DEF 14A of CoreCivic, Inc.
Filed Mar 28, 2024 · FY20230001140361-24-015814
Corporate Governance
| • | reviewing and revising our current peer group; and |
Corporate Governance
relationship to the Company and interest (direct or indirect) in the transaction, the terms of the transaction, the availability of other sources of comparable products or services and the benefits to the Company of the transaction. No director is to participate in the approval of an Interested Transaction for which he or she is a Related Party or otherwise has a direct or indirect interest. In addition, our Audit Committee is to review and assess ongoing Interested Transactions, if any, on at least an annual basis to determine whether such transactions, if any, remain appropriate or should be modified or terminated. Stock Ownership Guidelines We maintain stock ownership guidelines for our executive officers and non-executive directors because we believe it is important to align the interests of our management and our Board with the interests of our stockholders. The guidelines are discussed in detail under the headings Executive and Director Compensation—Guidelines and Policies—Executive Officer Stock Ownership Guidelines and Executive and Director Compensation—Director Compensation—Director Stock Ownership Guidelines in this Proxy Statement and are accessible on our website, www.corecivic.com (under the “Corporate Governance” section of the Investors page). No Hedging or Pledging Permitted Our insider trading guidelines include provisions that prohibit members of our Board, executive officers, other officers, and employees from engaging in hedging or pledging transactions involving Company securities. Generally prohibited practices include purchasing or selling derivative securities, such as exchange-traded put or call options as well as participating in individually arranged derivative transactions. Directors, executive officers, other officers, and employees are also generally prohibited from participating in long-term forward sales or monetization transactions that are used to hedge an ownership position in the Company’s securities. None of the members of our Board or our executive officers are engaged in any hedging or pledging transactions involving Company securities. Compensation Clawback Clawback Policy for Directors, Officers, and Employees In December 2022, our Board adopted a recoupment policy (the “Clawback Policy”) requiring that, in certain circumstances, the directors, officers and employees of the Company may be required to reimburse the Company for any bonus or incentive compensation awarded to such director, officer or employee. In addition, the Clawback Policy may result in our Board effectuating the cancellation of unvested restricted stock or outstanding stock option awards previously granted to such director, officer or employee in the amount to be determined by the Board. The circumstances triggering this recoupment require a determination by the Board, or an appropriate committee of the Board, that any fraud, illegal act, or intentional misconduct by any director, officer or employee caused, directly or indirectly, the occurrence of an Adverse Event.(1) Executive Compensation Recoupment Policy In 2023, in accordance with the listing standards of the NYSE, our Board adopted the CoreCivic, Inc. NYSE Executive Compensation Recoupment Policy (the “Recoupment Policy”). The Recoupment Policy, which applies to current and former executive officers, provides for the mandatory recoupment of erroneously awarded incentive-based compensation in the event of an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The Recoupment Policy provides that promptly following such an accounting restatement, the Compensation Committee will determine the amount of the erroneously awarded compensation, which is the excess of the amount of incentive-based compensation received by current and former executive officers that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts, computed without regard to any taxes paid. Subject to certain exceptions in the Recoupment Policy, the Company will reasonably promptly require the recoupment of such erroneously awarded compensation from the applicable current and former executive officers. The Recoupment Policy provides that the Compensation Committee may determine, in its sole discretion, the method(s) for recouping any erroneously awarded incentive compensation, which may include taking any remedial and recovery actions permitted by applicable legal requirements and the rules and regulations of the NYSE, as determined by the Compensation Committee.
Corporate Governance
| • | The financial and strategic business goals (“Strategic Business Goals”) used for determining payouts under our incentive compensation plans are aligned with our near-term and long-term operating and strategic growth plans, and are established at challenging, but appropriate, levels that do not encourage unnecessary or excessive risk taking. |
Corporate Governance
| • | We use restricted stock units (“RSUs”) rather than stock options for equity awards because, unlike options, RSUs retain value even in a depressed market. |
Corporate Governance
| • | Performance-based vesting over multiple years for our long-term equity incentive awards, along with a modifier based on total shareholder return, promotes the alignment of our executives’ interests with those of our stockholders for the long-term performance of the Company. |
Corporate Governance
| • | Time-based vesting RSUs and establishing minimum performance thresholds for performance-vesting awards that result in some compensation at levels below full target achievement, rather than an “all-or-nothing” approach, and more than targeted levels of compensation at higher levels of performance. |
Election of Directors
Election of Directors Our Board reflects a diverse, highly engaged group of directors with a wide range of relevant experience. The following matrix provides information about each of our incumbent director nominees, including certain types of knowledge, skills, experiences, and attributes possessed by one or more of our directors, which our Board believes are relevant to our business and operations. The matrix does not encompass all the knowledge, skill, experience, or attributes of our directors and does not suggest that a director who is not listed as having any particular knowledge, skill, experience, or attribute is unable to contribute to the decision-making process in such area. No individual knowledge, skill, experience, or attribute is solely dispositive of becoming a member of our Board. The matrix does not include information about Donna M. Alvarado, who is not standing for re-election at the virtual Annual Meeting.
Election of Directors
| | Emkes | Dennis | Fischer | Hernandez-Blades | Hininger | Hylton | Lappin | Mariucci | Marshall | Murphy | Prann | | Knowledge, Skills, and Experience | | | | | | | | | | | | | Public Company Board Experience | • | • | • | | • | • | • | • | • | • | • | | Financial | • | • | • | | • | • | | • | | • | • | | Risk Management | • | • | • | | • | • | • | • | • | • | • | | Accounting | | • | | | • | | | • | | • | • | | Corporate Governance | • | • | • | | • | | | • | • | • | • | | HR/Compensation | • | • | | | • | | | • | | • | • | | Executive Experience | • | • | • | • | • | • | • | • | | • | • | | Operations | • | • | • | | • | • | • | | | • | | | Strategic Planning | • | • | • | • | • | • | • | • | • | • | • | | Government/Regulatory | • | | • | | • | • | • | • | • | | | | Rehabilitation and Corrections | | | | | • | • | • | | | | | | Human Rights | • | • | | | • | • | • | | • | | | | Cybersecurity | | | | | | • | | | • | | | | Climate | | | | | | | | • | • | | | | ESG | | | • | • | | | | • | • | | |
Election of Directors
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Election of Directors
| | Emkes | Dennis | Fischer | Hernandez-Blades | Hininger | Hylton | Lappin | Mariucci | Marshall | Murphy | Prann | | Demographics | | | | | | | | | | | | | Race/Ethnicity | | | | | | | | | | | | | Black/African American | | | | | | | | | • | | | | Hispanic/Latino | | | | • | | | | | | | | | White/Caucasian | • | • | • | | • | • | • | • | | • | • | | Gender | | | | | | | | | | | | | Female | | | | • | | • | | • | | | | | Male | • | • | • | | • | | • | | • | • | • |
Election of Directors
The current term of office of each of our directors expires at the virtual Annual Meeting. Our Board has nominated the following eleven nominees, all of whom are incumbent directors, for election to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. We expect each of the eleven nominees to serve if elected. If any of them becomes unavailable to serve as a director, our Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by our Board. The general criteria considered by our Nominating and Governance Committee with respect to director nominees are discussed beginning on page 14 of this Proxy Statement under the heading Corporate Governance – Board Meetings and Committees – Nominating and Governance Committee. Based on the evaluation of those criteria, our Nominating and Governance Committee and Board believe each nominee contributes relevant skills, expertise, and experience to our Board, and that the group of nominees collectively has the skills, expertise, experience, independence, diversity, and other attributes necessary to effectively discharge our Board’s oversight responsibilities on behalf of our stockholders. DIRECTOR COMMITMENTS The Board believes that all members of the Board should devote sufficient time and attention to their duties and to otherwise fulfill the responsibilities required of directors. In assessing whether directors and director nominees have sufficient time and attention to devote to board duties, the Nominating and Governance Committee and the Board consider whether directors serve on an excessive number of public company boards, a situation frequently referred to as “overboarding.” Our Board believes that each of our directors has demonstrated the ability to devote sufficient time and attention to board duties and to otherwise fulfill the responsibilities required of our directors.
Election of Directors
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Election of Directors
INCUMBENT DIRECTORS STANDING FOR RE-ELECTION Information regarding each of the incumbent directors standing for re-election, including qualifications considered for each nominee, is set forth below. Directors’ ages are given as of the date of this Proxy Statement.
Election of Directors
| Damon T. Hininger Director since: 2009 | Mr. Hininger, age 54, has served as a director and our President and Chief Executive Officer since October 2009. He also serves as a member of our Executive Committee. From 2008 until 2009, he served as our President and Chief Operating Officer. From 2007 until 2008, he served as our Senior Vice President, Federal and Local Customer Relations, after having served as Vice President, Federal and Local Customer Relations since 2002. Prior to 2002, he held several positions of increasing responsibility with the Company. Mr. Hininger joined the Company in 1992 as a correctional officer at our Midwest Regional Reception Center (formerly known as the Leavenworth Detention Center). He serves on the Board of Trustees of the United Way of Metropolitan Nashville and Belmont University, where he also serves on the Board of Advisors for the Massey School of Business. Mr. Hininger also serves on the Board of Directors of the Nashville Public Education Foundation, the Men of Valor, the Kansas State University Foundation and as a member of the Executive Board of the Middle Tennessee Council of the Boy Scouts of America. Mr. Hininger holds a bachelor’s degree from Kansas State University and a master’s degree in business administration from the Jack Massey School of Business at Belmont University. He is a 2022 recipient of the American Correctional Association’s (“ACA”) E.R. Cass Award for Correctional Achievement, the highest honor bestowed by that organization. | | | In making the decision to nominate Mr. Hininger to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his current service as our President and CEO and his comprehensive knowledge of the Company, its business, operations and management team through his current position and past roles with the Company, including roles at the facility operations level, as Chief Operating Officer and as Senior Vice President, Federal and Local Customer Relations. The Board also considered Mr. Hininger's familiarity and experience with human rights issues affecting the Company's business because of his leadership role in our Company, his multi-decade experience in our industry and his participation in human rights related panels and programs as part of his involvement with the ACA and the Correctional Leaders Association. |
Election of Directors
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Election of Directors
| ROBERT J. DENNIS Director since: 2013 | Mr. Dennis, age 70, has served as a director since February 2013, and serves as Chair of our Compensation Committee and as a member of our Executive Committee. Mr. Dennis served as the Executive Chair of the Board of Directors of Genesco Inc., a publicly traded retailer of footwear, apparel, and accessories, from February 2020 until his retirement on June 30, 2020. Previously, Mr. Dennis served as Genesco’s President and Chief Executive Officer from 2008 until February 2020 and as Chair from April 2010 to February 2020. Prior to joining Genesco, Mr. Dennis held senior management positions with Hat World Corporation and Asbury Automotive and was a partner and leader of the North American Retail Practice with McKinsey & Company. Mr. Dennis serves as a director, chair of the Compensation Committee, and member of the governance and finance and investment committees of HCA Holdings, Inc., a publicly traded health care services company. Mr. Dennis serves on the Board of Trustees of the United Way of Metropolitan Nashville, the Board of Leadership Nashville, the Board of the Nashville Chamber of Commerce, and serves on the Board of Visitors at Vanderbilt University’s Owen School of Management. Mr. Dennis holds a master’s degree in business administration, with distinction, from the Harvard Business School, and bachelor’s and master’s degrees from Rensselaer Polytechnic Institute. | | | In making the decision to nominate Mr. Dennis to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his leadership experience as chief executive officer of a public company; his public company director experience; his demonstrated business acumen; his understanding of corporate finance and business development matters; and his civic and community involvement. The Board also considered Mr. Dennis’ human rights related experience associated with the management of a clothing retailer engaged in international business, labor, and supply chain management. |
Election of Directors
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Election of Directors
| MARK A. EMKES Director since: 2014 | Mr. Emkes, age 71, has served as a director since August 2014, and serves as the independent Chair of the Board. He also serves as a member of our Compensation Committee and our Nominating and Governance Committee. Mr. Emkes also serves as Chair of our Executive Committee. From 2011 until 2013, Mr. Emkes served as the State of Tennessee’s Commissioner of Finance and Administration. For more than five years until his retirement in 2010, Mr. Emkes served as Chief Executive Officer and Chair of the Board of Directors of Bridgestone Americas, Inc. and Bridgestone Americas Holdings, Inc., a tire and rubber manufacturing company. He also served as President of Bridgestone Americas, Inc. from January 2009 until his retirement. From 2004 until 2010, Mr. Emkes also served as a director of Bridgestone Corporation. Mr. Emkes serves as a director and chair of the compensation committee of Greif, Inc., a publicly traded industrial packaging products and services company, and is a former director and chair of the audit committee of First Horizon National Corporation, a publicly traded regional financial institution. Mr. Emkes has served as President of the Middle Tennessee Council of the Boy Scouts of America, the Board of Directors of the Community Foundation of Middle Tennessee and the Advisory Board of Habitat for Humanity, Nashville Chapter. Mr. Emkes was the 2011 recipient of the Jennings A. Jones Champion of Free Enterprise Award and was inducted into the Nashville Business Hall of Fame in 2012. Mr. Emkes holds a bachelor’s degree in economics from DePauw University and a master’s degree in business administration from the Thunderbird School of Global Management. | | | In making the decision to nominate Mr. Emkes to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his leadership experience in various management positions, including as chief executive officer and chair of an international company; his demonstrated business acumen and his understanding of corporate finance and business development matters; his understanding of state government through his public sector experience; and his civic and community involvement. The Board also considered Mr. Emkes’ experience with human rights issues, including those related to sourcing, workplace practices and labor management as part of his role as executive leader of an international manufacturer operating throughout the Americas. |
Election of Directors
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Election of Directors
| ALEXANDER R. FISCHER Director since: 2024 | Mr. Fischer, age 56, has served as a director since March 2024. He is the founder of Alex R. Fischer and Company, which offers strategic advisory services on corporate strategy, real estate development and economic development, operating in such capacity since 2021. He is also a Partner with The New Albany Company, the master developer for over 20,000 acres of mixed-use development. His prior roles include serving as President and CEO of the Columbus Partnership from 2009 to 2021 and undertaking various positions at Battelle Memorial Institute, including Senior Vice President for Business and Commercialization, from 2002 to 2009. Earlier, Mr. Fischer served as Commissioner of Economic Development, Deputy Governor, and Chief of Staff for the State of Tennessee from 1997 to 2002. Mr. Fischer currently serves on the board of directors of Advanced Drainage Systems, a publicly traded drainage products and services company, where he chairs the Nominating and Governance Committee and serves on the Audit Committee. Mr. Fischer also currently serves as a director of Nationwide Children’s Hospital, where he previously served as Chair; White Oak Partners, as Chair; Andelyn Biosciences; and Downtown Columbus, Inc., also as Chair. He previously served on the board of trustees for The Ohio State University. Mr. Fischer holds a Bachelor of Science in Economics and Public Administration and a Master of Science in Urban Planning and Economic Development, both from the University of Tennessee. | | | In making the decision to nominate Mr. Fischer to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his executive leadership experience; his knowledge of and experience in real estate, economic development, public policy leadership, and public and private infrastructure projects; and his leadership in civic, non-profit, and public education spheres. |
Election of Directors
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Election of Directors
| CATHERINE HERNANDEZ-BLADES Director since: 2024 | Ms. Hernandez-Blades, age 56, has served as a director since March 2024. Until January 2024, she served as Senior Vice President, Marketing and Communications for SAIC, a Fortune 500 technology integrator. Before joining SAIC in 2021, beginning in 2014, Ms. Hernandez-Blades held roles of increasing responsibility at Aflac, Inc., a publicly traded provider of supplemental health insurance and life insurance products, concluding in the role of Senior Vice President, Chief ESG and Communications Officer, which she held from 2019 to 2021. From 2017 to 2019, Ms. Hernandez-Blades served as Aflac's Senior Vice President, Chief Brand and Communications Officer. From 2014 to 2017, Ms. Hernandez-Blades served as Aflac's Senior Vice President, Corporate Communications. From 2011 to 2014, Ms. Hernandez-Blades served as Vice President and Chief Marketing and Communications Officer at Flextronics International Limited, a NASDAQ-traded public company specializing in electronics manufacturing services and original design manufacturing. From 2008 to 2011, Ms. Hernandez-Blades served as Vice President, Communications and Public Affairs for Raytheon, a defense contractor and industrial corporation. Ms. Hernandez-Blades is a Trustee for the Institute for Public Relations and serves as the U.S. representative on the Advisory Board of the World Communications Forum Association - Davos. In 1999, she was appointed Executive Director of the Louisiana Seafood Promotion and Marketing Board by the state’s then-serving governor, Mike Foster. She previously served as chair of Operation Homefront, a nationally recognized non-profit organization (501(c)(3)) dedicated to supporting America's military families. She has won an EMMY; is in three halls of fame (PR News, Women in Communications, and the PRWeek Hall of Femme); has two Cannes Lions; and is the first American to win the Relations 4 the Future medal at Davos. She was a 2019 Forbes Top 50 Most Influential Global CMO and was honored as the 2019 LatinaStyle magazine Corporate Executive of the Year. Ms. Hernandez-Blades holds a Bachelor of Arts, Mass Communications, University of Louisiana at Lafayette and is a Fellow of the Loyola University Institute of Environmental Communication. | | | In making the decision to nominate Ms. Hernandez-Blades to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, her executive leadership in communications, marketing, and public relations; her extensive experience as a communications leader at large employers and government contractors; her contribution to both gender and ethnic diversity on our Board; her leadership experience in ESG matters; her experience with publicly-traded companies, and her nonprofit work in support of service members and their families. |
Election of Directors
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Election of Directors
| STACIA A. HYLTON Director since: 2016 | Ms. Hylton, age 63, has served as a director since August 2016, and is a member of our Nominating and Governance Committee and Risk Committee. Since April 2022, Ms. Hylton has served as the Chief Executive Officer of KACE Company, a digital intelligence and cyber forensic company. Since 2016, Ms. Hylton has served as a Principal for LS Advisory, a New Jersey-based business solutions advisory consultancy. In 2010, U.S. President Barack Obama nominated Ms. Hylton to serve as Director of the U.S. Marshals Service (“USMS”), a federal agency with more than 5,600 employees responsible for federal judiciary security, fugitive operations, asset forfeitures, prisoner operations, transportation, and witness security, and served as Director of the USMS until her retirement in 2015. She served as the U.S. Attorney General’s Federal Detention Trustee in the U.S. Department of Justice from 2004 to 2010. From 1980 to 2004, Ms. Hylton served in progressively senior leadership positions within the USMS. Ms. Hylton serves as a director and member of the audit committee of Spok Holdings, Inc., a publicly traded provider of communications solutions and previously served as a director and member of the audit committee of the Board of Directors of Trust Stamp, Inc., a publicly traded company listed on the Euronext Growth equity trading market. Ms. Hylton is a Fellow for the National Academy for Public Administration and has served on the Board of Directors of the National Center for Missing and Exploited Children and Law Enforcement Exploring. Ms. Hylton has served on the Executive Committee for the International Chiefs of Police and the Accreditation and Policy Committees for the National Sheriffs Association. Ms. Hylton holds a bachelor’s degree in criminal justice from Northeastern University. | | | In making the decision to nominate Ms. Hylton to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, her understanding of government through her public sector experience; her experience as a public company director and member of an audit committee; her unique understanding of the USMS; her civic and community involvement; her professional experience with technological and cybersecurity concerns; and her contribution to the Board’s gender diversity. The Board also considered Ms. Hylton’s experience with human rights issues related to our business, developed through leadership of a large, federal law enforcement and detention agency. In that role, Ms. Hylton led the establishment, revision, and compliance monitoring of human rights standards, engaged with nongovernmental organizations and national and international stakeholders and participated in policing and detention reform initiatives. |
Election of Directors
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Election of Directors
| HARLEY G. LAPPIN Director since: 2018 | Mr. Lappin, age 68, has served as a director and was employed as a special operations advisor to the leadership team of the Company from January 2018 until February 2022. Mr. Lappin served as our Executive Vice President and Chief Corrections Officer from 2011 until his retirement from such position on January 1, 2018. Prior to joining the Company in 2011, Mr. Lappin served from 2003 to 2011 as Director of the Bureau of Prisons (“BOP”). As Director of the BOP, Mr. Lappin had oversight and management responsibility for 116 federal prisons, 14 large, private contract facilities and more than 250 contracts for community corrections facilities, in total comprising more than 215,000 offenders managed by 38,000 employees. Mr. Lappin has received numerous awards throughout his career, including the Associate Warden of the Year award for the BOP’s South Central Region (1992); the BOP’s Excellence in Prison Management Award (2000); the Attorney General’s Award for Excellence in Management (2001); and the Presidential Rank Award of Meritorious Executive (2004). In 2010, he received the ACA’s E.R. Cass Award for Correctional Achievement, the highest honor bestowed by that organization. In 2015, Mr. Lappin received the Louie L. Wainwright Award from the Association of State Correctional Administrators (“ASCA”). Mr. Lappin has served as chair of the Standards Committee of the ACA, is a former board member of both the National Institute of Corrections and the Federal Prison Industry Board, and a former chair of the Prison Industry Committee of ASCA. Mr. Lappin holds a bachelor’s degree from Indiana University and a master’s degree in criminal justice from Kent State University. | | | In making the decision to nominate Mr. Lappin to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his comprehensive corrections industry experience, including executive leadership of federal and private sector correctional system operations; his public company leadership experience; his understanding of government through his public sector experience; and his extensive knowledge of the Company, its business, operations, facilities, customers and personnel through his past role as our Chief Corrections Officer. The Board also considered Mr. Lappin’s extensive experience with human rights issues affecting our business, such as safe and secure detention, respect for prisoner and detainee rights, labor management, and engagement with nongovernmental organizations. He acquired this experience while serving in various roles including executive leader of the nation’s largest corrections and detention system. |
Election of Directors
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Election of Directors
| ANNE L. MARIUCCI Director since 2011 | Ms. Mariucci, age 66, has served as a director since December 2011, and serves as a member of our Audit Committee and our Compensation Committee. Since 2003, she has been affiliated with private equity firms Hawkeye Partners (Austin, Texas), Inlign Capital Partners (Phoenix, Arizona) and Glencoe Capital (Chicago, Illinois). Prior to 2003, Ms. Mariucci served in a variety of senior executive roles with Del Webb Corporation, and following its 2001 merger with Pulte Homes, Inc., as President of Del Webb Group and Senior Vice President of Strategy for Pulte Homes, Inc. Ms. Mariucci serves as a director of Taylor Morrison Home Corporation, a publicly traded homebuilder where she serves as Chair, Compensation Committee, and as a member of the Audit and Nominating & Governance committees. Ms. Mariucci also serves as a director of Southwest Gas Holdings, Inc. a publicly traded holding company, where she serves as Chair of the Pension Investment Committee and as a member of the Compensation and Nominating & Corporate Governance Committees. Ms. Mariucci serves as lead director of Berry Corporation (f/k/a Berry Petroleum Corporation), a publicly traded energy company, where she serves as a member of the Nominating and Corporate Governance Committee, Chair of the Compensation Committee, and a member of the Audit Committee. Ms. Mariucci serves as a director of Banner Health, a non-profit health system, where she serves as Board Chair, a member of the Compensation Committee and Vice Chair of the Investment Committee. Ms. Mariucci serves as a director of the Arizona State University Foundation and the Fresh Start Women’s Foundation. Ms. Mariucci is a past director of the Arizona State Retirement System, Scottsdale Healthcare and Action Performance Companies, as well as a past trustee of the Urban Land Institute. She also served on the Arizona Board of Regents. Ms. Mariucci holds a bachelor’s degree in accounting and finance from the University of Arizona and completed the corporate finance program at the Stanford University Graduate School of Business. | | | In making the decision to nominate Ms. Mariucci to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, her public company executive leadership experience; her understanding of and experience with the State of Arizona, a state where a significant portion of our operations is located; her background in accounting and corporate finance; her experience and knowledge with real estate; her experience as a public company director and member of audit and compensation committees; her civic and community involvement; her familiarity with energy, climate and sustainability issues gained through experience in the energy sector; and her contribution to the Board’s gender diversity. |
Election of Directors
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Election of Directors
| THURGOOD MARSHALL, JR. Director since: 2002 | Mr. Marshall, age 67, has served as a director since December 2002, and serves as Chair of our Risk Committee and as a member of our Nominating and Governance Committee. Until his retirement in 2019, he served as a partner in the Washington D.C. office of the law firm of Morgan, Lewis & Bockius LLP, and a principal in the firm’s Morgan Lewis Consulting Group LLC, which assists business clients with communications, political and legal strategies. Mr. Marshall has held appointments in all three branches of the federal government. Prior to joining a predecessor of Morgan, Lewis & Bockius LLP in 2001, he served as Assistant to the President and Cabinet Secretary from 1997 to 2001. Mr. Marshall has served as Director of Legislative Affairs and Deputy Counsel to the Vice President, and as counsel to the Senate Judiciary Committee, the Senate Committee on Commerce, Science and Transportation and the Senate Government Affairs Committee. In 2006, he was confirmed by the United States Senate to serve on the Board of Governors of the United States Postal Service and served as Chair prior to completing his service in 2013. Mr. Marshall serves as a director of Genesco Inc., a publicly traded retailer of footwear, apparel, and accessories. He also serves as a director for En+Group, a public limited company focused on green metals and energy, where he also serves as Compliance Committee Chair and as a member of the Remuneration and the Health, Safety and Environment committees. He is a former member of the Board of Trustees of the Ford Foundation and the Ethics & Compliance Certification Institute. Mr. Marshall serves as a trustee on four non-profit boards – The Third Way, Campaign Legal Center, President Lincoln’s Cottage, and the DC Grays. Mr. Marshall holds a bachelor’s degree and a juris doctor from the University of Virginia and served as a law clerk for United States District Judge Barrington D. Parker. Mr. Marshall also completed the CERT Certificate in Cybersecurity Oversight from the Software Engineering Institute of Carnegie Mellon University. | | | In making the decision to nominate Mr. Marshall to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his understanding of politics and the public sector through his varied government service and consulting work; his understanding of organizational governance and oversight through his service as a director in the public, non-profit and for-profit sectors; his understanding of legal, regulatory and compliance issues through his education and experience as a lawyer; his education in and experience with cybersecurity risk; his understanding of climate, energy, and natural resources concerns gained from service on the board of a metals and energy company; and his contribution to the Board’s cultural diversity. The Board also considered Mr. Marshall’s extensive experience with and expertise in human rights issues, including his service as a board member of the American Bar Association’s Center for Human Rights, his work focusing on human rights issues as a staff member for Senator Edward M. Kennedy, and his service in the Administration of President Clinton in various roles affecting United States human rights policy. |
Election of Directors
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Election of Directors
| DEVIN I. MURPHY Director since 2018 | Mr. Murphy, age 64, has served as a director since November 2018, and serves on our Audit, Risk and Nominating and Governance Committees. He is Managing Director of Investment Management of Phillips Edison & Company, a NASDAQ listed real estate investment trust that is one of the nation's largest owners and operators of grocery anchored shopping centers. Prior to being named Managing Director of Investment Management of Phillips Edison in January 2024, Mr. Murphy served as President from March 2019 to December 2023. Prior to that, he served as Chief Financial Officer of Phillips Edison for six years. Before joining Phillips Edison in 2013, Mr. Murphy worked for 27 years as an investment banker and held senior leadership roles at Morgan Stanley and Deutsche Bank. He was the Global Head of Real Estate Investment Banking at Deutsche Bank. | | | His Deutsche Bank team executed over 500 transactions of all types for clients, representing total transaction volume exceeding $400 billion, including initial public offerings, mergers and acquisitions, common stock offerings and secured and unsecured debt offerings. Mr. Murphy began his banking career at Morgan Stanley in 1986 and held a number of senior positions including Vice Chairman, co-head of US Real Estate Investment Banking and Head of Real Estate Private Capital Markets. He also served on the Investment Committee of the Morgan Stanley Real Estate Funds, a series of global private real estate funds with over $35 billion in assets under management. During his 20 years with Morgan Stanley, Mr. Murphy and his teams executed numerous capital markets and mergers and acquisition transactions including a number of industry defining transactions. Mr. Murphy is an Independent Director of Apartment Income REIT Corp (AIRC), a NYSE listed apartment REIT and serves on the Audit, Compensation and Human Resources and Governance and Corporate Responsibility Committees of AIRC. Mr. Murphy received a Bachelor of Arts in English and History with Honors from the College of William and Mary and a Master of Business Administration from the University of Michigan. | | | In making the decision to nominate Mr. Murphy to serve as a director, the Nominating and Governance Committee considered, in addition to the criteria above, his executive leadership of real estate and finance-focused organizations; his leadership experience as President of a public company; his knowledge of and experience in real estate, corporate finance, capital markets, and corporate governance; and his high-level leadership roles in complex merger and acquisition transactions and activities. |
Election of Directors
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Election of Directors
| JOHN R. PRANN, JR. Director since: 2000 | Mr. Prann, age 73, has served as a director since December 2000, and serves as Chair of our Audit Committee. He also serves as a member of our Compensation Committee. From 2009 to 2016, Mr. Prann served as Chair of the Board of Directors of a privately held motorsports business. From 2012 to 2014, Mr. Prann served as a Senior Advisor to The Pritzker Group, a private capital, venture capital and asset management firm. From 1993 to 2001, Mr. Prann served as President, Chief Executive Officer and Chief Operating Officer of Katy Industries, Inc., a publicly traded manufacturer and distributor of consumer products and maintenance cleaning products. Mr. Prann also served as President and Chief Executive Officer of CRL, Inc., a diversified holding company that held a 25% interest in Katy Industries, Inc. Mr. Prann served as a director of CPAC, Inc., a publicly traded chemicals and equipment business, and Dynojet Research, Inc. He has served as a partner with the accounting firm of Deloitte & Touche. Mr. Prann holds a bachelor’s degree in biology from the University of California, Riverside, and a master’s degree in business administration from the University of Chicago. | | | In making the decision to nominate Mr. Prann to serve as a director, our Nominating and Governance Committee considered, in addition to the criteria referred to above, his executive leadership experience as president and chief executive of a public company and his understanding of accounting and finance issues through his education and career. |
Election of Directors
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Election of Directors
Incumbent Director Not Standing for Re-Election
Election of Directors
| DONNA M. ALVARADO Director since 2003 | Ms. Alvarado, age 75, has served as a director since December 2003, and serves as Chair of our Nominating and Governance Committee. She also serves as a member of our Audit Committee and Risk Committee. Ms. Alvarado is the founder and president of Aguila International, an international business consulting firm specializing in human resources and leadership development. Ms. Alvarado has held senior management positions in government, including Deputy Assistant Secretary of Defense with the U.S. Department of Defense and Director of ACTION, the federal domestic volunteer agency. Ms. Alvarado serves as a director and member of the audit, compensation and public affairs committees of CSX Corporation, a publicly traded provider of rail and other transportation services. She serves as a director and chair of the nominating and corporate governance committee, as well as a member of the audit and risk committees, of Park National Corporation, a publicly traded bank holding company. Ms. Alvarado has served as a member and as chair of both the Ohio Board of Regents and the Ohio Workforce Policy Board. She holds both a bachelor’s degree and a master’s degree in Spanish from The Ohio State University, completed doctoral coursework in Latin American literature at the University of Oklahoma and earned a postgraduate certificate in financial management from the Wharton School of Business at the University of Pennsylvania. |
Election of Directors
REQUIRED VOTE AND BOARD RECOMMENDATION Under the Company’s Bylaws, a majority of all the votes cast at the virtual Annual Meeting is required for the election of each nominee in an uncontested election of directors. A majority of votes cast means the number of shares cast “for” a nominee’s election exceeds the number of votes cast “against” that nominee. Brokers do not have discretionary authority to vote on the election of directors. Abstentions and broker non-votes will have no effect on the outcome of the vote of the election of directors as they are not considered votes cast. If a director nominee is an incumbent director and does not receive a majority of the votes cast in an uncontested election, that director will continue to serve on our Board as a “holdover” director but must tender his or her resignation to our Board promptly after certification of the election results of the stockholder vote. The Nominating and Governance Committee of our Board will then recommend to our Board whether to accept the resignation or whether other action should be taken. Our Board will act on the tendered resignation, considering the recommendation of our Nominating and Governance Committee, and our Board’s decision will be publicly disclosed within 90 days after certification of the election results of the stockholder vote. A director who tenders his or her resignation after failing to receive a majority of the votes cast will not participate in the recommendation of our Nominating and Governance Committee or the decision of our Board with respect to his or her resignation.
Election of Directors
| Our Board unanimously recommends a vote “FOR” each of the eleven nominees. |
Election of Directors
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Election of Directors
Proposal TWO:
Executive and Director Compensation
Executive and Director Compensation Compensation Discussion and Analysis This section of the Proxy Statement discusses the philosophy, objectives, and elements of our executive compensation programs and the compensation awarded to our Named Executive Officers (“NEOs”), consisting of our Chief Executive Officer, Chief Financial Officer and our next three highest paid executives in 2023. This information should be read in conjunction with the Summary Compensation Table and the related tables and narratives that follow the Compensation Discussion and Analysis in this Proxy Statement. Based on SEC proxy disclosure rules, the following individuals were our NEOs for the fiscal year ended December 31, 2023:
Executive and Director Compensation
| Damon T. Hininger | Chief Executive Officer and President, Director | | David M. Garfinkle | Executive Vice President and Chief Financial Officer | | Patrick D. Swindle | Executive Vice President and Chief Operating Officer | | Anthony L. Grande | Executive Vice President and Chief Development Officer | | Lucibeth N. Mayberry | Executive Vice President and Chief Innovation Officer |
Executive and Director Compensation
Executive Summary Our Company and Strategy We are the nation’s largest owner of partnership correctional, detention, and residential reentry facilities, we are also one of the largest prison operators in the United States and we are the second largest community corrections owner and operator in the United States. Through three segments, CoreCivic Safety, CoreCivic Community and CoreCivic Properties, we provide a broad range of solutions to government partners that serve the public good through corrections and detention management, a network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. Our principal corporate objective is creating long-term value for our stockholders by pursuing avenues to profitably grow our primary CoreCivic Safety correctional and detention business while diversifying our revenues and cash flows by prudently expanding our CoreCivic Community and CoreCivic Properties businesses.
Executive and Director Compensation
| • | CoreCivic Safety pursues avenues to grow by improving performance under contracts with our existing government partners, marketing available facility capacity to existing and new government partners, and providing new facility capacity as appropriate to meet specific partner needs. |
Executive and Director Compensation
| • | CoreCivic Community pursues opportunities to market available residential capacity to existing and new government partners and to expand the scope of non-residential services intended to assist people transitioning from incarceration or to avoid incarceration altogether. |
Executive and Director Compensation
| • | CoreCivic Properties offers government partners and providers an attractive portfolio of correctional and detention facilities that can be leased for various needs as an alternative to contracting for “turn-key” correctional, detention and residential reentry bed space and services and pursues opportunities to develop, build and lease prison facilities to government agencies in need of criminal justice infrastructure. |
Executive and Director Compensation
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Executive and Director Compensation
2023 Company Performance Highlights Despite the challenging labor market and the uncertainties surrounding post-pandemic border policies, we expanded existing partner relationships, established new partner relationships, renewed several significant contracts, and completed numerous other transactions and milestones, including the following: CORECIVIC SAFETY:
Executive and Director Compensation
| • | Renewed all 18 management contracts scheduled to expire in 2023. |
Executive and Director Compensation
| • | Entered a new management contract with Hinds County, Mississippi to care for up to 250 adult male pre-trial detainees at our Tallahatchie County Correctional Facility in Tutwiler, Mississippi. |
Executive and Director Compensation
| • | Entered a new management contract with the state of Wyoming to care for up to 240 male inmates at the Tallahatchie County Correctional Facility. |
Executive and Director Compensation
| • | Entered a new management contract with Harris County, Texas, to care for up to 360 male inmates at the Tallahatchie County Correctional Facility. |
Executive and Director Compensation
| • | Entered a new management contract with the state of Montana to care for up to 120 inmates at our Saguaro Correctional Facility in Eloy, Arizona. |
Executive and Director Compensation
| • | Served our customer's unique surge in demand by accommodating and managing an average daily ICE population that more than doubled following the expiration of Title 42 in May 2023. |
Executive and Director Compensation
| • | Deployed a Residential Network, or ResNet, at approximately 20 of our correctional facilities, which involved the installation of a secure controlled network, and the addition of an average of 20 new Microsoft® Surface laptops at each of these sites. With strict security measures in place designed to ensure compliance and public safety, an important component of ResNet is connecting residents to online job skills training, testing and certification. ResNet is now the means by which many of the programs we have in place are offered, including our educational and vocational programs and other programs we believe are vital to reentry such as anger management, substance abuse education and financial literacy. |
Executive and Director Compensation
| • | Partnered with Reentry Coaching Academy, or ReCA, a non-profit organization, to offer Life Coaching training and certification for incarcerated individuals at our Saguaro facility in Arizona. Graduates of the program will serve as future Peer Life Coaches at the Saguaro facility. |
Executive and Director Compensation
| • | Partnered with Our Journey, a non-profit organization led by an individual who has lived experience to produce reentry booklets for each state in which we have facilities. In 2023, a booklet for the state of Georgia was completed and a booklet for the state of Tennessee is in process. |
Executive and Director Compensation
| • | Implemented several additional programs to help prepare returning citizens for life after release, including “2nd Opportunity”, a life skills and employment readiness program, and Rebound Employment Training, which teaches the skills necessary to become a successful online freelancer or remote worker upon release. We also partnered with Geographic Solutions whose “Virtual One Stop Reentry Employment Opportunities” software system provides employment readiness and resume building skills and was customized for us to allow incarcerated persons the opportunity to search and apply for current job openings in the communities to which they will be released. |
Executive and Director Compensation
| • | Began piloting Steered Straight's “One Step Away” rehabilitation and recovery program at our Hardeman County Correctional Facility in Tennessee and at our Cibola County Corrections Facility in New Mexico to reduce drug usage, particularly fentanyl, and all overdoses, as well as to strengthen incarcerated persons' recovery and aftercare. |
Executive and Director Compensation
| • | Partnered with Reboot Recovery to offer a peer-led, 12-week research-based PTSD/Trauma and Resiliency program for incarcerated veterans. We piloted the program at four facilities and are now expanding the program to all our facilities. |
Executive and Director Compensation
| • | Deployed the first in-facility Medication Assisted Treatment, or MAT, program at our Tallahatchie County Correctional facility for residents under the state of Vermont's jurisdiction and at our Saguaro Correctional Facility for residents under the state of Montana's jurisdiction. MAT is the use of medications in combination with counseling and behavioral therapies, which is effective in the treatment of opioid use disorders and can help some people to sustain recovery. |
Executive and Director Compensation
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Executive and Director Compensation
| • | Launched “BriefCam”, an AI-based camera solution designed to assist with monitoring risk areas at our facilities. |
Executive and Director Compensation
| • | Launched “Remote Vital Signs Monitoring” in certain facilities designed to fight overdose and suicide-related risks by providing constant monitoring of an individual while in a designated area. |
Executive and Director Compensation
| • | Our Librarian at the Trousdale Turner Correctional Center in Tennessee was selected as the 2023 winner of the “Exceptional Service Award” by the American Library Association. She was selected because of her noteworthy contributions to expand resources and literature at the Trousdale Turner facility. |
Executive and Director Compensation
| • | Our Warden at the Northeast Ohio Correctional Center received the North American Association of Wardens and Superintendents 2023 “Warden of the Year” award. The award recognizes a warden who has gone the extra mile to solve problems in their organization, involve themselves in community and local organizations, and mentor in the development of others. |
Executive and Director Compensation
CORECIVIC COMMUNITY:
Executive and Director Compensation
| • | Renewed all 16 management contracts scheduled to expire during 2023. |
Executive and Director Compensation
| • | Twenty-four residents at our CAI Ocean View facility in California received a “Certificate of Completion in Money Smarts and Transitional Skills”. |
Executive and Director Compensation
| • | Partnered with the San Diego City College to offer classes in Forklift Operation, Auto Mechanics, and Carpentry to residents at our Ocean View facility. |
Executive and Director Compensation
| • | Partnered with Coastline and Career Expansion, Inc. at our CAI Boston Avenue facility in California to provide a training program in workforce development, construction, utilities, energy and safety. Students learn skills from basic industry awareness to OSHA requirements in this five-week, on-site program. They also learn how to properly use hand and power tools, and how to safely handle construction materials. Upon completion, students receive an industry-recognized certificate. |
Executive and Director Compensation
CORECIVIC PROPERTIES:
Executive and Director Compensation
| • | Entered into a lease agreement with the Oklahoma Department of Corrections, or ODC, for our 1,670-bed Allen Gamble Correctional Center. The new lease agreement includes a base term that commenced on October 1, 2023, with a scheduled expiration date of June 30, 2029, and unlimited two-year renewal options. We previously operated the Allen Gamble facility in our Safety segment under a management contract with the ODC. The management contract was scheduled to expire on June 30, 2023. However, effective July 1, 2023, we entered a 90-day contract extension for the management contract, after which time, operations of the Allen Gamble facility transferred from us to the ODC in accordance with the new lease agreement. The new lease agreement meets the needs of our customer while providing us with more stable cash flows and enhanced profitability. |
Executive and Director Compensation
| • | Completed the sale of three residential reentry centers, generating net sales proceeds of $10.3 million. |
Executive and Director Compensation
CORPORATE AND OTHER:
Executive and Director Compensation
| • | Amended and extended our Third Amended and Restated Credit Agreement, or the Previous Bank Credit Facility, by entering into a Fourth Amended and Restated Credit Agreement, or the New Bank Credit Facility, in an aggregate principal amount of $400.0 million, consisting of a $125.0 million term loan (previously $100.0 million under the Previous Bank Credit Facility), or the Term Loan, and a revolving credit facility with a borrowing capacity of $275.0 million (previously $250.0 million under the Previous Bank Credit Facility), or the Revolving Credit Facility. The New Bank Credit Facility extends the maturity to October 2028 from the May 2026 maturity under the Previous Bank Credit Facility. |
Executive and Director Compensation
| • | Purchased $21.0 million of our 8.25% senior unsecured notes with a maturity date of April 2026 and $6.9 million of our 4.75% senior unsecured notes with a maturity date of October 2027 at a weighted average purchase price of approximately 97% of par through open market purchases. |
Executive and Director Compensation
| • | Redeemed in full our 4.625% senior unsecured notes that remained outstanding, amounting to $153.8 million, on February 1, 2023. The notes, with an original principal amount of $350.0 million, were originally scheduled to mature in May 2023. |
Executive and Director Compensation
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Executive and Director Compensation
| • | Repurchased a total of 3.5 million common shares at a total cost of $38.1 million, or $10.97 per share, under our existing share repurchase program. |
Executive and Director Compensation
| • | Named a 2023 Middle Tennessee Top Workplace by “The Tennessean”, making us one of just 117 companies to make the 2023 list. The top workplaces award is based solely on employee feedback gathered through a third-party survey. The confidential survey uniquely measures 15 culture drivers that are critical to the success of any organization, including alignment, execution, and connection. |
Executive and Director Compensation
Stock Price Performance and TSR Ranking Within Our Peer Group Our stock price increased from a closing price of $11.56 at fiscal year-end 2022 to $14.53 at fiscal year-end 2023. We believe our stock price was positively impacted by the continuing successful execution of our capital allocation strategy and our achievement of occupancy growth within new and existing partner relationships despite certain COVID-19 occupancy restrictions, which remained in place during most of the first half of 2023, and a challenging labor market. Our total stockholder return (“TSR”) for 2023 and the three-year and five-year periods ended December 31, 2023, and ranking within our peer group (as set forth under Compensation Discussion and Analysis—Process for Determining Compensation—Independent Review and Use of Market Data—Peer Group Review and Update), are presented below. On March 18, 2024, our closing stock price was $14.52.
Executive and Director Compensation
| | TSR(1) (%) | Percentile Ranking Within Peer Group(1) (%) | | One-Year TSR (12/31/2022 - 12/31/2023) | 26% | 52% | | Three-Year TSR (12/31/2020 - 12/31/2023) | 122% | 96% | | Five-Year TSR (12/31/2018 - 12/31/2023) | -7% | 13% |
Executive and Director Compensation
| 1. | TSR and Percentile Ranking within Peer Group were calculated by Exequity, our independent compensation consultant, using the Peer Group discussed in Compensation Discussion and Analysis—Process for Determining Compensation—Independent Review and Use of Market Data—Peer Group Review and Update. |
Executive and Director Compensation
Pay for Performance Pay for performance is an important component of our longstanding executive compensation philosophy. Our compensation approach is designed to attract, retain, and motivate qualified, knowledgeable, and talented executives. Compensation is provided using a balanced mix of short-term and long-term incentives because we believe that this balance drives leadership decisions that continuously strengthen our Company and focus on returning value to stockholders. As each year’s executive compensation program goals are set, our Compensation Committee considers our Company’s external challenges and opportunities, examining not only opportunities for desirable business outcomes, but also opportunities for our Company to contribute to the improvement of the lives of those entrusted to our care and the career development of our workforce. The Compensation Committee also strives to align financial targets and NEO incentives with the most important aspects of our Company’s capital allocation and growth strategies. In 2019, with the assistance of Exequity, our Compensation Committee led a comprehensive review and redesign of the Company’s executive compensation program. We believe the 2019 redesign of the Company’s executive compensation program built upon the strong foundation established under prior executive compensation policies, while creating proper incentives for our executives to achieve corporate and strategic objectives and to maximize stockholder value over the long-term and to align pay with stockholders’ interests. In 2021, the Compensation Committee, with the assistance of Exequity, reviewed the Company’s existing executive compensation program for changes it should implement as a result of the Company’s conversion from a REIT to a taxable C Corporation, effective January 1, 2021. While the structure of the Company’s executive compensation program itself did not change, Exequity recommended that the Compensation Committee adopt changes to the Company’s peer group to better align the peer group with the Company’s revocation of its REIT election and conversion to a taxable C Corporation. The Compensation Committee adopted this recommendation (see Compensation Discussion and Analysis—Process for Determining Compensation—Independent Review and Use of Market Data—Peer Group Review and Update and Compensation Discussion and Analysis—Long-Term Incentive Compensation—Peer Group for Determining rTSR Modifier for Performance-Based RSU Awards).
Executive and Director Compensation
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Executive and Director Compensation
Consistent with the 2019 objectives, our Compensation Committee has developed and approved an executive compensation program providing for a range of compensation for our executives, with the intent of rewarding strong performance and reducing incentive compensation when our performance objectives are not achieved. For 2023, the overall program did not change, but the Compensation Committee did review the peer group to ensure it was still appropriate. For a detailed discussion of our short-term and long-term incentive programs, see the Executive and Director Compensation—NEO Compensation for 2023—Annual Cash Incentive Plan and Executive and Director Compensation—NEO Compensation for 2023—Long-Term Incentive Compensation sections, respectively, of this Proxy Statement.
Executive and Director Compensation
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Executive and Director Compensation
The charts below illustrate the balance of target total compensation during 2023 for the CEO and the average of the other NEOs:
Elements of CEO and Other NEO Average Target Compensation(1)
| (1) The percentages of total compensation for our CEO and the average of our other NEOs as calculated above are based on the 2023 base salary and the value of executive-level perquisites paid to the CEO and other NEOs which were not paid generally to all employees, the 2023 annual cash incentive compensation award (assuming achievement at the target level (such award was ultimately paid at 168.6% for our CEO and 134.9% for our other NEOs)), the grant date fair value of the performance-based RSU awards granted in February 2023 (assuming vesting at the target achievement level) and the grant date fair value of the time-based RSU awards granted in February 2023. Each compensation element is outlined in more detail in the 2023 Summary Compensation Table on page 68 below. For the NEOs other than the CEO, the chart above is based on the average of each category. |
Elements of CEO and Other NEO Average Target Compensation(1)
| Compensation Element | Key Characteristics | Why We Use This Element | Considerations in Setting Pay Amount | 2023 Decisions | | Base Salary | • Fixed compensation • Payable in cash • Reviewed annually • Adjusted when appropriate | • To attract and retain qualified executives • Compensates for roles and responsibilities • Provides a secure level of guaranteed compensation | • Level of responsibility • Experience, skills and performance • Competitive labor market | • Our CEO received a 3% increase in base salary, and our other NEOs (on average) received a 3% increase in base salary during 2023 | | Short-Term Cash Incentive Compensation | • Variable compensation • Cash-based • Adjusted annually as appropriate • Tied to preset performance targets | • Motivates and rewards • Incentivizes pursuit of short-term strategic goals | • Adjusted EBITDA • Four Short-Term Goals (as defined below) focused on breakthrough achievements. • Four Strategic Business Goals (as defined below)focused on improving lives and respecting human rights of residents and employees | • Financial performance exceeded target level • Short-Term Goals were not achieved. • Strategic Business Goals achieved resulting in a 1.20x modifier • CEO and NEOs received payout of 168.6% and 134.9% of base salary, respectively | | Long-Term Equity Incentive Compensation | • Variable compensation • Performance-based RSUs and Time-based RSUs, vesting ratably over three years | • Motivates and rewards • Incentivizes pursuit of long-term value • Encourages multi-year retention of executives • Aligns with shareholder interests | • Performance-based RSUs vest from 50-150% of grant over three years based on Normalized FFO targets set annually • Performance-based RSUs modified by Relative TSR(1) • Time-based RSUs vest ratably over three years | • CEO granted a 60/40, performance/time-based split of RSUs in 2023; other NEOs granted 50/50 split. • Normalized FFO exceeded target. • Relative TSR(1) at 85.5th percentile resulting in a 1.2x modifier | | Other Benefits | • Fixed compensation • General programs available to all employees • Certain executive-level perquisites not paid generally to our other employees | • Executives enjoy same benefits as all employees • Provides competitive benefits to attract and retain talent | • Maintain common benefits across workforce • Offer executive level benefits comparable with other similarly positioned companies | • Our CEO and other NEOs receive limited executive perquisites described more fully on page 65 |
Elements of CEO and Other NEO Average Target Compensation(1)
| (1) Relative TSR (“rTSR”) was determined by comparing our Company’s total shareholder return (“TSR”) against the companies comprising the Russell 2000. This calculation was performed by Exequity, our independent Compensation Consultant, at the request of our Compensation Committee. More information on the Compensation Committee’s use of rTSR can be found under the heading Compensation Discussion and Analysis—2023 Performance-Based RSU Awards (2023-2025 Performance Period). |
Elements of CEO and Other NEO Average Target Compensation(1)
| • | Design of Our Annual Cash Incentive Plan—As described below under Annual Cash Incentive Plan on page 54, our annual cash incentive plan is performance-based, and a failure to achieve the minimum performance level in either Adjusted EBITDA or the failure to accomplish our Short-Term Goals results in zero bonus opportunity for such category (i.e., all this compensation is “at risk”). Further, the bonus opportunity provided by our annual cash incentive plan is increased or decreased based upon the level of achievement of certain Strategic Business Goals. |
Elements of CEO and Other NEO Average Target Compensation(1)
| • | Design of Our Long-Term Equity Incentive Compensation Program—As described under Long-Term Incentive Compensation on page 59, a significant portion of our NEO’s long-term incentive compensation is in the form of performance-based RSUs which vest based on the achievement of annual Normalized FFO performance targets and are subject to an rTSR modifier, which may positively or negatively adjust the number of performance-based RSUs vesting, if any. As described on page 61, the failure to achieve the minimum Normalized FFO performance target in a particular year results in no RSUs vesting and the forfeiture of that year’s performance-based award. Normalized FFO is an amount calculated and presented on the basis of methodologies other than in accordance with GAAP and is defined in Appendix A to this Proxy Statement. Please refer to Appendix A for further explanation and reconciliation of Normalized FFO to net income, its most directly comparable GAAP measure. |
Elements of CEO and Other NEO Average Target Compensation(1)
| • | No Tax “Gross Ups” for Severance Payments—As described in Potential Payments upon Termination or Change of Control on page 73, we do not provide excise or other tax “gross up” payments in connection with any severance payment made to an NEO. |
Elements of CEO and Other NEO Average Target Compensation(1)
Process for Determining Compensation – Independent Review and Use of Market Data Role of Compensation Committee Our Compensation Committee establishes and regularly reviews our compensation philosophy and programs, exercises authority with respect to the determination and payment of base and incentive compensation to executive officers and administers our Amended and Restated 2020 Stock Incentive Plan (the “2020 Plan”). Our Compensation Committee annually reviews executive compensation and our compensation programs to ensure our CEO and the other executive officers are rewarded appropriately for their contributions to our success, and our overall compensation strategy supports the objectives and values of our organization, as well as stockholder interests. Our Compensation Committee conducts this review and makes compensation decisions through a comprehensive process involving a series of meetings primarily occurring in the first and second quarters of each year. Compensation Committee meetings typically are attended by our Compensation Committee members, our Chair of the Board, our CEO and, upon request, the Compensation Committee’s independent compensation consultant. As with all Board committees, other Board members also have a standing invitation to attend our Compensation Committee’s meetings. Our CEO generally makes recommendations to our Compensation Committee regarding equity awards for the executive officers other than himself. Our Compensation Committee meets in executive session to the extent the members deem necessary or appropriate to ensure independent analysis and determinations. For example, executive sessions are generally convened to discuss the CEO's compensation and the Committee's evaluation of the CEO's performance outside the presence of the CEO and other members of management. Additional information regarding our Compensation Committee and its meetings is included above under Corporate Governance—Board Meetings and Committees. In making executive compensation determinations, our Compensation Committee performs an overall analysis of each executive’s individual job performance, position, experience, and level of responsibilities, impact on the execution of our strategy, contributions to our corporate performance, job tenure, and potential. The Compensation Committee relies on its general experience and subjective considerations of various factors, including our strategic business goals, information with respect to the peer group set forth below, proprietary and publicly available compensation surveys, and data with respect to other public companies provided by our compensation consultant, Exequity. Our Compensation Committee does not set specific targets or utilize any formulaic benchmarks for overall compensation or for allocations between fixed and performance-based compensation, cash and non-cash compensation or short-term and long-term
Elements of CEO and Other NEO Average Target Compensation(1)
| Annual Base Salary | Annual Cash Incentive Compensation | Long-term Performance- Based Equity Incentive | Long-term Time-Based Equity Incentive | | Compensates our NEOs for their roles and responsibilities and provides a secure level of guaranteed compensation. | Tied to achievement of objective financial performance and achievement of short-term business goals; and modified by success or failure on Strategic Business Goals established annually by our Compensation Committee. | Tied to the objective financial performance of the Company; modified positively or negatively by our Company’s rTSR; and strengthens the commonality of interests between executive officers and our stockholders. | Vests based on the passage of time and supports the retention of skilled NEOs who are incentivized to make decisions that support sustainable business operations and value creation over the long-term. |
Elements of CEO and Other NEO Average Target Compensation(1)
Benefits and perquisites play a limited role in our executives’ total compensation packages. Our Compensation Committee believes that, because our balance of long-term and short-term incentives and our use of performance-based and time-based RSUs that provide a tie to our stockholders’ interests and our stock ownership guidelines, our executive compensation programs currently serve our compensation philosophy and objectives well. Role of Independent Compensation Consultant Our Compensation Committee has engaged an independent compensation consultant, Exequity, to assist in reviewing compensation strategies and plans and to provide proprietary and publicly available compensation surveys and data with respect to other public companies. When requested, Exequity works directly with the Chair of our Compensation Committee and as directed by the Chair of our Compensation Committee, with our CEO and other executive officers. Exequity representatives also attend Compensation Committee meetings when requested by the Compensation Committee. Exequity was selected due to its extensive experience in providing compensation consulting services and its status as a nationally recognized advisor on executive and director compensation programs. At our Compensation Committee’s request, Exequity has from time to time performed compensation analyses, including peer and market comparisons, internal pay equity assessments, updating of the executive salary structure, and modeling of executive compensation levels at different levels of Company performance. These analyses and input from Exequity have assisted our Compensation Committee in determining whether our strategies and plans were advisable based on the Company’s current financial position and Strategic Business Goals, competitive with our peers and consistent with current practices in corporate governance and compensation design. Additional information regarding the engagement and independence of Exequity as independent compensation consultant to our Compensation Committee is included above under the heading Corporate Governance—Board Meetings and Committees. Peer Group Review and Update In 2023, at the request of our Compensation Committee, Exequity assessed and recommended adjustments with respect to our peer group selection methodology and composition. In reviewing the existing peer group, the Compensation Committee sought to identify which of the Company’s 2022 peer group members were appropriate going forward.
Elements of CEO and Other NEO Average Target Compensation(1)
While none of our peer group companies met all the selection criteria above, each peer group company met five or more of the selection criteria. At the time the Compensation Committee reviewed the peer group, our revenue was at approximately the 37th percentile when compared with the revenue of our peers.
Elements of CEO and Other NEO Average Target Compensation(1)
| • | Annual cash incentive compensation; and |
Elements of CEO and Other NEO Average Target Compensation(1)
| • | Long-term incentive compensation consisting of RSU awards. |
Elements of CEO and Other NEO Average Target Compensation(1)
Annual Base Salary We seek to provide base salaries for our executive officers that provide a secure level of guaranteed cash compensation in accordance with their experience, skills, performance, and job roles and responsibilities. Typically, in the second quarter of each year, our Compensation Committee reviews and, if applicable, approves an annual salary plan for our executive officers, considering several factors, including prior year’s salary, responsibilities, tenure, individual performance, salaries paid by companies in our peer group for comparable positions, the Company’s overall pay scale, and the Company’s recent and projected financial performance. Our Compensation Committee also solicits the views and recommendations of our CEO, in consultation with our Chair, when setting the base salaries of the other executive officers, given their respective insight into internal pay equity and positioning matters, as well as executive performance. At a Compensation Committee meeting typically held in the second quarter of each year, our CEO summarizes his assessment of the performance during the previous year of each of the other executive officers. Our CEO, in consultation with our Chair, also provides his recommendations on any compensation adjustments. Our Compensation Committee approves any base salary adjustments for these executives based on factors such as the competitive compensation analysis, our CEO’s assessment of individual performance, the Company’s performance, the location of the executive’s current salary within the applicable salary range, general market conditions, and internal pay equity considerations. The process is similar for determining any base salary adjustments for our CEO, except our CEO does not provide our Compensation Committee with a recommendation. Our CEO presents a self-assessment of his performance during the year to our Compensation Committee, which then approves any base salary adjustment based on the factors described above with respect to our other executives. To the extent it deems necessary and appropriate, our Compensation Committee meets in executive sessions to discuss adjustments to the base salaries of our executive officers, including our CEO. Such adjustments typically take effect on or about July 1 of each year. In 2023, base salary represented approximately 19.6% of our CEO’s total direct compensation package (and, on average, approximately 24.0% of our other NEOs’ total compensation package at target performance (calculated in the manner described on page 47)). Specifically, the Compensation Committee considered each NEO’s current base pay, considering base salary levels paid to persons holding similar positions at peer companies, as well as the relative responsibilities of each NEO role within our Company. Based on its review, the Compensation Committee determined that a 3.0% increase in Mr. Hininger’s base salary was necessary to continue to maintain a market-competitive level of compensation for Mr. Hininger, considering his experience level and job responsibilities. The Compensation Committee also increased the base salaries of the other NEOs by 3.0%, to maintain a market-competitive level of compensation for these executives, based on the review described above.
Elements of CEO and Other NEO Average Target Compensation(1)
Annual Cash Incentive Plan Our annual cash incentive plan provides our executive officers with an opportunity to earn cash compensation based on the extent to which objective performance targets set in advance by our Compensation Committee are met. In 2023, assuming performance at the target level of achievement, annual cash incentive compensation represented approximately 26.4% of our CEO’s total compensation package and, on average, 25.9% of our other NEOs’ total compensation packages (calculated in the manner described on page 47). In 2023, our Compensation Committee concluded the competitiveness of our annual cash incentive plan for attracting, retaining, and motivating qualified, knowledgeable, and talented executives, as well as its alignment with our capital allocation and growth strategies, would be sustained by:
Elements of CEO and Other NEO Average Target Compensation(1)
| • | linking a fixed percentage to the Company’s success or failure in achieving specific short-term business goals (as described below); |
Elements of CEO and Other NEO Average Target Compensation(1)
| • | subjecting the combined results of the two cash incentive metrics above to a modifier based on the achievement of Strategic Business Goals (as described below). |
Elements of CEO and Other NEO Average Target Compensation(1)
Further, the Compensation Committee deemed it appropriate to cause any resulting cash bonus to which our NEOs were eligible to receive as a result of the achievement of the performance targets established for Adjusted EBITDA and/or the Short-Term Goals to be subjected to a Strategic Business Goals modifier, which may increase or decrease such cash bonus depending on the level of achievement of the Strategic Business Goals established by the Compensation Committee. The Compensation Committee adopted objective Strategic Business Goals as a performance modifier to the annual cash incentive compensation because our Compensation Committee believes that value is returned to our stockholders when we invest in the lives and futures of our workforce and those entrusted to our care by our government partners. Our Compensation Committee believes the addition of the Strategic Business Goals modifier strikes an appropriate balance in rewarding our executive officers for achieving positive financial results in the near-term, while strengthening their focus on the successful execution of our long-term growth strategy, as well as the development of both our workforce and those entrusted to our care by our government partners. Achievement of the Strategic Business Goals is determined by our Compensation Committee based on their assessment of our performance with respect to the Strategic Business Goals. For these reasons, the entirety of each NEO’s annual cash incentive bonus opportunity for 2023 was subjected to a modifier tied to achievement of the following four goals:
Elements of CEO and Other NEO Average Target Compensation(1)
The Strategic Business Goals modifier can increase or decrease the amount of annual cash incentive compensation calculated based on Adjusted EBITDA and the Short-Term Business Goals, which could also result in annual cash incentive compensation above the maximums or below the minimums described below
Calculation of the Short-Term Cash Incentive
Calculation of the Short-Term Cash Incentive
Calculation of the Short-Term Cash Incentive
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Calculation of the Short-Term Cash Incentive
The table below sets forth the performance targets and corresponding percentage of base salary amounts to be awarded to our CEO and other NEOs based on the achievement of Adjusted EBITDA during the year ended December 31, 2023, as established by the Compensation Committee on February 16, 2023. Under this established framework, Adjusted EBITDA and the Short-Term Goals metric determine the percentage of the annual cash incentive award before such award is adjusted upward or downward based on the achievement of Strategic Business Goals:
Calculation of the Short-Term Cash Incentive
| 2023 Annual Cash Incentive Opportunity | | | | | | | | | Adjusted EBITDA Target | Adjusted EBITDA ($) | CEO Bonus % of Base Salary (%) | Other NEO Bonus % of Base Salary (%) | | SHORT- TERM GOALS | CEO Bonus % of Base Salary (%) | Other NEO Bonus % of Base Salary (%) | | Min | $244,501,600 | 72.50% | 58.00% | | Achieved | 30.00% | 24.00% | | | $250,614,140 | 78.75% | 63.00% | | Not Achieved | 0.00% | 0.00% | | | $256,726,680 | 85.00% | 68.00% | | | | | | | $262,839,220 | 91.25% | 73.00% | | | | | | | $268,951,760 | 97.50% | 78.00% | | | | | | | $275,064,300 | 103.75% | 83.00% | | | | | | | $281,176,840 | 110.00% | 88.00% | | | | | | | $287,289,380 | 116.25% | 93.00% | | | | | | | $293,401,920 | 122.50% | 98.00% | | | | | | | $299,514,460 | 128.75% | 103.00% | + | | | | | Target | $305,627,000 | 135.00% | 108.00% | | | | | | | $311,739,540 | 141.25% | 113.00% | | | | | | | $317,852,080 | 147.50% | 118.00% | | | | | | | $323,964,620 | 153.75% | 123.00% | | | | | | | $330,077,160 | 160.00% | 128.00% | | | | | | | $336,189,700 | 166.25% | 133.00% | | | | | | | $342,302,240 | 172.50% | 138.00% | | | | | | | $348,414,780 | 178.75% | 143.00% | | | | | | | $354,527,320 | 185.00% | 148.00% | | | | | | | $360,639,860 | 191.25% | 153.00% | | | | | | Maximum | $366,752,400 | 197.50% | 158.00% | | | | |
Calculation of the Short-Term Cash Incentive
Under the annual cash incentive opportunity, a failure to achieve the minimum bonus level in the Adjusted EBITDA category or a failure to achieve any of the Short-Term Goals results in zero bonus opportunity for that category. The CEO and NEOs may achieve a pro-rata share of the Short-Term Goals amount by satisfying one, two, or three of the four Short-Term Goal components. Similarly, achievement of performance above the maximum bonus level in the Adjusted EBITDA category results in a bonus opportunity at the maximum level only for that category. Assuming the achievement of Adjusted EBITDA at or above the minimum level, the percentage of salary awarded for performance falling between the listed achievement levels is determined by using straight-line interpolation. Because the Short-Term Goals category components are each success or failure only, there is no means by which an NEO could exceed that measure nor is any straight-line interpolation necessary or possible.
Calculation of the Short-Term Cash Incentive
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Calculation of the Short-Term Cash Incentive
Cash incentive awards achieved under the 2023 Annual Cash Incentive Opportunity table above are further increased or decreased based upon the achievement of Strategic Business Goals established by our Compensation Committee on February 16, 2023, in accordance with the table below.
Calculation of the Short-Term Cash Incentive
| Strategic Business Goals Met | Strategic Business Goals Modifier | | None | 0.8x | | One | 0.9x | | Two | 1.0x | | Three | 1.1x | | Four | 1.2x |
Calculation of the Short-Term Cash Incentive
For 2023, we generated $311.0 million of Adjusted EBITDA. We failed to achieve any of the components of the Short-Term Goals. As a result, our CEO’s annual cash incentive opportunity using straight-line interpolation was 140.5% of base salary and our other NEOs’ annual cash incentive opportunity using straight-line interpolation was 112.4% of base salary, before the application of the Strategic Business Goals modifier. As indicated in the table below, the Compensation Committee determined that we achieved four of our Strategic Business Goals, which resulted in a Strategic Business Goals modifier of 1.2x. The following table reflects our Compensation Committee’s determination of the appropriate modifier based on Strategic Business Goals established by the Compensation Committee on February 16, 2023:
Calculation of the Short-Term Cash Incentive
| Strategic Business Goals Modifier | 2023 Target (%) | 2023 Performance (%) | Goal Achieved? | | DEI Behavior training and deployment of Denison Culture survey | 90% and Yes | 98% and Yes | Yes | | Human rights training and human rights policy implementation goals | 90% and Yes | 98% and Yes | Yes | | Reentry, rehabilitation, and recidivism reduction programs development - Achieve 80% on CTS scores and three program implementation goals (1) | 80%, Yes, Yes, and Yes | 82%, Yes, Yes, and Yes | Yes | | Reduce frontline vacancies | Reduce by 7.1 pts. | 7.9 pt. reduction | Yes | | Resulting Modifier | | | 1.2x |
Calculation of the Short-Term Cash Incentive
| (1) The Compensation Committee required a minimum achievement of three of the following four reentry, rehabilitation, and recidivism reduction goals: (a) 80% of Company facilities that offer cognitive behavioral programming such as Go Further, Threshold, RDAP, Interactive Journaling, Moral Reconation Therapy, or Thinking for a Change will show a reduction in Criminal Thinking scores as measured by pre/post CTS scores (actual performance: 82%); (b) the Company’s implementation of a new Academic or Vocational Program at three or more facilities during 2023 (actual performance: three facilities); (c) the Company identifies and implements at least three new overdose prevention strategies during 2023 (actual performance: three strategies); and (d) the Company establishes relationships with at least five new organizations to offer reentry programs in our reentry facilities (actual performance: 23 new organizational relationships). The Committee determined that the Company met or exceeded all four of the goals during 2023. |
Calculation of the Short-Term Cash Incentive
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Calculation of the Short-Term Cash Incentive
Based on our 2023 performance, the following annual cash incentive plan compensation was awarded to our NEOs in February 2023:
Calculation of the Short-Term Cash Incentive
| | | | | Calculation of Actual Cash Incentive Compensation | | | | | | | | | 2023 Base Salary(1) | 2023 Target Bonus | | Adjusted EBITDA Realized CEO 140.5 % NEO 112.4% | | SHORT-TERM GOALS (FAIL) CEO 0% NEO 0% | | Strat Bus. Goals | 2023 Cash Incentive Compensation | | | | ($) | (%) | ($) | (%) | ($) | (%) | ($) | (0.8x-1.2x) | (%) | ($) | | Hininger | 1,060,751 | 135% | 1,432,014 | 140.5% | 1,490,315 | 0% | $0.00 | 1.2x | 168.6% | 1,788,378 | | Garfinkle | 559,185 | 108% | 603,920 | 112.4% | 628,506 | 0% | $0.00 | 1.2x | 134.9% | 754,207 | | Swindle | 526,936 | 108% | 569,091 | 112.4% | 592,259 | 0% | $0.00 | 1.2x | 134.9% | 710,711 | | Grande | 568,617 | 108% | 614,106 | 112.4% | 639,107 | 0% | $0.00 | 1.2x | 134.9% | 766,928 | | Mayberry | 526,936 | 108% | 569,091 | 112.4% | 592,259 | 0% | $0.00 | 1.2x | 134.9% | 710,711 |
Calculation of the Short-Term Cash Incentive
| (1) The amounts in this column reflect the base salary actually paid by the Company to the NEO during the year and reflect, to the extent applicable, any changes in base salary during the year. |
Calculation of the Short-Term Cash Incentive
Long-Term Incentive Compensation Our pay mix is weighted toward equity compensation because we believe long-term, equity-based incentive compensation strengthens and aligns the interests of our executive officers with our stockholders. Equity incentive awards are generally granted to our executive officers on an annual basis. In 2023, long-term equity incentive compensation represented approximately 51.7% of our CEO’s total direct compensation package and, on average, approximately 48.0% of our other NEOs’ total compensation package (calculated in the manner described on page 47). Long-Term Equity Incentive Compensation Plan Components Our long-term equity incentive plan components are: Performance-Based RSUs
Calculation of the Short-Term Cash Incentive
| • | Vest over a three-year period based on the achievement of an annual Normalized FFO performance target and subject to an rTSR modifier, which may positively or negatively adjust the number of performance-based RSUs vesting. |
Calculation of the Short-Term Cash Incentive
| • | Awards settled in stock, with cash dividends on RSUs, if any, being paid in cash only for RSUs that ultimately vest upon the achievement of performance targets. |
Calculation of the Short-Term Cash Incentive
| • | Granted to NEOs, executive officers and other vice presidents. |
Calculation of the Short-Term Cash Incentive
Time-Based RSUs
Calculation of the Short-Term Cash Incentive
| • | Annual time-based RSU awards vest in equal amounts over three years beginning on the later of (i) the anniversary date of the grant or (ii) the delivery of the audited financial statements by the Company’s independent registered public accountant for the applicable fiscal year. |
Calculation of the Short-Term Cash Incentive
| • | Awards settled in stock, with cash dividends on RSUs, if any, being paid in cash only for RSUs that ultimately vest. |
Calculation of the Short-Term Cash Incentive
| • | Granted to the NEOs as well as to other eligible employees. |
Calculation of the Short-Term Cash Incentive
2023 Long-Term Equity Incentive Compensation Awards As part of its 2019 review of the executive compensation programs described above, the Compensation Committee discussed with Exequity the most appropriate way to motivate and retain our executives. The Compensation Committee believed it was important to continue to use RSU awards instead of stock options to better align the interest of our executives with our stockholders, to encourage executive retention and to conform to compensation practices which provide for granting of both time-based and performance-based equity awards to executive officers.
Calculation of the Short-Term Cash Incentive
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Calculation of the Short-Term Cash Incentive
As a result of these discussions, the Compensation Committee made the decision to structure long-term equity incentive compensation awards in 2023 as a combination of performance-based RSUs and time-based RSUs. Our Compensation Committee considered many factors in determining the mix and value of the time-based and performance-based RSUs to be granted to our NEOs. Factors considered included our financial performance, our progress in the successful execution of our capital allocation and growth strategies, competitive market practices, internal pay equity, executive recruitment and retention, our focus on equity compensation in our pay mix to encourage long-term value creation, and the volatile nature of the stock market in general and the Company’s common stock in particular. Performance-based RSUs create substantial upside opportunity in that vesting depends on the achievement of targets aligned with the Company’s business strategy, while time-based RSUs offer a level of predictability in that they vest in accordance with a preset schedule so long as the grantee remains employed at the time of vesting. Both performance-based and time-based RSUs offer upside and downside potential because each type of RSU is tied to our stock price and each offers the opportunity to accrue dividend equivalents before vesting (if dividends are distributed), but are not paid until vesting, and then only to the extent the associated performance-based RSUs or time-based RSUs vest and the underlying shares are issued (see Compensation Discussion and Analysis—NEO Compensation for 2023—Dividend Equivalent Rights). Utilizing both types of RSUs closely aligns our CEO and other NEOs with the long-term interests of our stockholders. The Compensation Committee believed the use of Normalized FFO as a performance metric for purposes of our performance-based RSUs reflects the value we deliver to our stockholders, as well as the earnings and cash-generating potential of our portfolio and is comparable to performance metrics used by real estate operating companies. See Compensation Discussion and Analysis—2023 Performance-Based RSU Awards (2023-2025 Performance Period). Additionally, by subjecting the performance-based RSUs to the rTSR modifier, the long-term compensation for our NEOs is brought into better alignment with the market results experienced by our stockholders. As a result of the determination discussed above, on February 16, 2023, the Compensation Committee made the following long-term incentive compensation awards to the NEOs in the form of time-based RSUs and performance-based RSUs:
Calculation of the Short-Term Cash Incentive
| Name | 2023 Performance- Based RSUs Granted(1) | 2023 Time-Based RSUs Granted(2) | Grant Date Fair Value(3) ($) | | Damon T. Hininger | 132,911 | 101,911 | 2,799,997 | | David M. Garfinkle | 43,710 | 50,273 | 1,104,994 | | Patrick D. Swindle | 42,722 | 49,136 | 1,080,011 | | Anthony L. Grande | 43,710 | 50,273 | 1,104,994 | | Lucibeth N. Mayberry | 42,722 | 49,136 | 1,080,011 |
Calculation of the Short-Term Cash Incentive
| (1) The performance-based RSUs vest annually in three anniversary tranches subject to the achievement of the annual Normalized FFO performance target, and further subject to an rTSR modifier. Based on Normalized FFO performance, our NEOs are eligible to earn as high as 150% of the original grant value, subject to adjustment by an rTSR modifier, which may positively or negatively adjust the number of performance-based RSUs vesting, or as low as 0% of the original grant value if the threshold performance metric is not achieved. |
Calculation of the Short-Term Cash Incentive
| (2) The time-based RSUs vest in equal amounts over three years on the later of (i) the anniversary date of the grant or (ii) the delivery of the audited financial statements by the Company’s independent registered public accountant for the applicable fiscal year. |
Calculation of the Short-Term Cash Incentive
| (3) The grant date fair value was calculated using a Monte Carlo valuation of $12.64 per share for the performance-based RSUs and a closing share price of $10.99 per share for the time-based RSUs, in each case, as of the respective grant date. The amounts presented above do not include the impact of the rTSR modifier. |
Calculation of the Short-Term Cash Incentive
The grant date fair value of performance-based RSUs awarded to NEOs in 2023 was approximately 8% higher than the performance-based RSUs awarded in 2022. The last adjustment to the grant date fair value for performance-based RSUs awards occurred in 2019. The Compensation Committee determined to make this adjustment upon review of peer compensation data, other market data, and the recommendations of Exequity. 2023 Time-Based RSU Awards The time-based RSUs granted to the NEOs reflected in the table above vest in equal amounts over three years on the later of (i) the anniversary date of the grant or (ii) the delivery of the audited financial statements by the Company’s independent registered public accountant for the applicable fiscal year. The Compensation Committee believes the amount of the time-based RSUs granted to our
Calculation of the Short-Term Cash Incentive
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Calculation of the Short-Term Cash Incentive
NEOs was appropriate given our compensation philosophy and objectives, including our retention objectives. In 2023, time-based RSUs represented approximately 20.7% of our CEO’s total compensation package, and on average, 24.0% of our other NEOs’ total compensation package (calculated in the manner described on page 47). Peer Group for Determining rTSR Modifier for Performance-Based RSU Awards In setting the performance goal for the performance-based RSU awards for 2023, our Compensation Committee, consistent with its approach in 2021 (following the Company’s transition to a taxable C corporation) and 2022, evaluated whether the Russell 2000 was the appropriate rTSR comparator peer group for the Company in 2023. Because the Russell 2000 measures the performance of the smallest 2,000 members of the Russell Index based on market cap and covers a broad array of industries, the Compensation Committee reasoned that the Russell 2000 continues to provide a useful comparison source that is both reflective of broader market performance and investor expectation. On February 16, 2023, our Compensation Committee, utilizing the same rTSR comparator group in 2021, established a three-year rTSR performance period (2021-2023) for the vesting of the first tranche of NEO RSU awards made in 2023 as well as for the vesting of the second tranche of RSU awards made in 2022 and for vesting of the third tranche of RSU awards made in 2021. 2023 Performance-Based RSU Awards (2023-2025 Performance Period) In 2023, after considering the dynamic nature of our Company’s business, industry and growth strategy, the Compensation Committee elected to establish an annual Normalized FFO performance target for the first award tranche. The Compensation Committee established the vesting targets for the 2023 Performance Period on February 16, 2023, in accordance with the following table. Failure to achieve the minimum Normalized FFO performance target in a particular year results in no RSUs vesting and the forfeiture of that year’s tranche of performance-based award. Additionally, the amount of RSUs that will ultimately vest based on the Normalized FFO targets in the table below will be adjusted positively or negatively based on the rTSR modifier.
Calculation of the Short-Term Cash Incentive
| | 2023 Normalized FFO(1) ($) | Normalized FFO Modifier (%) | | 2023 Normalized FFO(1) ($) | Normalized FFO Modifier (%) | | Minimum | $1.14 | 50.00% | Target | $1.43 | 100.00% | | | $1.15 | 51.72% | | $1.44 | 101.72% | | | $1.16 | 53.45% | | $1.45 | 103.45% | | | $1.17 | 55.17% | | $1.46 | 105.17% | | | $1.18 | 56.90% | | $1.47 | 106.90% | | | $1.19 | 58.62% | | $1.48 | 108.62% | | | $1.20 | 60.34% | | $1.49 | 110.34% | | | $1.21 | 62.07% | | $1.50 | 112.07% | | | $1.22 | 63.79% | | $1.51 | 113.79% | | | $1.23 | 65.52% | | $1.52 | 115.52% | | | $1.24 | 67.24% | | $1.53 | 117.24% | | | $1.25 | 68.97% | | $1.54 | 118.97% | | | $1.26 | 70.69% | | $1.55 | 120.69% | | | $1.27 | 72.41% | | $1.56 | 122.41% | | | $1.28 | 74.14% | | $1.57 | 124.14% | | | $1.29 | 75.86% | | $1.58 | 125.86% | | | $1.30 | 77.59% | | $1.59 | 127.59% | | | $1.31 | 79.31% | | $1.60 | 129.31% | | | $1.32 | 81.03% | | $1.61 | 131.03% | | | $1.33 | 82.76% | | $1.62 | 132.76% |
Calculation of the Short-Term Cash Incentive
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Calculation of the Short-Term Cash Incentive
| | 2023 Normalized FFO(1) ($) | Normalized FFO Modifier (%) | 2023 Normalized FFO(1) ($) | Normalized FFO Modifier (%) | | | | $1.34 | 84.48% | $1.63 | 134.48% | | | | $1.35 | 86.21% | $1.64 | 136.21% | | | | $1.36 | 87.93% | $1.65 | 137.93% | | | | $1.37 | 89.66% | $1.66 | 139.66% | | | | $1.38 | 91.38% | $1.67 | 141.38% | | | | $1.39 | 93.10% | $1.68 | 143.10% | | | | $1.40 | 94.83% | $1.69 | 144.83% | | | | $1.41 | 96.55% | $1.70 | 146.55% | | | | $1.42 | 98.28% | $1.71 | 148.28% | | | Target | $1.43 | 100.00% | $1.72 | 150.00% | Maximum |
Calculation of the Short-Term Cash Incentive
| (1) Normalized FFO is an amount calculated and presented on the basis of methodologies other than in accordance with GAAP. Please refer to Appendix A for further explanation and reconciliation of our 2023 Normalized FFO to net income, its most directly comparable GAAP measure. |
Calculation of the Short-Term Cash Incentive
At the same time our Compensation Committee established the Normalized FFO performance targets for the 2023 Performance Period, the Compensation Committee also established the following rTSR modifier levels, which positively or negatively modify any Normalized FFO performance achieved based on the table below.
Calculation of the Short-Term Cash Incentive
| rTSR Percentile | Modifier(1)(2) | | 25th | 0.8x | | 50th | 1.0x | | 75th | 1.2x |
Calculation of the Short-Term Cash Incentive
| (1) If the Company’s absolute TSR for the performance period is less than zero, the rTSR modifier shall not exceed 1.0x for the performance period. |
Calculation of the Short-Term Cash Incentive
| (2) If the applicable rTSR percentile performance falls between the listed rTSR percentiles, straight-line interpolation is used to determine the applicable modifier. |
Calculation of the Short-Term Cash Incentive
As described above, for 2023, our Company’s rTSR was calculated based on the TSRs of the companies comprising the Russell 2000. The Compensation Committee chose this comparison group as it believes that it represents the most appropriate set of companies on which to base the Company’s rTSR performance. The Compensation Committee believes that calculating rTSR against the companies comprising the Russell 2000 provides a more comprehensive comparison of our share price performance than our compensation peer group which is comprised of a narrower industry base and a limited number of companies. The Compensation Committee also believes that comparing our Company’s shareholder return against the shareholder return of the companies in this group closely aligns this key compensation metric with the expectations of investors in small cap companies. For 2023, our Company achieved a Normalized FFO of $1.47, which resulted in the achievement of a Normalized FFO performance of 106.9%. The Company’s three-year (2021-2023) rTSR performance of 94.4% landed in the highest quartile, resulting in an rTSR modifier of 1.2x. As a result of the application of the rTSR modifier, the number of 2023 performance-based RSUs that vested amounted to 128.28% of the original grant amount, or 120% of the Normalized FFO performance achieved of 106.9%. The Compensation Committee believed the amount of these awards was appropriate given our compensation philosophy and objectives. The Compensation Committee believed that the effect of the combined Normalized FFO and rTSR calculations properly rewarded our CEO and other NEOs because the rTSR modifier further increased the impact of Normalized FFO performance on CEO and NEO equity incentive awards. Finally, the Compensation Committee determined the modifier was appropriate because it rewards the NEOs for the Company’s stock performance when compared to the Russell 2000. In 2023, performance-based RSUs represented approximately 31.0% of our CEO’s total compensation package, and on average, 24.0% of our other NEOs’ total compensation package (calculated in the manner described on page 47).
Calculation of the Short-Term Cash Incentive
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Outstanding 2022 Performance-Based RSU Awards (2022-2024 Performance Period)
Outstanding 2022 Performance-Based RSU Awards (2022-2024 Performance Period) The second tranche of performance-based RSUs granted in 2022 are subject to the same Normalized FFO modifier of 106.9% described above and the same three-year rTSR modifier of 1.2x described above. The Compensation Committee determined that using a three-year rTSR modifier for the second tranche of the 2022 RSUs was consistent with the intention of the incentive plan and the approach applied for 2023 awards. As a result of the application of the three-year rTSR modifier, the number of the second tranche of 2022 performance-based RSUs that vested amounted to 128.28% of the original grant amount, or 120% of the Normalized FFO performance achieved of 106.9%.
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period) The third tranche of performance-based RSUs granted in 2021 are subject to the same Normalized FFO modifier of 106.9% described above and the same three-year rTSR modifier of 1.2x described above. The Compensation Committee determined that using a three-year rTSR modifier for the final third of the 2021 RSUs was consistent with the intention of the incentive plan and the approach applied for 2023 awards. As a result of the application of the three-year rTSR modifier, the number of the third tranche of 2021 performance-based RSUs that vested amounted to 128.28% of the original grant amount, or 120% of the Normalized FFO performance achieved of 106.9%. Vesting of 2021-2023 Time-Based RSUs Based on the Passage of Time and 2021-2023 Performance-Based RSUs Based on 2023 Performance. As set forth in the table below, as a result of our Normalized FFO performance of $1.47 for 2023, and the application of the applicable rTSR modifier of 1.2 x described above, the 2023 performance period tranches for outstanding performance-based RSUs granted in 2021, 2022 and 2023 vested in the amounts set forth below. In accordance with the terms of the awards, the vesting occurs and shares are issued on the later of (i) delivery of the audited financial statements by the Company’s independent registered public accountant for the applicable fiscal year and (ii) the applicable anniversary of the grant date. Additionally, as set forth in the table below, the 2023 period tranches for the time-based and performance-based RSUs granted in 2021, 2022 and 2023 vested on February 20, 2024.
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| | '23 TBRSUs(1) Vesting in '24 | '22 TBRSUs(1) Vesting in '24 | '21 TBRSUs(1) Vesting in '24 | '23 PBRSUs(2) Vesting per '23 Performance in '24 | '22 PBRSUs(2) Vesting per '23 Performance in '24 | '21 PBRSUs(2) Vesting per '23 Performance in '24 | | Damon T. Hininger | 33,970 | 35,230 | 45,614 | 56,831 | 60,752 | 67,517 | | David M. Garfinkle | 16,757 | 16,937 | 21,931 | 18,690 | 19,471 | 21,639 | | Patrick D. Swindle | 16,378 | 16,937 | 21,931 | 18,267 | 19,471 | 21,639 | | Anthony L. Grande | 16,757 | 16,937 | 21,931 | 18,690 | 19,471 | 21,639 | | Lucibeth N. Mayberry | 16,378 | 16,937 | 21,931 | 18,267 | 19,471 | 21,639 |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| (1) “TBRSUs” refers to time-based restricted stock units as described in the section of this Proxy titled 2023 Long-Term Equity Incentive Compensation Awards. |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| (2) “PBRSUs” refers to performance-based restricted stock units as described in the section of this Proxy titled 2023 Long-Term Equity Incentive Compensation Awards. |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
Dividend Equivalent Rights. The performance-based RSUs and time-based RSUs have associated dividend equivalent rights that are earned based on cash dividends, if any, paid by the Company while the award is unvested and outstanding. The dividend equivalent rights, if any, are paid in cash, and do not vest and are not paid unless and until, and then only to the extent, the associated performance-based RSUs or time-based RSUs vest and the underlying shares are issued. This further aligns the executive officer’s interests with our stockholders, encourages dividend growth performance and does not result in payment of any unearned compensation. The Company has not declared a dividend since the payment of our first quarter dividend in 2020. In August 2020, our Board unanimously voted to discontinue our quarterly dividend and prioritize allocating our free cash flow to reduce debt levels. Any future dividend is subject to our Board’s determinations as to the amount and timing thereof, as well as limitations under the Company’s debt covenants. Substantial Compensation Tied to Our Objective Performance RSUs granted in 2023 comprised both performance-based RSUs that vest based on the achievement of an annually set Normalized FFO performance target, subject to a positive or negative adjustment by an rTSR modifier, and time-based RSUs that vest ratably over three years. In 2023, our annual cash incentives were earned based upon our objective performance against a pre-established
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
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Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
financial performance target (Adjusted EBITDA) and pass/fail Short-Term Business Goals and modified positively or negatively based on our achievement of objective Strategic Business Goals. As a result, a substantial portion of executive compensation is at risk, paid based on our objective performance and tied to the interests of our stockholders and long-term value creation. Non-Direct Compensation Severance and Change in Control Benefits We believe reasonable severance and change in control benefits are necessary to recruit and retain effective senior managers. These severance benefits reflect the fact that it may be difficult for such executives to find comparable employment within a short period of time and are a product of a generally competitive recruiting environment within our industry. We also believe a change in control arrangement will provide some level of protection to our executive officers who might be terminated involuntarily in connection with such a transaction. In addition, we have sought to maintain a high level of consistency in the severance terms applicable to all members of the executive team. Through December 31, 2023, we had executive employment agreements in place with each of our executive officers. Such executive employment agreements provide cash severance equal to one year of the executive officer’s then-current annual base salary for termination of employment by the Company without “cause” or resignation for “good reason,” and a double trigger payment of 2.99 times their base salary, plus certain other benefits, in the event of termination of the executive’s employment by the Company without “cause” or resignation for “good reason” in connection with a “change in control” (collectively, the “Severance Benefits”). The executive employment agreements and the potential costs in the event of a change in control are reviewed periodically by our Compensation Committee, which remains informed with respect to developments and suggested best practices in compensation structure and design. In 2020, we undertook a review of the provisions of the executive employment agreements (including protections provided in the event of a change in control, compliance with applicable law and provisions related to post-termination non-competition, non-solicitation, confidentiality, and non-disclosure) and, effective January 1, 2021, we entered into the executive employment agreements with each of our then-current executive officers. The executive employment agreements provided for an initial term expiring December 31, 2022, with automatic renewal for an additional year absent notice of nonrenewal by the Company or the executive at least 60 days in advance of the expiration of the initial term. Pursuant to those terms, all the current executive officers' executive employment agreements automatically renewed for a one-year period expiring December 31, 2023. Each of these executive employment agreements also implements revised confidentiality, non-disclosure, non-competition, and non-solicitation provisions. Each of these agreements provides for a minimum annual salary. In addition, during the term, the executives are eligible to participate in all compensation or employee benefit plans or programs maintained by the Company for the benefit of its salaried employees or senior executives from time to time. These plans and programs may include health and life insurance. In addition, during the term, these agreements provide for reimbursement for certain professional and civic memberships that are approved in advance by the Company. Each of the executive employment agreements provides for severance benefits, which are described above and more fully discussed under the heading Compensation Discussion and Analysis—Potential Payments Upon Termination or Change in Control in this Proxy Statement. We continue to believe reasonable severance and change in control benefits are necessary to recruit and retain effective senior managers, and, in connection with expiration of the executive employment agreements on December 31, 2023, our Compensation Committee determined that the Company should adopt an Executive Severance and Change in Control Plan (the “Severance Plan”) applicable to each of our executive officers. Our Compensation Committee believes that the Severance Plan was preferable to individual executive employment agreements because the Severance Plan ensures continuity of terms between our executive officers and facilitates ease of administration. The Severance Plan was adopted in late 2023 and became effective January 1, 2024. The Severance Plan retains the Severance Benefits from the executive employment agreements that expired on December 31, 2023, and, as a result, provides for substantially the same benefits as those provided in such executive employment agreements. Each of our named executive officers is a participant under the Severance Plan. In connection with each such named executive officer’s participation in the Severance Plan, each such executive officer entered into a Confidentiality, Intellectual Property and Non-Competition Restrictive Covenants Agreement with the Company (the “Confidentiality Agreement”). The Confidentiality Agreement contains terms that are substantially the same as the comparable provisions contained in the executive employment agreements that expired on December 31, 2023.
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
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Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
Perquisites and Other Benefits The Company has paid relocation expenses, either in the form of reimbursement or a lump sum payment, to the NEOs who have relocated to Nashville, Tennessee to assume their positions with the Company. We permit limited tax gross up payments to our executives to cover the income tax associated with the taxable portions (if any) of such relocation reimbursement payments. The NEOs are also eligible for benefits generally available to and on the same terms as the Company’s employees who are exempt for purposes of the Fair Labor Standards Act, including health insurance, short-term disability insurance, and dental insurance. Additionally, the Company pays supplemental life and long-term disability insurance premiums for the NEOs. To encourage community involvement, the NEOs are also eligible for reimbursement for certain civic and professional memberships that are approved in advance. We also pay for physicals for executive officers up to $3,500 per individual on an annual basis and provide an optional concierge physician service benefit up to $3,000 per year to our officers, including our executive officers. We also reimburse our NEOs for certain wellness memberships. Retirement Plans The Company maintains a qualified 401(k) plan. The Company matches a percentage of eligible employee contributions to our 401(k) Plan. Employer matching contributions are made in cash on a dollar-for-dollar basis up to 5% of the employee’s base salary and are 100% vested immediately. The Company also maintains a nonqualified deferred compensation plan covering our executive officers and certain key employees (the “Executive Deferred Compensation Plan”). Under the terms of the Executive Deferred Compensation Plan, participants are eligible to defer up to 50% of their annual base salary and 100% of their cash incentive bonus each plan year. The Company, in its discretion, may make matching contributions to the plan. Currently, the Company makes matching contributions equal to 100% of amounts deferred up to 5% of total cash compensation. The matching contribution is credited monthly but is reduced at the end of the plan year for any matching amounts contributed to the participant’s 401(k) account. Any compensation deferred and matching contributions, if any, earn a return based on a fixed rate that is established by the Company based on the return received by the Company on certain investments designated as a funding mechanism for meeting its obligations under the Executive Deferred Compensation Plan. Participants are 100% vested in amounts deferred under the Executive Deferred Compensation Plan and earnings on those amounts, while the matching contributions vest 20% after two years of service, 40% after three years of service, 80% after four years of service and 100% after five years of service, subject to accelerated vesting in the event of a change in control, death, disability, or retirement (age 62). Guidelines and Policies Executive Officer Stock Ownership Guidelines We maintain stock ownership guidelines applicable to our executive officers and non-executive directors. The stock ownership guidelines are designed to align the economic interests of executive officers and our Board with those of stockholders and to discourage excessive risk-taking by management and directors. Under these guidelines, each of our executive officers is expected to own a fixed number of shares of the Company’s common stock equal to three times such executive officer’s base salary on his or her hire or promotion date divided by the Company’s closing common stock price, as reported by the NYSE, on such date. Executive officers are expected to achieve these ownership levels, subject to a limited hardship exemption, within five years following their date of hire or promotion. See Executive and Director Compensation—Guidelines and Policies—Executive Officer Stock Ownership Guidelines and Executive and Director Compensation—Director Compensation—Director Stock Ownership Guidelines. The following rules are used in determining share ownership of our executive officers and directors under the guidelines:
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| • | shares of common stock owned outright by the executive officer or director and his or her immediate family members who share the same household, whether held individually or jointly; |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| • | shares of restricted stock or RSUs where the restrictions have lapsed, even though such shares may be subject to an election made by the holder to defer receipt of the shares; and |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| • | shares held in trusts or other legal entities established for estate planning purposes with respect to which the executive officer or director retains beneficial ownership (due to complexities of these arrangements, requests to include shares held in such arrangements must be reviewed and approved by our Compensation Committee). |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
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Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
Based on a review of such programs at Fortune 500 companies, our Board determined that the Company’s ownership requirements were fair, yet challenging, and that five years was a reasonable time during which executives and directors would be able to comply. Our Board believes these ownership guidelines encourage executive officers of the Company and the Board to act in the long-term interests of our stockholders, while discouraging excessive risk-taking. Our guidelines and the compliance status of our NEOs as of the last quarterly review date of February 22, 2024, are shown in the table below:
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| Name | Shares Required by Guidelines | Number of Shares Held | Compliance Deadline | | Damon T. Hininger | 87,138 | 683,345 | 10/15/2014 | | David M. Garfinkle | 32,777 | 292,274 | 5/1/2019 | | Patrick D. Swindle | 53,119 | 145,886 | 1/1/2023 | | Anthony L. Grande | 35,671 | 112,438 | 8/21/2013 | | Lucibeth N. Mayberry | 22,340 | 176,115 | 11/1/2018 |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
Grant Timing Policy
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| • | Grants of equity awards for executive officers are typically made on the date of the February Compensation Committee meeting, after our Compensation Committee has had the opportunity to review full year results for the prior year and consider anticipated results for the current year. |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| • | Our Compensation Committee occasionally approves additional equity awards in certain special circumstances, such as upon an executive officer’s initial employment with the Company, the promotion of an executive officer to a new position or in recognition of special contributions made by an executive officer. For grants to executive officers, all such grants are approved by our Compensation Committee with an effective date of grant on or after the date of such approval. If the grant date is after the date of approval, it is on a date that is specified by our Compensation Committee at the time of approval. |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
| • | The Company strives to ensure equity grants are made following the public release of important information such as year-end results or anticipated results for the succeeding year. |
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
Deductibility of Executive Compensation Section 162(m) of the Code limits the tax deductibility of compensation over $1.0 million paid to certain executive officers of the Company. Prior to the 2017 enactment of the Tax Cuts and Jobs Act (the “TCJA”), Section 162(m) provided an exemption from the deduction limitation for compensation that constituted “qualified performance-based compensation.” The TCJA, however, repealed the exemption for “qualified performance-based compensation,” effective for taxable years beginning after December 31, 2017, subject to transitional relief for certain arrangements in place as of November 2, 2017. This change, among others, has caused more of the compensation we pay to our executive officers to be non-deductible under Section 162(m) and has eliminated our ability to structure performance-based awards to be exempt from the Section 162(m) limitations. In designing our executive compensation program and determining the compensation of our executive officers, the Compensation Committee considers multiple factors, including the potential impact of the deduction limitation contained in Section 162(m). However, the Compensation Committee will not necessarily limit executive compensation to that which is or may be deductible under Section 162(m). The deductibility of some types of compensation depends upon the timing of an executive officer’s vesting or exercise of previously granted rights. Additionally, interpretations of and changes in the tax laws, and other factors beyond the Compensation Committee’s control will also affect the deductibility of compensation. The Compensation Committee will consider alternative arrangements to preserve the deductibility of compensation payments and benefits to the extent consistent with its compensation goals and will continue to monitor any developments regarding Section 162(m). To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, the Compensation Committee has not adopted a policy that all compensation must be deductible. The Compensation Committee believes our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in a non-deductible compensation expense.
Outstanding 2021 Performance-Based RSU Awards (2021-2023 Performance Period)
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Anne L. Mariucci
| Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Non-qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Damon T. Hininger President & Chief Executive Officer | 2023 | $1,060,751 | $2,799,997 | $1,788,378 | $— | $142,911 | $5,792,037 | | | 2022 | $1,014,374 | $2,600,005 | $1,305,217 | $77,723 | $162,422 | $5,159,741 | | | 2021 | $963,540 | $2,600,002 | $1,694,859 | $85,678 | $101,237 | $5,445,316 | | David M. Garfinkle Executive Vice President & Chief Financial Officer | 2023 | $559,185 | $1,104,994 | $754,207 | $— | $76,587 | $2,494,973 | | | 2022 | $534,737 | $999,996 | $550,446 | $13,106 | $37,841 | $2,136,126 | | | 2021 | $507,940 | $999,993 | $714,770 | $15,694 | $34,824 | $2,273,221 | | Patrick D. Swindle Executive Vice President & Chief Operating Officer | 2023 | $526,936 | $1,080,011 | $710,711 | $— | $70,633 | $2,388,291 | | | 2022 | $503,899 | $999,996 | $518,702 | $697 | $63,722 | $2,087,016 | | | 2021 | $475,357 | $999,993 | $668,919 | $— | $28,753 | $2,173,022 | | Anthony L. Grande Executive Vice President & Chief Development Officer | 2023 | $568,617 | $1,104,994 | $766,928 | $— | $80,660 | $2,521,199 | | | 2022 | $543,757 | $999,996 | $559,731 | $21,921 | $84,263 | $2,209,668 | | | 2021 | $516,506 | $999,993 | $726,823 | $36,385 | $58,184 | $2,337,891 | | Lucibeth N. Mayberry Executive Vice President, Real Estate | 2023 | $526,936 | $1,080,011 | $710,711 | $— | $36,721 | $2,354,379 | | | 2022 | $503,899 | $999,996 | $518,702 | $11,662 | $38,546 | $2,072,805 | | | 2021 | $475,357 | $999,993 | $668,919 | $13,965 | $30,521 | $2,188,755 |
Anne L. Mariucci
| Year (a) | Summary Compensation Table Total for PEO (b) ($) | Compensation Actually Paid to PEO (c) ($) | Average Summary Compensation Total for Non-PEO NEOs (D) ($) | Average Compensation Actually Paid to Non-PEO NEOs (E) ($) | Value of Initial Fixed $100 Investment Based on CXW TSR (f) ($) | Value of Initial Fixed $100 Investment Based on Peer Group TSR (g) ($) | Net Income (Loss) (in thousands) (h) ($) | Normalized FFO (in thousands) (i) ($) | | 2020 | $4,405,451 | $1,440,049 | $1,804,908 | $645,024 | $40 | $92 | $54,157 | $271,768 | | 2021 | $5,445,316 | $7,174,536 | $2,243,222 | $2,892,714 | $61 | $126 | $(51,896) | $225,484 | | 2022 | $5,159,741 | $5,286,571 | $2,126,404 | $2,223,381 | $71 | $91 | $122,320 | $165,216 | | 2023 | $5,792,037 | $7,581,408 | $2,439,711 | $3,113,536 | $89 | $97 | $67,590 | $168,436 |
Principal Executive Officer and Non-PEO Named Executive Officers (Non-PEO NEOs)
| NAME | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS(1) ($) | CHANGE IN NONQUALIFIED DEFERRED COMPENSATION EARNINGS(2) ($) | ALL OTHER COMPENSATION ($) | TOTAL ($) | | Donna M. Alvarado | $116,000 | $134,999 | $— | $— | $250,999 | | Robert J. Dennis | $100,000 | $134,999 | $— | $— | $234,999 | | Mark A. Emkes | $148,500 | $185,002 | $— | $— | $333,502 | | Stacia A. Hylton | $98,500 | $134,999 | $— | $— | $233,499 | | Harley G. Lappin | $80,000 | $134,999 | $— | $— | $214,999 | | Anne L. Mariucci | $100,000 | $134,999 | $— | $— | $234,999 | | Thurgood Marshall, Jr. | $108,500 | $134,999 | $— | $— | $243,499 | | Devin I. Murphy | $108,500 | $134,999 | $— | $— | $243,499 | | John R. Prann, Jr. | $115,000 | $134,999 | $— | $— | $249,999 |