Private Prison Execs Win Big While Guards and Prisoners Lose Out
Many of the problems associated with imprisonment in the U.S. high staff turnover, prisoner neglect and abuse, and the introduction of contraband by employees, for example can be attributed to the paltry salaries and few benefits that most guards receive. But while low-paid guards must make do with their miserly paychecks, those at the top of the prison hierarchy especially the executives of private prison companies are living lives of lavish excess.
Like those they watch over, many prison guards make a barely livable wage. In Mississippi, for example, the starting salary for state prison guards is $19,620 a year; in Tennessee its $21,000 and in Alabama $25,352. These salaries are generally far less than those of their bosses. For instance, the commissioner of the New York Department of Corrections (DOC) makes $136,000 a year, and Californias top prison official earns $129,000. At the Bureau of Prisons, where annual pay for guards starts at $34,000 to $35,000, the BOP commissioner draws a healthy $160,000 salary. The dichotomy is perhaps most striking in Texas, however, where Brad Livingston, Executive Director of the Department of Criminal Justice, rakes in $165,000 a year more than 7 times the $22,400 starting salary of a TDCJ prison guard.
Still, thats nothing compared to the disparity seen in the private prison industry, where executives make millions while their employees receive menial wages. In April 2006, for instance, the GEO Group formerly Wackenhut Corrections Corp. [see PLN, June 2004, p.16] was hiring prison guards in Indiana for $8.00 an hour. Cornell Companies, Inc. was recently paying guards $8.50 per hour in high-wage Alaska. Corrections Corporation of America (CCA) was paying between $10.50 and $11.50 for guards at three Colorado prisons, and less than $8.00 an hour for guards in Kentucky.
Contrast these low-end wages with executive payouts. As President and Chief Executive Officer (CEO) of CCA, John D. Ferguson made $1.36 million in 2005 and exercised stock options worth $3.66 million. Thus, his total compensation was more than 300 times the annual salary of a CCA guard in Kentucky. The companys Chief Financial Officer (CFO), Irving E. Lingo Jr., earned slightly less, drawing a mere $677,000 in salary and exercising $793,000 in options. At least three other top CCA executives earned nearly $1 million in combined salary and stock options in 2005 (and these figures dont include current stock holdings, unexercised options, accrued retirement packages and other benefits).
At Cornell, CEO James E. Hyman, who was named Chairman of the company in February 2005, received an initial compensation package of $1.07 million plus $1.14 million in restricted stock awards and the option to purchase 50,000 shares of common stock over five years. CFO John Nieser received $225,000 in salary and options on 46,000 shares of stock. [See PLN, February 2004, p.1 for more on Cornell].
Executives at other for-profit prison service companies are paid similarly hefty salaries. Take Joseph Neubauer, CEO of Aramark, the parent corporation of Aramark Correctional Services. He made a cool $2.6 million in 2005 and exercised $13.1 million in stock options. The companys CFO, L. Frederick Sutherland, did nicely too, with a salary of $943,000 and $995,000 in exercised options. At America Services Group, which owns Secure Pharmacy Plus, Prison Health Services (PHS), EMSA and Correctional Health Services all of which have horrendous track records of sacrificing prisoner health and safety in pursuit of larger profits executive compensation is slightly lower but still excessive. CEO Michael Catalano earned a base salary of $525,000 in 2006, while CFO Michael Taylor made $260,000. This was in addition to their stock options, which in 2004 were valued at $142,500 and $45,000, respectively.
Most people would not begrudge private prison executives reasonable compensation for their services. In many cases, however, greed quickly overcomes reason. To boost their companys bottom line, these executives tend to skimp on employee pay and benefits, training, background checks and prisoner services. They then reward themselves with enormous salaries and extravagant perks. Consider executives at the GEO Group, based in tony Boca Raton, Florida. Dr. George Zoley, the companys Chairman and CEO, drew $2.2 million in salary and bonuses in 2004 and received $1.4 million in other compensation, according to companypay.com. CFO Wayne H. Calabrese reportedly made $1.14 million in salary and bonuses and $1.04 million in other compensation.
For Zoley, the money will continue rolling in even when he no longer works for the private prison company. If he is fired without cause, according to GEOs proxy statement, hell receive title to the company car hes been using, employee benefits for 10 years, and twice his current annual salary plus a bonus of $1.82 million. If he retires the company will owe him a one-time, after-tax payment of $2.9 million.
Yet while Zoley and Calabrese are growing fat on their multi-million dollar compensation packages, others in the GEO family are begging for scraps. A case in point is the GEO-operated Tri-County Justice and Detention Center in Illinois, where guards are clamoring for a raise after four years at the same salary. In arbitration with the guards union, the International Labor Union of North America Local 773, GEO offered to boost the hourly wage by $.25. The guards, however, are holding out for at least $1. Ive been working here for 7 years and 6 months, said Tri-County guard Peggy Keith. I started at $8.00 per hour, and now we make $8.85, thats it.
Despite four months of arbitration the parties remained at an impasse as of June 2006. GEO wont offer more and the union wont accept less. Pulaski County Sheriff Randy Kern is worried that the jail might close if the two sides cant come to an agreement. I hope we can get something [worked] out over there so we can keep the jail up and running, he lamented. That way we can keep prisoners there, so everybody can make money.
Its just that private prison executives will make much more money at the expense of their underpaid employees.
Sources: kfvs12.com, palmbeachpost.com, Sun-Sentinel (Fort Lauderdale, Florida).
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