UNITED
STATES SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
February 26,
2009
CORNELL
COMPANIES, INC.
(Exact name of
registrant as specified in its charter)
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DELAWARE
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1-14472
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76-0433642
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(State or other
jurisdiction of
incorporation)
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(Commission File
Number)
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(I.R.S. Employer
Identification No.)
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1700
West Loop South, Suite 1500
Houston,
Texas 77027
(Address of
principal executive offices) (Zip Code)
(713)
623-0790
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former name or
former address, if changed since last report)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see
General Instruction A.2.below):
o
Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02
Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangement of Certain Officers.
On February 26,
2009, the Board of Directors of Cornell Companies, Inc. (“Company”)
approved the following changes with respect to the compensation of its named
executive officers (“NEO’s”):
1.
Base Salaries. As of April 1,
2009, the base salaries set forth below shall be effective for John Nieser,
Senior Vice President, Chief Financial Officer & Treasurer and Pat
Perrin, Senior Vice President, Chief Administrative Officer. There was no
change to the base salary for James E. Hyman, Chairman, President &
Chief Executive Officer.
a.
Mr. Nieser - $260,000.
b.
Mr. Perrin – $215,000.
2.
Cash Incentive Compensation (ICP)
Opportunity. For 2009, the amounts described below for the respective NEO’s
were set as their respective ICP opportunities - there was no change from the
2008 ICP opportunity for the NEO’s.
a.
Mr. Hyman – 100% of base, with 60% being based on
financial performance and 40% based upon achievement of operational and
personal milestone objectives.
b.
Mr. Nieser - 50% of base, with 65% being based
upon financial performance and 35% being based upon achievement of operational
and personal milestone objectives.
c.
Mr. Perrin - 35% of base, with 65% being based
upon financial performance and 35% being based upon achievement of operational
and personal milestone objectives.
The potential ICP can be
increased by up to 200% of the portion of such ICP opportunity related to the
Company’s financial performance. The financial performance will be based
upon the Company’s achievement of previously established earnings per share (“EPS”)
goals for the fiscal year ending December 31, 2009. The operational and personal milestone
objectives are based upon (i) operations excellence and capital
effectiveness in the case of Mr. Hyman, (ii) compliance, financial
processes/systems, leadership, cost of capital and return on capital employed
in the case of Mr. Nieser, and (iii) efficiency, effectiveness,
enterprise continuity, business unit strategy support and leadership in the
case of Mr. Perrin.
3. Equity Awards. The Board of Directors approved a
new form of equity awards to the NEO’s under the Company’s 2006 Equity
Incentive Plan (the “2006 Plan”), the material terms of which are discussed
below. The new form of equity awards are
subject to the terms of the 2006 Plan and individual award agreements to be
entered into between the Company and each NEO.
Once the forms of the individual award agreements are finalized, they
will be filed as exhibits to a Form 8-K.
The equity awards to the NEO’s will consist of performance-based
restricted stock to be granted effective as of April 1, 2009. The
awards are split equally between time-based plus profitability threshold
restricted stock awards (“Time-Based Plus Profitability Shares”) and earnings
before interest, taxes, depreciation and amortization (“EBITDA”)
performance-based restricted stock awards (“EBITDA Based Shares”).
The Time-Based Plus
Profitability Shares are based on a net income profitability target for each
year during the three year performance period, with shares accumulating in
one-third increments upon the achievement of each net income profitability target
with respect to a calendar year from 2009 up to and including 2011. The shares, to the extent accumulated, will
vest on April 1, 2012. Each net
income profitability target is specific to a particular year during the
performance period. Thus, if a target is
missed for any year during the performance period, there is no opportunity to
make up the missed target in subsequent years during the performance
period. If the NEO voluntarily resigns or
is terminated with cause prior to the end of the performance period, then
accumulated Time-
Based Plus Profitability Shares will be forfeited. If the NEO is terminated
without cause prior to the end of the performance period, then accumulated Time-Based
Plus Profitability Shares (and a prorated number of Time-Based Plus
Profitability Shares for the performance year in which such event occurs) will
vest.
The EBITDA Based Shares
are subject to achievement of three separate EBITDA targets based upon 2009
EBITDA, with such shares accumulating in one-third increments upon the
achievement of each of the EBITDA targets with respect to any calendar year
from 2009 up to and including 2011.
The shares, to the extent accumulated, will vest on April 1, 2012.
If the NEO voluntarily resigns or is terminated with cause prior to the end of
the performance period, then accumulated EBITDA Based Shares will be forfeited.
If the NEO is terminated without cause prior to the end of the performance
period, then accumulated EBITDA Based Shares
will vest.
In the event of a Change
of Control (as defined in the 2006 Plan) of the Company, all Time-Based Plus
Profitability Shares and EBITDA Based Shares vest in full.
The equity awards for the
NEO’s are as follows:
a.
Mr. Hyman – 32,000 Time-Based Plus
Profitability Shares and EBITDA Based Shares.
b.
Mr. Nieser – 22,000 Time-Based Plus
Profitability Shares and EBITDA Based Shares.
c.
Mr. Perrin – 12,500 Time-Based Plus
Profitability Shares and EBITDA Based Shares.
Item 5.05
Amendment to Code of
Ethics.
On
February 26, 2009, the Board of Directors of the Company approved the
reorganization of its corporate governance ethics policies and procedures,
including the Policy Governing Business Conduct, to set forth the code of
ethics for senior financial officers in one document. A copy of the separate code of ethics ,
entitled “Code of Ethics for Senior Financial Officers” is attached as Exhibit 10.1
to this Form 8-K.
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