SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.___)
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement ___ Confidential, for Use of
the Commission Only (as
permitted by Rule
14a-6(e)(2)
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE SOUTHERN COMPANY
(Name of the Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) of
Schedule 14A.
___ $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 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------
___ Fee paid previously with preliminary materials.
___ 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.
(1)Amount Previously Paid:
- --------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------
<PAGE>
[LOGO OF SOUTHERN COMPANY APPEARS HERE]
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NOTICE OF 1995
ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
TIME: 10:00 a.m. (EDT)
Wednesday, May 24, 1995
PLACE: Savannah Civic Center
221 West Oglethorpe Avenue
Savannah, Georgia
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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.
[RECYCLED PAPER LOGO APPEARS HERE]
<PAGE>
[LOGO OF SOUTHERN COMPANY APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS -- MAY 24, 1995
Dear Stockholder:
The Annual Meeting of Stockholders of THE SOUTHERN COMPANY will be held at
the Savannah Civic Center, 221 West Oglethorpe Avenue, Savannah, Georgia on
Wednesday, May 24, 1995, at 10:00 a.m. (EDT), for the following purposes:
(1) Electing 14 members of the board of directors;
(2) Ratifying the appointment of Arthur Andersen LLP as independent
auditors for 1995;
(3) Approving the Outside Directors Stock Plan for Subsidiaries of The
Southern Company;
(4) Approving amendments to The Southern Company Productivity Improvement
Plan for Executive Officers;
(5) Approving amendments to The Southern Company Executive Stock Plan;
(6) Considering and voting upon a stockholder proposal, if presented at the
meeting, as described in Item 6 in the attached proxy statement; and
(7) 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 en-
closed 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 27, 1995, are
entitled to vote at the meeting.
By Order of the Board of Directors,
Tommy Chisholm
Secretary
Atlanta, Georgia
April 10, 1995
<PAGE>
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 1995 Annual
Meeting of Stockholders to be held on Wednesday, May 24, 1995, at 10:00 a.m.
(EDT) in Savannah, Georgia. It is proposed that this proxy statement and ac-
companying form of proxy first will be sent to the Company's stockholders on
or about April 10, 1995.
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 direc-
tors 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 di-
rectors 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 re-
ceived 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 27, 1995, as the record date for the deter-
mination of stockholders entitled to notice of and to vote at the 1995 Annual
Meeting of Stockholders. On the record date, there were outstanding
665,154,977 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 prop-
erly 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.
John C. Adams
Mr. Adams, 55, is chairman, president, and chief executive officer of Russell
Corporation, designers, manufacturers, and marketers of apparel and fabrics.
He served as senior vice president of sales operations for Russell Corporation
from 1989 to 1991; president and chief operations officer from 1991 to 1992;
and president and chief executive officer from 1992 to 1993, when he was ap-
pointed to his current position. He is a director of First National Bank of
Alexander City, Alabama and Aliant Corporation.
2
<PAGE>
A. D. Correll
Mr. Correll, 53, is chairman of the board and chief executive officer of Geor-
gia-Pacific Corporation, manufacturers and distributors of building products,
pulp, and paper. He served as senior vice president of Georgia-Pacific Corpora-
tion 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 Georgia-Pacific Corpora-
tion, Trust Company Bank, and Trust Company of Georgia. He was elected director
of the Company in 1994.
A. W. Dahlberg
Mr. Dahlberg, 54, is chairman of the board, president, and chief executive of-
ficer of the Company and chairman of the executive committee of Southern Com-
pany Services, Inc. Prior to 1994, he was president and chief executive officer
of Georgia Power Company. He is a director of Alabama Power Company, Georgia
Power Company, SEI Holdings, III, Inc., Southern Company Services, Inc., South-
ern Electric International, Inc., Southern Nuclear Operating Company, Inc.,
Equifax, Inc., Protective Life Corporation, Trust Company Bank, and Trust Com-
pany of Georgia. He was elected director of the Company in 1985.
Paul J. DeNicola
Mr. DeNicola, 46, 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 posi-
tion. He is a director of Gulf Power Company, Mississippi Power Company, Savan-
nah Electric and Power Company, SEI Holdings, Inc., Southern Communications
Services, Inc., Southern Company Services, Inc., Southern Electric Internation-
al, Inc., Southern Electric Wholesale Generators, Inc., Southern Nuclear Oper-
ating Company, Inc., and The Southern Development and Investment Group, Inc. He
was elected director of the Company in 1989.
Jack Edwards
Mr. Edwards, 66, 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, 50, is president and chief executive officer of Georgia Power
Company, president of Piedmont-Forrest Corporation, and executive vice presi-
dent of the Company. Prior to 1994, he was president and chief executive offi-
cer of Southern Company Services, Inc. He is a director of Georgia Power Compa-
ny, Piedmont-Forrest Corporation, SEI Holdings, Inc., Southern Company Servic-
es, Inc., Southern Electric Generating Company, Southern Electric Internation-
al, Inc., Southern Electric Wholesale Generators, Inc., Southern Nuclear Oper-
ating Company, Inc., and SouthTrust Corporation. He was elected director of the
Company in 1988.
Bruce S. Gordon
Mr. Gordon, 48, is group president of Bell Atlantic Network Services, Inc.,
telecommunications and computer equipment services. Prior to 1993, he served as
vice president of marketing and sales of Bell Atlantic Network Services, Inc.
He is a director of Barfield Companies and was elected director of the Company
in 1994.
3
<PAGE>
L. G. Hardman, III
Mr. Hardman, 55, 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 Har-
mony 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, 55, is president and chief executive officer of Alabama Power Com-
pany, president of Alabama Property Company and Southern Electric Generating
Company, and executive vice president of the Company. He is a director of Ala-
bama Power Company, Alabama Property Company, Southern Company Services, Inc.,
Southern Electric Generating Company, Southern Nuclear Operating Com-pany,
Inc., AmSouth Bancorporation, and AmSouth Bank, N.A. He was elected director of
the Company in 1989.
William A. Parker, Jr.
Mr. Parker, 67, is chairman of the board of Seminole Investment Company,
L.L.C., private investments in land, securities, and warehouses. He is a direc-
tor of Georgia Power Company, Atlantic Realty Company, 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 emeritus of Protective Life Corporation, an insur-
ance concern. Prior to 1994, he was chairman of the board of Protective Life
Corporation. 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, 63, is president of Berry College, Mount Berry, Georgia. She is a
director of Georgia Power Company, Becton Dickinson & Company, Kmart Corpora-
tion, and Texas Instruments Incorporated. She was elected director of the Com-
pany in 1984.
Gerald J. St. Pe
Mr. St. Pe, 55, is president of Ingalls Shipbuilding, Inc. division of Litton
Industries, Inc., and senior vice president of Litton Industries, Inc. He is a
director of Mississippi Power Company and Merchants and Marine Bank.
Herbert Stockham
Mr. Stockham, 66, is chairman of the board of Stockham Valves & Fittings, Inc.,
manufacturers of pipe fittings and valves. He is a director of Behavioral
Health Systems, Inc., 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL
NO. 1.
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<PAGE>
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, 1994. It is based on information fur-
nished to the Company by the directors, nominees, and executive officers. The
shares owned by all directors, nominees, and executive officers as a group con-
stitute less than one percent of the total number of shares of the respective
classes outstanding as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SHARES
TITLE OF SECURITY BENEFICIALLY OWNED (1) (2)
----------------- --------------------------
<C> <S> <C>
John C. Adams Southern Company common
stock................... 3,000
Edward L. Addison Southern Company common
stock................... 313,008
William P. Copenhaver Southern Company common
stock................... 2,906
A. D. Correll Southern Company common
stock................... 1,124
A. W. Dahlberg Southern Company common
stock................... 92,736
Paul J. DeNicola Southern Company common
stock................... 41,269
Jack Edwards Southern Company common
stock................... 3,102
H. Allen Franklin Southern Company common
stock................... 61,231
Bruce S. Gordon Southern Company common
stock................... 42
L. G. Hardman, III Southern Company common
stock................... 6,779
Elmer B. Harris Southern Company common
stock................... 104,175
Earl D. McLean, Jr. Southern Company common
stock................... 14,451
William A. Parker, Jr. Southern Company common
stock................... 26,254
Georgia Power Company
preferred stock......... 2
William J. Rushton, III Southern Company common
stock................... 6,201
Alabama Power Company
preferred stock......... 20
Gloria M. Shatto Southern Company common
stock................... 13,351
Georgia Power Company
preferred stock......... 1,200
Gerald J. St. Pe Southern Company common
stock................... 16,043
Herbert Stockham Southern Company common
stock................... 6,117
Directors, Nominees, and
Executive Officers of the
Company as a Group Southern Company common
(18 persons) stock................... 868,034
Subsidiary companies
preferred stock......... 1,222
</TABLE>
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(1) "Beneficial ownership" means the sole or shared power to vote, or to di-
rect the voting of, a security and/or investment power with respect to a secu-
rity.
(2) The shares shown include shares of common stock of which certain direc-
tors and executive officers have the right to acquire beneficial ownership
within 60 days pursuant to The Southern Company Executive Stock Plan, as fol-
lows: Mr. Addison, 230,025 shares; Mr. Dahlberg, 45,847 shares; Mr. DeNicola,
12,139 shares; Mr. Franklin, 40,383 shares; Mr. Harris, 58,867 shares; and all
directors, nominees, and executive officers of the Company as a group, 446,677
shares. Also included are shares of the Company's common stock held by the
spouses of the following directors: Mr. Addison, 1,424 shares; Mr. Copenhaver,
700 shares; Mr. Edwards, 255 shares; Mr. Hardman, 100 shares; Mr. Harris, 310
shares; Mr. Parker, 48 shares; and Dr. Shatto, 11,157 shares. Also included are
1,200 shares of Georgia Power Company preferred stock owned by Dr. Shatto's
spouse. Each director disclaims any interest in these shares owned by their
spouses.
5
<PAGE>
CERTAIN TRANSACTIONS
During 1994, Alabama Power Company and Southern Company Services, Inc. on be-
half of Protective Life Insurance Company collected premiums through payroll
deductions of $715,595 from their respective employees electing to purchase
various types of insurance policies from Protective Life. Mr. Rushton owns an
interest in and serves as chairman emeritus and director of Protective Life
Corporation, holding company for Protective Life Insurance Company. Messrs. Ad-
dison and Dahlberg also are directors of Protective Life Corporation. During
1994, Alabama Power Company paid Hand, Arendall, Bedsole, Greaves & Johnston
$198,342 for legal services. Mr. Edwards is a partner of Hand, Arendall,
Bedsole, Greaves & Johnston. During 1994, Alabama Power Company and Southern
Company Ser- vices, Inc. paid Bell Atlantic Network Services, Inc. $422,026 for
monthly maintenance fees on printers and terminals. Mr. Gordon is group presi-
dent of Bell Atlantic Network Services, Inc. During 1995, the Company paid Ed-
ward L. Addison $161,703 for consulting services. Mr. Addison served as chair-
man, chief executive officer, and director of the Company until March 1, 1995.
The Company believes that these transactions have been on terms representing
competitive market prices that are no less favor-able 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 10 nonemployees, eight of
whom currently are serving as directors, and four officers.
The board of directors met eight times in 1994. Its five standing committees
met a total of 26 times. The average attendance of all directors for the board
and committee meetings was 98 percent, with Mr. Parker attending 72 percent of
the board and applicable committee meetings.
With the exception of the Executive Committee of which the Company's chairman
of the board and president is a member and serves as its chairman, all standing
committee members and chairmen are nonemployee directors.
CERTAIN COMMITTEES
AUDIT COMMITTEE -- The members of the Audit Committee are Mr. Edwards, chair-
man, Mr. Copenhaver, Mr. Gordon, and Mr. Stockham. Mr. Copenhaver will retire
May 24, 1995. The Audit Committee met seven times in 1994. The Audit Committee
annually reviews and recommends the selection of the Company's independent au-
ditor 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 disagree-
ments with management concerning accounting or disclosure matters. The Commit-
tee also oversees the Company's internal accounting and financial controls and
annual internal audit plan and activities. The Audit Committee regularly re-
ports 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. Mr. Copenhaver
will retire on May 24, 1995. The Compensation Committee met seven times in
1994. The Compensation Committee reviews the performance of the chairman of the
board and the president of the Company and recommends to the board their com-
pensation under the base salary plan, the Performance Pay Plan, and the Produc-
tivity Improvement Plan for Executive Officers. It also reviews and makes rec-
ommendations to
6
<PAGE>
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. Hard-
man, chairman, Mr. Edwards, Mr. Rushton, and Dr. Shatto. The Nominating Commit-
tee met five times in 1994. This committee identifies and recommends to the
board of directors the nominees for election to the board. The Nominating Com-
mittee expects normally to identify from its own resources the names of quali-
fied nominees but will accept from stockholders recommendations of individuals
to be considered as nominees. Stockholder recommendations, together with a de-
scription of the proposed nominee's qualifications, relevant biographical in-
formation, and the proposed nominee's signed consent to serve, should be sub-
mitted in writing to the secretary of the Company and received by that office
by December 13, 1995. 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 at least $5,000 is paid in Company common stock. A meeting fee
of $1,000 is paid for each meeting of the board of directors attended and for
each committee meeting attended. Also, each nonemployee committee chairman is
paid an annual retainer fee of $5,000. All or a portion of the fees payable in
cash may be deferred until membership on the board is terminated. Dr. Shatto
also was paid $1,000 for service on the Southern Company College board of advi-
sors.
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 re-
tainer 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") dis-
cusses generally the committee's executive compensation objectives and policies
and their relationship to corporate performance in 1994. Also, the report spe-
cifically discusses the committee's bases for compensation in 1994 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 provid-
ing 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. Addi-
tionally, executive compensation is variable so that higher performance leads
to higher pay and lower performance results in lower pay.
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<PAGE>
Total executive compensation (base salary plus incentive compensation) is
compared with that of a group of electric and gas utility companies with simi-
lar market and operating characteristics and within a comparable size range.
Currently, each company in that group has annual 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 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 compen-
sation (annual performance bonus), and long-term incentive compensation.
BASE SALARY. Base salary levels, including the chairman's, are largely deter-
mined by comparison with salaries of other gas and electric utility companies
of comparable size, as reported in market surveys prepared by independent, out-
side consultants. All but one of these companies are included in the 24 compa-
nies that comprise the Standard & Poor's Electric Utility Index. A salary range
above and below the median salary reported in such surveys is established. Base
salary increases are based on individual job performance and set within the es-
tablished competitive salary range. Base salary also can be increased based on
a significant increase in job responsibilities. In 1994, base salary increases
(including promotions) for the executive officers, including the chairman, were
within the range of increases for all regular employees. The chairman's base
salary level was above the median in 1994; the 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 per-
formance bonus under the Company's Performance Pay Plan.
Amounts paid to executive officers for 1994 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 cus-
tomer satisfaction. Individual objectives are goals and initiatives that link
the corporate performance goals and the Company's strategic direction. The com-
mittee 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 amount
available for the payment of awards.
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 perfor-
mance 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 insuf-
ficient to fund its common stock dividend at the same level as the prior year.
8
<PAGE>
The earnings target requires the Company's return on common equity to rank
above the median of a large group (approximately 100) of investor-owned elec-
tric utility companies -- the companies with which the Company competes for in-
vestors -- with a longer term target to rank in the highest quartile of this
group of companies. All of the companies in the Standard & Poor's Electric
Utility Index are included in this group. The Company's position was in the top
of the second highest quartile for 1994. For purposes of determining the level
of performance under the return on common equity goal, certain one-time costs
associated with the reorganization of subsidiaries of the Company were exclud-
ed, placing the Company in the top quartile. The competitive cost of electric-
ity target requires the Company to establish and keep cost of service in the
lowest quartile of 16 electric utilities in the southeastern United States --
the primary companies with which the Company competes for markets -- 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 and
maintained its position in the second-lowest quartile in 1994 and is on track
for meeting the cost of electricity target by 1995. The customer satisfaction
target required the Company to make more of our "satisfied" customers -- espe-
cially our largest customers -- "very satisfied." During 1994, the number of
our key customers surveyed who were "very satisfied" increased by 50 percent.
Corporate performance met or exceeded the target levels in all three areas in
1994, 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 1994 performance averaged 50 percent
(with the earnings goal weighted significantly higher) and the remainder at-
tributable to the achievement of individual performance objectives.
The chairman's target annual performance award opportunity for full achieve-
ment of goals was 10 percent of his base salary. Of the annual performance bo-
nus paid to the chairman for 1994 performance, 70 percent was based on the cor-
porate 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 per-
formance on both a short-term and long-term basis. The committee found that,
under all measurement criteria, performance met or exceeded the targets estab-
lished for 1994. This resulted in an award under the plan that exceeded the
target award opportunity.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives for executive offi-
cers, including the chairman, are provided through annual grants of performance
awards under the Productivity Improvement Plan and annual grants of stock op-
tions 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 addi-
tional compensation based on the Company's average return on common equity per-
formance 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 grant-
ed.
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 of up to approximately 50 percent of the executive's
salary range midpoint. 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. (See Proposal No. 4 on pages 16
and 17 of this proxy statement for information regarding proposed changes to
the Productivity Improvement Plan for Executive Officers.)
9
<PAGE>
For the performance period January 1, 1991, through December 31, 1994, the
Company's return on equity was the second highest of the selected group, re-
sulting in awards to the executive officers, including the chairman, of 115
percent of the established target award opportunity.
Stock Option Grants. Under the Company's Executive Stock Plan, executive of-
ficers, 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 to-
tal 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 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 de-
termining the size of the latest grants. Historically, the total number of
stock options granted annually by the committee to all participants has not ex-
ceeded 10 percent of the total number of shares authorized under the plan. (See
Proposal No. 5 on pages 17 to 20 of this proxy statement for proposed changes
to the Executive Stock 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 anni-
versary 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 re-
warded. 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 amend the Productivity Improvement Plan for Executive Offi-
cers. For further information on this matter, see Proposal No. 4 on pages 16
and 17 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>
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, 1994.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------- -----------------------------
NUMBER
OF SE-
CURITIES LONG-TERM
OTHER UNDERLY- INCENTIVE
ANNUAL ING STOCK PLAN ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSA- OPTIONS PAYOUTS COMPENSA-
POSITION YEAR ($) ($) TION ($) (#) ($)(1) TION ($)(2)
- ------------------ ---- ------- ------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
E. L. Addison 1994 787,239 162,930 5,227 58,267 425,840 45,012
Retired Chairman and 1993 734,714 148,118 9,527 47,118 339,714 47,909
CEO, The Southern 1992 696,526 176,331 4,255 52,626 262,579 38,072
Company
A. W. Dahlberg 1994 600,026 120,415 6,579 43,062 306,459 32,630
Chairman, President & 1993 477,967 96,331 17,707 30,644 225,406 44,547
CEO, The Southern 1992 469,178 110,094 6,508 34,226 171,243 26,979
Company
P. J. DeNicola 1994 361,618 74,294 3,540 26,569 188,858 21,381
President, Southern 1993 313,970 63,641 6,832 14,996 132,986 24,436
Company Services 1992 272,246 70,272 3,022 16,182 79,519 14,341
H. A. Franklin 1994 415,954 87,763 30,078 31,386 203,201 100,201
President, Georgia Power 1993 365,000 73,584 16,438 23,408 140,650 37,298
Company 1992 328,196 84,096 2,704 19,366 90,200 17,669
E. B. Harris 1994 436,280 96,711 13,882 31,441 236,642 24,467
President, Alabama Power 1993 418,818 117,630 23,469 26,892 198,131 39,388
Company 1992 397,499 96,615 9,161 30,036 147,278 24,435
</TABLE>
- ----------
(1) Payouts made in 1993, 1994, and 1995 for the four-year performance peri-
ods ending December 31, 1992, 1993, and 1994, respectively.
(2) Company contributions in 1994 to the Employee Savings Plan, Employee
Stock Ownership Plan, and nonpension related accruals under the Supplemental
Benefit Plan (ERISA excess plan under which accruals are made to offset Inter-
nal Revenue Code imposed limitations under the Employee Savings and Stock Own-
ership Plans) for the following: Mr. Addison -- $5,555, $1,789, and $37,668;
Mr. Dahlberg -- $5,420, $1,789, and $25,421; Mr. DeNicola -- $6,750, $1,789,
and $12,842; Mr. Franklin -- $6,750, $1,789, and $15,043; and Mr. Harris --
$6,750, $1,789, and $15,928. Also included for Mr. Franklin are relocation al-
lowances of $76,619.
11
<PAGE>
STOCK OPTION GRANTS
The following table sets forth all stock option grants to the named execu-
tive officers during the year ending December 31, 1994.
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
------------------------------------------------ -------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) ($)(3)
- ---- ---------- -------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
E. L. Addison........... 58,267 13 18.875 03/01/1998(4) 118,282
A. W. Dahlberg.......... 43,062 10 18.875 07/18/2004 109,808
P. J. DeNicola.......... 26,569 6 18.875 07/18/2004 67,751
H. A. Franklin.......... 31,386 7 18.875 07/18/2004 80,034
E. B. Harris............ 31,441 7 18.875 07/18/2004 80,175
</TABLE>
- ----------
(1) Grants were made on July 18, 1994, and vest annually at a rate of 25
percent on the anniversary date of the grant. Grants fully vest upon termina-
tion 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 446,443 stock options were granted in 1994 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 vola-
tility -- 16.79 percent; risk-free rate of return -- 7.3 percent; dividend
yield -- 6.25 percent; and time to exercise -- 10 years.
(4) In accordance with the terms of the Executive Stock Plan, Mr. Addison's
unexercised options became fully vested on March 1, 1995, the date of his re-
tirement, and will expire on March 1, 1998, three years thereafter.
AGGREGATED STOCK OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised dur-
ing the year ending December 31, 1994, by the named executive officers and the
value of unexercised options held by them as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE 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 0 230,025/135,828 1,423,043/213,647
A. W. Dahlberg.......... Not exercised 0 45,847/93,513 176,753/144,813
P. J. DeNicola.......... 3,068 20,936 12,139/50,250 34,450/72,049
H. A. Franklin.......... Not exercised 0 40,383/63,905 186,066/86,272
E. B. Harris............ Not exercised 0 58,867/75,800 276,376/120,463
</TABLE>
- ----------
(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.
12
<PAGE>
(2) This column represents the excess of the fair market value of the
Company's common stock of $20.00 per share, as of December 31, 1994, above the
exercise price of the options. One column reports the "value" of options that
are vested and therefore could be exercised; the other the "value" of options
that are not vested and therefore could not be exercised as of December 31,
1994.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994
The following table sets forth the long-term incentive plan awards made to
the named executive officers under the Company's Productivity Improvement Plan
for Executive Officers for the performance period January 1, 1994, through De-
cember 31, 1997.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE BASED PLANS
OTHER PERIOD ---------------------------------
NUMBER OF UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS(1) OR PAYOUT ($)(2) ($)(2) ($)(2)
- ---- --------- ---------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
E. L. Addison..... 0 -- -- -- --
A. W. Dahlberg.... 471,947 4 years 235,974 471,947 943,894
P. J. DeNicola.... 261,300 4 years 130,650 261,300 522,600
H. A. Franklin.... 305,573 4 years 152,787 305,573 611,146
E. B. Harris...... 269,311 4 years 134,656 269,311 538,622
</TABLE>
- ----------
(1) A performance unit is a method of assigning a dollar value to a perfor-
mance award opportunity. The number of units granted to named executive offi-
cers is 65 percent of their base salary range midpoint, with each unit valued
at $1.00. No awards are paid unless the participant remains actively employed
by the Company during any portion of the final year of the applicable perfor-
mance period. For more information about the Productivity Improvement Plan for
Executive Officers, see Proposal No. 4 on pages 16 and 17.
(2) The threshold, target, and maximum value of a unit is $0.50, $1.00, and
$2.00, respectively, and can vary based on the Company's return on common eq-
uity relative to a selected group of electric and gas utilities in the south-
eastern 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
950,000.................... 242,250 323,000 403,750 484,500 565,250 646,000
</TABLE>
The above table sets forth the estimated combined annual pension benefits un-
der the pension and supplemental defined benefit plans in effect during 1994.
Employee compensation covered by the pension and supplemental benefit plans for
pension purposes is limited to the average of the highest
13
<PAGE>
three of the final 10 years' base salary and wages (reported under column ti-
tled "Salary" in the Summary Compensation Table on page 11). As of December 31,
1994, the applicable compensation levels for Messrs. Addison, Dahlberg,
DeNicola, Franklin, and Harris would have been $753,528; $514,152; $327,492;
$385,716; and $421,620, respectively. As of December 31, 1994, Messrs. Addison,
Dahlberg, DeNicola, Franklin, and Harris had 40, 34, 25, 23, and 36 years, re-
spectively, 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, un-
less 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 re-
turn 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, 1989, and that all dividends are reinvested. The
shareholder return shown below for the five-year historical period may not be
indicative of future performance.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Southern Company common stock $100 $104 $138 $165 $199 $192
- --------------------------------------------------------------------------------
S & P Electric Utility Index 100 103 134 141 159 138
- --------------------------------------------------------------------------------
S & P 500 Index 100 97 126 136 150 152
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors, upon recommendation of the Audit Committee, has se-
lected Arthur Andersen LLP as independent auditors for 1995. Representatives of
Arthur Andersen LLP are expected to be present at the annual meeting and will
have an opportunity to make a statement if they desire and to respond to appro-
priate 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 OUTSIDE DIRECTORS STOCK PLAN FOR SUBSIDIARIES OF THE
COMPANY
The board of directors has adopted to be effective January 1, 1995, subject
to stockholder approval, the Outside Directors Stock Plan for Subsidiaries of
the Company (the "Plan"). The purpose of the Plan is to provide a mechanism for
nonemployee directors of the Company's subsidiaries to automatically increase
their ownership of Company common stock and thereby further align their inter-
ests with those of the stockholders. Currently, the outside directors of the
following five subsidiaries are eligible to participate in the Plan: Alabama
Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power
Company, and Savannah Electric and Power Company. Presently, there are approxi-
mately 50 participants in the Plan.
The Plan will be administered by the Company's compensation committee.
The Plan provides for the payment to nonemployee directors of a portion (cur-
rently $2,000 or $3,000) of their annual retainer fee (currently ranging from
$15,000 to $23,000) in unrestricted shares of Company common stock, par value
$5 per share. Additionally, the Plan will permit participants to elect to re-
ceive a greater portion -- up to all -- of their annual retainer fee in shares
of Company common stock. The shares will be issued quarterly.
The board of directors may amend or terminate the Plan at any time, subject
to stockholder approval when required by law or regulation.
The following table sets forth estimated amounts to be paid under the Plan in
1995:
OUTSIDE DIRECTORS STOCK PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)
- ----------------- ----------------
<S> <C>
E. L. Addison, Retired Chairman and CEO, The Southern Company. 0
A. W. Dahlberg, Chairman, President, and CEO, 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............................ 13,500
Non-executive officer employees............................... 0
</TABLE>
The vote needed to approve the Outside Directors Stock Plan for Subsidiaries
of the Company is a majority of the shares of the Company's stock represented
at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3.
15
<PAGE>
4. PROPOSAL TO AMEND 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, and approved by the stockholders on May 25, 1994. The Plan was amended by
the board of directors effective as of January 1, 1995.
The board of directors is seeking stockholder approval of the amended Plan in
order to continue 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.
The Plan has been amended to increase the award opportunity for superior per-
formance and to increase the level of performance that must be met before any
awards are paid. Payments under the Plan are paid 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 required the Company's return on equity
over the four-year performance period to rank in the top quartile of the se-
lected group of companies. Prior to amendment, performance at the target level
resulted in an award ranging from five to 50 percent of the participant's sal-
ary range midpoint, depending on the level of the position held by the partici-
pant. Under the amended Plan, the award opportunity will range from 10 to 65
percent of the participant's salary range midpoint at the beginning of the
four-year period, depending on the participant's job level. The maximum award
that may be paid to any individual under the Plan is $1,500,000. The executive
officers currently participating in the amended Plan will have an award oppor-
tunity ranging from 35 to 65 percent of their midpoint.
Prior to amendment, awards ranged from 50 percent of the target award if the
Company's return on equity was in the second lowest quartile to 125 percent of
the target if the Company's return on equity was the highest among the selected
group of companies. Under the amended Plan, awards will range from 50 percent
of the target award if the Company's return on equity is in the second highest
quartile to 200 percent of the target award if the Company's return on equity
is the highest among the selected group of companies. Under the amended Plan no
awards may be paid if the Company's return on equity is below the median or if
the Company's current earnings are not sufficient to fund its common stock div-
idend at the same level as the prior year. Also, the amended Plan continues to
provide that, in the discretion of the compensation committee, extraordinary
income may be excluded for the purpose of calculating the Company's return on
equity, which could result in smaller awards under the terms of the Plan.
16
<PAGE>
The following table sets forth estimated amounts to be paid under the Plan
for the four-year performance period ended December 31, 1995:
PRODUCTIVITY IMPROVEMENT PLAN FOR EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)
- ----------------- ----------------
<S> <C>
E. L. Addison, Retired Chairman and CEO, The Southern Company. 471,947
A. W. Dahlberg, Chairman, President, and CEO, The Southern
Company...................................................... 471,947
P. J. DeNicola, President, Southern Company Services.......... 261,300
H. A. Franklin, President, Georgia Power Company.............. 305,573
E. B. Harris, President, Alabama Power Company................ 269,311
Executive officers as a group................................. 2,449,360
Non-executive directors as a group............................ 0
Non-executive officer employees............................... 0
</TABLE>
The vote needed to approve the proposed amendments to the Productivity Im-
provement Plan for Executive Officers is a majority of the shares of the
Company's stock represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 4.
5. PROPOSAL TO AMEND THE SOUTHERN COMPANY EXECUTIVE STOCK PLAN
The Southern Company Executive Stock Plan (the "Plan") was adopted by the
board of directors effective as of December 7, 1987, and approved by the stock-
holders on May 25, 1988. The Plan was amended by the board of directors to be
effective as of January 1, 1995, subject to stockholder approval, to increase
the number of participants and the maximum grant opportunity above that ap-
proved by the stockholders in 1988.
The purpose of the Plan is to maximize the long-term success of the Company,
to ensure a balanced emphasis on both current and long-term performance, to en-
hance Plan participants' identification with stockholders' interests, and to
facilitate the attraction and retention of key individuals with outstanding
ability.
The Plan is administered by the Compensation Committee of the board of direc-
tors of the Company (the "committee"). The committee consists of three or more
directors of the Company who are not employees of the Company or its subsidiar-
ies and who are not participants in the Plan. The committee has exclusive au-
thority to interpret the Plan.
The Plan permits the committee to grant, in its discretion, Incentive Stock
Options and Nonqualified Stock Options (collectively, "Stock Options"), Stock
Appreciation Rights, and Restricted Stock to a select group of management em-
ployees. The committee has determined that it is advantageous to expand the
group of employees to whom it may make grants under the Plan. When approved by
the stockholders in 1988, the approximate number of participants was 25. Under
the amended Plan, the approximate number of participants will be 200.
Nonqualified Stock Options entitle the participant to purchase up to the num-
ber of shares of the Company's common stock ("Common Stock") specified in the
grant at a specified price (the "Option Price"). The Option Price, which cannot
be lower than the fair market value of the Common Stock on the grant date, is
set by the committee at the time a grant is made. Nonqualified Stock Options
may not be exercised less than 12 months or more than 10 years after the date
granted.
17
<PAGE>
Stock Options designated by the committee as Incentive Stock Options will
comply with Section 422A of the Internal Revenue Code. They entitle the partic-
ipant to purchase the specified number of shares of Common Stock at the Option
Price not less than 12 months or more than 10 years from the grant date. The
aggregate fair market value of Common Stock determined at the time of each
grant for which any participant may exercise Incentive Stock Options under the
Plan for any calendar year shall not exceed $100,000.
Stock Appreciation Rights are rights that, when exercised, entitle the par-
ticipant to the appreciation in value of the number of shares of Common Stock
specified in the grant, from the date granted to the date exercised. The exer-
cised Stock Appreciation Right may be paid in cash or Common Stock, as deter-
mined by the committee. Stock Appreciation Rights may be granted in the sole
discretion of the committee in conjunction with an Incentive Stock Option or
Nonqualified Stock Option.
Restricted Stock awards are grants of shares of Common Stock that are held by
the Company for the benefit of the participant without payment of consideration
by the participant. There are restrictions or conditions on the participant's
right to transfer or sell such shares. The committee will establish a "Restric-
tion Period" of from three years through 10 years for each Restricted Stock
award made. The participant will be entitled to dividends paid on the Re-
stricted Stock and will have the right to vote such shares.
Stock Options must be paid in full when exercised by the participant. The
committee, in its discretion, may permit the Option Price to be paid in whole
or in part through the transfer to the Company of shares of Common Stock previ-
ously acquired by the participant, provided, however, that the shares trans-
ferred must have been held by the participant for longer than six months and
must not be Restricted Stock.
A total of 6 million shares of Common Stock (adjusted for the two-for-one
common stock split on February 28, 1994) is available for grants under the
Plan. The committee has only granted Nonqualified Stock Options under the Plan
and while it does not anticipate a change at this time, the other types of
awards provided for in the Plan may be granted in the future. When the Plan was
approved by the stockholders in 1988, the committee stated its intention to set
the maximum number of shares of Common Stock that a participant could purchase
under a Stock Option. The committee established that a participant could be
granted the option to purchase up to the number of shares of Common Stock with
an aggregate value on the grant date of a set percentage of base salary level,
ranging from 50 to 135 percent, based upon an individual's position level. The
committee intends under the amended Plan to increase the maximum that may be
granted to 150 percent of base salary level. On March 27, 1995, the closing
price per share of Common Stock reported on the New York Stock Exchange Compos-
ite Tape was $20.25.
The committee has established that participants become 25 percent vested in
each Stock Option grant on the anniversary date of the grant and 25 percent per
year thereafter unless the participant terminates employment based upon retire-
ment, death, or disability, in which case, the options become fully vested. The
committee may eliminate the vesting requirements if the applicable accounting
principles require that the Stock Options be charged against the earnings of
the Company in the year granted.
The board of directors may terminate or amend the Plan at any time; provided,
however, without stockholder approval, the board may not (1) increase the total
number of shares of Common Stock under the Plan, (2) withdraw the administra-
tion of the Plan from the committee, (3) permit a committee member to partici-
pate in the Plan, (4) materially increase participants' benefits under the
Plan, or (5) materially modify eligibility requirements for participation in
the Plan.
The Plan will terminate December 7, 1997, unless terminated sooner by the
board of directors.
18
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The tax consequences of the Plan are summarized in the following discussion
that deals with the general tax principles applicable to the Plan under current
federal law. Capital gains are currently taxed at a minimum federal rate of 28
percent, while ordinary income rates are graduated to a maximum rate of 39.6
percent. The following material discusses the characterization of income under
the various Plan features as ordinary income or capital gain or loss.
Incentive Stock Options. A Participant who receives an Incentive Stock Option
will not be treated as receiving taxable income upon the grant of the option or
upon its exercise, provided the exercise occurs, in general, during employment
or within three months after termination of employment. How- ever, any appreci-
ation in share value since the date of grant will be an item of tax preference
at the time of exercise in determining liability for the alternative minimum
tax. If stock acquired pursuant to an Incentive Stock Option is not sold or
otherwise disposed of within two years from the date of grant of the option and
is held for at least one year after delivery of the stock purchased by the op-
tion, any gain or loss resulting from a sale or other disposition of the stock
will be treated as long-term capital gain or loss. If stock acquired upon exer-
cise of an Incentive Stock Option is disposed of prior to the expiration of
such holding periods, the Participant will realize ordinary income in the year
of such disposition in an amount equal to the excess of the fair market value
of the stock on the date exercised over the exercise price. Any gain in excess
of that ordinary income amount generally will be taxed at capital gains rates.
However, under a special rule, the ordinary income realized upon a disqualify-
ing disposition will not exceed the amount of the Participant's gain.
The Company will not be entitled to any deduction as a result of the grant or
exercise of any Incentive Stock Option, or on a later disposition of the stock
received, except that in the event of a disqualifying disposition the Company
will be entitled to a deduction equal to the amount of ordinary income realized
by the Participant, or, if less, the amount equal to the excess of the fair
market value of the stock on the date exercised over the exercise price.
Nonqualified Stock Options. No taxable income will be realized by a Partici-
pant upon the grant of a Nonqualified Stock Option. Upon exercise of a Nonqual-
ified Stock Option, the Participant will realize ordinary income in an amount
measured by the excess of the fair market value of the shares on the date exer-
cised over the Option Price, and the Company will be entitled to a correspond-
ing deduction. In the case of a Participant subject to Section 16(b) of the Se-
curities Exchange Act of 1934, unless the Participant elects otherwise, the
amount and timing of such income (and deduction by the Company) will instead be
based on the fair market value of the shares on the date the Section 16(b) re-
striction lapses as to such shares. Upon a subsequent disposition of the
shares, the Participant will realize short-term or long-term capital gain or
loss to the extent of any intervening appreciation or depreciation. The Company
will not be entitled to any further deduction at that time.
Stock Appreciation Rights. At the time of receiving a Stock Appreciation
Right, the Participant will not recognize any taxable income. Likewise, the
Company will not be entitled to a deduction for the Stock Appreciation Right.
Upon the exercise of a Stock Appreciation Right, the Participant will recognize
ordinary income in an amount equal to the cash and/or fair market value of the
shares received. However, Participants, who are subject to Section 16(b) of the
Securities Exchange Act of 1934 and who receive such stock, will not recognize
ordinary income until the restrictions imposed by Section 16(b) lapse and the
stock will be valued on that date. Nevertheless, such Participants may elect,
at the date of exercise, to recognize ordinary income pursuant to Section 83(b)
of the Internal Revenue Code of 1986. If such an election is made, the stock is
valued on the date of exercise of the Stock Appreciation Right. If a Partici-
pant receives stock, then the fair market value of the stock (recognized as or-
dinary income) becomes the Participant's tax basis for determining gains or
losses on the
19
<PAGE>
subsequent sale of such stock. The Company will be entitled to a deduction in
the amount and at the time that the Participant first recognizes ordinary in-
come.
Restricted Stock. The Participant receiving a Restricted Stock award will
recognize ordinary income equal to the fair market value of the Restricted
Stock at the time the restrictions lapse. However, the Participant may elect to
report the fair market value of the stock as ordinary income at the time of re-
ceipt. The Company may deduct the amount of income recognized by the Partici-
pant at the time the Participant recognizes the income.
The tax treatment of Restricted Stock which is disposed of will depend upon
whether the Participant made an election to include the value of the stock in
income when awarded. If the Participant made such an election, any disposition
thereafter will result in a long-term or short-term capital gain depending upon
the period the Restricted Stock is held. If an election is not made, disposi-
tion prior to the lapse of restrictions will result in ordinary income to the
Participant equal to the amount received on disposition. The Company may also
deduct the amount.
The following table sets forth the maximum number and dollar value (number of
options times exercise price) of Nonqualified Stock Options that could have
been granted had the amended Plan been in effect on the date options were
granted in 1994 to the individuals and groups indicated:
EXECUTIVE STOCK PLAN
<TABLE>
<CAPTION>
NUMBER DOLLAR
NAME AND POSITION OF OPTIONS VALUE ($)
- ----------------- ---------- ---------
<S> <C> <C>
E. L. Addison, Retired Chairman and CEO, The Southern
Company 64,741 1,221,984
A. W. Dahlberg, Chairman, President, and CEO, The South-
ern Company 47,847 903,114
P. J. DeNicola, President, Southern Company Services 29,521 557,208
H. A. Franklin, President, Georgia Power Company 34,873 658,224
E. B. Harris, President, Alabama Power Company 34,935 659,394
Executive officers as a group 243,047 4,587,501
Non-executive directors as a group 0 0
Non-executive officer employees 285,102 5,381,277
</TABLE>
The vote needed to approve the proposed amendments to The Southern Company
Executive Stock Plan is a majority of the shares of the Company's stock repre-
sented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 5.
6. STOCKHOLDER PROPOSAL ON DISCLOSURE OF CERTAIN CONSULTING FIRMS
The Company has been advised that Mr. Russell C. DeMonbreun, 1976 Emerald
Drive, Jonesboro, Georgia 30236, holder of 3,345 shares of common stock, pro-
poses to submit the following resolution at the 1995 Annual Meeting of Stock-
holders:
"RESOLVED: That the shareholders of the Southern Company recommend that
the Board of Directors take the necessary steps to provide the stockholders
with a list of consulting firms which have received in excess of
$100,000.00 compensation from the Southern Company or any of its subsidiary
companies during the year. The information would include:
1. The name and location of the consulting firm
20
<PAGE>
2. The amount of the contract
3. The amount of payments during the year
4. The name of the executive or manager authorizing the expenditure
5. A brief description of the activities covered by the agreement
6. The names of any employees of the Southern Company or any of its
subsidiary companies receiving any compensation from the consulting
firm."
STATEMENT OF SECURITY HOLDER
"REASONS: It is recognized that experts in certain management and
technical areas can provide some services more efficiently and economically
than if they are done in house. The adoption of this resolution would
assure the stockholders that these services are being administered and
monitored effectively to avoid billing irregularities, duplication of
efforts, conflict of interest, and the abdication of management
responsibilities.
"If you agree, please mark your proxy FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL NO. 6 FOR THE FOL-
LOWING REASONS:
It is the view of the board of directors that use of outside experts is both
necessary and desirable. The Company and its subsidiaries do engage the serv-
ices of outside experts in various fields. For the most part, these providers
of services have a reasonable expectation that the contracts they enter into
with the Company or its subsidiaries are private. Subjecting them to widespread
and detailed disclosure as proposed may inhibit the ability of the Company and
its subsidiaries to retain such services.
Even if it were possible within the limits of propriety and practicality,
which is dubious at best, for the Company to provide the list as proposed, the
task of compiling, administering, and distributing the data would be burdensome
and expensive and, in the opinion of the board of directors, provide no benefit
of any kind to the Company or its stockholders.
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 of the Company's stock 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 reim-
bursement to brokers, banks, nominees, and other fiduciaries for forwarding
proxy material to beneficial owners in accordance with regulations of the Secu-
rities and Exchange Commission and the New York Stock Exchange.
21
<PAGE>
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 1996 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 1996 An-
nual Meeting of Stockholders is December 13, 1995.
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 1994 Annual Report to the Securities and Exchange Commission on
Form 10-K will be provided without charge to each stockholder upon written re-
quest to Tommy Chisholm, Secretary, The Southern Company, 64 Perimeter Center
East, Atlanta, Georgia 30346.
22
Appendix A
OUTSIDE DIRECTORS STOCK PLAN
FOR SUBSIDIARIES OF THE SOUTHERN COMPANY
Effective January 1, 1995
<PAGE>
OUTSIDE DIRECTORS STOCK PLAN
FOR SUBSIDIARIES OF THE SOUTHERN COMPANY
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption. Subject to (a) the approval of the adoption
by the Board of Directors of The Southern Company ("Company") of
the Outside Directors Stock Plan for Subsidiaries of The Southern
Company (the "Plan") by the shareholders of the Company at the
annual meeting thereof to be held on May 24, 1995, and (b) the
Company's receipt of the requisite approval of the issuance of
the Stock pursuant to the Plan by the Securities and Exchange
Commission (the "Commission") under the Public Utility Holding
Company Act of 1935, as amended, and the rules thereunder, The
Southern Company hereby adopts the Outside Directors Stock Plan
for Subsidiaries of The Southern Company, effective January 1,
1995.
1.2 Purpose. The Plan is designed to more closely align
the interests of Directors of the System Companies (defined
herein) with the interests of the shareholders of the Company
through ownership of the Company's common stock, par value $5.00
per share (the "Stock").
<PAGE>
ARTICLE II - DEFINITIONS
2.1 "Affiliated Employer" shall mean any corporation which
is a member of the controlled group of corporations of which The
Southern Company is the common parent corporation.
2.2 "Board of Directors" shall mean the Board of Directors
of each System Company.
2.3 "Commission" shall mean the Securities and Exchange
Commission.
2.4 "Company" shall mean The Southern Company.
2.5 "Director" shall mean any person (a) who serves on the
Board of Directors of one or more System Companies on or after
January 1, 1995; and (b) who is not an active employee of The
Southern Company or an Affiliated Employer.
2.6 "Effective Date" shall mean January 1, 1995.
2.7 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.8 "Market Value" shall mean the average of the high and
low prices of the Stock, as published in the Wall Street Journal
in its report of New York Stock Exchange composite transactions,
on the date such market value is to be determined (or the average
of the high and low sale prices on the trading day immediately
preceding such determination date if the Stock is not traded on
the applicable valuation date).
2.9 "Participant" shall mean each Director on the Board of
Directors of a System Company who meets the requirements of
Section 3.1 of the Plan.
-3-
<PAGE>
2.10 "Plan" shall mean the Outside Directors Stock Plan for
Subsidiaries of The Southern Company, as amended from time to
time.
2.11 "Plan Administrator" shall mean the Compensation
Committee of the Board of Directors of The Southern Company.
2.12 "Plan Year" shall mean the calendar year.
2.13 "Retainer Fee" shall mean the annual rate of the fees
paid to a Director for service on the Board of Directors of a
System Company, but excluding reimbursements for expenses and any
fees or compensation for (a) attendance at the meetings of the
Board of Directors or any committee, (b) service on a committee,
and (c) service at the request of the Board of Directors or a
committee.
2.14 "Stock" shall mean the Company's common stock, par
value $5.00 per share.
2.15 "System Company" shall mean any affiliate or subsidiary
of The Southern Company which the Board of Directors of The
Southern Company may from time to time determine to bring under
the Plan and which shall adopt the Plan, and any successor of any
of them. The System Companies that have adopted the Plan are
listed in Schedule A, attached hereto, as such Schedule may be
amended from time to time.
The masculine pronoun shall be construed to include the
feminine pronoun and the singular shall include the plural, where
the context so requires.
-4-
<PAGE>
ARTICLE III - ELIGIBILITY
3.1 Eligibility Requirements.
(a) Except as provided in Subsections (b) and (c) below,
each Director who serves on a Board of Directors of a System
Company shall become a Participant in the Plan on the first date
such Director serves on the Board of Directors of a System
Company.
(b) For purposes of the initial Plan Year, a Director who
serves on the Board of Directors of Georgia Power Company or
Alabama Power Company shall become a Participant in the Plan on
the Effective Date, subject to (1) approval of the Plan by the
shareholders of the Company at the annual meeting thereof to be
held on May 24, 1995, and (2) the Company's receipt of the
requisite approval of the Plan by the Commission under the Public
Utility Holding Company Act of 1935, as amended, and the rules
thereunder.
(c) For purposes of the initial Plan Year, a Director who
serves on the Board of Directors of Gulf Power Company,
Mississippi Power Company or Savannah Electric and Power Company
shall become a Participant in the Plan on the later of (1) the
date the Plan is approved by the shareholders of the Company at
the annual meeting thereof to be held on May 24, 1995, and (2)
the Company's receipt of the requisite approval of the Plan by
the Commission under the Public Utility Holding Company Act of
1935, as amended, and the rules thereunder.
-5-
<PAGE>
ARTICLE IV - FORM AND TIME OF BENEFIT DISTRIBUTIONS
4.1 Stock Grant. Each Participant shall receive a portion
of his annual Retainer Fee in Stock, with the remainder of such
annual Retainer Fee to be payable, in increments elected by the
Director in accordance with Section 4.2 below, in cash or in
Stock. The portion of the annual Retainer Fee required to be
paid in Stock pursuant to this Section 4.1 shall be stated in
Schedule B, attached hereto, as such Schedule shall be amended
from time to time.
4.2 Election to Determine Percentage or Amount of
Compensation to be Paid in Stock. Each Participant shall have a
one-time opportunity to elect to have the remaining portion of
his Retainer Fee paid in cash or Stock of the Company, or a
combination thereof. Such election shall be made at the time
specified by the Plan Administrator on a form provided to the
Participant by the Plan Administrator, which form shall
acknowledge that once made, such election is irrevocable.
Notwithstanding the foregoing, if, when and as permitted by the
Commission, the Plan Administrator may allow a Participant to
elect to change the amount of their Retainer Fee paid in Stock;
provided that such election shall not affect the dollar amount of
such Participant's required Stock distribution stated in Schedule
B attached hereto. Nothing contained in this Section 4.2 shall
be interpreted in such a manner as would disqualify the Plan from
treatment as a "formula plan" under Rule 16b-3, as promulgated by
-6-
<PAGE>
the Commission under the Exchange Act, as that rule may be
amended from time to time.
4.3 Amount and Date of Payment for Stock Compensation.
(a) For any Plan Year in which a Director is a Participant
for the full Plan Year, any Stock compensation due a Participant
pursuant to Sections 4.1 and 4.2 above shall be payable on a
quarterly basis, with the first such quarterly distribution being
made on April 1 and succeeding quarterly distributions being made
on July 1, October 1, and January 1. The amount of Stock to be
distributed to a Participant shall initially be determined by
first dividing the Participant's required and elected dollar
amount of Stock compensation by four (4) and then dividing such
quarterly quotient by the market value of the Stock on the date
one day prior to the date of distribution, with subsequent
distributions based on such quarterly quotient divided by the
market value of the Stock on the date one day prior to the date
of each subsequent distribution.
(b) Notwithstanding the foregoing, for purposes of the 1995
Plan Year, Stock distributions shall be made as follows:
(1) For Participants who are Directors of Alabama
Power Company or Georgia Power Company on January 1, 1995, no
Stock distributions shall be made prior to receipt of the
requisite approval described in Section 1.1; provided, however,
that once the requisite approval of the Plan is received, the
Stock distribution shall be made on the first quarterly date
following such approval and shall include any Stock distributions
-7-
<PAGE>
which would have been made had the requisite approval been
obtained on the Effective Date. The Stock distributions to be
made in accordance with this Section 4.3(b)(1) shall be valued in
accordance with the provisions of Section 4.3(a).
(2) For Participants who are Directors of Gulf Power
Company, Mississippi Power Company or Savannah Electric and Power
Company, no Stock distributions shall be made prior to receipt of
the requisite approval described in Section 1.1; provided,
however, that once the requisite approval of the Plan is
received, the Stock distribution to be made to Participants
pursuant to this Section 4.3(b)(2) shall be made on the first
quarterly date following such approval. The Stock distributions
to be made pursuant to this Section 4.3(b)(2) shall not include
any Stock distributions attributable to any calendar quarter
prior to the time the requisite approval is received. The Stock
distributions to be paid in accordance with this Section
4.3(b)(2) shall be valued in accordance with the provisions of
Section 4.3(a).
4.4 Death Benefits. No benefits shall be payable under the
Plan to any beneficiary of a Participant following a
Participant's death.
-8-
<PAGE>
ARTICLE V - ADMINISTRATION OF PLAN
5.1 Administrator. The general administration of the Plan
shall be the responsibility of the Compensation Committee of the
Board of Directors of The Southern Company, as Plan
Administrator.
5.2 Powers. The Plan Administrator shall administer the
Plan in accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan more
particularly set forth herein. It shall interpret the Plan and
shall have the discretion to determine all questions arising in
the administration, interpretation and application of the Plan,
including any ambiguities contained herein or any questions of
fact. Any such determination by it shall be conclusive and
binding on all persons. It may adopt such regulations as it
deems desirable for the conduct of its affairs. It may appoint
such accountants, counsel, actuaries, specialists and other
persons as it deems necessary or desirable in connection with the
administration of this Plan, and shall be the agent for the
service of process.
5.3 Duties of the Plan Administrator.
(a) The Plan Administrator is responsible for the daily
administration of the Plan. It may appoint other persons or
entities to perform any of its fiduciary functions. The Plan
Administrator and any such appointee may employ advisors and
other persons necessary or convenient to help it carry out its
duties, including its fiduciary duties. The Plan Administrator
-9-
<PAGE>
shall have the right to remove any such appointee from his
position. Any person, group of persons or entity may serve in
more than one fiduciary capacity.
(b) The Plan Administrator shall maintain accurate and
detailed records and accounts of Participants and of their rights
under the Plan and of all receipts, disbursements, transfers and
other transactions concerning the Plan. Such accounts, books and
records relating thereto shall be open at all reasonable times to
inspection and audit by persons designated by the Board of
Directors of each System Company.
(c) The Plan Administrator shall take all steps necessary
to ensure that the Plan complies with the law at all times.
These steps shall include such items as the preparation and
filing of all documents and forms required by any governmental
agency; maintaining of adequate Participants' records; recording
and transmission of all notices required to be given to
Participants; the receipt and dissemination, if required, of all
reports and information received from a System Company; securing
of such fidelity bonds as may be required by law; and doing such
other acts necessary for the proper administration of the Plan.
The Plan Administrator shall keep a record of all of its
proceedings and acts, and shall keep all such books of account,
records and other data as may be necessary for proper
administration of the Plan.
5.4 Indemnification. The System Companies shall indemnify
the Plan Administrator against any and all claims, losses,
-10-
<PAGE>
damages, expenses and liability arising from any action or
failure to act, except when the same is finally judicially
determined to be due to gross negligence or willful misconduct.
The System Companies may purchase at their own expense sufficient
liability insurance for the Plan Administrator to cover any and
all claims, losses, damages and expenses arising from any action
or failure to act in connection with the execution of the duties
as Plan Administrator.
-11-
<PAGE>
ARTICLE VI - MISCELLANEOUS
6.1 Assignment. Neither the Participant nor his legal
representative shall have any rights to sell, assign, transfer or
otherwise convey the right to receive the payment of any benefit
due hereunder, which payment and the right thereto are expressly
declared to be nonassignable and nontransferable. Any attempt to
assign or transfer the right to payment under the Plan shall be
null and void and of no effect.
6.2 Amendment and Termination. The Plan may be wholly or
partially amended or otherwise modified, suspended or terminated
at any time by the Board of Directors of The Southern Company or
by the Compensation Committee with the approval of The Southern
Company Board of Directors, upon execution of a duly authorized
written document; provided, however, that, without the approval
of the shareholders of the Company entitled to vote thereon, no
amendment may be made which would, absent such shareholder
approval, disqualify the Plan for coverage under Rule 16b-3, as
promulgated by the Commission under the Exchange Act, as that
rule may be amended from time to time; and provided further that
the Plan may not be amended more than once every six (6) months
unless such amendment is made in order to comply with changes to
either the Internal Revenue Code of 1986, as amended, or the
Employee Retirement Income Security Act of 1974, as amended, and
the rules thereunder. Notwithstanding the foregoing, no such
amendment or termination shall impair any rights to payments to
-12-
<PAGE>
which a Participant may be entitled prior to the effective date
of such amendment or termination.
6.3 No Guarantee of Continued or Future Service on a Board
of Directors. Participation hereunder shall not be construed as
creating a right in any Director to continued service or future
service on the Board of Directors of any System Company.
Participation hereunder does not constitute an employment
contract between any Director and any System Company.
6.4 Construction. This Plan shall be construed in
accordance with and governed by the laws of the State of Georgia,
to the extent such laws are not otherwise superseded by the laws
of the United States.
IN WITNESS WHEREOF, the Board of Directors of The Southern
Company, through its duly authorized officers, has adopted this
Outside Directors Stock Plan for Subsidiaries of The Southern
Company this day of , 1994, to be
effective as provided herein.
THE SOUTHERN COMPANY:
(CORPORATE SEAL)
By:______________________________
Its:
Attest:
By: ________________________
Its:
[wkb]:\soco\odir5.stk
-13-
<PAGE>
OUTSIDE DIRECTORS STOCK PLAN
FOR SUBSIDIARIES OF THE SOUTHERN COMPANY
SCHEDULE A
The System Companies as of January 1, 1995 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
<PAGE>
OUTSIDE DIRECTORS STOCK PLAN
FOR SUBSIDIARIES OF THE SOUTHERN COMPANY
SCHEDULE B
As of January 1, 1995
The portion of a Participant's Retainer Fee required to be
distributed in common stock of The Southern Company shall be
determined in accordance with the following schedule:
Dollar Amount
Company of Required Stock Distribution
Alabama Power Company $3000.00
Georgia Power Company $3000.00
Gulf Power Company $2000.00
Mississippi Power Company $2000.00
Savannah Electric and Power $2000.00
Company
Appendix B
AMENDMENT AND RESTATEMENT OF
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EFFECTIVE JANUARY 1, 1995
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
Amended and Restated
Effective January 1, 1995
ARTICLE DESCRIPTION PAGE
ARTICLE I Definitions . . . . . . . . . . . . . . . . . 2
ARTICLE II Participants . . . . . . . . . . . . . . . . . 4
ARTICLE III Corporate Financial Performance Award . . . . 6
ARTICLE IV Miscellaneous Provisions . . . . . . . . . . . 7
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of The Southern Company Executive Productivity
Improvement Plan (the "Plan") are to provide a financial
incentive which will focus the efforts of certain executives on
areas that will have a direct and significant influence on
corporate performance and to provide the potential for levels of
compensation that will enhance the Employing Companies' abilities
to attract, retain and motivate such executives. In order to
achieve these objectives, the Plan will be based upon corporate
performance.
The amendment and restatement shall be effective as of
January 1, 1995.
<PAGE>
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the
following meanings unless a different meaning is plainly required
by the context:
1.1 "Annual Salary" shall mean the wages paid to a
Participant without including overtime and before deduction of
taxes, FICA, etc.
1.2 "Award" shall mean the award opportunity multiplied by
the performance unit value determined under Section 3.2 of the
Plan.
1.3 "Award Opportunity" shall mean the target award
opportunity determined under Section 3.1 of the Plan.
1.4 "Board of Directors" shall mean the Board of Directors
of Southern Company Services, Inc.
1.5 "Chief Executive Officer" shall mean the individual
designated as such by the Board of Directors of an Employing
Company and of The Southern Company.
1.6 "Committee" or "Compensation Committee" shall mean the
Compensation Committee of the Board of Directors of The Southern
Company or the Employing Company.
1.7 "Common Stock" shall mean the common stock of The
Southern Company.
1.8 "Computation Period" shall mean a four-year period
commencing on the first day of the initial year of participation
and thereafter it shall mean a four-year period commencing the
first day of January each year.
1.9 "Employing Company" shall mean Southern Company
Services, Inc., or any affiliate or subsidiary (direct or
indirect) of The Southern Company, which the Board of Directors
may from time to time determine to bring under the Plan and which
shall adopt the Plan, and any successor of any of them.
1.10 "Executive Employee" shall mean any person who is
currently employed by an Employing Company who is an "officer" as
that term is defined in Regulation 16a-1 promulgated by the
Securities Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, excluding however any principal
financial officer, principal accounting officer or controller
unless the person holding such position otherwise meets the
definition of "officer" set forth in such Regulation.
- 2 -
<PAGE>
1.11 "Grade Level" shall mean the evaluation assigned under
the job evaluation system.
1.12 "Grade Level Value" shall mean the assigned dollar
value within the Annual Salary range for a Grade Level in a
Computation Period, upon which awards are based.
1.13 "Participant" shall mean an Executive Employee who
satisfies the criteria referred to in Article II at the beginning
of a Computation Period.
1.14 "Payment Date" shall mean the date the check evidencing
the Award is endorsed by an authorized person of an Employing
Company.
1.15 "Peer Group Companies" shall mean the Companies set
forth on Exhibit C attached hereto. Such Exhibit may be revised
from time to time by the Committee to reflect mergers,
acquisitions, reorganizations, etc. of peer group members.
1.16 "Plan" shall mean The Southern Company Executive
Productivity Improvement Plan, as described herein or as from
time to time amended.
1.17 "Prior Plan" shall mean the Plan as amended and
restated effective January 1, 1994.
Where the context requires, words in the masculine gender
shall include the feminine and neuter genders, words in the
singular shall include the plural, and words in the plural shall
include the singular.
- 3 -
<PAGE>
ARTICLE II
Participants
2.1 Participation in the Plan shall be limited to Executive
Employees of the Employing Companies.
2.2 Any Participant who vacates an eligible Grade Level
prior to the close of a Computation Period and who is not
immediately reemployed with an affiliate of an Employing Company
shall forfeit any Award for any Computation Periods that have not
closed as of the date the Participant vacates such eligible Grade
Level.
2.3 Any Participant who terminates his employment with the
Company and who is not immediately reemployed with an affiliate
of an Employing Company prior to the Payment Date of any Award
due under this Plan for reasons other than death, disability, or
retirement shall forfeit any Award due under this Plan. If a
Participant terminates his employment for reason of death,
disability or retirement, such Participant shall be eligible to
receive an Award for the Computation Period ending in the year of
such death, disability or retirement.
2.4 Notwithstanding any other provision of this Plan, no
employee whose employment is terminated for cause, as that term
is defined by the Committee, shall be eligible to receive an
Award under this Plan.
2.5 The administration of Awards for Participants who are
promoted or transferred from one Grade Level included in the Plan
to another Grade Level included in the Plan shall be based on the
Participant's Grade Level Value on the first day of the
Computation Period for which an Award is being granted. For the
Computation Periods ending December 31, 1995, December 31, 1996,
December 31, 1997 and December 31, 1998 a Participant's Grade
Level Value for determining Awards shall be the Participant's
Grade Level Value on January 1, 1995.
2.6 Notwithstanding any other provision of this Plan, the
maximum Award for any Computation Period payable to any
Participant shall be one million five hundred thousand dollars
($1,500,000).
2.7 Any individual who initially becomes a Participant in
the Plan as of January 1, 1995 shall be considered to have been
participating in the Plan as of January 1, 1993 for purposes of
determining benefits payable for any Computation Period that
began or begins on or after January 1, 1993 and such Participant
will therefore be eligible for an Award equal to seventy-five
percent (75%) of the Award Opportunity for the Computation Period
ending December 31, 1995.
- 4 -
<PAGE>
2.8 In the case of an individual who becomes a Participant
subsequent to January 1, 1995, said Participant will participate
in each Computation Period which ends not less than two (2) years
after becoming a Participant. A new four-year measuring period
begins each year in order to recognize the need to link
objectives over longer periods of time, to recognize changes in
the operating environment, and to encourage Participants to make
long-term decisions.
- 5 -
<PAGE>
ARTICLE III
Corporate Financial Performance Award
3.1 The Award Opportunity for each Participant shall be
based upon his Grade Level(s) and shall range from sixty-five
percent (65%) to ten percent (10%) of the Grade Level Value held
by the Participant at the beginning of any Computation Period.
The Award Opportunity for each Grade Level held by a Participant
shall be determined in accordance with the chart set forth in
Exhibit A herein.
3.2 Each Award Opportunity shall be multiplied by the value
of the performance unit factor set forth in Exhibit B herein,
which is based on The Southern Company's average return on common
equity ranking during a Computation Period as compared to the
average return on common equity ranking of the Peer Group
Companies to determine a Participant's Award. The return on
common equity of the Peer Group Companies shall be determined
annually by an independent certified public accountant based on
generally accepted accounting principles and shall be properly
adjusted and annualized by such accountant so that each Peer
Group Company return on common equity may be accurately compared
to that of The Southern Company.
3.3 Notwithstanding the above provisions, an Award will not
be granted for any Computation Period ending with the calendar
year in which the current earnings of The Southern Company are
less than the amount necessary to fund the dividends on its
Common Stock at the rate such dividends were paid for the
immediately preceding calendar year.
3.4 In the discretion of the Compensation Committee of the
Board of Directors, the Award for one or more Computation
Period(s) may be calculated without regard to any extraordinary
item of income incurred by The Southern Company or any Employing
Company, provided such determination is made prior to the close
of the Computation Period.
3.5 The Awards to the Participants will be paid in cash as
soon as is practicable after all evaluations are completed. An
Award payment may not be deferred under this Plan. In the event
an Award was deferred under the Prior Plan, such deferral shall
be governed by the terms of the Prior Plan.
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<PAGE>
ARTICLE IV
Miscellaneous Provisions
4.1 Neither the Participant, his beneficiary, nor his
personal representative shall have any rights to commute, sell,
assign, transfer or otherwise convey the right to receive any
payments hereunder, which payments and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any
attempt to assign or transfer the right to payments of this Plan
shall be void and have no effect.
4.2 The Employing Company shall not reserve or otherwise
set aside funds for the payments of Awards deferred in accordance
with the Prior Plan.
4.3 The Plan may be amended, modified, or terminated by the
Board of Directors in its sole discretion at any time and from
time to time; provided, however, that no such amendment,
modification, or termination shall impair any rights to payments
which have been deferred under the Prior Plan prior to such
amendment, modification, or termination.
4.4 It is expressly understood and agreed that the Awards
made in accordance with the Plan are in addition to any other
benefits or compensation to which a Participant may be entitled
or for which he may be eligible, whether funded or unfunded, by
reason of his employment with the Employing Company.
4.5 There shall be deducted from the payment of each Award
under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Employing Company
to such governmental authority for the account of the person
entitled to such distribution.
4.6 Any Awards paid to a Participant while employed by an
Employing Company shall not be considered in the calculation of
the Participant's benefits under any other employee welfare or
pension benefit plan maintained by an Employing Company, unless
otherwise specifically provided therein.
4.7 This Plan, and all its rights under it, shall be
governed by and construed in accordance with the laws of the
State of Georgia.
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<PAGE>
IN WITNESS WHEREOF, Southern Company Services, Inc., through
its duly authorized officers, hereby amends and restates The
Southern Company Executive Productivity Improvement Plan this
____ day of ____________________, 1995, to be effective January
1, 1995.
SOUTHERN COMPANY SERVICES, INC.
By:
Its:
Attest:
By:
Its:
[CORPORATE SEAL]
[adamscl] h:\wpdocs\krr\southern\exec-pip.411
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<PAGE>
EXPLANATORY NOTES
Under Section 3.2 the average ROCE for a Computation Period will
be determined by a) calculating the average ROCE for each year in
the Computation Period, b) adding the average ROCE calculations
for all years in the Computation Period; and c) dividing the
total by the number of years in the Computation Period.
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Grade Target Award Opportunity
1/1/95 4/1/95
President/CEO 65%
President/CEO 50%
29/30 (15) 50%
27/28 (14) 45%
25/26 (13) 40%
25/24 (12) 35%
21/22 (11) 30%
19/20 (10) 25%
17/18 (9) 20%
15/16 (8) 15%
13/14 (7) 10%
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT B
AWARD PERCENTAGE SCHEDULE
Value of Performance Ranking Against
Unit ($) Comparison Group
$2.00 Above position 1
$1.80 1
$1.60 2
$1.40 3
$1.20 4
$1.00 4.5
$0.90 5
$0.80 6
$0.70 7
$0.60 8
$0.50 8.5
$0.00 Below 8.5
<PAGE>
THE SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT C
The Peer Group Companies are as follows:
TECO Energy, Inc.
Carolina Power & Light Company
SCANA
Central Louisiana Electric Company, Inc.
Duke Power Company
Potomac Electric Power Company
American Electric Power Company, Inc.
Dominion Resources, Inc.
Allegheny Power Systems, Inc.
Florida Progress
Delmarva Power & Light Company
Baltimore Gas and Electric Company
Entergy, Inc.
FPL Group
Kentucky Utilities Energy Corporation
Central and South West Corporation
The Southern Company
Appendix C
THE SOUTHERN COMPANY EXECUTIVE STOCK PLAN
<PAGE>
THE SOUTHERN COMPANY EXECUTIVE STOCK PLAN
ARTICLE I
1.1 Name and Purpose. The name of this Plan is the "The
Southern Company Executive Stock Plan" (the "Plan"). Its purpose
is to (a) maximize the long-term success of The Southern Company,
(b) ensure a balanced emphasis on both current and long-term
performance, (c) enhance Participants' identification with
shareholders' interests, and (d) facilitate the attraction and
retention of key individuals with outstanding ability.
1.2 Definitions. Whenever used in the Plan, the following
terms shall have the meaning set forth below:
(a) "Award" shall mean, individually and collectively,
any Option, Stock Appreciation Rights, or Restricted Stock
granted under the Plan.
(b) "Base Value" shall mean the Fair Market Value of a
Stock Appreciation Right on the date of its grant.
(c) "Board of Directors" shall mean the Board of
Directors of the Company.
(d) "Committee" shall mean the Compensation Committee
of the Board of Directors of the Company composed of not less
than three (3) directors of the Company who are not employees of
the Company or any Employing Company, and who are not
Participants in the Plan.
(e) "Common Stock" shall mean the Common Stock of The
Southern Company.
<PAGE>
(f) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(g) "Company" shall mean The Southern Company or any
successor thereto.
(h) "Disability" shall mean total and permanent
disability as determined by the Social Security Administration.
(i) "Employee" shall mean any person who is currently
employed by an Employing Company.
(j) "Effective Date" shall mean the date the Plan is
adopted by the Board of Directors of the Company, subject to
approval by the shareholders of the Company at a meeting held
within twelve (12) months following the date of adoption by the
Board of Directors.
(k) "Employing Company" shall mean any affiliate or
subsidiary (direct or indirect) of the Company, which the Board
of Directors may from time to time determine to bring under the
Plan and which may adopt the Plan, and any successor of any of
them.
The Employing Companies as of January 1, 1988 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Southern Company Services, Inc.
Southern Electric International, Inc.
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<PAGE>
(l) "Fair Market Value" shall mean the average of the high
and low prices at which a share of Common Stock shall have been
traded on the date of grant or the exercise of an Award, or on
the next preceding trading day if such date was not a trading
date, as reported on the New York Stock Exchange-Composite
Transactions Listing, or as otherwise determined by the
Committee. In no event shall the Fair Market Value equal less
than the par value of the Common Stock.
(m) "Incentive Stock Option" shall mean a stock option
within the meaning of Section 422A of the Code granted pursuant
to Section 4.1(a).
(n) "Nonqualified Stock Option" shall mean an Option, other
than an Incentive Stock Option, granted pursuant to
Section 4.1(b).
(o) "Option" shall mean, individually and collectively, an
Incentive Stock Option and a Nonqualified Stock Option to
purchase Common Stock.
(p) "Option Price" shall mean the price per share of Common
Stock set by the grant of an Option, but in no event less than
the Fair Market Value of the Option.
(q) "Participant" shall mean any Employee who satisfies the
criteria set forth in Article III.
(r) "Restricted Stock" shall mean an Award granted pursuant
to Section 4.1(d).
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<PAGE>
(s) "Separation Date" shall mean, as determined by the
Committee, the date on which a Participant's employment with an
Employing Company terminates for reasons other than his transfer
of employment to another Employing Company. Whether any leave of
absence shall constitute termination of employment for the
purposes of the Plan shall be determined in each case by the
Committee at its sole discretion.
(t) "Stock Appreciation Rights" or "SAR's" shall mean a
right to any appreciation in shares of Common Stock granted
pursuant to Section 4.1(c).
Where the context requires, words in the masculine gender
shall include the feminine and neuter genders, words in the
singular shall include the plural, and words in the plural shall
include the singular.
1.3 Plan Duration. The Plan shall remain in effect for ten
(10) years from the Effective Date or until terminated by the
Board of Directors, whichever occurs first.
ARTICLE II
2.1 Plan Administration. The Plan shall be administered by
the Committee. The Committee is authorized to establish such
rules and to appoint such agents as it deems appropriate for the
proper administration of the Plan, and to make such
determinations and to take such steps in connection with the Plan
5
<PAGE>
or the benefits provided hereunder as it deems necessary or
advisable.
2.2 Plan Interpretation. The Committee shall have the
exclusive authority to interpret the Plan. The decision of the
Committee with respect to any question arising as to the grant of
an Award to a Participant in the Plan, the amount, term, form,
and time of payment of Awards under the Plan, or any other matter
concerning the Plan shall be final, conclusive, and binding on
both the Company and the Participants.
ARTICLE III
3.1 Eligibility. The Participants in the Plan shall be
limited to those Employees who have a significant impact on the
long-term performance and success of the Company and who are
recommended for inclusion by the President of the Company and
approved by the Committee. Subject to the terms of the Plan, the
Committee shall select from time to time the Participants to whom
Awards shall be granted and shall determine the number of shares
to be granted.
ARTICLE IV
4.1 Awards. Beginning June 1, 1988 and thereafter not more
frequently than once each calendar year, the Committee shall
determine the forms and amounts of Awards for Participants of the
respective Employing Companies; provided that in no event shall
any Award be granted until the shareholders of the Company have
6
<PAGE>
approved the Plan. All Awards shall be subject to the terms and
conditions of the Plan and to such other terms and conditions
consistent with the Plan as the Committee deems appropriate.
Awards under the Plan need not be uniform and Awards under two
(2) or more paragraphs may be combined in one agreement. Any
combination of Awards may be granted at one time and on more than
one occasion to the same Participant. Such Awards may take the
following forms, in the Committee's sole discretion:
(a) Incentive Stock Options - These shall be stock
options within the meaning of Section 422A of the Code to
purchase Common Stock. In addition to other restrictions
contained in the Plan, an Incentive Stock Option (1) shall not be
exercised more than ten (10) years after the date it is granted,
(2) shall not have an Option Price less than the Fair Market
Value of Common Stock on the date the Incentive Stock Option is
granted, (3) shall otherwise comply with Section 422A of the
Code, and (4) shall be designated as an "Incentive Stock Option"
by the Committee. The aggregate Fair Market Value of Common
Stock determined at the time of each grant for which any
Participant may exercise Incentive Stock Options under this Plan
for any calendar year shall not exceed $100,000. Subject to the
provisions of Section 7.1 hereof, no Incentive Stock Option may
be exercised during the first twelve (12) months following its
grant.
(b) Nonqualified Stock Options - These shall be stock
options to purchase Common Stock which are not designated by the
7
<PAGE>
Committee as "Incentive Stock Options." At the time of the
grant, the Committee shall determine the Option exercise period,
the Option Price, and such other conditions or restrictions on
the exercise of the Nonqualified Stock Option as the Committee
deems appropriate. In addition to other restrictions contained
in the Plan, a Nonqualified Stock Option (1) shall not be
exercised more than ten (10) years after the date it is granted,
and (2) shall not have an Option Price less than 100% of the Fair
Market Value of Common Stock on the date the Nonqualified Stock
Option is granted. Subject to the provisions of Section 7.1
hereof, no Nonqualified Stock Option granted under this Plan
shall be exercised during the first twelve (12) months following
its grant.
(c) Stock Appreciation Rights - These shall be rights
that on exercise entitle the holder to receive the excess of
(1) the Fair Market Value of Common Stock on the date of exercise
over (2) its Base Value multiplied by (3) the number of SAR's
exercised. Such rights shall be satisfied in cash, stock, or a
combination thereof, as determined by the Committee. Stock
Appreciation rights granted under the Plan may be granted in the
sole discretion of the Committee in conjunction with an Incentive
Stock Option or Nonqualified Stock Option under the Plan. The
Committee may impose such conditions or restrictions on the
exercise of SAR's as it deems appropriate and may terminate,
amend, or suspend such SAR's at any time. Subject to the
provisions of Section 7.1 hereof, no SAR's granted under this
8
<PAGE>
Plan shall exercised less than one (1) year or more than ten (10)
years after the date it is granted.
(d) Restricted Stock - Restricted Stock shall be shares of
Common Stock held by the Company for the benefit of a Participant
without payment of consideration, with restriction or conditions
upon the Participant's right to transfer or sell such shares.
The following provisions shall applicable to Restricted Stock
Awards:
(1) Each certificate for Restricted Stock shall
be registered in the name of the Participant and shall be
deposited by him with the Company, together with a stock power
endorsed in blank.
(2) At the time of making a Restricted Stock
Award, the Committee shall establish the "Restriction Period"
applicable thereto. Such Restriction Period shall range from
three (3) to ten (10) years as determined by the Committee. The
Committee may provide for the annual lapse of restrictions with
respect to a specified percentage of the Restricted Stock,
provided the Participant satisfies all eligibility requirements
at such time.
(3) The Participant shall be entitled to receive
dividends during the Restriction Period and shall have the right
to vote such Common Stock and all other shareholder's rights
except the following:
(i) the Participant shall not be entitled to
delivery of the stock certificate during the Restriction Period,
9
<PAGE>
(ii) the Company shall retain custody of the
Common Stock during the Restriction Period, and
(iii) a breach of a restriction or a breach
of the terms and conditions established by the Committee with
respect to the Restricted Stock shall cause a forfeiture of the
Restricted Stock.
(4) The Committee may, in its sole discretion,
prescribe such additional restrictions, terms, or conditions upon
or to the Restricted Share Awards as it may deem necessary or
appropriate.
4.2 Individual Agreements. After the Committee determines
a form and amount of a Participant's Award, it shall cause the
Company to enter into such written agreement or agreements with
the Participant setting forth the form and amount of the Award
and any conditions and restrictions on the Award imposed by the
Plan and the Committee.
4.3 Exercise and Payment. Options may be exercised from
time to time by giving notice to the Committee, specifying the
number of shares to be purchased. Notice of exercise shall be
accompanied by payment in full of the Option Price in cash. The
Committee, in its discretion, may permit the Option Price to be
paid in whole or in part through the transfer to the Company of
shares of Common Stock previously acquired by the Participant;
provided, however, that the shares so transferred shall have been
held by the Participant for a period of more than six (6) months
and no Restricted Stock may be transferred as payment of the
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<PAGE>
Option Price. In the event the Option Price is paid, in whole or
in part, with shares of Common Stock, such shares shall be valued
at their Fair Market Value, as of the date of exercise of the
Option. Such shares shall be delivered, along with any portion
to be paid in cash, within five (5) days after the date of
exercise. If the Participant fails to pay the Option Price
within such five (5) day period, the Committee shall have the
right to take whatever action it deems appropriate, including
voiding the exercise of the Option. The Company shall not issue
or transfer Common Stock upon the exercise of an Option until the
Option Price is fully paid.
ARTICLE V
5.1 Termination of Employment. A Participant whose
employment terminates for reasons other than retirement,
Disability, or death shall, in the discretion of the Committee,
have no right to receive any benefit or payment for existing
Awards under the Plan. Any outstanding Award shall terminate on
the Participant's Separation Date; provided, however, that the
Committee, in its sole discretion, may permit the exercise of any
outstanding Award after the Participant's Separation Date, but in
no event beyond the earlier of (a) three (3) months from the
Participant's Separation Date or (b) the expiration date of the
Award, to the extent exercisable on such Participant's Separation
Date.
11
<PAGE>
5.2 Death of a Participant. In the event of the death of a
Participant prior to the exercise of all Incentive Stock Options,
Nonqualified Stock Options, and Stock Appreciation Rights granted
to such Participant, the administrator of the deceased
Participant's estate, the executor under his will, or the person
or persons to whom the Options or SAR's shall have been validly
transferred by such executor or administrator pursuant to the
will or laws of intestate succession shall have the right, within
thirty-six (36) months from the date of such Participant's death,
but not beyond the expiration date of the Options or SAR's, to
exercise such Options or SAR's to the extent exercisable on such
Participant's Separation Date.
5.3 Retirement. (a) In the event of the termination of a
Participant's employment due to his retirement prior to the
exercise of all Incentive Stock Options granted to the
Participant, such Participant shall have the right, within three
(3) months of his Separation Date, but not beyond the expiration
date of such Options, to exercise such Incentive Stock Options to
the extent exercisable on his Separation Date.
(b) In the event of the termination of a Participant's
employment due to his retirement prior to the exercise of all
Nonqualified Stock Options or Stock Appreciation Rights granted
to the Participant, such Participant shall have the right, within
thirty-six (36) months of his Separation Date, but not beyond the
expiration date of such Nonqualified Stock Options or SAR's, to
12
<PAGE>
exercise such Nonqualified Stock Options or SAR's to the extent
exercisable on his Separation Date.
5.4 Disability. (a) In the event of the termination of a
Participant's employment due to Disability prior to the exercise
of all Incentive Stock Options granted to the Participant, such
Participant or his legal representative shall have the right,
within twelve (12) months of his Separation Date, but not beyond
the expiration date of such Incentive Stock Options, to exercise
such Incentive Stock Options to the extent exercisable on his
Separation Date.
(b) In the event of the termination of a Participant's
employment due to Disability prior to the exercise of all
Nonqualified Stock Options and Stock Appreciation Rights granted
to the Participant, such Participant or his legal representative
shall have the right, within thirty-six (36) months of his
Separation Date, but not beyond the expiration date of such
Nonqualified Stock Options or SAR's, to exercise such
Nonqualified Stock Options or SAR's to the extent exercisable on
his Separation Date.
ARTICLE VI
6.1 Limitation of Shares of Common Stock Available under
the Plan. (a) The total number of shares of Common Stock
available to be granted by the Committee as Awards to the
Participants under the Plan shall not exceed 3,000,000 shares.
13
<PAGE>
(b) The total number of shares available under
Section 6.1(a) shall be reduced from time to time in the manner
specified:
(1) Incentive Stock Options and Nonqualified
Stock Options - The grant of an Incentive Stock Option and
Nonqualified Stock Option shall reduce the available shares by
the number of shares subject to such Option.
(2) Stock Appreciation Rights - The grant of
Stock Appreciation Rights shall reduce the available shares by
the number of SAR's granted; provided, however, if SAR's are
granted in conjunction with an Option and the exercise of such
Option would cancel the SAR's and vice versa, then the grant of
the SAR's will only reduce the amount available by the excess, if
any, of the number of SAR's granted over the number of shares
subjected to the related Option.
(3) Restricted Stock - The grant of Restricted
Stock shall reduce the available shares by the number of shares
of Restricted Stock granted.
(c) The total number of shares available under
Section 6.1(a) shall be increased from time to time in the manner
specified:
(1) Incentive Stock Options and Nonqualified
Stock Options - The lapse or cancellation of an Incentive Stock
Option or Nonqualified Stock Option shall increase the available
shares by the number of shares released from such Option;
provided, however, in the event the cancellation of an Option is
14
<PAGE>
due to the exercise of SAR's related to such Option, the
cancellation of such Option shall only increase the amount
available by the excess, if any, of the number of shares released
from such Option over the number of SAR's exercised.
(2) Stock Appreciation Rights - The lapse or
cancellation of Stock Appreciation Rights shall increase the
available shares by the number of SAR's which lapse or are
cancelled; provided, however, in the event the cancellation of
such SAR's is due to the exercise of an Option related to such
SAR's, the cancellation of such SAR's shall only increase the
available shares by the excess, if any, of the number of SAR's
cancelled over the number of shares delivered on the exercise of
such Option.
(3) Restricted Shares - The reversion of
Restricted Stock to the Company due to the breach or occurrence
of a restriction or condition on such shares shall increase the
available shares by the number of shares of Restricted Stock
reverted.
ARTICLE VII
7.1 Adjustment Upon Changes in Capitalization. The total
number of shares of Common Stock available for Awards under the
Plan or allocable to any individual Participant, the number of
shares of Common Stock subject to outstanding Options, the
exercise price for such Options, the number of outstanding SAR's,
and the Base Value of such SAR's shall be appropriately adjusted
15
<PAGE>
by the Committee or any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock
dividend, subdivision or combination of shares, or
reclassification. In the event of a merger or consolidation of
the Company or a tender offer for shares of Common Stock, the
Committee may make such adjustments with respect to Awards under
the Plan and take such other action as it deems necessary or
appropriate to reflect, or in anticipation of, such merger,
consolidation, or tender offer, including without limitation the
substitution of new Awards, the termination or adjustment of
outstanding Awards, the acceleration of Awards, or the removal of
limitations or restrictions on outstanding Awards.
ARTICLE VIII
8.1 Withholding Taxes. The Company of the Participant
shall deduct from all payments and distributions in cash under
the Plan any taxes required to be withheld for federal, state, or
local governments. In the event distributions are made in shares
of Common Stock, the Company shall retain the value of sufficient
shares to equal the amount of the tax required to be withheld in
respect of such distributions.
8.2 Employment. The establishment of the Plan and Awards
hereunder shall not be construed as conferring on any Participant
any right to continued employment, and the employment of any
Participant may be terminated without regard to the effect which
such action might have upon him as a Participant.
16
<PAGE>
8.3 Non-Alienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit
under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, excluding the use of Options under this Plan as
collateral in exercising such Options. Any attempt to do so
shall be null and void. No such benefits shall, prior to receipt
thereof by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagement, or
torts of the Participant.
8.4 Non-Alienation of Election or Exercise Rights. No
election as to benefits or exercise of Options, Stock
Appreciation Rights, or other rights may be made during a
Participant's lifetime by anyone other than the Participant.
8.5 Amendment, Modification, and Termination of the Plan.
The Board of Directors, at any time, may terminate and in any
respect amend or modify the Plan; provided, however, that no such
action by the Board of Directors, without approval of the
Company's shareholders, may:
(a) Increase the total number of shares of Common
Stock available under the Plan;
(b) withdraw the administration of the Plan from the
Committee;
(c) permit any person to participate in the Plan while
a member of the Committee;
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<PAGE>
(d) materially increase the benefits accruing to
Participants under the Plan; or
(e) materially modify the requirements as to
eligibility for participation in the Plan.
Except as provided in Sections 4.1(c) and 7.1, no amendment,
modification, or termination of the Plan shall in any manner
adversely affect the rights of any Participant under the Plan
without the consent of such Participant.
8.6 Indemnification. Each person who is or shall have
been a member of the Committee or of the Board of Directors shall
be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts
paid by him in satisfaction of judgment in any such action, suit,
or proceeding against him. Such person shall give the Company an
opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or Bylaws,
as a matter of law, or otherwise, or any power that the Company
may have to indemnify them or hold them harmless.
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<PAGE>
8.7 Reliance on Reports. Each member of the Committee and
each member of the Board of Directors shall be fully justified in
relying or acting in good faith upon any report made by the
independent public accountants of the Company and any Employing
Company and upon any other information furnished in connection
with the Plan by any person or persons other than himself. In no
event shall any person who is or shall have been a member of the
Committee or the Board of Directors be liable for any
determination made or other action taken or any omission to act
in reliance upon any such report or information or for any action
taken, including the furnishing of information, or failure to
act, if in good faith.
8.8 Governing Law. To the extent that federal law shall
not be held to have preempted local law, this Plan shall be
governed by the laws of the State of Delaware. If any provision
of the Plan shall be held invalid or unenforceable, the remaining
provisions hereof shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused The Southern
Company Executive Stock Plan to be executed by its duly
authorized officers pursuant to resolutions of the Board of
Directors this 7th day of December, 1987, to be effective
December 7, 1987.
THE SOUTHERN COMPANY
By:
Edward L. Addison
President
Attest:
By:
Tommy Chisholm
Secretary
[CORPORATE SEAL]
19
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20
<PAGE>
FIRST AMENDMENT TO THE SOUTHERN COMPANY
EXECUTIVE STOCK PLAN
WHEREAS, the Board of Directors of The Southern Company
(hereinafter referred to as the "Company") heretofore established
The Southern Company Executive Stock Plan (hereinafter referred
to as the "Plan") for the purpose of (a) maximizing the long-term
success of The Southern Company, (b) ensuring a balanced emphasis
on both current and long-term performance, and (c) enhancing
participants' identification with shareholders' interests, and
(d) facilitating the attraction and retention of key individuals
with outstanding ability; and
WHEREAS, it is anticipated that the Board of Directors of
Southern Nuclear Operating Company will adopt the terms and
provisions of the Plan effective upon the date of such resolution
adopting the Plan; and
WHEREAS, the Board of Directors of the Company is authorized
to include any affiliate or subsidiary of the Company under the
Plan as an "Employing Company" pursuant to Section 1.2(k) of the
Plan; and
WHEREAS, the Board of Directors of the Company is authorized
pursuant to Section 8.5 of the Plan to amend the Plan.
NOW, THEREFORE, effective as stated herein, the Board of
Directors of the Company hereby amends the Plan as follows:
I.
Section 1.2(k) of the Plan shall be amended by deleting said
Section in its entirety and substituting therefor the following
language to be effective upon the adoption of the terms and
provisions of the Plan by the Board of Directors of Southern
Nuclear Operating Company:
(k) "Employing Company" shall mean any affiliate
or subsidiary (direct or indirect) of the Company,
which the Board of Directors may from time to time
determine to bring under the Plan and which shall adopt
the Plan, and any successor of any of them.
The Employing Companies are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Company Services, Inc.
Southern Electric International, Inc.
Southern Nuclear Operating Company
II.
21
<PAGE>
Except as amended herein by this First Amendment, the Plan
shall remain in full force and effect as adopted by the Company
prior to the adoption of this First Amendment.
IN WITNESS WHEREOF, The Southern Company, through its
authorized officers, has adopted this First Amendment to The
Southern Company Executive Stock Plan this 18th day of July,
1989, to be effective as stated herein.
THE SOUTHERN COMPANY
By:
Edward L. Addison
President
Attest:
By:
Tommy Chisholm
Secretary
(CORPORATE SEAL)
22
<PAGE>
SECOND AMENDMENT TO
THE SOUTHERN COMPANY
EXECUTIVE STOCK PLAN
WHEREAS, the Board of Directors of The Southern Company
(hereinafter referred to as the "Company") heretofore established
The Southern Company Executive Stock Plan (hereinafter referred
to as the "Plan") for the purpose of (a) maximizing the long-term
success of The Southern Company, (b) ensuring a balanced emphasis
on both current and long-term performance, (c) enhancing
participants' identification with shareholders' interests, and
(d) facilitating the attraction and retention of key individuals
with outstanding ability; and
WHEREAS, the Company desires to amend the Plan to clarify
the Compensation Committee of the Board of Directors authority to
determine who may participate in the Plan; and
WHEREAS, the Company, through action of its Board of
Directors, is authorized pursuant to Section 8.5 of the Plan to
amend the Plan at any time.
NOW THEREFORE, effective January 1, 1995, the Company hereby
amends the Plan as follows:
IX
Amend Section 3.1 of the Plan by deleting said Section in
its entirety and substituting the following in lieu thereof:
3.1 Eligibility. The Participants in the Plan
shall be limited to those Employees, as determined by
the Committee, who have a significant impact on the
long-term performance and success of the Company.
Subject to the terms of the Plan, the Committee shall
identify individuals eligible to become Participants in
the Plan, select from time to time the Participants to
whom Awards shall be granted and shall determine the
number of shares to be granted.
X
Except as amended herein, the Plan shall remain in full
force and effect as maintained by the Company prior to the
adoption of this Second Amendment.
23
<PAGE>
IN WITNESS WHEREOF, The Southern Company, through its
authorized officers, has adopted this Second Amendment to The
Southern Company Executive Stock Plan this day of
, 1995, to be effective as of January 1, 1995.
THE SOUTHERN COMPANY
By:
A.W. Dahlberg, President
ATTEST:
By:
Tommy Chisholm, Secretary
24
<PAGE>
EXPLANATION OF DIFFERENCES BETWEEN
CIRCULATED DOCUMENT AND ELECTRONIC DOCUMENT
Notice of Annual Meeting and Proxy Statement
1. The circulated document is 7 1/2 by 8 1/2 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 24 are partially printed in PMS 180 ink. The
two horizontal lines and the words "TIME:" and "PLACE:" on folio page
24 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" on folio page 9, "Stock
Option Grants" on folio page 10, "Incentive Stock Options",
"Nonqualified Stock Options", and "Stock Appreciation Rights" on folio
page 19, "Restricted Stock" on folio page 20, and the last paragraph on
folio page 22 are in italics.
<PAGE>
INDEX OF EXHIBITS
Exhibit
Number -
21A - Form of Proxy
21B - Form of Proxy - Employee Savings Plan and Employee Stock Ownership
Plan Participants
<PAGE>
Exhibit 21A
P R O X Y
THE SOUTHERN COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
For Annual Meeting of Stockholders May 24, 1995
The undersigned hereby appoints A. W. DAHLBERG and W. L. WESTBROOK, or either
of them, proxies with full power of substitution in each, to vote all shares
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
THE SOUTHERN COMPANY, to be held at the Savannah Civic Center, 221 West Ogle-
thorpe Avenue, Savannah, Georgia, at 10:00 a.m. (EDT), and any adjournments
thereof, on all matters legally coming before the meeting including, without
limitation, the proposals listed on the reverse side hereof.
Please mark, date, and sign exactly as
name appears and return this proxy card
promptly in the enclosed envelope to The
Southern Company, Stockholder Services,
P. O. Box 105700, Atlanta, Georgia 30352-
9870.
Date _______________________________, 1995
__________________________________________
__________________________________________
Signature(s)
CHECK BOX IF YOU ARE ATTENDING THE ANNUAL
MEETING IN PERSON [_]
(CONTINUED ON OTHER SIDE)
<PAGE>
P R O X Y
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WILL BE VOTED "FOR" ITEMS 1 - 5
AND "AGAINST" ITEM 6.
(1) Election of Directors (3) Approval of Outside Directors
FOR all nominees listed below [_] Stock Plan
FOR [_] AGAINST [_] ABSTAIN [_]
J. C. Adams, A. D. Correll, A. W.
Dahlberg, P. J. DeNicola, (4) Approval of amendments to the
J. Edwards, H. A. Franklin, B. S. Productivity Improvement Plan for
Gordon, L. G. Hardman, III, E. B. Executive Officers
Harris, W. A. Parker, Jr., W. J.
Rushton, III, G. M. Shatto, G. J. FOR [_] AGAINST [_] ABSTAIN [_]
St. Pe, H. Stockham
(5) Approval of amendments to The
(Instruction: To withhold Southern Company Executive Stock
authority to vote for any Plan
individual nominee, write that
nominee's name on the space FOR [_] AGAINST [_] ABSTAIN [_]
provided below.)
THE DIRECTORS RECOMMEND A VOTE "AGAINST"
ITEM 6.
__________________________________
WITHHOLD vote for all nominees [_] (6) Stockholder Proposal on Disclosure
of Certain Consulting Firms
THE DIRECTORS RECOMMEND A VOTE "FOR"
ITEMS 2 - 5.
(2) Appointment of Auditors FOR [_] AGAINST [_] ABSTAIN [_]
FOR [_]AGAINST [_] ABSTAIN [_]
(SEE OTHER SIDE)
<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
P R O X Y
This Proxy
THE SOUTHERN COMPANY Is For Your
Combined
E.S.O.P. and
E.S.P. (if
any) Shares.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
For Annual Meeting of Stockholders May 24, 1995
The undersigned hereby appoints A. W. DAHLBERG and W. L. WESTBROOK, or either
of them, proxies with full power of substitution in each, to vote all shares
the undersigned is entitled to vote at the Annual Meeting of Stockholders of
THE SOUTHERN COMPANY, to be held at the Savannah Civic Center, 221 West
Oglethorpe Avenue, Savannah, Georgia, at 10:00 a.m. (EDT), and any adjournments
thereof, on all matters legally coming before the meeting including, without
limitation, the proposals listed on the reverse side hereof.
Please mark, date, and sign exactly as
name appears and return this proxy card
promptly in the enclosed envelope to The
Southern Company, Bin 071, 64 Perimeter
Center East, Atlanta, Georgia 30346.
Date _______________________________, 1995
__________________________________________
__________________________________________
Signature(s)
CHECK BOX IF YOU ARE ATTENDING THE ANNUAL
MEETING IN PERSON [_]
(CONTINUED ON OTHER SIDE)
<PAGE>
P R O X Y
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WILL BE VOTED "FOR" ITEMS 1 - 5
AND "AGAINST" ITEM 6.
(1) Election of Directors (3) Approval of Outside Directors
FOR all nominees listed below [_] Stock Plan
FOR [_] AGAINST [_] ABSTAIN [_]
J. C. Adams, A. D. Correll, A. W.
Dahlberg, P. J. DeNicola, (4) Approval of amendments to the
J. Edwards, H. A. Franklin, B. S. Productivity Improvement Plan for
Gordon, L. G. Hardman, III, E. B. Executive Officers
Harris, W. A. Parker, Jr., W. J.
Rushton, III, G. M. Shatto, G. J. FOR [_] AGAINST [_] ABSTAIN [_]
St. Pe, H. Stockham
(5) Approval of amendments to The
(Instruction: To withhold Southern Company Executive Stock
authority to vote for any Plan
individual nominee, write that
nominee's name on the space FOR [_] AGAINST [_] ABSTAIN [_]
provided below.)
THE DIRECTORS RECOMMEND A VOTE "AGAINST"
ITEM 6.
__________________________________
WITHHOLD vote for all nominees [_] (6) Stockholder Proposal on Disclosure
of Certain Consulting Firms
THE DIRECTORS RECOMMEND A VOTE "FOR"
ITEMS 2 - 5.
(2) Appointment of Auditors FOR [_] AGAINST [_] ABSTAIN [_]
FOR [_]AGAINST [_] ABSTAIN [_]
(SEE OTHER SIDE)
<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.
