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CCA Anti-Prison Rape Shareholder Resolution Fails to Pass

As previously reported in Prison Legal News, PLN associate editor Alex Friedmann, who owns a small amount of stock in Corrections Corporation of America (CCA), filed a shareholder resolution with the company in November 2011. The resolution requested that CCA issue reports every six months on its efforts to reduce incidents of prisoner rape and sexual abuse at its for-profit facilities, including statistical data related to all such incidents during each reporting period. [See: PLN, April 2012, p.14; March 2012, p.18].

According to Friedmann, who served six of his ten years in prison at a CCA-operated facility in Tennessee in the 1990s, the resolution was intended to prompt the company to focus on the issue of sexual assaults, particularly by CCA employees.

“If CCA has to report this information they will have a greater incentive to reduce rape and sexual abuse because it will make the company look bad if they have very high numbers,” he said. “And if they have to report this, the public, i.e., CCA shareholders, will be able to judge the effectiveness” of the company’s efforts.

In a letter to CCA’s board of directors, Friedmann wrote, “My resolution could not be filed with any other company outside the private prison industry because in no other industry do a company’s employees consistently engage in rape and sexual abuse.” Noting that CCA claims it has a zero-tolerance policy for sexual abuse, “this is an opportunity to prove it,” he stated.

Instead, CCA petitioned the Securities and Exchange Commission (SEC) to exclude the shareholder resolution, saying it planned to voluntarily produce less detailed reports related to rape and sexual abuse, claiming that reports on prison rape were part of the company’s ordinary business operations, and questioning Friedmann’s motives behind his resolution to have the company report on its efforts to reduce prison rape.

Friedmann obtained pro bono assistance from the law firm of Stroock & Stroock & Lavan LLP, and filed a response to CCA’s objections. The SEC rejected CCA’s arguments in February 2012, which led to the resolution being included in the company’s proxy materials – along with a lengthy opposition statement from CCA.

“It’s a sad commentary when the nation’s leading private prison company, which routinely brags about being the fifth-largest corrections system in the country, strongly opposes a resolution that would require reporting on its efforts to reduce prison rape and sexual abuse,” observed PLN editor Paul Wright.

Friedmann drafted a formal solicitation statement in favor of the resolution, and, under SEC rules, required CCA to distribute it to approximately 4,600 shareholders at his expense. He also contacted a number of CCA’s institutional stockholders, asking them to support the resolution because it had an impact on investors.

“Shareholder resolutions are often framed in terms of risk, and indeed there are risks if CCA fails to reduce prisoner rape and sexual abuse, which include liability, adverse publicity and loss of business,” Friedmann said. “There is also the human cost to prisoners who are sexually assaulted at CCA facilities,” he noted.

After ISS Governance, one of the nation’s leading proxy advisory services, recommended that shareholders vote for the resolution, CCA took the deliberate step of issuing supplemental proxy materials urging shareholders to reject the resolution. Another proxy advisory firm, ProxyTell, also recommended a “for” vote on the resolution while a third, Glass Lewis, recommended an “against” vote.

Friedmann attended CCA’s annual shareholder meeting on May 10, 2012, and was afforded two minutes to formally present the resolution. During his presentation to the company’s executives and board members, Friedmann referred to CCA’s opposition to the resolution as “shameful” and “an affront not only to the reputation of this company and its employees and board members, but also to prisoners who have been sexually assaulted at CCA facilities.”

He noted that the resolution provided CCA with an opportunity to demonstrate it was willing to be transparent and publicly accountable in regard to its efforts to reduce incidents of rape and sexual abuse at its facilities, but that the company had failed to do so. CCA’s board of directors – including Thurgood Marshall, Jr., who served as Cabinet Secretary under President Clinton, and former U.S. Senator Dennis DeConcini – had unanimously recommended that shareholders vote against the resolution.

Other activists attending the CCA annual meeting also made statements to the company’s executives and board members, including representatives from the Jesuits, the Sisters of Charity of the Blessed Virgin Mary, and a DC-based church with a number of ex-prisoner members. Outside CCA’s corporate office, several faith-based organizations staged a small protest during the meeting.

After Friedmann presented the resolution, CCA announced that it had failed to pass. The voting results, filed with the SEC several days later, indicated that 14.6 million shares voted in favor of the resolution and 64.35 million shares voted against, with 7.89 million shares abstaining and 5.33 million recorded as broker non-votes. Therefore, of the shares voting, around 18.5 percent voted for the resolution – or more than one in six of the voting shares.

“The results are significant,” said Friedmann, “particularly considering the public policy subject matter of the resolution and the fact that it was backed by a limited campaign initiated by a single shareholder – who is a former CCA prisoner, at that.” He commended the stockholders who voted 14.6 million shares for the resolution.

“Since almost 20% of the voting shares were in favor of this resolution, CCA’s management team should take notice – and action – accordingly,” added Wright, who noted that the SEC considers a 3% favorable shareholder vote to be successful enough to reintroduce a resolution the following year.

A number of national groups had expressed support for the resolution, including Just Detention International (, the nation’s leading organization working to stop prison rape and sexual assault. Other supporting organizations included the National Center on Domestic and Sexual Violence; National Organization for Women; Justice Policy Institute; National Council of Women’s Organizations; National Center for Transgender Equality; Citizens United for the Rehabilitation of Errants (CURE); Justice Fellowship; National Lawyers Guild; Detention Watch Network; Partnership for Safety and Justice; and Enlace – an alliance of worker centers, unions and community organizations that works against corporate abuses.

The CCA shareholder resolution also generated a moderate amount of media coverage, including articles in Truthout, Mother Jones, the Guardian (UK), the Nashville Business Journal, the Tennessean, the Nashville Scene and Seven Days – a Vermont-based weekly publication.

Friedmann indicated that he intends to introduce future shareholder resolutions, though whether he would reintroduce the anti-prison rape resolution would depend on CCA’s compliance with the Prison Rape Elimination Act (PREA) standards, which were released by the U.S. Department of Justice on May 17, 2012 – one week after CCA shareholders voted down the resolution.

In regard to CCA’s successful efforts to derail the resolution, Friedmann had this to say: “It’s hard to appeal to the consciences of people who don’t have one, the kind of people who keep their conscience locked in a jar on their desk.”

Sources: SEC filings, HRDC press releases, Nashville Scene, Mother Jones

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