8-KMaterial Agreements

SOUTHERN CO 8-K Report, Material Agreement (Feb 25, 2005)

Filed February 25, 2005For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

This 8-K filing from The Southern Company, filed on February 25, 2005, details actions taken by its Compensation and Management Succession Committee and Board of Directors on February 21, 2005, primarily concerning executive and director compensation for fiscal year 2005. Key decisions include the establishment of performance criteria for annual bonuses and dividend equivalent awards under the Omnibus Incentive Compensation Plan, as well as adjustments to base salaries for executive officers and compensation for non-employee directors. Investors should note that the performance metrics for executive bonuses are weighted equally between Southern Company's earnings per share and its subsidiary companies' net income or return on equity. The plan also incorporates business unit-specific goals and includes safeguards such as minimum performance thresholds and dividend maintenance requirements before bonuses are paid. These adjustments are designed to align executive incentives with company performance and shareholder value, with changes to base salaries effective March 1, 2005.

Key Highlights

  • 1Established performance criteria for fiscal year 2005 annual performance bonuses and future performance-based dividend equivalent awards under the Southern Company Omnibus Incentive Compensation Plan.
  • 2Annual performance bonuses for executive officers will be based on a 50% weighting for Southern Company's earnings per share and a 50% weighting for subsidiary companies' net income or return on equity.
  • 3Bonus payments are subject to achievement of corporate performance goals, business unit adjusting goals, minimum earnings levels, and the maintenance of the prior year's common stock dividend.
  • 4Performance-based dividend equivalents for executive officers are tied to total stockholder return over a four-year period compared to peer utility companies.
  • 5Approved annual base salary adjustments for Southern Company's executive officers, effective March 1, 2005, based on recommendations from an independent compensation consultant.
  • 6Approved an adjustment to the compensation program for non-employee directors, specifically increasing the annual retainers for chairs of Board committees, effective March 1, 2005.

Frequently Asked Questions

The filing details adjustments to annual performance bonuses, performance-based dividend equivalent awards, and annual base salaries for executive officers of Southern Company and its subsidiary registrants. Additionally, compensation for non-employee directors was adjusted.

Executive bonuses are determined based on a combination of corporate performance goals (50% Southern Company EPS, 50% subsidiary net income/ROE) and business unit-specific goals. Payments are contingent on meeting minimum thresholds, including sufficient earnings to maintain the current common stock dividend level.

Performance-based dividend equivalents are linked to the company's total stockholder return over a four-year period, measured against a peer group of utility companies. Payouts range from 25% to 100% of the dividend paid, depending on the percentile ranking of the total stockholder return.

The adjustments to annual base salaries for executive officers and the compensation for non-employee directors are effective March 1, 2005. The performance criteria established are for fiscal year 2005 and future performance periods.