of preparation, assembly and mailing this Proxy Statement material will be borne by WCC. It is contemplated that the solicitation of proxies will be by mail and telephone. We mailed this Proxy Statement, the Notice of Annual Meeting, the Proxy Card and our Annual Report to Shareholders on or about April 1, 2002. 2
PROPOSAL 1 ELECTION OF DIRECTORS The Board of Directors for the upcoming year will consist of ten (10) members except as set forth below. Nine nominees are listed below. At the time of mailing this Proxy Statement, the Nominating and Compensation Committee has not selected the tenth nominee for election to the Board of Directors. Accordingly, the one vacancy will be filled by the affirmative vote of a majority of the Board of Directors after the Annual Meeting. The director filling such vacancy will serve for the ensuing year and until the successor is elected and qualified. On March 8, 2002, The Wackenhut Corporation, WCC's parent company ("TWC" or "Parent"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Group 4 Falck A/S, a corporation organized under the laws of Denmark ("Group 4 Falck"), and Milestone Acquisition Corporation, a Florida corporation and an indirect, wholly-owned subsidiary of Group 4 Falck ("Merger Sub"). Pursuant to the Merger Agreement, Group 4 Falck will, assuming the satisfaction or waiver of all conditions to the closing under the Merger Agreement, acquire all of the issued and outstanding capital stock of TWC through the merger (the "Merger") of Merger Sub with and into TWC. The Merger is expected to be consummated after the WCC Annual Meeting to which this Proxy Statement relates. George R. Wackenhut, Richard R. Wackenhut and Philip L. Maslowe, three of the director nominees named below, have submitted their resignations from the WCC Board of Directors effective the date that the Merger is consummated. Pursuant to an agreement among WCC, TWC and Group 4 Falck signed in connection with the Merger (the "WCC Agreement"), two of the vacancies created by these resignations will be filled by Lars Norby Johansen, the Chief Executive Officer of Group 4 Falck, and Soren Lundsberg-Nielsen, the General Counsel of Group 4 Falck. The third vacancy created by the resignations will not be filled and the Board of Directors will thereafter consist of nine (9) members. For more information on the Merger and the WCC Agreement, please see "Agreement among WCC, TWC and Group 4 Falck A/S" in the Certain Relationships and Related Transactions section later in this Proxy Statement. Unless instructed otherwise, the persons named on the accompanying Proxy Card will vote for the election of the nominees named below for election to the Board of Directors to serve for the ensuing year and until their successors are elected and qualified, subject to the preceding paragraph. Eight of the named nominees are presently directors of WCC who were elected by the shareholders at their last annual meeting. DIRECTORS AND NOMINEES
A brief biographical statement for each nominee follows: CONTINUING DIRECTORS - --------------------------------------------------------------------------------
CONTINUING DIRECTORS - --------------------------------------------------------------------------------
CONTINUING DIRECTORS - --------------------------------------------------------------------------------
CONTINUING DIRECTORS - --------------------------------------------------------------------------------
COMPOSITION AND FUNCTIONS OF SPECIFIC COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors has established an Executive Committee, a Nominating and Compensation Committee, and an Audit and Finance Committee. The Executive Committee's members are George R. Wackenhut, Richard R. Wackenhut and George C. Zoley. The Executive Committee met four times during the past fiscal year. The Executive Committee has full authority to exercise all the powers of the Board of Directors between meetings of the Board of Directors, except as reserved by the Board of Directors. The Nominating and Compensation Committee's members are Benjamin R. Civiletti (Committee Chairman) and Richard H. Glanton. A third member, Dr. Manuel Justiz, who formerly served on the Nomination and Compensation Committee, resigned from the Board of Directors effective February 7, 2002. The Nominating and Compensation Committee met two times during the past fiscal year. The Nominating and Compensation Committee, 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 WCC. See the Report of the Compensation Committee later in this Proxy Statement. Shareholders desiring to suggest qualified nominees for director positions should advise the Secretary of WCC in writing and include sufficient biographical material to permit an appropriate evaluation. The Audit and Finance Committee's members are John R. Ruffle (Committee Chairman), Benjamin R. Civiletti and Norman A. Carlson. Mr. Ruffle has submitted his resignation from the Board of Directors effective May 2, 2002. 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, a copy of which is filed with the Securities and Exchange Commission as required. The Report of the Audit and Finance Committee is included later in this Proxy Statement. The Board of Directors held four meetings during the 2001 fiscal year. Each incumbent director attended at least 75% of the total number of meetings of the Board of Directors and the total number of meetings held by all Board committees on which he served. AUDIT AND AUDIT RELATED FEES The aggregate fees billed during the most recently completed fiscal year by Arthur Andersen LLP, WCC's independent certified public accountants, for professional services rendered in connection with the audit of WCC's annual financial statements (Form 10-K) and reviews of WCC's quarterly financial statements (Forms 10-Q), were $171,500. Fees billed for audit related services, including, statutory audits of subsidiaries, contract and benefit plan audits, accounting consultation and various attest services under professional standards, were $186,752. FINANCIAL INFORMATION SYSTEMS DESIGN FEES No fees were billed during the most recently completed fiscal year by Arthur Andersen LLP for professional services such as directly or indirectly operating or supervising the operation of WCC's information systems, managing WCC's local area network, or designing or implementing a hardware or software system that aggregates source data underlying the financial statements or generates information that is significant to WCC's financial statements taken as a whole. NON-AUDIT RELATED FEES The aggregate fees billed during the most recently completed fiscal year for services rendered by Arthur Andersen LLP other than services covered in the preceding paragraphs were $156,175 for tax return 8
preparation and consulting services. The Audit and Finance Committee considered and determined that the provision of these services was compatible with maintaining Arthur Andersen LLP's independence. Arthur Andersen LLP attributes 0% of engagement hours expended to work performed by persons other than full-time, permanent employees of Arthur Andersen LLP. A representative of Arthur Andersen LLP 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 at the meeting. SECURITY OWNERSHIP The following table shows the number of shares of WCC's Common Stock, each with a par value of $0.01 per share, that were beneficially owned as of March 11, 2002 by each director nominee for election as director at the 2002 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 WCC to beneficially own more than 5% of WCC's outstanding Common Stock.
NOTES (1) Unless stated otherwise, the address of the beneficial owners is 4200 Wackenhut Drive, Palm Beach Gardens, Florida 33410. (2) Information concerning beneficial ownership was furnished by the persons named in the table or derived from documents filed with the Securities and Exchange Commission. Each person named in the table has sole voting and investment power with respect to the shares beneficially owned. (3) These shares are indirectly held through a wholly owned subsidiary of The Wackenhut Corporation, Tuhnekcaw, Inc., a Delaware Corporation. (4) Includes 12,000,000 shares of Common Stock owned directly by the directors and executive officers and 874,970 shares of Common Stock underlying stock options held by the directors and executive officers that are immediately exercisable or exercisable within 60 days. The number of shares of Common Stock underlying stock options are held by the directors and executive officers as follows: Mr. Calabrese -- 140,000; Mr. Carlson -- 8,000; Mr. Civiletti -- 12,000; Mr. Glanton -- 6,000; Mr. G.R. Wackenhut -- 107,530; Mr. R.R. Wackenhut -- 74,666; Mr. Zoley -- 318,000; Ms. Brown -- 75,774; Mr. O'Rourke -- 76,000; other executive officers -- 57,000. (5) George R. Wackenhut and Ruth J. Wackenhut, 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. The Wackenhut Corporation, through a wholly owned subsidiary, Tuhnekcaw, Inc., controls WCC. By virtue of their control of The Wackenhut Corporation, George R. Wackenhut and Ruth J. Wackenhut are deemed beneficial owners of the WCC stock owned by The Wackenhut Corporation. EXECUTIVE COMPENSATION The following table shows salary paid and bonuses accrued by WCC during the fiscal year ended December 30, 2001, and each of the two preceding fiscal years, to and on behalf of the Chief Executive Officer and each of the four most highly compensated executive officers of WCC other than the Chief Executive Officer, for services in all capacities while they were employees of WCC, and the capacities in which the services were rendered. In addition, the table shows other Long-Term Compensation awarded to the named individuals for the indicated years. SUMMARY COMPENSATION TABLE
OPTIONS / SAR GRANTS IN LAST FISCAL YEAR TO THE FIVE MOST HIGHLY COMPENSATED EXECUTIVES
Agreements and Retirement Agreements with these three executive officers were cancelled and replaced with Executive Employment Agreements and new Retirement Agreements. Under the former Executive Severance Agreements, a lump sum severance payment was to be paid to the executive upon the termination of executive's employment by the Company within one year following a Change in Control (as defined in the Executive Severance and Retirement Agreements), or upon the termination of employment by the executive more than one year, but less than two years, following a Change in Control. Under the former Executive Retirement Agreements, a lump sum payment equal to the present value of the executive's retirement benefits was to be paid to the executive at the same time that the severance payment was made under the Executive Severance Agreements. Under the terms of these former agreements, both lump sum payments would have to be charged against the Company as of the date of the Change in Control. Under the new Executive Employment Agreements, the one-time severance payment under the former Executive Severance Agreements is replaced by Change in Control payments comparable in aggregate amount (equal to three times the sum of the executive's annual salary as of the first day of the first month following a Change in Control and the annual bonus payment paid to the executive for fiscal year 2001), but payable in 24 equal consecutive monthly payments during an initial two-year employment term, and charged against the Company as earned. In addition, under the new Executive Retirement Agreements, upon a Change in Control, the executive is no longer entitled to a lump sum payment equal to the present value of the retirement benefits he was to receive under the former Retirement Agreements upon termination from employment, but instead is to receive a lump sum payment equal to the present value of his retirement benefits upon reaching the retirement age of 55 (accelerated from age 60 following a Change in Control). WCC believes that the new Executive Employment and Retirement Agreements provide WCC with more favorable payment terms and will help preserve the continuity of management by incentivizing the executives to remain employed with WCC following a Change in Control. The new Executive Employment Agreements provide that if a Change in Control occurs (as defined in the Executive Employment Agreements), the executive will be entitled to the following: (1) a two-year "rolling" employment contract including the terms and conditions described below; (2) Change in Control payments (as described above); (3) all of WCC's interest in any automobile used by the executive and the payment of the balance of any outstanding loan or lease on such automobile; and (4) an acceleration of the executive's retirement age from age 60 to age 55 and, upon reaching such accelerated retirement age, payment of the present value of all payments due under the Executive Retirement Agreements (as described in the Executive Retirement Agreements). If no Change in Control occurs, the executives are entitled to the Retirement Benefits at age 60 as set forth in the Executive Retirement Agreements section below. The Merger contemplated by the Merger Agreement among WCC, TWC and Group 4 Falck, if consummated, would have constituted a Change in Control under the former Executive Severance and Retirement Agreements, and will constitute a Change in Control under the terms of the Executive Employment Agreements and the new Executive Retirement Agreements. For more information on the Merger, please see "Agreement among WCC, TWC and Group 4 Falck A/S" in the Certain Relationships and Related Transactions section later in this Proxy Statement. The Executive Employment Agreements provide that Messrs. Zoley, Calabrese and O'Rourke will receive a base salary of not less than $632,500, $448,000 and $255,200, respectively, per year, or such higher salary as may be in effect when a Change in Control occurs. In addition, Messrs. Zoley, Calabrese and O'Rourke will be entitled to receive a target bonus of 35%, 30% and 25%, respectively, of the executive's then current annual salary plus a multiplier of up to 50% in accordance with the executive bonus plan established by the Board of Directors for determining the executive's annual bonus. The Executive Employment Agreements also provide for certain benefits to Messrs. Zoley, Calabrese and O'Rourke, including, life and health insurance and other benefits generally available to executive officers. The executive or WCC may terminate the Executive Employment Agreement for any reason. Upon the termination of the Executive Employment Agreements for any reason other than by the resignation of the executive without Good Reason, as defined in the Executive Employment Agreements, the executive will be entitled to receive the following: (1) six months' annual base salary and target level incentive bonus plus the remainder of any unpaid Change in Control payment; (2) the continuation of his employee benefits for a 12
period of three years, or alternatively, at the executive's election, a cash payment equal to the present value of WCC's cost of providing such benefits; and (3) the dollar value of the sum of vacation time had he remained employed and accrued vacation time. Upon the termination of the Executive Employment Agreement by the resignation of the executive without Good Reason, the executive will be entitled only to the amount of salary, bonus, employee benefits or Change in Control payment that is due through the effective date of the resignation. The Executive Employment Agreements and new Executive Retirement Agreements include a non-competition agreement for a period of two (2) years after the termination of the executive's employment. The former Executive Severance Agreements provided, and the Executive Employment Agreements and new Executive Retirement Agreements provide that if any payment to the executive thereunder would be subject to federal excise taxes imposed on certain employment payments, WCC will make an additional payment to the executive to cover any such tax payable by the executive together with the taxes on such gross-up payment. EXECUTIVE RETIREMENT AGREEMENTS The following table sets forth the annual payments under the Executive Retirement Agreements for George C. Zoley, Wayne H. Calabrese and John G. O'Rourke that are payable to each executive upon reaching the retirement age of 60. In the event a Change in Control occurs, each of the three executives will receive the net present value of his total retirement payments at age 55. EXECUTIVE RETIREMENT AGREEMENT BENEFITS TABLE
WCC's Retirement Plan is a defined benefit plan and, subject to certain maximum and minimum provisions, bases pension benefits on a percentage of the employee's final average annual salary, not including bonus (earned during the employee's last five years of credited service) times the employee's years of credited service. Benefits under the Retirement Plan are offset by social security benefits. Generally, a participant will vest in his or her benefits upon the completion of ten years of service. The amount of benefit increases for each full year beyond ten years of service except that there are no further increases after twenty-five years of service. CORPORATION INCENTIVE PLAN In March 1995, WCC adopted the Wackenhut Corrections Corporation Senior Officer Incentive Plan (the "Corporation Incentive Plan") for certain of its senior officers including all of the Named Executive Officers. Participants in the Corporation Incentive Plan are assigned a target incentive award, stated as a percentage of the participant's base salary depending upon the participant's position with WCC. The target incentive awards for 2001 for the Chief Executive Officer, President and Senior Vice Presidents of WCC were 35%, 30%, and 25% respectively, of base salary. The Compensation Committee's decisions regarding the amount of incentive compensation payable in a given year and the allocation among the participants is based on several factors, including WCC's profitability, the contribution of a particular employee during the fiscal year and compliance with previously agreed upon goals and objectives as outlined in WCC's strategic plan. The Compensation Committee may increase an incentive award by up to 50% to reflect individual performance. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During fiscal 2001, Benjamin R. Civiletti (Chairman), Manuel J. Justiz and Richard H. Glanton served on the Nominating and Compensation Committee of the Board of Directors. Mr. Justiz resigned from the Board of Directors effective February 7, 2002. Benjamin R. Civiletti also serves as Vice Chairman of the Nominating and Compensation Committee of Parent. John R. Ruffle, who has submitted his resignation from the Board of Directors effective May 2, 2002, served as Chairman of the Audit and Finance Committee of the Board of Directors and also served on the Audit and Finance Committee of Parent. George R. Wackenhut, Chairman, serves as Chairman of Parent, and as an officer and director of certain of its affiliates. Richard R. Wackenhut, Director, serves as Vice Chairman, CEO & President of Parent, and as an officer and director of certain of its affiliates. Philip Maslowe, Director, serves as Executive Vice President & CFO of Parent, and as an officer and director of certain of its affiliates. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Nominating and Compensation Committee of the Board of Directors ("Compensation Committee") met two times during 2001. The Compensation Committee is composed of three independent, non-employee directors who are not eligible to participate in any of the executive compensation programs. Among its other duties, the Compensation Committee is responsible for recommending to the full Board of Directors 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 WCC's compensation plans for key employees. The Compensation Committee seeks to provide, through its administration for 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 agreements or plans (as noted earlier in this section of the Proxy Statement), and long-term incentive awards in the form of stock options. 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 WCC determines a salary for each senior executive position that it believes is appropriate to attract and retain talented and experienced executives, and that is generally competitive with salaries for executives holding similar positions at comparable companies. The starting point for this analysis is each officer's base salary for the immediately preceding fiscal year. From time to time, 14
management will obtain reports from independent organizations concerning compensation levels for reasonably comparable companies. This information will be used as a market check on the reasonableness of the salaries proposed by management. The comparator companies will include a group of competitor companies whose revenue, performance and position matches are deemed relevant and appropriate. Management will then recommend executive salaries to the Compensation Committee. The Compensation Committee reviews and adjusts the salaries suggested by management, as it deems appropriate, and generally asks management to justify its recommendations, particularly if there is a substantial difference between the recommended salary and an officer's compensation for the prior fiscal year. In establishing the base salary for each officer (including that of the CEO), the Compensation Committee will evaluate numerous factors, including WCC'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 WCC. In addition, data developed as a part of the strategic planning process, but which may not directly relate to corporate profitability, will be utilized as appropriate. The Summary Compensation Table set forth elsewhere in this Proxy Statement shows the salaries of the CEO and the other named executive officers. The Compensation Committee formally evaluates the performance of the CEO. The CEO's salary was maintained at the same level in 2001 as in the prior year. WCC has an incentive compensation plan (the "Bonus Plan") for officers and key employees. The aggregate amount of incentive compensation payable under the Bonus Plan will be based on WCC's consolidated revenue and income after provision for income taxes. The Bonus Plan is intended as an incentive for executives to increase both revenue and profit and uses these as factors in calculating the individual bonuses. The weighing for these factors are 65% profit and 35% revenue. WCC exceeded the revenue and profit target for 2001. An adjustment to the incentive award up to 50% may be applied to reflect individual performance. The Compensation Committee's decisions regarding the amount of incentive compensation payable in a given year and the allocation among the participants, will be based on these factors, the contribution of a particular employee during the fiscal year and compliance with previously agreed upon goals and objectives as outlined in WCC's strategic plan. WCC 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 WCC. Such options are granted at market value at the time of grant and have variable vesting periods in order to encourage retention. The base salary, Bonus Plan and Stock Option Plan components of compensation will be implemented in accordance with the above-described policies, and will result in a compensation program that the Compensation Committee believes is fair, competitive, and in the best interests of the shareholders. By the Nominating and Compensation Committee: Benjamin R. Civiletti (Chairman) Richard H. Glanton Manuel J. Justiz (Resigned as of February 7, 2002) 15
AUDIT AND FINANCE COMMITTEE REPORT The Audit and Finance Committee of the Board of Directors of WCC met four times during 2001. All members of the Audit and Finance Committee are independent as independence is defined in the applicable standards of the New York Stock Exchange (the "NYSE"). The Audit and Finance Committee has adopted a written charter that sets forth its powers and duties. The Audit and Finance Committee reviews this Charter annually. In accordance with those powers and duties: 1. The Audit and Finance Committee has reviewed and discussed the audited financial statements for the fiscal year with management; 2. The Audit and Finance Committee has 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; 3. The Audit and Finance Committee has 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 accountant's independence; and 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 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. 5. The Audit and Finance Committee has reviewed all fees, both audit related and non-audit related, of the independent accountant and considers the provision of non-audit services to be compatible with the maintenance of the independent accountant's independence. 6. The Audit and Finance Committee has a written charter a copy of which is filed with the Securities and Exchange Commission as required. The Audit and Finance Committee reviews the Charter annually. 7. All members of the Audit and Finance Committee are independent as independence is defined in Section 303 of the NYSE's current listing standards. By the Audit and Finance Committee: John F. Ruffle (Chairman) (Resignation tendered effective May 2, 2002) Benjamin R. Civiletti Norman A. Carlson 16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN* WACKENHUT CORRECTIONS CORPORATION, WILSHIRE 5000 EQUITY, AND S&P SERVICES (COMMERCIAL AND CONSUMER) INDEXES (Performance through December 31, 2001) (PERFORMANCE GRAPH)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS SERVICES AGREEMENT. WCC and its Parent, TWC, entered into a services agreement (the "Services Agreement") on December 20, 1995, which became effective January 1, 1996, pursuant to which TWC agreed to continue to provide certain of these services to WCC. This agreement is being renewed on a year-to-year basis. In accordance with the terms of the Services Agreement, WCC paid TWC a fixed annual fee for services (the "Annual Services Fee") equal to $2,944,000 in fiscal 1999, $3,468,000 in fiscal 2000, and $2,831,000 in fiscal 2001. Management of WCC believes that the Annual Services Fees for services that will, or may be provided, under the Services Agreement are, or will be, on terms no less favorable to 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 TWC with a corresponding reduction in the Annual Services Fee. Under the Services Agreement, the services to be provided by TWC to WCC for the Annual Services Fee include the following: FINANCIAL, ACCOUNTING AND TAX SERVICES. Under the Services Agreement, TWC 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. HUMAN RESOURCES SERVICES. Under the Services Agreement, TWC provides WCC assistance in the identification and selection of employees and compliance by WCC with various equal employment opportunity and other employment related requirements. TWC also assists WCC in implementing and administering employee benefit plans which comply with applicable laws and regulations. INFORMATION TECHNOLOGY. Under the Services Agreement, TWC provides WCC with (i) training services, (ii) application development, (iii) telephone support for application users, (iv) configuration and development of personal computer support, (v) updates of application systems, (vi) design and execution of disaster recovery plans and (vii) telecommunications infrastructure and support. Any services provided by TWC to WCC beyond the services covered by the Annual Services Fees are billed to WCC at cost or on a cost plus basis as described in the Services Agreement or such other basis as WCC and TWC agree. The following table sets forth certain amounts billed to WCC during fiscal 1999, fiscal 2000, and fiscal 2001, for services not covered by the Annual Services Fee paid under the Services Agreement.
(3) Effective February 15, 1996, WCC entered into a 15-year agreement with TWC providing for the rental of approximately 14,672 square feet of office space at its corporate headquarters in Palm Beach Gardens, Florida, on terms which WCC believes to be no less favorable to WCC than could have been obtained from unaffiliated third parties. TWC also provides building services such as mailroom, reception and security as a component of the Services Agreement. The Services Agreement formerly contained certain provisions governing competition between WCC and TWC. On March 21, 2002, the Services Agreement was amended to eliminate these provisions, which have been superseded by provisions in the WCC Agreement. See "Agreement among WCC, TWC and Group 4 Falck A/S" below. AGREEMENT AMONG WCC, TWC AND GROUP 4 FALCK A/S. On March 8, 2002, TWC entered into an Agreement and Plan of Merger (the "Merger Agreement") with Group 4 Falck A/S, a corporation organized under the laws of Denmark ("Group 4 Falck"), and Milestone Acquisition Corporation, a Florida corporation and an indirect, wholly-owned subsidiary of Group 4 Falck ("Merger Sub"). Pursuant to the Merger Agreement, Group 4 Falck will, assuming the satisfaction or waiver of all conditions to the closing under the Merger Agreement, acquire all of the issued and outstanding capital stock of TWC through the merger (the "Merger") of Merger Sub with and into TWC. In connection with the Merger, WCC, TWC and Group 4 Falck entered into an agreement, dated March 8, 2002, that will govern certain aspects of their relationship following the consummation of the Merger (the "WCC Agreement"). The WCC Agreement provides, among other things, that (1) for a period of three years following the Merger, the board of directors of WCC will consist of nine members; five will be independent directors; two will be WCC officers; and two will be Group 4 Falck representatives, (2) during the one year period following the Merger, the Nominating and Compensation Committee of the WCC board of directors will consist of three members; two will be independent directors; and one will be a director nominated by Group 4 Falck, and (3) until such time as Group 4 Falck directly or indirectly owns less than 49% of WCC's outstanding common stock, (i) neither Group 4 Falck nor TWC will engage in the business of managing or operating prison, detention facility or mental health facility management businesses anywhere in the United States, and (ii) representatives of Group 4 Falck and TWC who serve on WCC's board of directors will not have access to certain proprietary, confidential information of WCC, its subsidiaries or affiliates. The WCC Agreement also requires that any purchases of WCC common stock by either TWC or Group 4 Falck during the three year period following the Merger be made only at a price approved by a majority of the independent directors of WCC. OTHER RELATIONSHIPS AND TRANSACTIONS From time to time, TWC 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. WCC from time to time uses the services of the law firm of Venable, Baetjer and Howard, of which Mr. Benjamin R. Civiletti, a Director Nominee of TWC, is a partner, and the law firm of Reed Smith Shaw & McClay LLP, of which Mr. Richard H. Glanton is a partner. The amounts paid for these services in fiscal year 2001 were not material. 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 TWC, and serves as a Director of Wackenhut Corrections Corporation Australia Pty Limited, Australasian Correctional Services Pty Limited, Australasian Correctional Management Pty Limited, Canadian Correctional Management Inc., WCC RE Holdings LLC., Atlantic Shores Healthcare Inc., and Wackenhut Corrections Corporation, N.V., affiliates of WCC. George R. Wackenhut, Chairman of the Board of WCC, is Chairman of the Board of TWC and, together with his wife Ruth J. Wackenhut, through trusts over which they have sole dispositive and voting power, controls approximately 50.05% of the issued and outstanding voting common stock of TWC. TWC owns all of the outstanding shares of Tuhnekcaw, Inc., a Delaware corporation that in turn owns approximately 57.20% of 19
issued and outstanding shares of Common Stock of WCC. Richard R. Wackenhut, a member of the Board of Directors of WCC, also serves as CEO, President and Vice Chairman of the Board of TWC. He is the son of George R. and Ruth J. Wackenhut. DIRECTORS' COMPENSATION Directors of WCC who are not officers were paid during fiscal year 2001 an annual retainer fee at the rate of $20,000 per year plus $1,500 for each Board Meeting attended, $1,000 for each committee meeting attended as committee members, and $1,500 for each committee meeting attended as committee chairperson. Each Director also receives from WCC an option to purchase up to two thousand (2,000) shares of the Common Stock of the Corporation. No other compensation was paid to Directors or their affiliates by WCC during 2001. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE All SEC Forms 3, 4 and 5 filings appear to have been made when due. PROPOSAL 2 TO APPOINT INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Although not required by the Bylaws or other applicable legal requirements, the Board of Directors, in the interest of accepted corporate practice, asks shareholders to ratify the action of the Board of Directors in appointing the firm of Arthur Andersen LLP to be the independent certified public accountants of WCC for the fiscal year 2002, and to perform such other services as may be requested. Arthur Andersen LLP has advised WCC that no partner or employee of Arthur Andersen LLP has any direct financial interest or any material indirect interest in WCC other than receiving payment for its services as independent certified public accountants. If the selection of Arthur Andersen LLP is ratified by our shareholders at the annual meeting, the Board in its discretion nevertheless may select and appoint a different independent accounting firm at any time. If the shareholders do not ratify the selection of Arthur Andersen LLP, the Audit and Finance Committee and the Board will reconsider the retention of that firm, but the Board would not be required to select another firm as independent public accountants and may nevertheless retain Arthur Andersen LLP. If the Board does select another firm to serve as WCC's independent public accountants, whether or not the shareholders have ratified the selection of Arthur Andersen LLP, the Board would not be required to call a special meeting of the shareholders to seek ratification of that new selection, and in all likelihood would not call a special meeting for that purpose. In all cases, the Board of Directors will make any determination as to the selection of WCC's independent public accountants in light of the best interests of WCC and its shareholders. SHAREHOLDER PROPOSAL DEADLINE Shareholder proposals intended to be presented at the year 2003 Annual Meeting of Shareholders must be received by WCC for inclusion in WCC's Proxy Statement and form of proxy relating to that meeting by November 26, 2002. Additionally, WCC must have notice of any shareholder proposal to be submitted at the 2003 Annual Meeting of Shareholders (but not required to be included in WCC's Proxy Statement) by February 14, 2003, or such proposal will be considered untimely pursuant to Rule 14a-5(e) under the Exchange Act and persons named in the proxies solicited by management may exercise discretionary voting authority with respect to such proposal. 20
OTHER MATTERS The Board of Directors knows of no other matters to come before the shareholders' meeting. However, if any other matters properly come before the meeting or any of its adjournments, the person or persons voting the proxies will vote them in accordance with their best judgment on such matters. BY ORDER OF THE BOARD OF DIRECTORS, /s/John J. Bulfin John J. Bulfin Senior Vice President, General Counsel and Corporate Secretary April 1, 2002 - -------------------------------------------------------------------------------- A COPY OF WCC'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 30, 2001, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, BUT EXCLUDING EXHIBITS THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE MADE AVAILABLE WITHOUT CHARGE TO INTERESTED SHAREHOLDERS UPON WRITTEN REQUEST TO MARGARET PEARSON, VICE PRESIDENT, CORPORATE & INVESTOR RELATIONS, WACKENHUT CORRECTIONS CORPORATION, 4200 WACKENHUT DRIVE, PALM BEACH GARDENS, FLORIDA, 33410-4243. 21
[ ] 1. ELECTION OF DIRECTORS: Nominees: 3. In their discretion, the Proxies are authorized 01 Wayne H. Calabrese 06 Richard R. Wackenhut to vote upon such other business as may 02 Norman A. Carlson 07 George C. Zoley properly come before the meeting. 03 Benjamin R. Civiletti 08 Philip L. Maslowe [ ] [ ] 04 Richard H. Glanton 09 G. Fred DiBona, Jr. 05 George 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. To ratify the appointment of Arthur Andersen LLP as independent certified [ ] [ ] [ ] public accountants of the Company. Date_______________________2002 ________________________________ Signature Please mark, sign date and return this Proxy card promptly using the enclosed envelope. - ---------------------------------------------------------------------------------------- VOTE BY TELEPHONE OR MAIL 24 HOURS A DAY, 7 DAYS A WEEK Telephone voting is available through 4PM Eastern Time the business day prior to annual meeting day. Telephone Mail 1-800-435-6710
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2. Please mark your votes as indicated in [ X ] this example 1. ELECTION OF DIRECTORS: VOTE FOR all nominees VOTE WITHHELD Nominees: 3. In their discretion, the listed to the right (except as as to all nominees. 01 Wayne H. Calabrese 06 Richard R. Wackenhut Proxies are authorized marked to the contrary). 02 Norman A. Carlson 07 George C. Zoley to vote upon such other [ ] [ ] 03 Benjamin R. Civiletti 08 Philip L. Maslowe business as may properly 04 Richard H. Glanton 09 G. Fred DiBona, Jr. come before the meeting. 05 George R. Wackenhut INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list above. FOR AGAINST ABSTAIN 2. To ratify the appointment of Arthur Andersen LLP as [ ] [ ] [ ] independent certified public accountants of the Company. Dated:_______________, 2002 ___________________________ Signature Please mark, sign, date and return this Proxy card promptly using the enclosed envelope. - ----------------------------------------------------------------------------------------- *FOLD AND DETACH HERE *
THIS VOTING INSTRUCTION FORM IS REQUESTED BY THE DREYFUS TRUST COMPANY IN CONJUNCTION WITH A PROXY ALLOCATION BY THE BOARD OF DIRECTORS OF WACKENHUT CORRECTIONS CORPORATION CONFIDENTIAL VOTING INSTRUCTION FORM TO: THE DREYFUS TRUST COMPANY AS TRUSTEES OF WACKENHUT CORRECTIONS EMPLOYEES' 401(K) AND RETIREMENT PLAN The undersigned hereby instructs The Dreyfus Trust Company, as Trustee of the Wackenhut Corrections Corporation, Employees' 401(k) and Retirement Plan, to vote in person or by Proxy at the Annual Meeting of Shareholders, to be held May 2, 2002 and at any postponements thereof, all shares of Common Stock of the Wackenhut Corrections Corporation, for which the undersigned shall be entitled to instruct, in the manner appointed on the other side hereof. The Dreyfus Trust Company will vote the shares represented by this Voting Instruction Form that is properly completed, signed, and received by The Dreyfus Trust Company before 5:00 p.m. EST on April 29, 2002. Please note that if this Voting Instruction Form is not properly completed and signed, or if it is not received by The Dreyfus Trust Company as indicated above, shares allocated to a participant's account will not be voted. The Dreyfus Trust Company makes no recommendation regarding any voting instruction. (Continued, and to be signed, on other side.) - ------------------------------------------------------------------------------- *FOLD AND DETACH HERE *