CCA to cut staff amid restructuring
Corrections Corp. of America, a private prison operator based in Nashville, plans to layoff as many as 55 full-time positions as part of a cost-cutting plan and company restructuring, the company announced Tuesday.
The layoffs come as CCA, whose shares have plummeted in recent weeks, faces shrinking federal government contracts and seeks to expand its focus on re-entry programs. The job cuts will affect about 12 percent of its corporate workforce at its Nashville headquarters and the move is expected to save the company $9 million in 2017.
"Recognizing the continuing evolution of our core corrections and detention businesses, and our strategy to grow our reentry and real estate platforms, we conducted a thorough review of our corporate structure to optimize our support of both existing and future operations," Damon T. Hininger, CCA president and CEO, said in a statement. "Proactively addressing the challenges and opportunities of our business means very difficult decisions must be made, and our most immediate concern is for the welfare of the employees affected by the restructuring."
The company's shares have fallen 45 percent since Aug. 18, when the U.S. Dept. of Justice announced it would phase out the use of private prisons. CCA shares tumbled 7.6 percent Tuesday to $14.78 per share, after presidential candidate Hillary Clinton's criticism of private prisons during the presidential debate Monday night.
Hininger will forfeit certain stock awards from 2016, valued at $2 million, and will not accept equity-based pay in 2017 in conjunction with the cost-cutting plan, according to the company. Hininger's total compensation was $3.4 million in 2015, which included a $882,000 salary, according to company filings. The gesture is "a testament to Damon's leadership and character," said Mark Emkes, a non-executive CCA chairman.
CCA, one of the nation's largest prison and detention center operators, runs 85 facilities with nearly 90,000 beds, according to its most recent quarterly filing. A new facility in Trousdale County, Tenn., opened this year but temporarily stopped accepting new inmates in May after "serious issues" were raised by a state corrections official. The prison began taking new inmates again in July.
In the past three years, CCA has added 25 re-entry facilities in four states that are designed to house inmates and transition out of prisons at the end of their sentences
During the debate, Clinton said states should end contracts with private prison companies.
"I'm glad that we’re ending private prisons in the federal system," Clinton said. "I want to see them ended in the state system. You shouldn't have a profit motivation to fill prison cells with young Americans."
Clinton said last year she would no longer accept campaign contributions from lobbyists associated with private prison companies, including CCA, and that she would end private prisons and immigration detention centers.
CCA spokesman Jonathan Burns said CCA disagreed with Clinton's comments and emphasized the company's focus on expanding re-entry programs as part of an effort to reduce recidivism rates.
"Taking away an important tool that helps governments manage their corrections needs is not a solution to the serious challenges facing our justice system," Burns said in an emailed statement. "In fact, ending contracting will lead to more overcrowding, higher costs, and less re-entry programming."
Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.
CCA looks to re-entry program growth as federal contracts shrink