Largest Private Prison Firm Objects to Resolution to Fund Rehabilitative, Reentry Programs

Nashville, TN – Corrections Corporation of America (NYSE: CXW), the nation’s largest for-profit prison firm, formally objected to a shareholder resolution that would require the company to spend just 5% of its net income “on programs and services designed to reduce recidivism rates for offenders.”

The resolution was submitted by Alex Friedmann, associate director of the Human Rights Defense Center and managing editor of HRDC’s monthly publication, Prison Legal News. An activist shareholder, Friedmann owns a small amount of CCA stock; in the 1990s he served six years at a CCA-operated prison in Clifton, Tennessee prior to his release in 1999. “As a former prisoner, I know firsthand the importance of providing rehabilitative programs and reentry services,” Friedmann stated. “I also know firsthand the incentive of private prisons to cut costs – including expenses associated with rehabilitative programs – in order to increase their profit margins.”

Citing data from the Bureau of Justice Statistics, the resolution notes that “Recidivism rates for prisoners released from correctional facilities are extremely high, with almost 77% of offenders being re-arrested within five years of release.” Further, “[t]he need to reduce recidivism rates for offenders held in [CCA’s] facilities is of particular importance, as two recent studies concluded that prisoners housed at privately-operated facilities have higher average recidivism rates.” The shareholder resolution states that it “provides an opportunity for CCA to do more to reduce the recidivism rates of offenders released from the Company’s facilities, and thus reduce crime and victimization in our communities.”

CCA filed a formal objection with the Securities and Exchange Commission (SEC), seeking to exclude the resolution from its 2015 proxy materials distributed to shareholders. In its objection, CCA argued that the resolution relates to “ordinary business operations,” comparing it to other shareholder resolutions that have, for example, sought to require companies to “test and install showerheads that use limited amounts of water.”

In a press release issued by CCA last year, the company announced “a series of commitments” to rehabilitative programming, stating it would “play a larger role in helping reduce the nation’s high recidivism rate.” At the time, CCA CEO Damon Hininger claimed that “Reentry programs and reducing recidivism are 100 percent aligned with our business model.” “CCA’s objection to a shareholder resolution that would require the company to spend just 5% of its net income on rehabilitative and reentry programs demonstrates the lack of the company’s sincerity when it claims to care about reducing recidivism,” stated HRDC executive director Paul Wright. “Evidently, retaining 95% of its profits isn’t enough for CCA – which isn’t surprising, because as a for-profit company CCA is only concerned about its bottom line, not what is best for members of the public, including those victimized by crime.”

“If CCA was serious about investing in rehabilitation and reentry programs for prisoners who will be released from the company’s for-profit facilities, then it would not have objected to this resolution,” Friedmann added. “But it did, so we can draw our own conclusions.”

Resolution

On Sept. 15, 2014, Corrections Corporation of America (“the Company”) announced that it will expand reentry programs at the Company’s facilities.

CCA president Damon Hininger pledged that CCA “would play a larger role in helping reduce the nation’s high recidivism rate,” noting that “Reentry programs and reducingrecidivism are 100 percent aligned with our business model.”

Recidivism rates for released prisoners are extremely high, with almost 77 percent of offenders being re-arrested within five years of release.

The need to reduce recidivism rates for offenders held in the Company’s facilities is particularly important, as two recent studies concluded that prisoners housed at privatelyoperated prisons have higher recidivism rates.

A 2013 Minnesota study determined “that offenders who had been incarcerated in a private prison had a greater hazard of recidivism in all 20 models, and the recidivism risk was significantly greater in eight of the models.”

A 2008 study of Oklahoma prisoners in public and private prisons found “a significantly greater hazard of recidivism among private prison inmates in six of the eight models tested…. In every categorical model (including the two that were non-significant), private
prison inmate groups had a greater hazard of recidivism than did public inmate groups.”

Although the Company provides rehabilitative programs at its facilities, such programs are typically required by the terms of the Company’s contracts with government agencies. This resolution provides an opportunity for CCA to do more to reduce the recidivism rates of offenders released from the Company’s facilities, and thus reduce crime and victimization in our communities.

Resolved

That the stockholders of the Company request that the Board of Directors adopt the following policy to be implemented beginning in fiscal year 2015, for the purpose of reducing recidivism for offenders in the Company’s facilities:

  1. That by the end of the third quarter of each fiscal year, the Company shall expend funds equal to five percent (5%) of the Company’s net income for the prior fiscal year on programs and services designed to reduce recidivism rates for offenders in the Company’s correctional facilities.
  2. That the expenditure of the funds specified in Section 1 shall be in addition to any funds the Company already spends, intends to spend or is required to spend on rehabilitative or reentry programs and services pursuant to the Company’s contracts with government agencies.
  3. That the expenditure of the funds specified in Section 1 may be used to expand rehabilitative programs or services already provided in the Company’s correctional facilities; to establish new rehabilitative programs or services; or as donations to nonprofit organizations that provide rehabilitative or reentry programs and services for prisoners or released prisoners.
  4. That the Company shall expend the funds specified in Section 1 proportionally among the Company’s correctional facilities that are in active operation (vacant facilities not included), with such funds prorated according to each active facility’s average daily population at the end of the prior fiscal year.