8-KLeadership ChangesExhibits & Filings

SOUTHERN CO 8-K Report, Executive Changes (Jan 7, 2009)

Filed January 7, 2009For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

This 8-K filing from The Southern Company (SO) reports on significant amendments made on December 31, 2008, to its Change in Control Benefits Protection Plan and a Deferred Compensation Agreement with executive G. Edison Holland, Jr. These changes are primarily aimed at ensuring compliance with Section 409A of the Internal Revenue Code regarding non-qualified deferred compensation plans. The key impact for investors is the alteration in the payment structure for certain executive benefits following a change in control or retirement. Previously, benefits under supplemental pension plans were paid as monthly annuity payments. Under the newly adopted Amended Plan and Amended Agreement, these benefits will now be paid as a single lump-sum value distributed over 10 annual installments. This change affects how and when these executive benefits are disbursed, which could have implications for the company's cash flow and the timing of reported expenses related to these plans.

Key Highlights

  • 1The Southern Company adopted an Amended Change in Control Benefits Protection Plan (Amended Plan) effective December 31, 2008.
  • 2An Amended Deferred Compensation Agreement was entered into with G. Edison Holland, Jr. on December 31, 2008.
  • 3Both the Amended Plan and Amended Agreement are intended to comply with Section 409A of the Internal Revenue Code.
  • 4A principal amendment changes the payment method for non-qualified pension benefits upon termination after a change in control.
  • 5Benefits will now be paid as a single-sum value in 10 annual installments, replacing previous monthly annuity payments.
  • 6This change applies to The Southern Company Supplemental Benefit Plan and The Southern Company Supplemental Executive Retirement Plan.
  • 7The Amended Agreement with G. Edison Holland, Jr. also modifies the payment terms for his non-qualified pension benefits upon retirement to a 10-year installment plan.

Frequently Asked Questions

The main purpose of the changes is to ensure that The Southern Company's executive benefit plans, specifically the Change in Control Benefits Protection Plan and the Deferred Compensation Agreement with G. Edison Holland, Jr., comply with Section 409A of the Internal Revenue Code.

Previously, benefits from supplemental pension plans were paid as monthly annuity payments. Now, following a change in control or retirement (for Mr. Holland), these benefits will be paid as the single-sum value of the benefits, distributed over 10 annual installments.

The reported changes specifically relate to The Southern Company's Change in Control Benefits Protection Plan and a Deferred Compensation Agreement with a specific executive, G. Edison Holland, Jr. These plans deal with non-qualified pension benefits, which are typically for senior executives. Therefore, the impact is focused on a select group of executives rather than the general employee population.

For investors, the key implication is the change in the timing of benefit payouts for executives. Instead of ongoing monthly payments, there will be a lump sum distributed over 10 years. This could affect the company's cash flow planning and the timing of recognizing related compensation expenses.