What is the main reason for amending Southern Company's executive benefit plans?

The primary reason for amending The Southern Company Supplemental Benefit Plan and The Southern Company Supplemental Executive Retirement Plan (SERP) is to comply with the requirements of Section 409A of the Internal Revenue Code, which governs non-qualified deferred compensation plans.

How does the change in payment structure affect participants who were already receiving benefits?

The filing states that participants who had not commenced receiving Plan Benefits on or before March 1, 2007, will experience the change. Those who had already begun receiving benefits prior to this date are not explicitly detailed as being affected by the payment form change, though other Section 409A provisions may still apply.

What is the new payment method for most affected executives?

For participants who had not commenced receiving benefits by March 1, 2007, and do not elect otherwise, the new payment method is the single-sum value of their benefits paid out in 10 annual installments, replacing the previous monthly annuity payments.

Can executives still receive their benefits as a monthly annuity?

Yes, actively employed participants as of March 1, 2007, have a one-time opportunity to elect during 2007 to receive their benefits in the form of the original monthly annuity payments.

Are there any specific rules for 'key employees' regarding benefit payments?

Yes, in accordance with Section 409A, payment of Plan Benefits to any 'key employee' may not begin until at least six months following the retirement of that key employee.

SOUTHERN CO 8-K: Leadership Changes

Summary

On April 3, 2007, Southern Company (SO) filed a Form 8-K to report significant amendments to its Supplemental Benefit Plan and Supplemental Executive Retirement Plan (SERP). These amendments, effective January 1, 2005, were primarily driven by the need to comply with Section 409A of the Internal Revenue Code concerning non-qualified deferred compensation. The core change for participants who had not yet begun receiving benefits by March 1, 2007, is a shift from lifetime monthly annuity payments to a single-sum payout distributed over 10 annual installments. However, actively employed participants as of March 1, 2007, have a one-time opportunity in 2007 to elect to retain the original monthly annuity payment structure. Additionally, for "key employees," benefit payments will be delayed by at least six months following their retirement to align with Section 409A regulations.

Key Highlights

1Southern Company amended and restated its Supplemental Benefit Plan and SERP.
2The amendments are required to comply with Section 409A of the Internal Revenue Code.
3Effective date of amended plans is January 1, 2005.
4For participants not yet receiving benefits by March 1, 2007, the payment form shifts from monthly annuities to a 10-year annual installment payout.
5Actively employed participants as of March 1, 2007, can elect to keep the monthly annuity payment option during a 2007 election period.
6Benefit payments for "key employees" will be delayed by at least six months post-retirement.
7These changes primarily affect the timing and form of non-qualified pension benefit payments to executives.

SOUTHERN CO 8-K Report, Executive Changes (Apr 4, 2007)

Summary

Key Highlights

Frequently Asked Questions