Corrections Corporation Of America Plans Layoffs And CEO Pay Cuts

(RTTNews) - Corrections Corporation of America (CXW) announced a restructuring of its corporate operations and implementation of a cost reduction plan. It expects that 50 to 55 full time positions will be eliminated as a result of the restructuring, or approximately 12% of the corporate workforce at its headquarters.

The company expects to report a charge in the third quarter of 2016 of approximately $4.0 million associated with this restructuring. This charge primarily consists of cash payments for severance and related benefits to terminated employees and a non-cash charge associated with the voluntary forfeiture by CCA's chief executive officer of a restricted stock unit award.

The impact of these staffing reductions, together with the implementation of the cost reduction plan, are expected to result in expense savings of approximately $9.0 million in 2017, most of which are general and administrative expenses. A substantial portion of these expense savings will commence in the fourth quarter of 2016.

In support of the cost reduction plan, Damon Hininger, CCA's President and Chief Executive Officer volunteered to forfeit restricted stock units awarded to him on February 19, 2016, and requested CCA's compensation committee to not award him any equity-based compensation in 2017. This includes the forfeiture of all accrued dividend equivalents that would have been paid to Mr. Hininger thereunder. The fair value of the forfeited restricted stock unit award on the grant date of February 19, 2016 was $2.0 million. Unrecognized compensation expense on this award of about $1.7 million is included in the estimated restructuring charge.