The Corrections Corporation of America (CCA) announced plans to cut between 50 and 55 jobs at its Nashville corporate headquarters as part of a restructuring and cost-reduction initiative. The announcement follows a plummeting of the company’s stock price last month after the Department of Justice announced its plan to stop using private prisons like those the company owns and operates. Federal contracts impacted reportedly represent 7 percent of the company’s total revenue, and shares have not recovered since the policy change. The Department of Homeland Security also announced it was conducting a review of its use of private prisons last month.
CCA’s announcement came a day after Hillary Clinton called for the end of private prisons during Monday’s presidential debate.
The restructuring will cost the company $4M this year and is expected to produce savings of $9M in 2017 by helping the company “more effectively serve facility operations and support the progression of CCA’s business-diversification strategy,” according to a news release.
“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,” Damon Hininger, CCA’s president and chief executive officer, said in the release. “Together with the ongoing initiatives that are diversifying our business model, I am confident this restructuring and cost-reduction plan will better position CCA for long-term value creation for our shareholders.”
Hininger will forfeit $2M in restricted stock awarded to him earlier this year, as part of the restructuring, and he will request no equity-based compensation in 2017, the release says.
“This entirely voluntary gesture by Damon regarding his compensation demonstrates the serious and personal way the team is working to ensure CCA is poised for long-term success,” Mark Emkes, non-executive chairman of CCA’s board of directors, said in the release.