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ACCESSION NUMBER: 0000890566-99-000487
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19990512
FILED AS OF DATE: 19990409
COMPANY CONFORMED NAME: CORNELL CORRECTIONS INC
CENTRAL INDEX KEY: 0001016152
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-FACILITIES SUPPORT MANAGEMENT SERVICES 
IRS NUMBER: 760433642
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FORM TYPE: DEF 14A
SEC FILE NUMBER: 001-14472
FILM NUMBER: 99590258
STREET 1: 1700 WEST LOOP SOUTH
STREET 2: STE 1500
BUSINESS PHONE: 7136230790
STREET 1: 4801 WOODWAY
STREET 2: STE 400W
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
CORNELL CORRECTIONS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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: _______________________________________________________
CORNELL CORRECTIONS, INC.
1700 West Loop South, Suite 1500
Houston, Texas 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1999
To the Stockholders of
Cornell Corrections, Inc.:
Notice is hereby given that the annual meeting of stockholders (the
“Annual Meeting”) of Cornell Corrections, Inc. will be held at Ritz Carlton
Chicago, 160 East Pearson Street, Chicago, Illinois 60611, at 10:00 a.m.,
Central time, on Wednesday, May 12, 1999, for the following purposes:
1. To elect five directors to the Board of Directors.
2. To approve the appointment of Arthur Andersen LLP as independent
public accountants for 1999.
3. To transact such other business as may properly come before the
Annual Meeting, or any adjournment or adjournments thereof.
Stockholders of record at the close of business on April 6, 1999 will be
entitled to notice of and to vote at the Annual Meeting, or any adjournment or
adjournments thereof. You are cordially invited to attend the Annual Meeting in
person. Even if you plan to attend the Annual Meeting, you are requested to
mark, sign, date and mail promptly the enclosed proxy for which a return
envelope is provided.
By Order of the Board of Directors
Kevin B. Kelly, SECRETARY
April 8, 1999
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED
TO MARK, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY. IF YOU ATTEND THE
ANNUAL MEETING, YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
CORNELL CORRECTIONS, INC.
1700 West Loop South, Suite 1500
Houston, Texas 77027
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement and accompanying proxy card are furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Cornell Corrections, Inc., a Delaware corporation (“Cornell” or the
“Company”), for use at the annual meeting of stockholders to be held on
Wednesday, May 12, 1999, at Ritz Carlton Chicago, 160 East Pearson Street,
Chicago, Illinois 60611, at 10:00 a.m., Central time, or at any adjournment or
adjournments thereof (such meeting or adjournment(s) thereof referred to as the
“Annual Meeting”). Copies of the Proxy Statement and the accompanying proxy
card are being mailed to stockholders on or about April 8, 1999.
In addition to solicitation by mail, solicitation of proxies may be made by
personal interview, special letter, telephone or telecopy by regular employees
of the Company. Brokerage firms will be requested to forward proxy materials to
beneficial owners of shares registered in their names and will be reimbursed for
their reasonable expenses. The cost of solicitation of proxies will be paid by
A proxy received by the Board of Directors of the Company may be revoked by
the stockholder giving the proxy at any time before it is exercised. A
stockholder may revoke a proxy by notification in writing to the Company at 1700
West Loop South, Suite 1500, Houston, Texas 77027, Attention: Corporate
Secretary. A proxy may also be revoked by execution of a proxy bearing a later
date or by attendance at the Annual Meeting and voting by ballot. A proxy in the
form accompanying this Proxy Statement, when properly executed and returned,
will be voted in accordance with the instructions contained therein. A proxy
received by management which does not withhold authority to vote or on which no
specification has been indicated will be voted FOR the election as directors of
the nominees listed therein, FOR the other proposals set forth in this Proxy
Statement, and in the discretion of the persons named in the proxy in connection
with any other business that may properly come before the Annual Meeting. A
majority of the outstanding shares will constitute a quorum at the Annual
Meeting. Information regarding the vote required for approval of particular
matters is set forth in the discussion of those matters appearing elsewhere in
this Proxy Statement. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
COMMON STOCK OUTSTANDING AND PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on April 6, 1999, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting. At that date there were outstanding 9,585,800
shares of common stock, par value $0.001 per share (“Common Stock”), of the
Company and the holders thereof will be entitled to one vote for each share of
Common Stock held of record by them on that date for each proposal to be
presented at the Annual Meeting.
The following table sets forth information with respect to the shares of
Common Stock (the only outstanding class of voting securities of the Company)
owned of record and beneficially as of April 6, 1999, unless otherwise
specified, by (i) all persons known to possess voting or dispositive power over
5% of the Common Stock, (ii) each director and named executive officer, and
(iii) all directors and executive officers of the Company as a group:
* Less than 1.0%.
(1) Shares of Common Stock listed include shares subject to stock options
exercisable within 60 days (12,600 for Mr. Bergeron, 128,124 for Mr.
Cornell, 13,250 for Mr. Griffin, 5,000 for Mr. Leidel, 4,000 for Ms.
Lissner, 149,374 for Mr. Logan, 13,250 for Mr. Taylor, 19,000 for Mr. Wiebe,
and 344,598 for all the above as a group).
(2) Based on a filing made with the SEC reflecting ownership of Common Stock as
of December 31, 1998. The filing indicates shared voting and dispositive
power for 895,700 shares of Common Stock.
(3) Based on a joint filing made with the SEC reflecting ownership of Common
Stock as of December 31, 1998. The filing was made by the following: The
Equitable Companies Incorporated (the “Equitable Companies”), which is the
general partner of Alliance Capital Management L.P.; AXA-UAP, which
beneficially owns a majority interest in the Equitable Companies; and Alpha
Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, and AXA Courtage Assurance Mutuelle, as a group which
beneficially owns a majority interest in AXA-UAP. The filing indicates sole
voting power for 708,600 shares of Common Stock, shared voting power for
156,500 shares of Common Stock and sole dispositive power for 869,700 shares
of Common Stock.
(4) Based on a filing made with the SEC reflecting ownership of Common Stock as
of December 31, 1998. The filing indicates shared voting power for 539,100
shares of Common Stock and shared dispositive power for 719,196 shares of
(5) Based on a filing made with the SEC reflecting ownership of Common Stock as
of December 31, 1998. The filing indicates sole voting power for 315,300
shares of Common, shared voting power for 7,300 shares of Common Stock and
sole dispositive power for 495,500 shares of Common Stock.
(6) Based on a filing made with the SEC reflecting ownership of Common Stock as
of December 31, 1998. The filing indicates sole voting power for 511,987
shares of Common Stock and sole dispositive power for 423,322 shares of
Common Stock. Includes 88,665 shares over which Jane B. Cornell, the former
wife of David M. Cornell, has sole dispositive power and, pursuant to a
voting agreement, over which Mr. Cornell has sole voting power.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), requires the Company’s directors and executive officers to
file with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock. Based solely on a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all its directors and executive officers during 1998
complied on a timely basis with all applicable filing requirements under Section
16(a) of the Exchange Act, except that Ms. Lissner and Mr. Taylor, directors of
the Company, did not timely file a Form 4.
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting. Each nominee is
currently a director of the Company. The persons named as proxy holders in the
accompanying proxy intend to vote each properly signed and submitted proxy FOR
the election as a director of each of the persons named as a nominee below under
“Nominees for Director” unless authority to vote in the election of directors
is withheld on such proxy. The directors will be elected to hold office until
the next annual meeting of stockholders or until their successors are elected
and qualified. If, for any reason, at the time of the election one or more of
the nominees should be unable to serve, the proxy will be voted for a substitute
nominee or nominees selected by the Board of Directors. In accordance with the
Company’s Amended and Restated Bylaws, the directors will be elected by a
plurality of votes cast at the Annual Meeting.
THE COMPANY RECOMMENDS VOTING “FOR” THE NOMINEES.
NOMINEES FOR DIRECTOR
The following table sets forth the name, age and principal position of each
nominee for director:
DAVID M. CORNELL has been a director of the Company and the Chairman,
President and Chief Executive Officer of the Company since its founding.
CAMPBELL A. GRIFFIN, JR. has been a director of the Company since October
1996 and is currently managing personal investments. Mr. Griffin joined the law
firm of Vinson & Elkins L.L.P. in 1957 and was a partner from 1968 to 1992. He
was a member of the Management Committee of Vinson & Elkins L.L.P. from 1981 to
1990 and the Managing Partner of the Dallas office from 1986 to 1989. From 1991
to 1993, Mr. Griffin served as an Adjunct Professor of Administrative Science at
William Marsh Rice University and, from 1993 to 1995, he was a Councilman for
the City of Hunters Creek Village.
PETER A. LEIDEL has been a director of the Company and its predecessor
since May 1991. Mr. Leidel is founder and Managing Director of Yorktown Partners
LLC, and a partner of Ticonderoga Capital, both of which manage private
investment funds. In September 1997, Mr. Leidel resigned as Senior Vice
President of Dillon Read & Co, Inc. (a predecessor of SBC Warburg Dillon Read,
Inc.) where he worked since 1983 managing private investment funds. Mr. Leidel
is a director of Willbros Group, Inc. and five private companies.
ARLENE R. LISSNER has been a director of the Company since September 1997
when the Company acquired Abraxas, and is President of Abraxas Group, Inc., a
wholly-owned subsidiary of the Company.
Ms. Lissner founded Abraxas in 1973, where she served as President and Chief
Executive Officer until 1977, at which time she left that position to become
Chairperson of the Board of Directors of Abraxas. Ms. Lissner resumed her role
as President and Chief Executive Officer of Abraxas from April 1996 through
TUCKER TAYLOR has been a director of the Company since October 1996. Mr.
Taylor, an advisor to the health care and corrections industries, joined Medical
Care International as Executive Vice President in 1992, and remained with
Columbia/HCA through 1997 following its acquisition of Medical Care
International. Prior thereto, he was a marketing and planning consultant. Mr.
Taylor is also a director of SuperShuttle, a privately held ground
transportation company, and Alta Healthcare Systems, a privately held hospital
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and Compensation Committee,
the members of which are not employees of the Company. The Audit Committee,
which is composed of Tucker Taylor and Campbell A. Griffin, Jr., held four
meetings during the last fiscal year. The Audit Committee recommends the
appointment of independent public accountants to conduct audits of the Company’s
financial statements, reviews with the independent accountants the plan and
results of the auditing engagement, approves other professional services
provided by the independent accountants and evaluates the independence of the
accountants. The Audit Committee also reviews the adequacy of the Company’s
system of internal accounting controls.
The Compensation Committee, which is composed of Peter A. Leidel and Tucker
Taylor, held three meetings during the last fiscal year. Richard T. Henshaw III
resigned from the Compensation Committee on October 15, 1998, and resigned from
the Board on December 31, 1998. Mr. Taylor became a member of the Compensation
Committee on October 15, 1998. The Compensation Committee approves, or in some
cases recommends to the Board, remuneration arrangements and compensation plans
involving the Company’s directors, executive officers and certain other
employees whose compensation exceeds specified levels. The Compensation
Committee also acts on the granting of stock options, including those under the
Company’s Amended and Restated 1996 Stock Option Plan (the “1996 Plan”). The
Board does not have a standing nominating committee or other committee
performing a similar function.
During 1998, the Board of Directors held eleven meetings. During 1998, all
members of the Board of Directors attended at least 75% of the total of all
Board meetings and applicable committee meetings.
Mr. Cornell and Ms. Lissner do not receive compensation for serving as
directors. Mr. Griffin, Mr. Leidel and Mr. Taylor receive an annual fee of
$5,000, a fee of $1,000 for attendance at each Board of Directors meeting and a
fee of $500 for attendance at each committee meeting (unless held on the same
day as a Board of Directors meeting). Mr. Griffin and Mr. Taylor also were
granted by the Company in October 1996 nonqualified options to purchase 15,000
shares of Common Stock under the 1996 Plan and Mr. Leidel was granted by the
Company in February 1998 nonqualified options to purchase 15,000 shares of
Common Stock under the 1996 Plan. The options to Messrs. Griffin, Leidel and
Taylor vested 25% on the date of the grant and the remainder vest ratably over
three years with a term of 10 years and have a per share exercise price equal to
the market value of a share of Common Stock on the date of the grant.
Additionally, Messrs. Griffin, Leidel and Taylor were each granted in January
1999 nonqualified options to purchase 2,000 shares of Common Stock under the
1996 Plan. These options vested 100% on the date of the grant with a term of 10
years and have a per share exercise price equal to the market value of a share
of Common Stock on December 31, 1998. All directors are reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or committees thereof and for other expenses incurred in their capacity as
EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES
The following table sets forth the names, ages and positions of the persons
who are not directors and who are executive officers and other key employees of
STEVEN W. LOGAN has been Executive Vice President of the Company since
April 1998 and was Chief Operating Officer from April 1998 through December
1998. Previously, Mr. Logan served as Senior Vice President of the Company from
November 1997 to April 1998, and Chief Financial Officer, Treasurer and
Secretary of the Company from 1993 to April 1998. From 1984 to 1993, Mr. Logan
served in various positions with Arthur Andersen LLP, Houston, most recently as
an Experienced Manager. Mr. Logan is a Certified Public Accountant.
THOMAS R. JENKINS has been Chief Operating Officer of the Company since
January 1999 and previously served as Vice President, Juvenile since September
1997. From November 1995 through September 1997 he served as Vice
President — Operations of Abraxas. From 1973 through November 1995, Mr. Jenkins
served with the Department of Public Welfare, Commonwealth of Pennsylvania in
various capacities ranging from Director of various juvenile facilities to
Director of the Pennsylvania Child Welfare Services.
MARVIN H. WIEBE, JR. has been Senior Vice President of the Company since
November 1997 and Vice President of the Company since the Company acquired
Eclectic Communications, Inc. (“Eclectic”) in 1994. He was previously Vice
President — Administration and Finance, Vice President — Secure Detention and
Chief Financial Officer of Eclectic, where he was employed for 11 years. Mr.
Wiebe has served as President of the International Community Corrections
Association (“ICCA”) and as an auditor for the American Correctional
Association (“ACA”) Commission on Accreditation for Corrections and is a
member of the ICCA, the California Probation Parole & Correctional Association
and the ACA.
BRIAN E. BERGERON has been Chief Financial Officer and Treasurer of the
Company since April 1998. Mr. Bergeron previously served as the Director of
Acquisition Development since joining the Company in August 1997. From 1996 to
1997, Mr. Bergeron served as the Director of Financial Reporting for Randall’s
Food Markets, Inc. in Houston, Texas. From 1992 to 1996, Mr. Bergeron served in
various audit positions for Arthur Andersen LLP, Houston, and from 1990 to 1992
he served as Credit Analyst for First City National Bank in Houston, Texas. Mr.
Bergeron is a Certified Public Accountant.
GARY L. HENMAN has been Vice President, Secure Institutional since October
1998 and National Director of Quality Assurance since June 1998. He was
previously an associate professor at Louisiana State University from 1997 to
September 1998. From 1973 to 1997, Mr. Henman was with the Federal Bureau of
Prisons (“FBOP”), progressing to Deputy Regional Director and Warden of five
facilities, including the United States Penitentiaries at Leavenworth, Kansas
and Marion, Illinois. Mr. Henman was Chairman of both the FBOP High Security
Facility Task Force and the FBOP Task Force on Vocational Training.
JOHN C. GODLESKY has been Vice President, Juvenile since January 1999. He
previously served as Director, Division of Residential Programs of Abraxas from
June 1993 to December 1998, and was responsible for the overall development,
direction and management of Abraxas’ juvenile residential programs.
LAURA J. SHOL has served as Vice President, Pre-Release since November
1997, and was the Company’s Managing Director of Pre-Release Centers since May
1997. She previously served as Director
of Community Corrections of the Company from June 1996 through May 1997, and was
Senior Regional Administrator of Eclectic from 1986 to June 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 1998, the Company had notes and accrued interest receivable
from Mr. Cornell and Mr. Logan in the amounts of $613,630 and $299,393,
respectively. Interest on the notes, which were incurred upon the exercise of
stock options and in connection with other personal matters, is charged annually
at a rate of 6.63% and the notes mature on July 8, 2000.
In September 1997, in connection with the acquisition of Abraxas, the
Company entered into a Covenant Not to Compete Agreement with Ms. Lissner
pursuant to which she agreed for a period of 20 years not to: (i) engage in any
business in competition with any business operation of the Company or its
affiliates; (ii) request that any customer or supplier of the Company or any of
its affiliates curtail or cancel its business with the Company or any such
affiliate; or (iii) induce or attempt to influence any employee of the Company
or any of its affiliates to terminate his or her employment with the Company or
any such affiliate, or hire or retain the services of any such employee. In
consideration of Ms. Lissner’s agreements, the Company agreed to pay Ms. Lissner
10 annual installments of $60,000 each beginning on January 2, 1998. Such
payments may be accelerated upon the mutual agreement of Ms. Lissner and the
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for all
decisions regarding compensation for the Company’s executive officers. The
Compensation Committee is composed of Peter A. Leidel and Tucker Taylor, both
independent non-employee directors.
The Company’s executive compensation program is focused on stockholder
value, the overall performance of the Company, success of the Company as
impacted by the executive’s performance and the performance of the individual
The Compensation Committee’s objective is to provide competitive levels of
compensation to the Company’s executive officers that are integrated with the
Company’s annual long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements and assist the
Company in attracting and retaining qualified executives. The compensation
policies and programs utilized by the Compensation Committee and endorsed by the
Board of Directors generally consists of the following:
(i) Recommend executive officer total compensation in relation to
(ii) Provide a competitive compensation program in order to attract,
motivate, and retain qualified personnel;
(iii) Provide a management tool for focusing and directing the energies
of key executives toward achieving individual and corporate
(iv) Provide long-term incentive compensation in the form of annual
stock option awards and performance-based stock option awards to
link individual success to that of the Company.
The Company’s executive compensation consists of three key components: base
salary, annual incentive compensation in the form of cash bonuses, and stock
options, each of which is intended to complement the others and, taken together,
to satisfy the Company’s compensation objectives. The Compensation Committee’s
policies with respect to each of the three components are discussed below.
BASE SALARY. Each fiscal year the Compensation Committee, along with the
CEO, reviews and approves an annual salary plan for the Company’s executive
officers. This salary plan is developed by the CEO. Many factors are included in
determining base salaries, such as the responsibilities borne by the executive
officer, the scope of the position, length of service with the Company and
corporate and individual performance.
CASH BONUSES. The Compensation Committee provides annual incentives to the
Company’s executive officers in the form of cash bonuses. These bonuses are
discretionary and are based on (i) the relative success of the Company in
attaining certain financial objectives and the individual’s contribution to the
achievement of those financial objectives, and (ii) certain subjective factors
as established from time to time by the Compensation Committee.
STOCK OPTIONS. The primary objective of the stock option program is to
link the interests of the Company’s executive officers and other selected
employees to the stockholders through significant annual grants of stock
options. The Company’s existing 1996 Plan authorizes the issuance of both
incentive and non-qualified stock options to officers and key employees of the
Company. Subject to general limits prescribed by the 1996 Plan, the Compensation
Committee has the authority to determine the individuals to whom stock options
are awarded, the terms of the options and the number of shares subject to each
option. The size of any particular stock option award is based upon position and
the individual performance during the related evaluation period.
CHIEF EXECUTIVE OFFICER’S COMPENSATION. The Compensation Committee’s basis
for compensation of the CEO is derived from the same considerations addressed
above. Mr. Cornell participates in the same executive compensation plans
available to the other executive officers. In July 1998, the Compensation
Committee increased the salary of Mr. Cornell by 43% to $330,000, and in January
1999, the Compensation Committee increased the salary of Mr. Cornell by 14% to
$375,000. The compensation levels established for Mr. Cornell were in response
to the Compensation Committee’s assessment of (i) the Company’s $6.1 million of
net earnings in 1998, (ii) record revenue growth, which increased by
approximately 75% compared to 1997, (iii) the Company’s success in acquiring and
integrating certain competitors and (iv) the Compensation Committee’s continued
recognition of Mr. Cornell’s leadership of the Company.
Submitted by the Compensation Committee of the Company’s Board of
Peter A. Leidel, Chairman
Tucker Taylor, Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board are Messrs. Leidel
and Taylor, both of whom are non-employee directors. Mr. Leidel was formerly a
Senior Vice President of Dillon Read & Co., Inc. whose successor, SBC Warburg
Dillon Read, Inc., performed investment banking services for the Company in 1997
for which it received customary fees.
The following table sets forth compensation information for the chief
executive officer and the four other most highly compensated executive officers
(the “named executive officers”) of the Company during the Company’s fiscal
years 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
(1) Amounts in 1998 for Messrs. Cornell, Logan, Wiebe, Ms. Lissner and Mr.
Bergeron include (i) the Company’s 401(k) matching contributions of $4,500,
$4,500, $4,500 $3,678 and $2,438, respectively, and (ii) group term life
insurance premiums of $2,808, $264, $1,177, $1,963, and $167, respectively.
(2) Excludes $50,750, $53,750 and $56,750 representing Mr. Wiebe’s portion of an
annual fixed installment payment in 1998, 1997 and 1996, respectively,
relating to an acquisition by the Company in 1994.
(3) Ms. Lissner became President of Abraxas Group, Inc. on September 9, 1997.
(4) Mr. Bergeron joined the Company in August 1997.
The following table presents information regarding options granted to each
of the named executive officers in 1998.
OPTION GRANTS IN 1998
(1) The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. Actual gains realized, if any, on stock
option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the values shown in this table will be achieved.
(2) Represents a single grant of options on January 6, 1998 which are
exercisable in five equal annual installments beginning January 6, 1999.
(3) Represents a single grant of options on April 9, 1998 for Messrs. Cornell,
Logan and Wiebe, and on June 25, 1998 for Mr. Bergeron. These options vest
88 months from the date of grant; however, early vesting can occur on the
attainment of certain performance objectives. An amount equal to 25% of the
options vests upon the Company achieving revenues of $200 million over any
period of 12 consecutive months; 25% upon the Company achieving earnings per
share of $1.00 in any period of 12 consecutive months; 25% upon the Company
achieving an average stock price of $25.00 per share for any 90 consecutive
trading days; and 25% upon the Company achieving a 12% return on equity over
any period of 12 consecutive months.
(4) Represents a single grant of options on April 9, 1998 which are exercisable
in five equal installments beginning April 9, 1999.
The following table presents information regarding options exercised in
1998 and the value of options outstanding at December 31, 1998 for each of the
named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
(1) The excess, if any, of the market value of Common Stock at December 31, 1998
($19.00) over the option exercise price(s).
(2) All of these options become immediately exercisable upon a change in control
of the Company.
The following performance graph compares the cumulative total stockholder
return on the Common Stock to the cumulative total returns of the Russell 2000
Stock Index and the Company’s peer group since the date the Common Stock began
trading on the American Stock Exchange (October 3, 1996) and on the New York
Stock Exchange beginning December 10, 1998. The graph assumes that the value of
the investment in the Common Stock and each index was $100 as of October 3, 1996
and that all dividends were reinvested on a quarterly basis.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
TOTAL RETURN ANALYSIS
10/3/1996 12/31/1996 12/31/1997 12/31/1998
Cornell Corrections…. $100.00 $ 72.45 $169.59 $155.29
Peer Group…………. $100.00 $ 97.70 $118.65 $ 82.54
Russell 2000……….. $100.00 $104.85 $127.46 $124.61
(1) The Company’s 1998 peer group consists of the following companies:
Corrections Corporation of America, Wackenhut Corrections Corporation,
Correctional Services Corporation, Youth Services International, Inc., and
Children’s Comprehensive Services, Inc.
In September 1997, Abraxas Group, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company, and the Company entered into an
employment agreement with Arlene R. Lissner pursuant to which Ms. Lissner agreed
to serve as President of Abraxas Group, Inc. As compensation for her services,
Abraxas Group, Inc. agreed to pay Ms. Lissner an annual salary of at least
$125,000 for a period of three years. The Company is a party to the employment
agreement solely to guarantee the performance of Abraxas Group, Inc.’s
PROPOSAL NO. 2 — APPROVAL OF APPOINTMENT OF INDEPENDENT
The Board of Directors, upon recommendation of its Audit Committee, has
approved and recommends the appointment of Arthur Andersen LLP as independent
public accountants to conduct an audit of the Company’s financial statements for
the year 1999. This firm has acted as independent public accountants for the
Company since 1992.
Members of Arthur Andersen LLP will attend the Annual Meeting and will be
available to respond to questions which may be asked by stockholders. Such
members will also have an opportunity to make a statement at the Annual Meeting
if they desire to do so.
The Board of Directors recommends that stockholders approve the appointment
of Arthur Andersen LLP as the Company’s independent public accountants. In
accordance with the Company’s Amended and Restated Bylaws, approval of the
appointment of independent public accountants will require the affirmative vote
of a majority of the shares of Common Stock voted on the matter. Accordingly,
abstentions and broker non-votes applicable to shares present at the Annual
Meeting will not be included in the tabulation of votes cast on this proposal.
THE COMPANY RECOMMENDS VOTING “FOR” PROPOSAL NO. 2.
PROPOSALS, NOMINATIONS AND OTHER BUSINESS FOR NEXT ANNUAL MEETING
The Board of Directors knows of no other matters than those described above
which are likely to come before the Annual Meeting. If any other matters
properly come before the Annual Meeting, persons named in the accompanying form
of proxy intend to vote such proxy in accordance with their best judgment on
Any proposals of holders of Common Stock of the Company intended to be
presented at the annual meeting of stockholders of the Company to be held in
2000 must be received by the Company, addressed to the Secretary of the Company,
1700 West Loop South, Suite 1500, Houston, Texas 77027, no later than December
9, 1999, to be included in the proxy statement relating to that meeting.
Any holder of Common Stock of the Company desiring to bring business before
the 2000 annual meeting of stockholders in a form other than a stockholder
proposal in accordance with the preceding paragraph must give written notice
that is received by the Company, addressed to the Secretary of the Company, 1700
West Loop South, Suite 1500, Houston, Texas 77027, no later than March 23, 2000.
The written notice must comply with the provisions of the Company’s Amended and
Restated Bylaws summarized below.
The Company’s Amended and Restated Bylaws provide that, for business to be
properly brought before a stockholder meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Company. To be timely, a stockholder’s notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not less than 50
days prior to the meeting; provided, however, that in the event that less than
55 days’ notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder to be timely must be received
no later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the meeting was mailed or such public
disclosure was made. A stockholder’s notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and address,
as they appear on the Company’s books, of the stockholder proposing such
business, (c) the class and number of shares of the Company which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business.
By Order of the Board of Directors
Kevin B. Kelly, SECRETARY
April 8, 1999
THE COMPANY WILL FURNISH WITHOUT CHARGE ADDITIONAL COPIES OF ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 TO INTERESTED
SECURITY HOLDERS ON REQUEST. THE COMPANY WILL FURNISH TO ANY SUCH PERSON ANY
EXHIBITS DESCRIBED IN THE LIST ACCOMPANYING SUCH REPORT UPON PAYMENT OF
REASONABLE FEES RELATING TO THE COMPANY’S FURNISHING SUCH EXHIBITS. REQUESTS FOR
COPIES SHOULD BE DIRECTED TO THE SECRETARY AT THE COMPANY’S ADDRESS PREVIOUSLY
FRONT SIDE OF PROXY
PROXY CORNELL CORRECTIONS, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Cornell Corrections, Inc. (the
“Company”) hereby appoints David M. Cornell and Steven W. Logan, and each of
them, attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to vote in respect of the undersigned’s shares of the Company’s
Common Stock at the Annual Meeting of Stockholders of the Company to be held at
the Ritz Carlton Chicago, 160 East Pearson Street, Chicago, Illinois 60611, at
10:00 a.m., Central time, on Wednesday, May 12, 1999, and at any adjournment(s)
thereof, the number of shares the undersigned would be entitled to vote if
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE NOMINEES SET FORTH
BELOW AND “FOR” PROPOSAL 2 BELOW.
PROPOSAL 1: ELECTION OF [ ] FOR the nominees listed [ ] WITHHOLD AUTHORITY to
DIRECTORS below (except as marked vote for the nominees
to the contrary below) listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE’S NAME IN THE LIST BELOW.)
David M. Cornell Peter A. Leidel
Campbell A. Griffin, Jr. Arlene R. Lissner
PROPOSAL 2: TO RATIFY THE APPOINTMENT OF ARTHUR FOR AGAINST ABSTAIN
ANDERSEN LLP AS THE COMPANY’S [ ] [ ] [ ]
INDEPENDENT PUBLIC ACCOUNTANTS FOR 1999
BACK SIDE OF PROXY
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder(s).
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE DIRECTOR NOMINEES
SET FORTH ON THE REVERSE SIDE AND “FOR” PROPOSAL 2. All prior proxies are
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE PROXY CARD USING THE
Dated _________________________ , 1999
(PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, ETC., GIVE FULL
TITLE AS SUCH. FOR JOINT ACCOUNTS, EACH
JOINT OWNER SHOULD SIGN.)
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