Summary
This 8-K filing from The Southern Company (SO) reports a modification to its cash-based awards, specifically concerning performance-based dividend equivalents on stock options granted to approximately 6,000 employees. These awards are tied to the company's total shareholder return (TSR) ranking within a utility peer group over four-year performance periods. The modification adjusts the payout thresholds for dividend equivalents, lowering the minimum performance requirement for any payout. Previously, dividend equivalents ranged from 25% to 100% based on a TSR ranking of the 30th to 90th percentile. The updated terms now allow for a payout range of approximately 5% to 100% for TSR rankings from above the 10th percentile up to the 90th percentile. Crucially, no dividend equivalents will be paid if the TSR ranking falls at or below the 10th percentile, or if the company's earnings are insufficient to cover its current common stock dividend. This change impacts awards granted in February 2002, 2003, 2004, and 2005.
Key Highlights
- 1Modification of cash-based awards impacting approximately 6,000 employees across Southern Company and its subsidiaries.
- 2Awards are performance-based dividend equivalents on stock options.
- 3Performance metric is Southern Company's total shareholder return (TSR) ranking within a utility peer group over four-year periods.
- 4Payout thresholds for dividend equivalents have been adjusted downwards.
- 5New minimum performance threshold for any payout is now above the 10th percentile TSR ranking (previously 30th percentile).
- 6Dividend equivalents can range from approximately 5% to 100% of the stock dividend.
- 7No payouts will occur if TSR ranking is at or below the 10th percentile or if earnings cannot support the common stock dividend.