UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THE SOUTHERN COMPANY
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(Name of Registrant as Specified In Its Charter)
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[SOUTHERN COMPANY LOGO APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS - MAY 27, 1998
TIME 10:00 a.m. CDT, on Wednesday,
May 27, 1998
PLACE Mobile Convention Center
One South Water Street
Mobile, Alabama
ITEMS OF BUSINESS (1) Elect 14 members of the board of directors; and
(2) Transact other business that properly comes before
the meeting or any adjournments of the meeting.
RECORD DATE Holders of common shares of record at
the close of business, March 30, 1998, are
entitled to vote at the meeting.
ANNUAL REPORT The Annual Report of the Company for
1997, which is not a part of the proxy
soliciting material, is enclosed.
PROXY VOTING It is important that your shares be represented and voted
at the meeting. You may vote one of three ways. Please
use the TOLL-FREE TELEPHONE NUMBER or INTERNET
instructions on the enclosed proxy card OR MARK, SIGN,
DATE AND PROMPTLY RETURN the enclosed proxy card in the
postage-paid envelope furnished for that purpose. Any
proxy may be revoked in the manner described in the
accompanying proxy statement at any time prior to its
exercise at the meeting.
By Order of the Board of Directors,
Tommy Chisholm
Secretary
Atlanta, Georgia
April 13, 1998
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TABLE OF CONTENTS
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PROXY STATEMENT............................................................................................. 1
GENERAL INFORMATION......................................................................................... 1
1. ELECTION OF DIRECTORS.................................................................................... 1
Stock Ownership.......................................................................................... 3
Certain Transactions..................................................................................... 4
CORPORATE GOVERNANCE..................................................................................... 4
Certain Committees....................................................................................... 4
Audit Committee.......................................................................................... 4
Compensation & Management Succession Committee.......................................................... 4
Governance Committee.................................................................................... 4
Compensation of Directors............................................................................... 5
EXECUTIVE COMPENSATION...................................................................................... 5
Compensation & Management Succession Committee Report on Executive Compensation............................ 5
Executive Compensation Objectives and Policies.......................................................... 5
Executive Compensation Components....................................................................... 6
Tax Considerations...................................................................................... 9
Summary................................................................................................. 9
Summary Compensation Table.................................................................................. 10
Stock Option Grants......................................................................................... 10
Aggregated Stock Option Exercises in 1997 and Year-End Option Values........................................ 11
Long-Term Incentive Plans - Awards in 1997.................................................................. 11
Pension Plan Table.......................................................................................... 12
Five-Year Performance Graph................................................................................. 13
APPOINTMENT OF INDEPENDENT AUDITORS......................................................................... 13
2. OTHER BUSINESS........................................................................................... 13
SOLICITATION OF PROXIES..................................................................................... 13
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING OF STOCKHOLDERS............................................... 13
YOUR VOTE IS IMPORTANT...................................................................................... 13
</TABLE>
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SOUTHERN COMPANY
270 PEACHTREE STREET
ATLANTA, GEORGIA 30303
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by the board of directors of The
Southern Company (the "Company") for use at its 1998 Annual Meeting of
Stockholders to be held on Wednesday, May 27, 1998, at 10:00 a.m. (CDT) in
Mobile, Alabama. It is proposed that this proxy statement and accompanying proxy
card first will be sent to the Company's stockholders on or about April 13,
1998.
Stockholders of record can give instructions on the voting of their proxy by
calling the toll-free telephone number listed on the proxy card, using the
Internet address shown on the proxy card, or returning their signed proxy card.
The telephone and Internet procedures authenticate stockholders by use of a
control number and permit confirmation that the vote has been properly recorded.
Specific instructions are on the enclosed proxy card. The shares represented by
your proxy will be voted in accordance with your instructions if the proxy is
properly voted as described above before the meeting (and not revoked later).
Each share is entitled to one vote, except that voting for directors may be
cumulative (i.e., in voting for directors you may multiply the number of shares
stated on the proxy card by the number of directors to be elected and then cast
the resulting number of votes among the nominees as desired). Your proxy may be
revoked by written request that is received by the secretary of the Company
before the annual meeting. If you wish, you may revoke your proxy at the
meeting by voting in person.
At the annual meeting, abstentions will be treated as present for purposes of
determining a quorum. 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 30, 1998, as the record date for the
determination of stockholders entitled to notice of and to vote at the 1998
Annual Meeting of Stockholders. On the record date, 696,946,972 shares of common
stock were outstanding, 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 proxy card, intend to vote each properly
voted 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 substitute nominees named by the board and for the
remaining nominees unless the board reduces the number of nominees. The board of
directors has no reason to expect this to 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, 58, served as chairman of the board, president, and chief executive
officer of Russell Corporation, designers, manufacturers, and marketers of
apparel and fabrics from 1993 to 1998. He served as president and chief
operations officer of Russell Corporation from 1991 to 1992 and president and
chief executive officer from 1992 to 1993. He is a director of Aliant Bank of
Alexander City, Alabama, Aliant National Corporation, and Russell Corporation.
He was elected director of the Company in 1995.
A. D. Correll
Mr. Correll, 56, is chairman of the board and chief executive officer of
Georgia-Pacific Corporation, manufacturers and distributors of building
products, pulp, and paper. He served as president and chief operating officer of
Georgia-Pacific Corporation from July, 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 Corporation, Sears, Roebuck and Co., and SunTrust Banks, Inc.
He was elected director of the Company in 1994.
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A. W. Dahlberg
Mr. Dahlberg, 57, is chairman of the board, president and chief executive
officer of the Company. He served as president of the Company from January, 1994
until March, 1995. Prior to 1994, he was president and chief executive officer
of Georgia Power Company. He is a director of Equifax, Inc., Protective Life
Corporation, SunTrust Banks, Inc., and Southern system companies -Alabama Power
Company and Georgia Power Company. He was elected director of the Company in
1985.
Paul J. DeNicola
Mr. DeNicola, 49, is president and chief executive officer of Southern Company
Services, Inc. and executive vice president and group executive of the Company.
He served as executive vice president of Southern Company Services, Inc. from
April, 1991 to January, 1994, when he was appointed to his current position. He
is a director of Southern system companies - Gulf Power Company, Mississippi
Power Company, and Savannah Electric and Power Company. He was elected director
of the Company in 1989.
Jack Edwards
Mr. Edwards, 69, is a member of Hand Arendall, L.L.C., attorneys. He served in
the U.S. House of Representatives for 20 years, retiring in 1985. He is a
director of Northrop Grumman Corporation, QMS, Inc., and Holnam, Inc.
Mr. Edwards is also President Pro Tempore of the Board of Trustees of the
University of Alabama System. He was elected director of the Company in 1987.
H. Allen Franklin
Mr. Franklin, 53, is president and chief executive officer of Georgia Power
Company and executive vice president of the Company. Prior to 1994, he was
president and chief executive officer of Southern Company Services, Inc. He is a
director of SouthTrust Corporation and Georgia Power Company. He was elected
director of the Company in 1988.
Bruce S. Gordon
Mr. Gordon, 51, is group president of Bell Atlantic Network Services, Inc.,
telecommunications and computer equipment services. Prior to 1993, he served as
senior 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.
L. G. Hardman III
Mr. Hardman, 58, is chairman of the board and chief executive officer of First
Commerce Bancorp, Inc.; chairman of the board of The First National Bank of
Commerce, Georgia; and chairman of the board, president, and treasurer of
Harmony Grove Mills, Inc. He is a director of Georgia Power Company and was
elected director of the Company in 1986.
Elmer B. Harris
Mr. Harris, 58, is president and chief executive officer of Alabama Power
Company and executive vice president of the Company. He is a director of AmSouth
Bancorporation and Alabama Power Company. He was elected director of the Company
in 1989.
Zack T. Pate
Dr. Pate, 61, is chairman of the World Association of Nuclear Operators and
chairman emeritus of the Institute of Nuclear Power Operations (INPO), an
independent nonprofit organization promoting safety, reliability, and excellence
in the operation of nuclear electric generating plants. Prior to 1998, he was
president and chief executive officer of INPO. He is a nominee for election as a
director of the Company.
William J. Rushton, III
Mr. Rushton, 68, is chairman emeritus of Protective Life Corporation, an
insurance concern. Prior to 1994, he was chairman of the board of Protective
Life Corporation. He is a director of Alabama Power Company and was elected
director of the Company in 1971.
Gloria M. Shatto
Dr. Shatto, 66, is president of Berry College, Mount Berry, Georgia. She is a
director of Georgia Power Company, Becton Dickinson & Company, and Texas
Instruments Incorporated. She was elected director of the Company in 1984.
Gerald J. St. Pe
Mr. St. Pe, 58, is president of Ingalls Shipbuilding, Inc. division of Litton
Industries, Inc., and senior vice president of Litton Industries, Inc. He
was elected director of the Company in 1995.
Herbert Stockham
Mr. Stockham, 69, is chairman of the board, chief executive officer, and a
director of SVI Corporation, manufacturers of commercial casting products.
He was elected director of the Company in 1978.
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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.
ADDITIONAL INFORMATION
STOCK OWNERSHIP
This 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, 1997, except for Dr. Pate whose number of
shares are given as of March 30, 1998. It is based on information furnished to
the Company by them. The shares owned by all directors, nominees, and executive
officers as a group constitute less than one percent of the total number of
shares of the respective classes outstanding as of December 31, 1997.
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NUMBER OF SHARES
BENEFICIALLY
TITLE OF SECURITY OWNED (1) (2)
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John C. Adams Southern Company common stock........................................... 2,516
Thomas G. Boren Southern Company common stock........................................... 41,526
A. D. Correll Southern Company common stock........................................... 11,626
A. W. Dahlberg Southern Company common stock........................................... 255,790
Paul J. DeNicola Southern Company common stock........................................... 109,746
Jack Edwards Southern Company common stock........................................... 17,928
H. Allen Franklin Southern Company common stock........................................... 146,255
Bruce S. Gordon Southern Company common stock........................................... 1,348
L. G. Hardman III Southern Company common stock........................................... 14,816
Elmer B. Harris Southern Company common stock........................................... 204,339
William A. Parker, Jr. Southern Company common stock........................................... 27,691
Zack T. Pate Southern Company common stock........................................... 4,247
William J. Rushton, III Southern Company common stock........................................... 7,607
Alabama Power Company preferred stock................................... 20
Gloria M. Shatto Southern Company common stock........................................... 17,459
Georgia Power Company preferred stock................................... 1,200
Gerald J. St. Pe Southern Company common stock........................................... 29,423
Herbert Stockham Southern Company common stock........................................... 8,168
Directors, Nominees, and
Executive Officers of the
Company as a Group (20 Southern Company common stock.......................................... 1,248,282
people) Subsidiary companies preferred stock................................... 1,220
</TABLE>
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(1) "Beneficial ownership" means the sole or shared power to vote, or to
direct the voting of, a security, or investment power with respect to a
security, or any combination thereof.
(2) The shares shown include shares of common stock that certain directors and
executive officers have the right to acquire beneficial ownership of within
60 days pursuant to the Southern Company Performance Stock Plan, as
follows: Mr. Boren - 28,832 shares; Mr. Dahlberg - 193,347 shares; Mr.
DeNicola - 75,791 shares; Mr. Franklin - 120,384 shares; Mr. Harris -
150,793 shares; and all directors, nominees, and executive officers of the
Company as a group - 768,574 shares. Also included are shares of the
Company's common stock held by the spouses of the following directors: Mr.
Edwards - 297 shares; Mr. Hardman - 100 shares; Mr. Harris - 310 shares;
Mr. Parker - 57 shares; and Dr. Shatto - 13,438 shares and 1,200 shares of
Georgia Power Company preferred stock. Each director disclaims any interest
in the shares owned by their spouses. Also includes shares of common stock
held in the Southern Company Deferred Stock Trust of which certain
directors have the power to direct the voting, as follows: Mr. Adams -
7,959 shares; Mr. Correll - 7,489 shares; Mr. Edwards - 13,290 shares; Mr.
Gordon - 748 shares; Mr. Hardman - 6,019 shares; Mr. Parker - 400 shares;
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Mr. Rushton - 400 shares; Dr. Shatto - 400 shares; Mr. St. Pe - 7,041 shares;
and Mr. Stockham - 400 shares; and all directors as a group - 44,146 shares.
CERTAIN TRANSACTIONS
During 1997, Alabama Power Company paid Hand Arendall, L.L.C. $146,557 for
legal services. Mr. Edwards is a member of Hand Arendall, L.L.C. In
1997, Southern Nuclear Operating Company, Inc. paid dues to the
Institute of Nuclear Power Operations (INPO) totaling $1,990,116. Dr.
Pate was chairman and chief executive officer of INPO in 1997.
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 members. The nominees for election
as directors consist of 10 nonemployees and four officers. The board
of directors met eight times in 1997. Its four standing committees met
a total of 17 times. The average attendance of all directors for the
board and committee meetings was 94 percent, with Mr. Parker attending
less than 75 percent of the board and applicable committee meetings.
Mr. Parker will retire on May 27, 1998. All standing committee members
and chairmen are nonemployee directors.
CERTAIN COMMITTEES AUDIT COMMITTEE
The members of the Audit Committee are: Mr. Hardman,
chairman; Mr. Gordon; Mr. Parker; Mr. St. Pe; and Mr. Stockham. The
Audit Committee met five times in 1997. The committee annually reviews
and recommends the selection of the Company's independent auditor and
reviews the auditing firm's fees and the scope and timing of audits.
The committee reviews the independent auditor's report or opinion on
the Company's financial statements, significant changes in accounting
principles and practices, significant proposed adjustments, and any
unresolved disagreements with management concerning accounting or
disclosure matters. The committee also oversees the Company's
financial reporting and accounting practices, internal accounting,
legal compliance, and control systems. The committee regularly reports
its recommendations and findings to the full board of directors.
COMPENSATION & MANAGEMENT SUCCESSION COMMITTEE
The members of the Compensation & Management Succession Committee are: Mr.
Correll, chairman; Mr. Hardman; Mr. St. Pe; and Mr. Stockham. The
Compensation & Management Succession Committee met three times in
1997. The committee reviews the performance of the president of the
Company and recommends to the board his compensation under the base
salary program, the Performance Pay Plan, and the Executive
Productivity Improvement Plan. It also reviews and makes
recommendations to the board on certain compensation and benefit
programs applicable to the Company's subsidiaries and administers the
Company's executive compensation plans. The committee also reviews the
Company's management succession plans.
GOVERNANCE COMMITTEE
The members of the Governance Committee are: Mr. Rushton, chairman; Mr.
Adams; Mr. Gordon; Mr. Parker; and Dr. Shatto. The Governance Committee met two
times in 1997. The committee identifies and recommends to the board of directors
the nominees for election to the board. The committee expects normally to
identify from its own resources the names of qualified nominees but will accept
from stockholders recommendations of individuals to be considered as nominees.
Stockholder recommendations, together with a description of the proposed
nominee's qualifications, relevant biographical information, and the proposed
nominee's signed consent to serve, should be submitted in writing to the
secretary of the Company and received by that office by December 14, 1998. The
determination of nominees recommended to the board by the committee is within
its sole discretion, and the final selection of the board's nominees is within
the sole discretion of the board of directors. The committee also reviews and
makes recommendations to the board on directors' compensation and reviews
corporate governance issues.
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COMPENSATION OF DIRECTORS
Each nonemployee director of the Company serving as of February 17, 1997, is
paid an annual retainer fee of $40,000, of which $10,000 is deferred in shares
of Company common stock under the Deferred Compensation Plan for Directors of
The Southern Company (the "Deferred Compensation Plan") until membership on
the board is terminated. Each nonemployee director of the Company first elected
after February 17, 1997, is paid an annual retainer fee of $49,000, of which
$19,000 is deferred in shares of Company common stock under the Deferred
Compensation Plan until membership on the board is terminated. A meeting fee of
$1,250 is paid for each meeting of the board of directors attended and a fee of
$1,000 is paid for each committee meeting attended. Also, each committee
chairman is paid an annual retainer fee of $5,000. All or a portion of the fees
payable in cash can be deferred under the Deferred Compensation Plan until
membership on the board is terminated.
Effective January 1, 1997, the board of directors terminated the Outside
Directors Pension Plan (the "Pension Plan") and froze the benefits payable under
the Pension Plan. Nonemployee directors were given a one-time opportunity to
elect to receive a Pension Plan benefit buy-out equal to the actuarial present
value of future Pension Plan benefits, based on the annual retainer in effect on
December 31, 1996 ($30,000), or receive benefits under the terms of the Pension
Plan frozen at the level of the annual retainer rate in effect on December 31,
1996. Directors who elected to receive the benefit buy-out were required to
defer receipt of that amount under the Deferred Compensation Plan until
termination from board membership. Two directors elected to continue to
participate under the terms of the Pension Plan. They are entitled to annual
benefits of $30,000 upon retirement from the board. Payments will continue for
the greater of the lifetime of the participant or 10 years. The termination of
the Pension Plan did not affect retired directors already receiving payments
under it.
EXECUTIVE COMPENSATION
COMPENSATION & MANAGEMENT SUCCESSION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
This report discusses generally our executive compensation objectives and
policies and their relationship to corporate performance in 1997. Also, the
report specifically discusses our bases for compensation in 1997 of the
Company's chairman of the board, president, and chief executive officer (the
"chairman") as reported in the Summary Compensation Table following this report.
EXECUTIVE COMPENSATION OBJECTIVES AND POLICIES
Our objective is to provide a competitive compensation program with
appropriate incentives for superior corporate performance, thereby providing a
strong and direct link between corporate performance and pay. Performance is
defined in several ways, as more fully discussed below, each of which has
relevance to the Company's success in the short term, long term, or both.
Additionally, executive compensation is variable so that higher performance
leads to higher pay and lower performance results in lower pay.
Total executive compensation (base salary plus incentive compensation) is
compared with that of electric and gas utility companies with similar market
and operating characteristics and within a comparable size range. Currently,
each company in that group has revenues of $3 billion and higher. Twenty of
these companies are included in the 26 companies that make up the Standard &
Poor's Electric Utility Index, the peer group in the five-year performance
graph.
Total executive compensation of the president of Southern Energy, Inc.
("Southern Energy president") is compared with that of heavy industrial and
durable goods manufacturing companies with similar market and operating
characteristics and within a comparable size range, as reported in market
surveys prepared by independent outside consultants. Currently, these companies
have revenues averaging $3 billion.
Total executive compensation of the chairman is determined:
. 70 percent by comparison with that of the above electric and gas utility
group, and
. 30 percent by comparison with that of a group of heavy industrial and
durable goods manufacturing companies with similar market and operating
characteristics and within a comparable size range as provided by
independent outside consultants.
We target total executive pay levels at the median of the applicable
selected groups of companies, adjusted for size. 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
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compensation that in turn can result in total compensation that can be higher
than the target. Lower performance results in lower incentive compensation and,
therefore, compensation that is lower than the median level of the applicable
groups of companies. If certain performance goals are not reached, no incentive
compensation is paid.
EXECUTIVE COMPENSATION COMPONENTS
Total executive compensation consists of:
. base salary
. short-term incentive compensation (annual performance bonus)
. long-term incentive compensation
The compensation components of the chairman and the Southern Energy president
are described separately where they differ from those of the other named
executive officers.
BASE SALARY. Base salary levels are largely determined by comparison with
salaries of other companies with similar market and operating characteristics
and within a comparable size range, as reported in market surveys prepared by
independent outside consultants. The groups of companies used for base salary
comparisons are the same as those used for total executive compensation
comparisons discussed above.
A salary range above and below the median salary reported in such surveys, as
adjusted for size, is established. Base salary increases are based on individual
job performance and set within the established competitive salary range. Base
salary also can be increased based on a significant increase in job
responsibilities. The base salary levels of the named executive officers were
below the applicable medians in 1997.
ANNUAL PERFORMANCE BONUS. All regular employees of the Company's
subsidiaries, except those employed by Southern Communications, Southern Company
Energy Solutions, and Southern Energy and its subsidiaries, and except those
employed by Georgia Power and Southern Nuclear Operating Company in Georgia who
are part of a certain collective bargaining unit, are eligible to receive an
annual performance bonus under the Company's Performance Pay Plan.
Amounts paid to executive officers for 1997 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)
. kilowatt-hour cost
. overhead costs
. cash flow
. customer satisfaction
Individual objectives are goals and initiatives that link the corporate
performance goals and the Company's strategic direction. We believe 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 chairman, extraordinary expenses or income may be excluded for the purpose
of calculating the amount available for the payment of awards. For 1997, the
windfall-profits tax imposed upon South Western Electricity plc was excluded.
A target performance level is set for each goal. Awards paid are based on
performance relative to the established target. Performance above the target
level results in proportionately higher payout. Likewise, performance below the
target results in proportionately lower payout. No awards are made if
performance is below a threshold level or if a minimum earnings level is not
achieved. Also, no awards are made if the Company's current earnings are
insufficient to fund its common stock dividend at the same level as the prior
year.
The earnings target required the Company's return on common equity to be
sufficient to maintain the common stock dividend at or below a specific payout
ratio. Additional funds are made available for awards if the return on common
equity of the Company's traditional business ranks in the highest quartile of a
large group (approximately 100) of investor-owned electric utility companies the
companies with which the Company competes for investors. All of the companies in
the Standard & Poor's Electric Utility Index are included in this group. The
Company's position was in the top quartile for 1997.
The kilowatt-hour cost target required the Company to keep capital
expenditures and operation and maintenance costs below specific targets designed
to achieve a kilowatt-hour cost that is at or below the competitive market price
offered by electric providers, including the companies comprising the Standard &
Poor's Electric Utility Index. The Company continued to cut costs aggressively
and achieved costs below the targets.
The overhead costs target requires the Company to reduce overhead costs by 20
percent by 1998 and called for specific targets in 1997 designed to achieve that
goal. During 1997, the Company reduced overhead costs below the 1997 targets.
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The cash flow target required the Company to generate a positive cash flow
above capital reinvestment and dividend requirements. The Company generated a
positive cash flow in 1997.
The customer satisfaction target required the Company to rank in the best
quartile of 16 regional or national electric utilities in the United States the
primary companies with which the Company competes for customers. More than
one-half of these companies are included in the Standard & Poor's Electric
Utility Index. During 1997, the company achieved a customer satisfaction rating
of 8.66 on a scale of 0 to 10 - retaining the Company's position in the best
quartile. Corporate performance met or exceeded the target levels in all five
areas in 1997, resulting in proportionately higher awards.
The achievement of the return on common equity corporate performance goal
determined the initial funding for the annual performance bonuses paid to the
executive officers for 1997 performance. The remainder of the corporate
performance goals provided the opportunity of adjusting the funding for
performance bonuses to a maximum of 110 percent or a minimum of 90 percent of
that initial funding.
The chairman's target annual performance award opportunity for full
achievement of goals was 10 percent of his base salary. Of the annual
performance bonus paid to the chairman for 1997 performance, 80 percent was
based on the corporate performance goals described above with the remainder
based on individual objectives regarding leadership and strategic initiatives
designed to strengthen the Company's performance on a short-term and long-term
basis. We found that, under all measurement criteria, performance met or
exceeded the targets established for 1997. This resulted in an award under the
plan that exceeded the target award opportunity.
Based on the degree of achievement of pre-determined goals, the Southern
Energy president is awarded an annual performance bonus paid in cash. The
Southern Energy president's goals for 1997 were related to achieving a
prescribed net income and return on equity, continuing to position Southern
Energy for future growth, and managing assets to achieve certain returns.
Excluding England's windfall-profits tax, Southern Energy exceeded its targets
in 1997.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives for executive
officers, including the chairman, are provided through annual grants of
performance awards under the Executive Productivity Improvement Plan and the
Performance Dividend Plan and annual grants of stock options under the
Performance Stock Plan. (The Southern Energy president does not participate in
the Executive Productivity Improvement Plan.) We believe that, together, these
plans reflect two primary means of motivating and rewarding improvement in the
long-term performance of the Company. Performance awards result in additional
compensation based on the Company's performance over a four-year period ranked
against specific peer groups of companies.
Stock options provide gains to executives only if, in the long term, the
Company's common stock price improves over the fair market value of the stock
on the date options are granted.
Executive Productivity Improvement Plan. The named executive officers
participating in the plan are granted a number of units, valued at $1.00 each,
equal to 50 to 65 percent of their respective salary range midpoint at the
beginning of the four-year performance period.
In 1997, the Plan was amended to change the basis of the performance
measurement from return on equity ("ROE") to total shareholder return ("TSR")
for the years beginning on or after January 1, 1997. TSR is calculated as the
value of an investment of $100 per quarter for each quarter over a specific
period (the "TSR Computation Period"). Payments under the Plan are paid in cash
and, for the applicable Computation Periods, are based upon the annual ranking
of the Company's ROE within a group of 16 utility companies located in the
southeastern United States, more than one-half of which are included in the
Standard & Poor's Electric Utility Index, or upon the annual ranking of the
Company's TSR to the TSR of a group of 77 investor-owned electric utilities in
the United States as reported by Goldman, Sachs & Co. in their annual "Selected
Electric Utility Industry Statistics" report, which includes all of the
companies in the Standard & Poor's Electric Utility Index.
The award opportunity for the four-year periods beginning January 1, 1994,
through January 1, 1996, is based partly on ROE performance and partly on TSR
performance. The award opportunity for Computation Periods beginning on or after
January 1, 1997, is based entirely on TSR performance. The following chart shows
the applicable bases for the four-year periods beginning January 1:
ROE TSR
--- ----
1994................... 75% 25%
1995................... 50% 50%
1996................... 25% 75%
1997................... 0% 100%
7
<PAGE>
Awards based on ROE performance range from 50 percent of the target award if
the Company's ROE is in the second highest quartile to 200 percent of the target
award if the Company's ROE is the highest among the selected group of companies.
Awards based upon TSR performance will range from 50 percent of the target award
if the Company's TSR is at the 30th percentile to 200 percent of the target
award if the Company's TSR is at or above the 90th percentile among the selected
group of companies.
No awards may be paid for any ROE Computation Period in which the Company's
ROE is below the median, nor for any TSR Computation Period in which the
Company's TSR is below the 30th percentile, nor for any four-year period ending
in a calendar year in which the Company's current earnings are not sufficient to
fund its common stock dividend at the same level as the prior year.
For the performance period January 1, 1994, through December 31, 1997, the
Company's ROE was the fourth highest of that selected group and the Company's
TSR was below the 30th percentile of that selected group of companies, resulting
in each unit granted to the executive officers, including the chairman, being
valued at $0.90 ($1.20 X 75% + $0 X 25%).
Value Creation Plan. Based on market data for long-term incentives, the
Southern Energy president was awarded Appreciation Rights and Indexed Rights
(collectively "Rights") under the Southern Energy, Inc. Value Creation Plan
equal to an economic value of 27 percent of his total compensation. No other
executive officer participates in this plan.
Rights granted under the Plan entitle participants to share in the
appreciation in the value of Southern Energy over a term of 10 years from the
date of grant, as verified by a nationally recognized independent appraisal
firm. The initial valuation and exercise price of the units of phantom interests
in Southern Energy created by the Plan were $10.00 each. The total number of
such units outstanding shall be adjusted to reflect changes in capitalization of
Southern Energy. The impact of the windfall-profits tax imposed upon South
Western Electricity plc is reflected in the value of Southern Energy.
Appreciation Rights vest at the rate of 25 percent per year on each of the first
four anniversary dates of the date of the grant.
Indexed Rights entitle the participant to the appreciation in value over the
initial or base value (as increased each year at a prescribed rate of interest)
over a 10-year term. Indexed Rights vest 100 percent on the fourth anniversary
of the date of the grant. Vested Rights may be exercised by the participant at
the value established as of December 31 of the immediately preceding Plan year,
and are paid in cash.
Stock Option Grants. Under the Company's Performance Stock Plan, executive
officers, including the chairman, are granted stock options that give them the
right to purchase shares of the Company's common stock at a specified price.
Under the Performance Dividend Plan, participants are eligible to receive
cash dividend equivalent awards based on the Company's Total Shareholder Return
("TSR"), the number of stock options granted after 1996 held at year-end, and
the amount of the aggregate annual dividend declared by the Company for the year
in which an award is made. Dividend equivalent awards based upon TSR performance
range from 25 percent of the applicable annual dividend if the Company's TSR is
at the 30th percentile to 100 percent of the applicable annual dividend if the
Company's TSR is at or above the 90th percentile among the selected group of
companies. For the chairman, dividend equivalent awards based upon TSR
performance range from 50 percent of the applicable annual dividend if the
Company's TSR is at the 30th percentile to 200 percent of the applicable annual
dividend if the Company's TSR is at or above the 90th percentile among the
selected group of companies. No awards are paid under the Performance Dividend
Plan if the Company's TSR is below the 30th percentile. No dividend equivalent
awards were paid in 1997, because the Company's TSR was below the 30th
percentile. (The Southern Energy president participates in the Performance Stock
Plan and the Performance Dividend Plan.)
Stock option grants are one of the components of total executive
compensation. As already discussed, total executive compensation is targeted at
the median total compensation paid by the applicable groups of companies. The
estimated annualized value of the stock options granted, if targeted performance
is achieved, represented approximately 42 percent of the targeted compensation
level for the chairman and from 10 percent to 15 percent of the targeted
compensation levels for the other named executive officers for the last fiscal
year. Neither the size of prior option grants nor the number of outstanding
grants was considered in determining the size of the latest grants. The total
number of stock options
8
<PAGE>
granted in 1997 by the committee to all participants was less than 5 percent of
the total number of shares authorized under the plan.
We believe that granting stock options aligns the interests of executives
with those of common stockholders in two ways. First, because the exercise
price of all stock options granted under the Plan is equal to the fair market
value on the grant date, there must be an appreciation in the price of the
common stock for participants to benefit. Second, long-term performance is
encouraged because options vest annually at a rate of 25 percent on the
anniversary date of the grant.
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code (the "Code") generally limits tax
deductibility of certain compensation paid to each of the named executive
officers to $1,000,000, per officer, unless the compensation is paid under a
performance plan, meeting certain criteria under the Code. We seek to administer
performance-based compensation plans approved by the stockholders in order to
qualify the compensation to be paid under the plans for full income tax
deductibility under Section 162(m) of the Code. The Company's Executive
Productivity Improvement Plan, Performance Stock Plan, Performance Dividend
Plan, and Value Creation Plan conform to the criteria under the Code and
performance bonuses paid under these plans are deductible to the extent that the
officer's compensation exceeds $1,000,000. We believe that income tax
deductibility is of secondary consideration to the best interests of the
stockholders in providing incentive compensation linked to the corporate
performance goals and personal incentives.
SUMMARY
Our policy in setting executive compensation and in establishing the
appropriate balance among fixed, short-term, and long-term
compensation is designed to clearly link pay and performance. We
believe that our executive compensation program rewards executives
more as stockholders are rewarded. Total executive compensation is
increasingly weighted toward long-term incentives and, therefore,
toward long-term Company performance and total shareholder return. To
achieve these goals, we frequently review the various pay plans and
policies and modify them as we deem necessary to continue to attract,
retain, and motivate talented executives and to pay them
competitively.
Members of the Compensation & Management
Succession Committee:
A. D. Correll, Chairman G. J. St. Pe'
L. G. Hardman III H. Stockham
9
<PAGE>
SUMMARY COMPENSATION TABLE
This table shows information concerning the Company's chairman of the board,
president, and chief executive officer, and each of the other four most highly
compensated executive officers of the Company serving as of December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
<S> <C> <C> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES LONG-TERM
UNDERLYING INCENTIVE
OTHER ANNUAL STOCK PLAN ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)(1) ($)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
A. W. Dahlberg....................... 1997 817,644 206,250 27,485 135,882 433,247 49,766
Chairman, President & 1996 782,409 118,534 6,833 154,610 770,216 43,850
CEO 1995 722,489 120,415 6,577 52,203 866,493 40,755
Southern Company
T. G. Boren.......................... 1997 345,000 387,625 14,868 18,941 0 19,415
President 1996 291,086 275,000 13,757 14,250 0 16,293
Southern Energy 1995 248,333 298,497 12,579 13,295 0 10,263
P. J. DeNicola....................... 1997 416,452 62,980 8,731 29,638 239,874 25,493
President 1996 400,491 56,520 3,325 26,330 426,442 22,894
Southern Company Services 1995 384,845 50,464 3,037 26,297 479,747 21,603
H. A. Franklin....................... 1997 511,505 129,426 14,219 36,544 280,513 31,350
President 1996 482,658 73,260 10,992 31,853 498,688 27,334
Georgia Power Company 1995 456,366 82,935 3,936 31,960 561,024 25,493
E. B. Harris......................... 1997 500,700 101,002 20,453 35,648 247,224 30,172
President 1996 480,310 72,697 7,112 31,608 439,508 25,068
Alabama Power Company 1995 458,940 74,204 5,956 32,170 494,447 26,058
</TABLE>
- --------
(1) Payouts made in 1996, 1997, and 1998 for the four-year performance
periods ending December 31, 1995, 1996, and 1997, respectively.
(2) Company contributions in 1997 to the Employee Savings Plan, Employee
Stock Ownership Plan, and non-pension related accruals under the Supplemental
Benefit Plan (ERISA excess plan under which accruals are made to offset Internal
Revenue Code imposed limitations under the Employee Savings and Stock Ownership
Plans) for the following: Mr. Dahlberg - $7,181, $1,072, and $41,513; Mr. Boren
- - $6,469, $1,072, and $11,875; Mr. DeNicola - $7,125, $1,072, and $17,296; Mr.
Franklin - $7,181, $1,072, and $23,097; and Mr. Harris - $7,125, $1,072, and
$21,975.
STOCK OPTION GRANTS
This table shows all stock option grants to the named executive officers
during the year ending December 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
INDIVIDUAL GRANTS GRANT DATE VALUE
------------------------------------------------------- ----------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN OR BASE GRANT DATE
OPTIONS GRANTED FISCAL PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) YEAR(2) ($/SH)(1) DATE(1) ($)(3)
- ---- --------------- ------------- --------- ----------- -------------
A. W. Dahlberg.......... 135,882 8 21.25 7/21/2007 1,445,785
T. G. Boren............. 18,941 1 21.25 7/21/2007 108,343
P. J. DeNicola.......... 29,638 2 21.25 7/21/2007 169,529
H. A. Franklin.......... 36,544 2 21.25 7/21/2007 209,032
E. B. Harris............ 35,648 2 21.25 7/21/2007 203,907
</TABLE>
- --------
(1) Performance Stock Plan grants were made on July 21, 1997, and vest
annually at a rate of 25 percent on the anniversary date of the grant. Grants
fully vest upon termination incident to death, total disability, or retirement.
The exercise price is the average of the high and low fair market value of the
Company's common stock on the date granted.
10
<PAGE>
(2) A total of 1,776,094 stock options were granted in 1997 to employees
participating in the Company's Performance 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 for the
chairman: price volatility - 17.471 percent; risk-free rate of return - 6.49
percent; dividend yield - zero percent; and time to exercise - 10 years.
Assumptions used to calculate this value for other named executive officers:
price volatility - 17.471 percent; risk-free rate of return - 6.49 percent;
dividend yield - 3.06 percent; and time to exercise - 10 years. These
assumptions reflect the effects of cash dividend equivalents paid to
participants at the target rates under the Performance Dividend Plan.
AGGREGATED STOCK OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
This table shows information concerning options exercised during the year
ending December 31, 1997, by the named executive officers and the value of
unexercised options and rights held by them as of December 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Securites
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
NUMBER OF at Year-End(#) at Year-End($)(2)
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ------------------ -------------- --------------- ------------------------
A. W. Dahlberg.......... Not exercised 0 193,347/288,708 1,249,649/1,148,129
T. G. Boren............. Not exercised 0 28,832/39,456 153,707/168,837
P. J. DeNicola.......... Not exercised 0 75,791/69,493 484,399/297,574
H. A. Franklin.......... Not exercised 0 120,384/84,261 892,379/360,544
E. B. Harris............ Not exercised 0 150,793/83,300 1,191,285/356,415
</TABLE>
- --------
(1) The "Value Realized" would be ordinary income, before taxes, and would
represent the amount equal to the excess of the fair market value of the shares
or rights at the time of exercise above the exercise price.
(2) This column represents the excess of the fair market value of the
Company's common stock of $25.875 per share, as of December 31, 1997, above the
exercise price of the options. One column reports the "value" of options that
are vested and therefore could be exercised; the other, the "value" of options
that are not vested and therefore could not be exercised as of December 31,
1997.
LONG-TERM INCENTIVE PLANS - AWARDS IN 1997
This table shows the long-term incentive plan awards made to the named
executive officers for the performance period January 1, 1997, through December
31, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS PERIOD
Number PERIOD UNTIL NON-STOCK PRICE BASED PLANS NUMBER
of MATURATION Threshold Target Maximum
Units(1) or Payout (1) (4)(2) ($)(2) ($)(2)
--------- ------------- ----------- -------- ----------
NAME
A. W. Dahlberg................. 500,830 4 years 250,415 500,830 1,001,660
T. G. Boren.................... 838,983 4 -10 years -- 0 --
P. J. DeNicola................. 277,290 4 years 138,645 277,290 554,580
H. A. Franklin................. 324,269 4 years 162,135 324,269 648,538
E. B. Harris................... 285,784 4 years 142,892 285,784 571,568
</TABLE>
- --------
(1) A performance unit is a method of assigning a dollar value to a
performance award opportunity. Under the Executive Productivity Improvement Plan
of the Company (the "plan"), the number of units granted to named executive
officers (except Mr. Boren, who does not participate in the plan) is 50 percent
to 65 percent of their base salary range midpoint at the beginning of the
performance period, with each unit valued at $1.00. No awards are paid unless
the participant remains employed by the Company through the end of the
performance period.
11
<PAGE>
The Compensation & Management Succession Committee awarded Mr. Boren 76,271
appreciation rights and 762,712 indexed rights to the appreciation in the value
of Southern Energy, Inc. over a term of 10 years from March 15, 1997, under the
Southern Energy, Inc. Value Creation Plan. Each unit of phantom interest in
Southern Energy, Inc. had an initial value and exercise price of $10.00.
Appreciation rights vest annually at a rate of 25 percent on the anniversary
date of the grant and indexed rights vest 100 percent on the fourth anniversary
date of the grant.
(2) The threshold, target, and maximum value of a unit under the plan is
$0.50, $1.00, and $2.00, respectively, and can vary based on the Company's
return on common equity and total shareholder return relative to selected groups
of electric and gas utilities. If certain minimum performance relative to the
selected groups 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.
The target value of a unit under the Southern Energy, Inc. Value Creation
Plan is not determinable. The actual value, if any, a participant may realize
ultimately depends on the value of Southern Energy, Inc. at a future date. For
the indexed rights, the appreciation in value is adjusted by an interest rate
over the 10-year period. As of December 31, 1997, each unit of phantom interest
in Southern Energy, Inc. had a value of less than the initial value. Based on
the 1997 performance, the rights issued under this plan would have no value.
PENSION PLAN TABLE
YEARS OF ACCREDITED SERVICE
--------------------------------------------------
REMUNERATION 15 20 25 30 35 40
$ 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
500,000 127,500 170,000 212,500 255,000 297,000 340,000
700,000 178,500 238,000 297,500 357,000 416,500 476,000
800,000 204,000 272,000 340,000 408,000 476,000 544,000
900,000 229,500 306,000 382,500 459,000 535,500 612,000
1,100,000 280,500 374,000 467,500 561,000 654,500 748,000
1,300,000 331,500 442,000 552,500 663,000 773,500 884,000
1,500,000 382,500 510,000 637,500 765,000 892,500 1,020,000
1,700,000 433,500 578,000 722,500 867,000 1,011,500 1,156,000
This table shows the estimated combined annual pension benefits under the
Pension, Supplemental Defined Benefit, and Supplemental Executive Retirement
Plans in effect during 1997. (Mr. Boren does not participate in the Supplemental
Executive Retirement Plan.) Compensation of the chairman and the other named
executive officers covered by the Plans for pension purposes is limited to the
average of the highest three of the final 10 years' compensation - base salary
plus the excess of annual and long-term incentive compensation over 25 percent
of base salary (reported under columns titled "Salary", "Bonus", and "Long-Term
Incentive Plan Payouts" in the Summary Compensation Table on page 10). The
Southern Energy president's compensation covered by the Pension and Supplemental
Defined Benefit Plans for pension purposes is limited to the average of the
highest three of the final 10 years' base salary and wages (reported under
column titled "Salary" in the Summary Compensation Table on page 10). As of
December 31, 1997, the applicable compensation levels for determination of
pension benefits for Messrs. Boren, Dahlberg, DeNicola, Franklin, and Harris
would have been $279,888; $1,430,340; $741,624; $908,664; and $839,724,
respectively. As of December 31, 1997, Messrs. Boren, Dahlberg, DeNicola,
Franklin, and Harris had 27, 36, 27, 26, and 38 years, respectively, of
accredited service.
The amounts shown in the table were calculated according to the final
average pay formula and are based on a single life annuity without reduction for
joint and survivor annuities (although married employees are required to have
their pension benefits paid in one of various joint and survivor annuity forms,
unless the employee elects otherwise with the spouse's consent) or computation
of 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 $3,900 per year times the number of years of accredited service,
divided by the total possible years of accredited service to normal retirement
age.
12
<PAGE>
FIVE-YEAR PERFORMANCE GRAPH
This performance graph compares the cumulative total shareholder return on
the Company's common stock with the Standard & Poor's Electric Utility Index and
the Standard & Poor's 500 Index for the past five years. The graph assumes that
the value of the investment in the Company's common stock and each index was
$100 on December 31, 1992, and that all dividends are reinvested. The
shareholder return shown below for the five-year historical period may not be
indicative of future performance.
<TABLE>
<CAPTION>
[PERFORMANCE GRAPH APPEARS HERE]
<S> <C> <C> <C> <C> <C> <C>
COMPARISON OF FIVE YEAR CUMULATIVE RETURNS AMONG
SOUTHERN COMPANY COMMON STOCK, S&P ELECTRIC UTILITY INDEX AND
S&P 500 INDEX
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Southern Company Common Stock $100 $121 $116 $152 $147 $178
S&P Electric Utility Index 100 113 98 128 128 162
S&P 500 Index 100 110 112 153 189 252
</TABLE>
APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors, upon recommendation of the Audit Committee, has
selected Arthur Andersen LLP as independent auditors for 1998. 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
appropriate questions from stockholders.
2. OTHER BUSINESS
The board of directors is not aware of any other matters to be presented at
the annual meeting for stockholder action. However, the holders of the proxies
intend to vote in their discretion on any properly presented matters.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be paid by the Company and includes
reimbursement to brokers, banks, nominees, and other fiduciaries for forwarding
proxy materials to beneficial owners in accordance with regulations of the
Securities and Exchange Commission and the New York Stock Exchange. Officers and
other employees of the Company or its subsidiaries may solicit proxies
personally or by telephone in certain instances in an effort to have larger
representation at the meeting.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
The deadline for the receipt of stockholder proposals for consideration for
inclusion in the Company's proxy statement and proxy card for the 1999 Annual
Meeting of Stockholders is December 14, 1998.
YOUR VOTE IS IMPORTANT
To save the Company the expense of a second proxy mailing, please use the
toll-free telephone number or Internet instructions on the enclosed proxy card
or mark, date, sign, and promptly return the enclosed proxy card.
The Company's 1997 Annual Report to the Securities and Exchange Commission on
Form 10-K will be provided without charge to each stockholder upon written
request to Tommy Chisholm, Secretary, Southern Company, 270 Peachtree Street,
Suite 2200, Atlanta, Georgia 30303.
13
<PAGE>
(PRINTED ON RECYCLE PAPER LOGO)
EXPLANATION OF DIFFERENCES BETWEEN
CIRCULATION DOCUMENT AND ELECTRONIC DOCUMENT
Notice of Annual Meeting and Proxy Statement
1. The back cover contains the phrase "Printed on Recycled Paper" with the
appropriate logo.
<PAGE>
INDEX OF EXHIBITS
Exhibit
Number
21A - Form of Proxy
EXHIBIT 21A
- - - - - -- - - - Detach and Mail Bottom Portion - - - - - - - - - - - -
[GRAPHIC OMITTED]
PROXY FORM PROXY FORM
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 27, 1998
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 Mobile Convention Center, One South Water
Street, Mobile, Alabama at 10:00 a.m. (CDT), and any adjournments thereof, on
all matters legally coming before the meeting including, without limitation, the
proposal listed on the reverse side hereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR
LISTED ON THE REVERSE SIDE.
Please date, sign exactly as your name appears on the form, and mail the proxy
promptly. When signing as an attorney, executor, administrator, trustee, or
guardian, please give your full title as such. If shares are held jointly, both
owners must sign.
Continued and to be voted and signed on reverse.
<PAGE>
[GRAPHIC OMITTED] VOTE BY TELEPHONE OR INTERNET
Your telephone or internet vote authorizes
the named proxies to vote your shares in the
same manner as if you marked, signed, and
returned your proxy card. If you wish, you
may still vote by mail.
VOTE BY PHONE: TOLL-FREE
1-888-457-2963
Call from a U.S. touch-tone phone ANYTIME.
There is NO charge for this call. You will
be asked to enter the 10 digit control number
located to the left of these instructions.
This is a free call.
OPTION A: To vote as the Board of Directors
recommends, Press 1. When asked, confirm
your vote by pressing 1.
OPTION B: To vote on each item
separately, press 0. To vote FOR ALL
nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9; to withhold on an
individual nominee, please mark your
card accordingly and vote by mail.
Free Phone Call: 1-888-457-2963
* ANYTIME *
VOTE BY INTERNET: The Web address is:
http://south.proxyvoting.com
VOTE BY MAIL: Mark, sign, date, and forward
CONTROL NUMBER: bottom portion in postage-paid envelope
- ---------------- provided.
- ----------------
If you vote by phone or vote using the Internet, please do not mail your proxy.
FOLD AND DETACH HERE THANK YOU FOR VOTING FOLD AND DETACH HERE
- -----------------------------------------------------------------------------
UNLESS OTHERWISE SPECIFIED BELOW, THIS PROXY WILL BE VOTED "FOR" ITEM 1.
The Board of Directors recommends a vote "FOR" item 1.
1. ELECTION OF DIRECTORS: J. C. Adams, A. D. Correll, A. W. Dahlberg, P. J.
DeNicola, J. Edwards, H. A. Franklin, B. S. Gordon, L. G. Hardman III,
E. B. Harris, Z. T. Pate, W. J. Rushton III, G. M. Shatto, G. J. St. Pe,
H. Stockham.
<TABLE>
<CAPTION>
<S> <C> <C>
( ) FOR ( ) WITHHOLD (INSTRUCTIONS: To withhold authority to vote for any individual
all nominees, listed above authority to vote for all nominees, write that nominee's name in the space provided below.)
(except as marked to the nominees listed above.
contrary to the right). ________________________________________________________________
( ) Mark here if attending annual meeting.
( ) Mark here to suspend mailing of future Annual Reports on this account.
</TABLE>
Signature(s) ____________________________________
____________________________________
Date _____________ , 1998
<PAGE>
EXPANATION OF DIFFERENCES BETWEEN
CIRCULATED DOCUMENT AND ELECTRONIC DOCUMENT
Form of Proxy
1. The circulated document includes a map with directions to the annual
meeting site.
