EX-10.7






Exhibit 10.7




AMENDED AND RESTATED


THE GEO GROUP, INC.




SENIOR MANAGEMENT PERFORMANCE AWARD PLAN





	1.	 	PURPOSE
	 
	 	 	The purpose of this Plan is to attract, retain, and motivate designated key employees of the
Company by providing performance-based cash awards. The Company believes such awards create
a strong incentive for the key employees participating in the Plan to expend maximum effort
for the growth and success of the Company.
	 
	2.	 	DEFINITIONS
	 
	 	 	Unless the context otherwise requires, for purposes of this Plan, the terms below shall have
the following meanings:






	 	(a)	 	“Board” shall mean the Board of Directors of the Company.
	 
	 	(b)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended and any
successor thereto.
	 
	 	(c)	 	“Code Section 162(m) Exception” shall mean the exception for performance-based
compensation under Section 162(m) of the Code or any successor section and the Treasury
regulations promulgated thereunder.
	 
	 	(d)	 	“Code Section 409A” shall mean Section 409A of the Code, and its implementing
regulations and guidance.
	 
	 	(e)	 	“Company” shall mean The GEO Group, Inc. and any successor by merger,
consolidation or otherwise.
	 
	 	(f)	 	“Committee” shall mean the Compensation Committee of the Board or such other
Committee of the Board that is appointed by the Board to administer this Plan; it is
intended that all of the members of any such Committee shall satisfy the requirements
to be outside directors, as defined under Code Section 162(m).
	 
	 	(g)	 	“Discretionary Adjustment” shall have the meaning set forth in Section 5.3.
	 
	 	(h)	 	“Net-Income-After-Tax” means net income of the Company, after all federal,
state and local taxes. For purposes of determining Net-Income-After-Tax, extraordinary
items and changes in accounting principles, as defined by United States generally
accepted accounting principles, shall be disregarded. Extraordinary items shall
include, but are not limited to, items of unusual and infrequent nature (i.e., loss
incurred in the early extinguishment of debt). Changes in accounting principles shall
include, but are not limited to, those that occur as a result of new pronouncements or
requirements issued by accounting authorities including, but not limited to, the
Securities Exchange Commission and the Financial Accounting Standards Board.
Non-recurring and unusual items not included or planned for in the Company’s annual
budget may be excluded from Net-Income-After-Tax in the sole and absolute discretion of
the Committee.




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	 	(i)	 	“Participant” shall mean an executive employee of the Company eligible to
receive a Performance Award in accordance with this Plan. The executive employees of
the Company eligible to participate in the Plan are listed in Section 4 hereof.
	 
	 	(j)	 	“Performance Award” shall mean the amount paid or payable under Section 5.2
hereof.
	 
	 	(k)	 	“Performance Goals” shall mean the objective performance goals, formulas and
standards described in Section 5.1 hereof.
	 
	 	(l)	 	“Plan” shall mean this Amended and Restated Senior Management Performance Award Plan of the Company.
	 
	 	(m)	 	“Plan Year” shall mean a fiscal year of the Company.
	 
	 	(n)	 	“Pro Rata” shall mean a portion of a Performance Award based on the number of
days worked during a Plan Year as compared to the total number of days in the Plan
Year.
	 
	 	(o)	 	“Revenue” shall mean gross revenues of the Company.
	 
	 	(p)	 	“Target Performance Award” shall mean the targeted Performance Award, expressed
as a percentage of base salary in effect on December 31 of the Plan Year as set forth
in Section 4 hereof.






	3.	 	GOVERNANCE
	 
	 	 	The Plan shall be governed by the Committee. The Committee shall have the exclusive
authority and responsibility to: (a) interpret the Plan; (b) determine amounts to be paid
out under the Plan and the conditions for payment thereof; (c) certify attainment of
Performance Goals and other material terms; (d) adjust Performance Awards as provided
herein; (e) authorize the payment of all benefits and expenses of the Plan as they become
payable under the Plan; (f) adopt, amend and rescind rules and regulations relating to the
Plan; and (g) make all other determinations and take all other actions necessary or
desirable for the Plan’s administration, including, without limitation, correcting any
defect, supplying any omission or reconciling any inconsistency in this Plan in the manner
and to the extent it shall deem necessary to carry this Plan into effect. Notwithstanding
anything to the contrary, the Plan shall be administered on a day-to-day basis by the Chief
Executive Officer and the Vice President of Human Resources of the Company.
	 
	 	 	Decisions of the Committee shall be made by a majority of its members. All decisions of the
Committee on any question concerning the interpretation and administration of the Plan shall
be final, conclusive, and binding upon all parties. The Committee may rely on information
and consider recommendations provided by the Board or the executive officers of the Company.




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	4.	 	ELIGIBLE PARTICIPANTS; TARGET PERFORMANCE AWARD
	 
	 	 	The eligible Participants and the Target Performance Awards for such Participants are as
follows:





	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Target Performance	 
	 	Positions	 	 	Awards (% of Salary)	 
	 	Chief Executive Officer

	 	 	 	150	%	 
	 	President

	 	 	 	120	%	 
	 	Chief Financial Officer

	 	 	 	50	%	 
	 	Sr. Vice Presidents

	 	 	 	45	%	 
	 






	5.	 	PERFORMANCE GOALS AND PERFORMANCE AWARDS






	 	5.1	 	PERFORMANCE GOALS. The Performance Goals shall be the budgeted Revenue and
Net-Income-After-Tax for the subject Plan Year, which shall be weighted as follows
(collectively, the “Target Weighting of Revenue and Net-Income-After-Tax”):





	 	 	 	 	 	 	 	 
	 	Revenue

	 	 	 	35	%	 
	 	Net-Income-After-Tax

	 	 	 	65	%	 
	 






	 	5.2	 	PERFORMANCE AWARDS. Subject to compliance with Section 5.4 herein, each
Participant shall be eligible to receive a Performance Award based on the Company’s
financial performance for Revenue and Net-Income-After-Tax during the Plan Year.






	 	 	Participants’ Annual Performance Awards will be calculated by applying the following
percentage adjustment methodology separately to the respective Target Weighting of Revenue
and Net-Income-After-Tax results in accordance with the following chart:





	 	 	 	 	 	 
	 
	 	Percentage of Budgeted	 	 	 	 
	 	Fiscal Year Targets Achieved	 	 	 	 
	 	for Revenue and for	 	 	Percentage by which the Target Weighting of Revenue and	 
	 	Net-Income-After-Tax	 	 	Net-Income-After-Tax is Reduced/Increased	 
	 	Less than 80%

	 	 	No Performance Award	 
	 	80% — 100%

	 	 	2.5 times the percentage (negative) difference between
the actual achieved percentages of budgeted Revenue
and Net-Income-After-Tax targets and
100% of the Revenue and Net-Income-After-Tax targets	 
	 	100%

	 	 	No Adjustment to Target Weighting	 
	 	101% — 120%
(Amounts over 120% shall
not be considered for
purposes of this calculation)

	 	 	2.5 times the percentage (positive) difference between the
actual achieved percentages of budgeted Revenue
(up to 120%) and Net-Income-After-Tax targets and
100% of the Revenue and Net-Income-After-Tax targets	 
	 





Example A — Budget Performance (100% Target Payout)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Difference	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	between	 	 	 	 	 	 	 	 	Adjustment	 	 	 	 	 	 	 	 	 	 
	 	Performance	 	 	 	 	 	 	 	 	 	 	 	 	Actual and	 	 	 	 	 	 	 	 	to Target	 	 	 	Target	 	 	 	Actual	 	 
	 	Goals	 	 	Budget	 	 	 	Actual	 	 	 	Budget	 	 	 	Factor	 	 	 	Weighting	 	 	 	Weighting	 	 	 	Weighting	 	 
	 	Revenue
	 	 	$	100.00	 	 	 	$	100.00	 	 	 	 	0	%	 	 	 	n/a	 	 	 	 	0	%	 	 	 	35	%	 	 	 	35	%	 
	 	Net Income
	 	 	$	10.00	 	 	 	$	10.00	 	 	 	 	0	%	 	 	 	n/a	 	 	 	 	0	%	 	 	 	65	%	 	 	 	65	%	 
	 	Total percentage applied to individual target performance awards	 	 	 	100	%	 
	 






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Example B — 105% Target Payout




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Difference	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	between	 	 	 	 	 	 	 	 	Adjustment	 	 	 	 	 	 	 	 	 	 
	 	Performance	 	 	 	 	 	 	 	 	 	 	 	 	Actual and	 	 	 	 	 	 	 	 	to Target	 	 	 	Target	 	 	 	Actual	 	 
	 	Goals	 	 	Budget	 	 	 	Actual	 	 	 	Budget	 	 	 	Factor	 	 	 	Weighting	 	 	 	Weighting	 	 	 	Weighting	 	 
	 	Revenue
	 	 	$	100.0	 	 	 	 	0         $102.	 	 	 	 	00                +2	%	 	 	 	2.5	 	 	 	 	+5	%	 	 	 	35	%	 	 	 	36.75	%	 
	 	Net Income
	 	 	$	10.0	 	 	 	 	0          $10.	 	 	 	 	20                +2	%	 	 	 	2.5	 	 	 	 	+5	%	 	 	 	65	%	 	 	 	68.25	%	 
	 	Total percentage applied to individual target performance awards	 	 	 	105	%	 
	 





Example C — 95% Target Payout




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Difference	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	between	 	 	 	 	 	 	 	 	Adjustment	 	 	 	 	 	 	 	 	 	 
	 	Performance	 	 	 	 	 	 	 	 	 	 	 	 	Actual and	 	 	 	 	 	 	 	 	to Target	 	 	 	Target	 	 	 	Actual	 	 
	 	Goals	 	 	Budget	 	 	 	Actual	 	 	 	Budget	 	 	 	Factor	 	 	 	Weighting	 	 	 	Weighting	 	 	 	Weighting	 	 
	 	Revenue
	 	 	$	100.00	 	 	 	$	98.00	 	 	 	 	-2	%	 	 	 	2.5	 	 	 	 	-5	%	 	 	 	35	%	 	 	 	33.25	%	 
	 	Net Income
	 	 	$	10.00	 	 	 	$	9.80	 	 	 	 	-2	%	 	 	 	2.5	 	 	 	 	-5	%	 	 	 	65	%	 	 	 	61.75	%	 
	 	Total percentage applied to individual target performance awards	 	 	 	95	%	 
	 





Example D — 98.5% Target Payout




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Difference	 	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	between	 	 	 	 	 	 	 	 	Adjustment	 	 	 	 	 	 	 	 	 	 
	 	Performance	 	 	 	 	 	 	 	 	 	 	 	 	Actual and	 	 	 	 	 	 	 	 	to Target	 	 	 	Target	 	 	 	Actual	 	 
	 	Goals	 	 	Budget	 	 	 	Actual	 	 	 	Budget	 	 	 	Factor	 	 	 	Weighting	 	 	 	Weighting	 	 	 	Weighting	 	 
	 	Revenue $1
	 	 	 	00.00         $1	 	 	 	 	02.00	 	 	 	 	+2	%	 	 	 	2.5	 	 	 	 	+5	%	 	 	 	35	%	 	 	 	36.75	%	 
	 	Net Income $
	 	 	 	10.00          $	 	 	 	 	9.80	 	 	 	 	-2	%	 	 	 	2.5	 	 	 	 	-5	%	 	 	 	65	%	 	 	 	61.75	%	 
	 	Total percentage applied to individual target performance awards	 	 	 	98.5	%	 
	 






	 	 	Following final calculations of the Company’s financial performance during the relevant Plan
Year, data shall be presented to the Chief Executive Officer which shall set forth the
Participants’ Performance Awards calculated in accordance with the Plan. The Chief Executive
Officer shall review the data for all Participants, apply any Discretionary Adjustments
applicable pursuant to Section 5.3, and then prepare final recommendations for the
Committee.






	 	5.3	 	DISCRETIONARY ADJUSTMENT. For Participants other than the Chief Executive
Officer and the President, the Chief Executive Officer may recommend a discretionary
increase (the “Discretionary Adjustment”) to a Participant’s Performance Award of up to
50% of the Participant’s Target Performance Award calculated in accordance with the
provisions of Sections 5.1 and 5.2, subject to review and approval by the Committee.
The Chief Executive Officer and the President shall not be eligible to receive a
discretionary Performance Award adjustment pursuant to this Section 5.3.




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	 	5.4	 	FORM AND TIMING OF PAYMENT; COMMITTEE CERTIFICATION. The Performance Awards
will be paid in cash to the Participants who are to receive such payments as soon as
practicable after the award amounts are approved and certified in writing by the
Committee; provided, however, that the Performance Awards shall be paid no later than
March 15th following the end of the performance period to which such
Performance Awards relate.






	6.	 	CHANGE IN STATUS
	 
	 	 	In the event that a Participant remains employed with the Company but is no longer eligible
to receive a Performance Award during the Plan Year, whether due to a promotion, demotion or
lateral move, the Participant shall be entitled to a Pro Rata portion of the Performance
Award for which he/she was eligible under this Plan, subject to the terms of Section 5.4,
based upon the length of time the Participant served in the eligible position, in which case
such Performance Award (a) shall be determined after the end of the Plan Year during which
the change in eligibility status occurs based solely on the actual results of the Company
for such full Plan Year, and (b) shall not exceed a Pro Rata portion of the actual
Performance Award which the Participant would otherwise have been eligible to receive under
this Plan with respect to the Plan Year in which the change in eligibility status occurs had
the Participant remained eligible to receive a Performance Award for the full Plan Year.
	 
	7.	 	TERMINATION OF EMPLOYMENT. Notwithstanding anything herein to the contrary, subject to
Sections 5.4 and 14 of this Plan, the provisions of this Section 7 shall apply in the event of
the termination of employment of a Participant.






	 	7.1	 	TERMINATION BY THE COMPANY FOR CAUSE. In the event that a Participant’s
employment is terminated by the Company for Cause (as such term is defined under such
Participant’s employment agreement with the Company), any Performance Award for the
Plan Year in which the termination occurs will be automatically forfeited by the
Participant.
	 
	 	7.2	 	RESIGNATION OR VOLUNTARY TERMINATION BY THE PARTICIPANT OTHER THAN FOR GOOD
REASON. In the event that a Participant resigns or otherwise voluntarily terminates
employment with the Company for any reason (other than by reason of retirement from the
Company in accordance with Company policy and/or any agreement between the Company and
the Participant, which is addressed in paragraph 7.4 below, or as a result of the Chief
Executive Officer, President or Chief Financial Officer terminating his/her employment
for Good Reason (as such term is defined in their employment agreements with the
Company)), any Performance Award for the Plan Year in which the termination occurs will
be automatically forfeited by the Participant unless the Chief Executive Officer, in
his sole and absolute discretion, decides to grant a Performance Award for such Plan
Year to such Participant, in which case such Performance Award (a) shall be determined
after the end of the Plan Year during which the termination occurs based solely on the
actual results of the Company for such full Plan Year, and




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	 	 	 	(b) shall not exceed a Pro Rata portion of the actual Performance Award which the
Participant would otherwise have been eligible to receive under this Plan with
respect to the Plan Year in which the termination occurs had the Participant
remained employed with the Company for the full Plan Year.
	 
	 	7.3	 	TERMINATION BY THE COMPANY WITHOUT CAUSE, BY THE PARTICIPANT FOR GOOD REASON,
OR AS A RESULT OF THE DEATH OR DISABILITY OF THE PARTICIPANT. In the event that a
Participant’s employment is terminated (a) by the Company without Cause (as such term
is defined under such Participant’s employment agreement with the Company), (b) by the
Participant, but only in the case of the Chief Executive Officer, President or Chief
Financial Officer, for Good Reason (as such term is defined in their employment
agreements with the Company)), or (c) as a result of the death or disability (as such
term is defined under such Participant’s employment agreement with the Company) of the
Participant, then such Participant (or such Participant’s estate, as applicable), shall
be entitled to receive a Pro Rata portion of the actual Performance Award which the
Participant would otherwise have been eligible to receive under this Plan with respect
to the Plan Year in which the termination occurs had the Participant remained employed
with the Company for the full Plan Year; provided, however, that such Performance Award
shall not be determined until after the end of the Plan Year during which the
termination occurs and shall be based solely on the actual results of the Company for
such full Plan Year.
	 
	 	7.4	 	TERMINATION AS A RESULT OF THE RETIREMENT OF THE PARTICIPANT. In the event
that a Participant’s employment is terminated as a result of the retirement of the
Participant in accordance with Company policy on a date following the 90th
day of then current Company fiscal year, the Participant shall be entitled to receive a
Pro Rata portion of the actual Performance Award which the Participant would otherwise
have been eligible to receive under this Plan with respect to the Plan Year in which
the termination occurs had the Participant remained employed with the Company for the
full Plan Year; provided, however, that such Performance Award shall not be determined
until after the end of the Plan Year during which the termination occurs and shall be
based solely on the actual the results of the Company for such full Plan Year. No
Performance Award or Pro Rata portion thereof shall be due or payable to a Participant
whose employment is terminated as a result of a retirement that is effective prior to
the 90th day of the then current Company fiscal year.






	8.	 	NON-ASSIGNABILITY
	 
	 	 	No Performance Award under this Plan or payment thereof, nor any right or benefit under this
Plan, shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
garnishment, execution or levy of any kind or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber and to the extent permitted by applicable law,
charge, garnish, execute upon or levy upon the same shall be void and shall not be
recognized or given effect by the Company.




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	9.	 	NO RIGHT TO EMPLOYMENT
	 
	 	 	Nothing in the Plan or in any notice of award pursuant to the Plan shall confer upon any
person the right to continue in the employment of the Company or one of its subsidiaries or
affiliates nor affect the right of the Company or any of its subsidiaries or affiliates to
terminate the employment of any Participant.
	 
	10.	 	AMENDMENT OR TERMINATION
	 
	 	 	The Board reserves the right, in its sole discretion, to amend, modify, suspend,
discontinue, or terminate the Plan or to adopt a new plan in place of this Plan at any time;
provided, however, that:






	 	i.	 	no such amendment shall, without the prior approval of the stockholders of the
Company in accordance with applicable law to the extent required under Code Section
162(m),






	 	•	 	alter the Performance Goals as set forth in Section 5.1;
	 
	 	•	 	increase the maximum amounts set forth in Section 5.2 and Section 5.3;
	 
	 	•	 	change the class of eligible employees or the Target Performance Awards (%
of Salary) set forth in Section 4; or
	 
	 	•	 	implement any change to a provision of the Plan requiring stockholder
approval in order for the Plan to continue to comply with the requirements of
the Code Section 162(m) Exception;






	 	ii.	 	no amendment, suspension, or termination shall, without the consent of the
Participant, alter or impair a Participant’s right to receive payment of a Performance
Award for a Plan Year otherwise payable hereunder; and
	 
	 	iii.	 	in the event of any conflict between the terms of this Plan and the terms of
any employment, compensation or similar agreement between the Company and a
Participant, the terms of the employment, compensation or similar agreement between the
Company and the Participant shall prevail.






	11.	 	SEVERABILITY
	 
	 	 	In the event that any one or more of the provisions contained in the Plan shall, for any
reason, be held to be invalid, illegal or unenforceable, in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of the Plan and the Plan
shall be construed as if such invalid, illegal or unenforceable provisions had never been
contained therein.
	 
	12.	 	WITHHOLDING
	 
	 	 	The Company shall have the right to make such provisions as it deems necessary or
appropriate to satisfy any obligations it may have to withhold federal, state, or local
income or other taxes incurred by reason of payments pursuant to the Plan.




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	13.	 	GOVERNING LAW
	 
	 	 	This Plan and any amendments thereto shall be construed, administered, and governed in all
respects in accordance with the laws of the State of Florida (regardless of the law that
might otherwise govern under applicable principles of conflict of laws).
	 
	14.	 	REGULATORY PROVISIONS
	 
	 	 	This Plan is not intended to provide for deferral of compensation for purposes of Code
Section 409A, by means of complying with Section 1.409A-1(b)(4) of the final Treasury
regulations issued under Code Section 409A. The provisions of this Plan shall be interpreted
in a manner that satisfies the requirements of Section 1.409A-1(b)(4) of the final Treasury
regulations issued under Code Section 409A and the Plan shall be operated accordingly. If
any provision of this Plan or any term or condition of any Performance Award would otherwise
frustrate or conflict with this intent, the provision, term or condition will be interpreted
and deemed amended so as to avoid this conflict.
	 
	 	 	In the event that following the application of the immediately preceding paragraph, any
Performance Award is subject to Code Section 409A, the provisions of Code Section 409A are
hereby incorporated herein by reference to the extent necessary for any Performance Award
that is subject to Code Section 409A to comply therewith. In such event, the provisions of
this Plan shall be interpreted in a manner that satisfies the requirements of Code Section
409A and the Plan shall be operated accordingly. If any provision of this Plan or any term
or condition of any Performance Award would otherwise frustrate or conflict with this
intent, the provision, term or condition will be interpreted and deemed amended so as to
avoid this conflict.
	 
	 	 	Solely for purposes of determining the amount of any Performance Award under this Plan, the
term “Salary” shall mean the Participant’s base salary in effect during the performance
period not taking into account any deferrals of salary that such Participant may make to a
401(k) plan, a Section 125 plan or any other deferred compensation plan; provided, however,
that the term “Salary” shall not, in any event, with respect to any Participant, exceed the
maximum deductible amount described in Section 162(m)(1) of the Code.
	 
	 	 	Notwithstanding any other provision of this Plan, if a Participant is not employed by the
Company on the last day of the performance period to which a Performance Award relates, the
maximum Performance Award payable to such Participant shall not exceed the “Pro-Rata
Performance Award.” For this purpose, the term “Pro-Rata Performance Award” shall mean the
Performance Award, if any, that would have been payable by the Company to such Participant
for the performance period if and to the extent that the performance goals for such
performance period have been met, if the Participant had been employed by the Company
throughout the entire performance period, multiplied by a fraction, the numerator of which
shall be the number of days from the first day of the bonus period through and including the
date of termination of employment and the denominator of which shall be the total number of
days in the performance period.






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