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]
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 Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
THE SOUTHERN COMPANY
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) 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:
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[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
NOTICE OF
ANNUAL MEETING
2000
& PROXY STATEMENT
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CONTENTS
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<TABLE>
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General Information 1
Corporate Governance 2
Nominees for Election as Directors 4
Proposal to Approve the Company's Performance Pay Plan 6
Compensation & Management Succession Committee Report 8
Executive Compensation Information 11
Stock Ownership Table 12
Summary Compensation Table 13
Option Grants Table 14
Option Exercises Table 14
Long-Term Incentive Awards Table 15
Pension Plan Table 16
Five-Year Performance Graph 17
</TABLE>
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LETTER TO STOCKHOLDERS
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A.W. Dahlberg
Chairman and
Chief Executive Officer
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
Dear Fellow Stockholder:
You are cordially invited to attend our 2000 Annual Meeting of Stockholders
at 10:00 a.m. EDT on Wednesday, May 24, 2000 at the Rialto Center for the
Performing Arts in Atlanta, Georgia.
At the meeting, I will report on the state of our business and our plans for
the future. Also, we will elect our board of directors and vote on the
Company's Performance Pay Plan.
Your vote is important. Please review the proxy material and return your
proxy form as soon as possible.
I look forward to seeing you on May 24.
Sincerely,
[PHOTO]
/s/ A.W. Dahlberg
A.W. Dahlberg
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS -- MAY 24, 2000
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TIME
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10:00 a.m. EDT, on Wednesday, May 24, 2000
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BUSINESS
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(1) Elect 12 members of the board of directors,
(2) Approve the Southern Company Performance Pay Plan, and
(3) Transact other business properly coming before the meeting.
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DOCUMENTS
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The Proxy Statement, proxy form, and the Southern Company Annual Report are
included in this mailing.
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PLACE
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Rialto Center for the Performing Arts
80 Forsyth Street
Atlanta, Georgia
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RECORD DATE
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Stockholders owning Company shares at the close of business on March 27, 2000,
are entitled to attend and vote at the meeting.
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VOTING
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Even if you plan to attend the meeting in Atlanta, please provide us your voting
instructions in one of the following ways as soon as possible:
(1) Internet - use the Internet address on the proxy card
(2) Telephone - use the toll-free number on the proxy form
(3) Mail - mark, sign, and date the proxy form and return in the enclosed
postage-paid envelope
BY ORDER OF THE BOARD OF DIRECTORS, TOMMY CHISHOLM, SECRETARY, APRIL 12, 2000
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
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PROXY STATEMENT
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GENERAL INFORMATION
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Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: The board of directors of Southern Company is soliciting your proxy for the
2000 Annual Meeting of Stockholders and any adjournments thereof. The
meeting will be held at 10:00 a.m., EDT, on Wednesday, May 24, 2000, at the
Rialto Center for the Performing Arts, 80 Forsyth Street, Atlanta, Georgia.
This Proxy Statement and proxy form are initially being provided to
stockholders on or about April 12, 2000.
Q: WHAT'S BEING VOTED UPON AT THE MEETING?
A: The election of 12 directors and approval of the Southern Company
Performance Pay Plan. We are not aware of any other matters to be presented
to the meeting; however, the holders of the proxies will vote in their
discretion on any other matters properly presented.
Q: HOW DO I GIVE VOTING INSTRUCTIONS?
A: You may attend the meeting and give instructions in person or by the
Internet, by telephone, or by mail. Instructions are on the proxy form. The
proxy committee, named on the enclosed proxy form, will vote all properly
executed proxies that are delivered pursuant to this solicitation and not
subsequently revoked in accordance with the instructions given by you.
Q: CAN I CHANGE MY VOTE?
A: Yes, you may revoke your proxy by submitting a subsequent proxy or by
written request received by the Company's secretary before the meeting.
Q: WHO CAN VOTE?
A: All stockholders of record on the record date of March 27, 2000. On that
date, there were 648,694,527 Southern Company common shares outstanding and
entitled to vote.
Q: HOW MUCH DOES EACH SHARE COUNT?
A: Each share counts as one vote, except votes for directors may be
cumulative. For directors, you may multiply the number of shares you own by
the number of directors to be elected and then cast the resulting number
among the nominees as you wish. For the purpose of determining a quorum,
abstentions are counted, but shares held by a broker that the broker fails
to vote are not. Neither are counted for or against the matters being
considered.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY FORM?
A: You will receive a proxy form for each account that you have. Please vote
proxies for all accounts to ensure that all your shares are voted. If you
wish to consolidate multiple accounts, please contact Stockholder Services
at (800) 554-7626.
Q: WHEN ARE STOCKHOLDER PROPOSALS DUE FOR THE 2001 ANNUAL MEETING OF
STOCKHOLDERS?
A: The deadline for the receipt of stockholder proposals to be considered for
inclusion in the Company's proxy materials is December 13, 2000. They must
be submitted in writing to Tommy Chisholm, Corporate Secretary, Southern
Company, 270 Peachtree Street NW, Atlanta, Georgia 30303. Additionally, the
proxy solicited by the board of directors for next year's meeting will
confer discretionary authority to vote on any stockholder proposal
presented at that meeting that is not included in the Company's proxy
materials, unless the Company is provided written notice of such proposal
no later than February 26, 2001.
Q: WHO PAYS THE EXPENSE OF SOLICITING PROXIES?
A: The Company pays the cost of soliciting proxies. The officers or other
employees of the Company or its subsidiaries may solicit proxies to have a
larger representation at the meeting.
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
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CORPORATE GOVERNANCE
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HOW IS THE COMPANY ORGANIZED?
Southern Company is a holding company managed by a core group of officers and
governed by a board of directors that has been set at 12 members. The nominees
for election as directors consist of nine non-employees and three executive
officers of the Company.
WHAT ARE DIRECTORS PAID FOR THEIR SERVICES?
Only non-employee directors are compensated for board service. The pay
components are:
ANNUAL RETAINERS:
- - $40,000 if first elected as a director before 1997, of which $10,000 is
deferred in shares of Company common stock until board membership ends
- - $49,000 if first elected as a director in 1997 or later, of which $19,000
is deferred in shares of Company common stock until board membership ends
- - $5,000 additional annual retainer if serving as chairman of a board
committee
EQUITY GRANTS:
- - 400 additional shares of Company common stock in quarterly grants of 100
shares deferred until board membership ends
MEETING FEES:
- - $1,250 for each board meeting attended
- - $1,000 for each committee meeting attended
Directors may elect to defer up to 100 percent of their compensation until
membership on the board ends.
There is no pension plan for non-employee directors.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE:
- - Members are Mr. Hardman, Chairman; Ms. Bern; Mr. Gordon; Dr. Pate; and Mr.
St. Pe
- - Met seven times in 1999
- - Oversees the Company's auditing, accounting, financial reporting, legal
compliance, and internal control functions
- - Reviews independent accountant's report 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
- - Recommends independent accountants and reviews their services, fees, and
the scope and timing of audits
Upon recommendation of the Audit Committee, the board of directors has selected
Arthur Andersen LLP as independent accountants for 2000. Representatives of
Arthur Andersen LLP are expected to be present at the meeting and will have an
opportunity to make a statement if they desire and to respond to appropriate
questions from stockholders.
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COMPENSATION & MANAGEMENT SUCCESSION
COMMITTEE:
- - Members are Mr. St. Pe, Chairman; Mr. Correll; Mr. Hardman; and Mr. Lesar
- - Met five times in 1999
- - Evaluates performance of executive officers and recommends their
compensation
- - Administers executive compensation plans
- - Reviews management succession plans
GOVERNANCE COMMITTEE:
- - Members are Mr. Gordon, Chairman; Ms. Bern; Mr. Chapman; and Mr. James
- - Met four times in 1999
- - Reviews corporate governance issues
- - Considers and recommends nominees for election as directors and recommends
director compensation
- - Considers and recommends membership of committees of the board
The Governance Committee expects to identify from its own resources 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
signed consent to serve, should be submitted in writing to the Company's
secretary and received by that office by December 13, 2000. Stockholder
recommendations will be considered by the Governance Committee in determining
nominees to recommend to the board. The final selection of the board's nominees
is within the sole discretion of the board of directors.
FINANCE COMMITTEE:
- - Members are Mr. Correll, Chairman; Mr. Chapman; and Mr. Lesar
- - Met six times in 1999
- - Reviews Southern's financial affairs, recommends actions to the board, and
approves certain capital expenditures of subsidiaries
NUCLEAR OVERSIGHT COMMITTEE:
- - Membership consists of Dr. Pate, Chairman
- - Met five times in 1999
- - Reviews nuclear operations activities
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The Board of Directors met seven times in 1999. Average director attendance at
all board and committee meetings was 95 percent. No director attended less than
75 percent of applicable meetings.
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
3
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NOMINEES FOR ELECTION AS DIRECTORS
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ITEM NO. 1 - ELECTION OF DIRECTORS
The persons named on the enclosed proxy form will vote, unless otherwise
instructed, each properly executed proxy for the election of the following
nominees as directors. If any named nominee becomes unavailable for election,
the board may substitute another nominee. In that event, the proxy would be
voted for the substitute nominee unless instructed otherwise on the proxy form.
DORRIT J. BERN - Director since 1999
Ms. Bern, 49, is chairman of the board, president, and chief executive officer
of Charming Shoppes, Inc., retail apparel stores. She served as group vice
president of Sears, Roebuck and Co. from 1993 to August 1995, and as vice
chairman of the board, president, and chief executive officer of Charming
Shoppes from August 1995 until January 1997, when she was appointed to her
current position.
THOMAS F. CHAPMAN - Director since 1999
Mr. Chapman, 56, is chairman of the board and chief executive officer of
Equifax, Inc., information services and transaction processing company. He
served as executive vice president and group executive from 1993 to August 1997,
president from August 1997 to June 1999, and chief operating officer of Equifax
from August 1997 to January 1998. He was appointed chief executive officer in
January 1998 and chairman of the board of Equifax in May 1999. He is a director
of Equifax, Inc.
A. D. CORRELL - Director since 1994
Mr. Correll, 58, is chairman of the board, chief executive officer, and
president of Georgia-Pacific Corporation, manufacturers and distributors of
building products, pulp, and paper. He is a director of Georgia-Pacific
Corporation, Sears, Roebuck and Co., and SunTrust Banks, Inc.
A. W. DAHLBERG - Director since 1985
Mr. Dahlberg, 59, is chairman of the board and chief executive officer of the
Company. He was appointed to his current position in March 1995. He also served
as president of the Company from 1994 until June 1999. He is a director of
Equifax, Inc., Protective Life Corporation, and SunTrust Banks, Inc.
H. ALLEN FRANKLIN - Director since 1988
Mr. Franklin, 55, is president and chief operating officer of the Company. He
served as president and chief executive officer of Georgia Power Company and
executive vice president of the Company from 1994 until June 1999, when he was
appointed to his current position. He is a director of SouthTrust Corporation
and Southern system companies - Alabama Power Company, Georgia Power Company,
and Gulf Power Company.
BRUCE S. GORDON - Director since 1994
Mr. Gordon, 53, is group president of enterprise business group of Bell
Atlantic, telecommunications. He served as group president - consumer and small
business of Bell Atlantic from 1993 to August 1997, and as group president
retail services of Bell Atlantic from August 1997 until December 1998, when he
was appointed to his current position. He is a director of Barfield Companies.
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L. G. HARDMAN III - Director since 1986
Mr. Hardman, 60, 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.
ELMER B. HARRIS - Director since 1989
Mr. Harris, 60, 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.
DONALD M. JAMES - Director since 1999
Mr. James, 51, chairman and chief executive officer of Vulcan Materials Company,
construction materials and industrial chemicals company. He served as president
of Vulcan Materials Company's Southern Division from 1994 to 1996; as senior
vice president from 1995 to 1996; as president and chief operating officer from
February 1996 until February 1997; and as president and chief executive officer
of Vulcan Materials Company from February 1997 until May 1997, when he was
appointed to his current position. He is a director of Protective Life
Corporation and SouthTrust Corporation.
DAVID J. LESAR - Director since 1999
Mr. Lesar, 46, is president and chief operating officer of Halliburton Company,
diversified energy services. He was executive vice president of Halliburton
Energy Services from 1993 until June 1995, executive vice president and chief
financial officer of Halliburton Company from June 1995 until June 1997; and
president and chief executive officer of its Brown & Root, Inc. subsidiary from
September 1996 until June 1997, when he was appointed to his current position.
He is a director of Cordant Technologies, Inc.
ZACK T. PATE - Director since 1998
Dr. Pate, 63, 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.
GERALD J. ST. PE - Director since 1995
Mr. St. Pe, 60, is executive vice president of Litton Industries, Inc. and chief
operating officer of Litton Ship Systems. He served as president of Ingalls
Shipbuilding, Inc. division of Litton Industries, Inc. from 1987, and senior
vice president of Litton Industries, Inc. from 1986 until June 1999, when he was
appointed to his current positions.
Each nominee has served in his or her present position for at least the past
five years, unless otherwise noted.
The affirmative vote of a plurality of shares present and entitled to vote is
required for the election of directors.
The board of directors recommends a vote "For" the nominees listed in Item No.
1.
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SOUTHERN
COMPANY
Energy to Serve Your World-SM-
5
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PROPOSAL TO APPROVE THE COMPANY'S PERFORMANCE PAY PLAN
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ITEM NO. 2 - PROPOSAL TO APPROVE THE COMPANY'S
PERFORMANCE PAY PLAN (SHAREHOLDER APPROVED)
The Southern Company Performance Pay Plan (Shareholder Approved) (the "Plan")
was approved by the Compensation & Management Succession Committee of the board
of directors of the Company (the "Committee") on December 12, 1999, subject to
stockholder approval, to strengthen our emphasis on incentive compensation.
The purpose of the Plan is to provide financial incentives which focus the
efforts of certain key employees on areas which have direct and significant
influences on corporate performance and to provide the potential for levels of
compensation which will enhance the Company's ability to attract, retain and
motivate such key employees.
Only executive officers of the Company are eligible to participate in the Plan.
Presently, there are five executive officers participating in the Plan.
The Plan is administered by the Committee. The Committee consists of four
directors of the Company who are not employees of the Company or its
subsidiaries and who are not participants in the Plan. The Committee has
exclusive authority to interpret the Plan.
During the past 10 years, the Committee has established stronger links between
overall corporate performance and the way we compensate our executives. This
Plan combines the performance incentive goals of our former Performance Pay Plan
and our Productivity Improvement Plan to focus short-term incentive compensation
on specific predetermined corporate goals.
At the beginning of each year, the Committee will establish performance goals,
the formulas for determining awards, and any factors that will be included in
determining performance. The Committee, in its discretion, may pay awards based
on the accomplishment of any or all of the goals set for a given year. The
Committee may set goals using any combination of the following criteria:
- - earnings per share,
- - net income,
- - return on equity,
- - return on assets,
- - return on capital,
- - total shareholder return, and
- - performance of any of the above factors compared to peer group companies.
Each year the Committee will establish a target incentive level for each
participant as well as a minimum and maximum of that target to be paid, based on
actual performance.
In determining performance, the Committee may exclude extraordinary income or
expenses. The Committee may also exercise discretion to reduce any performance
awards. And, no awards may be paid if the Company's current earnings are not
sufficient to fund the common stock dividend at the same level as the prior
year. The maximum performance award payable to any participant in any year under
the Plan is $6,000,000.
6
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The Plan provides for pro rata payments at not less than target-level
performance if a change in control occurs and the Plan is not continued or
replaced with a comparable plan. (See page 11 for a description of change in
control agreements.)
The board is seeking stockholder approval of the Plan in order to qualify all
compensation to be paid under the Plan for full income tax deductibility under
Section 162(m) of the Internal Revenue Code (the "Code"). Section 162(m) of the
Code generally limits tax deductibility of certain compensation paid to each of
the Company's five most highly compensated executive officers to $1,000,000, per
officer, unless the compensation is paid under a performance plan that meets
criteria of the Code and has been approved by stockholders.
The vote needed to approve the Plan is a majority of the shares of the Company's
stock represented at the meeting and entitled to vote.
The board of directors recommends a vote "For" Item No. 2.
The following table sets forth estimated amounts to be paid under the Plan at
target-level performance for the year ending December 31, 2000:
PERFORMANCE PAY PLAN (SHAREHOLDER APPROVED)
<TABLE>
<CAPTION>
Name and Position Dollar Value ($)
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A. W. DAHLBERG, CHAIRMAN & CEO, SOUTHERN COMPANY 948,864
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H. A. FRANKLIN, PRESIDENT & COO, SOUTHERN COMPANY 496,125
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S. M. FULLER, PRESIDENT, SOUTHERN ENERGY 315,000
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E. B. HARRIS, PRESIDENT, ALABAMA POWER COMPANY 432,900
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D. M. RATCLIFFE, PRESIDENT, GEORGIA POWER COMPANY 339,424
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EXECUTIVE OFFICERS AS A GROUP 2,532,313
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NON-EXECUTIVE DIRECTORS AS A GROUP 0
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NON-EXECUTIVE OFFICER EMPLOYEES 0
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</TABLE>
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SOUTHERN
COMPANY
Energy to Serve Your World-SM-
7
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COMPENSATION & MANAGEMENT SUCCESSION COMMITTEE REPORT
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WHAT IS THE EXECUTIVE COMPENSATION PHILOSOPHY?
Our intent is to provide a competitive compensation program that is linked
directly to the Company's strategic business objectives and its short- and
long-term operating performance. With the objective of maximizing stockholder
value over time, this policy serves to align the interests of executives and
stockholders.
WHAT COMPRISES TOTAL EXECUTIVE COMPENSATION?
- - Base pay,
- - Short-term incentives (annual performance bonuses), and
- - Long-term incentives.
TOTAL EXECUTIVE COMPENSATION
Total executive compensation targets are set at the median of the marketplace.
With the exception of Mr. Dahlberg and Ms. Fuller, the marketplace is defined as
a group of large companies in the electric and gas utility industries.
Twenty-seven of these companies are included in the 29 companies that comprise
the Standard & Poor's Electric Utility Index -- the peer group used in the
five-year performance graph.
The marketplace for Mr. Dahlberg is determined by using a weighting of:
- - Seventy percent by comparison to the mentioned electric and gas utility
companies, and
- - Thirty percent by comparison to a group of heavy industrial and durable
goods manufacturing companies within a comparable size range.
The marketplace comparison for Ms. Fuller is the same group of heavy industrial
and durable goods manufacturing companies.
BASE PAY
A range for base pay is determined for each executive by comparing the base pay
at the appropriate peer group of companies described previously. Base pay is set
at a level that is at or below the median paid at those companies because of our
emphasis on incentive compensation in our executive compensation program.
ANNUAL PERFORMANCE BONUSES
Annual bonuses are paid through the Performance Pay Plan, and except for Ms.
Fuller and Mr. Boren, all of the executives participated in this plan. (See Item
No. 2 on page 6 of this proxy statement for information regarding the proposed
Southern Company Performance Pay Plan.)
PERFORMANCE GOALS
The annual performance bonuses are based on the attainment of corporate and
individual goals that we set at the beginning of the year.
We believe that accomplishing the corporate goals is essential for the Company's
continued success and sustained financial performance. For 1999, the corporate
performance goals included specific targets for:
- - Company earnings -- return on equity ("ROE") and earnings per share
("EPS"),
- - operation, maintenance and capital costs,
- - cash flow, and
- - customer satisfaction.
Ms. Fuller's and Mr. Boren's corporate goals related specifically to the
earnings and growth of Southern Energy, Inc.
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Each executive's individual goals are designed so that their accomplishment
contributes to the accomplishment of the corporate performance goals.
A target performance level is set for each goal. Performance above or below the
targets results in proportionately higher or lower bonus payments. No bonuses
are paid if performance is below a threshold level or if a minimum earnings
level is not reached. Also, no bonuses are paid if the Company's current
earnings are not sufficient to fund the common stock dividend at the same level
as the prior year.
ANNUAL BONUS PAYMENTS
Corporate performance met or exceeded the target levels in all areas in 1999.
The annual bonuses paid for 1999 performance reflect the successful
accomplishment of the corporate and individual performance goals, resulting in
bonuses that exceeded the target levels.
Mr. Dahlberg's annual performance bonus under the Performance Pay Plan for
target-level performance was 10 percent of his base pay. His bonus paid for 1999
performance was based 60 percent on the achievement of the corporate performance
goals and 40 percent on his individual goals.
LONG-TERM INCENTIVES
We based a significant portion of our total compensation program on long-term
incentive compensation. Mr. Dahlberg's long-term compen-sation represented over
76 percent of his total compensation for 1999.
Long-term incentive vehicles are:
- - Productivity Improvement Plan (all executives except Ms. Fuller and Mr.
Boren),
- - stock options and performance dividend equivalents, and
- - Value Creation Plan (Ms. Fuller and Mr. Boren, only).
PRODUCTIVITY IMPROVEMENT PLAN
This Plan compensates executives based on comparison of the Company's
performance over a four-year period with other electric utility companies. The
basis used to measure Company performance under the Plan was changed from return
on equity ("ROE") to total shareholder return ("TSR") three years ago. We
believe that TSR better reflects long-term shareholder value. The change more
closely aligns executive and shareholder interest. The bonuses paid under the
Plan are for the four-year performance period of January 1, 1996 through
December 31, 1999 and were based on one year of performance under the ROE goals
and three years using TSR (except for Mr. Ratcliffe's, whose bonus was based on
four years of ROE performance).
Each executive participating in this plan had a long-term bonus target ranging
from 50 to 65 percent of base pay at the beginning of the period or average base
pay over the four-year period. Mr. Dahlberg's target was 65 percent of base pay
at the beginning of the four-year performance period. The actual bonus paid was
based on the Company's performance compared to other utility companies and could
range from 50 percent of the target level to 200 percent.
Factors in determining the bonus are:
- - ROE is compared with that of a group of utility companies in the
southeastern United States.
- - TSR is compared with a group of approximately 70 electric utilities as
reported by Goldman, Sachs & Co.
- - ROE must reach the second highest quartile for any bonus to be paid. The
maximum amount is paid only if the Company is ranked in the 90th percentile
of peer group companies.
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SOUTHERN
COMPANY
Energy to Serve Your World-SM-
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- - TSR must be at the 30th percentile for any bonus to be paid. If it reaches
the 90th percentile, the maximum bonus is paid.
For the period that ended on December 31, 1999, the Company's ROE (for 1996)
ranked tenth and TSR (for 1997 through 1999) was at the 65th percentile,
resulting in bonus payments that were 118 percent of the target level. For Mr.
Ratcliffe, the Company's ROE for the four-year period that ended on December 31,
1999, ranked second highest resulting in a bonus payment that was 180 percent of
his target.
If the new plan is approved (see Item No. 2 on page 6), the Committee has
determined that grants under the existing Productivity Improvement Plan will
be substantially reduced and made only as necessary to meet targeted total
compensation.
STOCK OPTIONS AND PERFORMANCE DIVIDENDS
Executives are granted options with ten-year terms to purchase the Company's
common stock at the market price on the date of the grant. The estimated
annualized value represented approximately 47 percent of Mr. Dahlberg's total
compensation and 16-31 percent for the other executives. The size of prior
grants and the number of options outstanding were not considered in determining
the size of the grants made in 1999. These options vest over a three-year
period.
Executives also are paid performance-based dividend equivalents on stock options
granted after 1996 and held at the end of the year. Dividend equivalents can
range from 25 percent of the common stock dividend rate if TSR is at the 30th
percentile to 100 percent of the dividend rate if TSR reaches the 90th
percentile. Mr. Dahlberg receives twice the amount per share paid to the other
executives. For stock options held on December 31, 1999, Mr. Dahlberg received
$1.84 per share and the other executives received $.92 per share.
VALUE CREATION PLAN
Ms. Fuller and Mr. Boren were awarded rights to the appreciation in value of
Southern Energy, Inc. over a term of ten years. Vested rights may be exercised,
and their valuation is based on the value of Southern Energy on December 31 of
the prior year. The value of Southern Energy calculated under the Plan is
verified annually by a nationally-recognized independent appraisal firm.
POLICY ON INCOME TAX
DEDUCTIBILITY OF EXECUTIVE
COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deductibility of an
executive's compensation that exceeds $1 million per year unless the
compensation is paid under a performance-based plan as defined in the Code and
that has been approved by stockholders. The Company has obtained stockholder
approval for its long-term incentive plans and is seeking approval of the
Performance Pay Plan (see Item No. 2 on page 6). However, our policy is to
maximize long-term stockholder value, and tax deductibility is only one factor
considered in setting compensation.
SUMMARY
We believe that the policies and programs described in this report link pay and
performance and serve the best interest of stockholders. 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.
Members of the committee:
G. J. St. Pe, Chairman
A. D. Correll
L. G. Hardman III
D. J. Lesar
10
<PAGE>
- -------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
EMPLOYMENT, CHANGE IN CONTROL,
AND SEPARATION AGREEMENTS
The Company has Change in Control Agreements with each of its executive
officers, including those shown on the Summary Compensation Table on page 13,
except Mr. Boren. If an executive is involuntarily terminated, other than for
cause, within two years following a change in control of the Company, the
Agreements provide for:
- - lump sum payment of three times annual compensation,
- - up to five years' coverage under group health and life insurance plans,
- - immediate vesting of all stock options and stock appreciation rights
previously granted,
- - payment of any accrued long-term and short-term bonuses and dividend
equivalents, and
- - payment of any excise tax liability incurred as a result of payments made
under the Agreement.
A change in control is defined under the Agreements as:
- - acquisition of at least 20 percent of the Company's stock,
- - a change in the majority of the members of the Company's board of
directors,
- - a merger or other business combination that results in the Company's
stockholders immediately before the merger owning less than 65 percent of
the voting power after the merger, or
- - a sale of substantially all the assets of the Company.
If a change in control affects only a subsidiary of the Company, these payments
would only be made to executives of the affected subsidiary who are
involuntarily terminated as a result of that change in control.
The Company also has amended its short- and long-term incentive plans to provide
for pro-rata payments at not less than target-level performance if a change in
control occurs and the plans are not continued or replaced with comparable
plans.
On February 28, 1998, the Company and Georgia Power Company entered into a
Deferred Compensation Agreement with Mr. Franklin. On the fifth anniversary of
the Agreement, if still employed by the Company or one of its subsidiaries, Mr.
Franklin will receive the cash value of the number of shares of common stock
that could have been purchased for $500,000 on February 28, 1998, and on which
dividends were reinvested throughout the five-year period. If certain
performance goals are met, Mr. Franklin also will receive the estimated income
tax expense on the compensation. Mr. Franklin may elect to defer receipt of the
award until termination of employment. Georgia Power assigned this agreement to
Southern Company Services effective July 8, 1999.
On October 5, 1999, the Company and Southern Energy Resources entered into a
Deferred Compensation Agreement with Ms. Fuller. On July 1, 2003, if still
employed by the Company or one of its subsidiaries, Ms. Fuller will receive the
cash value of the number of shares of common stock that could have been
purchased for $400,000 on October 5, 1999, and on which dividends were
reinvested throughout the period. If certain performance goals are met, Ms.
Fuller also will receive the estimated income tax expense on the compensation.
Ms. Fuller may elect to defer receipt of the award until termination of
employment.
On July 17, 1999, the Company and Southern Energy Resources entered into a
Separation Agreement with Mr. Boren, which provides for Mr. Boren to be paid a
severance payment of $750,000 and a prorated 1999 incentive award under Southern
Energy's Short-Term Incentive Plan at target. The agreement continues the
deferral of prior awards to Mr. Boren in Southern Energy's Deferred Incentive
Plan and permits vesting of his existing rights granted under Southern Energy's
Value Creation Plan. Also, it entitles him to exercise vested rights until the
end of the first exercise window after his last unvested rights, vest.
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
11
<PAGE>
- --------------------------------------------------------------------------------
STOCK OWNERSHIP TABLE
- --------------------------------------------------------------------------------
This table shows the number of shares owned by directors, nominees, and
executive officers as of December 31, 1999, except for Mr. James whose number of
shares are given as of March 31, 2000. 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 Southern Company common stock outstanding as of
December 31, 1999. No director, nominee, or executive officer owned securities
issued by any subsidiary companies.
<TABLE>
<CAPTION>
Shares Beneficially Owned Include:
------------------------------------------
Shares Shares Individuals
Beneficially Have Rights to Acquire Shares Held by
Owned (1) within 60 days (2) Family Members (3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DORRIT J. BERN 3,004
- ------------------------------------------------------------------------------------------------------------------------
THOMAS G. BOREN 92,737 89,097 10
- ------------------------------------------------------------------------------------------------------------------------
THOMAS F. CHAPMAN 428
- ------------------------------------------------------------------------------------------------------------------------
A. D. CORRELL 22,407
- ------------------------------------------------------------------------------------------------------------------------
A. W. DAHLBERG 522,928 452,027
- ------------------------------------------------------------------------------------------------------------------------
H. ALLEN FRANKLIN 220,337 191,114
- ------------------------------------------------------------------------------------------------------------------------
S. MARCE FULLER 23,842 19,650
- ------------------------------------------------------------------------------------------------------------------------
BRUCE S. GORDON 4,593
- ------------------------------------------------------------------------------------------------------------------------
L. G. HARDMAN III 17,422 100
- ------------------------------------------------------------------------------------------------------------------------
ELMER B. HARRIS 260,741 219,394 310
- ------------------------------------------------------------------------------------------------------------------------
DONALD M. JAMES 2,777
- ------------------------------------------------------------------------------------------------------------------------
DAVID J. LESAR 1,580
- ------------------------------------------------------------------------------------------------------------------------
ZACK T. PATE 17,466
- ------------------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE 95,158 85,160
- ------------------------------------------------------------------------------------------------------------------------
GERALD J. ST. PE 33,599 1,750
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS, NOMINEES, AND EXECUTIVE
OFFICERS AS A GROUP (20 PEOPLE) 1,631,270 1,269,938 2,282
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(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) Indicates shares of the Company's common stock that certain executive
officers have the right to acquire within 60 days. Shares indicated are
included in the Shares Beneficially Owned column.
(3) Each director disclaims any interest in shares held by family members.
Shares indicated are included in the Shares Beneficially Owned column.
12
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
This table shows information concerning the Company's chairman of the board and
chief executive officer, and each of the other five most highly compensated
executive officers of the Company serving during 1999.
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------
Annual Compensation Long-Term Compensation
Number of
Securities Long-Term All Other
Name and Principal Other Annual Underlying Incentive Plan Compensation
Position Year Salary ($) Bonus ($) Compensation($) Stock Options(#) Payouts ($)(1) ($)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A. W. DAHLBERG (3) 1999 903,426 181,896 23,755 201,196 579,392 49,283
Chairman & CEO 1998 897,820 218,625 11,067 161,757 438,061 50,135
Southern Company 1997 817,644 206,250 27,485 135,882 433,247 49,766
- ---------------------------------------------------------------------------------------------------------------------------------
T. G. BOREN (4) 1999 235,577 256,667 11,069 0 --- 765,607
President 1998 370,833 425,938 15,162 20,809 --- 19,943
Southern Energy 1997 345,000 387,625 14,868 18,941 --- 19,415
- ---------------------------------------------------------------------------------------------------------------------------------
H. A. FRANKLIN 1999 603,658 126,000 31,023 71,153 375,137 32,654
President & COO 1998 564,329 237,502 7,078 30,521 283,629 31,590
Southern Company 1997 511,505 129,426 14,219 36,544 280,513 31,350
- ---------------------------------------------------------------------------------------------------------------------------------
S. M. FULLER (5) 1999 341,462 465,231 1,146 17,988 --- 17,274
President
Southern Energy
- ---------------------------------------------------------------------------------------------------------------------------------
E. B. HARRIS 1999 550,674 97,125 15,301 31,341 330,618 29,800
President 1998 545,102 192,751 19,060 29,411 249,971 30,180
Alabama Power Company 1997 500,700 101,002 20,453 35,648 247,224 30,172
- ---------------------------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE (6) 1999 388,819 85,389 16,051 24,110 321,983 20,885
President
Georgia Power Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Payouts made in 1998, 1999, and 2000 for the four-year performance periods
ending December 31, 1997, 1998, and 1999, respectively.
(2) Company contributions in 1999 to the Employee Savings Plan, Employee Stock
Ownership Plan, and non-pension related accruals under the Supplemental
Benefit Plan, as well as the separation payment to Mr. Boren under the
agreement described on page 11 are provided in the following table:
<TABLE>
<CAPTION>
Separation
Payment ($) ESP($) ESOP($) SBP($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A. W. Dahlberg - 7,401 897 40,985
- -------------------------------------------------------------------------------
T. G. Boren 750,000 4,500 897 10,210
- -------------------------------------------------------------------------------
H. A. Franklin - 6,242 897 25,515
- -------------------------------------------------------------------------------
S. M. Fuller - 5,691 897 10,686
- -------------------------------------------------------------------------------
E. B. Harris - 5,691 897 23,212
- -------------------------------------------------------------------------------
D. M. Ratcliffe - 7,301 897 12,687
- -------------------------------------------------------------------------------
</TABLE>
(3) Mr. Dahlberg's Other Annual Compensation includes $11,906 in preferential
earnings on stock options paid in 1999.
(4) Mr. Boren retired effective July 31, 1999.
(5) Ms. Fuller first became an executive officer on July 20, 1999.
(6) Mr. Ratcliffe first became an executive officer on June 1, 1999.
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
13
<PAGE>
- --------------------------------------------------------------------------------
STOCK OPTIONS
- --------------------------------------------------------------------------------
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options Granted Exercise or Grant Date
Underlying to Employees Base Price Expiration Present
Name Options Granted(1) in fiscal Year(2) ($/Sh)(1) Date (1) Value($)(3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. W. DAHLBERG 201,196 10 26.5625 7/19/2009 1,955,625
- ------------------------------------------------------------------------------------------------------------------------
T. G. BOREN 0 --- --- --- ---
- ------------------------------------------------------------------------------------------------------------------------
H. A. FRANKLIN 71,153 3 26.5625 7/19/2009 447,552
- ------------------------------------------------------------------------------------------------------------------------
S. M. FULLER 17,988 1 26.5625 7/19/2009 113,145
- ------------------------------------------------------------------------------------------------------------------------
E. B. HARRIS 31,341 1 26.5625 5/01/2009 197,135
- ------------------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE 24,110 1 26.5625 7/19/2009 151,652
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Performance Stock Plan grants were made on July 19, 1999, and vest annually
at a rate of one-third on the anniversary date of the grant (Mr. Boren did
not receive a grant in 1999). Grants fully vest upon termination because of
death, total disability, or retirement and expire five years after
retirement, three years after death or total disability, or on their normal
expiration date if earlier. Exercise price is the average of the high and
low fair market value of the Company's common stock on the date granted.
Options may be transferred to family members, family trusts, and family
limited partnerships.
(2) A total of 2,108,818 stock options were granted in 1999.
(3) Value was calculated using the Black-Scholes option valuation model. The
actual value, if any, ultimately realized depends on the market value of
the Company's common stock at a future date. Significant assumptions are
shown below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Risk-free rate Dividend Discount for forfeiture risk:
Volatility of return opportunity Term before vesting before expiration
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHAIRMAN 20.74% 5.79% 100% 10 YEARS 7.79% 17.38%
- ---------------------------------------------------------------------------------------------------------------------
OTHERS 20.74% 5.79% 50% 10 YEARS 7.79% 13.40%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
These assumptions reflect the effects of cash dividend equivalents paid to
participants under the Performance Dividend Plan assuming targets are met.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Number of Securities Value of Unexercised
Shares Value Underlying Unexercised In-the-Money Options at
Acquired on Realized Options at Year-End Year-End ($) (2)
-------------------------------------------------------
Name Exercise ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A. W. DAHLBERG Not exercised 0 452,027 392,981 1,131,659 121,238
- ---------------------------------------------------------------------------------------------------------------------------
T. G. BOREN Not exercised 0 89,097 0 160,360 0
- ---------------------------------------------------------------------------------------------------------------------------
H. A. FRANKLIN Not exercised 0 191,114 111,645 700,904 31,389
- ---------------------------------------------------------------------------------------------------------------------------
S. M. FULLER Not exercised 0 19,650 32,660 23,623 11,258
- ---------------------------------------------------------------------------------------------------------------------------
E. B. HARRIS 4,718 71,802 219,394 70,733 915,188 30,688
- ---------------------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE 3,984 53,908 85,160 42,959 307,716 14,711
- ---------------------------------------------------------------------------------------------------------------------------
</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 or rights
at the time of exercise above the exercise price.
(2) These columns represent the excess of the fair market value of the
Company's common stock of $23.50 per share, as of December 31, 1999, above
the exercise price of the options. The amounts under the Exercisable column
report the "value" of options that are vested and therefore could be
exercised. The Unexercisable column reports the "value" of options that are
not vested and therefore could not be exercised as of December 31, 1999.
14
<PAGE>
- --------------------------------------------------------------------------------
LONG-TERM INCENTIVE AWARDS TABLES
- --------------------------------------------------------------------------------
These tables show long-term incentive plan awards made for the performance
period January 1, 1999, through December 31, 2002.
PRODUCTIVITY IMPROVEMENT PLAN
<TABLE>
<CAPTION>
Performance or Estimated Future Payouts Under
Other Period Non-Stock Price Based Plans
Number Until Maturation -------------------------------------------
Name of Units(1) or Payout(1) Threshold($) (2)Target($)(2) Maximum($)(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A. W. DAHLBERG 622,871 4 years 311,426 622,871 1,245,742
H. A. FRANKLIN 438,499 4 years 219,250 438,499 876,998
E. B. HARRIS 321,879 4 years 160,940 321,879 643,758
</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 Messrs. Dahlberg,
Franklin, and Harris is 65 percent of the average of Mr. Dahlberg's base
pay and Messrs. Franklin's and Harris' base salary range mid-points,
respectively, as of December 31 for each calendar year in the four-year
computation 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.
(2) The threshold, target, and maximum value of a unit under the plan is $0.50,
$1.00, and $2.00, respectively, and can vary based on the Company's total
shareholder return relative to a selected group of electric utilities. If
certain minimum performance relative to the selected group is not achieved,
there will be no payout; nor is there a payout if the current earnings of
the Company are not sufficient to fund the dividend at the rate paid in the
last calendar year. The plan provides that in the discretion of the
Compensation & Management Succession Committee, extraordinary income may be
excluded for purposes of calculating the amount available for the payment
of awards. All awards are payable in cash at the end of the performance
period.
SOUTHERN ENERGY'S VALUE CREATION PLAN
<TABLE>
<CAPTION>
Performance or Estimated Future Payouts Under
Other Period Non-Stock Price Based Plans
Number Until Maturation --------------------------------------------
Name of Units(1) or Payout(1) Threshold($)(2) Target($)(2) Maximum($)(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. G. BOREN 137,173 4 - 10 years -- 326,472 --
S. M. FULLER 88,851 4 - 10 years -- 211,465 --
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Compensation & Management Succession Committee awarded Mr. Boren and
Ms. Fuller the above numbers of rights to the appreciation in the value of
Southern Energy, Inc. over a term of 10 years from March 15, 1999, 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 $11.61. Appreciation rights vest annually at a rate of 25 percent on the
anniversary date of the grant.
(2) 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. As of December 31, 1999, each unit of phantom interest in
Southern Energy, Inc. had a value of $13.99. Based on the 1999 performance,
the rights awarded to Mr. Boren and Ms. Fuller under this plan would have
values of $326,472 and $211,465, respectively.
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
15
<PAGE>
- --------------------------------------------------------------------------------
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years of Accredited Service
- --------------------------------------------------------------------------------------------------------------------------
Compensation 15 20 25 30 35 40
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 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
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
1,800,000 459,000 612,000 765,000 918,000 1,071,000 1,224,000
</TABLE>
This table shows the estimated annual pension benefits payable at normal
retirement age under Southern's qualified Pension Plan, as well as
non-qualified supplemental benefits, based on the stated compensation and
years of service with Southern's subsidiaries. Compensation for pension
purposes is limited to the average of the highest three of the final 10 years'
compensation. For Messrs. Dahlberg, Franklin, Harris, and Ratcliffe,
compensation is base salary plus the excess of annual and long-term incentive
compensation over 25 percent of base salary. For Mr. Boren and Ms. Fuller, it
is base salary plus the excess of short-term incentive compensation over 10
percent of base salary. (These compensation components are reported under
columns titled "Salary", "Bonus", and "Long-Term Incentive Plan Payouts" in
the Summary Compensation Table on page 13).
As of December 31, 1999, the applicable compensation levels and accredited
service for determination of pension benefits would have been:
<TABLE>
<CAPTION>
Accredited
Compensation Service
-------------------------------------------------
<S> <C> <C>
T. G. BOREN $ 688,368 29
A. W. DAHLBERG 1,492,056 38
H. A. FRANKLIN 967,132 28
S. M. FULLER 575,948 14
E. B. HARRIS 878,724 40
D. M. RATCLIFFE 583,968 27
-------------------------------------------------
</TABLE>
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 or computation of Social Security offset that would apply
in most cases.
16
<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 $100
was invested on December 31, 1994, in the Company's common stock and each of the
listed indices, 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]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOUTHERN COMPANY $ 100 $ 130 $ 126 $ 153 $ 181 $ 154
S & P ELECTRIC UTILITY INDEX 100 131 131 165 191 154
S&P 500 INDEX 100 138 169 226 290 351
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
17
<PAGE>
[LOGO]
SOUTHERN
COMPANY
Energy to Serve Your World-SM-
<PAGE>
APPENDIX I
ADMISSION TICKET
(Not Transferable)
[GRAPHIC OMITTED]
2000 ANNUAL MEETING OF STOCKHOLDERS
10 a.m. (EDT), May 24, 2000
Rialto Center for the Performing Arts
80 Forsyth St.
Atlanta, Georgia 30303
404-651-1234
[Directions and map omitted]
- - - - - - - - - - - - Detach and Mail Bottom Portion - - - - - - - - - - - -
[GRAPHIC OMITTED]
PROXY FORM PROXY FORM
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS MAY 24, 2000
The Annual Meeting of Stockholders of The Southern Company will be held on
Wednesday, May 24, 2000, at 10:00 a.m. (EDT), at the Rialto Center for the
Performing Arts, Atlanta, Georgia. Stockholders owning shares at the close of
business on March 27, 2000, are entitled to attend and vote at the meeting.
Stockholders will act on the election of 12 members of the board of directors,
vote on the Performance Pay Plan, and transact such other business as may
properly come before the meeting.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
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 Rialto Center for the Performing Arts 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 of this form.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS
INDICATED, THE SHARES WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.
Continued on reverse side.
<PAGE>
[GRAPHIC OMITTED] THREE WAYS TO VOTE!
VOTING by Internet or telephone is a convenient and
cost-saving way to vote your shares. If you wish, you
may still vote by mail.
VOTE BY INTERNET: The Web address is
http://www.proxyvoting.com/south
VOTE BY TELEPHONE: 1-888-457-2963
Enter the 10 digit control number located to the left of
these instructions FREE CALL
A. To vote as the Board recommends on ALL Items,
Press 1
B. To vote on each Item separately, Press 0
Item 1: To vote FOR ALL nominees, Press 1
To WITHHOLD FOR ALL nominees, Press 9
To WITHHOLD ON AN INDIVIDUAL nominee,
Press 0 and listen for instructions
Item 2: To vote FOR, Press 1
To vote AGAINST, Press 9
To Vote ABSTAIN, Press 0
When asked, please confirm your vote by pressing 1
INTERNET/PHONE CONTROL NO: VOTE BY MAIL: Mark, sign, date, and forward
------------------------- bottom portion in postage-paid envelope provided
------------------------- to: P. O. Box 105700, Atlanta, GA 30348-9870
NOTE: The last instruction received, either paper or electronic, will be the
last tabulated.
If you vote by Internet or telephone, please do not mail this form.
----------------------
THANK YOU FOR VOTING
FOLD AND DETACH HERE FOLD AND DETACH HERE
UNLESS OTHERWISE SPECIFIED BELOW, YOUR SHARES WILL BE VOTED "FOR"
PROPOSALS 1 AND 2.
The Board of Directors recommends a vote "FOR" Proposal 1 and
Proposal 2. Fill in instruction ovals completely with blue or
black ink or No. 2 pencil.
1. ELECTION OF DIRECTORS: 01 D. J. Bern, 02 T. F. Chapman, 03 A. D. Correll,
04 A. W. Dahlberg, 05 H. A. Franklin, 06 B. S. Gordon,
07 L. G. Hardman III, 08 E. B. Harris, 09 D. M. James, 10 D. J. Lesar,
11 Z. T. Pate, 12 G. J. St. Pe'
<TABLE>
<CAPTION>
<S> <C> <C>
( ) FOR ( ) WITHHOLD (INSTRUCTIONS: To withhold authority to vote for any individual
all nominees, listed authority to vote for all nominee, write number(s)of nominee(s) in the space below.)
above (except as marked nominees listed above.
to the contrary to the right. Number: -----------------------------
2. APPROVE PERFORMANCE PAY PLAN ( ) FOR ( ) AGAINST ( ) ABSTAIN
( ) Mark here if you plan to attend the Annual Meeting.
( ) I (we) Consent to suspending future mailings of the Annual
Report and Proxy Statement on this account. I (we) receive other
copies at the same household or will access the documents ectronically.
</TABLE>
Signature(s): ___________________________________
________________________________________________
Date: ______________________________________, 2000
<PAGE>
APPENDIX II
SOUTHERN COMPANY
PERFORMANCE PAY PLAN
(SHAREHOLDER APPROVED)
Troutman Sanders LLP
Bank of America Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Effective January 1, 2000
<PAGE>
SOUTHERN COMPANY
PERFORMANCE PAY PLAN
(SHAREHOLDER APPROVED)
Purposes
The purposes of the Performance Pay Plan (Shareholder Approved) are to
focus the attention and efforts of certain executives on goals which have a
direct and significant influence on individual, organizational and corporate
performance; to improve the correlation between pay and performance for the
achievement of corporate goals; and to provide the potential for levels of
compensation that will enhance the ability of Southern Company and its
affiliates to attract, retain, and motivate certain executive employees. Such
compensation shall be paid out of the general assets of Southern Company. No
benefits under the Performance Pay Plan (Shareholder Approved) shall be deferred
under this Plan or held in trust for the benefit of eligible employees. The
Performance Pay Plan (Shareholder Approved) is not intended to be an employee
benefit plan or any other plan subject to regulation by the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). It is intended to be a bonus
program as such term is defined in the regulations under ERISA at 29 C.F.R.
Section 2510.3-2(c) and a qualified performance based plan under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code").
The Performance Pay Plan (Shareholder Approved) is hereby established
and shall be effective January 1, 2000.
ARTICLE I
Definitions
For purposes of the Performance Pay Plan (Shareholder Approved), the
following terms shall have the following meanings, unless a different meaning is
plainly required by the context:
1.1 "Annual Salary" shall mean base salary or wages paid to an
Executive Employee before deductions for taxes, social security, etc., including
all amounts contributed on an Executive Employee's behalf by a Business Unit to
the Southern Company Flexible Benefits Plan, any amounts contributed on an
Executive Employee's behalf by a Business Unit to the Southern Company Employee
Savings Plan as Elective Employer Contributions (as said term is defined in
Section 4.1 therein), pursuant to an Executive Employee's exercise of any
deferral option made in accordance with Section 401(k) of the Internal Revenue
Code, any amounts contributed on an Executive Employee's behalf to the Southern
Company Deferred Compensation Plan, but excluding all awards under the Southern
Company Performance Pay Plan, the Southern Company Performance Pay Plan
(Shareholder Approved), the Southern Company Executive Productivity Improvement
Plan and the Southern Company Productivity Improvement Plan; overtime pay; shift
differential; and substitution pay. Annual Salary of an Executive Employee shall
be determined as of the last day of the Performance Period, except that the
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Annual Salary of an Executive Employee who terminates before the last day of the
Performance Period shall be determined as of his date of termination. The Annual
Salary of an Executive Employee who commences service during a Performance
Period and the Annual Salary of an Executive Employee who terminates his
employment for one of the reasons set forth in Section 2.4 of the Plan shall be
prorated based upon his date of commencement or termination of service with his
Business Unit in accordance with the provisions of the Plan.
1.2 "Beneficial Ownership" shall mean beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act.
1.3 "Board of Directors" shall mean the Board of Directors of Southern
Company Services, Inc.
1.4 "Business Combination" shall mean a reorganization, merger,
consolidation or sale of Southern Company or a sale of all or substantially all
of Southern Company's assets.
1.5 "Business Unit" shall mean an Employing Company or an
organizational unit established by the Chief Executive Officer of Southern
Company ("CEO") (which may consist of a portion of one Employing Company or
portions of more than one Employing Company) and designated from time to time to
be eligible to participate under the Plan. A Business Unit shall not consist of
any portion of a Non-Adopting Company. In the event more than one Business Unit
covers the same Executive Employee, the Committee shall assign the Executive
Employee to a particular Business Unit for purposes of determining the amount of
an Incentive Pay Award for a Performance Period.
1.6 "Committee" shall mean the Compensation and Management Succession
Committee of the Southern Board.
1.7 "Consummation" shall mean the completion of the final act necessary
to complete a transaction as a matter of law, including, but not limited to, any
required approvals by the corporation's shareholders and board of directors, the
transfer of legal and beneficial title to securities or assets and the final
approval of the transaction by any applicable domestic or foreign governments or
agencies.
1.8 "Control" shall mean, in the case of a corporation, Beneficial
Ownership of more than 50% of the combined voting power of the corporation's
Voting Securities, or in the case of any other entity, Beneficial Ownership of
more than 50% of such entity's voting equity interests.
1.9 "Effective Date" shall mean January 1, 2000.
1.10"Employee" shall mean an employee of a subsidiary or affiliate of
Southern Company.
1.11 "Employing Company" or Employing Companies" shall mean Southern
Company Services, Inc., or any affiliate or subsidiary (direct or indirect) of
Southern Company, which the Board of Directors may from time to time determine
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to be eligible to participate under the Plan and which shall adopt the Plan, and
any successor of any such affiliate or subsidiary.
1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.13 "Executive Employee" shall mean an Employee who is an executive
officer of a Business Unit.
1.14 "Group" shall have the meaning set forth in Section 14(d) of the
Exchange Act.
1.15 "Incentive Pay Award" or "Award" shall mean the amount awarded to
a Participant in accordance with Article III hereof.
1.16 "Incumbent Board" shall mean those individuals who constitute the
Southern Board as of October 19, 1998 plus any individual who became or shall
become a director subsequent to such date whose election or nomination for
election by Southern's shareholders was approved by a vote of at least 75% of
the directors then comprising the Incumbent Board. Notwithstanding the
foregoing, no individual who shall become a director of the Southern Board
subsequent to the Effective Date of the Plan whose initial assumption of office
occurs as a result of an actual or threatened election contest (within the
meaning of Rule 14a-11 of the Regulations promulgated under the Exchange Act)
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Southern Board shall be a member of the Incumbent Board.
1.17 "Non-Adopting Company" shall mean any subsidiary or affiliate of
Southern Company which is not a Business Unit.
1.18 "Participant" shall mean an Executive Employee who satisfies the
criteria set forth in Article II.
1.19 "Performance Period" shall mean each 12-month period commencing on
the first day of January and ending on the last day of December next following.
1.20 "Person" shall mean any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
1.21 "Plan" shall mean the Southern Company Performance Pay Plan
(Shareholder Approved), as described herein or as from time to time amended.
1.22 "Plan Administrator" shall mean the Compensation and Benefits
Department of Southern Company Services, Inc.
1.23 "Plan Termination" shall mean the termination of the Plan by an
Employing Company or Southern Company following a Southern Change in Control
unless an equitable arrangement (embodied in an ongoing substitute or
replacement plan) has been made with respect to the Plan in connection with the
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Southern Change in Control. For purposes of this Plan, an ongoing substitute or
alternative plan shall be considered an "equitable arrangement" if a nationally
recognized compensation consulting firm chosen by the Committee opines in
writing that the post-Southern Change in Control plan is an equitable substitute
or replacement of the Plan, and that such substitute or alternative plan
provides substantially similar target opportunities and a substantially similar
level of performance difficulty.
1.24 "Southern Board" shall mean the Board of Directors of Southern
Company.
1.25 "Southern Change in Control" shall mean any of the following:
(a) The Consummation of an acquisition by any Person of Beneficial
Ownership of 20% or more of Southern Company's Voting Securities; provided,
however, that for purposes of this subsection (a), the following acquisitions of
Southern Company's Voting Securities shall not constitute a Change in Control:
(i) any acquisition directly from Southern Company,
(ii) any acquisition by Southern Company,
(iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by Southern Company
or any corporation controlled by Southern Company,
(iv) any acquisition by a qualified pension plan or
publicly held mutual fund,
(v) any acquisition by an Employee or Group composed
exclusively of Employees, or
(vi) any Business Combination which would not
otherwise constitute a Change in Control because of the
application of clauses (i), (ii) and (iii) of Section 1.25(c)
herein;
(b) A change in the composition of the Southern Board whereby
individuals who constitute the Incumbent Board cease for any reason to
constitute at least a majority of the Southern Board; or
(c) Consummation of a Business Combination, unless, following such
Business Combination, all of the following three conditions are met:
(i) all or substantially all of the individuals and
entities who held Beneficial Ownership, respectively, of
Southern Company's Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
65% or more of the combined voting power of the Voting
Securities of the corporation surviving or resulting from such
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Business Combination, (including, without limitation, a
corporation which as a result of such transaction holds
Beneficial Ownership of all or substantially all of Southern
Company's Voting Securities or all or substantially all of
Southern Company's assets) (such surviving or resulting
corporation to be referred to as "Surviving Company"), in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of Southern
Company's Voting Securities,
(ii) no Person (excluding any corporation resulting
from such Business Combination, any qualified pension plan,
publicly held mutual fund, Group composed exclusively of
employees or employee benefit plan (or related trust) of
Southern Company, its subsidiaries or Surviving Company) holds
Beneficial Ownership, directly or indirectly, of 20% or more
of the combined voting power of the then outstanding Voting
Securities of Surviving Company except to the extent that such
ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board
of directors of Surviving Company were members of the
Incumbent Board at the earlier of the date of execution of the
initial agreement, or of the action of the Southern Board,
providing for such Business Combination.
1.26 "Southern Company" shall mean The Southern Company.
1.27 "Southern Termination" shall mean the following:
(a) The Consummation of a reorganization, merger or consolidation
of Southern Company under circumstances where either (i) Southern Company is not
the surviving corporation or (ii) Southern Company's Voting Securities are no
longer publicly traded;
(b) The Consummation of a sale or other disposition of all or
substantially all of Southern Company's assets; or
(c) The Consummation of an acquisition by any Person of Beneficial
Ownership of all of Southern Company's Voting Securities such that Southern
Company's Voting Securities are no longer publicly traded.
1.28 "Subsidiary Change in Control" shall mean the following:
(a) The Consummation of an acquisition by any Person of Beneficial
Ownership of 50% or more of the combined voting power of the then outstanding
Voting Securities of an Employing Company; provided, however, that for purposes
of this Section 1.28, any acquisition by an employee of Southern Company or its
affiliates, or a Group composed entirely of employees of Southern Company or its
affiliates, any qualified pension plan, any publicly held mutual fund or any
employee benefit plan (or related trust) sponsored or maintained by Southern
Company or any corporation Controlled by Southern Company shall not constitute a
Change in Control.
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(b) Consummation of a reorganization, merger or consolidation of an
Employing Company (an "Employing Company Business Combination"), in each case,
unless, following such Employing Company Business Combination, Southern Company
Controls the corporation surviving or resulting from such Employing Company
Business Combination, or
(c) Consummation of the sale or other disposition of all or
substantially all of the assets of an Employing Company to an entity which
Southern Company does not Control.
1.29 "Subsidiary Employee" shall mean an Executive Employee of an
Employing Company which has undergone a Subsidiary Change in Control who is
participating in the Plan.
1.30 "Voting Securities" shall mean the outstanding voting
securities of a corporation entitling the holder thereof to vote generally in
the election of such corporation's directors.
Where the context requires, words in the masculine gender include the
feminine and neuter genders and words in the singular include the plural and
words in the plural include the singular.
ARTICLE II
Participants
2.1 Eligibility and Participation. All Executive Employees of the
Employing Companies shall be eligible to participate in the Plan. However,
actual participation in the Plan will be determined annually by the Committee
subject to the termination of participation provisions set forth in Sections 2.3
through 2.7 of the Plan. Employees approved for participation will be notified
of their selection as soon after approval as practicable. No Participant or
Executive Employee shall at any time have a right to be selected for
participation in the Plan for any Performance Period, despite having been
selected for participation in a previous Performance Period.
2.2 Participation During Performance Period. The Committee shall
have in its sole and absolute discretion the authority to allow participation
in the Plan by any Executive Employee who becomes an Executive Employee after
the first ninety (90) days of the Performance Period. The Committee shall have
the discretion to adjust the Incentive Pay Award to reflect the period of
participation. Such participation and adjustment of the Incentive Pay Award
shall comply with the requirements of Section 162(m) of the Code.
2.3 Termination of Approval. The Committee may withdraw approval
for a Participant's participation at any time. In the event of such withdrawal,
the Executive Employee concerned will cease to be a Participant as of the date
of such withdrawal. The Executive Employee will be notified of such withdrawal
as soon as practicable following the Committee's action. A Participant who is
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withdrawn from participation under this Section 2.3 will not receive an
Incentive Pay Award for the Performance Period, except and to the extent that
the Committee decides otherwise in its sole and absolute discretion.
2.4 Termination of Employment. If a Participant's employment is
terminated by reason of death, disability or retirement, such Participant or his
estate shall be eligible to receive an Incentive Pay Award for the Performance
Period ending in the year of such death, disability or retirement unless such
death, disability or retirement shall have occurred on January 1 in which case
the Participant or his estate shall only be entitled to an Incentive Pay Award
for the Performance Period ending December 31 of the previous year. Subject to
the provisions of Section 2.7, any Participant who terminates employment for any
other reason shall receive only any unpaid Incentive Pay Award for a completed
Performance Period and shall not be eligible to receive an Incentive Pay Award
for the Performance Period ending in the year of such termination of employment.
2.5 Transfer to Non-Adopting Employer. Notwithstanding the
provisions of Section 2.4 above and any other contrary provision of the Plan,
in the case of an individual transferring from an Employing Company to a
Non-Adopting Employer, such individual shall continue to participate in the
Plan for the Performance Period during which the transfer occurs. However, the
Committee shall have in its sole and absolute discretion the authority to
appropriately adjust the Incentive Pay Award for such Performance Period
provided such adjustment is in accordance with any requirements of Section
162(m) of the Code.
2.6 Corporate Spinoff. Notwithstanding the provisions of Section
2.4 above and any other contrary provisions of the Plan, in the case of an
individual who is no longer employed with an Employing Company because of a
corporate spinoff, such individual shall continue to participate in the Plan for
the Performance Period during which the spinoff occurs. However, the Committee
shall have in its sole and absolute discretion the authority to appropriately
adjust the Incentive Pay Award for such Performance Period provided such
adjustment is in accordance with any requirements of Section 162(m) of the Code.
2.7 Forfeiture upon Termination for Cause. Notwithstanding anything to
the contrary in this Plan, any Participant whose employment is terminated for
Cause shall forfeit any and all unpaid Incentive Pay Awards as of his date of
termination. For purposes of the preceding sentence, "Cause" shall mean the
termination of a Participant's employment by a Business Unit under any of the
following circumstances:
(a) The Participant willfully neglects or refuses to discharge his
duties to the Business Unit as an employee or refuses to comply with any lawful
or reasonable instructions given to him by the Business Unit without reasonable
excuse;
(b) The Participant is guilty of gross misconduct. For purposes of
this Plan, the following acts shall constitute gross misconduct:
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(i) any act involving fraud or dishonesty or
breach of appropriate regulations of competent authorities;
(ii) the carrying out of any activity or the making
of any statement which would prejudice and/or reduce the good
name and standing of Southern Company or a Business Unit or
would bring Southern Company or a Business Unit into any
contempt or ridicule or would reasonably shock or offend any
community in which Southern Company or a Business Unit is
located;
(iii) attendance at work in a state of intoxication
or otherwise being found in possession at his or her workplace
of any prohibited drug or substance, possession of which would
amount to a criminal offense;
(iv) assault or other act of violence against any
employee or other person during the course of the Participant's
employment; and
(v) conviction of any felony or misdemeanor involving
moral turpitude.
The Committee shall determine in its sole and absolute discretion
whether a Participant has been terminated for "Cause."
ARTICLE III
Incentive Pay Award Opportunities
3.1 Incentive Pay Award.
-------------------
(a) The Incentive Pay Award for a Performance Period shall be
determined based upon a formula established by the Committee in the first ninety
(90) days of the Performance Period using any combination of the following
factors:
(i) earnings per share or similar measure of Southern
Company common stock, or another security of the Southern
Company or its affiliates;
(ii) net income of Southern Company;
(iii) net income of a Business Unit;
(iv) return on equity for Southern Company common stock;
(v) total shareholder return on Southern Company
common stock;
(vi) return on capital;
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(vii) return on assets;
(viii) Annual Salary; and/or
(ix) any of the foregoing factors as compared to peer
group companies.
(b) Notwithstanding any other provision of the Plan, the Incentive Pay
Award shall not exceed six million dollars ($6,000,000.00) for any one
Participant during a Performance Period.
(c) In accordance with the deductibility requirement under Code ss.
162(m), the regulations promulgated thereunder and any other pronouncements of
the Internal Revenue Service, the Committee shall have the sole and complete
discretion to adjust the Incentive Pay Award downward.
3.2 Calculation and Payment of Incentive Pay Awards.
-----------------------------------------------
(a) The Incentive Pay Award shall be calculated by the Plan
Administrator, based upon the formula established by the Committee pursuant to
Section 3.1 and the determinations of the Committee as to any negative
adjustments.
(b) Prior to the payment of an Incentive Pay Award, the Committee shall
provide in writing certification that the Participant has fulfilled any
prerequisites for payment of such Incentive Pay Award as required under Section
162(m) of the Code. Once such certification is obtained, the Plan Administrator
shall be solely responsible for calculating each Participant's Incentive Pay
Award and distributing such Incentive Pay Award.
(c) The Plan Administrator shall endeavor to pay the Incentive Pay
Awards for a Performance Period to the Participants not later than two and
one-half (2 1/2) months following the close of the preceding Performance Period,
or such shorter or longer period of time following the close of the preceding
Performance Period as may be required under the Internal Revenue Code to
preserve the timely accrual of the federal income tax deduction for Incentive
Pay Awards paid with respect to such Performance Period.
(d) The Incentive Pay Award payment shall be made in cash or its
functional equivalent and the receipt of such payment may not be deferred under
this Plan at the option of the Participant. In the event of a Participant's
death prior to the payment of any Incentive Pay Award payable to the
Participant, such amount shall be paid to the estate of the Participant.
3.3 Certain Exclusions. The Committee may exclude various items and
occurrences from business results before determining the Incentive Pay Awards
under the Plan. To the extent such exclusions affect awards to Participants
covered under Section 162(m) of the Code, the exclusions shall be prescribed in
resolutions that meet the requirements of Section 162(m) of the Code for
deductibility.
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3.4 Determination of Incentive Pay Awards. All elements
required to determine Incentive Pay Awards shall be fixed in all events by the
end of the Performance Period.
3.5 Insufficient Earnings. 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 Southern Company are less than the amount
necessary to fund the dividends on Southern Company's common stock at the rate
such dividends were paid for the immediately preceding calendar year.
3.6 Shareholder Approval. No Incentive Pay Award shall be paid to a
Participant under the Plan unless the Plan has been approved by a majority of
the shareholders of Southern Company as required by Section 162(m) of the Code.
3.7. No Duplication. A Participant shall not receive more than one
Incentive Pay Award for a Performance Period under the Plan or any similar plan.
A Participant who receives an Incentive Pay Award under this Plan shall not
receive an award under the Southern Company Performance Pay Plan or any other
plan intended to replace the Southern Company Performance Pay Plan.
ARTICLE IV
Change in Control
4.1 Southern Change in Control. In the event of a Southern Change in
Control, if there is no Plan Termination, payout of Incentive Pay Awards to
Participants for the Performance Period in which the Southern Change in Control
shall have occurred shall be the greater of actual or target performance under
the Plan.
4.2 Plan Termination. Notwithstanding any other provision of this Plan
to the contrary, in the event of a Plan Termination within two (2) years
following a Southern Change in Control, each Participant who is an Employee on
the date of such Plan Termination shall be entitled to receive within thirty
(30) days of the Plan Termination, cash in an amount equal to a pro-rated payout
of his Incentive Pay Award under the Plan for the Performance Period in which
the Plan Termination shall have occurred, at the greater of target or actual
performance under the Plan and prorated by the number of months which have
passed since the beginning of the Performance Period until the date of the Plan
Termination.
4.3 Subsidiary Change in Control. Notwithstanding any other provision
of this Plan to the contrary, in the event of a Subsidiary Change in Control,
each Subsidiary Employee on the date of such Change in Control whose employment
is not transferred upon such Subsidiary Change in Control to another Business
Unit shall be entitled to receive within thirty (30) days of the Subsidiary
Change in Control, cash in an amount equal to a prorated payout of his Incentive
Pay Award under the Plan for the Performance Period in which the Subsidiary
Change in Control shall have occurred, at the greater of actual or target
performance under the Plan and prorated by the number of months which have
passed since the beginning of the Performance Period until the date of the
Subsidiary Change in Control.
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4.4 Southern Termination. Notwithstanding any other provision of this
Plan to the contrary, in the event of a Southern Termination, each Participant
on the date of such Southern Termination shall be entitled to receive within
thirty (30) days of the Southern Termination, cash in an amount equal to a
prorated payout of his Incentive Pay Award under the Plan for the Performance
Period in which the Southern Termination shall have occurred, at the greater of
actual or target performance under the Plan and prorated by the number of months
which have passed since the beginning of the Performance Period until the date
of the Southern Termination. This Plan shall terminate immediately following the
payments provided for in this Section 4.4.
4.5 Pro rata Calculation. For purposes of calculating any pro rata
Incentive Pay Awards under this Article IV, a month shall not be considered if
the determining event occurs on or before the 14th day of the month, and a month
shall be considered if the determining event occurs on or after the 15th day of
the month.
ARTICLE V
Administration of Plan
----------------------
5.1 Responsibilities. Subject to oversight and direction from the
Committee, the Plan Administrator shall be responsible for the daily
administration of the Plan. The Plan Administrator shall adopt such procedures
and guidelines as it deems necessary or desirable in order to discharge its
duties hereunder.
5.2 Record Keeping and Reporting.
----------------------------
(a) The Plan Administrator shall maintain permanent records and
accounts of Participants and shall be responsible for all receipts,
disbursements, transfers and other transactions concerning the Plan.
(b) The Plan Administrator shall undertake the preparation and filing
of all documents and forms required by any governmental agency. The Plan
Administrator shall keep all such books of account records, and other data as
may be necessary for proper administration of the Plan.
5.3 Responsibilities in General. Except for the specific powers and
responsibilities reserved to the Committee, 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 as more particularly set forth
herein. The Plan Administrator shall interpret the Plan and shall determine all
questions concerning eligibility, administration, interpretation, and
application of the Plan, and all such determinations shall be conclusive and
binding on all Participants and interested persons. The Plan Administrator shall
adopt such procedures and guidelines as it deems necessary or desirable in order
to discharge its duties hereunder.
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5.4 Indemnification. The Business Units shall indemnify the Plan
Administrator against any and all claims, losses, damages, expenses, and
liability arising from its actions or omissions, except when the same are
finally adjudicated to be due to gross negligence or willful misconduct. The
Business Units 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 omission in connection with the execution of
the duties as the Plan Administrator.
5.5 Service of Process. The Plan Administrator shall be the appointed
agent for the service of process.
ARTICLE VI
Miscellaneous Provisions
------------------------
6.1 No Right of Assignment or Alienation. Neither the Participant 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.
6.2 No Trust Requirement. Unless the Board of Directors shall in its
discretion determine otherwise, the Business Units shall neither reserve nor
otherwise set aside funds for the payments of Incentive Pay Awards under the
Plan.
6.3 Amendment and Termination of Plan. Except for the provisions of
Article IV hereof, which may not be amended following a Southern Change in
Control, Subsidiary Change in Control or a Southern Termination, the Board of
Directors may terminate the Plan at any time or may from time to time amend the
Plan. Any amendment or termination of the Plan shall apply, in the Board of
Directors' sole discretion, with respect to all Participants.
6.4 Incentive Pay Award as Compensation.
-----------------------------------
(a) Incentive Pay 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 Business Unit.
(b) There shall be deducted from each Incentive Pay Award to a
Participant the amount of any tax required to be withheld by any governmental
authority and paid over by the Business Unit to such governmental authority.
6.5 Coordination with Benefit Plans. Any Incentive Pay Awards paid to a
Participant while employed by a Business Unit shall not be considered in the
calculation of the Participant's benefits under any employee welfare or pension
benefit plan maintained by an Business Unit, unless otherwise specifically
provided therein.
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6.6 Plan Not a Contract. The Plan shall not be deemed to constitute a
contract between a Business Unit and any Executive Employee, nor shall anything
herein contained be deemed to give any Executive Employee any right to be
retained in the employ of a Business Unit or interfere with the right of the
Business Unit to discharge any Executive Employee at any time and to treat him
without regard to the effect which such treatment might have upon him as a
Participant.
6.7 Choice of Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Georgia except for the application of
any law which would require the use of the laws of another state.
6.8 Pooling Accounting. Notwithstanding anything to the contrary
herein, if, but for any provision of this Plan, a Change in Control transaction
would otherwise be accounted for as a pooling of interests under APB No. 16
("Pooling Accounting") (after giving effect to any and all other facts and
circumstances affecting whether such Change in Control transaction would use
Pooling Accounting), such provision or provisions of this Plan that would
otherwise cause the Change in Control transaction to be ineligible for Pooling
Accounting shall automatically be void and ineffective to the extent required to
permit Pooling Accounting to be used for such Change in Control transaction.
IN WITNESS WHEREOF, Southern Company Services, Inc., through its
officers duly authorized, hereby establishes the Southern Company Performance
Pay Plan (Shareholder Approved) this 12th day of April, 2000, to be effective
January 1, 2000.
SOUTHERN COMPANY SERVICES, INC.
By: /s/ Christopher C. Womack
Christopher C. Womack
Senior Vice President, Human Resources
Attest:
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
