<PAGE 1>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant X
Filed by a party other than the registrant
Check the appropriate box:
Preliminary proxy statement
X Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-
11(c) or Rule 14a-12
THE SOUTHERN COMPANY
(Name of Registrant as Specified in Its Charter)
THE SOUTHERN COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
X $125 per Exchange Act Rule 0-11(c)(l)(ii), 14a-
6(i)(l), or 14a-6(j)(2).
$500 per each party to the controversy pursuant
to Exchange Act Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid
previously. Identify the previous filing by
registration statement number, or the
form or schedule and the date of its filing.
Amount previously paid: N/A Filing party: N/A
Form, schedule or registration statement number: N/A
Date filed: N/A
<PAGE> 2
Southern Company
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS -- MAY 25, 1994
Dear Stockholder:
The Annual Meeting of Stockholders of THE SOUTHERN COMPANY will be held at
the Mobile Convention Center, One South Water Street, Mobile, Alabama on
Wednesday, May 25, 1994, at 10:00 a.m. (CDT), for the following purposes:
(1) Electing 14 members of the board of directors;
(2) Ratifying the appointment of Arthur Andersen & Co. as independent
auditors for 1994;
(3) Approving the Outside Directors Stock Plan;
(4) Approving The Southern Company Productivity Improvement Plan for
Executive Officers;
(5) Considering and voting upon stockholder proposals, if presented at the
meeting, as described in Items 5 and 6 in the attached proxy statement;
and
(6) Transacting such other business as may properly come before the meeting
or any adjournments thereof.
Your vote is important. Please mark, date, sign, and promptly return the
enclosed form of proxy in the enclosed postage-paid envelope. If you attend the
annual meeting, you may revoke this proxy by voting in person.
Only stockholders of record at the close of business on March 28, 1994, are
entitled to vote at the meeting.
By Order of the Board of Directors,
Tommy Chisholm
Secretary
Atlanta, Georgia
April 11, 1994
<PAGE> 3
THE SOUTHERN COMPANY
64 PERIMETER CENTER EAST
ATLANTA, GEORGIA 30346
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement and the accompanying form of proxy are being furnished
to stockholders in connection with the solicitation of proxies by the board of
directors of The Southern Company (the "Company") for use at its 1994 Annual
Meeting of Stockholders to be held on Wednesday, May 25, 1994, at 10:00 a.m.
(CDT) in Mobile, Alabama. It is proposed that this proxy statement and
accompanying form of proxy first will be sent to the Company's stockholders on
or about April 11, 1994.
The shares represented by your proxy will be voted in accordance with your
directions if the proxy is properly signed and returned to the Company before
the meeting. Each share is entitled to one vote, except that voting for
directors may be cumulative (i.e., in voting for directors each stockholder may
multiply the number of shares stated on the form of proxy by the number of
directors to be elected and then cast the resulting number of votes among the
nominees as desired). Your proxy may be revoked by written request that is
received by the secretary of the Company before the annual meeting. If you wish,
you may revoke your proxy at the meeting by voting in person.
At the annual meeting, abstentions will be treated as present for purposes
of determining a quorum and shares held by a broker that the broker fails to
vote will not be treated as present for purposes of a quorum. Abstentions and
broker "nonvotes" will not be counted either for or against any item submitted
for vote.
The board of directors set March 28, 1994, as the record date for the
determination of stockholders entitled to notice of and to vote at the 1994
Annual Meeting of Stockholders. On the record date, there were outstanding
648,346,540 shares of common stock, and, to the knowledge of management, no
person had beneficial ownership of more than five percent of the outstanding
shares.
1. ELECTION OF DIRECTORS
The proxies, named on the enclosed form of proxy, intend to vote each
properly executed proxy for the election of the listed nominees as directors for
the ensuing year or until their successors are elected and qualified, unless you
specify otherwise. If any nominee becomes unable to stand for election, the
proxies will be voted for a substitute nominee or nominees named by the board
and for the remaining nominees. The board of directors has no reason to expect
that this will occur.
The affirmative vote of a plurality of shares present and entitled to vote
is required for the election of directors.
EDWARD L. ADDISON
Mr. Addison, 63, is chairman of the board and chief executive officer of the
Company and chairman of the executive committee of Southern Company Services,
Inc. Prior to 1994, he was president and chief executive officer of the Company.
He is a director of Alabama Power Company, Georgia Power Company, Southern
Company Services, Inc., Southern Nuclear Operating Company, Inc., CSX
Corporation, Phelps Dodge Corporation, Protective Life Corporation, Wachovia
Bank of Georgia, N.A., and Wachovia Corporation of Georgia. He was elected
director of the Company in 1978.
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WILLIAM P. COPENHAVER
Mr. Copenhaver, 69, served as chairman of the board and chief executive officer
of Columbia Nitrogen Corporation, agricultural and industrial chemicals, from
July, 1989 to November, 1989. Prior to July, 1989, he was president and chairman
of the board of Columbia Nitrogen Corporation. He is a director of Georgia Power
Company, Arcadian Corporation, and Georgia Bank & Trust Company. He was elected
director of the Company in 1986.
A. D. CORRELL
Mr. Correll, 52, is chairman of the board and chief executive officer of
Georgia-Pacific Corporation, manufacturers and distributors of building
products, pulp, and paper. He served as senior vice president of Georgia-Pacific
Corporation from 1988 to 1989; executive vice president of Georgia-Pacific
Corporation from 1989 to 1991; president and chief operating officer of
Georgia-Pacific Corporation from 1991 to May, 1993; and president and chief
executive officer of Georgia-Pacific Corporation from May, 1993 to December,
1993, when he was appointed to his current position. He is a director of Trust
Company Bank and Trust Company of Georgia.
A. W. DAHLBERG
Mr. Dahlberg, 53, is president of the Company and vice chairman of the executive
committee of Southern Company Services, Inc. Prior to 1994, he was president and
chief executive officer of Georgia Power Company. He is a director of Georgia
Power Company, Southern Company Services, Inc., Southern Electric International,
Inc., Southern Nuclear Operating Company, Inc., Equifax, Inc., Protective Life
Corporation, Trust Company Bank, and Trust Company of Georgia. He was elected
director of the Company in 1985.
PAUL J. DENICOLA
Mr. DeNicola, 45, is president and chief executive officer of Southern Company
Services, Inc. and executive vice president of the Company. He was president and
chief executive officer of Mississippi Power Company from May, 1989 to April,
1991 and executive vice president of Southern Company Services, Inc. from April,
1991 to January, 1994, when he was appointed to his current position. He is a
director of Gulf Power Company, Mississippi Power Company, Savannah Electric and
Power Company, SEI Holdings, Inc., Southern Company Services, Inc., Southern
Electric International, Inc., Southern Electric Wholesale Generators, Inc.,
Southern Nuclear Operating Company, Inc., and The Southern Development and
Investment Group, Inc. He was elected director of the Company in 1989.
JACK EDWARDS
Mr. Edwards, 65, is a partner of Hand, Arendall, Bedsole, Greaves & Johnston,
attorneys. He is a director of Dravo Corporation, HOLNAM Inc., and Northrop
Corporation. He was elected director of the Company in 1987.
H. ALLEN FRANKLIN
Mr. Franklin, 49, is president and chief executive officer of Georgia Power
Company, president of Piedmont-Forrest Corporation, and executive vice president
of the Company. Prior to 1994, he was president and chief executive officer of
Southern Company Services, Inc. He is a director of Georgia Power Company,
Piedmont-Forrest Corporation, SEI Holdings, Inc., Southern Company Services,
Inc., Southern Electric Generating Company, Southern Electric International,
Inc., Southern Electric Wholesale Generators, Inc., Southern Nuclear Operating
Company, Inc., and SouthTrust Bank. He was elected director of the Company in
1988.
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L. G. HARDMAN, III
Mr. Hardman, 54, is chairman of the board and chief executive officer of First
Commerce Bancorp, Inc.; chairman of the board of the First National Bank of
Commerce, Georgia; and chairman of the board, president, and treasurer of
Harmony Grove Mills, Inc. He is a director of Georgia Power Company and was
elected director of the Company in 1986.
ELMER B. HARRIS
Mr. Harris, 54, is president and chief executive officer of Alabama Power
Company; president of Alabama Property Company, Columbia Fuels, Inc., and
Southern Electric Generating Company; and executive vice president of the
Company. He is a director of Alabama Power Company, Alabama Property Company,
Columbia Fuels, Inc., Southern Company Services, Inc., Southern Electric
Generating Company, Southern Nuclear Operating Company, Inc., AmSouth
Bancorporation, and AmSouth Bank, N.A. He was elected director of the Company in
1989.
EARL D. MCLEAN, JR.
Mr. McLean, 68, is an owner of the T. C. Griffith Insurance Agency, Inc.,
insurance and real estate. He is a director of Mississippi Power Company and was
elected director of the Company in 1985.
WILLIAM A. PARKER, JR.
Mr. Parker, 66, is chairman of the board of Cherokee Investment Company, Inc.,
private investments in land, securities, and warehouses. He is a director of
Georgia Power Company, Atlantic Realty Company, First Union Real Estate
Investment Trust, Genuine Parts Company, Haverty Furniture Companies, Inc., ING
North America Insurance Company, Life Insurance Company of Georgia, and Post
Properties, Inc. He was elected director of the Company in 1973.
WILLIAM J. RUSHTON, III
Mr. Rushton, 64, is chairman of the board of Protective Life Corporation, an
insurance concern. He is a director of Alabama Power Company, AmSouth
Bancorporation, AmSouth Bank, N.A., and Protective Life Corporation. He was
elected director of the Company in 1971.
GLORIA M. SHATTO
Dr. Shatto, 62, is president of Berry College, Mount Berry, Georgia. She is a
director of Georgia Power Company, Becton Dickinson & Company, Kmart
Corporation, and Texas Instruments Incorporated. She was elected director of the
Company in 1984.
HERBERT STOCKHAM
Mr. Stockham, 65, is chairman of the board of Stockham Valves & Fittings,
Inc., manufacturers of pipe fittings and valves. He is a director of SouthTrust
Corporation and Stockham Valves & Fittings, Inc. He was elected director of the
Company in 1978.
Each nominee has served in his or her present position for at least the
past five years, unless otherwise noted.
One report on Form 4 reporting a transaction involving Mississippi Power
Company preferred stock that was redeemed by the issuer was not filed with the
Securities and Exchange Commission on a timely basis by Mr. McLean. One report
on Form 4 reporting a transaction involving the purchase of Company common stock
was not filed with the Securities and Exchange Commission on a timely basis by
Mr. DeNicola.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL
NO. 1.
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ADDITIONAL INFORMATION
STOCK OWNERSHIP
The following table shows the number of shares of the Company's common
stock and preferred stock of subsidiary companies owned by the directors,
nominees, and executive officers as of December 31, 1993. It is based on
information furnished to the Company by the directors, nominees, and executive
officers. The number of Company common shares shown does not reflect the stock
distribution resulting from the two-for-one common stock split approved by the
Company's board of directors in January, 1994. The shares owned by all
directors, nominees, and executive officers as a group constitute less than one
percent of the total number of shares of the respective classes outstanding as
of December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
TITLE OF SECURITY OWNED(1)(2)
------------------------------------------------- ----------------
<S> <C> <C>
Edward L. Addison Southern Company common stock.................... 125,032
William P. Copenhaver Southern Company common stock.................... 1,350
A. D. Correll Southern Company common stock.................... 1,000
A. W. Dahlberg Southern Company common stock.................... 29,287
Paul J. DeNicola Southern Company common stock.................... 10,846
Jack Edwards Southern Company common stock.................... 1,371
H. Allen Franklin Southern Company common stock.................... 19,132
L. G. Hardman, III Southern Company common stock.................... 3,053
Elmer B. Harris Southern Company common stock.................... 35,545
John M. McIntosh Southern Company common stock.................... 7,016
Earl D. McLean, Jr. Southern Company common stock.................... 7,051
William A. Parker, Jr. Southern Company common stock.................... 16,822
Georgia Power Company preferred stock............ 2
William J. Rushton, III Southern Company common stock.................... 3,000
Alabama Power Company preferred stock............ 20
Gloria M. Shatto Southern Company common stock.................... 6,003
Herbert Stockham Southern Company common stock.................... 2,785
Louis J. Willie Southern Company common stock.................... 1,587
Alabama Power Company preferred stock............ 391
Georgia Power Company preferred stock............ 200
Gulf Power Company preferred stock............... 50
Directors, Nominees, and
Executive Officers of the
Company as a Group Southern Company common stock.................... 334,711
(18 persons) Subsidiary companies preferred stock............. 663
</TABLE>
- ---------------
(1) "Beneficial ownership" means the sole or shared power to vote, or to
direct the voting of, a security and/or investment power with respect to a
security.
(2) The shares shown include shares of common stock of which certain
directors and executive officers have the right to acquire beneficial ownership
within 60 days pursuant to The Southern Company Executive Stock Plan, as
follows: Mr. Addison, 86,357 shares; Mr. Dahlberg, 4,278 shares; Mr. Franklin,
9,522 shares; Mr. Harris, 14,215 shares; and all directors, nominees, and
executive officers of the Company as a group, 132,503 shares. Also included are
shares of the Company's common stock held by the spouses of the following
directors: Mr. Addison, 670 shares; Mr. Copenhaver, 350 shares; Mr. Edwards, 120
shares; Mr. Harris, 155 shares; Mr. Parker, 22 shares; and Dr. Shatto, 5,067
shares. Each director disclaims any interest in these shares owned by their
spouses.
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CERTAIN TRANSACTIONS
During 1993, Alabama Power Company and Southern Company Services, Inc. on
behalf of Protective Life Insurance Company collected premiums through payroll
deductions of $577,172 from their respective employees electing to purchase
various types of insurance policies from Protective Life. During 1993, Southern
Company Services, Inc. sold its office building at 800 Shades Creek Parkway,
Birmingham, Alabama for a negotiated price of $8,000,000 to a partnership of
which Protective Life Corporation is a limited partner. Mr. Rushton owns an
interest in and serves as chairman of the board and director of Protective Life
Corporation, holding company for Protective Life Insurance Company. Messrs.
Addison and Dahlberg also are directors of Protective Life Corporation. During
1993, Alabama Power Company paid Hand, Arendall, Bedsole, Greaves & Johnston
$125,720 for legal services. Mr. Edwards is a partner of Hand, Arendall,
Bedsole, Greaves & Johnston. During 1993, Alabama Power Company paid L&K
Electric Supply $198,863 for electrical supplies. Mr. Willie holds a 25.5
percent interest in L&K Electric Supply. The Company believes that these
transactions have been on terms representing competitive market prices that are
no less favorable than those available from others.
CORPORATE GOVERNANCE
The Southern Company is organized as a holding company managed by a core
group of officers and governed by a board of directors that has been set at 14.
The nominees for election as directors consist of nine nonemployee directors and
five officers.
The board of directors met eight times in 1993. Its five standing
committees met a total of 21 times. The average attendance of all directors for
the board and committee meetings was 95 percent, and no director attended fewer
than 75 percent of board and applicable committee meetings.
With the exception of the Executive Committee, which is chaired by the
Company's chairman of the board, all committee members are nonemployee
directors.
CERTAIN COMMITTEES
AUDIT COMMITTEE -- The members of the Audit Committee are Mr. Edwards, chairman,
Mr. Copenhaver, and Mr. Stockham. The Audit Committee met six times in 1993. The
Audit Committee annually reviews and recommends the selection of the Company's
independent auditor and reviews the auditing firm's fees and the scope and
timing of audits. The Committee reviews the independent auditor's report or
opinion on the Company's financial statements, significant changes in accounting
principles and practices, significant proposed adjustments, and any unresolved
disagreements with management concerning accounting or disclosure matters. The
Committee also oversees the Company's internal accounting and financial controls
and annual internal audit plan and activities. The Audit Committee regularly
reports its recommendations and findings to the full board of directors.
COMPENSATION COMMITTEE -- The members of the Compensation Committee are Mr.
Copenhaver, chairman, Mr. Hardman, Mr. Parker, and Mr. Stockham. The
Compensation Committee met three times in 1993. The Compensation Committee
reviews the performance of the chairman of the board and the president of the
Company and recommends to the board their compensation under the base salary
plan, the Performance Pay Plan, and the Productivity Improvement Plan for
Executive Officers. It also reviews and makes recommendations to the board on
directors' compensation and on certain compensation and benefit programs
applicable to the Company's subsidiaries and administers The Southern Company
Executive Stock Plan and the Outside Directors Stock Plan.
NOMINATING COMMITTEE -- The members of the Nominating Committee are Mr. Hardman,
chairman, Mr. Edwards, Mr. Rushton, and Dr. Shatto. The Nominating Committee met
two times in 1993. This Committee identifies and recommends to the board of
directors the nominees for election to the board. The Nominating Committee
expects normally to identify from its own resources the names of qualified
nominees but will accept from stockholders recommendations of individuals to be
considered as
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nominees. Stockholder recommendations, together with a description of the
proposed nominee's qualifications, relevant biographical information, and the
proposed nominee's signed consent to serve, should be submitted in writing to
the secretary of the Company and received by that office by December 13, 1994.
The determination of nominees recommended to the board by the Nominating
Committee is within the sole discretion of the Committee, and the final
selection of the board's nominees is within the sole discretion of the board of
directors.
COMPENSATION OF DIRECTORS
Each nonemployee director of the Company is paid an annual retainer fee of
$30,000, of which, if approved by the stockholders, at least $5,000 must be
received in Company common stock, and a meeting fee of $1,000 for each meeting
of the board of directors attended and for each committee meeting attended. (See
Proposal No. 3 on page 15 for additional information about the payment of
directors' fees in stock.) Additionally, each committee chairman is paid an
annual retainer fee of $5,000. All or a portion of the fees paid in cash may be
deferred until membership on the board is terminated.
The Company also provides retirement benefits to nonemployee directors who
are credited with a minimum of 60 months of service on the board of directors of
one or more System companies, under The Southern Company Outside Directors
Pension Plan. Eligible directors are entitled to benefits upon retirement from
the board if retirement is within five years of their normal retirement date.
The annual benefit payable is based upon length of service and varies from 75
percent to 100 percent of the annual retainer fee, excluding any committee
retainer fee, in effect on the date of retirement. Generally, payments continue
for the greater of the lifetime of the participant or 10 years.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee (the "committee")
discusses generally the committee's executive compensation objectives and
policies and their relationship to corporate performance in 1993. Also, the
report specifically discusses the committee's bases for compensation in 1993 of
the Company's chairman of the board and chief executive officer (the
"chairman"), as reported in the Summary Compensation Table following this
report.
EXECUTIVE COMPENSATION OBJECTIVES AND POLICIES
The committee's objective is to provide a competitive compensation program
with appropriate incentives for superior corporate performance, thereby
providing a strong and direct link between corporate performance and pay.
Performance is defined in several ways, as more fully discussed below, each of
which has relevance to the Company's success in the short term, long term, or
both. Additionally, executive compensation is variable so that higher
performance leads to higher pay and lower performance results in lower pay.
Total executive compensation (base salary plus incentive compensation) is
compared with that of a group of electric and gas utility companies with similar
market and operating characteristics and within a comparable size range.
Currently, each company in that group has revenues of $3 billion and higher. All
but one of these companies are included in the 24 companies that make up the
Standard & Poor's Electric Utility Index, the peer group in the five-year
performance graph. The committee targets total executive pay levels at the
median of this selected group of companies. This is accomplished through a mix
of base compensation and short-and long-term incentive compensation. Higher
corporate performance, based on various performance measures described below,
can result in increased incentive compensation that in turn results in total
compensation that is higher than the target. Lower performance results in lower
incentive compensation and, therefore, compensation that is lower than the
median level
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of the selected group of companies. If certain performance thresholds are not
reached, no incentive compensation is paid.
EXECUTIVE COMPENSATION COMPONENTS
Total executive compensation, as reported in the Summary Compensation
Table, consists of three primary components: base salary, short-term incentive
compensation (annual performance bonus), and long-term incentive compensation.
BASE SALARY. Base salary levels, including the chairman's, are largely
determined by comparison with salaries of other gas and electric utility
companies of comparable size, as reported in market surveys prepared by
independent, outside consultants. All but one of these companies are included in
the 24 companies that comprise the Standard & Poor's Electric Utility Index. A
salary range above and below the median salary reported in the surveys is
established. Base salary increases are based on individual job performance and
set within the established competitive salary range. Base salary also can be
increased based on a significant increase in job responsibilities. In 1993, base
salary increases for the executive officers, including the chairman, averaged
five percent -- well within the range of increases for all regular employees.
The chairman's base salary level was above the median in 1993; the other named
executive officers' base salary levels were at or below the median.
ANNUAL PERFORMANCE BONUS. All regular employees of the Company's
subsidiaries not part of a collective bargaining unit are eligible to receive an
annual performance bonus under the Company's Performance Pay Plan.
Amounts paid to executive officers for 1993 performance were based on the
achievement of corporate performance goals and individual objectives. Corporate
performance goals are designed to improve operating results in the areas of
earnings (return on common equity), competitive cost of electricity, and
customer satisfaction. Individual objectives are goals and initiatives that link
the corporate performance goals and the Company's strategic direction. The
committee believes that achievement of these goals is essential for the
Company's continued success and sustained financial performance. The plan
provides that in the discretion of the chief executive officer of the Company,
extraordinary expenses or income may be excluded for the purpose of calculating
the Company's return on equity which can affect the payment of awards under the
plan.
A target performance level is set for each goal. Awards paid are based on
performance relative to the established target. Performance above the target
level results in proportionately higher payout. Likewise, performance below the
target results in proportionately lower payout. No awards are made if
performance is below a threshold level or if a minimum earnings level is not
achieved. Also, no awards are made if the Company's current earnings are
insufficient to fund its common stock dividend at the same level as the prior
year.
The earnings target requires the Company to achieve and maintain a return
on common equity by 1995 that ranks in the highest quartile of a large group
(approximately 100) of investor-owned electric utility companies -- the
companies with which the Company competes for investors. All of the companies in
the Standard & Poor's Electric Utility Index are included in this group. (The
Standard & Poor's Electric Utility Index is a widely-published index and
therefore is considered appropriate for purposes of the Company's five-year
performance graph. However, the committee has determined that for purposes of
setting an overall earnings goal, the best measure is the larger group of
companies used.) The Company improved its position within the highest quartile
in 1993. The competitive cost of electricity target requires the Company to
establish and keep cost of service in the lowest quartile of 16 electric
utilities in the southeastern United States -- companies with similar markets
and operating characteristics as the Company -- by 1995. More than one-half of
these companies are included in the Standard & Poor's Electric Utility Index.
The Company continued to cut costs aggressively in 1993, meeting its annual
milestone established for meeting the targeted cost of electricity goal by 1995.
The customer satisfaction
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target required the Company to increase the percentage of customers surveyed
saying they are "very satisfied" to 63 percent. During 1993, nearly 64 percent
of customers surveyed were "very satisfied." Corporate performance met or
exceeded the target levels in all three areas in 1993, resulting in
proportionately higher awards. The weight assigned the achievement of corporate
performance goals in determining annual performance bonuses paid to the
executive officers for 1993 performance averaged 45 percent, with the remainder
attributable to the achievement of individual performance objectives. The three
corporate performance goals were weighted equally.
The chairman's target annual performance award opportunity for full
achievement of goals was 10 percent of his base salary. Of the annual
performance bonus paid to the chairman for 1993 performance, 70 percent was
based on the corporate performance goals of return on common equity, customer
satisfaction, and cost of service, with the remainder based on individual
objectives regarding leadership and strategic initiatives designed to strengthen
the Company's performance on both a short-term and long-term basis. The
committee found that, under all measurement criteria, performance met or
exceeded the targets established for 1993. This resulted in an award under the
plan that exceeded the target award opportunity.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives for executive
officers, including the chairman, are provided through annual grants of
performance awards under the Productivity Improvement Plan and annual grants of
stock options under the Executive Stock Plan. The committee believes that,
together, these plans reflect two primary means of motivating and rewarding
improvement in the long-term performance of the Company. Performance awards
result in additional compensation based on the Company's average return on
common equity performance over a four-year period ranked against a group of
electric utility companies located in the southeastern United States. Stock
options provide gains to executives only if, in the long term, the Company's
common stock price improves over the fair market value of the stock on the date
options are granted.
Productivity Improvement Plan. The target set under the plan requires the
Company's return on equity over the four-year performance period to rank in the
top quartile of the selected group of companies. Performance at the target level
results in an award, payable in cash, ranging from five to 50 percent of the
executive officer's salary range midpoint, depending on the level of the
position held by the participant. Awards may range from 50 percent of the target
if the Company's return on equity is in the second lowest quartile to 125
percent of the target if the Company's return on equity is the best of the
selected group. No awards are paid if the Company's return on equity is in the
bottom quartile or if the Company's current earnings are insufficient to fund
its common stock dividend at the same level as the prior year. The plan provided
in 1993 that, in the discretion of the committee, extraordinary expenses or
income may be disregarded in calculating the Company's return on equity which
can affect the Company's ranking in the group. (Under the Productivity
Improvement Plan for Executive Officers, awards may only be paid if the
performance goals are achieved in accordance with the formula set forth in the
plan. See Proposal No. 4 on pages 15 and 16 of this proxy statement for more
information regarding the Productivity Improvement Plan for Executive Officers.)
For the plan years ended December 31, 1991, 1992, and 1993, the expense incurred
by the Company as a result of the write-off in 1990 of $218 million (after
taxes) of the investment in Plant Vogtle was determined to be such an expense.
For the performance period January 1, 1990, through December 31, 1993, the
Company's return on equity was in the highest quartile of the selected group,
resulting in awards to the executive officers, including the chairman, of 100
percent of the established target award opportunity.
Stock Option Grants. Under the Company's Executive Stock Plan, executive
officers, including the chairman, are granted stock options that give them the
right to purchase shares of the Company's common stock at a specified price.
Stock option grants are one of the components of total executive compensation.
As discussed above, total executive compensation is targeted at the median total
compensation paid by the selected group of large electric and gas utility
companies. The estimated annualized value of the stock options granted, if
targeted performance is achieved, represented
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approximately 10 percent of the targeted compensation levels for the last fiscal
year. Neither the size of prior option grants nor the number of outstanding
grants was considered in determining the size of the latest grants.
Historically, the total number of stock options granted annually by the
committee to all participants has not exceeded 10 percent of the total number of
shares authorized under the plan.
The committee believes that granting stock options aligns the interests of
executives with those of common stockholders in two ways. First, because the
exercise price of all stock options granted under the plan is equal to the fair
market value on the grant date, there must be an appreciation in the price of
the common stock for participants to benefit. Second, long-term performance is
encouraged because options vest annually at a rate of 25 percent on the
anniversary date of the grant.
SUMMARY
The committee's policy in setting executive compensation and in
establishing the appropriate balance among fixed, short-term, and long-term
compensation is designed to clearly link pay and performance. The committee
believes that its executive compensation program rewards executives more as
stockholders are rewarded. Total executive compensation is increasingly weighted
toward long-term incentives and, therefore, toward long-term Company performance
and total shareholder return. To achieve these goals, the committee frequently
reviews the various pay plans and policies and modifies them as it deems
necessary to continue to attract, retain, and motivate talented executives and
to pay them competitively.
The committee determined that for purposes of maintaining the deductibility
of executive compensation under the Internal Revenue Code of 1986, as amended,
it is necessary to seek stockholder approval of its Productivity Improvement
Plan for Executive Officers. For further information on this matter, see
Proposal No. 4 on pages 15 and 16 of this proxy statement.
MEMBERS OF THE COMPENSATION COMMITTEE:
W. P. Copenhaver, Chairman
L. G. Hardman, III
W. A. Parker, Jr.
H. Stockham
10
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the Company's
chairman of the board and chief executive officer and each of the other four
most highly compensated executive officers of the Company serving as of December
31, 1993. The number of Company common shares shown does not reflect the stock
distribution resulting from the two-for-one common stock split approved by the
Company's board of directors in January, 1994.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION NUMBER OF
--------------------------------------- SECURITIES LONG-TERM
OTHER UNDERLYING INCENTIVE
ANNUAL STOCK PLAN ALL OTHER
SALARY BONUS COMPENSATION OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)(2) ($)(1)(3)
- ------------------------------------ ---- ------- ------- ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
E. L. Addison 1993 734,714 148,118 9,527 23,559 339,714 47,909
Chairman and CEO, 1992 696,526 176,331 4,255 26,313 262,579 38,072
The Southern Company 1991 645,422 104,406 31,817 221,987
A. W. Dahlberg 1993 477,967 96,331 17,707 15,322 225,406 44,547
President, The Southern Company 1992 469,178 110,094 6,508 17,113 171,243 26,979
1991 418,968 67,958 20,710 126,085
P. J. DeNicola 1993 313,970 63,641 6,832 7,498 132,986 24,436
President, Southern Company 1992 272,246 70,272 3,022 8,091 79,519 14,341
Services 1991 238,766 33,666 8,685 44,431
H. A. Franklin 1993 365,000 73,584 16,438 11,704 140,650 37,298
President, Georgia Power Company 1992 328,198 84,096 2,704 9,683 90,200 17,669
1991 288,332 43,853 10,559 64,899
E. B. Harris 1993 418,818 117,630(4) 23,469 13,446 198,131 39,388
President, Alabama Power Company 1992 397,499 96,615 9,161 15,018 147,278 24,435
1991 371,491 45,147 18,344 107,729
</TABLE>
- ---------------
(1) The amounts for 1991 are omitted pursuant to the transition provisions
adopted by the Securities and Exchange Commission.
(2) Payouts made in 1992, 1993, and 1994 for the four-year performance
periods ending December 31, 1991, 1992, and 1993, respectively.
(3) Company contributions in 1993 to the Employee Savings Plan, Employee
Stock Ownership Plan, non-pension related accruals under the Supplemental
Benefit Plan (ERISA excess plan under which accruals are made to offset Internal
Revenue Code imposed limitations under the Employee Savings and Stock Ownership
Plans), and payments under a vehicle buyout program, respectively, for the
following: Mr. Addison -- $7,672, $1,709, $31,328, and $7,200; Mr.
Dahlberg -- $6,746, $1,709, $18,092, and $18,000; Mr. DeNicola -- $6,745,
$1,709, $8,296, and $7,686; Mr. Franklin -- $8,380, $1,709, $9,209, and $18,000;
and Mr. Harris -- $6,746, $1,709, $12,933, and $18,000.
(4) Includes a one-time award of $50,000 under the key contributor program
in recognition of exemplary performance in 1993. The key contributor program
permits an eligible employee's supervisor to make a "spot" award apart from any
other compensation plan to recognize a significant contribution made by the
employee. Mr. Harris received such an award on the recommendation of the
President of The Southern Company.
11
<PAGE> 13
STOCK OPTION GRANTS
The following table sets forth all stock option grants to the named
executive officers during the year ending December 31, 1993. The number of
Company common shares shown and the per share exercise price and market price do
not reflect the stock distribution resulting from the two-for-one common stock
split approved by the Company's board of directors in January, 1994.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF
SECURITIES GRANT DATE VALUE
UNDERLYING % OF TOTAL ------------------
OPTIONS OPTIONS GRANTED EXERCISE OR GRANT DATE
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) ($)(3)
- ------------------------- ---------- --------------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
E. L. Addison............ 23,559 13 42.4375 03/01/1998(4) 91,880
A. W. Dahlberg........... 15,322 9 42.4375 07/19/2003 61,748
P. J. DeNicola........... 7,498 4 42.4375 07/19/2003 30,217
H. A. Franklin........... 11,704 7 42.4375 07/19/2003 47,167
E. B. Harris............. 13,446 7 42.4375 07/19/2003 54,187
</TABLE>
- ---------------
(1) Grants were made on July 19, 1993, and vest annually at a rate of 25
percent on the anniversary date of the grant. Grants fully vest upon termination
incident to death, total disability, or retirement. The exercise price is the
average of the high and low fair market value of the Company's common stock on
the date granted.
(2) A total of 179,746 stock options were granted in 1993 to key executives
participating in the Company's Executive Stock Plan.
(3) Based on the Black-Scholes option valuation model. The actual value, if
any, an executive officer may realize ultimately depends on the market value of
the Company's common stock at a future date. This valuation is provided pursuant
to Securities and Exchange Commission disclosure rules. There is no assurance
that the value realized will be at or near the value estimated by the
Black-Scholes model. Assumptions used to calculate this value: price
volatility -- 12.45%; risk-free rate of return -- 5.81%; dividend
yield -- 5.37%; and time to exercise -- 10 years.
(4) In accordance with the terms of the Executive Stock Plan, Mr. Addison's
unexercised options expire on March 1, 1998, three years after his normal date
of retirement.
AGGREGATED STOCK OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during the year ending December 31, 1993, by the named executive officers and
the value of unexercised options held by them as of December 31, 1993. The
number of Company common shares shown and the per share exercise price and
market price do not reflect the stock distribution resulting from the
two-for-one common stock split approved by the Company's board of directors in
January, 1994.
<TABLE>
<CAPTION>
VALUE OF
TOTAL NUMBER OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NUMBER OF YEAR-END(#) YEAR-END($)(2)
SHARES ACQUIRED VALUE REALIZED ------------------------- -------------------------
NAME ON EXERCISE(#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
E. L. Addison..... Not exercised 0 86,357/67,436 1,532,755/615,363
A. W. Dahlberg.... 14,211 252,008 4,278/43,871 33,957/400,435
P. J. DeNicola.... 13,492 200,555 0/19,444 0/161,552
H. A. Franklin.... Not exercised 0 9,522/26,929 143,378/215,484
E. B. Harris...... Not exercised 0 14,215/37,398 211,494/330,107
</TABLE>
12
<PAGE> 14
- ---------------
(1) The "Value Realized" is ordinary income, before taxes, and represents
the amount equal to the excess of the fair market value of the shares at the
time of exercise above the exercise price.
(2) This column represents the excess of the fair market value of the
Company's common stock of $44.125 per share, as of December 31, 1993, above the
exercise price of the options. One column reports the "value" of options that
are vested and therefore could be exercised; the other the "value" of options
that are not vested and therefore could not be exercised as of December 31,
1993.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1993
The following table sets forth the long-term incentive plan awards made to
the named executive officers under the Company's Productivity Improvement Plan
for Executive Officers for the performance period January 1, 1993, through
December 31, 1996.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED
PERFORMANCE OR PLANS
OTHER PERIOD UNTIL -----------------------------
NUMBER OF MATURATION OR THRESHOLD TARGET MAXIMUM
NAME UNITS(1) PAYOUT ($)(2) ($)(2) ($)(2)
- -------------------------------------- --------- ------------------ --------- ------- -------
<S> <C> <C> <C> <C> <C>
E. L. Addison......................... 383,976 4 years 191,988 383,976 479,970
A. W. Dahlberg........................ 265,675 4 years 132,838 265,675 332,094
P. J. DeNicola........................ 181,621 4 years 90,811 181,621 227,026
H. A. Franklin........................ 226,663 4 years 113,332 226,663 283,329
E. B. Harris.......................... 234,145 4 years 117,073 234,145 292,681
</TABLE>
- ---------------
(1) A performance unit is a method of assigning a dollar value to a
performance award opportunity. The number of units granted to named executive
officers is 50 percent of their base salary range midpoint, with each unit
valued at $1.00. No awards are paid unless the participant remains employed by
the Company through the end of the performance period. For illustration
purposes, the base salary range midpoints have been projected at a four percent
growth rate for the four-year term.
(2) The threshold, target, and maximum value of a unit is $0.50, $1.00, and
$1.25, respectively, and can vary based on the Company's return on common equity
relative to a selected group of electric and gas utilities in the southeastern
United States. If certain minimum performance relative to the selected group is
not achieved, there will be no payout; nor is there a payout if the current
earnings of the Company are not sufficient to fund the dividend rate paid in the
last calendar year. The plan provides that in the discretion of the committee
extraordinary income may be excluded for purposes of calculating the amount
available for the payment of awards. All awards are payable in cash at the end
of the performance period.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF ACCREDITED SERVICE
---------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000..................... $ 12,750 $ 17,000 $ 21,250 $ 25,500 $ 29,750 $ 34,000
100,000..................... 25,500 34,000 42,500 51,000 59,500 68,000
300,000..................... 76,500 102,000 127,500 153,000 178,500 204,000
500,000..................... 127,500 170,000 212,500 255,000 297,500 340,000
700,000..................... 178,500 238,000 297,500 357,000 416,500 476,000
850,000..................... 216,750 289,000 361,250 433,500 505,750 578,000
</TABLE>
The above table sets forth the estimated combined annual pension benefits
under the pension and supplemental defined benefit plans in effect during 1993.
Employee compensation covered by the pension and supplemental benefit plans for
pension purposes is limited to the average of the highest three of the final 10
years' base salary and wages (reported under column titled "Salary" in the
Summary Compensation Table on page 11). As of December 31, 1993, the applicable
compensation levels for
13
<PAGE> 15
Messrs. Addison, Dahlberg, DeNicola, Franklin, and Harris would have been
$699,480, $474,012, $283,824, $336,888, and $415,980, respectively. As of
December 31, 1993, Messrs. Addison, Dahlberg, DeNicola, Franklin, and Harris had
39, 33, 24, 22, and 29 years, respectively, of accredited service.
The amounts shown in the table were calculated according to the final
average pay formula and are based on a single life annuity without reduction for
joint and survivor annuities (although married employees are required to have
their pension benefits paid in one of various joint and survivor annuity forms,
unless the employee elects otherwise with the spouse's consent) or computation
of the Social Security offset that would apply in most cases. This offset
amounts to one-half of the estimated Social Security benefit (primary insurance
amount) in excess of $3,000 per year times the number of years of accredited
service, divided by the total possible years of accredited service to normal
retirement age.
FIVE-YEAR PERFORMANCE GRAPH
The following performance graph compares the cumulative total shareholder
return on the Company's common stock with the Standard & Poor's Electric Utility
Index and the Standard & Poor's 500 Index for the past five years. The graph
assumes that the value of the investment in the Company's common stock and each
index was $100 on December 31, 1988, and that all dividends are reinvested. The
shareholder return shown below for the five-year historical period may not be
indicative of future performance.
<TABLE>
<CAPTION>
Southern
Measurement Period Company S&P Electric S&P 500 In-
(Fiscal Year Covered) common stock Utility Index dex
<S> <C> <C> <C>
1988 100 100 100
1989 142 133 132
1990 147 137 128
1991 196 178 166
1992 233 188 179
1993 282 212 197
</TABLE>
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors, upon recommendation of the Audit Committee, has
selected Arthur Andersen & Co. as independent auditors for 1994. Representatives
of Arthur Andersen & Co. are expected to be
14
<PAGE> 16
present at the annual meeting and will have an opportunity to make a statement
if they desire and to respond to appropriate questions from stockholders. The
appointment will be reconsidered by the directors if not ratified by the
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
3. PROPOSAL TO APPROVE THE COMPANY'S OUTSIDE DIRECTORS STOCK PLAN
The board of directors has adopted effective January 1, 1994, subject to
stockholder approval, The Southern Company Outside Directors Stock Plan (the
"Plan"). The purpose of the Plan is to provide a mechanism for nonemployee
directors to automatically increase their ownership of Company common stock and
thereby further align their interests with those of the stockholders.
The Plan will be administered by the Company's compensation committee.
The Plan provides for the payment to nonemployee directors of $5,000 of
their annual retainer fee (currently $30,000) in unrestricted shares of Company
common stock, par value $5 per share. Additionally, the Plan will permit
participants to elect to receive a greater portion -- up to all -- of their
annual retainer fee in shares of Company common stock. The shares will be issued
quarterly. The number of shares issued to each participant will be rounded to
the nearest whole share amount based on the fair market value of the Company's
common stock on the date issued. Presently, there are 10 participants in the
Plan.
The board of directors may amend or terminate the Plan at any time, subject
to stockholder approval when required by law or regulation.
The following table sets forth estimated amounts to be paid under the Plan
in 1994:
OUTSIDE DIRECTORS STOCK PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)
--------------------------------------------------------------------- ----------------
<S> <C>
E. L. Addison, Chairman and CEO, The Southern Company................ 0
A. W. Dahlberg, President, The Southern Company...................... 0
P. J. DeNicola, President, Southern Company Services................. 0
H. A. Franklin, President, Georgia Power Company..................... 0
E. B. Harris, President, Alabama Power Company....................... 0
Executive officers as a group........................................ 0
Non-executive directors as a group................................... 47,500
Non-executive officer employees...................................... 0
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3.
4. PROPOSAL TO APPROVE THE COMPANY'S PRODUCTIVITY IMPROVEMENT PLAN FOR EXECUTIVE
OFFICERS
The Southern Company Productivity Improvement Plan for Executive Officers
(the "Plan") was adopted by the board of directors effective as of January 1,
1994. The Company adopted the original Productivity Improvement Plan effective
January 1, 1982 (the "Original Plan"). Compensation paid under the Original Plan
and a description of it have been disclosed in the Company's proxy statement
every year since its effective date. (See the Summary Compensation Table on page
11 and the Compensation Committee Report on pages 7-10 for information on the
last three years' payments under the Original Plan.) The Plan is identical to
the Original Plan except that its only participants are the
15
<PAGE> 17
Company's executive officers and it does not permit any discretionary authority
to make or alter awards despite non-attainment of goals established under the
Plan. The Company's executive officers are no longer eligible to participate in
the Original Plan.
The board of directors is now seeking stockholder approval of the Plan in
order to qualify all compensation to be paid under the Plan for full
deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Section 162(m) of the Code limits deductibility of certain
compensation paid to each of the Company's five most highly compensated
executive officers to $1,000,000, per officer, unless the compensation is paid
under a performance plan, meeting certain criteria under the Code, that has been
approved by stockholders.
Only executive officers of the Company are eligible to participate in the
Plan. Presently, there are seven executive officers participating in the Plan.
Payments under the Plan are payable in cash and are based upon the ranking
of the Company's return on equity over a four-year period within a group of
electric utility companies located in the southeastern United States. The
targeted performance under the Plan requires the Company's return on equity over
the four-year performance period to rank in the top quartile of the selected
group of companies. Performance at the target level results in an award ranging
from five to 50 percent of the participant's salary range midpoint, depending on
the level of the position held by the participant. As discussed more fully in
the Compensation Committee Report on pages 7-10, performance at the target level
results in a payment to the five most highly compensated executive officers that
is 50 percent of their salary range midpoint. No current participant receives
less than 30 percent of his salary range midpoint for target-level performance.
Awards may range from 50 percent of the target award if the Company's
return on equity is in the second lowest quartile to 125 percent of the target
if the Company's return on equity is the highest among the selected group of
companies. No awards are paid if the Company's return on equity is in the bottom
quartile or if the Company's current earnings are not sufficient to fund its
common stock dividend at the same level as the prior year. Also, the Plan
provides that, in the discretion of the compensation committee, extraordinary
income may be excluded for the purpose of calculating the Company's return on
equity which could result in smaller awards under the terms of the Plan.
The following table sets forth estimated amounts to be paid under the Plan
for the four-year performance period ended December 31, 1994:
PRODUCTIVITY IMPROVEMENT PLAN FOR EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)
- ---------------------------------------------------------------------------- ----------------
<S> <C>
E. L. Addison, Chairman and CEO, The Southern Company....................... 383,976
A. W. Dahlberg, President, The Southern Company............................. 265,675
P. J. DeNicola, President, Southern Company Services........................ 181,621
H. A. Franklin, President, Georgia Power Company............................ 226,663
E. B. Harris, President, Alabama Power Company.............................. 234,145
Executive officers as a group............................................... 1,456,606
Non-executive directors as a group.......................................... 0
Non-executive officer employees............................................. 0
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 4.
16
<PAGE> 18
5. STOCKHOLDER PROPOSAL ON ADDITIONAL DISCLOSURE OF EXECUTIVE COMPENSATION
The Company has been advised that Mrs. Evelyn Y. Davis, Watergate Office
Building, 2600 Virginia Avenue, N. W., Suite 215, Washington, D.C. 20037, holder
of 200 shares of common stock (after the stock distribution on February 28,
1994, resulting from the two-for-one common stock split approved by the
Company's board of directors in January, 1994), proposes to submit the following
resolution at the 1994 Annual Meeting of Stockholders:
"RESOLVED: That the shareholders recommend that the Board take the
necessary step that the Southern Company specifically identify by name and
corporate title in all future proxy statements those executive officers,
not otherwise so identified, who are contractually entitled to receive in
excess of $100,000 annually as a base salary, together with whatever other
additional compensation bonuses and other cash payment were due them."
STATEMENT OF SECURITY HOLDER
"REASONS: In support of such proposed Resolution it is clear that the
shareholders have a right to comprehensively evaluate the management in the
manner in which the Corporation is being operated and its resources
utilized. At present only a few of the most senior executive officers are
so identified, and not the many other senior executive officers who should
contribute to the ultimate success of the Corporation. Through such
additional identification the shareholders will then be provided an
opportunity to better evaluate the soundness and efficacy of the overall
management.
"Last year the owners of 41,093,910 shares, representing approximately
18% of shares voting, voted FOR this proposal.
"If you AGREE, please mark your proxy FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL NO. 5 FOR THE
FOLLOWING REASONS:
The Securities and Exchange Commission's proxy solicitation rules
(Commission's rules) control disclosure of executive compensation. The
Commission determines what information stockholders and the investing public
should have to make informed decisions about a company. This is balanced against
the burden on a company to supply the requisite information. It would seem
reasonable to assume the adequacy of the Commission's rules regarding disclosure
of executive compensation and not impose additional requirements on the Company.
This proposal, however, seeks to impose more stringent disclosure requirements
on the Company than those imposed on other companies by the Commission's rules.
The board believes that any changes to the Commission's rules should be
uniformly applicable to all companies subject to them.
Under the Commission's rules, with which the Company complies fully,
information regarding all payments to the most highly compensated executive
officers is included in a series of tables on pages 11-14 and all executive
compensation policies are discussed in the Compensation Committee Report on
pages 7-10. It is the board's opinion that the information that would be
disclosed were the proposal implemented would not be beneficial to stockholders.
No material information on the Company's costs associated with executive
compensation would be provided.
Accordingly, adoption of this proposed resolution, which would impose more
stringent disclosure requirements on the Company without imparting any material
information to the stockholders, would not be in the best interests of the
stockholders of the Company.
17
<PAGE> 19
The vote needed to pass the proposed stockholder resolution is a majority
of the shares represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL NO. 5.
6. STOCKHOLDER PROPOSAL ON LIMITING EXECUTIVE COMPENSATION
The Company has been advised that Mr. and Mrs. Jerome R. Mikulski, 4715
Caviou Place, Colorado Springs, Colorado 80918, holders of 400 shares of common
stock (after the stock distribution on February 28, 1994, resulting from the
two-for-one common stock split approved by the Company's board of directors in
January, 1994), propose to submit the following resolution at the 1994 Annual
Meeting of Stockholders:
"RESOLVED: That the shareholders of The Southern Company recommend
that the Board of Directors take the necessary steps to institute a salary
ceiling such that no senior executive officer or director or consultant
acting in the capacity of an executive officer or director of the Company
receive a combined salary and other compensation which is more than one
hundred and fifty percent (150%) of the salary provided to the President of
the United States."
STATEMENT OF SECURITY HOLDER
"REASONS: There is no corporation which exceeds the size or has the
complexity of the government of the United States run by the President of
the United States. Even most government agencies far exceed the size as
measured by personnel and budget of any private corporation. The President
of the United States receives a salary of $200,000, while the heads of
agencies and even members of Congress are paid somewhat in excess of
$100,000.
"In order to overcome even the appearance that officers of public
corporations run the corporations for their benefit rather than for the
benefit of the shareholders, the salary and compensation should not exceed
that set forth above. Usually, there is no direct correlation between the
profitability of a corporation and the compensation to officers. In fact,
in many corporations, the compensation increases even as profits fall. Thus
it is clear that compensation does not usually serve as an incentive for a
better run or more profitable corporation. Any officer who believes he can
better his corporation should be sufficiently motivated by stock options or
by his purchase of stock on the open market.
"There is a general consensus in the United States that corporate
officials are grossly overpaid and that this state of affairs is
promulgated by the 'hands off' policy of Boards of Directors. Many
qualified people would gladly step in and do as good a job as the incumbent
officers of the Corporation and they would have no hesitation to serve
under the aforementioned ceiling on compensation.
"If you agree, please mark your proxy FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL NO. 6 FOR THE
FOLLOWING REASONS:
As discussed more fully in the Compensation Committee Report on pages 7-10,
the Company's executive compensation consists of a fixed portion (base salary),
a short-term (annual) performance award, a long-term performance award, and
annual grants of stock options. With the exception of base salary, all of the
Company's executive compensation components are performance-based. In fact, over
the past 12 years -- since the adoption of the Productivity Improvement Plan in
1982, the Executive Stock Plan in 1988, and the Performance Pay Plan in
1989 -- the composition of executive compensation
18
<PAGE> 20
has become increasingly performance-based. Performance below a target results in
lower total compensation and performance above the target results in higher
total compensation.
Imposition of an arbitrary limitation on executive compensation would
severely restrict the board's ability to continue to base executive compensation
on corporate performance -- good or bad. Also, the setting of an arbitrary
ceiling would make it difficult to establish varying salary levels based on
levels of responsibility in the organization. And, finally, imposition of a
salary ceiling would inhibit the Company's ability to attract and retain
qualified executive officers because other companies with which the Company
competes for employees would not be subject to the ceiling.
Accordingly, the board believes that adoption of this resolution would not
be in the best interest of the stockholders of the Company.
The vote needed to pass the proposed stockholder resolution is a majority
of the shares represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL NO. 6.
7. OTHER BUSINESS
The board of directors is not aware of any other matters to be presented at
the annual meeting for stockholder action. However, the holders of the proxies
intend to vote in their discretion on any properly presented matters.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be paid by the Company and includes
reimbursement to brokers, banks, nominees, and other fiduciaries for forwarding
proxy material to beneficial owners in accordance with regulations of the
Securities and Exchange Commission and the New York Stock Exchange. Officers and
other employees of the Company or its subsidiaries may solicit proxies
personally or by telephone in certain instances in an effort to have larger
representation at the meeting.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING OF STOCKHOLDERS
The deadline for the receipt of stockholder proposals for consideration for
inclusion in the Company's proxy statement and form of proxy for the 1995 Annual
Meeting of Stockholders is December 13, 1994.
YOUR VOTE IS IMPORTANT
To save the Company the expense of a second proxy mailing, please mark,
date, sign, and promptly return the enclosed form of proxy.
The Company's 1993 Annual Report to the Securities and Exchange Commission
on Form 10-K will be provided without charge to each stockholder upon written
request to Tommy Chisholm, Secretary, The Southern Company, 64 Perimeter Center
East, Atlanta, Georgia 30346.
19
<PAGE> 21
Southern Company
- --------------------------------------------------------------------------------
NOTICE OF 1994
ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
TIME: 10:00 a.m. (CDT)
Wednesday, May 25, 1994
PLACE: Mobile Convention Center
One South Water Street
Mobile, Alabama
- --------------------------------------------------------------------------------
To save the expense of a follow-up mailing, please mark, date, and sign your
form of proxy and promptly return it in the postage-paid envelope. If you plan
to attend the meeting, please check the appropriate box on the form of proxy and
additional information regarding the meeting will be sent to you.
EXPLANATION OF DIFFERENCES BETWEEN
CIRCULATED DOCUMENT AND ELECTRONIC DOCUMENT
Notice of Annual Meeting and Proxy Statement
1. The circulated document is 7 1/4 by 8 1/4 inches. It is
printed on recycled white financial paper stock and is paste
bound.
2. The type style for the proxy statement is Helvetica. The
type size is 10 over 12 point except the table on folio page
11 which is 8 point.
3. Logos on folio pages 1 and 20 are partially printed in PMS
180 ink. The two horizontal lines and the words "TIME:" and
"PLACE:" on folio page 20 are printed in PMS 180 ink.
4. Folio page 20 contains the phrase "Printed on Recycled
Paper" with the appropriate logo.
5. The phrases "Productivity Improvement Plan" and "Stock
Option Grants" on folio page 9 and the last paragraph on
folio page 19 are in italics.
<PAGE>
Exhibit 21A
C
O
THE SOUTHERN COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS N
For Annual Meeting of Stockholders May 25, 1994
T
P I
The undersigned hereby appoints E. L. ADDISON, A. W. DAHLBERG,
E. B. HARRIS, and W. L. WESTBROOK, and each or any of them, N
R proxies with full power of substitution in each, to vote all shares
the undersigned is entitled to vote at the Annual Meeting of U
Stockholders of THE SOUTHERN COMPANY, to be held at the Mobile
O Convention Center, Mobile, Alabama, at 10:00 a.m. (CDT), and any E
adjournments thereof, on all matters legally coming before the
meeting including, without limitation, the proposals listed on D
X the reverse side hereof.
O
Y
Please mark, date, and sign exactly as N
name appears and return this proxy
card promptly in the enclosed envelope
to The Southern Company, Stockholder O
Services, P. O. Box 105700, Atlanta,
Georgia 30352-9870. T
H
Date , 1994
E
R
Signature(s)
S
Check box if you are attending the
Annual Meeting in person I
D
E
<PAGE>
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1 - 4 and "AGAINST" ITEMS 5 and 6.
P
S
R
(1) Election of Directors E
O FOR all nominees listed below
E
X E. L. Addison, W. P. Copenhaver, A. D. Correll,
A. W. Dahlberg, P. J. DeNicola, J. Edwards,
Y H. A. Franklin, L. G. Hardman, III, E. B. Harris, O
E. D. McLean, Jr., W. A. Parker, Jr., W. J. Rushton, III,
G. M. Shatto, H. Stockham T
H
E
(Instruction: To withhold authority to vote for R
any individual nominee, write that nominee's name
on the space provided below.)
S
I
WITHHOLD vote for all nominees
D
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 2 - 4.
E
(2) Appointment of Auditors
FOR AGAINST ABSTAIN
(3) Approval of Outside Directors Stock Plan
FOR AGAINST ABSTAIN
(4) Approval of the Productivity Improvement Plan for Executive
Officers
FOR AGAINST ABSTAIN
<PAGE>
THE DIRECTORS RECOMMEND A VOTE "AGAINST" ITEMS 5 and 6.
(5) Stockholder Proposal Regarding Additional Disclosure
of Executive Compensation
FOR AGAINST ABSTAIN
(6) Stockholder Proposal on Limiting Executive Compensation
FOR AGAINST ABSTAIN
<PAGE>
EXPLANATION OF DIFFERENCES BETWEEN
CIRCULATED DOCUMENT AND ELECTRONIC DOCUMENT
Form of Proxy
1. The circulated document is 8 1/2 by 3 5/8 inches on yellow
and white IBM 3800 compatible stock.
2. The type style is Spectra Extra Bold, Bold and Medium. Type
sizes range from 18 point to 6 point.
<PAGE>
EXHIBIT 21B
C
O
THE SOUTHERN COMPANY This Proxy Is For
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS Your Combined N
For Annual Meeting of Stockholders May 25, 1994 E.S.O.P. and
E.S.P. (if any) T
Shares.
P I
The undersigned hereby appoints E. L. ADDISON, A. W. DAHLBERG,
E. B. HARRIS, and W. L. WESTBROOK, and each or any of them, N
R proxies with full power of substitution in each, to vote all shares
the undersigned is entitled to vote at the Annual Meeting of U
Stockholders of THE SOUTHERN COMPANY, to be held at the Mobile
O Convention Center, Mobile, Alabama, at 10:00 a.m. (CDT), and any E
adjournments thereof, on all matters legally coming before the
meeting including, without limitation, the proposals listed on D
X the reverse side hereof.
I
X
O
Y N
Please mark, date, and sign exactly as
name appears and return this proxy
card promptly in the enclosed envelope O
to The Southern Company, Bin 071, 64
Perimeter Center East, Atlanta, T
Georgia 30346.
H
Date , 1994 E
R
Signature(s) S
Check box if you are attending the I
Annual Meeting in person
D
E
<PAGE>
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1 - 4 and "AGAINST" ITEMS 5 and 6.
P
S
R
(1) Election of Directors E
O FOR all nominees listed below
E
X E. L. Addison, W. P. Copenhaver, A. D. Correll,
A. W. Dahlberg, P. J. DeNicola, J. Edwards,
Y H. A. Franklin, L. G. Hardman, III, E. B. Harris, O
E. D. McLean, Jr., W. A. Parker, Jr., W. J. Rushton, III,
G. M. Shatto, H. Stockham T
H
E
(Instruction: To withhold authority to vote for R
any individual nominee, write that nominee's name
on the space provided below.)
S
I
WITHHOLD vote for all nominees
D
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 2 - 4.
E
(2) Appointment of Auditors
FOR AGAINST ABSTAIN
(3) Approval of Outside Directors Stock Plan
FOR AGAINST ABSTAIN
(4) Approval of the Productivity Improvement Plan for Executive
Officers
FOR AGAINST ABSTAIN
<PAGE>
THE DIRECTORS RECOMMEND A VOTE "AGAINST" ITEMS 5 and 6.
(5) Stockholder Proposal Regarding Additional Disclosure
of Executive Compensation
FOR AGAINST ABSTAIN
(6) Stockholder Proposal on Limiting Executive Compensation
FOR AGAINST ABSTAIN
<PAGE>
EXPLANATION OF DIFFERENCES BETWEEN
CIRCULATED DOCUMENT AND ELECTRONIC DOCUMENT
Form of Proxy
1. The circulated document is 8 1/2 by 3 5/8 inches on yellow
and white IBM 3800 compatible stock.
2. The type style is Spectra Extra Bold, Bold and Medium. Type
sizes range from 18 point to 6 point.
<PAGE>
