þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE
ACT OF 1934
|
For the Fiscal Year Ended December 31, 2008 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE
ACT OF 1934
|
Commission | Registrant, State of Incorporation, | I.R.S. Employer | ||||||
File Number | Address and Telephone Number | Identification No. | ||||||
1-3526 |
The Southern Company
|
58-0690070 | ||||||
(A Delaware Corporation)
|
||||||||
30 Ivan Allen Jr. Boulevard, N.W.
|
||||||||
Atlanta, Georgia 30308
|
||||||||
(404) 506-5000
|
||||||||
|
||||||||
1-3164 |
Alabama Power Company
|
63-0004250 | ||||||
(An Alabama Corporation)
|
||||||||
600 North 18th Street
|
||||||||
Birmingham, Alabama 35291
|
||||||||
(205) 257-1000
|
||||||||
|
||||||||
1-6468 |
Georgia Power Company
|
58-0257110 | ||||||
(A Georgia Corporation)
|
||||||||
241 Ralph McGill Boulevard, N.E.
|
||||||||
Atlanta, Georgia 30308
|
||||||||
(404) 506-6526
|
||||||||
|
||||||||
0-2429 |
Gulf Power Company
|
59-0276810 | ||||||
(A Florida Corporation)
|
||||||||
One Energy Place
|
||||||||
Pensacola, Florida 32520
|
||||||||
(850) 444-6111
|
||||||||
|
||||||||
001-11229 |
Mississippi Power Company
|
64-0205820 | ||||||
(A Mississippi Corporation)
|
||||||||
2992 West Beach
|
||||||||
Gulfport, Mississippi 39501
|
||||||||
(228) 864-1211
|
||||||||
|
||||||||
333-98553 |
Southern Power Company
|
58-2598670 | ||||||
(A Delaware Corporation)
|
||||||||
30 Ivan Allen Jr. Boulevard, N.W.
|
||||||||
Atlanta, Georgia 30308
|
||||||||
(404) 506-5000
|
Title of each class | Registrant | |||
Common Stock, $5 par value
|
The Southern Company | |||
|
||||
Class A preferred, cumulative, $25 stated capital
|
Alabama Power Company | |||
5.20% Series
|
5.83% Series | |||
5.30% Series
|
||||
Senior Notes
|
||||
5 5/8% Series AA
|
5.875% Series II | |||
5 7/8% Series GG
|
6.375% Series JJ | |||
5.875% Series 2007B
|
||||
|
||||
Class A Preferred Stock, non-cumulative,
|
Georgia Power Company | |||
Par value $25 per share
|
||||
6 1/8% Series
|
||||
Senior Notes
|
||||
5.90% Series O
|
6% Series R | 5.70% Series X | ||
5.75% Series T
|
6% Series W | 5.75% Series G 2 | ||
6.375% Series 2007D
|
8.20% Series 2008C | |||
Long-term
debt payable to affiliated trusts,
$25 liquidation amount |
||||
5 7/8% Trust Preferred Securities
3
|
||||
|
||||
Senior Notes
|
Gulf Power Company | |||
5.25% Series H
|
5.75% Series I | |||
5.875% Series J
|
||||
|
1 | As of December 31, 2008. | |
2 | Assumed by Georgia Power Company in connection with its merger with Savannah Electric and Power Company, effective July 1, 2006. | |
3 | Issued by Georgia Power Capital Trust VII and guaranteed by Georgia Power Company. |
Senior Notes
|
Mississippi Power Company | |||
5 5/8% Series E
|
||||
Depositary preferred shares, each representing one-fourth
of a share of preferred stock, cumulative, $100 par value |
||||
5.25% Series
|
Title of each class | Registrant | |||||
Preferred stock, cumulative, $100 par value | Alabama Power Company | |||||
4.20% Series
|
4.60% Series | 4.72% Series | ||||
4.52% Series
|
4.64% Series | 4.92% Series | ||||
|
||||||
Preferred stock, cumulative, $100 par value | Mississippi Power Company | |||||
4.40% Series
|
4.60% Series | |||||
4.72% Series
|
4 | As of December 31, 2008. |
Registrant | Yes | No | ||
The Southern Company
|
ü | |||
Alabama Power Company
|
ü | |||
Georgia Power Company
|
ü | |||
Gulf Power Company
|
ü | |||
Mississippi Power Company
|
ü | |||
Southern Power Company
|
ü |
Large | Smaller | |||||||
Accelerated | Accelerated | Non-accelerated | Reporting | |||||
Registrant | Filer | Filer | Filer | Company | ||||
The Southern Company
|
ü | |||||||
Alabama Power Company
|
ü | |||||||
Georgia Power Company
|
ü | |||||||
Gulf Power Company
|
ü | |||||||
Mississippi Power Company
|
ü | |||||||
Southern Power Company
|
ü |
Description of | Shares Outstanding | |||||
Registrant | Common Stock | at January 31, 2009 | ||||
The Southern Company
|
Par Value $5 Per Share | 777,621,764 | ||||
Alabama Power Company
|
Par Value $40 Per Share | 25,475,000 | ||||
Georgia Power Company
|
Without Par Value | 9,261,500 | ||||
Gulf Power Company
|
Without Par Value | 3,142,717 | ||||
Mississippi Power Company
|
Without Par Value | 1,121,000 | ||||
Southern Power Company
|
Par Value $0.01 Per Share | 1,000 |
i
Term | Meaning | |
AFUDC
|
Allowance for Funds Used During Construction | |
Alabama Power
|
Alabama Power Company | |
AMEA
|
Alabama Municipal Electric Authority | |
Clean Air Act
|
Clean Air Act Amendments of 1990 | |
Dalton
|
Dalton Utilities | |
DOE
|
United States Department of Energy | |
Duke Energy
|
Duke Energy Corporation | |
Energy Act of 1992
|
Energy Policy Act of 1992 | |
Energy Act of 2005
|
Energy Policy Act of 2005 | |
Energy Solutions
|
Southern Company Energy Solutions, Inc. | |
EPA
|
United States Environmental Protection Agency | |
FASB
|
Financial Accounting Standards Board | |
FERC
|
Federal Energy Regulatory Commission | |
FMPA
|
Florida Municipal Power Agency | |
FP&L
|
Florida Power & Light Company | |
Georgia Power
|
Georgia Power Company | |
Gulf Power
|
Gulf Power Company | |
Hampton
|
City of Hampton, Georgia | |
IBEW
|
International Brotherhood of Electrical Workers | |
IIC
|
Intercompany Interchange Contract | |
IPP
|
Independent Power Producer | |
IRP
|
Integrated Resource Plan | |
IRS
|
Internal Revenue Service | |
KUA
|
Kissimmee Utility Authority | |
MEAG
|
Municipal Electric Authority of Georgia | |
Mirant
|
Mirant Corporation | |
Mississippi Power
|
Mississippi Power Company | |
Moody’s
|
Moody’s Investors Service | |
NRC
|
Nuclear Regulatory Commission | |
OPC
|
Oglethorpe Power Corporation | |
OUC
|
Orlando Utilities Commission | |
power pool
|
The operating arrangement whereby the integrated generating resources of the traditional operating companies and Southern Power are subject to joint commitment and dispatch in order to serve their combined load obligations | |
PowerSouth
|
PowerSouth Energy Cooperative (formerly, Alabama Electric Cooperative, Inc.) | |
PPA
|
Power Purchase Agreement | |
Progress Energy Carolinas
|
Carolina Power & Light Company, d/b/a Progress Energy Carolinas, Inc. | |
Progress Energy Florida
|
Florida Power Corporation, d/b/a Progress Energy Florida, Inc. | |
PSC
|
Public Service Commission | |
registrants
|
The Southern Company, Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Southern Power Company |
ii
Term | Meaning | |
RFP
|
Request for Proposal | |
RUS
|
Rural Utility Service (formerly Rural Electrification Administration) | |
S&P
|
Standard and Poor’s, a division of The McGraw-Hill Companies | |
Savannah Electric
|
Savannah Electric and Power Company (merged into Georgia Power on July 1, 2006) | |
SCS
|
Southern Company Services, Inc. (the system service company) | |
SEC
|
Securities and Exchange Commission | |
SEGCO
|
Southern Electric Generating Company | |
SEPA
|
Southeastern Power Administration | |
SERC
|
Southeastern Electric Reliability Council | |
SMEPA
|
South Mississippi Electric Power Association | |
Southern Company
|
The Southern Company | |
Southern Company system
|
Southern Company, the traditional operating companies, Southern Power, SEGCO, Southern Nuclear, SCS, SouthernLINC Wireless, and other subsidiaries | |
Southern Holdings
|
Southern Company Holdings, Inc. | |
SouthernLINC Wireless
|
Southern Communications Services, Inc. | |
Southern Nuclear
|
Southern Nuclear Operating Company, Inc. | |
Southern Power
|
Southern Power Company | |
Stone & Webster
|
Stone & Webster, Inc. | |
traditional operating companies
|
Alabama Power Company, Georgia Power Company, Gulf Power Company, and Mississippi Power Company | |
TVA
|
Tennessee Valley Authority | |
Westinghouse
|
Westinghouse Electric Company LLC |
iii
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; | |
• | current and future litigation, regulatory investigations, proceedings, or inquiries, including the pending EPA civil actions against certain Southern Company subsidiaries, FERC matters, IRS audits, and Mirant matters; | |
• | the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company’s subsidiaries operate; | |
• | variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; | |
• | available sources and costs of fuels; | |
• | effects of inflation; | |
• | ability to control costs; | |
• | investment performance of Southern Company’s employee benefit plans; | |
• | advances in technology; | |
• | state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and storm restoration cost recovery; | |
• | regulatory approvals related to the potential Plant Vogtle expansion, including Georgia PSC and NRC approvals; | |
• | the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; | |
• | internal restructuring or other restructuring options that may be pursued; | |
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; | |
• | the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required; | |
• | the ability to obtain new short- and long-term contracts with neighboring utilities and other wholesale customers; | |
• | the direct or indirect effect on Southern Company’s business resulting from terrorist incidents and the threat of terrorist incidents; | |
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company’s and its subsidiaries’ credit ratings; | |
• | the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; | |
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; | |
• | the direct or indirect effects on Southern Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; | |
• | the effect of accounting pronouncements issued periodically by standard setting bodies; and | |
• | other factors discussed elsewhere herein and in other reports filed by the registrants from time to time with the SEC. |
iv
I-1
I-2
I-3
Southern | ||||||||||||||||||||||||
Company | Alabama | Georgia | Gulf | Mississippi | Southern | |||||||||||||||||||
System* | Power | Power | Power | Power | Power | |||||||||||||||||||
New generation
|
$ | 1,953 | $ | — | $ | 1,209 | $ | 6 | $ | 48 | $ | 690 | ||||||||||||
Environmental
|
1,448 | 584 | 472 | 335 | 28 | — | ||||||||||||||||||
Other generating
facilities,
including
associated plant
substations
|
543 | 232 | 178 | 42 | 11 | 59 | ||||||||||||||||||
New business
|
411 | 196 | 170 | 29 | 16 | — | ||||||||||||||||||
Transmission
|
434 | 76 | 313 | 25 | 20 | — | ||||||||||||||||||
Distribution
|
404 | 157 | 189 | 29 | 30 | — | ||||||||||||||||||
Nuclear fuel
|
238 | 90 | 148 | — | — | — | ||||||||||||||||||
General plant
|
222 | 79 | 75 | 12 | 10 | — | ||||||||||||||||||
|
$ | 5,653 | $ | 1,414 | $ | 2,754 | $ | 478 | $ | 163 | $ | 749 | ||||||||||||
* | These amounts include the traditional operating companies and Southern Power (as detailed in the table above) as well as the amounts for the other subsidiaries. See “Other Businesses” herein for additional information. |
I-4
I-5
I-6
I-7
I-8
I-9
I-10
I-11
I-12
Employees at December 31, 2008 | ||||
Alabama Power
|
6,997 | |||
Georgia Power*
|
9,337 | |||
Gulf Power
|
1,342 | |||
Mississippi Power
|
1,317 | |||
SCS
|
4,536 | |||
Southern Holdings**
|
— | |||
Southern Nuclear
|
3,346 | |||
Southern Power***
|
— | |||
Other
|
401 | |||
Total
|
27,276 | |||
* | Georgia Power has initiated a voluntary attrition plan under which participating employees may elect to resign from their positions as of March 31, 2009. Approximately 700 employees who have indicated an interest in participating in the plan have been selected by Georgia Power and are permitted to resign and receive severance. The ultimate number of employees who resign under the plan cannot be determined at this time. | |
** | Southern Holdings has agreements with SCS whereby all employee services are rendered at cost. | |
*** | Southern Power has no employees. Southern Power has agreements with SCS and the traditional operating companies whereby employee services are rendered at amounts in compliance with FERC regulations. |
I-13
I-14
I-15
I-16
I-17
• | operator error or failure of equipment or processes; | ||
• | operating limitations that may be imposed by environmental or other regulatory requirements; | ||
• | labor disputes; | ||
• | terrorist attacks; | ||
• | fuel or material supply interruptions; | ||
• | compliance with mandatory reliability standards; | ||
• | information technology system failure; and | ||
• | catastrophic events such as fires, earthquakes, explosions, floods, droughts, hurricanes, pandemic health events such as an avian influenza, or other similar occurrences. |
I-18
• | shortages and inconsistent quality of equipment, materials, and labor; | ||
• | work stoppages; | ||
• | contractor or supplier non-performance under construction or other agreements; | ||
• | delays in or failure to receive necessary permits, approvals, and other regulatory authorizations; | ||
• | impacts of new and existing laws and regulations, including environmental laws and regulations; | ||
• | adverse weather conditions; | ||
• | unforeseen engineering problems; | ||
• | changes in project design or scope; | ||
• | environmental and geological conditions; |
I-19
• | delays or increased costs to interconnect facilities to transmission grids; | ||
• | unanticipated cost increases, including materials and labor; and | ||
• | attention to other projects. |
I-20
• | prevailing market prices for coal, natural gas, uranium, fuel oil, and other fuels used in the generation facilities of the traditional operating companies and Southern Power including associated transportation costs, and supplies of such commodities; | ||
• | demand for energy and the extent of additional supplies of energy available from current or new competitors; | ||
• | liquidity in the general wholesale electricity market; | ||
• | weather conditions impacting demand for electricity; | ||
• | seasonality; | ||
• | transmission or transportation constraints or inefficiencies; | ||
• | availability of competitively priced alternative energy sources; | ||
• | forced or unscheduled plant outages for the Southern Company system, its competitors, or third party providers; | ||
• | the financial condition of market participants; | ||
• | the economy in the service territory, the nation, and worldwide, including the impact of economic conditions on industrial and commercial demand for electricity and the worldwide demand for fuels; | ||
• | natural disasters, wars, embargos, acts of terrorism, and other catastrophic events; and | ||
• | federal, state, and foreign energy and environmental regulation and legislation. |
I-21
I-22
I-23
I-24
• | an economic downturn or uncertainty; | ||
• | the bankruptcy of an unrelated energy company or financial institution; | ||
• | capital markets volatility and interruption; | ||
• | financial institution distress; | ||
• | market prices for electricity and gas; | ||
• | terrorist attacks or threatened attacks on Southern Company’s facilities or unrelated energy companies’ facilities; | ||
• | war or threat of war; or | ||
• | the overall health of the utility and financial institution industries. |
I-25
I-26
Nameplate | ||||||
Generating Station | Location | Capacity (1) | ||||
(Kilowatts) | ||||||
FOSSIL STEAM
|
||||||
Gadsden
|
Gadsden, AL | 120,000 | ||||
Gorgas
|
Jasper, AL | 1,221,250 | ||||
Barry
|
Mobile, AL | 1,525,000 | ||||
Greene County
|
Demopolis, AL | 300,000 | (2) | |||
Gaston Unit 5
|
Wilsonville, AL | 880,000 | ||||
Miller
|
Birmingham, AL | 2,532,288 | (3) | |||
|
||||||
Alabama Power Total
|
6,578,538 | |||||
|
||||||
|
||||||
Bowen
|
Cartersville, GA | 3,160,000 | ||||
Branch
|
Milledgeville, GA | 1,539,700 | ||||
Hammond
|
Rome, GA | 800,000 | ||||
Kraft
|
Port Wentworth, GA | 281,136 | ||||
McDonough
|
Atlanta, GA | 490,000 | ||||
McIntosh
|
Effingham County, GA | 163,117 | ||||
McManus
|
Brunswick, GA | 115,000 | ||||
Mitchell
|
Albany, GA | 125,000 | ||||
Scherer
|
Macon, GA | 750,924 | (4) | |||
Wansley
|
Carrollton, GA | 925,550 | (5) | |||
Yates
|
Newnan, GA | 1,250,000 | ||||
|
||||||
Georgia Power Total
|
9,600,427 | |||||
|
||||||
|
||||||
Crist
|
Pensacola, FL | 970,000 | ||||
Daniel
|
Pascagoula, MS | 500,000 | (6) | |||
Lansing Smith
|
Panama City, FL | 305,000 | ||||
Scholz
|
Chattahoochee, FL | 80,000 | ||||
Scherer Unit 3
|
Macon, GA | 204,500 | (4) | |||
|
||||||
Gulf Power Total
|
2,059,500 | |||||
|
||||||
Daniel
|
Pascagoula, MS | 500,000 | (6) | |||
Eaton
|
Hattiesburg, MS | 67,500 | ||||
Greene County
|
Demopolis, AL | 200,000 | (2) | |||
Sweatt
|
Meridian, MS | 80,000 | ||||
Watson
|
Gulfport, MS | 1,012,000 | ||||
|
||||||
Mississippi Power Total
|
1,859,500 | |||||
|
||||||
|
||||||
Gaston Units 1-4
|
Wilsonville, AL | |||||
SEGCO Total
|
1,000,000 | (7) | ||||
|
||||||
Total Fossil Steam
|
21,097,965 | |||||
|
||||||
|
||||||
NUCLEAR STEAM
|
||||||
Farley
|
Dothan, AL | |||||
Alabama Power Total
|
1,720,000 | |||||
|
||||||
|
||||||
Hatch
|
Baxley, GA | 899,612 | (8) | |||
Vogtle
|
Augusta, GA | 1,060,240 | (9) | |||
|
||||||
Georgia Power Total
|
1,959,852 | |||||
|
||||||
Total Nuclear Steam
|
3,679,852 | |||||
|
||||||
|
||||||
COMBUSTION TURBINES
|
||||||
Greene County
|
Demopolis, AL | |||||
Alabama Power Total
|
720,000 | |||||
|
||||||
|
||||||
Boulevard
|
Savannah, GA | 59,100 | ||||
Bowen
|
Cartersville, GA | 39,400 | ||||
Intercession City
|
Intercession City, FL | 47,667 | (10) | |||
Kraft
|
Port Wentworth, GA | 22,000 | ||||
McDonough
|
Atlanta, GA | 78,800 | ||||
McIntosh Units 1 through 8
|
Effingham County, GA | 640,000 | ||||
McManus
|
Brunswick, GA | 481,700 | ||||
Mitchell
|
Albany, GA | 118,200 | ||||
Robins
|
Warner Robins, GA | 158,400 | ||||
Wansley
|
Carrollton, GA | 26,322 | ||||
Wilson
|
Augusta, GA | 354,100 | ||||
|
||||||
Georgia Power Total
|
2,025,689 | |||||
|
||||||
|
||||||
Lansing Smith Unit A
|
Panama City, FL | 39,400 | ||||
Pea Ridge Units 1-3
|
Pea Ridge, FL | 15,000 | ||||
|
||||||
Gulf Power Total
|
54,400 | |||||
|
||||||
|
||||||
Chevron
Cogenerating Station
|
Pascagoula, MS | 147,292 | (11) | |||
Sweatt
|
Meridian, MS | 39,400 |
I-27
Nameplate | ||||||
Generating Station | Location | Capacity (1) | ||||
(Kilowatts) | ||||||
Watson
|
Gulfport, MS | 39,360 | ||||
|
||||||
Mississippi Power Total
|
226,052 | |||||
|
||||||
|
||||||
Dahlberg
|
Jackson County, GA | 756,000 | ||||
DeSoto
|
Arcadia, FL | 343,760 | ||||
Oleander
|
Cocoa, FL | 791,301 | ||||
Rowan
|
Salisbury, NC | 455,250 | ||||
|
||||||
Southern Power Total
|
2,346,311 | |||||
|
||||||
|
||||||
Gaston
(SEGCO)
|
Wilsonville, AL | 19,680 | (7) | |||
|
||||||
Total Combustion Turbines
|
5,392,132 | |||||
|
||||||
|
||||||
COGENERATION
|
||||||
Washington County
|
Washington County, AL | 123,428 | ||||
GE Plastics Project
|
Burkeville, AL | 104,800 | ||||
Theodore
|
Theodore, AL | 236,418 | ||||
|
||||||
Total Cogeneration
|
464,646 | |||||
|
||||||
|
||||||
COMBINED CYCLE
|
||||||
Barry
|
Mobile, AL | |||||
Alabama Power Total
|
1,070,424 | |||||
|
||||||
McIntosh Units 10&11
|
Effingham County, GA | |||||
Georgia Power Total
|
1,318,920 | |||||
|
||||||
Smith
|
Lynn Haven, FL | |||||
Gulf Power Total
|
545,500 | |||||
|
||||||
Daniel (Leased)
|
Pascagoula, MS | |||||
Mississippi Power Total
|
1,070,424 | |||||
|
||||||
Franklin
|
Smiths, AL | 1,857,820 | ||||
Harris
|
Autaugaville, AL | 1,318,920 | ||||
Rowan
|
Salisbury, NC | 530,550 | ||||
Stanton Unit A
|
Orlando, FL | 428,649 | (12) | |||
Wansley
|
Carrollton, GA | 1,073,000 | ||||
|
||||||
Southern Power Total
|
5,208,939 | |||||
|
||||||
Total Combined Cycle
|
9,214,207 | |||||
|
||||||
|
||||||
HYDROELECTRIC FACILITIES
|
||||||
Bankhead
|
Holt, AL | 53,985 | ||||
Bouldin
|
Wetumpka, AL | 225,000 | ||||
Harris
|
Wedowee, AL | 132,000 | ||||
Henry
|
Ohatchee, AL | 72,900 | ||||
Holt
|
Holt, AL | 46,944 | ||||
Jordan
|
Wetumpka, AL | 100,000 | ||||
Lay
|
Clanton, AL | 177,000 | ||||
Lewis Smith
|
Jasper, AL | 157,500 | ||||
Logan Martin
|
Vincent, AL | 135,000 | ||||
Martin
|
Dadeville, AL | 182,000 | ||||
Mitchell
|
Verbena, AL | 170,000 | ||||
Thurlow
|
Tallassee, AL | 81,000 | ||||
Weiss
|
Leesburg, AL | 87,750 | ||||
Yates
|
Tallassee, AL | 47,000 | ||||
|
||||||
Alabama Power Total
|
1,668,079 | |||||
|
||||||
|
||||||
Barnett Shoals (Leased)
|
Athens, GA | 2,800 | ||||
Bartletts Ferry
|
Columbus, GA | 173,000 | ||||
Goat Rock
|
Columbus, GA | 38,600 | ||||
Lloyd Shoals
|
Jackson, GA | 14,400 | ||||
Morgan Falls
|
Atlanta, GA | 16,800 | ||||
North Highlands
|
Columbus, GA | 29,600 | ||||
Oliver Dam
|
Columbus, GA | 60,000 | ||||
Rocky Mountain
|
Rome, GA | 215,256 | (13) | |||
Sinclair Dam
|
Milledgeville, GA | 45,000 | ||||
Tallulah Falls
|
Clayton, GA | 72,000 | ||||
Terrora
|
Clayton, GA | 16,000 | ||||
Tugalo
|
Clayton, GA | 45,000 | ||||
Wallace Dam
|
Eatonton, GA | 321,300 | ||||
Yonah
|
Toccoa, GA | 22,500 | ||||
6 Other Plants
|
18,080 | |||||
|
||||||
Georgia Power Total
|
1,090,336 | |||||
|
||||||
Total Hydroelectric
Facilities
|
2,758,415 | |||||
|
||||||
|
||||||
Total Generating Capacity
|
42,607,217 | |||||
|
Notes: | ||
(1) | See “Jointly-Owned Facilities” herein for additional information. | |
(2) | Owned by Alabama Power and Mississippi Power as tenants in common in the proportions of 60% and 40%, respectively. | |
(3) | Capacity shown is Alabama Power’s portion (91.84%) of total plant capacity. | |
(4) | Capacity shown for Georgia Power is 8.4% of Units 1 and 2 and 75% of Unit 3. Capacity shown for Gulf Power is 25% of Unit 3. |
I-28
(5) | Capacity shown is Georgia Power’s portion (53.5%) of total plant capacity. | |
(6) | Represents 50% of the plant which is owned as tenants in common by Gulf Power and Mississippi Power. | |
(7) | SEGCO is jointly-owned by Alabama Power and Georgia Power. See BUSINESS in Item 1 herein for additional information. | |
(8) | Capacity shown is Georgia Power’s portion (50.1%) of total plant capacity. | |
(9) | Capacity shown is Georgia Power’s portion (45.7%) of total plant capacity. | |
(10) | Capacity shown represents 33 1/3% of total plant capacity. Georgia Power owns a 1/3 interest in the unit with 100% use of the unit from June through September. Progress Energy Florida operates the unit. | |
(11) | Generation is dedicated to a single industrial customer. | |
(12) | Capacity shown is Southern Power’s portion (65%) of total plant capacity. | |
(13) | Capacity shown is Georgia Power’s portion (25.4%) of total plant capacity. OPC operates the plant. |
I-29
Percentage Ownership | ||||||||||||||||||||||||||||||||||||||||||||||||
Progress | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | Alabama | Power | Georgia | Energy | Southern | |||||||||||||||||||||||||||||||||||||||||||
Capacity | Power | South | Power | OPC | MEAG | Dalton | Florida | Power | OUC | FMPA | KUA | |||||||||||||||||||||||||||||||||||||
(Megawatts) | ||||||||||||||||||||||||||||||||||||||||||||||||
Plant
Miller
Units 1 and 2 |
1,320 | 91.8 | % | 8.2 | % | — | % | — | % | — | % | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||||||||||||||||||
Plant Hatch
|
1,796 | — | — | 50.1 | 30.0 | 17.7 | 2.2 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Plant Vogtle
|
2,320 | — | — | 45.7 | 30.0 | 22.7 | 1.6 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Plant Scherer
Units 1 and 2 |
1,636 | — | — | 8.4 | 60.0 | 30.2 | 1.4 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Plant Wansley
|
1,779 | — | — | 53.5 | 30.0 | 15.1 | 1.4 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Rocky Mountain
|
848 | — | — | 25.4 | 74.6 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Intercession City, FL
|
143 | — | — | 33.3 | — | — | — | 66.7 | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Plant Stanton A
|
660 | — | — | — | — | — | — | — | 65 | % | 28 | % | 3.5 | % | 3.5 | % | ||||||||||||||||||||||||||||||||
I-30
I-31
I-32
I-33
I-34
I-35
I-36
I-37
Item 5. | MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
High | Low | |||||||
2008
|
||||||||
First Quarter
|
$ | 40.60 | $ | 33.71 | ||||
Second Quarter
|
37.81 | 34.28 | ||||||
Third Quarter
|
40.00 | 34.46 | ||||||
Fourth Quarter
|
38.18 | 29.82 | ||||||
|
||||||||
2007
|
||||||||
First Quarter
|
$ | 37.25 | $ | 34.85 | ||||
Second Quarter
|
38.90 | 33.50 | ||||||
Third Quarter
|
37.70 | 33.16 | ||||||
Fourth Quarter
|
39.35 | 35.15 | ||||||
Registrant | Quarter | 2008 | 2007 | |||||||
(in thousands) | ||||||||||
Southern Company
|
First | $ | 307,960 | $ | 290,292 | |||||
|
Second | 322,634 | 303,699 | |||||||
|
Third | 323,844 | 304,775 | |||||||
|
Fourth | 325,681 | 306,039 | |||||||
|
||||||||||
Alabama Power
|
First | 122,825 | 116,250 | |||||||
|
Second | 122,825 | 116,250 | |||||||
|
Third | 122,825 | 116,250 | |||||||
|
Fourth | 122,825 | 116,250 | |||||||
|
||||||||||
Georgia Power
|
First | 180,300 | 172,475 | |||||||
|
Second | 180,300 | 172,475 | |||||||
|
Third | 180,300 | 172,475 | |||||||
|
Fourth | 180,300 | 172,475 | |||||||
|
||||||||||
Gulf Power
|
First | 20,425 | 18,525 | |||||||
|
Second | 20,425 | 18,525 | |||||||
|
Third | 20,425 | 18,525 | |||||||
|
Fourth | 20,425 | 18,525 | |||||||
|
||||||||||
Mississippi Power
|
First | 17,100 | 16,825 | |||||||
|
Second | 17,100 | 16,825 | |||||||
|
Third | 17,100 | 16,825 | |||||||
|
Fourth | 17,100 | 16,825 |
II-1
Registrant | Quarter | 2008 | 2007 | |||||||
(in millions) | ||||||||||
Southern Power
|
First | $ | 23.63 | $ | 22.45 | |||||
|
Second | 23.63 | 22.45 | |||||||
|
Third | 23.63 | 22.45 | |||||||
|
Fourth | 23.63 | 22.45 | |||||||
II-2
II-3
Page | ||||
The Southern Company and Subsidiary Companies:
|
||||
II-9 | ||||
II-10 | ||||
II-50 | ||||
II-51 | ||||
II-52 | ||||
II-54 | ||||
II-56 | ||||
II-56 | ||||
II-57 | ||||
|
||||
Alabama Power:
|
||||
II-109 | ||||
II-110 | ||||
II-133 | ||||
II-134 | ||||
II-135 | ||||
II-137 | ||||
II-139 | ||||
II-139 | ||||
II-140 | ||||
|
||||
Georgia Power:
|
||||
II-173 | ||||
II-174 | ||||
II-199 | ||||
II-200 | ||||
II-201 | ||||
II-203 | ||||
II-204 | ||||
II-204 | ||||
II-205 | ||||
|
||||
Gulf Power:
|
||||
II-242 | ||||
II-243 | ||||
II-266 | ||||
II-267 | ||||
II-268 | ||||
II-270 | ||||
II-271 | ||||
II-271 | ||||
II-272 |
II-4
Page | ||||
Mississippi Power:
|
||||
II-301 | ||||
II-302 | ||||
II-328 | ||||
II-329 | ||||
II-330 | ||||
II-332 | ||||
II-333 | ||||
II-333 | ||||
II-334 | ||||
|
||||
Southern Power and Subsidiary Companies:
|
||||
II-366 | ||||
II-367 | ||||
II-387 | ||||
II-388 | ||||
II-389 | ||||
II-391 | ||||
II-391 | ||||
II-392 |
II-5
II-6
II-7
II-8
II-9
II-10
II-11
II-12
2008 Target | 2008 Actual | |||||||
Key Performance Indicator | Performance | Performance | ||||||
Top quartile in | ||||||||
Customer Satisfaction
|
customer surveys | Top quartile | ||||||
Peak Season EFOR — fossil/hydro
|
2.75% or less | 1.68 | % | |||||
Peak Season EFOR — nuclear
|
2.00% or less | 1.98 | % | |||||
Basic EPS
|
$ | 2.28 — $2.36 | $ | 2.26 | ||||
EPS, excluding leveraged lease charges
|
— | $ | 2.37 |
II-13
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Electric operating revenues
|
$ | 17,000 | $ | 1,860 | $ | 1,052 | $ | 810 | ||||||||
Fuel
|
6,817 | 973 | 701 | 655 | ||||||||||||
Purchased power
|
815 | 300 | (28 | ) | (188 | ) | ||||||||||
Other operations and maintenance
|
3,584 | 111 | 183 | 70 | ||||||||||||
Depreciation and amortization
|
1,414 | 199 | 51 | 27 | ||||||||||||
Taxes other than income taxes
|
794 | 56 | 23 | 39 | ||||||||||||
Total electric operating expenses
|
13,424 | 1,639 | 930 | 603 | ||||||||||||
Operating income
|
3,576 | 221 | 122 | 207 | ||||||||||||
Other income (expense), net
|
145 | 24 | 68 | (9 | ) | |||||||||||
Interest expense and dividends
|
837 | 25 | 61 | 75 | ||||||||||||
Income taxes
|
1,037 | 87 | 1 | 50 | ||||||||||||
Net income
|
$ | 1,847 | $ | 133 | $ | 128 | $ | 73 | ||||||||
Amount | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Retail — prior year
|
$ | 12,639 | $ | 11,801 | $ | 11,165 | ||||||
Estimated change in —
|
||||||||||||
Rates and pricing
|
668 | 161 | 9 | |||||||||
Sales growth
|
— | 60 | 115 | |||||||||
Weather
|
(106 | ) | 54 | 35 | ||||||||
Fuel and other cost recovery
|
854 | 563 | 477 | |||||||||
Retail — current year
|
14,055 | 12,639 | 11,801 | |||||||||
Wholesale revenues
|
2,400 | 1,988 | 1,822 | |||||||||
Other electric operating revenues
|
545 | 513 | 465 | |||||||||
Electric operating revenues
|
$ | 17,000 | $ | 15,140 | $ | 14,088 | ||||||
Percent change
|
12.3 | % | 7.5 | % | 6.1 | % | ||||||
II-14
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Other power sales —
|
||||||||||||
Capacity and other
|
$ | 538 | $ | 533 | $ | 499 | ||||||
Energy
|
1,319 | 989 | 841 | |||||||||
Total
|
$ | 1,857 | $ | 1,522 | $ | 1,340 | ||||||
II-15
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Unit power sales —
|
||||||||||||
Capacity
|
$ | 223 | $ | 202 | $ | 208 | ||||||
Energy
|
320 | 264 | 274 | |||||||||
Total
|
$ | 543 | $ | 466 | $ | 482 | ||||||
KWHs | Percent Change | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in billions) | ||||||||||||||||
Residential
|
52.3 | (2.0 | )% | 1.8 | % | 2.5 | % | |||||||||
Commercial
|
54.4 | (0.4 | ) | 3.2 | 2.2 | |||||||||||
Industrial
|
52.7 | (3.7 | ) | (0.7 | ) | (0.2 | ) | |||||||||
Other
|
0.9 | (2.9 | ) | 4.4 | (7.6 | ) | ||||||||||
Total retail
|
160.3 | (2.1 | ) | 1.4 | 1.4 | |||||||||||
Wholesale
|
39.3 | (3.4 | ) | 5.9 | 3.7 | |||||||||||
Total energy sales
|
199.6 | (2.3 | ) | 2.3 | 1.9 | |||||||||||
KWHs | Percent Change | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
Quarter Ended | Retail | Wholesale | Energy Sales | Retail | Wholesale | Energy Sales | ||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
March 2008
|
38,576 | 9,590 | 48,166 | 1.4 | % | (1.9 | )% | 0.7 | % | |||||||||||||||
June 2008
|
39,882 | 10,049 | 49,931 | (1.2 | ) | 1.0 | (0.7 | ) | ||||||||||||||||
September 2008
|
45,800 | 10,969 | 56,769 | (4.6 | ) | (2.2 | ) | (4.1 | ) | |||||||||||||||
December 2008
|
36,001 | 8,760 | 44,761 | (3.3 | ) | (10.6 | ) | (4.8 | ) |
II-16
2008 | 2007 | 2006 | ||||||||||
Total generation
(billions of KWHs)
|
198 | 206 | 201 | |||||||||
Total purchased power
(billions of KWHs)
|
11 | 8 | 8 | |||||||||
Sources of generation
(percent)
—
|
||||||||||||
Coal
|
68 | 70 | 70 | |||||||||
Nuclear
|
15 | 14 | 15 | |||||||||
Gas
|
16 | 15 | 13 | |||||||||
Hydro
|
1 | 1 | 2 | |||||||||
Cost of fuel, generated
(cents per net KWH)
—
|
||||||||||||
Coal
|
3.27 | 2.60 | 2.40 | |||||||||
Nuclear
|
0.50 | 0.50 | 0.47 | |||||||||
Gas
|
7.58 | 6.64 | 6.63 | |||||||||
Average cost of fuel, generated
(cents per net KWH)
|
3.52 | 2.89 | 2.63 | |||||||||
Average cost of purchased power
(cents per net KWH)
|
7.85 | 7.20 | 6.82 | |||||||||
II-17
II-18
II-19
II-20
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Operating revenues
|
$ | 127 | $ | (86 | ) | $ | (55 | ) | $ | (8 | ) | |||||
Other operations and maintenance
|
165 | (44 | ) | (29 | ) | (59 | ) | |||||||||
Depreciation and amortization
|
29 | (1 | ) | (6 | ) | (3 | ) | |||||||||
Taxes other than income taxes
|
3 | — | — | (1 | ) | |||||||||||
Total operating expenses
|
197 | (45 | ) | (35 | ) | (63 | ) | |||||||||
Operating income (loss)
|
(70 | ) | (41 | ) | (20 | ) | 55 | |||||||||
Equity in income (losses) of
unconsolidated subsidiaries
|
10 | 35 | 35 | 62 | ||||||||||||
Leveraged lease income (losses)
|
(85 | ) | (125 | ) | (29 | ) | (5 | ) | ||||||||
Other income (expense), net
|
12 | (29 | ) | 73 | (19 | ) | ||||||||||
Interest expense
|
94 | (28 | ) | (27 | ) | 48 | ||||||||||
Income taxes
|
(122 | ) | (7 | ) | 53 | 136 | ||||||||||
Net income (loss)
|
$ | (105 | ) | $ | (125 | ) | $ | 33 | $ | (91 | ) | |||||
II-21
II-22
II-23
II-24
II-25
II-26
II-27
II-28
II-29
II-30
II-31
II-32
II-33
II-34
II-35
II-36
II-37
II-38
II-39
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters. | |
• | Changes in existing income tax regulations or changes in IRS or state revenue department interpretations of existing regulations. | |
• | Identification of additional sites that require environmental remediation or the filing of other complaints in which Southern Company or its subsidiaries may be asserted to be a potentially responsible party. | |
• | Identification and evaluation of other potential lawsuits or complaints in which Southern Company or its subsidiaries may be named as a defendant. | |
• | Resolution or progression of new or existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
II-40
II-41
II-42
II-43
II-44
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets
(liabilities), net
|
$ | 4 | $ | (82 | ) | |||
Contracts realized or settled
|
(150 | ) | 80 | |||||
Current
period
changes
(a)
|
(139 | ) | 6 | |||||
Contracts outstanding at the end of the period, assets (liabilities), net
|
$ | (285 | ) | $ | 4 | |||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any. |
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (288 | ) | $ | — | |||
Cash flow hedges
|
(1 | ) | 1 | |||||
Non-accounting hedges
|
4 | 3 | ||||||
Total fair value
|
$ | (285 | ) | $ | 4 | |||
II-45
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2&3 | Years 4&5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Level 2
|
(285 | ) | (203 | ) | (77 | ) | (5 | ) | ||||||||
Level 3
|
— | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period
|
$ | (285 | ) | $ | (203 | ) | $ | (77 | ) | $ | (5 | ) | ||||
II-46
II-47
2010- | 2012- | After | Uncertain | |||||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Timing (d) | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Long-term debt
(a)
—
|
||||||||||||||||||||||||
Principal
|
$ | 617 | $ | 1,972 | $ | 2,745 | $ | 12,119 | $ | — | $ | 17,453 | ||||||||||||
Interest
|
858 | 1,616 | 1,424 | 11,102 | — | 15,000 | ||||||||||||||||||
Preferred and preference stock dividends
(b)
|
65 | 130 | 130 | — | — | 325 | ||||||||||||||||||
Other derivative obligations
(c)
—
|
||||||||||||||||||||||||
Energy-related
|
224 | 78 | 5 | — | — | 307 | ||||||||||||||||||
Interest
|
21 | — | — | — | — | 21 | ||||||||||||||||||
Operating leases
|
143 | 212 | 81 | 146 | — | 582 | ||||||||||||||||||
Unrecognized tax benefits and interest
(d)
|
145 | — | — | — | 16 | 161 | ||||||||||||||||||
Purchase commitments
(e)
—
|
||||||||||||||||||||||||
Capital
(f)
|
5,467 | 10,644 | — | — | — | 16,111 | ||||||||||||||||||
Limestone
(g)
|
13 | 70 | 72 | 144 | — | 299 | ||||||||||||||||||
Coal
|
4,608 | 5,999 | 2,602 | 3,421 | — | 16,630 | ||||||||||||||||||
Nuclear fuel
|
187 | 301 | 275 | 43 | — | 806 | ||||||||||||||||||
Natural gas
(h)
|
1,507 | 1,609 | 1,242 | 3,798 | — | 8,156 | ||||||||||||||||||
Purchased power
|
217 | 455 | 413 | 1,938 | — | 3,023 | ||||||||||||||||||
Long-term service agreements
(i)
|
85 | 203 | 255 | 1,731 | — | 2,274 | ||||||||||||||||||
Trusts —
|
||||||||||||||||||||||||
Nuclear decommissioning
|
3 | 7 | 7 | 53 | — | 70 | ||||||||||||||||||
Postretirement benefits
(j)
|
56 | 116 | — | — | — | 172 | ||||||||||||||||||
Total
|
$ | 14,216 | $ | 23,412 | $ | 9,251 | $ | 34,495 | $ | 16 | $ | 81,390 | ||||||||||||
(a) | All amounts are reflected based on final maturity dates. Southern Company and its subsidiaries plan to continue to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. Variable rate interest obligations are estimated based on rates as of January 1, 2009, as reflected in the statements of capitalization. Fixed rates include, where applicable, the effects of interest rate derivatives employed to manage interest rate risk. | |
(b) | Preferred and preference stock do not mature; therefore, amounts are provided for the next five years only. | |
(c) | For additional information, see Notes 1 and 6 to the financial statements. | |
(d) | The timing related to the $16 million in unrecognized tax benefits and interest payments in individual years beyond 12 months cannot be reasonably and reliably estimated due to uncertainties in the timing of the effective settlement of tax positions. See Notes 3 and 5 to the financial statements for additional information. | |
(e) | Southern Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for 2008, 2007, and 2006 were $3.8 billion, $3.7 billion, and $3.5 billion, respectively. | |
(f) | Southern Company forecasts capital expenditures over a three-year period. Amounts represent current estimates of total expenditures excluding those amounts related to contractual purchase commitments for nuclear fuel. At December 31, 2008, significant purchase commitments were outstanding in connection with the construction program. | |
(g) | As part of Southern Company’s program to reduce sulfur dioxide emissions from its coal plants, the traditional operating companies have begun construction of flue gas desulfurization projects and have entered into various long-term commitments for the procurement of limestone to be used in such equipment. | |
(h) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on the New York Mercantile Exchange future prices at December 31, 2008. | |
(i) | Long-term service agreements include price escalation based on inflation indices. | |
(j) | Southern Company forecasts postretirement trust contributions over a three-year period. Southern Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Therefore, no amounts related to the pension trust fund are included in the table. See Note 2 to the financial statements for additional information related to the pension and postretirement plans, including estimated benefit payments. Certain benefit payments will be made through the related trusts. Other benefit payments will be made from Southern Company’s corporate assets. |
II-48
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which Southern Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; | |
• | current and future litigation, regulatory investigations, proceedings, or inquiries, including the pending EPA civil actions against certain Southern Company subsidiaries, FERC matters, IRS audits, and Mirant matters; | |
• | the effects, extent, and timing of the entry of additional competition in the markets in which Southern Company’s subsidiaries operate; | |
• | variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; | |
• | available sources and costs of fuels; | |
• | effects of inflation; | |
• | ability to control costs; | |
• | investment performance of Southern Company’s employee benefit plans; | |
• | advances in technology; | |
• | state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and storm restoration cost recovery; | |
• | regulatory approvals related to the potential Plant Vogtle expansion, including Georgia PSC and NRC approvals; | |
• | the performance of projects undertaken by the non-utility businesses and the success of efforts to invest in and develop new opportunities; | |
• | internal restructuring or other restructuring options that may be pursued; | |
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to Southern Company or its subsidiaries; | |
• | the ability of counterparties of Southern Company and its subsidiaries to make payments as and when due and to perform as required; | |
• | the ability to obtain new short- and long-term contracts with neighboring utilities and other wholesale customers; | |
• | the direct or indirect effect on Southern Company’s business resulting from terrorist incidents and the threat of terrorist incidents; | |
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including Southern Company’s and its subsidiaries’ credit ratings; | |
• | the ability of Southern Company and its subsidiaries to obtain additional generating capacity at competitive prices; | |
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; | |
• | the direct or indirect effects on Southern Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; | |
• | the effect of accounting pronouncements issued periodically by standard setting bodies; and | |
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
II-49
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Operating Revenues:
|
||||||||||||
Retail revenues
|
$ | 14,055 | $ | 12,639 | $ | 11,801 | ||||||
Wholesale revenues
|
2,400 | 1,988 | 1,822 | |||||||||
Other electric revenues
|
545 | 513 | 465 | |||||||||
Other revenues
|
127 | 213 | 268 | |||||||||
Total operating revenues
|
17,127 | 15,353 | 14,356 | |||||||||
Operating Expenses:
|
||||||||||||
Fuel
|
6,818 | 5,856 | 5,152 | |||||||||
Purchased power
|
815 | 515 | 543 | |||||||||
Other operations and maintenance
|
3,748 | 3,670 | 3,519 | |||||||||
Depreciation and amortization
|
1,443 | 1,245 | 1,200 | |||||||||
Taxes other than income taxes
|
797 | 741 | 718 | |||||||||
Total operating expenses
|
13,621 | 12,027 | 11,132 | |||||||||
Operating Income
|
3,506 | 3,326 | 3,224 | |||||||||
Other Income and (Expense):
|
||||||||||||
Allowance for equity funds used during construction
|
152 | 106 | 50 | |||||||||
Interest income
|
33 | 45 | 41 | |||||||||
Equity in income (losses) of unconsolidated subsidiaries
|
11 | (24 | ) | (57 | ) | |||||||
Leveraged lease (losses) income
|
(85 | ) | 40 | 69 | ||||||||
Impairment loss on equity method investments
|
— | — | (16 | ) | ||||||||
Interest expense, net of amounts capitalized
|
(866 | ) | (886 | ) | (866 | ) | ||||||
Preferred and preference dividends of subsidiaries
|
(65 | ) | (48 | ) | (34 | ) | ||||||
Other income (expense), net
|
(29 | ) | 10 | (58 | ) | |||||||
Total other income and (expense)
|
(849 | ) | (757 | ) | (871 | ) | ||||||
Earnings Before Income Taxes
|
2,657 | 2,569 | 2,353 | |||||||||
Income taxes
|
915 | 835 | 780 | |||||||||
Consolidated Net Income
|
$ | 1,742 | $ | 1,734 | $ | 1,573 | ||||||
Common Stock Data:
|
||||||||||||
Earnings per share—
|
||||||||||||
Basic
|
$ | 2.26 | $ | 2.29 | $ | 2.12 | ||||||
Diluted
|
2.25 | 2.28 | 2.10 | |||||||||
Average number of shares of common stock
outstanding — (in millions)
|
||||||||||||
Basic
|
771 | 756 | 743 | |||||||||
Diluted
|
775 | 761 | 748 | |||||||||
Cash dividends paid per share of common stock
|
$ | 1.6625 | $ | 1.595 | $ | 1.535 | ||||||
II-50
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Operating Activities:
|
||||||||||||
Consolidated net income
|
$ | 1,742 | $ | 1,734 | $ | 1,573 | ||||||
Adjustments to reconcile consolidated net income
to net cash provided from operating activities —
|
||||||||||||
Depreciation and amortization
|
1,704 | 1,486 | 1,421 | |||||||||
Deferred income taxes and investment tax credits
|
215 | 7 | 202 | |||||||||
Deferred revenues
|
120 | (2 | ) | (1 | ) | |||||||
Allowance for equity funds used during construction
|
(152 | ) | (106 | ) | (50 | ) | ||||||
Equity in (income) losses of unconsolidated subsidiaries
|
(11 | ) | 24 | 57 | ||||||||
Leveraged lease losses (income)
|
85 | (40 | ) | (69 | ) | |||||||
Pension, postretirement, and other employee benefits
|
21 | 39 | 46 | |||||||||
Stock based compensation expense
|
20 | 28 | 28 | |||||||||
Derivative fair value adjustments
|
(1 | ) | (30 | ) | 32 | |||||||
Hedge settlements
|
15 | 10 | 13 | |||||||||
Hurricane Katrina grant proceeds-property reserve
|
— | 60 | — | |||||||||
Other, net
|
(97 | ) | 60 | 51 | ||||||||
Changes in certain current assets and liabilities —
|
||||||||||||
Receivables
|
(176 | ) | 165 | (69 | ) | |||||||
Fossil fuel stock
|
(303 | ) | (39 | ) | (246 | ) | ||||||
Materials and supplies
|
(23 | ) | (71 | ) | 7 | |||||||
Other current assets
|
(36 | ) | — | 73 | ||||||||
Accounts payable
|
(74 | ) | 105 | (173 | ) | |||||||
Hurricane Katrina grant proceeds
|
— | 14 | 120 | |||||||||
Accrued taxes
|
293 | (19 | ) | (103 | ) | |||||||
Accrued compensation
|
36 | (40 | ) | (24 | ) | |||||||
Other current liabilities
|
20 | 10 | (68 | ) | ||||||||
Net cash provided from operating activities
|
3,398 | 3,395 | 2,820 | |||||||||
Investing Activities:
|
||||||||||||
Property additions
|
(3,961 | ) | (3,545 | ) | (2,994 | ) | ||||||
Investment in restricted cash from pollution control bonds
|
(96 | ) | (157 | ) | — | |||||||
Distribution of restricted cash from pollution control bonds
|
69 | 78 | — | |||||||||
Nuclear decommissioning trust fund purchases
|
(720 | ) | (783 | ) | (751 | ) | ||||||
Nuclear decommissioning trust fund sales
|
712 | 775 | 743 | |||||||||
Proceeds from property sales
|
34 | 33 | 150 | |||||||||
Hurricane Katrina capital grant proceeds
|
7 | 35 | 153 | |||||||||
Investment in unconsolidated subsidiaries
|
(1 | ) | (37 | ) | (64 | ) | ||||||
Cost of removal net of salvage
|
(123 | ) | (108 | ) | (90 | ) | ||||||
Other
|
(47 | ) | — | 19 | ||||||||
Net cash used for investing activities
|
(4,126 | ) | (3,709 | ) | (2,834 | ) | ||||||
Financing Activities:
|
||||||||||||
Increase (decrease) in notes payable, net
|
(314 | ) | (669 | ) | 683 | |||||||
Proceeds —
|
||||||||||||
Long-term debt
|
3,686 | 3,826 | 1,564 | |||||||||
Preferred and preference stock
|
— | 470 | 150 | |||||||||
Common stock
|
474 | 538 | 137 | |||||||||
Redemptions —
|
||||||||||||
Long-term debt
|
(1,469 | ) | (2,566 | ) | (1,366 | ) | ||||||
Preferred and preference stock
|
(125 | ) | — | (15 | ) | |||||||
Payment of common stock dividends
|
(1,280 | ) | (1,205 | ) | (1,140 | ) | ||||||
Other
|
(28 | ) | (46 | ) | (34 | ) | ||||||
Net cash provided from (used for) financing activities
|
944 | 348 | (21 | ) | ||||||||
Net Change in Cash and Cash Equivalents
|
216 | 34 | (35 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Year
|
201 | 167 | 202 | |||||||||
Cash and Cash Equivalents at End of Year
|
$ | 417 | $ | 201 | $ | 167 | ||||||
II-51
Assets | 2008 | 2007 | ||||||||||
(in millions) | ||||||||||||
Current Assets:
|
||||||||||||
Cash and cash equivalents
|
$ | 417 | $ | 201 | ||||||||
Restricted cash
|
103 | 68 | ||||||||||
Receivables —
|
||||||||||||
Customer accounts receivable
|
1,054 | 1,000 | ||||||||||
Unbilled revenues
|
320 | 294 | ||||||||||
Under recovered regulatory clause revenues
|
646 | 716 | ||||||||||
Other accounts and notes receivable
|
301 | 348 | ||||||||||
Accumulated provision for uncollectible accounts
|
(26 | ) | (22 | ) | ||||||||
Fossil fuel stock, at average cost
|
1,018 | 710 | ||||||||||
Materials and supplies, at average cost
|
757 | 725 | ||||||||||
Vacation pay
|
140 | 135 | ||||||||||
Prepaid expenses
|
302 | 146 | ||||||||||
Other
|
326 | 411 | ||||||||||
Total current assets
|
5,358 | 4,732 | ||||||||||
Property, Plant, and Equipment:
|
||||||||||||
In service
|
50,618 | 47,176 | ||||||||||
Less accumulated depreciation
|
18,286 | 17,413 | ||||||||||
|
32,332 | 29,763 | ||||||||||
Nuclear fuel, at amortized cost
|
510 | 336 | ||||||||||
Construction work in progress
|
3,036 | 3,228 | ||||||||||
Total property, plant, and equipment
|
35,878 | 33,327 | ||||||||||
Other Property and Investments:
|
||||||||||||
Nuclear decommissioning trusts, at fair value
|
864 | 1,132 | ||||||||||
Leveraged leases
|
897 | 984 | ||||||||||
Other
|
227 | 238 | ||||||||||
Total other property and investments
|
1,988 | 2,354 | ||||||||||
Deferred Charges and Other Assets:
|
||||||||||||
Deferred charges related to income taxes
|
973 | 910 | ||||||||||
Prepaid pension costs
|
— | 2,369 | ||||||||||
Unamortized debt issuance expense
|
208 | 191 | ||||||||||
Unamortized loss on reacquired debt
|
271 | 289 | ||||||||||
Deferred under recovered regulatory clause revenues
|
606 | 389 | ||||||||||
Other regulatory assets
|
2,637 | 768 | ||||||||||
Other
|
428 | 460 | ||||||||||
Total deferred charges and other assets
|
5,123 | 5,376 | ||||||||||
Total Assets
|
$ | 48,347 | $ | 45,789 | ||||||||
II-52
Liabilities and Stockholders’ Equity | 2008 | 2007 | ||||||||||
(in millions) | ||||||||||||
Current Liabilities:
|
||||||||||||
Securities due within one year
|
$ | 617 | $ | 1,178 | ||||||||
Notes payable
|
953 | 1,272 | ||||||||||
Accounts payable
|
1,250 | 1,214 | ||||||||||
Customer deposits
|
302 | 274 | ||||||||||
Accrued taxes —
|
||||||||||||
Income taxes
|
197 | 52 | ||||||||||
Unrecognized tax benefits
|
131 | 165 | ||||||||||
Other
|
396 | 330 | ||||||||||
Accrued interest
|
196 | 218 | ||||||||||
Accrued vacation pay
|
179 | 171 | ||||||||||
Accrued compensation
|
447 | 408 | ||||||||||
Liabilities from risk management activities
|
261 | 63 | ||||||||||
Other
|
297 | 286 | ||||||||||
Total current liabilities
|
5,226 | 5,631 | ||||||||||
Long-term Debt
(See accompanying statements)
|
16,816 | 14,143 | ||||||||||
Deferred Credits and Other Liabilities:
|
||||||||||||
Accumulated deferred income taxes
|
6,080 | 5,839 | ||||||||||
Deferred credits related to income taxes
|
259 | 272 | ||||||||||
Accumulated deferred investment tax credits
|
455 | 479 | ||||||||||
Employee benefit obligations
|
2,057 | 1,492 | ||||||||||
Asset retirement obligations
|
1,183 | 1,200 | ||||||||||
Other cost of removal obligations
|
1,321 | 1,308 | ||||||||||
Other regulatory liabilities
|
262 | 1,613 | ||||||||||
Other
|
330 | 347 | ||||||||||
Total deferred credits and other liabilities
|
11,947 | 12,550 | ||||||||||
Total Liabilities
|
33,989 | 32,324 | ||||||||||
Preferred and Preference Stock of Subsidiaries
(See
accompanying statements)
|
1,082 | 1,080 | ||||||||||
Common Stockholders’ Equity
(See accompanying statements)
|
13,276 | 12,385 | ||||||||||
Total Liabilities and Stockholders’ Equity
|
$ | 48,347 | $ | 45,789 | ||||||||
Commitments and Contingent Matters
(See notes)
|
||||||||||||
II-53
2008 | 2007 | 2008 | 2007 | |||||||||||||||
(in millions) | (percent of total) | |||||||||||||||||
Long-Term Debt:
|
||||||||||||||||||
Long-term debt payable to affiliated trusts —
|
||||||||||||||||||
Maturity
|
Interest Rates | |||||||||||||||||
2042 through 2044
|
5.50% to 5.88% | $ | 412 | $ | 412 | |||||||||||||
Long-term senior notes and debt —
|
||||||||||||||||||
Maturity
|
Interest Rates | |||||||||||||||||
2008
|
2.54% to 7.00% | — | 459 | |||||||||||||||
2009
|
4.10% to 7.00% | 128 | 127 | |||||||||||||||
2010
|
4.70% | 102 | 102 | |||||||||||||||
2011
|
4.00% to 5.57% | 303 | 302 | |||||||||||||||
2012
|
4.85% to 6.25% | 1,778 | 1,478 | |||||||||||||||
2013
|
4.35% to 6.00% | 936 | 236 | |||||||||||||||
2014 through 2048
|
4.88% to 8.20% | 8,437 | 7,824 | |||||||||||||||
Adjustable rates (at 1/1/09):
|
||||||||||||||||||
2008
|
4.94% to 5.00% | — | 550 | |||||||||||||||
2009
|
2.3288% to 2.36% | 440 | 440 | |||||||||||||||
2010
|
2.42% to 6.10% | 1,034 | 202 | |||||||||||||||
2011
|
1.645% to 2.35% | 490 | — | |||||||||||||||
Total long-term senior notes and debt | 13,648 | 11,720 | ||||||||||||||||
Other long-term debt —
|
||||||||||||||||||
Pollution control revenue bonds —
|
||||||||||||||||||
Maturity
|
Interest Rates | |||||||||||||||||
2016 through 2048
|
1.95% to 6.00% | 2,030 | 812 | |||||||||||||||
Variable rates (at 1/1/09):
|
||||||||||||||||||
2011 through 2041
|
0.80% to 3.00% | 1,257 | 2,170 | |||||||||||||||
Total other long-term debt
|
3,287 | 2,982 | ||||||||||||||||
Capitalized lease obligations
|
106 | 101 | ||||||||||||||||
Unamortized debt premium (discount), net
|
(20 | ) | (19 | ) | ||||||||||||||
Total long-term debt (annual interest
requirement — $858 million)
|
17,433 | 15,196 | ||||||||||||||||
Less amount due within one year
|
617 | 1,053 | ||||||||||||||||
Long-term debt excluding amount due within one year | 16,816 | 14,143 | 53.9 | % | 51.2 | % | ||||||||||||
II-54
2008 | 2007 | 2008 | 2007 | |||||||||||||||
(in millions) | (percent of total) | |||||||||||||||||
Preferred and Preference Stock of Subsidiaries:
|
||||||||||||||||||
Cumulative preferred stock
|
||||||||||||||||||
$100 par or stated value — 4.20% to 5.44%
|
||||||||||||||||||
Authorized — 20 million shares
|
||||||||||||||||||
Outstanding — 1 million shares
|
81 | 81 | ||||||||||||||||
$1 par value — 4.95% to 5.83%
|
||||||||||||||||||
Authorized — 28 million shares
|
||||||||||||||||||
Outstanding — 12 million shares: $25 stated value
|
294 | 294 | ||||||||||||||||
Outstanding — 2008: 0 shares
|
— | 123 | ||||||||||||||||
Outstanding — 2007: 1,250 shares: $100,000 stated capital
|
||||||||||||||||||
Non-cumulative preferred stock
|
||||||||||||||||||
$25 par value — 6.00% to 6.13%
|
||||||||||||||||||
Authorized — 60 million shares
|
||||||||||||||||||
Outstanding — 2 million shares
|
45 | 45 | ||||||||||||||||
Preference stock
|
||||||||||||||||||
Authorized — 65 million shares
|
||||||||||||||||||
Outstanding — $1 par value — 5.63% to 6.50%
|
343 | 343 | ||||||||||||||||
— 14 million shares (non-cumulative)
|
||||||||||||||||||
— $100 par or stated value — 6.00% to 6.50%
|
319 | 319 | ||||||||||||||||
— 3 million shares (non-cumulative)
|
||||||||||||||||||
Total preferred and preference stock of subsidiaries
|
||||||||||||||||||
(annual dividend requirement — $65 million)
|
1,082 | 1,205 | ||||||||||||||||
Less amount due within one year
|
— | 125 | ||||||||||||||||
Preferred and preference stock of subsidiaries
excluding amount due within one year
|
1,082 | 1,080 | 3.5 | 3.9 | ||||||||||||||
Common Stockholders’ Equity:
|
||||||||||||||||||
Common stock, par value $5 per share —
|
3,888 | 3,817 | ||||||||||||||||
Authorized — 1 billion shares
|
||||||||||||||||||
Issued — 2008: 778 million shares
|
||||||||||||||||||
— 2007: 764 million shares
|
||||||||||||||||||
Treasury — 2008: 0.4 million shares
|
||||||||||||||||||
— 2007: 0.4 million shares
|
||||||||||||||||||
Paid-in capital
|
1,893 | 1,454 | ||||||||||||||||
Treasury, at cost
|
(12 | ) | (11 | ) | ||||||||||||||
Retained earnings
|
7,612 | 7,155 | ||||||||||||||||
Accumulated other comprehensive income (loss)
|
(105 | ) | (30 | ) | ||||||||||||||
Total common stockholders’ equity
|
13,276 | 12,385 | 42.6 | 44.9 | ||||||||||||||
Total Capitalization
|
$ | 31,174 | $ | 27,608 | 100.0 | % | 100.0 | % | ||||||||||
II-55
Common Stock | Accumulated | |||||||||||||||||||||||
Par | Paid-In | Retained | Other Comprehensive | |||||||||||||||||||||
Value | Capital | Treasury | Earnings | Income (Loss) | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Balance at December 31, 2005
|
$ | 3,759 | $ | 1,085 | $ | (359 | ) | $ | 6,332 | $ | (128 | ) | $ | 10,689 | ||||||||||
Net income
|
— | — | — | 1,573 | — | 1,573 | ||||||||||||||||||
Other comprehensive income
|
— | — | — | — | 19 | 19 | ||||||||||||||||||
Adjustment to initially apply
FASB Statement No. 158,
net of tax
|
— | — | — | — | 52 | 52 | ||||||||||||||||||
Stock issued
|
— | 11 | 168 | — | — | 179 | ||||||||||||||||||
Cash dividends
|
— | — | — | (1,140 | ) | — | (1,140 | ) | ||||||||||||||||
Other
|
— | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||
Balance at December 31, 2006
|
3,759 | 1,096 | (192 | ) | 6,765 | (57 | ) | 11,371 | ||||||||||||||||
Net income
|
— | — | — | 1,734 | — | 1,734 | ||||||||||||||||||
Other comprehensive income
|
— | — | — | — | 27 | 27 | ||||||||||||||||||
Stock issued
|
58 | 356 | 183 | — | — | 597 | ||||||||||||||||||
Adjustment to initially apply
FIN 48, net of tax
|
— | — | — | (15 | ) | — | (15 | ) | ||||||||||||||||
Adjustment to initially apply
FSP 13-2, net of tax
|
— | — | — | (125 | ) | — | (125 | ) | ||||||||||||||||
Cash dividends
|
— | — | — | (1,204 | ) | — | (1,204 | ) | ||||||||||||||||
Other
|
— | 2 | (2 | ) | — | — | — | |||||||||||||||||
Balance at December 31, 2007
|
3,817 | 1,454 | (11 | ) | 7,155 | (30 | ) | 12,385 | ||||||||||||||||
Net income
|
— | — | — | 1,742 | — | 1,742 | ||||||||||||||||||
Other comprehensive loss
|
— | — | — | — | (75 | ) | (75 | ) | ||||||||||||||||
Stock issued
|
71 | 438 | — | — | — | 509 | ||||||||||||||||||
Cash dividends
|
— | — | — | (1,279 | ) | — | (1,279 | ) | ||||||||||||||||
Other
|
— | 1 | (1 | ) | (6 | ) | — | (6 | ) | |||||||||||||||
Balance at December 31, 2008
|
$ | 3,888 | $ | 1,893 | $ | (12 | ) | $ | 7,612 | $ | (105 | ) | $ | 13,276 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Consolidated Net Income
|
$ | 1,742 | $ | 1,734 | $ | 1,573 | ||||||
Other comprehensive income (loss):
|
||||||||||||
Qualifying hedges:
|
||||||||||||
Changes in fair value, net of tax of $(19), $(3), and $(5),
respectively
|
(30 | ) | (5 | ) | (8 | ) | ||||||
Reclassification adjustment for amounts included in net income,
net of tax of $7, $6, and $-, respectively
|
11 | 9 | 1 | |||||||||
Marketable securities:
|
||||||||||||
Changes in fair value, net of tax of $(4), $3, and $4, respectively
|
(7 | ) | 4 | 8 | ||||||||
Reclassification adjustment for amounts included in net income,
net of tax of $-, $-, and $-, respectively
|
— | (1 | ) | — | ||||||||
Pension and other postretirement benefit plans:
|
||||||||||||
Benefit plan net gain (loss), net of tax of $(32), $13, and $-,
respectively
|
(51 | ) | 20 | — | ||||||||
Additional prior service costs from amendment to non-qualified
pension plans, net of tax of $-, $(2), and $-, respectively
|
— | (2 | ) | — | ||||||||
Change in additional minimum pension liability,
net of tax of $-, $-, and $10, respectively
|
— | — | 18 | |||||||||
Reclassification adjustment for amounts included in net income,
net of tax of $1, $1, and $-, respectively
|
2 | 2 | — | |||||||||
Total other comprehensive income (loss)
|
(75 | ) | 27 | 19 | ||||||||
Consolidated Comprehensive Income
|
$ | 1,667 | $ | 1,761 | $ | 1,592 | ||||||
II-56
II-57
2008 | 2007 | Note | ||||||||||
(in millions) | ||||||||||||
Deferred income tax charges
|
$ | 972 | $ | 911 | (a | ) | ||||||
Asset retirement obligations-asset
|
236 | 50 | (a | ) | ||||||||
Asset retirement obligations-liability
|
(5 | ) | (154 | ) | (a | ) | ||||||
Other cost of removal obligations
|
(1,321 | ) | (1,308 | ) | (a | ) | ||||||
Deferred income tax credits
|
(260 | ) | (275 | ) | (a | ) | ||||||
Loss on reacquired debt
|
271 | 289 | (b | ) | ||||||||
Vacation pay
|
140 | 135 | (c | ) | ||||||||
Under recovered regulatory clause revenues
|
432 | 371 | (d | ) | ||||||||
Building lease
|
48 | 49 | (d | ) | ||||||||
Generating plant outage costs
|
45 | 46 | (d | ) | ||||||||
Under recovered storm damage costs
|
27 | 43 | (d | ) | ||||||||
Property damage reserves
|
(97 | ) | (90 | ) | (d | ) | ||||||
Fuel hedging (realized and unrealized) losses
|
314 | 25 | (d | ) | ||||||||
Fuel hedging (realized and unrealized) gains
|
(10 | ) | (20 | ) | (d | ) | ||||||
Other assets
|
164 | 88 | (d | ) | ||||||||
Environmental remediation-asset
|
67 | 67 | (d | ) | ||||||||
Environmental remediation-liability
|
(19 | ) | (22 | ) | (d | ) | ||||||
Deferred purchased power
|
(156 | ) | (20 | ) | (d | ) | ||||||
Other liabilities
|
(25 | ) | (21 | ) | (d | ) | ||||||
Overfunded retiree benefit plans
|
— | (1,288 | ) | (e | ) | |||||||
Underfunded retiree benefit plans
|
2,068 | 547 | (e | ) | ||||||||
Total assets (liabilities), net
|
$ | 2,891 | $ | (577 | ) | |||||||
Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows: | ||
(a) | Asset retirement and removal liabilities are recorded, deferred income tax assets are recovered, and deferred tax liabilities are amortized over the related property lives, which may range up to 65 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. | |
(b) | Recovered over either the remaining life of the original issue or, if refinanced, over the life of the new issue, which may range up to 50 years. | |
(c) | Recorded as earned by employees and recovered as paid, generally within one year. | |
(d) | Recorded and recovered or amortized as approved by the appropriate state PSCs. | |
(e) | Recovered and amortized over the average remaining service period which may range up to 14 years. See Note 2 for additional information. |
II-58
II-59
2008 | 2007 | |||||||
(in millions) | ||||||||
Generation
|
$ | 26,154 | $ | 23,879 | ||||
Transmission
|
7,085 | 6,761 | ||||||
Distribution
|
13,856 | 13,134 | ||||||
General
|
2,750 | 2,619 | ||||||
Plant acquisition adjustment
|
43 | 43 | ||||||
Utility plant in service
|
49,888 | 46,436 | ||||||
IT equipment and software
|
240 | 230 | ||||||
Communications equipment
|
450 | 452 | ||||||
Other
|
40 | 58 | ||||||
Other plant in service
|
730 | 740 | ||||||
Total plant in service
|
$ | 50,618 | $ | 47,176 | ||||
II-60
2008 | 2007 | |||||||
(in millions) | ||||||||
Balance beginning of year
|
$ | 1,203 | $ | 1,137 | ||||
Liabilities incurred
|
4 | 1 | ||||||
Liabilities settled
|
(4 | ) | (8 | ) | ||||
Accretion
|
75 | 74 | ||||||
Cash flow revisions
|
(93 | ) | (1 | ) | ||||
Balance end of year
|
$ | 1,185 | $ | 1,203 | ||||
II-61
II-62
Plant Farley | Plant Hatch | Plant Vogtle | ||||||||||
(in millions) | ||||||||||||
External trust funds
|
$ | 404 | $ | 280 | $ | 168 | ||||||
Internal reserves
|
26 | — | — | |||||||||
Total
|
$ | 430 | $ | 280 | $ | 168 | ||||||
Plant Farley | Plant Hatch | Plant Vogtle | ||||||||||
Decommissioning periods:
|
||||||||||||
Beginning year
|
2037 | 2034 | 2027 | |||||||||
Completion year
|
2065 | 2061 | 2051 | |||||||||
(in millions)
|
||||||||||||
Site study costs:
|
||||||||||||
Radiated structures
|
$ | 1,060 | $ | 544 | $ | 507 | ||||||
Non-radiated structures
|
72 | 46 | 67 | |||||||||
Total
|
$ | 1,132 | $ | 590 | $ | 574 | ||||||
II-63
2008 | 2007 | |||||||
(in millions) | ||||||||
Net rentals receivable
|
$ | 492 | $ | 494 | ||||
Unearned income
|
(230 | ) | (244 | ) | ||||
Investment in leveraged leases
|
262 | 250 | ||||||
Deferred taxes from leveraged leases
|
(189 | ) | (163 | ) | ||||
Net investment in leveraged leases
|
$ | 73 | $ | 87 | ||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Pretax leveraged lease income
|
$ | 14 | $ | 16 | $ | 20 | ||||||
Income tax expense
|
(6 | ) | (7 | ) | (9 | ) | ||||||
Net leveraged lease income
|
$ | 8 | $ | 9 | $ | 11 | ||||||
II-64
2008 | 2007 | |||||||
(in millions) | ||||||||
Net rentals receivable
|
$ | 1,298 | $ | 1,298 | ||||
Unearned income
|
(663 | ) | (563 | ) | ||||
Investment in leveraged leases
|
635 | 735 | ||||||
Current taxes payable
|
(120 | ) | — | |||||
Deferred taxes from leveraged leases
|
(117 | ) | (316 | ) | ||||
Net investment in leveraged leases
|
$ | 398 | $ | 419 | ||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Pretax leveraged lease income (loss)
|
$ | (99 | ) | $ | 24 | $ | 49 | |||||
Income tax benefit (expense)
|
35 | (8 | ) | (17 | ) | |||||||
Net leveraged lease income (loss)
|
$ | (64 | ) | $ | 16 | $ | 32 | |||||
II-65
Carrying Amount | Fair Value | |||||||
(in millions) | ||||||||
Long-term debt:
|
||||||||
2008
|
$ | 17,327 | $ | 17,114 | ||||
2007
|
$ | 15,095 | $ | 14,931 |
Pension and Other | Accumulated Other | |||||||||||||||
Qualifying | Marketable | Postretirement | Comprehensive | |||||||||||||
Hedges | Securities | Benefit Plans | Income (Loss) | |||||||||||||
(in millions) | ||||||||||||||||
Balance at December 31, 2007
|
$ | (54 | ) | $ | 13 | $ | 11 | $ | (30 | ) | ||||||
Current period change
|
(19 | ) | (7 | ) | (49 | ) | (75 | ) | ||||||||
Balance at December 31, 2008
|
$ | (73 | ) | $ | 6 | $ | (38 | ) | $ | (105 | ) | |||||
II-66
2008 | 2007 | |||||||
(in millions) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 5,660 | $ | 5,491 | ||||
Service cost
|
182 | 147 | ||||||
Interest cost
|
435 | 324 | ||||||
Benefits paid
|
(324 | ) | (241 | ) | ||||
Plan amendments
|
— | 50 | ||||||
Actuarial gain
|
(74 | ) | (111 | ) | ||||
Balance at end of year
|
5,879 | 5,660 | ||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
7,624 | 6,693 | ||||||
Actual return (loss) on plan assets
|
(2,234 | ) | 1,153 | |||||
Employer contributions
|
27 | 19 | ||||||
Benefits paid
|
(324 | ) | (241 | ) | ||||
Fair value of plan assets at end of year
|
5,093 | 7,624 | ||||||
Funded status at end of year
|
(786 | ) | 1,964 | |||||
Fourth quarter contributions
|
— | 5 | ||||||
(Accrued liability) prepaid pension asset
|
$ | (786 | ) | $ | 1,969 | |||
II-67
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
36 | % | 34 | % | 38 | % | ||||||
International equity
|
24 | 23 | 24 | |||||||||
Fixed income
|
15 | 14 | 15 | |||||||||
Real estate
|
15 | 19 | 16 | |||||||||
Private equity
|
10 | 10 | 7 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Prepaid pension costs
|
$ | — | $ | 2,369 | ||||
Other regulatory assets
|
1,579 | 188 | ||||||
Current liabilities, other
|
(23 | ) | (21 | ) | ||||
Other regulatory liabilities
|
— | (1,288 | ) | |||||
Employee benefit obligations
|
(763 | ) | (379 | ) | ||||
Accumulated other comprehensive income
|
54 | (26 | ) | |||||
Prior Service Cost | Net(Gain)Loss | |||||||
(in millions) | ||||||||
Balance at December 31, 2008:
|
||||||||
Accumulated other comprehensive income
|
$ | 12 | $ | 42 | ||||
Regulatory assets
|
220 | 1,359 | ||||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 232 | $ | 1,401 | ||||
|
||||||||
Balance at December 31, 2007:
|
||||||||
Accumulated other comprehensive income
|
$ | 14 | $ | (40 | ) | |||
Regulatory assets
|
66 | 122 | ||||||
Regulatory liabilities
|
198 | (1,486 | ) | |||||
Total
|
$ | 278 | $ | (1,404 | ) | |||
|
||||||||
Estimated amortization in net periodic
pension cost in 2009:
|
||||||||
Accumulated other comprehensive income
|
$ | 2 | $ | — | ||||
Regulatory assets
|
33 | 7 | ||||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 35 | $ | 7 | ||||
II-68
Accumulated Other | ||||||||||||
Comprehensive
Income |
Regulatory
Assets |
Regulatory
Liabilities |
||||||||||
(in millions) | ||||||||||||
Balance at December 31, 2006
|
$ | — | $ | 158 | $ | (507 | ) | |||||
Net gain
|
(28 | ) | — | (753 | ) | |||||||
Change in prior service costs
|
4 | 46 | — | |||||||||
Reclassification adjustments:
|
||||||||||||
Amortization of prior service costs
|
(2 | ) | (7 | ) | (28 | ) | ||||||
Amortization of net gain
|
— | (9 | ) | — | ||||||||
Total reclassification adjustments
|
(2 | ) | (16 | ) | (28 | ) | ||||||
Total change
|
(26 | ) | 30 | (781 | ) | |||||||
Balance at December 31, 2007
|
(26 | ) | 188 | (1,288 | ) | |||||||
Net loss
|
83 | 1,412 | 1,322 | |||||||||
Change in prior service costs
|
— | — | — | |||||||||
Reclassification adjustments:
|
||||||||||||
Amortization of prior service costs
|
(2 | ) | (10 | ) | (34 | ) | ||||||
Amortization of net gain
|
(1 | ) | (11 | ) | — | |||||||
Total reclassification adjustments
|
(3 | ) | (21 | ) | (34 | ) | ||||||
Total change
|
80 | 1,391 | 1,288 | |||||||||
Balance at December 31, 2008
|
$ | 54 | $ | 1,579 | $ | — | ||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost
|
$ | 146 | $ | 147 | $ | 153 | ||||||
Interest cost
|
348 | 324 | 300 | |||||||||
Expected return on plan assets
|
(525 | ) | (481 | ) | (456 | ) | ||||||
Recognized net loss
|
9 | 10 | 16 | |||||||||
Net amortization
|
37 | 35 | 26 | |||||||||
Net periodic pension cost
|
$ | 15 | $ | 35 | $ | 39 | ||||||
Benefit Payments | ||||
(in millions) | ||||
2009
|
$ | 289 | ||
2010
|
304 | |||
2011
|
322 | |||
2012
|
341 | |||
2013
|
362 | |||
2014 to 2018
|
2,187 | |||
II-69
2008 | 2007 | |||||||
(in millions) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 1,797 | $ | 1,830 | ||||
Service cost
|
36 | 27 | ||||||
Interest cost
|
138 | 107 | ||||||
Benefits paid
|
(108 | ) | (83 | ) | ||||
Actuarial gain
|
(139 | ) | (90 | ) | ||||
Retiree drug subsidy
|
9 | 6 | ||||||
Balance at end of year
|
1,733 | 1,797 | ||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
820 | 731 | ||||||
Actual return (loss) on plan assets
|
(232 | ) | 105 | |||||
Employer contributions
|
142 | 61 | ||||||
Benefits paid
|
(99 | ) | (77 | ) | ||||
Fair value of plan assets at end of year
|
631 | 820 | ||||||
Funded status at end of year
|
(1,102 | ) | (977 | ) | ||||
Fourth quarter contributions
|
— | 65 | ||||||
Accrued liability
|
$ | (1,102 | ) | $ | (912 | ) | ||
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
44 | % | 34 | % | 45 | % | ||||||
International equity
|
17 | 18 | 20 | |||||||||
Fixed income
|
30 | 38 | 26 | |||||||||
Real estate
|
5 | 7 | 6 | |||||||||
Private equity
|
4 | 3 | 3 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Other regulatory assets
|
$ | 489 | $ | 360 | ||||
Current liabilities, other
|
(3 | ) | (3 | ) | ||||
Employee benefit obligations
|
(1,099 | ) | (909 | ) | ||||
Accumulated other comprehensive income
|
8 | 8 | ||||||
II-70
Prior Service | Net(Gain) | Transition | ||||||||||
Cost | Loss | Obligation | ||||||||||
(in millions) | ||||||||||||
Balance at December 31, 2008:
|
||||||||||||
Accumulated other comprehensive income
|
$ | 3 | $ | 5 | $ | — | ||||||
Regulatory assets
|
88 | 335 | 66 | |||||||||
Total
|
$ | 91 | $ | 340 | $ | 66 | ||||||
Balance at December 31, 2007:
|
||||||||||||
Accumulated other comprehensive income
|
$ | 4 | $ | 4 | $ | — | ||||||
Regulatory assets
|
99 | 177 | 84 | |||||||||
Total
|
$ | 103 | $ | 181 | $ | 84 | ||||||
|
||||||||||||
Estimated amortization as net periodic
postretirement benefit cost in 2009:
|
||||||||||||
Accumulated other comprehensive income
|
$ | — | $ | — | $ | — | ||||||
Regulatory assets
|
9 | 5 | 15 | |||||||||
Total
|
$ | 9 | $ | 5 | $ | 15 | ||||||
Accumulated Other | ||||||||
Comprehensive
Income |
Regulatory
Assets |
|||||||
(in millions) | ||||||||
Balance at December 31, 2006
|
$ | 14 | $ | 539 | ||||
Net gain
|
(6 | ) | (141 | ) | ||||
Change in prior service costs
|
— | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of transition obligation
|
— | (15 | ) | |||||
Amortization of prior service costs
|
— | (9 | ) | |||||
Amortization of net gain
|
— | (14 | ) | |||||
Total reclassification adjustments
|
— | (38 | ) | |||||
Total change
|
(6 | ) | (179 | ) | ||||
Balance at December 31, 2007
|
8 | 360 | ||||||
Net loss
|
1 | 166 | ||||||
Change in prior service costs
|
— | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of transition obligation
|
— | (18 | ) | |||||
Amortization of prior service costs
|
(1 | ) | (11 | ) | ||||
Amortization of net gain
|
— | (8 | ) | |||||
Total reclassification adjustments
|
(1 | ) | (37 | ) | ||||
Total change
|
— | 129 | ||||||
Balance at December 31, 2008
|
$ | 8 | $ | 489 | ||||
II-71
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost
|
$ | 28 | $ | 27 | $ | 30 | ||||||
Interest cost
|
111 | 107 | 98 | |||||||||
Expected return on plan assets
|
(59 | ) | (52 | ) | (49 | ) | ||||||
Net amortization
|
31 | 38 | 43 | |||||||||
Net postretirement cost
|
$ | 111 | $ | 120 | $ | 122 | ||||||
Benefit Payments | Subsidy Receipts | Total | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 100 | $ | (8 | ) | $ | 92 | |||||
2010
|
110 | (10 | ) | 100 | ||||||||
2011
|
120 | (11 | ) | 109 | ||||||||
2012
|
127 | (13 | ) | 114 | ||||||||
2013
|
134 | (14 | ) | 120 | ||||||||
2014 to 2018
|
746 | (100 | ) | 646 | ||||||||
2008 | 2007 | 2006 | ||||||||||
Discount
|
6.75 | % | 6.30 | % | 6.00 | % | ||||||
Annual salary increase
|
3.75 | 3.75 | 3.50 | |||||||||
Long-term return on plan assets
|
8.50 | 8.50 | 8.50 | |||||||||
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
(in millions) | ||||||||
Benefit obligation
|
$ | 122 | $ | 126 | ||||
Service and interest costs
|
9 | 7 | ||||||
II-72
II-73
II-74
II-75
II-76
II-77
II-78
II-79
II-80
II-81
II-82
II-83
II-84
II-85
II-86
Percent | Amount of | Accumulated | ||||||||||
Ownership | Investment | Depreciation | ||||||||||
(in millions) | ||||||||||||
Plant Vogtle (nuclear)
|
45.7 | % | $ | 3,303 | $ | 1,918 | ||||||
Plant Hatch (nuclear)
|
50.1 | 953 | 521 | |||||||||
Plant Miller (coal)
Units 1 and 2
|
91.8 | 986 | 425 | |||||||||
Plant Scherer (coal)
Units 1 and 2
|
8.4 | 117 | 68 | |||||||||
Plant Wansley (coal)
|
53.5 | 552 | 189 | |||||||||
Rocky Mountain (pumped storage)
|
25.4 | 175 | 102 | |||||||||
Intercession City (combustion turbine)
|
33.3 | 12 | 3 | |||||||||
Plant Stanton (combined cycle)
Unit A
|
65.0 | 151 | 14 | |||||||||
II-87
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Federal —
|
||||||||||||
Current
|
$ | 628 | $ | 715 | $ | 465 | ||||||
Deferred
|
177 | 11 | 207 | |||||||||
|
805 | 726 | 672 | |||||||||
State —
|
||||||||||||
Current
|
72 | 114 | 110 | |||||||||
Deferred
|
38 | (5 | ) | (2 | ) | |||||||
|
110 | 109 | 108 | |||||||||
Total
|
$ | 915 | $ | 835 | $ | 780 | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Deferred tax liabilities —
|
||||||||
Accelerated depreciation
|
$ | 5,356 | $ | 4,878 | ||||
Property basis differences
|
968 | 950 | ||||||
Leveraged lease basis differences
|
306 | 479 | ||||||
Employee benefit obligations
|
364 | 856 | ||||||
Under recovered fuel clause
|
516 | 443 | ||||||
Premium on reacquired debt
|
107 | 114 | ||||||
Regulatory assets associated with employee benefit obligations
|
869 | 303 | ||||||
Regulatory assets associated with asset retirement obligations
|
480 | 483 | ||||||
Other
|
132 | 140 | ||||||
Total
|
9,098 | 8,646 | ||||||
Deferred tax assets —
|
||||||||
Federal effect of state deferred taxes
|
354 | 305 | ||||||
State effect of federal deferred taxes
|
105 | 97 | ||||||
Employee benefit obligations
|
1,325 | 656 | ||||||
Other property basis differences
|
144 | 147 | ||||||
Deferred costs
|
99 | 131 | ||||||
Unbilled revenue
|
100 | 90 | ||||||
Other comprehensive losses
|
82 | 48 | ||||||
Regulatory liabilities associated with employee benefit obligations
|
— | 514 | ||||||
Asset retirement obligations
|
480 | 483 | ||||||
Other
|
279 | 259 | ||||||
Total
|
2,968 | 2,730 | ||||||
Total deferred tax liabilities, net
|
6,130 | 5,916 | ||||||
Portion included in prepaid expenses (accrued income taxes), net
|
(90 | ) | (106 | ) | ||||
Deferred state tax assets
|
103 | 88 | ||||||
Valuation allowance
|
(63 | ) | (59 | ) | ||||
Accumulated deferred income taxes
|
$ | 6,080 | $ | 5,839 | ||||
II-88
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction
|
2.6 | 2.7 | 2.9 | |||||||||
Synthetic fuel tax credits
|
— | (1.4 | ) | (2.7 | ) | |||||||
Employee stock plans dividend deduction
|
(1.3 | ) | (1.3 | ) | (1.4 | ) | ||||||
Non-deductible book depreciation
|
0.8 | 0.9 | 1.0 | |||||||||
Difference in prior years’ deferred and current tax rate
|
(0.2 | ) | (0.2 | ) | (0.3 | ) | ||||||
AFUDC-Equity
|
(1.9 | ) | (1.4 | ) | (0.7 | ) | ||||||
Production activities deduction
|
(0.4 | ) | (0.8 | ) | (0.2 | ) | ||||||
Donations
|
— | (0.8 | ) | — | ||||||||
Other
|
(1.0 | ) | (0.8 | ) | (0.9 | ) | ||||||
Effective income tax rate
|
33.6 | % | 31.9 | % | 32.7 | % | ||||||
II-89
2008 | 2007 | |||||||
(in millions) | ||||||||
Unrecognized tax benefits at beginning of year
|
$ | 264 | $ | 211 | ||||
Tax positions from current periods
|
49 | 46 | ||||||
Tax positions from prior periods
|
130 | 7 | ||||||
Reductions due to settlements
|
(297 | ) | — | |||||
Balance at end of year
|
$ | 146 | $ | 264 | ||||
2008 | 2007 | Change | ||||||||||
(in millions) | ||||||||||||
Tax positions impacting the effective tax rate
|
$ | 143 | $ | 96 | $ | 47 | ||||||
Tax positions not impacting the effective tax rate
|
3 | 168 | (165 | ) | ||||||||
Balance of unrecognized tax benefits
|
$ | 146 | $ | 264 | $ | (118 | ) | |||||
II-90
2008 | 2007 | |||||||
(in millions) | ||||||||
Interest accrued at beginning of year
|
$ | 31 | $ | 27 | ||||
Interest reclassified due to settlements
|
(49 | ) | — | |||||
Interest accrued during the year
|
33 | 4 | ||||||
Balance at end of year
|
$ | 15 | $ | 31 | ||||
II-91
2008 | 2007 | |||||||
(in millions) | ||||||||
Capitalized leases
|
$ | 20 | $ | 15 | ||||
Senior notes
|
565 | 1,005 | ||||||
Other long-term debt
|
32 | 33 | ||||||
Preferred stock
|
— | 125 | ||||||
Total
|
$ | 617 | $ | 1,178 | ||||
II-92
Expires | ||||||||||||||||||||
Company | Total | Unused | 2009 | 2011 | 2012 | |||||||||||||||
(in millions) | ||||||||||||||||||||
Alabama Power
|
$ | 1,256 | $ | 1,256 | $ | 466 | $ | 25 | $ | 765 | ||||||||||
Georgia Power
|
1,345 | 1,333 | 225 | — | 1,120 | |||||||||||||||
Gulf Power
|
120 | 120 | 120 | — | — | |||||||||||||||
Mississippi Power
|
99 | 99 | 99 | — | — | |||||||||||||||
Southern Company
|
950 | 950 | — | — | 950 | |||||||||||||||
Southern Power
|
400 | 400 | — | — | 400 | |||||||||||||||
Other
|
60 | 60 | 60 | — | — | |||||||||||||||
Total
|
$ | 4,230 | $ | 4,218 | $ | 970 | $ | 25 | $ | 3,235 | ||||||||||
II-93
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (288 | ) | $ | — | |||
Cash flow hedges
|
( 1 | ) | 1 | |||||
Non-accounting hedges
|
4 | 3 | ||||||
Total fair value
|
$ | (285 | ) | $ | 4 | |||
II-94
Weighted | Fair Value | |||||||||||||||||||
Notional | Variable Rate | Average | Hedge Maturity | Gain (Loss) | ||||||||||||||||
Amount | Received | Fixed Rate Paid | Date | December 31, 2008 | ||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
|
||||||||||||||||||||
Cash Flow Hedges on Existing Debt | ||||||||||||||||||||
Alabama Power*
|
$ | 576 | SIFMA Index | 2.69 | % | February 2010 | $ | (11 | ) | |||||||||||
Georgia Power*
|
301 | SIFMA Index | 2.22 | % | December 2009 | (3 | ) | |||||||||||||
Georgia Power
|
150 | 3-month LIBOR | 2.63 | % | February 2009 | (- | ) | |||||||||||||
Georgia Power
|
300 | 1-month LIBOR | 2.43 | % | April 2010 | (5 | ) | |||||||||||||
|
||||||||||||||||||||
Cash Flow Hedges on Forecasted Debt | ||||||||||||||||||||
Georgia Power
|
100 | 3-month LIBOR | 4.98 | % | February 2019 | (21 | ) |
* | Hedged using the Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA) (formerly the Bond Market Association/PSA Municipal Swap Index) |
II-95
II-96
Commitments | ||||||||||||||||
Natural Gas | Coal | Nuclear Fuel | Purchased Power | |||||||||||||
(in millions) | ||||||||||||||||
2009
|
$ | 1,507 | $ | 4,608 | $ | 187 | $ | 217 | ||||||||
2010
|
969 | 3,333 | 151 | 239 | ||||||||||||
2011
|
640 | 2,666 | 150 | 216 | ||||||||||||
2012
|
611 | 1,370 | 152 | 222 | ||||||||||||
2013
|
631 | 1,232 | 123 | 191 | ||||||||||||
2014 and thereafter
|
3,798 | 3,421 | 43 | 1,938 | ||||||||||||
Total
|
$ | 8,156 | $ | 16,630 | $ | 806 | $ | 3,023 | ||||||||
II-97
Minimum Lease Payments | ||||||||||||||||
Plant Daniel | Barges & Rail Cars | Other | Total | |||||||||||||
(in millions) | ||||||||||||||||
2009
|
$ | 29 | $ | 66 | $ | 48 | $ | 143 | ||||||||
2010
|
28 | 46 | 42 | 116 | ||||||||||||
2011
|
28 | 34 | 34 | 96 | ||||||||||||
2012
|
— | 21 | 25 | 46 | ||||||||||||
2013
|
— | 18 | 17 | 35 | ||||||||||||
2014 and thereafter
|
— | 40 | 106 | 146 | ||||||||||||
Total
|
$ | 85 | $ | 225 | $ | 272 | $ | 582 | ||||||||
II-98
Year Ended December 31 | 2008 | 2007 | 2006 | |||||||||
Expected volatility
|
13.1 | % | 14.8 | % | 16.9 | % | ||||||
Expected term
(in years)
|
5.0 | 5.0 | 5.0 | |||||||||
Interest rate
|
2.8 | % | 4.6 | % | 4.6 | % | ||||||
Dividend yield
|
4.5 | % | 4.3 | % | 4.4 | % | ||||||
Weighted average grant-date fair value
|
$ | 2.37 | $ | 4.12 | $ | 4.15 |
Shares Subject | Weighted Average | |||||||
To Option | Exercise Price | |||||||
Outstanding at December 31, 2007
|
34,074,622 | $ | 30.77 | |||||
Granted
|
7,084,902 | 35.78 | ||||||
Exercised
|
(4,112,651 | ) | 27.42 | |||||
Cancelled
|
(105,600 | ) | 34.70 | |||||
Outstanding at December 31, 2008
|
36,941,273 | $ | 32.09 | |||||
Exercisable at December 31, 2008
|
24,194,943 | $ | 30.20 | |||||
II-99
Average Common Stock Shares | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
As reported shares
|
771,039 | 756,350 | 743,146 | |||||||||
Effect of options
|
3,809 | 4,666 | 4,739 | |||||||||
Diluted shares
|
774,848 | 761,016 | 747,885 | |||||||||
II-100
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. |
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. |
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. |
II-101
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | ||||||||||||||||
Assets:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 22 | $ | — | $ | 22 | ||||||||
Nuclear decommissioning trusts
(a)
|
498 | 364 | — | 862 | ||||||||||||
Cash equivalents and restricted cash
|
469 | — | — | 469 | ||||||||||||
Other
|
2 | 46 | 35 | 83 | ||||||||||||
Total fair value
|
$ | 969 | $ | 432 | $ | 35 | $ | 1,436 | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 307 | $ | — | $ | 307 | ||||||||
Interest rate derivatives
|
— | 40 | — | 40 | ||||||||||||
Total fair value
|
$ | — | $ | 347 | $ | — | $ | 347 | ||||||||
(a) | Excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases. |
Level 3 | ||||
Other | ||||
(in millions) | ||||
Beginning balance at December 31, 2007
|
$ | 50 | ||
Total gains (losses) — realized/unrealized:
|
||||
Included in other comprehensive income
|
(12 | ) | ||
Purchases, issuances and settlements
|
1 | |||
Transfers in and/or out of Level 3
|
(4 | ) | ||
Ending balance at December 31, 2008
|
$ | 35 | ||
II-102
II-103
Electric Utilities | ||||||||||||||||||||||||||||
Traditional | ||||||||||||||||||||||||||||
Operating | Southern | All | ||||||||||||||||||||||||||
Companies | Power | Eliminations | Total | Other | Eliminations | Consolidated | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2008
|
||||||||||||||||||||||||||||
Operating revenues
|
$ | 16,521 | $ | 1,314 | $ | (835 | ) | $ | 17,000 | $ | 182 | $ | (55 | ) | $ | 17,127 | ||||||||||||
Depreciation and
amortization
|
1,325 | 89 | — | 1,414 | 29 | — | 1,443 | |||||||||||||||||||||
Interest income
|
32 | 1 | — | 33 | — | — | 33 | |||||||||||||||||||||
Interest expense
|
689 | 83 | — | 772 | 94 | — | 866 | |||||||||||||||||||||
Income taxes
|
944 | 93 | — | 1,037 | (122 | ) | — | 915 | ||||||||||||||||||||
Segment net income (loss)
|
1,703 | 144 | — | 1,847 | (104 | ) | (1 | ) | 1,742 | |||||||||||||||||||
Total assets
|
44,794 | 2,813 | (139 | ) | 47,468 | 1,407 | (528 | ) | 48,347 | |||||||||||||||||||
Gross property additions
|
4,058 | 50 | — | 4,108 | 14 | — | 4,122 | |||||||||||||||||||||
Electric Utilities | ||||||||||||||||||||||||||||
Traditional | ||||||||||||||||||||||||||||
Operating | Southern | All | ||||||||||||||||||||||||||
Companies | Power | Eliminations | Total | Other | Eliminations | Consolidated | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2007
|
||||||||||||||||||||||||||||
Operating revenues
|
$ | 14,851 | $ | 972 | $ | (683 | ) | $ | 15,140 | $ | 380 | $ | (167 | ) | $ | 15,353 | ||||||||||||
Depreciation and amortization
|
1,141 | 74 | — | 1,215 | 30 | — | 1,245 | |||||||||||||||||||||
Interest income
|
31 | 1 | — | 32 | 14 | (1 | ) | 45 | ||||||||||||||||||||
Interest expense
|
685 | 79 | — | 764 | 122 | — | 886 | |||||||||||||||||||||
Income taxes
|
866 | 84 | — | 950 | (115 | ) | — | 835 | ||||||||||||||||||||
Segment net income (loss)
|
1,582 | 132 | — | 1,714 | 22 | (2 | ) | 1,734 | ||||||||||||||||||||
Total assets
|
41,812 | 2,769 | (122 | ) | 44,459 | 1,767 | (437 | ) | 45,789 | |||||||||||||||||||
Gross property additions
|
3,465 | 184 | (4 | ) | 3,645 | 13 | — | 3,658 | ||||||||||||||||||||
Electric Utilities | ||||||||||||||||||||||||||||
Traditional | ||||||||||||||||||||||||||||
Operating | Southern | All | ||||||||||||||||||||||||||
Companies | Power | Eliminations | Total | Other | Eliminations | Consolidated | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2006
|
||||||||||||||||||||||||||||
Operating revenues
|
$ | 13,920 | $ | 777 | $ | (609 | ) | $ | 14,088 | $ | 413 | $ | (145 | ) | $ | 14,356 | ||||||||||||
Depreciation and amortization
|
1,098 | 66 | — | 1,164 | 37 | (1 | ) | 1,200 | ||||||||||||||||||||
Interest income
|
33 | 2 | — | 35 | 7 | (1 | ) | 41 | ||||||||||||||||||||
Interest expense
|
637 | 80 | — | 717 | 149 | — | 866 | |||||||||||||||||||||
Income taxes
|
867 | 82 | — | 949 | (169 | ) | — | 780 | ||||||||||||||||||||
Segment net income (loss)
|
1,462 | 124 | — | 1,586 | (11 | ) | (2 | ) | 1,573 | |||||||||||||||||||
Total assets
|
38,825 | 2,691 | (110 | ) | 41,406 | 1,933 | (481 | ) | 42,858 | |||||||||||||||||||
Gross property additions
|
2,561 | 501 | (16 | ) | 3,046 | 26 | — | 3,072 | ||||||||||||||||||||
Electric Utilities’ Revenues | ||||||||||||||||
Year | Retail | Wholesale | Other | Total | ||||||||||||
(in millions) | ||||||||||||||||
2008
|
$ | 14,055 | $ | 2,400 | $ | 545 | $ | 17,000 | ||||||||
2007
|
12,639 | 1,988 | 513 | 15,140 | ||||||||||||
2006
|
11,801 | 1,822 | 465 | 14,088 | ||||||||||||
II-104
Per Common Share | ||||||||||||||||||||||||||||
Trading | ||||||||||||||||||||||||||||
Operating | Operating | Consolidated | Basic | Price Range | ||||||||||||||||||||||||
Quarter Ended | Revenues | Income | Net Income | Earnings | Dividends | High | Low | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
March 2008
|
$ | 3,683 | $ | 708 | $ | 359 | $ | 0.47 | $ | 0.4025 | $ | 40.60 | $ | 33.71 | ||||||||||||||
June 2008
|
4,215 | 924 | 417 | 0.54 | 0.4200 | 37.81 | 34.28 | |||||||||||||||||||||
September 2008
|
5,427 | 1,405 | 780 | 1.01 | 0.4200 | 40.00 | 34.46 | |||||||||||||||||||||
December 2008
|
3,802 | 469 | 186 | 0.24 | 0.4200 | 38.18 | 29.82 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
March 2007
|
$ | 3,409 | $ | 691 | $ | 339 | $ | 0.45 | $ | 0.3875 | $ | 37.25 | $ | 34.85 | ||||||||||||||
June 2007
|
3,772 | 844 | 429 | 0.57 | 0.4025 | 38.90 | 33.50 | |||||||||||||||||||||
September 2007
|
4,832 | 1,382 | 762 | 1.00 | 0.4025 | 37.70 | 33.16 | |||||||||||||||||||||
December 2007
|
3,340 | 409 | 204 | 0.27 | 0.4025 | 39.35 | 35.15 |
II-105
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
|
||||||||||||||||||||
Operating Revenues (in millions)
|
$ | 17,127 | $ | 15,353 | $ | 14,356 | $ | 13,554 | $ | 11,729 | ||||||||||
Total Assets (in millions)
|
$ | 48,347 | $ | 45,789 | $ | 42,858 | $ | 39,877 | $ | 36,955 | ||||||||||
Gross Property Additions (in millions)
|
$ | 4,122 | $ | 3,658 | $ | 3,072 | $ | 2,476 | $ | 2,099 | ||||||||||
Return on Average Common Equity (percent)
|
13.57 | 14.60 | 14.26 | 15.17 | 15.38 | |||||||||||||||
Cash Dividends Paid Per Share of Common Stock
|
$ | 1.6625 | $ | 1.595 | $ | 1.535 | $ | 1.475 | $ | 1.415 | ||||||||||
Consolidated Net Income (in millions):
|
$ | 1,742 | $ | 1,734 | $ | 1,573 | $ | 1,591 | $ | 1,532 | ||||||||||
Earnings Per Share —
|
||||||||||||||||||||
Basic
|
$ | 2.26 | $ | 2.29 | $ | 2.12 | $ | 2.14 | $ | 2.07 | ||||||||||
Diluted
|
2.25 | 2.28 | 2.10 | 2.13 | 2.06 | |||||||||||||||
Capitalization (in millions):
|
||||||||||||||||||||
Common stock equity
|
$ | 13,276 | $ | 12,385 | $ | 11,371 | $ | 10,689 | $ | 10,278 | ||||||||||
Preferred and preference stock
|
1,082 | 1,080 | 744 | 596 | 561 | |||||||||||||||
Long-term debt
|
16,816 | 14,143 | 12,503 | 12,846 | 12,449 | |||||||||||||||
Total (excluding amounts due within one year)
|
$ | 31,174 | $ | 27,608 | $ | 24,618 | $ | 24,131 | $ | 23,288 | ||||||||||
Capitalization Ratios (percent):
|
||||||||||||||||||||
Common stock equity
|
42.6 | 44.9 | 46.2 | 44.3 | 44.1 | |||||||||||||||
Preferred and preference stock
|
3.5 | 3.9 | 3.0 | 2.5 | 2.4 | |||||||||||||||
Long-term debt
|
53.9 | 51.2 | 50.8 | 53.2 | 53.5 | |||||||||||||||
Total (excluding amounts due within one year)
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Other Common Stock Data:
|
||||||||||||||||||||
Book value per share
|
$ | 17.08 | $ | 16.23 | $ | 15.24 | $ | 14.42 | $ | 13.86 | ||||||||||
Market price per share:
|
||||||||||||||||||||
High
|
$ | 40.60 | $ | 39.35 | $ | 37.40 | $ | 36.47 | $ | 33.96 | ||||||||||
Low
|
29.82 | 33.16 | 30.48 | 31.14 | 27.44 | |||||||||||||||
Close (year-end)
|
37.00 | 38.75 | 36.86 | 34.53 | 33.52 | |||||||||||||||
Market-to-book ratio (year-end) (percent)
|
216.6 | 238.8 | 241.9 | 239.5 | 241.8 | |||||||||||||||
Price-earnings ratio (year-end) (times)
|
16.4 | 16.9 | 17.4 | 16.1 | 16.2 | |||||||||||||||
Dividends paid (in millions)
|
$ | 1,279 | $ | 1,204 | $ | 1,140 | $ | 1,098 | $ | 1,044 | ||||||||||
Dividend yield (year-end) (percent)
|
4.5 | 4.1 | 4.2 | 4.3 | 4.2 | |||||||||||||||
Dividend payout ratio (percent)
|
73.5 | 69.5 | 72.4 | 69.0 | 68.3 | |||||||||||||||
Shares outstanding (in thousands):
|
||||||||||||||||||||
Average
|
771,039 | 756,350 | 743,146 | 743,927 | 738,879 | |||||||||||||||
Year-end
|
777,192 | 763,104 | 746,270 | 741,448 | 741,495 | |||||||||||||||
Stockholders of record (year-end)
|
97,324 | 102,903 | 110,259 | 118,285 | 125,975 | |||||||||||||||
Traditional Operating Company Customers (year-end) (in thousands):
|
||||||||||||||||||||
Residential
|
3,785 | 3,756 | 3,706 | 3,642 | 3,600 | |||||||||||||||
Commercial
|
594 | 600 | 596 | 586 | 578 | |||||||||||||||
Industrial
|
15 | 15 | 15 | 15 | 14 | |||||||||||||||
Other
|
8 | 6 | 5 | 5 | 5 | |||||||||||||||
Total
|
4,402 | 4,377 | 4,322 | 4,248 | 4,197 | |||||||||||||||
Employees (year-end)
|
27,276 | 26,742 | 26,091 | 25,554 | 25,642 | |||||||||||||||
II-106
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
|
||||||||||||||||||||
Operating Revenues (in millions):
|
||||||||||||||||||||
Residential
|
$ | 5,476 | $ | 5,045 | $ | 4,716 | $ | 4,376 | $ | 3,848 | ||||||||||
Commercial
|
5,018 | 4,467 | 4,117 | 3,904 | 3,346 | |||||||||||||||
Industrial
|
3,445 | 3,020 | 2,866 | 2,785 | 2,446 | |||||||||||||||
Other
|
116 | 107 | 102 | 100 | 92 | |||||||||||||||
Total retail
|
14,055 | 12,639 | 11,801 | 11,165 | 9,732 | |||||||||||||||
Wholesale
|
2,400 | 1,988 | 1,822 | 1,667 | 1,341 | |||||||||||||||
Total revenues from sales of electricity
|
16,455 | 14,627 | 13,623 | 12,832 | 11,073 | |||||||||||||||
Other revenues
|
672 | 726 | 733 | 722 | 656 | |||||||||||||||
Total
|
$ | 17,127 | $ | 15,353 | $ | 14,356 | $ | 13,554 | $ | 11,729 | ||||||||||
Kilowatt-Hour Sales (in millions):
|
||||||||||||||||||||
Residential
|
52,262 | 53,326 | 52,383 | 51,082 | 49,702 | |||||||||||||||
Commercial
|
54,427 | 54,665 | 52,987 | 51,857 | 50,037 | |||||||||||||||
Industrial
|
52,636 | 54,662 | 55,044 | 55,141 | 56,399 | |||||||||||||||
Other
|
934 | 962 | 920 | 996 | 1,005 | |||||||||||||||
Total retail
|
160,259 | 163,615 | 161,334 | 159,076 | 157,143 | |||||||||||||||
Sales for resale
|
39,368 | 40,745 | 38,460 | 37,072 | 34,568 | |||||||||||||||
Total
|
199,627 | 204,360 | 199,794 | 196,148 | 191,711 | |||||||||||||||
Average Revenue Per Kilowatt-Hour (cents):
|
||||||||||||||||||||
Residential
|
10.48 | 9.46 | 9.00 | 8.57 | 7.74 | |||||||||||||||
Commercial
|
9.22 | 8.17 | 7.77 | 7.53 | 6.69 | |||||||||||||||
Industrial
|
6.54 | 5.52 | 5.21 | 5.05 | 4.34 | |||||||||||||||
Total retail
|
8.77 | 7.72 | 7.31 | 7.02 | 6.19 | |||||||||||||||
Wholesale
|
6.10 | 4.88 | 4.74 | 4.50 | 3.88 | |||||||||||||||
Total sales
|
8.24 | 7.16 | 6.82 | 6.54 | 5.78 | |||||||||||||||
Average Annual Kilowatt-Hour
|
||||||||||||||||||||
Use Per Residential Customer
|
13,844 | 14,263 | 14,235 | 14,084 | 13,879 | |||||||||||||||
Average Annual Revenue
|
||||||||||||||||||||
Per Residential Customer
|
$ | 1,451 | $ | 1,349 | $ | 1,282 | $ | 1,207 | $ | 1,074 | ||||||||||
Plant Nameplate Capacity
|
||||||||||||||||||||
Ratings (year-end) (megawatts)
|
42,607 | 41,948 | 41,785 | 40,509 | 38,622 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts):
|
||||||||||||||||||||
Winter
|
32,604 | 31,189 | 30,958 | 30,384 | 28,467 | |||||||||||||||
Summer
|
37,166 | 38,777 | 35,890 | 35,050 | 34,414 | |||||||||||||||
System Reserve Margin (at peak) (percent)
|
15.3 | 11.2 | 17.1 | 14.4 | 20.2 | |||||||||||||||
Annual Load Factor (percent)
|
58.7 | 57.6 | 60.8 | 60.2 | 61.4 | |||||||||||||||
Plant Availability (percent):
|
||||||||||||||||||||
Fossil-steam
|
90.5 | 90.5 | 89.3 | 89.0 | 88.5 | |||||||||||||||
Nuclear
|
91.3 | 90.8 | 91.5 | 90.5 | 92.8 | |||||||||||||||
Source of Energy Supply (percent):
|
||||||||||||||||||||
Coal
|
64.0 | 67.1 | 67.2 | 67.4 | 65.0 | |||||||||||||||
Nuclear
|
14.0 | 13.4 | 14.0 | 14.0 | 14.5 | |||||||||||||||
Hydro
|
1.4 | 0.9 | 1.9 | 3.1 | 2.9 | |||||||||||||||
Oil and gas
|
15.4 | 15.0 | 12.9 | 10.9 | 10.9 | |||||||||||||||
Purchased power
|
5.2 | 3.6 | 4.0 | 4.6 | 6.7 | |||||||||||||||
Total
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
II-107
II-108
II-109
II-110
2008 | 2008 | |||
Target | Actual | |||
Key Performance Indicator | Performance | Performance | ||
|
Top quartile in | |||
Customer Satisfaction
|
customer surveys | Top quartile | ||
Peak Season EFOR — fossil/hydro
|
2.75% or less | 1.51% | ||
Peak Season EFOR — nuclear
|
2.00% or less | 2.78% | ||
Net Income
|
$617 million | $616 million |
II-111
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Operating revenues
|
$ | 6,077 | $ | 717 | $ | 345 | $ | 367 | ||||||||
Fuel
|
2,184 | 422 | 90 | 216 | ||||||||||||
Purchased power
|
538 | 99 | 12 | (31 | ) | |||||||||||
Other operations and maintenance
|
1,259 | 73 | 89 | 53 | ||||||||||||
Depreciation and amortization
|
520 | 49 | 21 | 24 | ||||||||||||
Taxes other than income taxes
|
307 | 20 | 28 | 9 | ||||||||||||
Total operating expenses
|
4,808 | 663 | 240 | 271 | ||||||||||||
Operating income
|
1,269 | 54 | 105 | 96 | ||||||||||||
Total other income and (expense)
|
(246 | ) | 2 | (11 | ) | (40 | ) | |||||||||
Income taxes
|
368 | 16 | 21 | 46 | ||||||||||||
Net income
|
655 | 40 | 73 | 10 | ||||||||||||
Dividends on preferred and preference stock
|
39 | 4 | 11 | — | ||||||||||||
Net income after dividends on preferred and preference stock
|
$ | 616 | $ | 36 | $ | 62 | $ | 10 | ||||||||
Amount | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Retail — prior year
|
$ | 4,407.0 | $ | 3,995.7 | $ | 3,621.4 | ||||||
Estimated change in —
|
||||||||||||
Rates and pricing
|
246.1 | 216.3 | 48.4 | |||||||||
Sales growth
|
26.8 | (4.9 | ) | 35.8 | ||||||||
Weather
|
(70.4 | ) | 37.6 | 19.9 | ||||||||
Fuel and other cost recovery
|
252.8 | 162.3 | 270.2 | |||||||||
Retail — current year
|
4,862.3 | 4,407.0 | 3,995.7 | |||||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
711.9 | 627.0 | 634.6 | |||||||||
Affiliates
|
308.5 | 144.1 | 216.0 | |||||||||
Total wholesale revenues
|
1,020.4 | 771.1 | 850.6 | |||||||||
Other operating revenues
|
194.2 | 181.9 | 168.4 | |||||||||
Total operating revenues
|
$ | 6,076.9 | $ | 5,360.0 | $ | 5,014.7 | ||||||
Percent change
|
13.4 | % | 6.9 | % | 7.9 | % | ||||||
II-112
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Unit power sales —
|
||||||||||||
Capacity
|
$ | 160 | $ | 151 | $ | 154 | ||||||
Energy
|
238 | 192 | 198 | |||||||||
Total
|
398 | 343 | 352 | |||||||||
Other power sales —
|
||||||||||||
Capacity and other
|
134 | 128 | 137 | |||||||||
Energy
|
180 | 156 | 146 | |||||||||
Total
|
314 | 284 | 283 | |||||||||
Total non-affiliated
|
$ | 712 | $ | 627 | $ | 635 | ||||||
II-113
KWHs | Percent Change | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in billions) | ||||||||||||||||
Residential
|
18.4 | (2.6 | )% | 1.3 | % | 3.1 | % | |||||||||
Commercial
|
14.5 | (1.4 | ) | 2.8 | 2.1 | |||||||||||
Industrial
|
22.1 | (3.2 | ) | (1.6 | ) | (0.7 | ) | |||||||||
Other
|
0.2 | 0.2 | 0.7 | 0.4 | ||||||||||||
Total retail
|
55.2 | (2.5 | ) | 0.5 | 1.2 | |||||||||||
Wholesale —
|
||||||||||||||||
Non-affiliates
|
15.2 | (3.6 | ) | (1.3 | ) | 3.5 | ||||||||||
Affiliates
|
5.3 | 62.2 | (37.0 | ) | (10.3 | ) | ||||||||||
Total wholesale
|
20.5 | 7.6 | (10.0 | ) | (0.3 | ) | ||||||||||
Total energy sales
|
75.7 | 0.0 | (2.4 | ) | 0.8 | |||||||||||
2008 | 2007 | 2006 | ||||||||||
Total generation
(billions of KWHs)
|
70.0 | 69.8 | 72.0 | |||||||||
Total purchased power
(billions of KWHs)
|
9.2 | 9.6 | 8.9 | |||||||||
Sources of generation
(percent)—
|
||||||||||||
Coal
|
66 | 69 | 68 | |||||||||
Nuclear
|
20 | 19 | 19 | |||||||||
Gas
|
11 | 10 | 9 | |||||||||
Hydro
|
3 | 2 | 4 | |||||||||
Cost of fuel, generated
(cents per net KWH)—
|
||||||||||||
Coal
|
2.94 | 2.14 | 2.09 | |||||||||
Nuclear
|
0.50 | 0.50 | 0.47 | |||||||||
Gas
|
8.30 | 7.43 | 7.87 | |||||||||
Average cost of fuel, generated
(cents per net KWH)
|
3.00 | 2.36 | 2.27 | |||||||||
Average cost of purchased power
(cents per net KWH)
|
7.44 | 6.07 | 5.98 | |||||||||
II-114
II-115
II-116
II-117
II-118
II-119
II-120
II-121
II-122
II-123
II-124
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters. | |
• | Changes in existing income tax regulations or changes in IRS or Alabama Department of Revenue interpretations of existing regulations. | |
• | Identification of sites that require environmental remediation or the filing of other complaints in which the Company may be asserted to be a potentially responsible party. | |
• | Identification and evaluation of other potential lawsuits or complaints in which the Company may be named as a defendant. | |
• | Resolution or progression of new or existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
II-125
II-126
II-127
II-128
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets
(liabilities), net
|
$ | (0.4 | ) | $ | (32.6 | ) | ||
Contracts realized or settled
|
(44.0 | ) | 31.5 | |||||
Current period changes
(a)
|
(47.5 | ) | 0.7 | |||||
Contracts outstanding at the end of the period, assets (liabilities), net
|
$ | (91.9 | ) | $ | (0.4 | ) | ||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any. |
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (91.9 | ) | $ | (0.7 | ) | ||
Cash flow hedges
|
— | 0.5 | ||||||
Non-accounting hedges
|
— | (0.2 | ) | |||||
Total fair value
|
$ | (91.9 | ) | $ | (0.4 | ) | ||
II-129
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2&3 | Years 4&5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Level 2
|
(91.9 | ) | (71.4 | ) | (20.5 | ) | — | |||||||||
Level 3
|
— | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period
|
$ | (91.9 | ) | $ | (71.4 | ) | $ | (20.5 | ) | $ | — | |||||
II-130
2010- | 2012- | After | ||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Long-term debt
(a)
—
|
||||||||||||||||||||
Principal
|
$ | 250 | $ | 300 | $ | 750 | $ | 4,558 | $ | 5,858 | ||||||||||
Interest
|
291 | 549 | 499 | 4,351 | 5,690 | |||||||||||||||
Preferred and preference stock dividends
(b)
|
39 | 79 | 79 | — | 197 | |||||||||||||||
Energy-related derivative obligations
(c)
|
75 | 20 | — | — | 95 | |||||||||||||||
Operating leases
|
23 | 28 | 12 | 11 | 74 | |||||||||||||||
Purchase commitments
(d)
—
|
||||||||||||||||||||
Capital
(e)
|
1,365 | 1,865 | — | — | 3,230 | |||||||||||||||
Limestone
(f)
|
3 | 24 | 29 | 68 | 124 | |||||||||||||||
Coal
|
1,461 | 1,804 | 1,110 | 1,414 | 5,789 | |||||||||||||||
Nuclear fuel
|
48 | 82 | 76 | 10 | 216 | |||||||||||||||
Natural gas
(g)
|
505 | 386 | 311 | 210 | 1,412 | |||||||||||||||
Purchased power
|
105 | 44 | — | — | 149 | |||||||||||||||
Long-term service agreements
(h)
|
18 | 35 | 29 | 37 | 119 | |||||||||||||||
Postretirement benefits trust
(i)
|
17 | 35 | — | — | 52 | |||||||||||||||
Total
|
$ | 4,200 | $ | 5,251 | $ | 2,895 | $ | 10,659 | $ | 23,005 | ||||||||||
(a) | All amounts are reflected based on final maturity dates. The Company plans to continue to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. Variable rate interest obligations are estimated based on rates as of January 1, 2009, as reflected in the statements of capitalization. Fixed rates include, where applicable, the effects of interest rate derivatives employed to manage interest rate risk. | |
(b) | Preferred and preference stock do not mature; therefore, amounts are provided for the next five years only. | |
(c) | For additional information, see Notes 1 and 6 to the financial statements. | |
(d) | The Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for 2008, 2007, and 2006 were $1.26 billion, $1.19 billion, and $1.10 billion, respectively. | |
(e) | The Company forecasts capital expenditures over a three-year period. Amounts represent current estimates of total expenditures excluding those amounts related to contractual purchase commitments for nuclear fuel. At December 31, 2008, significant purchase commitments were outstanding in connection with the construction program. | |
(f) | As part of the Company’s program to reduce sulfur dioxide emissions from certain of its coal plants, the Company has begun construction of flue gas desulfurization projects and has entered into various long-term commitments for the procurement of limestone to be used in such equipment. | |
(g) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on the New York Mercantile Exchange future prices at December 31, 2008. | |
(h) | Long-term service agreements include price escalation based on inflation indices. | |
(i) | The Company forecasts postretirement trust contributions over a three-year period. The Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Therefore, no amounts related to the pension trust are included in the table. See Note 2 to the financial statements for additional information related to the pension and postretirement plans, including estimated benefit payments. Certain benefit payments will be made through the related trusts. Other benefit payments will be made from the Company’s corporate assets. |
II-131
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which the Company is subject, as well as changes in application of existing laws and regulations; | ||
• | current and future litigation, regulatory investigations, proceedings, or inquiries, including FERC matters and the pending EPA civil action against the Company; | ||
• | the effects, extent, and timing of the entry of additional competition in the markets in which the Company operates; | ||
• | variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; | ||
• | available sources and costs of fuels; | ||
• | effects of inflation; | ||
• | ability to control costs; | ||
• | investment performance of the Company’s employee benefit plans; | ||
• | advances in technology; | ||
• | state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and storm restoration cost recovery; | ||
• | internal restructuring or other restructuring options that may be pursued; | ||
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to the Company; | ||
• | the ability of counterparties of the Company to make payments as and when due and to perform as required; | ||
• | the ability to obtain new short- and long-term contracts with neighboring utilities; | ||
• | the direct or indirect effect on the Company’s business resulting from terrorist incidents and the threat of terrorist incidents; | ||
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including the Company’s credit ratings; | ||
• | the ability of the Company to obtain additional generating capacity at competitive prices; | ||
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; | ||
• | the direct or indirect effects on the Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; | ||
• | the effect of accounting pronouncements issued periodically by standard-setting bodies; and | ||
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
II-132
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
|
||||||||||||
Operating Revenues:
|
||||||||||||
Retail revenues
|
$ | 4,862,281 | $ | 4,406,956 | $ | 3,995,731 | ||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
711,903 | 627,047 | 634,552 | |||||||||
Affiliates
|
308,482 | 144,089 | 216,028 | |||||||||
Other revenues
|
194,265 | 181,901 | 168,417 | |||||||||
Total operating revenues
|
6,076,931 | 5,359,993 | 5,014,728 | |||||||||
Operating Expenses:
|
||||||||||||
Fuel
|
2,184,310 | 1,762,418 | 1,672,831 | |||||||||
Purchased power —
|
||||||||||||
Non-affiliates
|
178,807 | 96,928 | 124,022 | |||||||||
Affiliates
|
359,202 | 341,461 | 302,045 | |||||||||
Other operations and maintenance
|
1,258,888 | 1,186,235 | 1,096,978 | |||||||||
Depreciation and amortization
|
520,449 | 471,536 | 451,018 | |||||||||
Taxes other than income taxes
|
306,522 | 286,579 | 258,135 | |||||||||
Total operating expenses
|
4,808,178 | 4,145,157 | 3,905,029 | |||||||||
Operating Income
|
1,268,753 | 1,214,836 | 1,109,699 | |||||||||
Other Income and (Expense):
|
||||||||||||
Allowance for equity funds used during construction
|
45,519 | 35,425 | 18,253 | |||||||||
Interest income
|
19,394 | 19,545 | 20,897 | |||||||||
Interest expense, net of amounts capitalized
|
(278,917 | ) | (273,737 | ) | (252,282 | ) | ||||||
Other income (expense), net
|
(31,514 | ) | (29,144 | ) | (23,758 | ) | ||||||
Total other income and (expense)
|
(245,518 | ) | (247,911 | ) | (236,890 | ) | ||||||
Earnings Before Income Taxes
|
1,023,235 | 966,925 | 872,809 | |||||||||
Income taxes
|
367,813 | 351,198 | 330,345 | |||||||||
Net Income
|
655,422 | 615,727 | 542,464 | |||||||||
Dividends on Preferred and Preference Stock
|
39,463 | 36,145 | 24,734 | |||||||||
Net Income After Dividends on Preferred and Preference Stock
|
$ | 615,959 | $ | 579,582 | $ | 517,730 | ||||||
II-133
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
|
||||||||||||
Operating Activities:
|
||||||||||||
Net income
|
$ | 655,422 | $ | 615,727 | $ | 542,464 | ||||||
Adjustments to reconcile net income
to net cash provided from operating activities —
|
||||||||||||
Depreciation and amortization
|
599,767 | 548,959 | 524,313 | |||||||||
Deferred income taxes and investment tax credits, net
|
126,538 | 21,269 | (27,562 | ) | ||||||||
Allowance for equity funds used during construction
|
(45,519 | ) | (35,425 | ) | (18,253 | ) | ||||||
Pension, postretirement, and other employee benefits
|
(26,530 | ) | (18,781 | ) | (15,196 | ) | ||||||
Stock based compensation expense
|
3,105 | 4,900 | 4,848 | |||||||||
Tax benefit of stock options
|
685 | 1,118 | 610 | |||||||||
Other, net
|
27,689 | (13,650 | ) | 29,564 | ||||||||
Changes in certain current assets and liabilities —
|
||||||||||||
Receivables
|
(31,693 | ) | (5,797 | ) | (33,260 | ) | ||||||
Fossil fuel stock
|
(134,212 | ) | (33,840 | ) | (28,179 | ) | ||||||
Materials and supplies
|
(17,723 | ) | (32,543 | ) | (25,711 | ) | ||||||
Other current assets
|
(1,494 | ) | 22,354 | 38,645 | ||||||||
Accounts payable
|
(8,751 | ) | 78,508 | (49,725 | ) | |||||||
Accrued taxes
|
36,957 | (17,248 | ) | 1,124 | ||||||||
Accrued compensation
|
(4,722 | ) | 4,194 | (6,157 | ) | |||||||
Other current liabilities
|
(198 | ) | 10,098 | 18,486 | ||||||||
Net cash provided from operating activities
|
1,179,321 | 1,149,843 | 956,011 | |||||||||
Investing Activities:
|
||||||||||||
Property additions
|
(1,477,643 | ) | (1,157,186 | ) | (933,306 | ) | ||||||
Investment in restricted cash from pollution control bonds
|
(96,326 | ) | (97,775 | ) | — | |||||||
Distribution of restricted cash from pollution control bonds
|
35,979 | 78,043 | — | |||||||||
Nuclear decommissioning trust fund purchases
|
(300,503 | ) | (334,275 | ) | (286,551 | ) | ||||||
Nuclear decommissioning trust fund sales
|
299,636 | 333,409 | 285,685 | |||||||||
Cost of removal net of salvage
|
(41,744 | ) | (48,932 | ) | (40,834 | ) | ||||||
Other
|
(19,143 | ) | (26,621 | ) | (1,777 | ) | ||||||
Net cash used for investing activities
|
(1,599,744 | ) | (1,253,337 | ) | (976,783 | ) | ||||||
Financing Activities:
|
||||||||||||
Increase (decrease) in notes payable, net
|
24,995 | (119,670 | ) | (195,609 | ) | |||||||
Proceeds —
|
||||||||||||
Senior notes
|
850,000 | 850,000 | 950,000 | |||||||||
Preferred and preference stock
|
— | 200,000 | 150,000 | |||||||||
Common stock issued to parent
|
300,000 | 229,000 | 120,000 | |||||||||
Capital contributions
|
21,272 | 27,867 | 27,160 | |||||||||
Gross excess tax benefit of stock options
|
1,289 | 2,556 | 1,291 | |||||||||
Pollution control revenue bonds
|
265,100 | 265,500 | — | |||||||||
Redemptions —
|
||||||||||||
Senior notes
|
(410,000 | ) | (668,500 | ) | (546,500 | ) | ||||||
Preferred stock
|
(125,000 | ) | — | — | ||||||||
Pollution control revenue bonds
|
(11,100 | ) | — | (2,950 | ) | |||||||
Other long-term debt
|
— | (103,093 | ) | — | ||||||||
Payment of preferred and preference stock dividends
|
(40,899 | ) | (31,380 | ) | (24,318 | ) | ||||||
Payment of common stock dividends
|
(491,300 | ) | (465,000 | ) | (440,600 | ) | ||||||
Other
|
(9,369 | ) | (25,709 | ) | (24,635 | ) | ||||||
Net cash provided from financing activities
|
374,988 | 161,571 | 13,839 | |||||||||
Net Change in Cash and Cash Equivalents
|
(45,435 | ) | 58,077 | (6,933 | ) | |||||||
Cash and Cash Equivalents at Beginning of Year
|
73,616 | 15,539 | 22,472 | |||||||||
Cash and Cash Equivalents at End of Year
|
$ | 28,181 | $ | 73,616 | $ | 15,539 | ||||||
Supplemental Cash Flow Information:
|
||||||||||||
Cash paid during the period for —
|
||||||||||||
Interest (net of $20,215, $17,961, and $7,930 capitalized, respectively)
|
$ | 258,918 | $ | 248,289 | $ | 245,387 | ||||||
Income taxes (net of refunds)
|
214,368 | 340,951 | 345,803 | |||||||||
II-134
Assets | 2008 | 2007 | ||||||
(in thousands) | ||||||||
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 28,181 | $ | 73,616 | ||||
Restricted cash
|
80,079 | 19,732 | ||||||
Receivables —
|
||||||||
Customer accounts receivable
|
350,409 | 357,355 | ||||||
Unbilled revenues
|
98,921 | 95,278 | ||||||
Under recovered regulatory clause revenues
|
153,899 | 232,226 | ||||||
Other accounts and notes receivable
|
44,645 | 42,745 | ||||||
Affiliated companies
|
70,612 | 61,250 | ||||||
Accumulated provision for uncollectible accounts
|
(8,882 | ) | (7,988 | ) | ||||
Fossil fuel stock, at average cost
|
322,089 | 182,963 | ||||||
Materials and supplies, at average cost
|
305,880 | 287,994 | ||||||
Vacation pay
|
52,577 | 50,266 | ||||||
Prepaid expenses
|
88,220 | 72,952 | ||||||
Other
|
87,740 | 19,610 | ||||||
Total current assets
|
1,674,370 | 1,487,999 | ||||||
Property, Plant, and Equipment:
|
||||||||
In service
|
17,635,129 | 16,669,142 | ||||||
Less accumulated provision for depreciation
|
6,259,720 | 5,950,373 | ||||||
|
11,375,409 | 10,718,769 | ||||||
Nuclear fuel, at amortized cost
|
231,862 | 137,146 | ||||||
Construction work in progress
|
1,092,516 | 928,182 | ||||||
Total property, plant, and equipment
|
12,699,787 | 11,784,097 | ||||||
Other Property and Investments:
|
||||||||
Equity investments in unconsolidated subsidiaries
|
50,912 | 48,664 | ||||||
Nuclear decommissioning trusts, at fair value
|
403,966 | 542,846 | ||||||
Other
|
62,782 | 31,146 | ||||||
Total other property and investments
|
517,660 | 622,656 | ||||||
Deferred Charges and Other Assets:
|
||||||||
Deferred charges related to income taxes
|
362,596 | 347,193 | ||||||
Prepaid pension costs
|
166,334 | 989,085 | ||||||
Deferred under recovered regulatory clause revenues
|
180,874 | 81,650 | ||||||
Other regulatory assets
|
732,367 | 224,792 | ||||||
Other
|
202,018 | 209,153 | ||||||
Total deferred charges and other assets
|
1,644,189 | 1,851,873 | ||||||
Total Assets
|
$ | 16,536,006 | $ | 15,746,625 | ||||
II-135
Liabilities and Stockholder’s Equity | 2008 | 2007 | ||||||
(in thousands) | ||||||||
|
||||||||
Current Liabilities:
|
||||||||
Securities due within one year
|
$ | 250,079 | $ | 535,152 | ||||
Notes payable
|
24,995 | — | ||||||
Accounts payable —
|
||||||||
Affiliated
|
178,708 | 193,518 | ||||||
Other
|
358,176 | 308,177 | ||||||
Customer deposits
|
77,205 | 67,722 | ||||||
Accrued taxes —
|
||||||||
Income taxes
|
18,299 | 45,958 | ||||||
Other
|
30,372 | 29,198 | ||||||
Accrued interest
|
56,375 | 55,263 | ||||||
Accrued vacation pay
|
44,217 | 42,138 | ||||||
Accrued compensation
|
91,856 | 92,385 | ||||||
Liabilities from risk management activities
|
83,873 | 6,404 | ||||||
Other
|
53,777 | 48,927 | ||||||
Total current liabilities
|
1,267,932 | 1,424,842 | ||||||
Long-term Debt
(See accompanying statements)
|
5,604,791 | 4,750,196 | ||||||
Deferred Credits and Other Liabilities:
|
||||||||
Accumulated deferred income taxes
|
2,243,117 | 2,065,264 | ||||||
Deferred credits related to income taxes
|
90,083 | 93,709 | ||||||
Accumulated deferred investment tax credits
|
172,638 | 180,578 | ||||||
Employee benefit obligations
|
396,923 | 349,974 | ||||||
Asset retirement obligations
|
461,284 | 505,794 | ||||||
Other cost of removal obligations
|
634,792 | 613,616 | ||||||
Other regulatory liabilities
|
79,150 | 637,040 | ||||||
Other
|
45,859 | 31,417 | ||||||
Total deferred credits and other liabilities
|
4,123,846 | 4,477,392 | ||||||
Total Liabilities
|
10,996,569 | 10,652,430 | ||||||
Preferred and Preference Stock
(See accompanying statements)
|
685,127 | 683,512 | ||||||
Common Stockholder’s Equity
(See accompanying statements)
|
4,854,310 | 4,410,683 | ||||||
Total Liabilities and Stockholder’s Equity
|
$ | 16,536,006 | $ | 15,746,625 | ||||
Commitments and Contingent Matters
(See notes)
|
||||||||
II-136
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | (percent of total) | |||||||||||||||
|
||||||||||||||||
Long-Term Debt:
|
||||||||||||||||
Long-term debt payable to affiliated trusts —
|
||||||||||||||||
5.5% due 2042
|
$ | 206,186 | $ | 206,186 | ||||||||||||
Long-term notes payable —
|
||||||||||||||||
3.125% to 5.375% due 2008
|
— | 410,000 | ||||||||||||||
Floating rate (2.34% at 1/1/09) due 2009
|
250,000 | 250,000 | ||||||||||||||
4.70% due 2010
|
100,000 | 100,000 | ||||||||||||||
5.10% due 2011
|
200,000 | 200,000 | ||||||||||||||
4.85% due 2012
|
500,000 | 200,000 | ||||||||||||||
5.80% due 2013
|
250,000 | — | ||||||||||||||
5.125% to 6.375% due 2016-2047
|
3,275,000 | 2,975,000 | ||||||||||||||
Total long-term notes payable
|
4,575,000 | 4,135,000 | ||||||||||||||
Other long-term debt —
|
||||||||||||||||
Pollution control revenue bonds:
|
||||||||||||||||
2.00% to 5.00% due 2030-2038
|
500,500 | — | ||||||||||||||
Variable rates (0.92% to 1.83% at 1/1/09)
due 2015-2036
|
576,190 | 822,690 | ||||||||||||||
Total other long-term debt
|
1,076,690 | 822,690 | ||||||||||||||
Capitalized lease obligations
|
79 | 231 | ||||||||||||||
Unamortized debt premium (discount), net
|
(3,085 | ) | (3,759 | ) | ||||||||||||
Total long-term debt (annual interest
requirement — $290.8 million)
|
5,854,870 | 5,160,348 | ||||||||||||||
Less amount due within one year
|
250,079 | 410,152 | ||||||||||||||
Long-term debt excluding amount due within one year
|
5,604,791 | 4,750,196 | 50.3 | % | 48.3 | % | ||||||||||
II-137
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | (percent of total) | |||||||||||||||
|
||||||||||||||||
Preferred and Preference Stock:
|
||||||||||||||||
Cumulative preferred stock
|
||||||||||||||||
$100 par or stated value — 4.20% to 4.92%
|
||||||||||||||||
Authorized — 3,850,000 shares
|
||||||||||||||||
Outstanding — 475,115 shares
|
47,610 | 47,610 | ||||||||||||||
$1 par value — 5.20% to 5.83%
|
||||||||||||||||
Authorized — 27,500,000 shares
|
||||||||||||||||
Outstanding — 12,000,000 shares: $25 stated value
|
294,105 | 294,105 | ||||||||||||||
Outstanding — 2008: 0 shares
2007: 1,250 shares: $100,000 stated capital |
— | 123,331 | ||||||||||||||
Preference stock
|
||||||||||||||||
Authorized — 40,000,000 shares
|
||||||||||||||||
Outstanding — $1 par value — 5.63% to 6.50%
— 14,000,000 shares (non-cumulative) $25 stated value |
343,412 | 343,466 | ||||||||||||||
Total preferred and preference stock
(annual dividend requirement — $39.5 million) |
685,127 | 808,512 | ||||||||||||||
Less amount due within one year
|
— | 125,000 | ||||||||||||||
Preferred and preference stock
excluding amount due within one year
|
685,127 | 683,512 | 6.1 | 6.9 | ||||||||||||
Common Stockholder’s Equity:
|
||||||||||||||||
Common stock, par value $40 per share —
Authorized —
2008: 40,000,000 shares
— 2007: 25,000,000 shares
Outstanding — 2008: 25,475,000 shares
— 2007: 17,975,000 shares |
1,019,000 | 719,000 | ||||||||||||||
Paid-in capital
|
2,091,462 | 2,065,298 | ||||||||||||||
Retained earnings
|
1,753,797 | 1,630,832 | ||||||||||||||
Accumulated other comprehensive income (loss)
|
(9,949 | ) | (4,447 | ) | ||||||||||||
Total common stockholder’s equity
|
4,854,310 | 4,410,683 | 43.6 | 44.8 | ||||||||||||
Total Capitalization
|
$ | 11,144,228 | $ | 9,844,391 | 100.0 | % | 100.0 | % | ||||||||
II-138
Accumulated | ||||||||||||||||||||
Common | Paid-In | Retained | Other Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2005
|
$ | 370,000 | $ | 1,995,056 | $ | 1,439,144 | $ | (11,474 | ) | $ | 3,792,726 | |||||||||
Net income after dividends on preferred stock
|
— | — | 517,730 | — | 517,730 | |||||||||||||||
Issuance of common stock
|
120,000 | — | — | — | 120,000 | |||||||||||||||
Capital contributions from parent company
|
— | 33,907 | — | — | 33,907 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (4,057 | ) | (4,057 | ) | |||||||||||||
Adjustment to initially apply
FASB Statement No. 158, net of tax
|
— | — | — | 12,610 | 12,610 | |||||||||||||||
Cash dividends on common stock
|
— | — | (440,600 | ) | — | (440,600 | ) | |||||||||||||
Other
|
— | — | (29 | ) | — | (29 | ) | |||||||||||||
Balance at December 31, 2006
|
490,000 | 2,028,963 | 1,516,245 | (2,921 | ) | 4,032,287 | ||||||||||||||
Net income after dividends on preferred
and preference stock
|
— | — | 579,582 | — | 579,582 | |||||||||||||||
Issuance of common stock
|
229,000 | — | — | — | 229,000 | |||||||||||||||
Capital contributions from parent company
|
— | 36,441 | — | — | 36,441 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (1,526 | ) | (1,526 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (465,000 | ) | — | (465,000 | ) | |||||||||||||
Other
|
— | (106 | ) | 5 | — | (101 | ) | |||||||||||||
Balance at December 31, 2007
|
719,000 | 2,065,298 | 1,630,832 | (4,447 | ) | 4,410,683 | ||||||||||||||
Net income after dividends on preferred
and preference stock
|
— | — | 615,959 | — | 615,959 | |||||||||||||||
Issuance of common stock
|
300,000 | — | — | — | 300,000 | |||||||||||||||
Capital contributions from parent company
|
— | 26,164 | — | — | 26,164 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (5,502 | ) | (5,502 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (491,300 | ) | — | (491,300 | ) | |||||||||||||
Other
|
— | — | (1,694 | ) | — | (1,694 | ) | |||||||||||||
Balance at December 31, 2008
|
$ | 1,019,000 | $ | 2,091,462 | $ | 1,753,797 | $ | ( 9,949 | ) | $ | 4,854,310 | |||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Net income after dividends on preferred and preference stock
|
$ | 615,959 | $ | 579,582 | $ | 517,730 | ||||||
Other comprehensive income (loss):
|
||||||||||||
Qualifying hedges:
|
||||||||||||
Changes in fair value, net of tax of $(4,297), $(1,226),
and $155, respectively
|
(7,068 | ) | (2,017 | ) | 255 | |||||||
Reclassification adjustment for amounts included in net income,
net of tax of $952, $298, and $(3,696), respectively
|
1,566 | 491 | (6,080 | ) | ||||||||
Pension and other postretirement benefit plans:
|
||||||||||||
Change in additional minimum pension liability,
net of tax of $-, $-, and $1,109, respectively
|
— | — | 1,768 | |||||||||
Total other comprehensive income (loss)
|
(5,502 | ) | (1,526 | ) | (4,057 | ) | ||||||
Comprehensive Income
|
$ | 610,457 | $ | 578,056 | $ | 513,673 | ||||||
II-139
II-140
II-141
2008 | 2007 | Note | ||||||||||
(in millions) | ||||||||||||
Deferred income tax charges
|
$ | 363 | $ | 347 | (a | ) | ||||||
Loss on reacquired debt
|
80 | 87 | (b | ) | ||||||||
Vacation pay
|
53 | 50 | (c | ) | ||||||||
Under recovered regulatory clause revenues
|
335 | 314 | (d | ) | ||||||||
Fuel-hedging (realized and unrealized) losses
|
95 | 6 | (e | ) | ||||||||
Other assets
|
7 | 6 | (d | ) | ||||||||
Asset retirement obligations
|
18 | (150 | ) | (a | ) | |||||||
Other cost of removal obligations
|
(635 | ) | (614 | ) | (a | ) | ||||||
Deferred income tax credits
|
(90 | ) | (94 | ) | (a | ) | ||||||
Fuel-hedging (realized and unrealized) gains
|
(4 | ) | (5 | ) | (e | ) | ||||||
Mine reclamation and remediation
|
(14 | ) | (14 | ) | (d | ) | ||||||
Nuclear outage
|
(8 | ) | 2 | (d | ) | |||||||
Deferred purchased power
|
(20 | ) | (20 | ) | (d | ) | ||||||
Natural disaster reserve (future storms)
|
(33 | ) | (26 | ) | (d | ) | ||||||
Other liabilities
|
(4 | ) | (3 | ) | (d | ) | ||||||
Overfunded retiree benefit plans
|
— | (423 | ) | (f | ) | |||||||
Underfunded retiree benefit plans
|
614 | 138 | (f | ) | ||||||||
Total assets (liabilities), net
|
$ | 757 | $ | (399 | ) | |||||||
Note: | The recovery and amortization periods for these regulatory assets and (liabilities) are as follows: | |
(a) | Asset retirement and removal liabilities are recorded, deferred income tax assets are recovered, and deferred tax liabilities are amortized over the related property lives, which may range up to 50 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. | |
(b) | Recovered over the remaining life of the original issue which may range up to 50 years. | |
(c) | Recorded as earned by employees and recovered as paid, generally within one year. This includes both vacation and banked holiday pay. | |
(d) | Recorded and recovered or amortized as approved or accepted by the Alabama PSC. | |
(e) | Fuel-hedging assets and liabilities are recorded over the life of the underlying hedged purchase contracts, which generally does not exceed two years. Upon final settlement, actual costs incurred are recovered through the fuel cost recovery clauses. | |
(f) | Recovered and amortized over the average remaining service period which may range up to 14 years. See Note 2 for additional information. |
II-142
2008 | 2007 | |||||||
(in millions) | ||||||||
Generation
|
$ | 9,096 | $ | 8,541 | ||||
Transmission
|
2,559 | 2,435 | ||||||
Distribution
|
4,827 | 4,586 | ||||||
General
|
1,141 | 1,095 | ||||||
Plant acquisition adjustment
|
12 | 12 | ||||||
Total plant in service
|
$ | 17,635 | $ | 16,669 | ||||
II-143
2008 | 2007 | |||||||
(in millions) | ||||||||
Balance beginning of year
|
$ | 506 | $ | 476 | ||||
Liabilities incurred
|
— | — | ||||||
Liabilities settled
|
(2 | ) | (3 | ) | ||||
Accretion
|
31 | 33 | ||||||
Cash flow revisions
(a)
|
(74 | ) | — | |||||
Balance end of year
|
$ | 461 | $ | 506 | ||||
(a) | Updated based on results from 2008 Nuclear Decommissioning Study |
II-144
(in millions) | ||||
External trust funds
|
$ | 404 | ||
Internal reserves
|
26 | |||
Total
|
$ | 430 | ||
(in millions) | ||||
Site study costs:
|
||||
Radiated structures
|
$ | 1,060 | ||
Non-radiated structures
|
72 | |||
Total
|
$ | 1,132 | ||
II-145
II-146
Carrying Amount | Fair Value | |||||||
(in millions) | ||||||||
Long-term debt:
|
||||||||
2008
|
$ | 5,855 | $ | 5,784 | ||||
2007
|
5,160 | 5,079 |
II-147
2008 | 2007 | |||||||
(in millions) | ||||||||
|
||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 1,420 | $ | 1,394 | ||||
Service cost
|
43 | 35 | ||||||
Interest cost
|
109 | 82 | ||||||
Benefits paid
|
(94 | ) | (70 | ) | ||||
Plan amendments
|
— | 10 | ||||||
Actuarial (gain) loss
|
(18 | ) | (31 | ) | ||||
Balance at end of year
|
1,460 | 1,420 | ||||||
|
||||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
2,318 | 2,038 | ||||||
Actual return (loss) on plan assets
|
(692 | ) | 346 | |||||
Employer contributions
|
7 | 4 | ||||||
Benefits paid
|
(94 | ) | (70 | ) | ||||
Fair value of plan assets at end of year
|
1,539 | 2,318 | ||||||
Funded status at end of year
|
79 | 898 | ||||||
Fourth quarter contributions
|
— | 2 | ||||||
Prepaid pension asset, net
|
$ | 79 | $ | 900 | ||||
II-148
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
36 | % | 34 | % | 38 | % | ||||||
International equity
|
24 | 23 | 24 | |||||||||
Fixed income
|
15 | 14 | 15 | |||||||||
Real estate
|
15 | 19 | 16 | |||||||||
Private equity
|
10 | 10 | 7 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Prepaid pension asset
|
$ | 166 | $ | 989 | ||||
Other regulatory assets
|
479 | 43 | ||||||
Current liabilities, other
|
(6 | ) | (5 | ) | ||||
Other regulatory liabilities
|
— | (423 | ) | |||||
Employee benefit obligations
|
(81 | ) | (84 | ) |
Prior Service Cost | Net(Gain)Loss | |||||||
(in millions) | ||||||||
|
||||||||
Balance at December 31, 2008:
|
||||||||
Regulatory assets
|
$ | 58 | $ | 421 | ||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 58 | $ | 421 | ||||
|
||||||||
Balance at December 31, 2007:
|
||||||||
Regulatory assets
|
$ | 14 | $ | 29 | ||||
Regulatory liabilities
|
56 | (479 | ) | |||||
Total
|
$ | 70 | $ | (450 | ) | |||
|
||||||||
Estimated amortization in net
periodic pension cost in 2009:
|
||||||||
Regulatory assets
|
$ | 9 | $ | 1 | ||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 9 | $ | 1 | ||||
II-149
Regulatory | Regulatory | |||||||
Assets | Liabilities | |||||||
(in millions) | ||||||||
Balance at December 31, 2006
|
$ | 36 | $ | (183 | ) | |||
Net (gain) loss
|
1 | (232 | ) | |||||
Change in prior service costs
|
10 | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(2 | ) | (8 | ) | ||||
Amortization of net gain
|
(2 | ) | — | |||||
Total reclassification adjustments
|
(4 | ) | (8 | ) | ||||
Total change
|
7 | (240 | ) | |||||
Balance at December 31, 2007
|
43 | (423 | ) | |||||
Net (gain) loss
|
441 | 433 | ||||||
Change in prior service costs
|
— | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(2 | ) | (10 | ) | ||||
Amortization of net gain
|
(3 | ) | — | |||||
Total reclassification adjustments
|
(5 | ) | (10 | ) | ||||
Total change
|
436 | 423 | ||||||
Balance at December 31, 2008
|
$ | 479 | $ | — | ||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost
|
$ | 35 | $ | 35 | $ | 37 | ||||||
Interest cost
|
87 | 82 | 77 | |||||||||
Expected return on plan assets
|
(160 | ) | (146 | ) | (139 | ) | ||||||
Recognized net (gain) loss
|
2 | 2 | 3 | |||||||||
Net amortization
|
10 | 10 | 9 | |||||||||
Net periodic pension (income)
|
$ | (26 | ) | $ | (17 | ) | $ | (13 | ) | |||
Benefit Payments | ||||
(in millions) | ||||
2009
|
$ | 81 | ||
2010
|
84 | |||
2011
|
88 | |||
2012
|
92 | |||
2013
|
96 | |||
2014 to 2018
|
556 | |||
II-150
2008 | 2007 | |||||||
(in millions) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 480 | $ | 490 | ||||
Service cost
|
9 | 7 | ||||||
Interest cost
|
37 | 28 | ||||||
Benefits paid
|
(30 | ) | (23 | ) | ||||
Actuarial (gain) loss
|
(53 | ) | (24 | ) | ||||
Retiree drug subsidy
|
3 | 2 | ||||||
Balance at end of year
|
446 | 480 | ||||||
|
||||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
297 | 259 | ||||||
Actual return (loss) on plan assets
|
(75 | ) | 36 | |||||
Employer contributions
|
57 | 23 | ||||||
Benefits paid
|
(27 | ) | (21 | ) | ||||
Fair value of plan assets at end of year
|
252 | 297 | ||||||
Funded status at end of year
|
(194 | ) | (183 | ) | ||||
Fourth quarter contributions
|
— | 28 | ||||||
Accrued liability
|
$ | (194 | ) | $ | (155 | ) | ||
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
49 | % | 31 | % | 46 | % | ||||||
International equity
|
12 | 13 | 15 | |||||||||
Fixed income
|
31 | 46 | 29 | |||||||||
Real estate
|
5 | 7 | 7 | |||||||||
Private equity
|
3 | 3 | 3 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory assets
|
$ | 135 | $ | 95 | ||||
Employee benefit obligations
|
(194 | ) | (155 | ) | ||||
II-151
Prior Service | Net | Transition | ||||||||||
Cost | (Gain) Loss | Obligation | ||||||||||
(in millions) | ||||||||||||
Balance at December 31, 2008:
|
||||||||||||
Regulatory asset
|
$ | 49 | $ | 71 | $ | 15 | ||||||
|
||||||||||||
Balance at December 31, 2007:
|
||||||||||||
Regulatory asset
|
$ | 55 | $ | 20 | $ | 20 | ||||||
|
||||||||||||
Estimated amortization as
net periodic postretirement
cost in 2009:
|
||||||||||||
Regulatory asset
|
$ | 4 | $ | — | $ | 4 | ||||||
Regulatory Assets | ||||
(in millions) | ||||
Balance at December 31, 2006
|
$ | 147 | ||
Net gain
|
(41 | ) | ||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(4 | ) | ||
Amortization of prior service costs
|
(5 | ) | ||
Amortization of net gain
|
(2 | ) | ||
Total reclassification adjustments
|
(11 | ) | ||
Total change
|
(52 | ) | ||
Balance at December 31, 2007
|
95 | |||
Net loss
|
50 | |||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(5 | ) | ||
Amortization of prior service costs
|
(5 | ) | ||
Amortization of net gain
|
— | |||
Total reclassification adjustments
|
(10 | ) | ||
Total change
|
40 | |||
Balance at December 31, 2008
|
$ | 135 | ||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost
|
$ | 7 | $ | 7 | $ | 7 | ||||||
Interest cost
|
29 | 28 | 26 | |||||||||
Expected return on plan assets
|
(22 | ) | (19 | ) | (17 | ) | ||||||
Net amortization
|
9 | 11 | 12 | |||||||||
Net postretirement cost
|
$ | 23 | $ | 27 | $ | 28 | ||||||
II-152
Benefit Payments | Subsidy Receipts | Total | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 28 | $ | (3 | ) | $ | 25 | |||||
2010
|
31 | (3 | ) | 28 | ||||||||
2011
|
33 | (4 | ) | 29 | ||||||||
2012
|
35 | (4 | ) | 31 | ||||||||
2013
|
36 | (5 | ) | 31 | ||||||||
2014 to 2018
|
196 | (30 | ) | 166 | ||||||||
2008 | 2007 | 2006 | ||||||||||
Discount
|
6.75 | % | 6.30 | % | 6.00 | % | ||||||
Annual salary increase
|
3.75 | 3.75 | 3.50 | |||||||||
Long-term return on plan assets
|
8.50 | 8.50 | 8.50 | |||||||||
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
(in millions) | ||||||||
Benefit obligation
|
$ | 31 | $ | 33 | ||||
Service and interest costs
|
2 | 2 | ||||||
II-153
II-154
II-155
II-156
II-157
II-158
Total Megawatt | Company | Company | Accumulated | |||||||||||||
Facility | Capacity | Ownership | Investment | Depreciation | ||||||||||||
(in millions) | ||||||||||||||||
Greene County
|
500 | 60.00% | (1) | $ | 130 | $ | 68 | |||||||||
Plant Miller
|
||||||||||||||||
Units 1 and 2
|
1,320 | 91.84% | (2) | 986 | 425 | |||||||||||
(1) |
Jointly owned with an affiliate, Mississippi Power.
|
|
(2) | Jointly owned with PowerSouth. |
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Federal —
|
||||||||||||
Current
|
$ | 198 | $ | 287 | $ | 302 | ||||||
Deferred
|
121 | 17 | (25 | ) | ||||||||
|
319 | 304 | 277 | |||||||||
State —
|
||||||||||||
Current
|
43 | 43 | 56 | |||||||||
Deferred
|
6 | 4 | (3 | ) | ||||||||
|
49 | 47 | 53 | |||||||||
Total
|
$ | 368 | $ | 351 | $ | 330 | ||||||
II-159
2008 | 2007 | |||||||
(in millions) | ||||||||
Deferred tax liabilities:
|
||||||||
Accelerated depreciation
|
$ | 1,908 | $ | 1,766 | ||||
Property basis differences
|
343 | 341 | ||||||
Premium on reacquired debt
|
33 | 36 | ||||||
Pension and other benefits
|
175 | 340 | ||||||
Fuel clause under recovered
|
140 | 128 | ||||||
Regulatory assets associated with employee benefit obligations
|
286 | 90 | ||||||
Asset retirement obligations
|
— | 27 | ||||||
Regulatory assets associated with asset retirement obligations
|
199 | 187 | ||||||
Other
|
67 | 60 | ||||||
Total
|
3,151 | 2,975 | ||||||
Deferred tax assets:
|
||||||||
Federal effect of state deferred taxes
|
126 | 121 | ||||||
State effect of federal deferred taxes
|
104 | 96 | ||||||
Unbilled revenue
|
34 | 31 | ||||||
Storm reserve
|
4 | 3 | ||||||
Pension and other benefits
|
330 | 126 | ||||||
Other comprehensive losses
|
13 | 10 | ||||||
Regulatory liabilities associated with employee benefit obligations
|
— | 178 | ||||||
Asset retirement obligations
|
199 | 214 | ||||||
Other
|
82 | 88 | ||||||
Total
|
892 | 867 | ||||||
Total deferred tax liabilities, net
|
2,259 | 2,108 | ||||||
Portion included in current (liabilities) assets, net
|
(16 | ) | (43 | ) | ||||
Accumulated deferred income taxes in the balance sheets
|
$ | 2,243 | $ | 2,065 | ||||
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction
|
3.1 | 3.2 | 4.0 | |||||||||
Non-deductible book depreciation
|
0.9 | 0.9 | 1.0 | |||||||||
Differences in prior years’ deferred and current tax rates
|
(0.1 | ) | (0.2 | ) | (0.3 | ) | ||||||
AFUDC-equity
|
(1.6 | ) | (1.3 | ) | (0.7 | ) | ||||||
Production activities deduction
|
(0.5 | ) | (0.6 | ) | (0.2 | ) | ||||||
Other
|
(0.8 | ) | (0.7 | ) | (0.9 | ) | ||||||
Effective income tax rate
|
36.0 | % | 36.3 | % | 37.9 | % | ||||||
II-160
2008 | 2007 | |||||||
(in millions) | ||||||||
Unrecognized tax benefits at beginning of year
|
$ | 4.8 | $ | 1.2 | ||||
Tax positions from current periods
|
0.8 | 1.5 | ||||||
Tax positions from prior periods
|
(1.4 | ) | 2.1 | |||||
Reductions due to settlements
|
(1.2 | ) | — | |||||
Reductions due to expired statute of limitations
|
— | — | ||||||
Balance at end of year
|
$ | 3.0 | $ | 4.8 | ||||
2008 | 2007 | Change | ||||||||||
(in millions) | ||||||||||||
Tax positions impacting the effective tax rate
|
$ | 3.0 | $ | 4.8 | $ | (1.8 | ) | |||||
Tax positions not impacting the effective tax rate
|
— | — | — | |||||||||
Balance of unrecognized tax benefits
|
$ | 3.0 | $ | 4.8 | $ | (1.8 | ) | |||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Interest accrued at beginning of year
|
$ | 0.4 | $ | — | ||||
Interest reclassified due to settlements
|
(0.3 | ) | — | |||||
Interest accrued during the year
|
0.2 | 0.4 | ||||||
Balance at end of year
|
$ | 0.3 | $ | 0.4 | ||||
II-161
II-162
II-163
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (91.9 | ) | $ | (0.7 | ) | ||
Cash flow hedges
|
— | 0.5 | ||||||
Non-accounting hedges
|
— | (0.2 | ) | |||||
Total fair value
|
$ | (91.9 | ) | $ | (0.4 | ) | ||
Weighted | Fair Value | |||||||||
Notional | Variable Rate | Average | Hedge Maturity | Gain (Loss) | ||||||
Amount | Received | Fixed Rate Paid | Date | December 31, 2008 | ||||||
(in millions) | ||||||||||
$576 million
|
SIFMA
Index |
2.69%* | February 2010 | $ | (11 | ) | ||||
* | Hedged using the Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA), (formerly the Bond Market Association/PSA Municipal Swap Index) |
II-164
Commitments | ||||||||||||
Natural Gas | Coal | Nuclear Fuel | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 505 | $ | 1,461 | $ | 48 | ||||||
2010
|
266 | 996 | 37 | |||||||||
2011
|
120 | 808 | 45 | |||||||||
2012
|
154 | 636 | 44 | |||||||||
2013
|
157 | 474 | 32 | |||||||||
2014 and thereafter
|
210 | 1,414 | 10 | |||||||||
Total commitments
|
$ | 1,412 | $ | 5,789 | $ | 216 | ||||||
II-165
Commitments | ||||||||||||
Affiliated | Non-Affiliated | Total | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 61 | $ | 44 | $ | 105 | ||||||
2010
|
17 | 24 | 41 | |||||||||
2011
|
— | 3 | 3 | |||||||||
2012
|
— | — | — | |||||||||
2013
|
— | — | — | |||||||||
2014 and thereafter
|
— | — | — | |||||||||
Total commitments
|
$ | 78 | $ | 71 | $ | 149 | ||||||
Minimum Lease Payments | ||||||||||||
Rail Cars | Vehicles & Other | Total | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 17 | $ | 6 | $ | 23 | ||||||
2010
|
13 | 6 | 19 | |||||||||
2011
|
5 | 4 | 9 | |||||||||
2012
|
5 | 2 | 7 | |||||||||
2013
|
4 | 1 | 5 | |||||||||
2014 and thereafter
|
11 | — | 11 | |||||||||
Total
|
$ | 55 | $ | 19 | $ | 74 | ||||||
II-166
Year Ended December 31 | 2008 | 2007 | 2006 | |||||||||
Expected volatility
|
13.1 | % | 14.8 | % | 16.9 | % | ||||||
Expected term
(in years)
|
5.0 | 5.0 | 5.0 | |||||||||
Interest rate
|
2.8 | % | 4.6 | % | 4.6 | % | ||||||
Dividend yield
|
4.5 | % | 4.3 | % | 4.4 | % | ||||||
Weighted average grant-date fair value
|
$ | 2.37 | $ | 4.12 | $ | 4.15 |
Shares Subject | Weighted Average | |||||||
to Option | Exercise Price | |||||||
Outstanding at December 31, 2007
|
6,186,430 | $ | 30.50 | |||||
Granted
|
1,148,493 | 35.78 | ||||||
Exercised
|
(522,381 | ) | 27.68 | |||||
Cancelled
|
(3,346 | ) | 32.31 | |||||
Outstanding at December 31, 2008
|
6,809,196 | $ | 31.61 | |||||
Exercisable at December 31, 2008
|
4,610,589 | $ | 29.65 | |||||
II-167
II-168
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. | ||
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. | ||
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. |
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | ||||||||||||||||
Assets:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 3.6 | $ | — | $ | 3.6 | ||||||||
Nuclear decommissioning trusts
(a)
|
237.4 | 165.5 | — | 402.9 | ||||||||||||
Cash equivalents and restricted cash
|
80.1 | — | — | 80.1 | ||||||||||||
Total fair value
|
$ | 317.5 | $ | 169.1 | $ | — | $ | 486.6 | ||||||||
Liabilities:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 95.5 | $ | — | $ | 95.5 | ||||||||
Interest rate derivatives
|
— | 10.9 | — | 10.9 | ||||||||||||
Total fair value
|
$ | — | $ | 106.4 | $ | — | $ | 106.4 | ||||||||
(a) | Excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases. |
Net Income After | ||||||||||||
Operating | Operating | Dividends on Preferred | ||||||||||
Quarter Ended | Revenues | Income | and Preference Stock | |||||||||
(in millions) | ||||||||||||
March 2008
|
$ | 1,337 | $ | 274 | $ | 130 | ||||||
June 2008
|
1,470 | 319 | 153 | |||||||||
September 2008
|
1,865 | 478 | 252 | |||||||||
December 2008
|
1,405 | 198 | 81 | |||||||||
|
||||||||||||
March 2007
|
$ | 1,197 | $ | 255 | $ | 115 | ||||||
June 2007
|
1,336 | 311 | 147 | |||||||||
September 2007
|
1,635 | 476 | 246 | |||||||||
December 2007
|
1,192 | 173 | 72 | |||||||||
II-169
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands)
|
$ | 6,076,931 | $ | 5,359,993 | $ | 5,014,728 | $ | 4,647,824 | $ | 4,235,991 | ||||||||||
Net Income after Dividends
on Preferred and Preference Stock (in
thousands)
|
$ | 615,959 | $ | 579,582 | $ | 517,730 | $ | 507,895 | $ | 481,171 | ||||||||||
Cash Dividends
on Common Stock (in thousands)
|
$ | 491,300 | $ | 465,000 | $ | 440,600 | $ | 409,900 | $ | 437,300 | ||||||||||
Return on Average Common Equity (percent)
|
13.30 | 13.73 | 13.23 | 13.72 | 13.53 | |||||||||||||||
Total Assets (in thousands)
|
$ | 16,536,006 | $ | 15,746,625 | $ | 14,655,290 | $ | 13,689,907 | $ | 12,781,525 | ||||||||||
Gross Property Additions (in thousands)
|
$ | 1,532,673 | $ | 1,203,300 | $ | 960,759 | $ | 890,062 | $ | 786,298 | ||||||||||
Capitalization (in thousands):
|
||||||||||||||||||||
Common stock equity
|
$ | 4,854,310 | $ | 4,410,683 | $ | 4,032,287 | $ | 3,792,726 | $ | 3,610,204 | ||||||||||
Preferred and preference stock
|
685,127 | 683,512 | 612,407 | 465,046 | 465,047 | |||||||||||||||
Long-term debt
|
5,604,791 | 4,750,196 | 4,148,185 | 3,869,465 | 4,164,536 | |||||||||||||||
Total (excluding amounts due within one year)
|
$ | 11,144,228 | $ | 9,844,391 | $ | 8,792,879 | $ | 8,127,237 | $ | 8,239,787 | ||||||||||
Capitalization Ratios (percent):
|
||||||||||||||||||||
Common stock equity
|
43.6 | 44.8 | 45.9 | 46.7 | 43.8 | |||||||||||||||
Preferred and preference stock
|
6.1 | 6.9 | 7.0 | 5.7 | 5.6 | |||||||||||||||
Long-term debt
|
50.3 | 48.3 | 47.1 | 47.6 | 50.6 | |||||||||||||||
Total (excluding amounts due within one year)
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Security Ratings:
|
||||||||||||||||||||
First Mortgage Bonds —
|
||||||||||||||||||||
Moody’s
|
— | — | — | A1 | A1 | |||||||||||||||
Standard and Poor’s
|
— | — | — | A+ | A | |||||||||||||||
Fitch
|
— | — | — | AA- | AA- | |||||||||||||||
Preferred Stock/ Preference Stock —
|
||||||||||||||||||||
Moody’s
|
Baa1 | Baa1 | Baa1 | Baa1 | Baa1 | |||||||||||||||
Standard and Poor’s
|
BBB+ | BBB+ | BBB+ | BBB+ | BBB+ | |||||||||||||||
Fitch
|
A | A | A | A | A | |||||||||||||||
Unsecured Long-Term Debt —
|
||||||||||||||||||||
Moody’s
|
A2 | A2 | A2 | A2 | A2 | |||||||||||||||
Standard and Poor’s
|
A | A | A | A | A | |||||||||||||||
Fitch
|
A+ | A+ | A+ | A+ | A+ | |||||||||||||||
Customers (year-end):
|
||||||||||||||||||||
Residential
|
1,220,046 | 1,207,883 | 1,194,696 | 1,184,406 | 1,170,814 | |||||||||||||||
Commercial
|
211,119 | 216,830 | 214,723 | 212,546 | 208,547 | |||||||||||||||
Industrial
|
5,906 | 5,849 | 5,750 | 5,492 | 5,260 | |||||||||||||||
Other
|
775 | 772 | 766 | 759 | 753 | |||||||||||||||
Total
|
1,437,846 | 1,431,334 | 1,415,935 | 1,403,203 | 1,385,374 | |||||||||||||||
Employees (year-end)
|
6,997 | 6,980 | 6,796 | 6,621 | 6,745 | |||||||||||||||
II-170
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands):
|
||||||||||||||||||||
Residential
|
$ | 1,997,603 | $ | 1,833,563 | $ | 1,664,304 | $ | 1,476,211 | $ | 1,346,669 | ||||||||||
Commercial
|
1,459,466 | 1,313,642 | 1,172,436 | 1,062,341 | 980,771 | |||||||||||||||
Industrial
|
1,381,100 | 1,238,368 | 1,140,225 | 1,065,124 | 948,528 | |||||||||||||||
Other
|
24,112 | 21,383 | 18,766 | 17,745 | 16,860 | |||||||||||||||
Total retail
|
4,862,281 | 4,406,956 | 3,995,731 | 3,621,421 | 3,292,828 | |||||||||||||||
Wholesale — non-affiliates
|
711,903 | 627,047 | 634,552 | 551,408 | 483,839 | |||||||||||||||
Wholesale — affiliates
|
308,482 | 144,089 | 216,028 | 288,956 | 308,312 | |||||||||||||||
Total revenues from sales of
electricity
|
5,882,666 | 5,178,092 | 4,846,311 | 4,461,785 | 4,084,979 | |||||||||||||||
Other revenues
|
194,265 | 181,901 | 168,417 | 186,039 | 151,012 | |||||||||||||||
Total
|
$ | 6,076,931 | $ | 5,359,993 | $ | 5,014,728 | $ | 4,647,824 | $ | 4,235,991 | ||||||||||
Kilowatt-Hour Sales (in thousands):
|
||||||||||||||||||||
Residential
|
18,379,801 | 18,874,039 | 18,632,935 | 18,073,783 | 17,368,321 | |||||||||||||||
Commercial
|
14,551,495 | 14,761,243 | 14,355,091 | 14,061,650 | 13,822,926 | |||||||||||||||
Industrial
|
22,074,616 | 22,805,676 | 23,187,328 | 23,349,769 | 22,854,399 | |||||||||||||||
Other
|
201,283 | 200,874 | 199,445 | 198,715 | 198,253 | |||||||||||||||
Total retail
|
55,207,195 | 56,641,832 | 56,374,799 | 55,683,917 | 54,243,899 | |||||||||||||||
Sales for resale — non-affiliates
|
15,203,960 | 15,769,485 | 15,978,465 | 15,442,728 | 15,483,420 | |||||||||||||||
Sales for resale — affiliates
|
5,256,130 | 3,241,168 | 5,145,107 | 5,735,429 | 7,233,880 | |||||||||||||||
Total
|
75,667,285 | 75,652,485 | 77,498,371 | 76,862,074 | 76,961,199 | |||||||||||||||
Average Revenue Per Kilowatt-Hour
(cents):
|
||||||||||||||||||||
Residential
|
10.87 | 9.71 | 8.93 | 8.17 | 7.75 | |||||||||||||||
Commercial
|
10.03 | 8.90 | 8.17 | 7.55 | 7.10 | |||||||||||||||
Industrial
|
6.26 | 5.43 | 4.92 | 4.56 | 4.15 | |||||||||||||||
Total retail
|
8.81 | 7.78 | 7.09 | 6.50 | 6.07 | |||||||||||||||
Wholesale
|
4.99 | 4.06 | 4.03 | 3.97 | 3.49 | |||||||||||||||
Total sales
|
7.77 | 6.84 | 6.25 | 5.80 | 5.31 | |||||||||||||||
Residential Average Annual
Kilowatt-Hour Use Per Customer
|
15,162 | 15,696 | 15,663 | 15,347 | 14,894 | |||||||||||||||
Residential Average Annual
Revenue Per Customer
|
$ | 1,648 | $ | 1,525 | $ | 1,399 | $ | 1,253 | $ | 1,155 | ||||||||||
Plant Nameplate Capacity
Ratings (year-end) (megawatts)
|
12,222 | 12,222 | 12,222 | 12,216 | 12,216 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts):
|
||||||||||||||||||||
Winter
|
10,747 | 10,144 | 10,309 | 9,812 | 9,556 | |||||||||||||||
Summer
|
11,518 | 12,211 | 11,744 | 11,162 | 10,938 | |||||||||||||||
Annual Load Factor (percent)
|
60.9 | 59.4 | 61.8 | 63.2 | 63.2 | |||||||||||||||
Plant Availability (percent):
|
||||||||||||||||||||
Fossil-steam
|
90.08 | 88.2 | 89.6 | 90.5 | 87.8 | |||||||||||||||
Nuclear
|
94.13 | 87.5 | 93.3 | 92.9 | 88.7 | |||||||||||||||
Source of Energy Supply (percent):
|
||||||||||||||||||||
Coal
|
58.5 | 60.9 | 60.2 | 59.5 | 56.5 | |||||||||||||||
Nuclear
|
17.8 | 16.5 | 17.4 | 17.2 | 16.4 | |||||||||||||||
Hydro
|
2.9 | 1.8 | 3.8 | 5.6 | 5.6 | |||||||||||||||
Gas
|
9.2 | 8.7 | 7.6 | 6.8 | 8.9 | |||||||||||||||
Purchased power —
|
||||||||||||||||||||
From non-affiliates
|
2.9 | 1.8 | 2.1 | 3.8 | 5.4 | |||||||||||||||
From affiliates
|
8.7 | 10.3 | 8.9 | 7.1 | 7.2 | |||||||||||||||
Total
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
II-171
II-172
II-173
II-174
2008 | 2008 | |||||
Target | Actual | |||||
Key Performance Indicator | Performance | Performance | ||||
Customer Satisfaction
|
Top quartile in
customer surveys |
Top quartile in
customer surveys |
||||
Peak Season EFOR — fossil/hydro
|
2.75% or less | 0.84 | % | |||
Peak Season EFOR — nuclear
|
2.00% or less | 1.64 | % | |||
Net Income
|
$900 million | $903 million |
II-175
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Operating revenues
|
$ | 8,412 | $ | 840 | $ | 326 | $ | 170 | ||||||||
Fuel
|
2,813 | 172 | 408 | 296 | ||||||||||||
Purchased power
|
1,405 | 355 | (95 | ) | (171 | ) | ||||||||||
Other operations and maintenance
|
1,581 | 19 | 1 | (11 | ) | |||||||||||
Depreciation and amortization
|
637 | 126 | 13 | (28 | ) | |||||||||||
Taxes other than income taxes
|
316 | 25 | (8 | ) | 23 | |||||||||||
Total operating expenses
|
6,752 | 697 | 319 | 109 | ||||||||||||
Operating income
|
1,660 | 143 | 7 | 61 | ||||||||||||
Total other income and (expense)
|
(252 | ) | 5 | 18 | (22 | ) | ||||||||||
Income taxes
|
488 | 70 | (25 | ) | (5 | ) | ||||||||||
Net income
|
920 | 78 | 50 | 44 | ||||||||||||
Dividends on preferred and preference stock
|
17 | 11 | 1 | 1 | ||||||||||||
Net income after dividends on preferred and preference stock
|
$ | 903 | $ | 67 | $ | 49 | $ | 43 | ||||||||
II-176
Amount | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Retail — prior year
|
$ | 6,498.0 | $ | 6,205.6 | $ | 6,064.4 | ||||||
Estimated change in —
|
||||||||||||
Rates and pricing
|
396.9 | (66.2 | ) | (76.8 | ) | |||||||
Sales growth
|
(20.9 | ) | 46.5 | 76.6 | ||||||||
Weather
|
(37.7 | ) | 17.7 | 7.5 | ||||||||
Fuel cost recovery
|
450.1 | 294.4 | 133.9 | |||||||||
Retail — current year
|
7,286.4 | 6,498.0 | 6,205.6 | |||||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
568.8 | 537.9 | 551.7 | |||||||||
Affiliates
|
286.2 | 277.9 | 252.6 | |||||||||
Total wholesale revenues
|
855.0 | 815.8 | 804.3 | |||||||||
Other operating revenues
|
270.2 | 257.9 | 235.7 | |||||||||
Total operating revenues
|
$ | 8,411.6 | $ | 7,571.7 | $ | 7,245.6 | ||||||
Percent change
|
11.1 | % | 4.5 | % | 2.4 | % | ||||||
II-177
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Unit power sales —
|
||||||||||||
Capacity
|
$ | 40 | $ | 33 | $ | 33 | ||||||
Energy
|
44 | 33 | 38 | |||||||||
Total
|
84 | 66 | 71 | |||||||||
Other power sales —
|
||||||||||||
Capacity and other
|
129 | 158 | 165 | |||||||||
Energy
|
356 | 314 | 316 | |||||||||
Total
|
485 | 472 | 481 | |||||||||
Total non-affiliated
|
$ | 569 | $ | 538 | $ | 552 | ||||||
II-178
KWH | Percent Change | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in billions) | ||||||||||||||||
Residential
|
26.4 | (1.6 | )% | 2.4 | % | 2.7 | % | |||||||||
Commercial
|
33.0 | 0.0 | 2.9 | 2.5 | ||||||||||||
Industrial
|
24.2 | (5.2 | ) | (0.3 | ) | (1.0 | ) | |||||||||
Other
|
0.7 | (3.8 | ) | 5.6 | (10.5 | ) | ||||||||||
Total retail
|
84.3 | (2.1 | ) | 1.8 | 1.4 | |||||||||||
|
||||||||||||||||
Wholesale
|
||||||||||||||||
Non-affiliates
|
9.8 | (7.8 | ) | (1.0 | ) | 0.9 | ||||||||||
Affiliates
|
3.7 | (28.8 | ) | (5.0 | ) | 8.5 | ||||||||||
Total wholesale
|
13.5 | (14.7 | ) | (2.3 | ) | 3.4 | ||||||||||
Total energy sales
|
97.8 | (4.0 | )% | 1.1 | % | 1.7 | % | |||||||||
II-179
2008 | 2007 | 2006 | ||||||||||
Total generation
(billions of KWHs)
|
80.8 | 87.0 | 83.7 | |||||||||
Total purchased power
(billions of KWHs)
|
21.3 | 18.9 | 21.9 | |||||||||
Sources of generation
(percent) -
|
||||||||||||
Coal
|
74 | 75 | 75 | |||||||||
Nuclear
|
19 | 18 | 18 | |||||||||
Gas
|
6 | 7 | 6 | |||||||||
Hydro
|
1 | — | 1 | |||||||||
Cost of fuel, generated
(cents per net KWH) -
|
||||||||||||
Coal
|
3.44 | 2.87 | 2.58 | |||||||||
Nuclear
|
0.51 | 0.51 | 0.47 | |||||||||
Gas
|
6.90 | 6.28 | 5.76 | |||||||||
Average cost of fuel, generated
(cents per net KWH)
|
3.11 | 2.68 | 2.39 | |||||||||
Average cost of purchased power
(cents per net KWH)
|
8.10 | 7.27 | 6.38 | |||||||||
II-180
II-181
II-182
II-183
II-184
II-185
II-186
II-187
II-188
II-189
II-190
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters. | |
• | Changes in existing income tax regulations or changes in IRS or Georgia DOR interpretations of existing regulations. | |
• | Identification of additional sites that require environmental remediation or the filing of other complaints in which the Company may be asserted to be a potentially responsible party. | |
• | Identification and evaluation of other potential lawsuits or complaints in which the Company may be named as a defendant. | |
• | Resolution or progression of new or existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
II-191
II-192
Expires | ||||||||||||||
Total | Unused | 2009 | 2012 | |||||||||||
(in millions) | ||||||||||||||
$1,345
|
$ | 1,333 | $ | 225 | $ | 1,120 |
II-193
II-194
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets (liabilities), net
|
$ | (0.4 | ) | $ | (38.0 | ) | ||
Contracts realized or settled
|
(68.5 | ) | 41.6 | |||||
Current period changes(a)
|
(44.3 | ) | (4.0 | ) | ||||
Contracts outstanding at the end of the period, assets (liabilities), net
|
$ | (113.2 | ) | $ | (0.4 | ) | ||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any |
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2 & 3 | Years 4 & 5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Level 2
|
(113.2 | ) | (80.7 | ) | (32.4 | ) | (0.1 | ) | ||||||||
Level 3
|
— | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period
|
$ | (113.2 | ) | $ | (80.7 | ) | $ | (32.4 | ) | $ | (0.1 | ) | ||||
II-195
II-196
2010- | 2012- | After | Uncertain | |||||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Timing (d) | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Long-term
debt
(a)
—
|
||||||||||||||||||||||||
Principal
|
$ | 280 | $ | 667 | $ | 734 | $ | 5,612 | $ | — | $ | 7,293 | ||||||||||||
Interest
|
354 | 677 | 636 | 5,711 | — | 7,378 | ||||||||||||||||||
Preferred and preference stock dividends
(b)
|
17 | 35 | 35 | — | — | 87 | ||||||||||||||||||
Energy-related derivative obligations
(c)
|
85 | 33 | — | — | — | 118 | ||||||||||||||||||
Interest derivatives
|
21 | — | — | — | — | 21 | ||||||||||||||||||
Operating leases
|
43 | 65 | 32 | 28 | — | 168 | ||||||||||||||||||
Unrecognized tax benefits and interest
(d)
|
142 | — | — | — | 9 | 151 | ||||||||||||||||||
Purchase
commitments
(e)
—
|
||||||||||||||||||||||||
Capital
(f)
|
2,615 | 4,942 | — | — | — | 7,557 | ||||||||||||||||||
Limestone
(g)
|
10 | 34 | 31 | 37 | — | 112 | ||||||||||||||||||
Coal
|
2,497 | 3,713 | 1,406 | 1,999 | — | 9,615 | ||||||||||||||||||
Nuclear fuel
|
139 | 219 | 199 | 33 | — | 590 | ||||||||||||||||||
Natural gas
(h)
|
657 | 631 | 744 | 2,917 | — | 4,949 | ||||||||||||||||||
Purchased power
|
370 | 656 | 506 | 2,186 | — | 3,718 | ||||||||||||||||||
Long-term service agreements
(i)
|
14 | 32 | 103 | 581 | — | 730 | ||||||||||||||||||
Trusts —
|
||||||||||||||||||||||||
Nuclear
decommissioning
(j)
|
3 | 7 | 7 | 53 | — | 70 | ||||||||||||||||||
Postretirement benefits
(k)
|
39 | 81 | — | — | — | 120 | ||||||||||||||||||
Total
|
$ | 7,286 | $ | 11,792 | $ | 4,433 | $ | 19,157 | $ | 9 | $ | 42,677 | ||||||||||||
(a) | All amounts are reflected based on final maturity dates. The Company plans to continue to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. Variable rate interest obligations are estimated based on rates as of January 1, 2009, as reflected in the statements of capitalization. Fixed rates include, where applicable, the effects of interest rate derivatives employed to manage interest rate risk. | |
(b) | Preferred and preference stock does not mature; therefore, amounts provided are for the next five years only. | |
(c) | For additional information see Notes 1 and 6 to the financial statements. | |
(d) | The timing related to the realization of $9 million in unrecognized tax benefits and interest payments cannot be reasonably and reliably estimated due to uncertainties in the timing of the effective settlement of tax positions. Of the total $151 million, $81 million is the estimated cash payment. See Note 3 and Note 5 to the financial statements for additional information. | |
(e) | The Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for the last three years were $1.6 billion, $1.6 billion, and $1.6 billion, respectively. | |
(f) | The Company forecasts capital expenditures over a three-year period. Amounts represent current estimates of total expenditures, excluding those amounts related to contractual purchase commitments for nuclear fuel. At December 31, 2008, significant purchase commitments were outstanding in connection with the construction program. | |
(g) | As part of the Company’s program to reduce sulfur dioxide emissions from its coal plants, the Company has begun construction of flue gas desulfurization projects and has entered into various long-term commitments for the procurement of limestone to be used in such equipment. | |
(h) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on the New York Mercantile Exchange future prices at December 31, 2008. | |
(i) | Long-term service agreements include price escalation based on inflation indices. | |
(j) | Projections of nuclear decommissioning trust contributions are based on the 2007 Retail Rate Plan. | |
(k) | The Company forecasts postretirement trust contributions over a three-year period. The Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Therefore, no amounts related to the pension trust fund are included in the table. See Note 2 to the financial statements for additional information related to the pension and postretirement plans, including estimated benefit payments. Certain benefit payments will be made through the related trusts. Other benefit payments will be made from the Company’s corporate assets. |
II-197
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which the Company is subject, as well as changes in application of existing laws and regulations; | ||
• | current and future litigation, regulatory investigations, proceedings, or inquiries, including FERC matters and the pending EPA civil action against the Company; | ||
• | the effects, extent, and timing of the entry of additional competition in the markets in which the Company operates; | ||
• | variations in demand for electricity, including those relating to weather, the general economy, population, business growth (and declines), and the effects of energy conservation measures; | ||
• | available sources and costs of fuels; | ||
• | effects of inflation; | ||
• | ability to control costs; | ||
• | investment performance of the Company’s employee benefit plans; | ||
• | advances in technology; | ||
• | state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate cases related to fuel cost recovery; | ||
• | regulatory approvals related to the potential Plant Vogtle expansion, including Georgia PSC and NRC approvals; | ||
• | internal restructuring or other restructuring options that may be pursued; | ||
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to the Company; | ||
• | the ability of counterparties of the Company to make payments as and when due and to perform as required; | ||
• | the ability to obtain new short- and long-term contracts with neighboring utilities; | ||
• | the direct or indirect effect on the Company’s business resulting from terrorist incidents and the threat of terrorist incidents; | ||
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including the Company’s credit ratings; | ||
• | the ability of the Company to obtain additional generating capacity at competitive prices; | ||
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; | ||
• | the direct or indirect effects on the Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; | ||
• | the effect of accounting pronouncements issued periodically by standard-setting bodies; and | ||
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
II-198
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Operating Revenues:
|
||||||||||||
Retail revenues
|
$ | 7,286,345 | $ | 6,498,003 | $ | 6,205,620 | ||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
568,797 | 537,913 | 551,731 | |||||||||
Affiliates
|
286,219 | 277,832 | 252,556 | |||||||||
Other revenues
|
270,191 | 257,904 | 235,737 | |||||||||
Total operating revenues
|
8,411,552 | 7,571,652 | 7,245,644 | |||||||||
Operating Expenses:
|
||||||||||||
Fuel
|
2,812,417 | 2,640,526 | 2,233,029 | |||||||||
Purchased power —
|
||||||||||||
Non-affiliates
|
442,951 | 332,064 | 332,606 | |||||||||
Affiliates
|
962,100 | 718,327 | 812,433 | |||||||||
Other operations and maintenance
|
1,580,922 | 1,561,736 | 1,560,469 | |||||||||
Depreciation and amortization
|
636,970 | 511,180 | 498,754 | |||||||||
Taxes other than income taxes
|
316,219 | 291,136 | 298,824 | |||||||||
Total operating expenses
|
6,751,579 | 6,054,969 | 5,736,115 | |||||||||
Operating Income
|
1,659,973 | 1,516,683 | 1,509,529 | |||||||||
Other Income and (Expense):
|
||||||||||||
Allowance for equity funds used during construction
|
95,294 | 68,177 | 31,524 | |||||||||
Interest income
|
7,219 | 3,560 | 2,459 | |||||||||
Interest expense, net of amounts capitalized
|
(345,416 | ) | (343,462 | ) | (317,947 | ) | ||||||
Other income (expense), net
|
(9,258 | ) | 14,705 | 8,833 | ||||||||
Total other income and (expense)
|
(252,161 | ) | (257,020 | ) | (275,131 | ) | ||||||
Earnings Before Income Taxes
|
1,407,812 | 1,259,663 | 1,234,398 | |||||||||
Income taxes
|
487,504 | 417,521 | 442,334 | |||||||||
Net Income
|
920,308 | 842,142 | 792,064 | |||||||||
Dividends on Preferred and Preference Stock
|
17,381 | 6,006 | 4,839 | |||||||||
Net Income After Dividends on Preferred and Preference Stock
|
$ | 902,927 | $ | 836,136 | $ | 787,225 | ||||||
II-199
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Operating Activities:
|
||||||||||||
Net income
|
$ | 920,308 | $ | 842,142 | $ | 792,064 | ||||||
Adjustments to reconcile net income
to net cash provided from operating activities —
|
||||||||||||
Depreciation and amortization
|
758,283 | 616,796 | 588,428 | |||||||||
Deferred income taxes and investment tax credits, net
|
170,958 | (78,010 | ) | 16,159 | ||||||||
Deferred revenues
|
122,964 | 4,871 | (136 | ) | ||||||||
Allowance for equity funds used during construction
|
(95,294 | ) | (68,177 | ) | (31,524 | ) | ||||||
Pension, postretirement, and other employee benefits
|
(3,243 | ) | 8,836 | 18,604 | ||||||||
Stock based compensation expense
|
4,200 | 5,977 | 5,805 | |||||||||
Hedge settlements
|
(22,949 | ) | 12,121 | — | ||||||||
Other, net
|
909 | 18,550 | 4,592 | |||||||||
Changes in certain current assets and liabilities —
|
||||||||||||
Receivables
|
(82,995 | ) | 134,276 | 1,193 | ||||||||
Fossil fuel stock
|
(91,536 | ) | (1,211 | ) | (194,256 | ) | ||||||
Materials and supplies
|
(20,021 | ) | (32,998 | ) | 31,317 | |||||||
Prepaid income taxes
|
(14,885 | ) | 10,002 | 1,060 | ||||||||
Other current assets
|
(18,460 | ) | (4,359 | ) | 774 | |||||||
Accounts payable
|
(56,126 | ) | 22,626 | (85,189 | ) | |||||||
Accrued taxes
|
117,524 | (33,320 | ) | 82,735 | ||||||||
Accrued compensation
|
21,525 | (30,039 | ) | (10,328 | ) | |||||||
Other current liabilities
|
16,789 | 20,703 | (21,054 | ) | ||||||||
Net cash provided from operating activities
|
1,727,951 | 1,448,786 | 1,200,244 | |||||||||
Investing Activities:
|
||||||||||||
Property additions
|
(1,847,952 | ) | (1,765,344 | ) | (1,219,498 | ) | ||||||
Investment in restricted cash from pollution control bonds
|
— | (59,525 | ) | — | ||||||||
Distribution of restricted cash from pollution control bonds
|
32,675 | — | — | |||||||||
Nuclear decommissioning trust fund purchases
|
(419,086 | ) | (448,287 | ) | (464,274 | ) | ||||||
Nuclear decommissioning trust fund sales
|
412,206 | 441,407 | 457,394 | |||||||||
Cost of removal net of salvage
|
(62,722 | ) | (47,565 | ) | (33,620 | ) | ||||||
Change in construction payables, net of joint owner portion
|
2,639 | 24,893 | 35,075 | |||||||||
Other
|
(38,199 | ) | (25,479 | ) | (16,005 | ) | ||||||
Net cash used for investing activities
|
(1,920,439 | ) | (1,879,900 | ) | (1,240,928 | ) | ||||||
Financing Activities:
|
||||||||||||
Increase (decrease) in notes payable, net
|
(358,497 | ) | (17,690 | ) | 406,768 | |||||||
Proceeds —
|
||||||||||||
Senior notes
|
1,000,000 | 1,500,000 | 150,000 | |||||||||
Preferred and preference stock
|
— | 225,000 | — | |||||||||
Pollution control revenue bonds
|
386,485 | 190,800 | 153,910 | |||||||||
Capital contributions from parent company
|
272,894 | 322,448 | 312,544 | |||||||||
Other long-term debt
|
301,100 | — | — | |||||||||
Redemptions —
|
||||||||||||
Pollution control revenue bonds
|
(335,605 | ) | — | (153,910 | ) | |||||||
Capital leases
|
(1,125 | ) | (2,185 | ) | (136 | ) | ||||||
Senior notes
|
(198,097 | ) | (300,000 | ) | (150,000 | ) | ||||||
First mortgage bonds
|
— | — | (20,000 | ) | ||||||||
Preferred and preference stock
|
— | — | (14,569 | ) | ||||||||
Other long-term debt
|
— | (762,887 | ) | — | ||||||||
Payment of preferred and preference stock dividends
|
(17,016 | ) | (3,143 | ) | (2,958 | ) | ||||||
Payment of common stock dividends
|
(721,200 | ) | (689,900 | ) | (630,000 | ) | ||||||
Other
|
(19,104 | ) | (32,787 | ) | (5,253 | ) | ||||||
Net cash provided from financing activities
|
309,835 | 429,656 | 46,396 | |||||||||
Net Change in Cash and Cash Equivalents
|
117,347 | (1,458 | ) | 5,712 | ||||||||
Cash and Cash Equivalents at Beginning of Year
|
15,392 | 16,850 | 11,138 | |||||||||
Cash and Cash Equivalents at End of Year
|
$ | 132,739 | $ | 15,392 | $ | 16,850 | ||||||
Supplemental Cash Flow Information:
|
||||||||||||
Cash paid during the period for —
|
||||||||||||
Interest (net of $39,807, $28,668, and $12,530 capitalized,
respectively)
|
$ | 309,264 | $ | 317,938 | $ | 317,536 | ||||||
Income taxes (net of refunds)
|
279,904 | 456,852 | 398,735 | |||||||||
II-200
Assets | 2008 | 2007 | ||||||
(in thousands) | ||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 132,739 | $ | 15,392 | ||||
Restricted cash
|
22,381 | 48,279 | ||||||
Receivables —
|
||||||||
Customer accounts receivable
|
554,220 | 491,389 | ||||||
Unbilled revenues
|
147,978 | 137,046 | ||||||
Under recovered regulatory clause revenues
|
338,780 | 384,538 | ||||||
Other accounts and notes receivable
|
97,898 | 147,498 | ||||||
Affiliated companies
|
13,091 | 21,699 | ||||||
Accumulated provision for uncollectible accounts
|
(10,732 | ) | (7,636 | ) | ||||
Fossil fuel stock, at average cost
|
484,757 | 393,222 | ||||||
Materials and supplies, at average cost
|
356,537 | 337,652 | ||||||
Vacation pay
|
71,217 | 69,394 | ||||||
Prepaid income taxes
|
65,987 | 51,101 | ||||||
Other
|
182,425 | 55,169 | ||||||
Total current assets
|
2,457,278 | 2,144,743 | ||||||
Property, Plant, and Equipment:
|
||||||||
In service
|
23,975,262 | 22,011,215 | ||||||
Less accumulated provision for depreciation
|
9,101,474 | 8,696,668 | ||||||
|
14,873,788 | 13,314,547 | ||||||
Nuclear fuel, at amortized cost
|
278,412 | 198,983 | ||||||
Construction work in progress
|
1,434,989 | 1,797,642 | ||||||
Total property, plant, and equipment
|
16,587,189 | 15,311,172 | ||||||
Other Property and Investments:
|
||||||||
Equity investments in unconsolidated subsidiaries
|
57,163 | 53,813 | ||||||
Nuclear decommissioning trusts, at fair value
|
460,430 | 588,952 | ||||||
Other
|
40,945 | 47,914 | ||||||
Total other property and investments
|
558,538 | 690,679 | ||||||
Deferred Charges and Other Assets:
|
||||||||
Deferred charges related to income taxes
|
572,528 | 532,539 | ||||||
Prepaid pension costs
|
— | 1,026,985 | ||||||
Deferred under recovered regulatory clause revenues
|
425,609 | 307,294 | ||||||
Other regulatory assets
|
1,449,352 | 541,014 | ||||||
Other
|
265,174 | 268,335 | ||||||
Total deferred charges and other assets
|
2,712,663 | 2,676,167 | ||||||
Total Assets
|
$ | 22,315,668 | $ | 20,822,761 | ||||
II-201
Liabilities and Stockholder’s Equity | 2008 | 2007 | ||||||
(in thousands) | ||||||||
Current Liabilities:
|
||||||||
Securities due within one year
|
$ | 280,443 | $ | 198,576 | ||||
Notes payable
|
357,095 | 715,591 | ||||||
Accounts payable —
|
||||||||
Affiliated
|
260,545 | 236,332 | ||||||
Other
|
422,485 | 463,945 | ||||||
Customer deposits
|
186,919 | 171,553 | ||||||
Accrued taxes —
|
||||||||
Income taxes
|
70,916 | 68,782 | ||||||
Unrecognized tax benefits
|
128,712 | — | ||||||
Other
|
278,171 | 219,585 | ||||||
Accrued interest
|
79,432 | 74,674 | ||||||
Accrued vacation pay
|
57,643 | 56,303 | ||||||
Accrued compensation
|
135,191 | 114,974 | ||||||
Other
|
249,609 | 103,225 | ||||||
Total current liabilities
|
2,507,161 | 2,423,540 | ||||||
Long-term Debt
(See accompanying statements)
|
7,006,275 | 5,937,792 | ||||||
Deferred Credits and Other Liabilities:
|
||||||||
Accumulated deferred income taxes
|
3,064,580 | 2,850,655 | ||||||
Deferred credits related to income taxes
|
140,933 | 146,886 | ||||||
Accumulated deferred investment tax credits
|
256,218 | 269,125 | ||||||
Employee benefit obligations
|
882,965 | 678,826 | ||||||
Asset retirement obligations
|
688,019 | 663,503 | ||||||
Other cost of removal obligations
|
396,947 | 414,745 | ||||||
Other regulatory liabilities
|
115,865 | 577,642 | ||||||
Other
|
111,505 | 158,670 | ||||||
Total deferred credits and other liabilities
|
5,657,032 | 5,760,052 | ||||||
Total Liabilities
|
15,170,468 | 14,121,384 | ||||||
Preferred and Preference Stock
(See accompanying statements)
|
265,957 | 265,957 | ||||||
Common Stockholder’s Equity
(See accompanying statements)
|
6,879,243 | 6,435,420 | ||||||
Total Liabilities and Stockholder’s Equity
|
$ | 22,315,668 | $ | 20,822,761 | ||||
Commitments and Contingent Matters
(See notes)
|
||||||||
II-202
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | (percent of total) | |||||||||||||||
Long-Term Debt:
|
||||||||||||||||
Long-term debt payable to affiliated trusts —
|
||||||||||||||||
5.88% due 2044
|
$ | 206,186 | $ | 206,186 | ||||||||||||
Long-term notes payable —
|
||||||||||||||||
6.55% due May 15, 2008
|
— | 45,000 | ||||||||||||||
4.10% due 2009
|
125,300 | 125,000 | ||||||||||||||
Variable rate (5.00% at 1/1/08) due 2008
|
— | 150,000 | ||||||||||||||
Variable rate (2.3288% at 1/1/09) due 2009
|
150,000 | 150,000 | ||||||||||||||
Variable rate (2.42% at 1/1/09) due 2010
|
250,000 | — | ||||||||||||||
Variable rate (2.35% at 1/1/09) due 2011
|
300,000 | — | ||||||||||||||
4.00% to 5.57% due 2011
|
101,100 | 100,000 | ||||||||||||||
5.125% due 2012
|
200,000 | 200,000 | ||||||||||||||
4.90% to 6.00% due 2013
|
525,000 | 125,000 | ||||||||||||||
5.25% to 8.20% due 2015-2048
|
3,421,903 | 3,075,000 | ||||||||||||||
Total long-term notes payable
|
5,073,303 | 3,970,000 | ||||||||||||||
Other long-term debt —
|
||||||||||||||||
Pollution control revenue bonds:
|
||||||||||||||||
1.95% to 5.75% due 2016-2048
|
1,309,190 | 774,370 | ||||||||||||||
Variable rate (1.05% at 1/1/09) due 2011
|
8,330 | 10,450 | ||||||||||||||
Variable rate (0.80% to 3.00% at 1/1/09)
due 2016-2041
|
628,005 | 1,109,825 | ||||||||||||||
Total other long-term debt
|
1,945,525 | 1,894,645 | ||||||||||||||
Capitalized lease obligations
|
67,948 | 70,733 | ||||||||||||||
Unamortized debt discount
|
(6,244 | ) | (5,196 | ) | ||||||||||||
Total long-term debt (annual interest
requirement — $354.0 million)
|
7,286,718 | 6,136,368 | ||||||||||||||
Less amount due within one year
|
280,443 | 198,576 | ||||||||||||||
Long-term debt excluding amount due within one year
|
7,006,275 | 5,937,792 | 49.5 | % | 47.0 | % | ||||||||||
Preferred and Preference Stock:
|
||||||||||||||||
Non-cumulative preferred stock
|
||||||||||||||||
$25 par value — 6.125%
|
||||||||||||||||
Authorized — 50,000,000 shares
|
||||||||||||||||
Outstanding — 1,800,000 shares
|
44,991 | 44,991 | ||||||||||||||
Non-cumulative preference stock
|
||||||||||||||||
$100 par value — 6.50%
|
||||||||||||||||
Authorized — 15,000,000 shares
|
||||||||||||||||
Outstanding — 2,250,000 shares
|
220,966 | 220,966 | ||||||||||||||
Total
preferred and preference stock
(annual dividend requirement — $17.4 million) |
265,957 | 265,957 | 1.9 | 2.1 | ||||||||||||
Common Stockholder’s Equity:
|
||||||||||||||||
Common stock, without par value —
|
||||||||||||||||
Authorized: 20,000,000 shares
|
||||||||||||||||
Outstanding: 9,261,500 shares
|
398,473 | 398,473 | ||||||||||||||
Paid-in capital
|
3,655,731 | 3,374,777 | ||||||||||||||
Retained earnings
|
2,857,789 | 2,676,063 | ||||||||||||||
Accumulated other comprehensive income (loss)
|
(32,750 | ) | (13,893 | ) | ||||||||||||
Total common stockholder’s equity
|
6,879,243 | 6,435,420 | 48.6 | 50.9 | ||||||||||||
Total Capitalization
|
$ | 14,151,475 | $ | 12,639,169 | 100.0 | % | 100.0 | % | ||||||||
II-203
Accumulated | ||||||||||||||||||||
Common | Paid-In | Retained | Other Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2005
|
$ | 398,473 | $ | 2,717,539 | $ | 2,372,637 | $ | (36,566 | ) | $ | 5,452,083 | |||||||||
Net income after dividends on preferred stock
|
— | — | 787,225 | — | 787,225 | |||||||||||||||
Capital contributions from parent company
|
— | 322,306 | — | — | 322,306 | |||||||||||||||
Other comprehensive income
|
— | — | — | 5,184 | 5,184 | |||||||||||||||
Adjustment to initially apply
FASB Statement No. 158, net of tax |
— | — | — | 19,489 | 19,489 | |||||||||||||||
Cash dividends on common stock
|
— | — | (630,000 | ) | — | (630,000 | ) | |||||||||||||
Other
|
— | — | (36 | ) | — | (36 | ) | |||||||||||||
Balance at December 31, 2006
|
398,473 | 3,039,845 | 2,529,826 | (11,893 | ) | 5,956,251 | ||||||||||||||
Net income after dividends on preferred
and preference stock
|
— | — | 836,136 | — | 836,136 | |||||||||||||||
Capital contributions from parent company
|
— | 334,931 | — | — | 334,931 | |||||||||||||||
Other comprehensive loss
|
— | — | — | (2,000 | ) | (2,000 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (689,900 | ) | — | (689,900 | ) | |||||||||||||
Other
|
— | 1 | 1 | — | 2 | |||||||||||||||
Balance at December 31, 2007
|
398,473 | 3,374,777 | 2,676,063 | (13,893 | ) | 6,435,420 | ||||||||||||||
Net income after dividends on preferred
and preference stock
|
— | — | 902,927 | — | 902,927 | |||||||||||||||
Capital contributions from parent company
|
— | 280,954 | — | — | 280,954 | |||||||||||||||
Other comprehensive loss
|
— | — | — | (18,857 | ) | (18,857 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (721,200 | ) | — | (721,200 | ) | |||||||||||||
Other
|
— | — | (1 | ) | — | (1 | ) | |||||||||||||
Balance at December 31, 2008
|
$ | 398,473 | $ | 3,655,731 | $ | 2,857,789 | $ | (32,750 | ) | $ | 6,879,243 | |||||||||
2008 | 2007 | 2006 | |||||||||||
(in thousands) | |||||||||||||
Net income after dividends on preferred and preference stock
|
$ | 902,927 | $ | 836,136 | $ | 787,225 | |||||||
Other comprehensive income (loss):
|
|||||||||||||
Qualifying hedges:
|
|||||||||||||
Changes in fair value, net of tax of $(13,150), $(1,831), and
$(935), respectively
|
(20,846 | ) | (2,938 | ) | (1,454 | ) | |||||||
Reclassification adjustment for amounts included in net income,
net of tax of $1,255, $278, and $(441), respectively
|
1,989 | 441 | (700 | ) | |||||||||
Marketable securities:
|
|||||||||||||
Changes in fair value, net of tax of $-, $291, and $(494),
respectively
|
— | 497 | (817 | ) | |||||||||
Pension and other postretirement benefit plans:
|
|||||||||||||
Change in additional minimum pension liability, net of tax of $-,
$-, and $5,143, respectively
|
— | — | 8,155 | ||||||||||
Total other comprehensive income (loss)
|
(18,857 | ) | (2,000 | ) | 5,184 | ||||||||
Comprehensive Income
|
$ | 884,070 | $ | 834,136 | $ | 792,409 | |||||||
II-204
II-205
II-206
2008 | 2007 | Note | ||||||||||
(in millions) | ||||||||||||
Deferred income tax charges
|
$ | 573 | $ | 533 | (a | ) | ||||||
Loss on reacquired debt
|
165 | 175 | (b | ) | ||||||||
Vacation pay
|
71 | 69 | (c | ) | ||||||||
Underfunded retiree benefit plans
|
903 | 235 | (e | ) | ||||||||
Fuel-hedging
(realized and unrealized) losses
|
130 | 14 | (f | ) | ||||||||
Nuclear early site permit
|
49 | 28 | (h | ) | ||||||||
Other regulatory assets
|
160 | 133 | (d | ) | ||||||||
Asset retirement obligations
|
209 | 41 | (a | ) | ||||||||
Other cost of removal obligations
|
(397 | ) | (415 | ) | (a | ) | ||||||
Deferred income tax credits
|
(141 | ) | (147 | ) | (a | ) | ||||||
Overfunded retiree benefit plans
|
— | (540 | ) | (e | ) | |||||||
Environmental compliance cost recovery
|
(135 | ) | — | (g | ) | |||||||
Other regulatory liabilities
|
(14 | ) | (21 | ) | (d | ) | ||||||
Total assets (liabilities), net
|
$ | 1,573 | $ | 105 | ||||||||
Note: The recovery and amortization periods for these regulatory assets and (liabilities) are as follows: | ||
(a) | Asset retirement and removal liabilities are recorded, deferred income tax assets are recovered, and deferred tax liabilities are amortized over the related property lives, which may range up to 60 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. | |
(b) | Recovered over either the remaining life of the original issue or, if refinanced, over the life of the new issue which may range up to 50 years. | |
(c) | Recorded as earned by employees and recovered as paid, generally within one year. | |
(d) | Recorded and recovered or amortized as approved by the Georgia PSC. | |
(e) | Recovered and amortized over the average remaining service period which may range up to 16 years. See Note 2 for additional information. | |
(f) | Fuel-hedging assets and liabilities are recorded over the life of the underlying hedged purchase contracts, which generally do not exceed 42 months. Upon final settlement, costs are recovered through the fuel cost recovery clause. | |
(g) | This balance represents deferred revenue associated with the Environmental Compliance Cost Recovery (ECCR) tariff established in the 2007 Retail Rate Plan (as defined below). The recovery of the forecasted environmental compliance costs was levelized to collect equal annual amounts between January 1, 2008 and December 31, 2010 under the tariff. | |
(h) | This balance represents deferred costs incurred in support of preparation and completion of an early site permit and combined construction and operating license (COL) for two additional nuclear generating units at Plant Vogtle (Units 3 and 4). The costs will be capitalized to construction work in progress upon certification by the Georgia PSC. |
II-207
2008 | 2007 | |||||||
(in millions) | ||||||||
Generation
|
$ | 11,478 | $ | 10,180 | ||||
Transmission
|
3,764 | 3,593 | ||||||
Distribution
|
7,409 | 6,985 | ||||||
General
|
1,296 | 1,225 | ||||||
Plant acquisition adjustment
|
28 | 28 | ||||||
Total plant in service
|
$ | 23,975 | $ | 22,011 | ||||
II-208
2008 | 2007 | |||||||
(in millions) | ||||||||
Balance beginning of year
|
$ | 664 | $ | 627 | ||||
Liabilities incurred
|
4 | — | ||||||
Liabilities settled
|
(1 | ) | (3 | ) | ||||
Accretion
|
41 | 40 | ||||||
Cash flow revisions
|
(18 | ) | — | |||||
Balance end of year
|
$ | 690 | $ | 664 | ||||
II-209
II-210
Plant Hatch | Plant Vogtle | |||||||
Decommissioning periods:
|
||||||||
Beginning year
|
2034 | 2027 | ||||||
Completion year
|
2061 | 2051 | ||||||
|
||||||||
(in millions) | ||||||||
Site study costs:
|
||||||||
Radiated structures
|
$ | 544 | $ | 507 | ||||
Non-radiated structures
|
46 | 67 | ||||||
Total site study costs
|
$ | 590 | $ | 574 | ||||
|
||||||||
Accumulated provision
|
$ | 280 | $ | 168 | ||||
II-211
Carrying Amount | Fair Value | |||||||
(in millions) | ||||||||
|
||||||||
Long-term debt:
|
||||||||
2008
|
$ | 7,219 | $ | 7,096 | ||||
2007
|
$ | 6,066 | $ | 5,969 |
II-212
2008 | 2007 | |||||||
(in millions) | ||||||||
|
||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 2,178 | $ | 2,136 | ||||
Service cost
|
62 | 51 | ||||||
Interest cost
|
167 | 126 | ||||||
Benefits paid
|
(133 | ) | (98 | ) | ||||
Plan amendments
|
— | 15 | ||||||
Actuarial (gain) loss
|
(36 | ) | (52 | ) | ||||
Balance at end of year
|
2,238 | 2,178 | ||||||
|
||||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
3,073 | 2,710 | ||||||
Actual return (loss) on plan assets
|
(910 | ) | 456 | |||||
Employer contributions
|
8 | 5 | ||||||
Benefits paid
|
(133 | ) | (98 | ) | ||||
Fair value of plan assets at end of year
|
2,038 | 3,073 | ||||||
|
||||||||
Funded status at end of year
|
(200 | ) | 895 | |||||
Fourth quarter contributions
|
— | 2 | ||||||
(Accrued liability) prepaid pension asset
|
$ | (200 | ) | $ | 897 | |||
II-213
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
36 | % | 34 | % | 38 | % | ||||||
International equity
|
24 | 23 | 24 | |||||||||
Fixed income
|
15 | 14 | 15 | |||||||||
Real estate
|
15 | 19 | 16 | |||||||||
Private equity
|
10 | 10 | 7 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Prepaid pension costs
|
$ | — | $ | 1,027 | ||||
Other regulatory assets
|
642 | 64 | ||||||
Current liabilities, other
|
(7 | ) | (7 | ) | ||||
Other regulatory liabilities
|
— | (540 | ) | |||||
Employee benefit obligations
|
(193 | ) | (123 | ) | ||||
Prior Service Cost | Net (Gain) Loss | |||||||
(in millions) | ||||||||
Balance at December 31, 2008:
|
||||||||
Regulatory asset
|
$ | 87 | $ | 555 | ||||
Total
|
$ | 87 | $ | 555 | ||||
|
||||||||
(in millions)
|
||||||||
Balance at December 31, 2007:
|
||||||||
Regulatory asset
|
$ | 24 | $ | 40 | ||||
Regulatory liabilities
|
81 | (621 | ) | |||||
Total
|
$ | 105 | $ | (581 | ) | |||
|
||||||||
(in millions)
|
||||||||
Estimated amortization in net periodic
pension cost in 2009:
|
||||||||
Regulatory assets
|
$ | 14 | $ | 2 | ||||
Total
|
$ | 14 | $ | 2 | ||||
II-214
Regulatory Assets | Regulatory Liabilities | |||||||
(in millions) | ||||||||
Balance at December 31, 2006
|
$ | 56 | $ | (218 | ) | |||
Net (gain) loss
|
(1 | ) | (311 | ) | ||||
Change in prior service costs
|
15 | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(3 | ) | (11 | ) | ||||
Amortization of net gain
|
(3 | ) | — | |||||
Total reclassification adjustments
|
(6 | ) | (11 | ) | ||||
Total change
|
8 | (322 | ) | |||||
Balance at December 31, 2007
|
$ | 64 | $ | (540 | ) | |||
Net (gain) loss
|
585 | 554 | ||||||
Change in prior service costs
|
— | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(4 | ) | (14 | ) | ||||
Amortization of net gain
|
(3 | ) | — | |||||
Total reclassification adjustments
|
(7 | ) | (14 | ) | ||||
Total change
|
578 | 540 | ||||||
Balance at December 31, 2008
|
$ | 642 | $ | — | ||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost
|
$ | 49 | $ | 51 | $ | 53 | ||||||
Interest cost
|
134 | 126 | 117 | |||||||||
Expected return on plan assets
|
(211 | ) | (195 | ) | (184 | ) | ||||||
Recognized net (gain) loss
|
3 | 3 | 6 | |||||||||
Net amortization
|
14 | 14 | 8 | |||||||||
Net periodic pension cost (income)
|
$ | (11 | ) | $ | (1 | ) | $ | — | ||||
Benefit Payments | ||||
(in millions) | ||||
2009
|
$ | 118 | ||
2010
|
124 | |||
2011
|
130 | |||
2012
|
136 | |||
2013
|
143 | |||
2014 to 2018
|
841 | |||
II-215
2008 | 2007 | |||||||
(in millions) | ||||||||
|
||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 798 | $ | 807 | ||||
Service cost
|
13 | 10 | ||||||
Interest cost
|
61 | 47 | ||||||
Benefits paid
|
(47 | ) | (35 | ) | ||||
Actuarial (gain) loss
|
(57 | ) | (33 | ) | ||||
Retiree drug subsidy
|
4 | 2 | ||||||
Balance at end of year
|
772 | 798 | ||||||
|
||||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
427 | 388 | ||||||
Actual return on plan assets
|
(131 | ) | 54 | |||||
Employer contributions
|
59 | 18 | ||||||
Benefits paid
|
(43 | ) | (33 | ) | ||||
Fair value of plan assets at end of year
|
312 | 427 | ||||||
Funded status at end of year
|
(460 | ) | (371 | ) | ||||
Fourth quarter contributions
|
— | 31 | ||||||
Accrued liability (recognized in the balance sheets)
|
$ | (460 | ) | $ | (340 | ) | ||
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
43 | % | 38 | % | 46 | % | ||||||
International equity
|
21 | 21 | 23 | |||||||||
Fixed income
|
31 | 35 | 25 | |||||||||
Real estate
|
3 | 4 | 4 | |||||||||
Private equity
|
2 | 2 | 2 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Other regulatory assets
|
$ | 261 | $ | 171 | ||||
Employee benefit obligations
|
(460 | ) | (340 | ) | ||||
II-216
Prior Service | Net | Transition | ||||||||||
Cost | (Gain) Loss | Obligation | ||||||||||
(in millions) | ||||||||||||
|
||||||||||||
Balance at December 31, 2008:
|
||||||||||||
Regulatory assets
|
$ | 20 | $ | 198 | $ | 43 | ||||||
|
||||||||||||
Balance at December 31, 2007:
|
||||||||||||
Regulatory assets
|
$ | 22 | $ | 94 | $ | 55 | ||||||
|
||||||||||||
Estimated amortization
in net periodic
postretirement benefit
cost in 2009:
|
||||||||||||
Regulatory assets
|
$ | 2 | $ | 4 | $ | 9 | ||||||
Regulatory Assets | ||||
(in millions) | ||||
Balance at December 31, 2006
|
$ | 254 | ||
Net (gain) loss
|
(64 | ) | ||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(9 | ) | ||
Amortization of prior service costs
|
(2 | ) | ||
Amortization of net gain
|
(8 | ) | ||
Total reclassification adjustments
|
(19 | ) | ||
Total change
|
(83 | ) | ||
Balance at December 31, 2007
|
$ | 171 | ||
Net (gain) loss
|
110 | |||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(11 | ) | ||
Amortization of prior service costs
|
(3 | ) | ||
Amortization of net gain
|
(6 | ) | ||
Total reclassification adjustments
|
(20 | ) | ||
Total change
|
90 | |||
Balance at December 31, 2008
|
$ | 261 | ||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Service cost
|
$ | 10 | $ | 10 | $ | 11 | ||||||
Interest cost
|
50 | 47 | 44 | |||||||||
Expected return on plan assets
|
(30 | ) | (26 | ) | (25 | ) | ||||||
Net amortization
|
16 | 19 | 22 | |||||||||
Net postretirement cost
|
$ | 46 | $ | 50 | $ | 52 | ||||||
II-217
Benefit Payments | Subsidy Receipts | Total | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 45 | $ | (3 | ) | $ | 42 | |||||
2010
|
50 | (4 | ) | 46 | ||||||||
2011
|
54 | (5 | ) | 49 | ||||||||
2012
|
57 | (5 | ) | 52 | ||||||||
2013
|
60 | (6 | ) | 54 | ||||||||
2014 to 2018
|
334 | (41 | ) | 293 | ||||||||
2008 | 2007 | 2006 | ||||||||||
Discount
|
6.75 | % | 6.30 | % | 6.00 | % | ||||||
Annual salary increase
|
3.75 | 3.75 | 3.50 | |||||||||
Long-term return on plan assets
|
8.50 | 8.50 | 8.50 | |||||||||
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
(in millions) | ||||||||
Benefit obligation
|
$ | 61 | $ | 61 | ||||
Service and interest costs
|
$ | 4 | $ | 4 | ||||
II-218
II-219
II-220
II-221
II-222
II-223
II-224
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
|
||||||||||||
Energy
|
$ | 86 | $ | 66 | $ | 58 | ||||||
Capacity
|
41 | 42 | 38 | |||||||||
Total
|
$ | 127 | $ | 108 | $ | 96 | ||||||
Company | Accumulated | |||||||||||
Facility (Type) | Ownership | Investment | Depreciation | |||||||||
(in millions) | ||||||||||||
Plant Vogtle (nuclear)
|
45.7 | % | $ | 3,303 | $ | 1,918 | ||||||
Plant Hatch (nuclear)
|
50.1 | 953 | 521 | |||||||||
Plant Wansley (coal)
|
53.5 | 552 | 189 | |||||||||
Plant Scherer (coal)
|
||||||||||||
Units 1 and 2
|
8.4 | 117 | 68 | |||||||||
Unit 3
|
75.0 | 566 | 328 | |||||||||
Rocky Mountain (pumped storage)
|
25.4 | 175 | 102 | |||||||||
Intercession City (combustion-turbine)
|
33.3 | 12 | 3 | |||||||||
II-225
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
|
||||||||||||
Federal —
|
||||||||||||
Current
|
$ | 284 | $ | 442 | $ | 393 | ||||||
Deferred
|
155 | (72 | ) | 7 | ||||||||
|
439 | 370 | 400 | |||||||||
State —
|
||||||||||||
Current
|
32 | 54 | 33 | |||||||||
Deferred
|
16 | (6 | ) | 9 | ||||||||
|
48 | 48 | 42 | |||||||||
Total
|
$ | 487 | $ | 418 | $ | 442 | ||||||
II-226
2008 | 2007 | |||||||
(in millions) | ||||||||
Deferred tax
liabilities —
|
||||||||
Accelerated depreciation
|
$ | 2,554 | $ | 2,376 | ||||
Property basis differences
|
594 | 568 | ||||||
Employee benefit obligations
|
174 | 374 | ||||||
Fuel clause under recovery
|
311 | 281 | ||||||
Premium on reacquired debt
|
67 | 71 | ||||||
Regulatory assets associated with employee benefit obligations
|
349 | 123 | ||||||
Asset retirement obligations
|
267 | 257 | ||||||
Other
|
72 | 53 | ||||||
Total
|
4,388 | 4,103 | ||||||
Deferred tax
assets —
|
||||||||
Federal effect of state deferred taxes
|
189 | 160 | ||||||
Employee benefit obligations
|
457 | 226 | ||||||
Other property basis differences
|
127 | 130 | ||||||
Other deferred costs
|
99 | 131 | ||||||
Other comprehensive income
|
10 | 2 | ||||||
Regulatory liabilities associated with employee benefit
obligations
|
— | 209 | ||||||
Unbilled fuel revenue
|
42 | 34 | ||||||
Asset retirement obligations
|
267 | 257 | ||||||
Environmental capital cost recovery
|
52 | — | ||||||
Other
|
21 | 35 | ||||||
Total
|
1,264 | 1,184 | ||||||
Total deferred tax liabilities, net
|
3,124 | 2,919 | ||||||
Portion included in current liabilities, net
|
(60 | ) | (69 | ) | ||||
Accumulated deferred income taxes
|
$ | 3,064 | $ | 2,850 | ||||
II-227
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction
|
2.2 | 2.4 | 2.2 | |||||||||
Non-deductible book depreciation
|
0.9 | 1.1 | 1.1 | |||||||||
AFUDC equity
|
(2.4 | ) | (1.9 | ) | (0.9 | ) | ||||||
Donations
|
— | (1.7 | ) | — | ||||||||
Other
|
(1.1 | ) | (1.7 | ) | (1.6 | ) | ||||||
Effective income tax rate
|
34.6 | % | 33.2 | % | 35.8 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Unrecognized tax benefits at beginning of year
|
$ | 89.2 | $ | 65.0 | ||||
Tax positions from current periods
|
47.0 | 20.5 | ||||||
Tax positions from prior periods
|
4.6 | 3.7 | ||||||
Reductions due to settlements
|
(3.7 | ) | — | |||||
Balance at end of year
|
$ | 137.1 | $ | 89.2 | ||||
II-228
2008 | 2007 | Change | ||||||||||
(in millions) | ||||||||||||
Tax positions impacting the effective tax rate
|
$ | 134.2 | $ | 86.1 | $ | 48.1 | ||||||
Tax positions not impacting the effective tax rate
|
2.9 | 3.1 | (0.2 | ) | ||||||||
Balance of unrecognized tax benefits
|
$ | 137.1 | $ | 89.2 | $ | 47.9 | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Interest accrued at beginning of year
|
$ | 7.1 | $ | 2.7 | ||||
Interest reclassified due to settlements
|
(0.3 | ) | — | |||||
Interest accrued during the year
|
6.8 | 4.4 | ||||||
Balance at end of year
|
$ | 13.6 | $ | 7.1 | ||||
II-229
2008 | 2007 | |||||||
(in millions) | ||||||||
Capital lease
|
$ | 5 | $ | 4 | ||||
Senior notes
|
275 | 195 | ||||||
Total
|
$ | 280 | $ | 199 | ||||
II-230
II-231
Fair Value | ||||||||||||||
Notional | Variable Rate | Weighted Average | Hedge Maturity | Gain (Loss) | ||||||||||
Amount | Received | Fixed Rate Paid | Date | December 31, 2008 | ||||||||||
(in millions) | (in millions) | |||||||||||||
Cash Flow Hedges on Existing Debt | ||||||||||||||
$ | 301 |
SIFMA Index *
|
2.22 | % | December 2009 | $ | (3 | ) | ||||||
150 |
3-month LIBOR
|
2.63 | % | February 2009 | — | |||||||||
300 |
1-month LIBOR
|
2.43 | % | April 2010 | (5 | ) | ||||||||
Cash Flow Hedges on Forecasted Debt | ||||||||||||||
100 |
3-month LIBOR
|
4.98 | % | February 2019 | (21 | ) | ||||||||
* | Hedged using the Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA) (formerly the Bond Market Association/PSA Municipal Swap Index) |
II-232
Commitments | ||||||||||||
Natural Gas | Coal | Nuclear Fuel | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 657 | $ | 2,497 | $ | 139 | ||||||
2010
|
349 | 2,001 | 114 | |||||||||
2011
|
282 | 1,712 | 105 | |||||||||
2012
|
364 | 671 | 108 | |||||||||
2013
|
380 | 735 | 91 | |||||||||
2014 and thereafter
|
2,917 | 1,999 | 33 | |||||||||
Total
|
$ | 4,949 | $ | 9,615 | $ | 590 | ||||||
II-233
Vogtle | Affiliated | Non-Affiliated | ||||||||||
Capacity Payments | PPA | PPA | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 55 | $ | 220 | $ | 95 | ||||||
2010
|
54 | 153 | 136 | |||||||||
2011
|
51 | 119 | 143 | |||||||||
2012
|
46 | 107 | 116 | |||||||||
2013
|
21 | 107 | 109 | |||||||||
2014 and thereafter
|
114 | 596 | 1,476 | |||||||||
Total
|
$ | 341 | $ | 1,302 | $ | 2,075 | ||||||
Minimum Lease Payments | ||||||||||||
Rail Cars | Other | Total | ||||||||||
(in millions) | ||||||||||||
2009
|
$ | 33 | $ | 10 | $ | 43 | ||||||
2010
|
27 | 7 | 34 | |||||||||
2011
|
25 | 6 | 31 | |||||||||
2012
|
14 | 3 | 17 | |||||||||
2013
|
12 | 3 | 15 | |||||||||
2014 and thereafter
|
25 | 3 | 28 | |||||||||
Total
|
$ | 136 | $ | 32 | $ | 168 | ||||||
II-234
Year Ended December 31 | 2008 | 2007 | 2006 | |||||||||
Expected volatility
|
13.1 | % | 14.8 | % | 16.9 | % | ||||||
Expected term
(in years)
|
5.0 | 5.0 | 5.0 | |||||||||
Interest rate
|
2.8 | % | 4.6 | % | 4.6 | % | ||||||
Dividend yield
|
4.5 | % | 4.3 | % | 4.4 | % | ||||||
Weighted average grant-date fair value
|
$ | 2.37 | $ | 4.12 | $ | 4.15 |
Shares Subject to | Weighted Average | |||||||
Option | Exercise Price | |||||||
Outstanding at December 31, 2007
|
7,538,109 | $ | 30.59 | |||||
Granted
|
1,430,140 | 35.78 | ||||||
Exercised
|
(961,426 | ) | 27.34 | |||||
Cancelled
|
(14,387 | ) | 34.82 | |||||
Outstanding at December 31, 2008
|
7,992,436 | $ | 31.90 | |||||
Exercisable at December 31, 2008
|
5,308,585 | $ | 29.98 | |||||
II-235
II-236
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. | ||
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. | ||
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. |
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | ||||||||||||||||
|
||||||||||||||||
Assets:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 4.7 | $ | — | $ | 4.7 | ||||||||
Nuclear decommissioning trusts
(a)
|
260.3 | 198.8 | — | 459.1 | ||||||||||||
Cash equivalents and restricted cash
|
146.9 | — | — | 146.9 | ||||||||||||
Total fair value
|
$ | 407.2 | $ | 203.5 | $ | — | $ | 610.7 | ||||||||
Liabilities:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 117.9 | $ | — | $ | 117.9 | ||||||||
Interest rate derivatives
|
— | 29.3 | — | 29.3 | ||||||||||||
Total fair value
|
$ | — | $ | 147.2 | $ | — | $ | 147.2 | ||||||||
(a) | Excludes receivables related to investment income, pending investment sales, and payables related to pending investment purchases. |
II-237
Net Income After | ||||||||||||
Operating | Operating | Dividends on Preferred | ||||||||||
Quarter Ended | Revenues | Income | and Preference Stock | |||||||||
(in millions) | ||||||||||||
|
||||||||||||
March 2008
|
$ | 1,865 | $ | 325 | $ | 176 | ||||||
June 2008
|
2,111 | 442 | 248 | |||||||||
September 2008
|
2,644 | 711 | 402 | |||||||||
December 2008
|
1,792 | 182 | 77 | |||||||||
March 2007
|
$ | 1,657 | $ | 279 | $ | 131 | ||||||
June 2007
|
1,844 | 361 | 188 | |||||||||
September 2007
|
2,444 | 688 | 400 | |||||||||
December 2007
|
1,627 | 189 | 117 | |||||||||
II-238
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands)
|
$ | 8,411,552 | $ | 7,571,652 | $ | 7,245,644 | $ | 7,075,837 | $ | 5,727,768 | ||||||||||
Net Income after Dividends
on Preferred and Preference Stock (in thousands)
|
$ | 902,927 | $ | 836,136 | $ | 787,225 | $ | 744,373 | $ | 682,793 | ||||||||||
Cash Dividends
on Common Stock (in thousands)
|
$ | 721,200 | $ | 689,900 | $ | 630,000 | $ | 582,800 | $ | 588,700 | ||||||||||
Return on Average Common Equity (percent)
|
13.56 | 13.50 | 13.80 | 14.08 | 13.87 | |||||||||||||||
Total Assets (in thousands)
|
$ | 22,315,668 | $ | 20,822,761 | $ | 19,308,730 | $ | 17,898,445 | $ | 16,598,778 | ||||||||||
Gross Property Additions (in thousands)
|
$ | 1,953,448 | $ | 1,862,449 | $ | 1,276,889 | $ | 958,563 | $ | 1,252,197 | ||||||||||
Capitalization (in thousands):
|
||||||||||||||||||||
Common stock equity
|
$ | 6,879,243 | $ | 6,435,420 | $ | 5,956,251 | $ | 5,452,083 | $ | 5,123,276 | ||||||||||
Preferred and preference stock
|
265,957 | 265,957 | 44,991 | 43,909 | 58,547 | |||||||||||||||
Long-term debt
|
7,006,275 | 5,937,792 | 5,211,912 | 5,365,323 | 4,916,694 | |||||||||||||||
Total (excluding amounts due within one year)
|
$ | 14,151,475 | $ | 12,639,169 | $ | 11,213,154 | $ | 10,861,315 | $ | 10,098,517 | ||||||||||
Capitalization Ratios (percent):
|
||||||||||||||||||||
Common stock equity
|
48.6 | 50.9 | 53.1 | 50.2 | 50.7 | |||||||||||||||
Preferred and preference stock
|
1.9 | 2.1 | 0.4 | 0.4 | 0.6 | |||||||||||||||
Long-term debt
|
49.5 | 47.0 | 46.5 | 49.4 | 48.7 | |||||||||||||||
Total (excluding amounts due within one year)
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Security Ratings:
|
||||||||||||||||||||
Preferred
and Preference Stock -
|
||||||||||||||||||||
Moody’s
|
Baa1 | Baa1 | Baa1 | Baa1 | Baa1 | |||||||||||||||
Standard and Poor’s
|
BBB+ | BBB+ | BBB+ | BBB+ | BBB+ | |||||||||||||||
Fitch
|
A | A | A | A | A | |||||||||||||||
Unsecured
Long-Term Debt -
|
||||||||||||||||||||
Moody’s
|
A2 | A2 | A2 | A2 | A2 | |||||||||||||||
Standard and Poor’s
|
A | A | A | A | A | |||||||||||||||
Fitch
|
A+ | A+ | A+ | A+ | A+ | |||||||||||||||
Customers (year-end):
|
||||||||||||||||||||
Residential
|
2,039,503 | 2,024,520 | 1,998,643 | 1,960,556 | 1,926,215 | |||||||||||||||
Commercial
|
295,925 | 295,478 | 294,654 | 289,009 | 283,507 | |||||||||||||||
Industrial
|
8,248 | 8,240 | 8,008 | 8,290 | 7,765 | |||||||||||||||
Other
|
5,566 | 4,807 | 4,371 | 4,143 | 4,015 | |||||||||||||||
Total
|
2,349,242 | 2,333,045 | 2,305,676 | 2,261,998 | 2,221,502 | |||||||||||||||
Employees (year-end)
|
9,337 | 9,270 | 9,278 | 9,273 | 9,294 | |||||||||||||||
II-239
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands):
|
||||||||||||||||||||
Residential
|
$ | 2,648,176 | $ | 2,442,501 | $ | 2,326,190 | $ | 2,227,137 | $ | 1,900,961 | ||||||||||
Commercial
|
2,917,270 | 2,576,058 | 2,423,568 | 2,357,077 | 1,933,004 | |||||||||||||||
Industrial
|
1,640,407 | 1,403,852 | 1,382,213 | 1,406,295 | 1,217,536 | |||||||||||||||
Other
|
80,492 | 75,592 | 73,649 | 73,854 | 67,250 | |||||||||||||||
Total retail
|
7,286,345 | 6,498,003 | 6,205,620 | 6,064,363 | 5,118,751 | |||||||||||||||
Wholesale — non-affiliates
|
568,797 | 537,913 | 551,731 | 524,800 | 251,581 | |||||||||||||||
Wholesale — affiliates
|
286,219 | 277,832 | 252,556 | 275,525 | 172,375 | |||||||||||||||
Total revenues from sales of electricity
|
8,141,361 | 7,313,748 | 7,009,907 | 6,864,688 | 5,542,707 | |||||||||||||||
Other revenues
|
270,191 | 257,904 | 235,737 | 211,149 | 185,061 | |||||||||||||||
Total
|
$ | 8,411,552 | $ | 7,571,652 | $ | 7,245,644 | $ | 7,075,837 | $ | 5,727,768 | ||||||||||
Kilowatt-Hour Sales (in thousands):
|
||||||||||||||||||||
Residential
|
26,412,131 | 26,840,275 | 26,206,170 | 25,508,472 | 24,829,833 | |||||||||||||||
Commercial
|
33,058,109 | 33,056,632 | 32,112,430 | 31,334,182 | 29,553,893 | |||||||||||||||
Industrial
|
24,163,566 | 25,490,035 | 25,577,006 | 25,832,265 | 27,197,843 | |||||||||||||||
Other
|
670,588 | 697,363 | 660,285 | 737,343 | 744,935 | |||||||||||||||
Total retail
|
84,304,394 | 86,084,305 | 84,555,891 | 83,412,262 | 82,326,504 | |||||||||||||||
Sales for resale — non-affiliates
|
9,756,260 | 10,577,969 | 10,685,456 | 10,588,891 | 5,429,911 | |||||||||||||||
Sales for resale — affiliates
|
3,694,640 | 5,191,903 | 5,463,463 | 5,033,165 | 4,925,744 | |||||||||||||||
Total
|
97,755,294 | 101,854,177 | 100,704,810 | 99,034,318 | 92,682,159 | |||||||||||||||
Average Revenue Per Kilowatt-Hour (cents):
|
||||||||||||||||||||
Residential
|
10.03 | 9.10 | 8.88 | 8.73 | 7.66 | |||||||||||||||
Commercial
|
8.82 | 7.79 | 7.55 | 7.52 | 6.54 | |||||||||||||||
Industrial
|
6.79 | 5.51 | 5.40 | 5.44 | 4.48 | |||||||||||||||
Total retail
|
8.64 | 7.55 | 7.34 | 7.27 | 6.22 | |||||||||||||||
Wholesale
|
6.36 | 5.17 | 4.98 | 5.12 | 4.09 | |||||||||||||||
Total sales
|
8.33 | 7.18 | 6.96 | 6.93 | 5.98 | |||||||||||||||
Residential Average Annual
Kilowatt-Hour Use Per Customer
|
12,969 | 13,315 | 13,216 | 13,119 | 13,002 | |||||||||||||||
Residential Average Annual
Revenue Per Customer
|
$ | 1,300 | $ | 1,212 | $ | 1,173 | $ | 1,145 | $ | 995 | ||||||||||
Plant Nameplate Capacity
Ratings (year-end) (megawatts)
|
15,995 | 15,995 | 15,995 | 15,995 | 14,743 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts):
|
||||||||||||||||||||
Winter
|
14,221 | 13,817 | 13,528 | 14,360 | 13,087 | |||||||||||||||
Summer
|
17,270 | 17,974 | 17,159 | 16,925 | 16,129 | |||||||||||||||
Annual Load Factor (percent)
|
58.4 | 57.5 | 61.8 | 59.4 | 61.0 | |||||||||||||||
Plant Availability (percent):
|
||||||||||||||||||||
Fossil-steam
|
90.95 | 90.8 | 91.4 | 90.0 | 87.1 | |||||||||||||||
Nuclear
|
89.81 | 92.4 | 90.7 | 89.3 | 94.8 | |||||||||||||||
Source of Energy Supply (percent):
|
||||||||||||||||||||
Coal
|
58.7 | 61.5 | 59.0 | 60.7 | 57.6 | |||||||||||||||
Nuclear
|
14.8 | 14.6 | 14.4 | 14.5 | 16.5 | |||||||||||||||
Hydro
|
0.6 | 0.5 | 0.9 | 1.9 | 1.5 | |||||||||||||||
Oil and gas
|
5.1 | 5.5 | 5.0 | 3.0 | 0.2 | |||||||||||||||
Purchased
power -
|
||||||||||||||||||||
From non-affiliates
|
5.1 | 3.8 | 3.8 | 4.6 | 6.0 | |||||||||||||||
From affiliates
|
15.7 | 14.1 | 16.9 | 15.3 | 18.2 | |||||||||||||||
Total
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
II-240
II-241
II-242
II-243
2008 | 2008 | |||
Target | Actual | |||
Key Performance Indicator | Performance | Performance | ||
|
Top quartile in | |||
Customer Satisfaction
|
customer surveys | Top quartile | ||
Peak Season EFOR
|
3.00% or less | 2.47% | ||
Net Income
|
$102 million | $98 million |
II-244
Increase (Decrease) | ||||||||||||||||||||
Amount | from Prior Year | |||||||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||||||
(in millions) | ||||||||||||||||||||
Operating revenues
|
$ | 1,387.2 | $ | 127.4 | $ | 55.9 | $ | 120.3 | ||||||||||||
Fuel
|
635.6 | 62.2 | 38.5 | 119.1 | ||||||||||||||||
Purchased power
|
109.4 | 37.9 | (2.3 | ) | (24.6 | ) | ||||||||||||||
Other operations and maintenance
|
277.5 | 7.1 | 10.9 | 9.8 | ||||||||||||||||
Depreciation and amortization
|
84.8 | (0.8 | ) | (3.6 | ) | 4.2 | ||||||||||||||
Taxes other than income taxes
|
87.2 | 4.2 | 3.2 | 3.4 | ||||||||||||||||
Total operating expenses
|
1,194.5 | 110.6 | 46.7 | 111.9 | ||||||||||||||||
Operating income
|
192.7 | 16.8 | 9.2 | 8.4 | ||||||||||||||||
Total other income and (expense)
|
(34.1 | ) | 6.7 | 1.3 | (4.8 | ) | ||||||||||||||
Income taxes
|
54.1 | 7.0 | 1.8 | 0.3 | ||||||||||||||||
Net Income
|
104.5 | 16.5 | 8.7 | 3.3 | ||||||||||||||||
Dividends on Preference Stock
|
6.2 | 2.3 | 0.6 | 2.5 | ||||||||||||||||
Net Income after Dividends on Preference Stock
|
$ | 98.3 | $ | 14.2 | $ | 8.1 | $ | 0.8 | ||||||||||||
Amount | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Retail — prior year
|
$ | 1,006.3 | $ | 952.0 | $ | 864.9 | ||||||
Estimated
change in -
|
||||||||||||
Rates and pricing
|
6.3 | 2.5 | 14.2 | |||||||||
Sales growth
|
(4.6 | ) | 5.8 | 2.5 | ||||||||
Weather
|
3.9 | 1.2 | 2.4 | |||||||||
Fuel and other cost recovery
|
108.9 | 44.8 | 68.0 | |||||||||
Retail — current year
|
1,120.8 | 1,006.3 | 952.0 | |||||||||
Wholesale
revenues -
|
||||||||||||
Non-affiliates
|
97.1 | 83.5 | 87.2 | |||||||||
Affiliates
|
107.0 | 113.2 | 118.1 | |||||||||
Total wholesale revenues
|
204.1 | 196.7 | 205.3 | |||||||||
Other operating revenues
|
62.3 | 56.8 | 46.6 | |||||||||
Total operating revenues
|
$ | 1,387.2 | $ | 1,259.8 | $ | 1,203.9 | ||||||
Percent change
|
10.1 | % | 4.6 | % | 11.1 | % | ||||||
II-245
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Unit power
sales -
|
||||||||||||
Capacity
|
$ | 22,028 | $ | 18,073 | $ | 21,477 | ||||||
Energy
|
33,767 | 36,245 | 34,597 | |||||||||
Total
|
55,795 | 54,318 | 56,074 | |||||||||
Other power
sales -
|
||||||||||||
Capacity and other
|
10,890 | 2,397 | 2,436 | |||||||||
Energy
|
30,380 | 26,799 | 28,632 | |||||||||
Total
|
41,270 | 29,196 | 31,068 | |||||||||
Total non-affiliated
|
$ | 97,065 | $ | 83,514 | $ | 87,142 | ||||||
II-246
KWHs | Percent Change | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Residential
|
5,349 | (2.3 | )% | 0.9 | % | 2.0 | % | |||||||||
Commercial
|
3,961 | (0.3 | ) | 3.3 | 2.9 | |||||||||||
Industrial
|
2,210 | 7.9 | (4.1 | ) | (1.1 | ) | ||||||||||
Other
|
23 | (5.1 | ) | 4.2 | 5.1 | |||||||||||
Total retail
|
11,543 | 0.2 | 0.8 | 1.7 | ||||||||||||
Wholesale
|
||||||||||||||||
Non-affiliates
|
1,817 | (18.4 | ) | 7.1 | (9.4 | ) | ||||||||||
Affiliates
|
1,871 | (35.1 | ) | (1.8 | ) | 48.6 | ||||||||||
Total wholesale
|
3,688 | (27.8 | ) | 1.9 | 17.4 | |||||||||||
Total energy sales
|
15,231 | (8.4 | ) | 1.1 | 6.0 | |||||||||||
II-247
2008 | 2007 | 2006 | ||||||||||
Total generation
(millions of KWHs)
|
14,762 | 16,657 | 16,349 | |||||||||
Total purchased power
(millions of KWHs)
|
1,187 | 798 | 876 | |||||||||
Sources of
generation
(percent)
-
|
||||||||||||
Coal
|
84 | % | 86 | % | 87 | % | ||||||
Gas
|
16 | 14 | 13 | |||||||||
Cost of
fuel, generated
(cents per net KWH)
-
|
||||||||||||
Coal
|
3.58 | 2.86 | 2.68 | |||||||||
Gas
|
8.02 | 6.91 | 7.24 | |||||||||
Average cost of fuel, generated
(cents per net KWH)
|
4.31 | 3.44 | 3.27 | |||||||||
Average cost of purchased power
(cents per net KWH)
|
9.21 | 8.96 | 8.43 | |||||||||
II-248
II-249
II-250
II-251
II-252
II-253
II-254
II-255
II-256
II-257
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters. |
• | Changes in existing income tax regulations or changes in IRS or state revenue department interpretations of existing regulations. |
• | Identification of additional sites that require environmental remediation or the filing of other complaints in which the Company may be asserted to be a potentially responsible party. |
• | Identification and evaluation of other potential lawsuits or complaints in which the Company may be named as a defendant. |
• | Resolution or progression of new or existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
II-258
II-259
II-260
II-261
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets
(liabilities), net
|
$ | (0.2 | ) | $ | (7.1 | ) | ||
Contracts realized or settled
|
(8.0 | ) | 6.6 | |||||
Current period changes
(a)
|
(23.0 | ) | 0.3 | |||||
Contracts outstanding at the end of the period, assets (liabilities), net
|
$ | (31.2 | ) | $ | (0.2 | ) | ||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any. |
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (31.2 | ) | $ | (0.2 | ) | ||
Cash flow hedges
|
— | — | ||||||
Non-accounting hedges
|
— | — | ||||||
Total fair value
|
$ | (31.2 | ) | $ | (0.2 | ) | ||
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2&3 | Years 4&5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Level 2
|
(31.2 | ) | (25.9 | ) | (5.3 | ) | — | |||||||||
Level 3
|
— | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period
|
$ | (31.2 | ) | $ | (25.9 | ) | $ | (5.3 | ) | $ | — | |||||
II-262
II-263
2010- | 2012- | After | ||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-term debt
(a)
–
|
||||||||||||||||||||
Principal
|
$ | — | $ | 110,000 | $ | 60,000 | $ | 686,255 | $ | 856,255 | ||||||||||
Interest
|
40,864 | 81,728 | 78,110 | 471,610 | 672,312 | |||||||||||||||
Energy-related derivative obligations
(b)
|
26,928 | 5,305 | — | — | 32,233 | |||||||||||||||
Preference stock dividends
(c)
|
6,203 | 12,405 | 12,405 | — | 31,013 | |||||||||||||||
Operating leases
|
5,549 | 9,064 | 2,352 | 2,223 | 19,188 | |||||||||||||||
Purchase commitments
(d)
–
|
||||||||||||||||||||
Capital
(e)
|
477,618 | 737,292 | — | — | 1,214,910 | |||||||||||||||
Limestone
(f)
|
— | 11,540 | 12,125 | 40,182 | 63,847 | |||||||||||||||
Coal
|
282,370 | 182,486 | — | — | 464,856 | |||||||||||||||
Natural gas
(g)
|
112,618 | 128,320 | 40,276 | 151,016 | 432,230 | |||||||||||||||
Purchased power
|
23,007 | 53,672 | 53,997 | 3,918 | 134,594 | |||||||||||||||
Long-term service agreements
(h)
|
7,088 | 14,903 | 14,552 | 25,954 | 62,497 | |||||||||||||||
Postretirement benefits trust
(i)
|
34 | 68 | — | — | 102 | |||||||||||||||
Total
|
$ | 982,279 | $ | 1,346,783 | $ | 273,817 | $ | 1,381,158 | $ | 3,984,037 | ||||||||||
(a) | All amounts are reflected based on final maturity dates. The Company plans to continue to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. Variable rate interest obligations are estimated based on rates as of January 1, 2009, as reflected in the statements of capitalization. | |
(b) | For additional information, see Notes 1 and 6 to the financial statements. | |
(c) | Preference stock does not mature; therefore, amounts are provided for the next five years only. | |
(d) | The Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for the last three years were $277 million, $270 million, and $260 million, respectively. | |
(e) | The Company forecasts capital expenditures over a three-year period. Amounts represent current estimates of total expenditures. At December 31, 2008, significant purchase commitments were outstanding in connection with the construction program. | |
(f) | As part of the Company’s program to reduce sulfur dioxide emissions from its coal plants, the Company has begun construction of flue gas desulfurization projects and has entered into various long-term commitments for the procurement of limestone to be used in such equipment. | |
(g) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on the New York Mercantile Exchange future prices at December 31, 2008. | |
(h) | Long-term service agreements include price escalation based on inflation indices. | |
(i) | The Company forecasts postretirement trust contributions over a three-year period. The Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Therefore, no amounts related to the pension trust fund are included in the table. See Note 2 to the financial statements for additional information related to the pension and postretirement plans, including estimated benefit payments. Certain benefit payments will be made through the related trusts. Other benefit payments will be made from the Company’s corporate assets. |
II-264
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which the Company is subject, as well as changes in application of existing laws and regulations; |
• | current and future litigation, regulatory investigations, proceedings or inquiries, including FERC matters and the EPA civil actions against the Company; |
• | the effects, extent, and timing of the entry of additional competition in the markets in which the Company operates; |
• | variations in demand for electricity, including those relating to weather, the general economy, population, and business growth (and declines), and the effects of energy conservation measures; |
• | available sources and costs of fuels; |
• | effects of inflation; |
• | ability to control costs; |
• | investment performance of the Company’s employee benefit plans; |
• | advances in technology; |
• | state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and storm restoration cost recovery; |
• | internal restructuring or other restructuring options that may be pursued; |
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to the Company; |
• | the ability of counterparties of the Company to make payments as and when due and to perform as required; |
• | the ability to obtain new short- and long-term contracts with neighboring utilities; |
• | the direct or indirect effect on the Company’s business resulting from terrorist incidents and the threat of terrorist incidents; |
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including the Company’s credit ratings; |
• | the ability of the Company to obtain additional generating capacity at competitive prices; |
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; |
• | the direct or indirect effects on the Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; |
• | the effect of accounting pronouncements issued periodically by standard setting bodies; and |
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
II-265
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Operating Revenues:
|
||||||||||||
Retail revenues
|
$ | 1,120,766 | $ | 1,006,329 | $ | 952,038 | ||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
97,065 | 83,514 | 87,142 | |||||||||
Affiliates
|
106,989 | 113,178 | 118,097 | |||||||||
Other revenues
|
62,383 | 56,787 | 46,637 | |||||||||
Total operating revenues
|
1,387,203 | 1,259,808 | 1,203,914 | |||||||||
Operating Expenses:
|
||||||||||||
Fuel
|
635,634 | 573,354 | 534,921 | |||||||||
Purchased power —
|
||||||||||||
Non-affiliates
|
29,590 | 11,994 | 16,288 | |||||||||
Affiliates
|
79,750 | 59,499 | 57,536 | |||||||||
Other operations and maintenance
|
277,478 | 270,440 | 259,519 | |||||||||
Depreciation and amortization
|
84,815 | 85,613 | 89,170 | |||||||||
Taxes other than income taxes
|
87,247 | 82,992 | 79,808 | |||||||||
Total operating expenses
|
1,194,514 | 1,083,892 | 1,037,242 | |||||||||
Operating Income
|
192,689 | 175,916 | 166,672 | |||||||||
Other Income and (Expense):
|
||||||||||||
Allowance for equity funds used during construction
|
9,969 | 2,374 | 363 | |||||||||
Interest income
|
3,155 | 5,348 | 5,228 | |||||||||
Interest expense, net of amounts capitalized
|
(43,098 | ) | (44,680 | ) | (44,133 | ) | ||||||
Other income (expense), net
|
(4,064 | ) | (3,876 | ) | (3,548 | ) | ||||||
Total other income and (expense)
|
(34,038 | ) | (40,834 | ) | (42,090 | ) | ||||||
Earnings Before Income Taxes
|
158,651 | 135,082 | 124,582 | |||||||||
Income taxes
|
54,103 | 47,083 | 45,293 | |||||||||
Net Income
|
104,548 | 87,999 | 79,289 | |||||||||
Dividends on Preference Stock
|
6,203 | 3,881 | 3,300 | |||||||||
Net Income After Dividends on Preference Stock
|
$ | 98,345 | $ | 84,118 | $ | 75,989 | ||||||
II-266
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Operating Activities:
|
||||||||||||
Net income
|
$ | 104,548 | $ | 87,999 | $ | 79,289 | ||||||
Adjustments to reconcile net income
to net cash provided from operating activities —
|
||||||||||||
Depreciation and amortization
|
93,606 | 90,694 | 94,466 | |||||||||
Deferred income taxes
|
23,949 | (10,818 | ) | 1,170 | ||||||||
Allowance for equity funds used during construction
|
(9,969 | ) | (2,374 | ) | (363 | ) | ||||||
Pension, postretirement, and other employee benefits
|
1,585 | 6,062 | 3,319 | |||||||||
Stock based compensation expense
|
765 | 1,141 | 1,005 | |||||||||
Tax benefit of stock options
|
215 | 344 | 211 | |||||||||
Hedge settlements
|
(5,220 | ) | 3,030 | (5,399 | ) | |||||||
Other, net
|
(5,150 | ) | (7,074 | ) | 7,294 | |||||||
Changes in certain current assets and liabilities —
|
||||||||||||
Receivables
|
(49,885 | ) | 10,302 | (36,795 | ) | |||||||
Fossil fuel stock
|
(36,765 | ) | 5,025 | (31,297 | ) | |||||||
Materials and supplies
|
8,927 | (2,625 | ) | (2,330 | ) | |||||||
Prepaid income taxes
|
(416 | ) | 7,177 | (7,060 | ) | |||||||
Property damage cost recovery
|
26,143 | 25,103 | 24,544 | |||||||||
Other current assets
|
(307 | ) | (632 | ) | (955 | ) | ||||||
Accounts payable
|
(4,561 | ) | (555 | ) | 13,876 | |||||||
Accrued taxes
|
(6,511 | ) | 4,773 | (455 | ) | |||||||
Accrued compensation
|
570 | (1,322 | ) | (3,251 | ) | |||||||
Other current liabilities
|
6,418 | 732 | 6,165 | |||||||||
Net cash provided from operating activities
|
147,942 | 216,982 | 143,434 | |||||||||
Investing Activities:
|
||||||||||||
Property additions
|
(377,790 | ) | (241,538 | ) | (154,377 | ) | ||||||
Cost of removal net of salvage
|
(8,713 | ) | (9,408 | ) | (4,564 | ) | ||||||
Construction payables
|
37,244 | 10,817 | 3,309 | |||||||||
Other
|
576 | 803 | (8,779 | ) | ||||||||
Net cash used for investing activities
|
(348,683 | ) | (239,326 | ) | (164,411 | ) | ||||||
Financing Activities:
|
||||||||||||
Increase (decrease) in notes payable, net
|
107,438 | (75,821 | ) | 30,981 | ||||||||
Proceeds —
|
||||||||||||
Senior notes
|
— | 85,000 | 110,000 | |||||||||
Common stock issued to parent
|
— | 80,000 | — | |||||||||
Preference stock
|
— | 45,000 | — | |||||||||
Pollution control revenue bonds
|
37,000 | — | — | |||||||||
Gross excess tax benefit of stock options
|
298 | 799 | 423 | |||||||||
Capital contributions from parent company
|
75,324 | 4,174 | 26,140 | |||||||||
Other long-term debt
|
110,000 | — | — | |||||||||
Redemptions —
|
||||||||||||
Senior notes
|
(1,300 | ) | — | — | ||||||||
Pollution control revenue bonds
|
(37,000 | ) | — | (12,075 | ) | |||||||
First mortgage bonds
|
— | — | (25,000 | ) | ||||||||
Other long-term debt
|
— | (41,238 | ) | (30,928 | ) | |||||||
Payment of preference stock dividends
|
(6,057 | ) | (3,300 | ) | (3,300 | ) | ||||||
Payment of common stock dividends
|
(81,700 | ) | (74,100 | ) | (70,300 | ) | ||||||
Other
|
(5,167 | ) | (348 | ) | (1,285 | ) | ||||||
Net cash provided from financing activities
|
198,836 | 20,166 | 24,656 | |||||||||
Net Change in Cash and Cash Equivalents
|
(1,905 | ) | (2,178 | ) | 3,679 | |||||||
Cash and Cash Equivalents at Beginning of Year
|
5,348 | 7,526 | 3,847 | |||||||||
Cash and Cash Equivalents at End of Year
|
$ | 3,443 | $ | 5,348 | $ | 7,526 | ||||||
Supplemental Cash Flow Information:
|
||||||||||||
Cash paid during the period for —
|
||||||||||||
Interest (net of $3,973, $1,048, and $160 capitalized,
respectively)
|
$ | 39,956 | $ | 35,237 | $ | 37,297 | ||||||
Income taxes (net of refunds)
|
40,176 | 39,228 | 54,533 | |||||||||
II-267
Assets | 2008 | 2007 | ||||||
(in thousands) | ||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 3,443 | $ | 5,348 | ||||
Receivables —
|
||||||||
Customer accounts receivable
|
69,531 | 63,227 | ||||||
Unbilled revenues
|
48,742 | 39,000 | ||||||
Under recovered regulatory clause revenues
|
98,645 | 58,435 | ||||||
Other accounts and notes receivable
|
7,201 | 7,162 | ||||||
Affiliated companies
|
8,516 | 19,377 | ||||||
Accumulated provision for uncollectible accounts
|
(2,188 | ) | (1,711 | ) | ||||
Fossil fuel stock, at average cost
|
108,129 | 71,012 | ||||||
Materials and supplies, at average cost
|
36,836 | 45,763 | ||||||
Property damage cost recovery
|
— | 18,585 | ||||||
Other regulatory assets
|
38,907 | 10,220 | ||||||
Other
|
25,655 | 14,878 | ||||||
Total current assets
|
443,417 | 351,296 | ||||||
Property, Plant, and Equipment:
|
||||||||
In service
|
2,785,561 | 2,678,952 | ||||||
Less accumulated provision for depreciation
|
971,464 | 931,968 | ||||||
|
1,814,097 | 1,746,984 | ||||||
Construction work in progress
|
391,987 | 150,870 | ||||||
Total property, plant, and equipment
|
2,206,084 | 1,897,854 | ||||||
Other Property and Investments
|
15,918 | 4,563 | ||||||
Deferred Charges and Other Assets:
|
||||||||
Deferred charges related to income taxes
|
24,220 | 17,847 | ||||||
Prepaid pension costs
|
— | 107,151 | ||||||
Other regulatory assets
|
170,836 | 97,492 | ||||||
Other
|
18,550 | 22,784 | ||||||
Total deferred charges and other assets
|
213,606 | 245,274 | ||||||
Total Assets
|
$ | 2,879,025 | $ | 2,498,987 | ||||
II-268
Liabilities and Stockholder’s Equity | 2008 | 2007 | ||||||
(in thousands) | ||||||||
Current Liabilities:
|
||||||||
Notes payable
|
$ | 148,239 | $ | 44,625 | ||||
Accounts payable —
|
||||||||
Affiliated
|
50,304 | 39,375 | ||||||
Other
|
90,381 | 56,823 | ||||||
Customer deposits
|
28,017 | 24,885 | ||||||
Accrued taxes —
|
||||||||
Income taxes
|
39,983 | 30,026 | ||||||
Other
|
11,855 | 10,577 | ||||||
Accrued interest
|
8,959 | 7,698 | ||||||
Accrued compensation
|
15,667 | 15,096 | ||||||
Other regulatory liabilities
|
4,602 | 6,027 | ||||||
Liabilities from risk management activities
|
26,928 | 4,065 | ||||||
Other
|
29,047 | 27,958 | ||||||
Total current liabilities
|
453,982 | 267,155 | ||||||
Long-term Debt
(See accompanying statements)
|
849,265 | 740,050 | ||||||
Deferred Credits and Other Liabilities:
|
||||||||
Accumulated deferred income taxes
|
254,354 | 240,101 | ||||||
Accumulated deferred investment tax credits
|
11,255 | 12,988 | ||||||
Employee benefit obligations
|
97,389 | 74,021 | ||||||
Other cost of removal obligations
|
180,325 | 172,876 | ||||||
Other regulatory liabilities
|
28,596 | 82,741 | ||||||
Other
|
83,769 | 79,802 | ||||||
Total deferred credits and other liabilities
|
655,688 | 662,529 | ||||||
Total Liabilities
|
1,958,935 | 1,669,734 | ||||||
Preference Stock
(See accompanying statements)
|
97,998 | 97,998 | ||||||
Common Stockholder’s Equity
(See accompanying statements)
|
822,092 | 731,255 | ||||||
Total Liabilities and Stockholder’s Equity
|
$ | 2,879,025 | $ | 2,498,987 | ||||
Commitments and Contingent Matters
(See notes)
|
||||||||
II-269
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | (percent of total) | |||||||||||||||
Long Term Debt:
|
||||||||||||||||
Long-term notes payable —
|
||||||||||||||||
4.35% due 2013
|
$ | 60,000 | $ | 60,000 | ||||||||||||
4.90% to 5.90% due 2014-2044
|
528,700 | 530,000 | ||||||||||||||
Variable rates (1.645% at 1/1/09) due 2011
|
110,000 | — | ||||||||||||||
Total long-term notes payable
|
698,700 | 590,000 | ||||||||||||||
Other long-term debt —
|
||||||||||||||||
Pollution control revenue bonds —
|
||||||||||||||||
2.35% to 6.00% due 2022-2037
|
153,625 | 13,000 | ||||||||||||||
Variable rate (1.05% at 1/1/09) due 2022-2037
|
3,930 | 144,555 | ||||||||||||||
Total other long-term debt
|
157,555 | 157,555 | ||||||||||||||
Unamortized debt discount
|
(6,990 | ) | (7,505 | ) | ||||||||||||
Total long-term debt (annual interest requirement — $40.9 million)
|
849,265 | 740,050 | 48.0 | % | 47.2 | % | ||||||||||
Preferred and Preference Stock:
|
||||||||||||||||
Authorized - 20,000,000 shares—preferred stock
|
||||||||||||||||
- 10,000,000 shares—preference stock
|
||||||||||||||||
Outstanding - $100 par or stated value — 6% preference stock
|
53,886 | 53,886 | ||||||||||||||
— 6.45% preference stock
|
44,112 | 44,112 | ||||||||||||||
- 1,000,000 shares (non-cumulative)
|
||||||||||||||||
Preference stock
(annual dividend requirement — $6.2 million) |
97,998 | 97,998 | 5.5 | 6.2 | ||||||||||||
Common Stockholder’s Equity:
|
||||||||||||||||
Common stock, without par value —
|
||||||||||||||||
Authorized - 20,000,000 shares
|
||||||||||||||||
Outstanding - 1,792,717 shares
|
118,060 | 118,060 | ||||||||||||||
Paid-in capital
|
511,547 | 435,008 | ||||||||||||||
Retained earnings
|
197,417 | 181,986 | ||||||||||||||
Accumulated other comprehensive income (loss)
|
(4,932 | ) | (3,799 | ) | ||||||||||||
Total common stockholder’s equity
|
822,092 | 731,255 | 46.5 | 46.6 | ||||||||||||
Total Capitalization
|
$ | 1,769,355 | $ | 1,569,303 | 100.0 | % | 100.0 | % | ||||||||
II-270
Accumulated | ||||||||||||||||||||
Common | Paid-In | Retained | Other Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2005
|
$ | 38,060 | $ | 400,815 | $ | 166,279 | $ | (2,810 | ) | $ | 602,344 | |||||||||
Net income after dividends on
preference stock
|
— | — | 75,989 | — | 75,989 | |||||||||||||||
Capital contributions from parent
company
|
— | 27,777 | — | — | 27,777 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (3,112 | ) | (3,112 | ) | |||||||||||||
Adjustment to initially apply
FASB Statement No. 158, net of tax
|
— | — | — | 1,325 | 1,325 | |||||||||||||||
Cash dividends on common stock
|
— | — | (70,300 | ) | — | (70,300 | ) | |||||||||||||
Balance at December 31, 2006
|
38,060 | 428,592 | 171,968 | (4,597 | ) | 634,023 | ||||||||||||||
Net income after dividends on
preference stock
|
— | — | 84,118 | — | 84,118 | |||||||||||||||
Issuance of common stock
|
80,000 | — | — | — | 80,000 | |||||||||||||||
Capital contributions from parent
company
|
— | 6,458 | — | — | 6,458 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | 798 | 798 | |||||||||||||||
Cash dividends on common stock
|
— | — | (74,100 | ) | — | (74,100 | ) | |||||||||||||
Other
|
— | (42 | ) | — | — | (42 | ) | |||||||||||||
Balance at December 31, 2007
|
118,060 | 435,008 | 181,986 | (3,799 | ) | 731,255 | ||||||||||||||
Net income after dividends on
preference stock
|
— | — | 98,345 | — | 98,345 | |||||||||||||||
Capital contributions from parent
company
|
— | 76,539 | — | — | 76,539 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (1,133 | ) | (1,133 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (81,700 | ) | — | (81,700 | ) | |||||||||||||
Change in benefit plan measurement
date
|
— | — | (1,214 | ) | — | (1,214 | ) | |||||||||||||
Balance at December 31, 2008
|
$ | 118,060 | $ | 511,547 | $ | 197,417 | $ | (4,932 | ) | $ | 822,092 | |||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Net income after dividends on preference stock
|
$ | 98,345 | $ | 84,118 | $ | 75,989 | ||||||
Other comprehensive income (loss):
|
||||||||||||
Qualifying hedges:
|
||||||||||||
Changes in fair value, net of tax of $(1,077), $232,
and $(2,082), respectively
|
(1,716 | ) | 371 | (3,317 | ) | |||||||
Reclassification adjustment for amounts included in net income,
net of tax of $366, $269, and $140, respectively
|
583 | 427 | 224 | |||||||||
Pension and other postretirement benefit plans:
|
||||||||||||
Change in additional minimum pension liability,
net of tax of $-, $-, and $(13), respectively
|
— | — | (19 | ) | ||||||||
Total other comprehensive income (loss)
|
(1,133 | ) | 798 | (3,112 | ) | |||||||
Comprehensive Income
|
$ | 97,212 | $ | 84,916 | $ | 72,877 | ||||||
II-271
II-272
2008 | 2007 | Note | ||||||||||
(in thousands) | ||||||||||||
Environmental remediation
|
$ | 66,812 | $ | 66,923 | (a | ) | ||||||
Loss on reacquired debt
|
16,248 | 17,378 | (b | ) | ||||||||
Vacation pay
|
7,991 | 7,411 | (c | ) | ||||||||
Deferred charges related to income taxes
|
24,220 | 17,847 | (d | ) | ||||||||
Fuel-hedging (realized and unrealized) losses
|
35,333 | 1,834 | (e | ) | ||||||||
Underfunded retiree benefit plans
|
81,912 | 14,602 | (f | ) | ||||||||
Other assets
|
3,360 | 1,371 | (g | ) | ||||||||
Under recovered regulatory clause revenues
|
96,731 | 56,628 | (g | ) | ||||||||
Property damage reserve
|
(9,801 | ) | 18,585 | (h | ) | |||||||
Asset retirement obligations
|
(4,531 | ) | (4,570 | ) | (d | ) | ||||||
Other cost of removal obligations
|
(180,325 | ) | (172,876 | ) | (d | ) | ||||||
Deferred income tax credits
|
(12,983 | ) | (15,331 | ) | (d | ) | ||||||
Fuel-hedging (realized and unrealized) gains
|
(1,071 | ) | (1,455 | ) | (e | ) | ||||||
Over recovered regulatory clause revenues
|
(3,295 | ) | (5,233 | ) | (g | ) | ||||||
Other liabilities
|
(1,518 | ) | (1,715 | ) | (g | ) | ||||||
Overfunded retiree benefit plans
|
— | (60,464 | ) | (f | ) | |||||||
Total assets (liabilities), net
|
$ | 119,083 | $ | (59,065 | ) | |||||||
(a) | Recovered through the environmental cost recovery clause when the remediation is performed. | |
(b) | Recovered over the remaining life of the original issue, which may range up to 40 years. | |
(c) | Recorded as earned by employees and recovered as paid, generally within one year. | |
(d) | Asset retirement and removal liabilities are recovered, deferred charges related to income tax assets are recovered, and deferred charges related to income tax liabilities are amortized over the related property lives, which may range up to 65 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. | |
(e) | Fuel-hedging assets and liabilities are recognized over the life of the underlying hedged purchase contracts, which generally do not exceed four years. Upon final settlement, costs are recovered through the fuel cost recovery clause. | |
(f) | Recovered and amortized over the average remaining service period which may range up to 14 years. See Note 2 under “Retirement Benefits.” | |
(g) | Recorded and recovered or amortized as approved by the Florida PSC. | |
(h) | Recorded and recovered or amortized as approved by the Florida PSC. Storm cost recovery surcharge ends in June 2009. |
II-273
II-274
2008 | 2007 | |||||||
(in thousands) | ||||||||
Generation
|
$ | 1,445,095 | $ | 1,390,635 | ||||
Transmission
|
305,097 | 282,408 | ||||||
Distribution
|
900,793 | 873,642 | ||||||
General
|
131,269 | 128,704 | ||||||
Plant acquisition adjustment
|
3,307 | 3,563 | ||||||
Total plant in service
|
$ | 2,785,561 | $ | 2,678,952 | ||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Balance beginning of year
|
$ | 11,942 | $ | 12,718 | ||||
Liabilities incurred
|
— | 503 | ||||||
Liabilities settled
|
(354 | ) | (484 | ) | ||||
Accretion
|
631 | 619 | ||||||
Cash flow revisions
|
(177 | ) | (1,414 | ) | ||||
Balance end of year
|
$ | 12,042 | $ | 11,942 | ||||
II-275
II-276
Carrying Amount | Fair Value | |||||||
(in thousands) | ||||||||
Long-term debt:
|
||||||||
2008
|
$ | 849,265 | $ | 831,763 | ||||
2007
|
$ | 740,050 | $ | 725,885 |
II-277
2008 | 2007 | |||||||
(in thousands) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 251,781 | $ | 246,569 | ||||
Service cost
|
8,437 | 6,835 | ||||||
Interest cost
|
19,344 | 14,519 | ||||||
Benefits paid
|
(15,880 | ) | (11,625 | ) | ||||
Plan amendments
|
— | 1,698 | ||||||
Actuarial (gain) loss
|
(2,917 | ) | (6,215 | ) | ||||
Balance at end of year
|
260,765 | 251,781 | ||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
345,398 | 305,525 | ||||||
Actual return (loss) on plan assets
|
(101,036 | ) | 50,816 | |||||
Employer contributions
|
925 | 682 | ||||||
Benefits paid
|
(15,880 | ) | (11,625 | ) | ||||
Fair value of plan assets at end of year
|
229,407 | 345,398 | ||||||
Funded status at end of year
|
(31,358 | ) | 93,617 | |||||
Fourth quarter contributions
|
— | 149 | ||||||
(Accrued liability) prepaid pension asset
|
$ | (31,358 | ) | $ | 93,766 | |||
II-278
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
36 | % | 34 | % | 38 | % | ||||||
International equity
|
24 | 23 | 24 | |||||||||
Fixed income
|
15 | 14 | 15 | |||||||||
Real estate
|
15 | 19 | 16 | |||||||||
Private equity
|
10 | 10 | 7 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Prepaid pension costs
|
$ | — | $ | 107,151 | ||||
Other regulatory assets
|
71,990 | 6,561 | ||||||
Current liabilities, other
|
(863 | ) | (639 | ) | ||||
Other regulatory liabilities
|
— | (60,464 | ) | |||||
Employee benefit obligations
|
(30,494 | ) | (12,403 | ) |
Prior
Service Cost |
Net
(Gain) Loss |
|||||||
(in thousands) | ||||||||
Balance at December 31, 2008:
|
||||||||
Regulatory assets
|
$ | 9,984 | $ | 62,006 | ||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 9,984 | $ | 62,006 | ||||
|
||||||||
Balance at December 31, 2007:
|
||||||||
Regulatory assets
|
$ | 1,900 | $ | 4,661 | ||||
Regulatory liabilities
|
9,932 | (70,396 | ) | |||||
Total
|
$ | 11,832 | $ | (65,735 | ) | |||
|
||||||||
Estimated amortization in net periodic
pension cost in 2009:
|
||||||||
Regulatory assets
|
$ | 1,478 | $ | 224 | ||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 1,478 | $ | 224 | ||||
II-279
Regulatory | Regulatory | |||||||
Assets | Liabilities | |||||||
(in thousands) | ||||||||
Balance at December 31, 2006
|
$ | 5,091 | $ | (23,478 | ) | |||
Net (gain) loss
|
313 | (35,765 | ) | |||||
Change in prior service costs
|
1,698 | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(199 | ) | (1,221 | ) | ||||
Amortization of net gain
|
(342 | ) | — | |||||
Total reclassification adjustments
|
(541 | ) | (1,221 | ) | ||||
Total change
|
1,470 | (36,986 | ) | |||||
Balance at December 31, 2007
|
$ | 6,561 | $ | (60,464 | ) | |||
Net (gain) loss
|
66,170 | 61,989 | ||||||
Change in prior service costs
|
— | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(323 | ) | (1,525 | ) | ||||
Amortization of net gain
|
(418 | ) | — | |||||
Total reclassification adjustments
|
(741 | ) | (1,525 | ) | ||||
Total change
|
65,429 | 60,464 | ||||||
Balance at December 31, 2008
|
$ | 71,990 | $ | — | ||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Service cost
|
$ | 6,750 | $ | 6,835 | $ | 6,980 | ||||||
Interest cost
|
15,475 | 14,519 | 13,358 | |||||||||
Expected return on plan assets
|
(23,757 | ) | (21,934 | ) | (20,727 | ) | ||||||
Recognized net (gain) loss
|
334 | 342 | 463 | |||||||||
Net amortization
|
1,478 | 1,419 | 1,313 | |||||||||
Net periodic pension cost (income)
|
$ | 280 | $ | 1,181 | $ | 1,387 | ||||||
Benefit Payments | ||||
(in thousands) | ||||
2009
|
$ | 13,699 | ||
2010
|
14,119 | |||
2011
|
14,662 | |||
2012
|
15,342 | |||
2013
|
16,033 | |||
2014 to 2018
|
95,308 | |||
II-280
2008 | 2007 | |||||||
(in thousands) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 73,909 | $ | 73,985 | ||||
Service cost
|
1,766 | 1,351 | ||||||
Interest cost
|
5,671 | 4,330 | ||||||
Benefits paid
|
(4,864 | ) | (3,586 | ) | ||||
Actuarial (gain) loss
|
(4,522 | ) | (2,430 | ) | ||||
Retiree drug subsidy
|
431 | 259 | ||||||
Balance at end of year
|
72,391 | 73,909 | ||||||
|
||||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
19,610 | 17,640 | ||||||
Actual return (loss) on plan assets
|
(5,556 | ) | 2,934 | |||||
Employer contributions
|
3,559 | 2,363 | ||||||
Benefits paid
|
(4,433 | ) | (3,327 | ) | ||||
Fair value of plan assets at end of year
|
13,180 | 19,610 | ||||||
Funded status at end of year
|
(59,211 | ) | (54,299 | ) | ||||
Fourth quarter contributions
|
— | 872 | ||||||
Accrued liability
|
$ | (59,211 | ) | $ | (53,427 | ) | ||
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
35 | % | 33 | % | 37 | % | ||||||
International equity
|
23 | 22 | 23 | |||||||||
Fixed income
|
18 | 17 | 17 | |||||||||
Real estate
|
14 | 19 | 16 | |||||||||
Private equity
|
10 | 9 | 7 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Other regulatory assets
|
$ | 9,922 | $ | 8,040 | ||||
Current liabilities, other
|
(500 | ) | (511 | ) | ||||
Employee benefit obligations
|
(58,711 | ) | (52,916 | ) | ||||
II-281
Prior | Net | Transition | ||||||||||
Service Cost | (Gain) Loss | Obligation | ||||||||||
(in thousands) | ||||||||||||
Balance at December 31, 2008:
|
||||||||||||
Regulatory assets
|
$ | 3,187 | $ | 5,302 | $ | 1,433 | ||||||
Balance at December 31, 2007:
|
||||||||||||
Regulatory assets
|
$ | 3,619 | $ | 2,544 | $ | 1,877 | ||||||
Estimated amortization as net periodic
postretirement benefit cost in 2009:
|
||||||||||||
Regulatory assets
|
$ | 346 | $ | (87 | ) | $ | 356 | |||||
Regulatory | ||||
Assets | ||||
(in thousands) | ||||
Beginning balance
|
$ | 12,877 | ||
Net gain
|
(4,045 | ) | ||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(356 | ) | ||
Amortization of prior service costs
|
(346 | ) | ||
Amortization of net gain
|
(90 | ) | ||
Total reclassification adjustments
|
(792 | ) | ||
Total change
|
(4,837 | ) | ||
Balance at December 31, 2007
|
$ | 8,040 | ||
Net gain
|
2,759 | |||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(445 | ) | ||
Amortization of prior service costs
|
(432 | ) | ||
Amortization of net gain
|
— | |||
Total reclassification adjustments
|
(877 | ) | ||
Total change
|
1,882 | |||
Balance at December 31, 2008
|
$ | 9,922 | ||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Service cost
|
$ | 1,413 | $ | 1,351 | $ | 1,424 | ||||||
Interest cost
|
4,536 | 4,330 | 3,940 | |||||||||
Expected return on plan assets
|
(1,452 | ) | (1,320 | ) | (1,264 | ) | ||||||
Net amortization
|
702 | 792 | 857 | |||||||||
Net postretirement cost
|
$ | 5,199 | $ | 5,153 | $ | 4,957 | ||||||
II-282
Benefit | Subsidy | |||||||||||
Payments | Receipts | Total | ||||||||||
(in thousands) | ||||||||||||
2009
|
$ | 4,475 | $ | (378 | ) | $ | 4,097 | |||||
2010
|
4,792 | (442 | ) | 4,350 | ||||||||
2011
|
5,202 | (494 | ) | 4,708 | ||||||||
2012
|
5,449 | (565 | ) | 4,884 | ||||||||
2013
|
5,689 | (638 | ) | 5,051 | ||||||||
2014 to 2018
|
31,319 | (4,401 | ) | 26,918 | ||||||||
2008 | 2007 | 2006 | ||||||||||
Discount
|
6.75 | % | 6.30 | % | 6.00 | % | ||||||
Annual salary increase
|
3.75 | 3.75 | 3.50 | |||||||||
Long-term return on plan assets
|
8.50 | 8.50 | 8.50 | |||||||||
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
(in thousands) | ||||||||
Benefit obligation
|
$ | 3,904 | $ | 4,211 | ||||
Service and interest costs
|
275 | 236 | ||||||
II-283
II-284
II-285
II-286
II-287
Plant Scherer | Plant Daniel | |||||||
Unit 3 (coal) | Units 1 & 2 (coal) | |||||||
(in thousands) | ||||||||
Plant in service
|
$ | 191,688 | (a) | $ | 261,078 | |||
Accumulated depreciation
|
97,937 | 146,690 | ||||||
Construction work in progress
|
75,760 | 253 | ||||||
Ownership
|
25 | % | 50 | % | ||||
(a) | Includes net plant acquisition adjustment of $3.3 million. |
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Federal -
|
||||||||||||
Current
|
$ | 26,592 | $ | 51,321 | $ | 40,472 | ||||||
Deferred
|
21,481 | (9,431 | ) | (470 | ) | |||||||
|
48,073 | 41,890 | 40,002 | |||||||||
State -
|
||||||||||||
Current
|
3,563 | 6,581 | 3,651 | |||||||||
Deferred
|
2,467 | (1,388 | ) | 1,640 | ||||||||
|
6,030 | 5,193 | 5,291 | |||||||||
Total
|
$ | 54,103 | $ | 47,083 | $ | 45,293 | ||||||
II-288
2008 | 2007 | |||||||
(in thousands) | ||||||||
Deferred tax liabilities-
|
||||||||
Accelerated depreciation
|
$ | 284,653 | $ | 260,720 | ||||
Fuel recovery clause
|
39,176 | 22,934 | ||||||
Pension and other employee benefits
|
15,356 | 38,109 | ||||||
Property reserve
|
— | 6,624 | ||||||
Regulatory assets associated with employee benefit obligations
|
34,787 | 9,206 | ||||||
Regulatory assets associated with asset retirement obligations
|
4,877 | 4,837 | ||||||
Other
|
3,747 | 3,316 | ||||||
Total
|
382,596 | 345,746 | ||||||
Deferred tax assets-
|
||||||||
Federal effect of state deferred taxes
|
$ | 14,039 | $ | 13,168 | ||||
Post retirement benefits
|
17,428 | 16,371 | ||||||
Pension and other employee benefits
|
38,156 | 11,880 | ||||||
Property reserve
|
4,872 | — | ||||||
Other comprehensive loss
|
3,097 | 2,386 | ||||||
Regulatory liabilities associated with employee benefit obligations
|
— | 23,192 | ||||||
Asset retirement obligations
|
4,877 | 4,837 | ||||||
Other
|
7,003 | 12,126 | ||||||
Total
|
89,472 | 83,960 | ||||||
Net deferred tax liabilities
|
293,124 | 261,786 | ||||||
Less current portion, net
|
(38,770 | ) | (21,685 | ) | ||||
Accumulated deferred income taxes in the balance sheets
|
$ | 254,354 | $ | 240,101 | ||||
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction
|
2.5 | 2.5 | 2.8 | |||||||||
Non-deductible book depreciation
|
0.0 | 0.4 | 0.5 | |||||||||
Difference in prior years’ deferred and current tax rate
|
(0.5 | ) | (0.6 | ) | (0.8 | ) | ||||||
Production activities deduction
|
0.1 | (1.4 | ) | (0.3 | ) | |||||||
Allowance for funds used during construction
|
(2.2 | ) | (0.6 | ) | 0.0 | |||||||
Other, net
|
(0.8 | ) | (0.4 | ) | (0.8 | ) | ||||||
Effective income tax rate
|
34.1 | % | 34.9 | % | 36.4 | % | ||||||
II-289
2008 | 2007 | |||||||
(thousands) | ||||||||
Unrecognized tax benefits at beginning of year
|
$ | 887 | $ | 211 | ||||
Tax positions from current periods
|
93 | 469 | ||||||
Tax positions from prior periods
|
11 | 207 | ||||||
Reductions due to settlements
|
(697 | ) | — | |||||
Reductions due to expired statute of limitations
|
— | — | ||||||
Balance at end of year
|
$ | 294 | $ | 887 | ||||
2008 | 2007 | Change | ||||||||||
(thousands) | ||||||||||||
Tax positions impacting the effective tax rate
|
$ | 294 | $ | 887 | $ | 593 | ||||||
Tax positions not impacting the effective tax rate
|
— | — | — | |||||||||
Balance of unrecognized tax benefits
|
$ | 294 | $ | 887 | $ | 593 | ||||||
2008 | 2007 | |||||||
(thousands) | ||||||||
Interest accrued at beginning of year
|
$ | 58 | $ | 5 | ||||
Interest reclassified due to settlements
|
(54 | ) | — | |||||
Interest accrued during the year
|
13 | 53 | ||||||
Balance at end of year
|
$ | 17 | $ | 58 | ||||
II-290
II-291
II-292
II-293
Commitments | ||||||||||||
Purchased Power* | Natural Gas | Coal | ||||||||||
(in thousands) | ||||||||||||
2009
|
$ | 23,007 | $ | 112,618 | $ | 282,370 | ||||||
2010
|
26,811 | 85,713 | 158,520 | |||||||||
2011
|
26,861 | 42,607 | 23,966 | |||||||||
2012
|
26,927 | 20,149 | — | |||||||||
2013
|
27,070 | 20,127 | — | |||||||||
2014 and thereafter
|
3,918 | 151,016 | — | |||||||||
Total
|
$ | 134,594 | $ | 432,230 | $ | 464,856 | ||||||
* | Included above is $81 million in obligations with affiliated companies. |
Minimum Lease Payments | ||||||||||||
Rail Cars | Other | Total | ||||||||||
(in thousands) | ||||||||||||
2009
|
$ | 3,547 | $ | 2,002 | $ | 5,549 | ||||||
2010
|
3,545 | 1,877 | 5,422 | |||||||||
2011
|
1,822 | 1,820 | 3,642 | |||||||||
2012
|
1,229 | 219 | 1,448 | |||||||||
2013
|
904 | — | 904 | |||||||||
2014 and thereafter
|
2,223 | — | 2,223 | |||||||||
Total
|
$ | 13,270 | $ | 5,918 | $ | 19,188 | ||||||
II-294
Year Ended December 31 | 2008 | 2007 | 2006 | |||||||||
Expected volatility
|
13.1 | % | 14.8 | % | 16.9 | % | ||||||
Expected term
(in years)
|
5.0 | 5.0 | 5.0 | |||||||||
Interest rate
|
2.8 | % | 4.6 | % | 4.6 | % | ||||||
Dividend yield
|
4.5 | % | 4.3 | % | 4.4 | % | ||||||
Weighted average grant-date fair value
|
$ | 2.37 | $ | 4.12 | $ | 4.15 |
Shares Subject | Weighted Average | |||||||
to Option | Exercise Price | |||||||
Outstanding at December 31, 2007
|
1,225,355 | $ | 31.01 | |||||
Granted
|
239,507 | 35.79 | ||||||
Exercised
|
(184,865 | ) | 28.56 | |||||
Cancelled
|
(232 | ) | 35.78 | |||||
Outstanding at December 31, 2008
|
1,279,765 | 32.25 | ||||||
Exercisable at December 31, 2008
|
818,636 | $ | 30.31 | |||||
II-295
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. | ||
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. | ||
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. |
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | ||||||||||||||||
Assets:
|
||||||||||||||||
Energy-related derivatives total fair value
|
$ | — | $ | 1.0 | $ | — | $ | 1.0 | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Energy-related derivatives total fair value
|
$ | — | $ | 32.2 | $ | — | $ | 32.2 | ||||||||
II-296
Net Income After | ||||||||||||
Operating | Operating | Dividends on | ||||||||||
Quarter Ended | Revenues | Income | Preference Stock | |||||||||
(in thousands) | ||||||||||||
March 2008
|
$ | 311,535 | $ | 40,708 | $ | 19,530 | ||||||
June 2008
|
349,867 | 52,314 | 26,992 | |||||||||
September 2008
|
421,841 | 69,039 | 37,343 | |||||||||
December 2008
|
303,960 | 30,628 | 14,480 | |||||||||
March 2007
|
$ | 296,233 | $ | 40,775 | $ | 18,863 | ||||||
June 2007
|
298,394 | 45,017 | 21,275 | |||||||||
September 2007
|
376,556 | 64,999 | 34,163 | |||||||||
December 2007
|
288,625 | 25,125 | 9,817 | |||||||||
II-297
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands)
|
$ | 1,387,203 | $ | 1,259,808 | $ | 1,203,914 | $ | 1,083,622 | $ | 960,131 | ||||||||||
Net Income after Dividends
on Preferred and Preference Stock (in
thousands)
|
$ | 98,345 | $ | 84,118 | $ | 75,989 | $ | 75,209 | $ | 68,223 | ||||||||||
Cash Dividends
on Common Stock (in thousands)
|
$ | 81,700 | $ | 74,100 | $ | 70,300 | $ | 68,400 | $ | 70,000 | ||||||||||
Return on Average Common Equity (percent)
|
12.66 | 12.32 | 12.29 | 12.59 | 11.83 | |||||||||||||||
Total Assets (in thousands)
|
$ | 2,879,025 | $ | 2,498,987 | $ | 2,340,489 | $ | 2,175,797 | $ | 2,111,877 | ||||||||||
Gross Property Additions (in thousands)
|
$ | 390,744 | $ | 239,337 | $ | 147,086 | $ | 142,583 | $ | 161,205 | ||||||||||
Capitalization (in thousands):
|
||||||||||||||||||||
Common stock equity
|
$ | 822,092 | $ | 731,255 | $ | 634,023 | $ | 602,344 | $ | 592,172 | ||||||||||
Preferred and preference stock
|
97,998 | 97,998 | 53,887 | 53,891 | 4,098 | |||||||||||||||
Long-term debt
|
849,265 | 740,050 | 696,098 | 616,554 | 623,155 | |||||||||||||||
Total (excluding amounts due within one year)
|
$ | 1,769,355 | $ | 1,569,303 | $ | 1,384,008 | $ | 1,272,789 | $ | 1,219,425 | ||||||||||
Capitalization Ratios (percent):
|
||||||||||||||||||||
Common stock equity
|
46.5 | 46.6 | 45.8 | 47.3 | 48.6 | |||||||||||||||
Preferred and preference stock
|
5.5 | 6.2 | 3.9 | 4.2 | 0.3 | |||||||||||||||
Long-term debt
|
48.0 | 47.2 | 50.3 | 48.5 | 51.1 | |||||||||||||||
Total (excluding amounts due within one year)
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Security Ratings:
|
||||||||||||||||||||
First Mortgage Bonds -
|
||||||||||||||||||||
Moody’s
|
— | — | — | A1 | A1 | |||||||||||||||
Standard and Poor’s
|
— | — | — | A+ | A+ | |||||||||||||||
Fitch
|
— | — | — | A+ | A+ | |||||||||||||||
Preferred Stock/ Preference Stock -
|
||||||||||||||||||||
Moody’s
|
Baa1 | Baa1 | Baa1 | Baa1 | Baa1 | |||||||||||||||
Standard and Poor’s
|
BBB+ | BBB+ | BBB+ | BBB+ | BBB+ | |||||||||||||||
Fitch
|
A- | A- | A- | A- | A- | |||||||||||||||
Unsecured Long-Term Debt -
|
||||||||||||||||||||
Moody’s
|
A2 | A2 | A2 | A2 | A2 | |||||||||||||||
Standard and Poor’s
|
A | A | A | A | A | |||||||||||||||
Fitch
|
A | A | A | A | A | |||||||||||||||
Customers (year-end):
|
||||||||||||||||||||
Residential
|
373,595 | 373,036 | 364,647 | 354,466 | 343,151 | |||||||||||||||
Commercial
|
53,548 | 53,838 | 53,466 | 53,398 | 51,865 | |||||||||||||||
Industrial
|
287 | 298 | 295 | 298 | 285 | |||||||||||||||
Other
|
499 | 491 | 484 | 479 | 473 | |||||||||||||||
Total
|
427,929 | 427,663 | 418,892 | 408,641 | 395,774 | |||||||||||||||
Employees (year-end)
|
1,342 | 1,324 | 1,321 | 1,335 | 1,336 | |||||||||||||||
II-298
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands):
|
||||||||||||||||||||
Residential
|
$ | 581,723 | $ | 537,668 | $ | 510,995 | $ | 465,346 | $ | 401,382 | ||||||||||
Commercial
|
369,625 | 329,651 | 305,049 | 273,114 | 232,928 | |||||||||||||||
Industrial
|
165,564 | 135,179 | 132,339 | 123,044 | 99,420 | |||||||||||||||
Other
|
3,854 | 3,831 | 3,655 | 3,355 | 3,140 | |||||||||||||||
Total retail
|
1,120,766 | 1,006,329 | 952,038 | 864,859 | 736,870 | |||||||||||||||
Wholesale — non-affiliates
|
97,065 | 83,514 | 87,142 | 84,346 | 73,537 | |||||||||||||||
Wholesale — affiliates
|
106,989 | 113,178 | 118,097 | 91,352 | 110,264 | |||||||||||||||
Total revenues from sales of electricity
|
1,324,820 | 1,203,021 | 1,157,277 | 1,040,557 | 920,671 | |||||||||||||||
Other revenues
|
62,383 | 56,787 | 46,637 | 43,065 | 39,460 | |||||||||||||||
Total
|
$ | 1,387,203 | $ | 1,259,808 | $ | 1,203,914 | $ | 1,083,622 | $ | 960,131 | ||||||||||
Kilowatt-Hour Sales (in thousands):
|
||||||||||||||||||||
Residential
|
5,348,642 | 5,477,111 | 5,425,491 | 5,319,630 | 5,215,332 | |||||||||||||||
Commercial
|
3,960,923 | 3,970,892 | 3,843,064 | 3,735,776 | 3,695,471 | |||||||||||||||
Industrial
|
2,210,597 | 2,048,389 | 2,136,439 | 2,160,760 | 2,113,027 | |||||||||||||||
Other
|
23,237 | 24,496 | 23,886 | 22,730 | 22,579 | |||||||||||||||
Total retail
|
11,543,399 | 11,520,888 | 11,428,880 | 11,238,896 | 11,046,409 | |||||||||||||||
Sales for resale — non-affiliates
|
1,816,839 | 2,227,026 | 2,079,165 | 2,295,850 | 2,256,942 | |||||||||||||||
Sales for resale — affiliates
|
1,871,158 | 2,884,440 | 2,937,735 | 1,976,368 | 3,124,788 | |||||||||||||||
Total
|
15,231,396 | 16,632,354 | 16,445,780 | 15,511,114 | 16,428,139 | |||||||||||||||
Average Revenue Per Kilowatt-Hour (cents):
|
||||||||||||||||||||
Residential
|
10.88 | 9.82 | 9.42 | 8.75 | 7.70 | |||||||||||||||
Commercial
|
9.33 | 8.30 | 7.94 | 7.31 | 6.30 | |||||||||||||||
Industrial
|
7.49 | 6.60 | 6.19 | 5.69 | 4.71 | |||||||||||||||
Total retail
|
9.71 | 8.73 | 8.33 | 7.70 | 6.67 | |||||||||||||||
Wholesale
|
5.53 | 3.85 | 4.09 | 4.11 | 3.42 | |||||||||||||||
Total sales
|
8.70 | 7.23 | 7.04 | 6.71 | 5.60 | |||||||||||||||
Residential Average Annual
Kilowatt-Hour Use Per Customer
|
14,274 | 14,755 | 15,032 | 15,181 | 15,096 | |||||||||||||||
Residential Average Annual
Revenue Per Customer
|
$ | 1,552 | $ | 1,448 | $ | 1,416 | $ | 1,328 | $ | 1,162 | ||||||||||
Plant Nameplate Capacity
Ratings (year-end) (megawatts)
|
2,659 | 2,659 | 2,659 | 2,712 | 2,712 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts):
|
||||||||||||||||||||
Winter
|
2,360 | 2,215 | 2,195 | 2,124 | 2,061 | |||||||||||||||
Summer
|
2,533 | 2,626 | 2,479 | 2,433 | 2,421 | |||||||||||||||
Annual Load Factor (percent)
|
56.7 | 55.0 | 57.9 | 57.7 | 57.1 | |||||||||||||||
Plant Availability Fossil-Steam (percent)
|
88.6 | 93.4 | 91.3 | 89.7 | 92.4 | |||||||||||||||
Source of Energy Supply (percent):
|
||||||||||||||||||||
Coal
|
77.3 | 81.8 | 82.5 | 79.7 | 77.9 | |||||||||||||||
Gas
|
15.3 | 13.6 | 12.4 | 13.1 | 14.4 | |||||||||||||||
Purchased power -
|
||||||||||||||||||||
From non-affiliates
|
2.6 | 1.6 | 1.9 | 2.8 | 4.5 | |||||||||||||||
From affiliates
|
4.8 | 3.0 | 3.2 | 4.4 | 3.2 | |||||||||||||||
Total
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
II-299
II-300
II-301
II-302
II-303
2008
Target |
2008
Actual |
|||||
Key Performance Indicator | Performance | Performance | ||||
Customer Satisfaction
|
Top quartile in customer
surveys |
Top quartile | ||||
Peak Season EFOR
|
3.0% or less | 6.53 | % | |||
Net Income
|
$84.3 million | $86.0 million |
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Operating revenues
|
$ | 1,256.5 | $ | 142.8 | $ | 104.5 | $ | 39.5 | ||||||||
Fuel
|
586.5 | 92.2 | 55.6 | 80.1 | ||||||||||||
Purchased power
|
126.6 | 30.7 | 22.6 | (70.2 | ) | |||||||||||
Other operations and maintenance
|
260.0 | 4.8 | 18.6 | (3.0 | ) | |||||||||||
Depreciation and amortization
|
71.0 | 10.7 | 13.5 | 13.3 | ||||||||||||
Taxes other than income taxes
|
65.1 | 4.8 | (0.6 | ) | 0.8 | |||||||||||
Total operating expenses
|
1,109.2 | 143.2 | 109.7 | 21.0 | ||||||||||||
Operating income
|
147.3 | (0.4 | ) | (5.2 | ) | 18.5 | ||||||||||
Total other income and (expense)
|
(11.3 | ) | (1.1 | ) | 10.9 | (8.6 | ) | |||||||||
Income taxes
|
48.3 | (3.4 | ) | 3.7 | 1.7 | |||||||||||
Net income
|
87.7 | 1.9 | 2.0 | 8.2 | ||||||||||||
Dividends on preferred stock
|
1.7 | — | — | — | ||||||||||||
Net income after dividends on
preferred stock
|
$ | 86.0 | $ | 1.9 | $ | 2.0 | $ | 8.2 | ||||||||
II-304
Amount | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Retail — prior year
|
$ | 727.2 | $ | 647.2 | $ | 618.9 | ||||||
Estimated change in —
|
||||||||||||
Rates and pricing
|
18.8 | 8.7 | 23.2 | |||||||||
Sales growth
|
(1.1 | ) | 12.3 | (5.2 | ) | |||||||
Weather
|
(1.8 | ) | (2.5 | ) | 5.0 | |||||||
Fuel and other cost recovery
|
42.3 | 61.5 | 5.3 | |||||||||
Retail — current year
|
785.4 | 727.2 | 647.2 | |||||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
353.8 | 323.1 | 268.8 | |||||||||
Affiliates
|
100.9 | 46.2 | 76.4 | |||||||||
Total wholesale revenues
|
454.7 | 369.3 | 345.2 | |||||||||
Other operating revenues
|
16.4 | 17.2 | 16.8 | |||||||||
Total operating revenues
|
$ | 1,256.5 | $ | 1,113.7 | $ | 1,009.2 | ||||||
Percent change
|
12.8 | % | 10.4 | % | 4.1 | % | ||||||
II-305
KWHs | Percent Change | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Residential
|
2,121 | (0.6 | )% | 0.8 | % | (2.8 | )% | |||||||||
Commercial
|
2,857 | (0.7 | ) | 7.5 | (1.8 | ) | ||||||||||
Industrial
|
4,187 | (3.0 | ) | 4.2 | 9.1 | |||||||||||
Other
|
39 | 0.3 | 4.9 | (2.5 | ) | |||||||||||
Total retail
|
9,204 | (1.7 | ) | 4.4 | 2.7 | |||||||||||
Wholesale
|
||||||||||||||||
Non-affiliated
|
5,017 | (3.3 | ) | 12.1 | (3.9 | ) | ||||||||||
Affiliated
|
1,487 | 44.9 | (38.9 | ) | 87.4 | |||||||||||
Total wholesale
|
6,504 | 4.7 | (1.5 | ) | 10.4 | |||||||||||
Total energy sales
|
15,708 | 0.8 | 2.0 | 5.7 | ||||||||||||
II-306
2008 | 2007 | 2006 | ||||||||||
Total generation
(millions of KWHs)
|
14,324 | 14,119 | 14,224 | |||||||||
Total purchased power
(millions of KWHs)
|
2,091 | 2,084 | 1,718 | |||||||||
Sources of generation
(percent)
—
|
||||||||||||
Coal
|
67 | 69 | 71 | |||||||||
Gas
|
33 | 31 | 29 | |||||||||
Cost of fuel, generated
(cents per net KWH)
—
|
||||||||||||
Coal
|
3.52 | 2.92 | 2.52 | |||||||||
Gas
|
6.83 | 6.25 | 6.04 | |||||||||
Average cost of fuel, generated
(cents per net KWH)
|
4.43 | 3.78 | 3.34 | |||||||||
Average cost of purchased power
(cents per net KWH)
|
6.05 | 4.60 | 4.26 | |||||||||
II-307
II-308
II-309
II-310
II-311
II-312
II-313
II-314
II-315
II-316
II-317
II-318
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters; | ||
• | Changes in existing income tax regulations or changes in IRS or state revenue department interpretations of existing regulations; | ||
• | Identification of additional sites that require environmental remediation or the filing of other complaints in which the Company may be asserted to be a potentially responsible party; | ||
• | Identification and evaluation of new or other potential lawsuits or complaints in which the Company may be named as a defendant; | ||
• | Resolution or progression of existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
II-319
• | Fair market value of the Facility at lease inception; | ||
• | The Company’s incremental borrowing rate; | ||
• | Timing of debt payments and the related amortization of the initial acquisition cost during the initial lease term; | ||
• | Residual value of the Facility at the end of the lease term; | ||
• | Estimated economic life of the Facility; and | ||
• | Juniper’s status as a voting interest entity. |
II-320
II-321
II-322
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets
(liabilities), net
|
$ | 2.0 | $ | (6.3 | ) | |||
Contracts realized or settled
|
(30.7 | ) | 2.5 | |||||
Current period changes
(a)
|
(23.3 | ) | 5.8 | |||||
Contracts outstanding at the end of the period, assets (liabilities), net
|
$ | (52.0 | ) | $ | 2.0 | |||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any. |
II-323
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (52.0 | ) | $ | 1.3 | |||
Cash flow hedges
|
— | 0.9 | ||||||
Non-accounting hedges
|
— | (0.2 | ) | |||||
Total fair value
|
$ | (52.0 | ) | $ | 2.0 | |||
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2&3 | Years 4&5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Level 2
|
(52.0 | ) | (27.9 | ) | (19.0 | ) | (5.1 | ) | ||||||||
Level 3
|
— | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period
|
$ | (52.0 | ) | $ | (27.9 | ) | $ | (19.0 | ) | $ | (5.1 | ) | ||||
II-324
II-325
2010- | 2012- | After | ||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-term debt
(a)
—
|
||||||||||||||||||||
Principal
|
$ | 41,230 | $ | 82,767 | $ | 50,633 | $ | 237,695 | $ | 412,325 | ||||||||||
Interest
|
17,016 | 31,884 | 28,920 | 185,393 | 263,213 | |||||||||||||||
Preferred stock dividends
(b)
|
1,733 | 3,465 | 3,465 | — | 8,663 | |||||||||||||||
Energy-related derivative obligations
(c)
|
29,291 | 18,939 | 5,118 | — | 53,348 | |||||||||||||||
Operating leases
(d)
|
40,149 | 62,486 | 2,133 | 2,223 | 106,991 | |||||||||||||||
Purchase commitments
(e)
—
|
||||||||||||||||||||
Capital
(f)
|
162,817 | 1,471,106 | — | — | 1,633,923 | |||||||||||||||
Coal
|
368,572 | 298,787 | 86,800 | 7,800 | 761,959 | |||||||||||||||
Natural gas
(g)
|
191,576 | 194,642 | 44,608 | 204,944 | 635,770 | |||||||||||||||
Long-term service agreements
(h)
|
11,884 | 24,410 | 25,147 | 99,738 | 161,179 | |||||||||||||||
Postretirement benefits trust
(i)
|
125 | 251 | — | — | 376 | |||||||||||||||
Total
|
$ | 864,393 | $ | 2,188,737 | $ | 246,824 | $ | 737,793 | $ | 4,037,747 | ||||||||||
(a) | All amounts are reflected based on final maturity dates. The Company plans to continue to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. Variable rate interest obligations are estimated based on rates as of January 1, 2008, as reflected in the statements of capitalization. | |
(b) | Preferred stock does not mature; therefore, amounts are provided for the next five years only. | |
(c) | For additional information, see Notes 1 and 6 to the financial statements. | |
(d) | The decrease from 2010-2011 to 2012-2013 is primarily a result of the Daniel Operating lease contract that is scheduled to end during 2011. | |
(e) | The Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for 2008, 2007, and 2006 were $260 million, $255 million, and $237 million, respectively. | |
(f) | The Company forecasts capital expenditures over a three-year period. Amounts represent current estimates of total expenditures. At December 31, 2008, significant purchase commitments were outstanding in connection with the construction program. | |
(g) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on the New York Mercantile Exchange future prices at December 31, 2008. | |
(h) | Long-term service agreements include price escalation based on inflation indices. | |
(i) | The Company forecasts postretirement trust contributions over a three-year period. The Company expects that the earliest that cash may have to be contributed to the pension trust fund is 2011 and such contribution could be significant; however, projections of the amount vary significantly depending on interpretations of and decisions related to federal legislation passed during 2008 as well as other key variables including future trust fund performance and cannot be determined at this time. Therefore, no amounts related to the pension trust fund are included in the table. See Note 2 to the financial statements for additional information related to the pension and postretirement plans, including estimated benefit payments. Certain benefit payments will be made through the related trusts. Other benefit payments will be made from the Company’s corporate assets. |
II-326
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances and also changes in tax and other laws and regulations to which the Company is subject, as well as changes in application of existing laws and regulations; |
• | current and future litigation, regulatory investigations, proceedings, or inquiries, including FERC matters and EPA civil actions; |
• | the effects, extent, and timing of the entry of additional competition in the markets in which the Company operates; |
• | variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; |
• | available sources and costs of fuels; |
• | effects of inflation; |
• | ability to control costs; |
• | investment performance of the Company’s employee benefit plans; |
• | advances in technology; |
• | state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and storm restoration cost recovery; |
• | internal restructuring or other restructuring options that may be pursued; |
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to the Company; |
• | the ability of counterparties of the Company to make payments as and when due and to perform as required; |
• | the ability to obtain new short- and long-term contracts with neighboring utilities; |
• | the direct or indirect effect on the Company’s business resulting from terrorist incidents and the threat of terrorist incidents; |
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including the Company’s credit ratings; |
• | the ability of the Company to obtain additional generating capacity at competitive prices; |
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; |
• | the direct or indirect effects on the Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; |
• | the effect of accounting pronouncements issued periodically by standard setting bodies; and |
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
II-327
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
|
||||||||||||
Operating Revenues:
|
||||||||||||
Retail revenues
|
$ | 785,434 | $ | 727,214 | $ | 647,186 | ||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
353,793 | 323,120 | 268,850 | |||||||||
Affiliates
|
100,928 | 46,169 | 76,439 | |||||||||
Other revenues
|
16,387 | 17,241 | 16,762 | |||||||||
Total operating revenues
|
1,256,542 | 1,113,744 | 1,009,237 | |||||||||
Operating Expenses:
|
||||||||||||
Fuel
|
586,503 | 494,248 | 438,622 | |||||||||
Purchased power —
|
||||||||||||
Non-affiliates
|
27,036 | 9,188 | 16,292 | |||||||||
Affiliates
|
99,526 | 86,690 | 56,955 | |||||||||
Other operations and maintenance
|
260,011 | 255,177 | 236,692 | |||||||||
Depreciation and amortization
|
71,039 | 60,376 | 46,853 | |||||||||
Taxes other than income taxes
|
65,099 | 60,328 | 60,904 | |||||||||
Total operating expenses
|
1,109,214 | 966,007 | 856,318 | |||||||||
Operating Income
|
147,328 | 147,737 | 152,919 | |||||||||
Other Income and (Expense):
|
||||||||||||
Interest income
|
1,998 | 1,986 | 4,272 | |||||||||
Interest expense, net of amounts capitalized
|
(17,978 | ) | (18,158 | ) | (18,639 | ) | ||||||
Other income (expense), net
|
4,694 | 6,029 | (6,712 | ) | ||||||||
Total other income and (expense)
|
(11,286 | ) | (10,143 | ) | (21,079 | ) | ||||||
Earnings Before Income Taxes
|
136,042 | 137,594 | 131,840 | |||||||||
Income taxes
|
48,349 | 51,830 | 48,097 | |||||||||
Net Income
|
87,693 | 85,764 | 83,743 | |||||||||
Dividends on Preferred Stock
|
1,733 | 1,733 | 1,733 | |||||||||
Net Income After Dividends on Preferred Stock
|
$ | 85,960 | $ | 84,031 | $ | 82,010 | ||||||
II-328
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
|
||||||||||||
Operating Activities:
|
||||||||||||
Net income
|
$ | 87,693 | $ | 85,764 | $ | 83,743 | ||||||
Adjustments to reconcile net income
to net cash provided from operating activities —
|
||||||||||||
Depreciation and amortization
|
75,765 | 69,971 | 68,198 | |||||||||
Deferred income taxes and investment tax credits, net
|
24,840 | (36,572 | ) | (47,535 | ) | |||||||
Plant Daniel capacity
|
— | (5,659 | ) | (13,008 | ) | |||||||
Pension, postretirement, and other employee benefits
|
8,182 | 8,782 | 5,650 | |||||||||
Stock based compensation expense
|
724 | 1,038 | 1,057 | |||||||||
Tax benefit of stock options
|
489 | 287 | 258 | |||||||||
Hurricane Katrina grant proceeds-property reserve
|
— | 60,000 | — | |||||||||
Wholesale generation construction screening expense
|
(9,284 | ) | — | — | ||||||||
Other, net
|
(38,145 | ) | (24,814 | ) | (5,761 | ) | ||||||
Changes in certain current assets and liabilities —
|
||||||||||||
Receivables
|
(24,432 | ) | 25,107 | 64,976 | ||||||||
Fossil fuel stock
|
(38,072 | ) | (4,787 | ) | 7,765 | |||||||
Materials and supplies
|
297 | 487 | 750 | |||||||||
Prepaid income taxes
|
3,243 | 17,727 | 20,247 | |||||||||
Other current assets
|
(2,022 | ) | (1,923 | ) | (6,560 | ) | ||||||
Hurricane Katrina grant proceeds
|
— | 14,345 | 120,328 | |||||||||
Hurricane Katrina accounts payable
|
— | (53 | ) | (50,512 | ) | |||||||
Other accounts payable
|
3,251 | (4,525 | ) | (30,419 | ) | |||||||
Accrued taxes
|
2,428 | (867 | ) | 1,972 | ||||||||
Accrued compensation
|
(1,362 | ) | (1,993 | ) | (629 | ) | ||||||
Over recovered regulatory clause revenues
|
— | — | (26,188 | ) | ||||||||
Other current liabilities
|
836 | 4,343 | 634 | |||||||||
Net cash provided from operating activities
|
94,431 | 206,658 | 194,966 | |||||||||
Investing Activities:
|
||||||||||||
Property additions
|
(153,401 | ) | (144,925 | ) | (127,290 | ) | ||||||
Cost of removal net of salvage
|
(6,411 | ) | 2,195 | (9,420 | ) | |||||||
Construction payables
|
(4,084 | ) | 8,027 | (7,596 | ) | |||||||
Hurricane Katrina capital grant proceeds
|
7,314 | 34,953 | 152,752 | |||||||||
Other
|
819 | (755 | ) | (1,992 | ) | |||||||
Net cash provided from (used for) investing activities
|
(155,763 | ) | (100,505 | ) | 6,454 | |||||||
Financing Activities:
|
||||||||||||
Increase (decrease) in notes payable, net
|
16,350 | (41,433 | ) | (150,746 | ) | |||||||
Proceeds —
|
||||||||||||
Senior notes
|
50,000 | 35,000 | — | |||||||||
Gross excess tax benefit of stock options
|
934 | 572 | 669 | |||||||||
Capital contributions from parent company
|
3,541 | 5,436 | 5,503 | |||||||||
Pollution control revenue bonds
|
7,900 | — | — | |||||||||
Other long-term debt
|
80,000 | — | — | |||||||||
Redemptions —
|
||||||||||||
Pollution control revenue bonds
|
(7,900 | ) | — | — | ||||||||
Other long-term debt
|
— | (36,082 | ) | — | ||||||||
Payment of preferred stock dividends
|
(1,733 | ) | (1,733 | ) | (1,733 | ) | ||||||
Payment of common stock dividends
|
(68,400 | ) | (67,300 | ) | (65,200 | ) | ||||||
Other
|
(1,774 | ) | — | — | ||||||||
Net cash provided from (used for) financing activities
|
78,918 | (105,540 | ) | (211,507 | ) | |||||||
Net Change in Cash and Cash Equivalents
|
17,586 | 613 | (10,087 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Year
|
4,827 | 4,214 | 14,301 | |||||||||
Cash and Cash Equivalents at End of Year
|
$ | 22,413 | $ | 4,827 | $ | 4,214 | ||||||
Supplemental Cash Flow Information:
|
||||||||||||
Cash paid during the period for —
|
||||||||||||
Interest (net of $229, $12 and $- capitalized, respectively)
|
$ | 15,753 | $ | 16,164 | $ | 29,288 | ||||||
Income taxes (net of refunds)
|
23,829 | 67,453 | 75,209 | |||||||||
II-329
Assets | 2008 | 2007 | ||||||
(in thousands) | ||||||||
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 22,413 | $ | 4,827 | ||||
Receivables —
|
||||||||
Customer accounts receivable
|
40,262 | 43,946 | ||||||
Unbilled revenues
|
24,798 | 23,163 | ||||||
Under recovered regulatory clause revenues
|
54,994 | 40,545 | ||||||
Other accounts and notes receivable
|
8,995 | 5,895 | ||||||
Affiliated companies
|
24,108 | 11,838 | ||||||
Accumulated provision for uncollectible accounts
|
(1,039 | ) | (924 | ) | ||||
Fossil fuel stock, at average cost
|
85,538 | 47,466 | ||||||
Materials and supplies, at average cost
|
27,143 | 27,440 | ||||||
Prepaid income taxes
|
1,061 | 5,735 | ||||||
Other regulatory assets
|
59,219 | 32,234 | ||||||
Other
|
9,838 | 12,687 | ||||||
Total current assets
|
357,330 | 254,852 | ||||||
Property, Plant, and Equipment:
|
||||||||
In service
|
2,234,573 | 2,130,835 | ||||||
Less accumulated provision for depreciation
|
923,269 | 880,148 | ||||||
|
1,311,304 | 1,250,687 | ||||||
Construction work in progress
|
70,665 | 50,015 | ||||||
Total property, plant, and equipment
|
1,381,969 | 1,300,702 | ||||||
Other Property and Investments
|
8,280 | 9,556 | ||||||
Deferred Charges and Other Assets:
|
||||||||
Deferred charges related to income taxes
|
9,566 | 8,867 | ||||||
Prepaid pension costs
|
— | 66,099 | ||||||
Other regulatory assets
|
171,680 | 62,746 | ||||||
Other
|
23,870 | 24,843 | ||||||
Total deferred charges and other assets
|
205,116 | 162,555 | ||||||
Total Assets
|
$ | 1,952,695 | 1,727,665 | |||||
II-330
Liabilities and Stockholder’s Equity | 2008 | 2007 | ||||||
(in thousands) | ||||||||
|
||||||||
Current Liabilities:
|
||||||||
Securities due within one year
|
$ | 41,230 | $ | 1,138 | ||||
Notes payable
|
26,293 | 9,944 | ||||||
Accounts payable —
|
||||||||
Affiliated
|
36,847 | 40,394 | ||||||
Other
|
63,704 | 60,758 | ||||||
Customer deposits
|
10,354 | 9,640 | ||||||
Accrued taxes —
|
||||||||
Income taxes
|
8,842 | — | ||||||
Other
|
50,701 | 48,853 | ||||||
Accrued interest
|
3,930 | 2,713 | ||||||
Accrued compensation
|
20,604 | 21,965 | ||||||
Other regulatory liabilities
|
9,718 | 11,082 | ||||||
Liabilities from risk management activities
|
29,291 | 3,754 | ||||||
Other
|
19,143 | 20,128 | ||||||
Total current liabilities
|
320,657 | 230,369 | ||||||
Long-term Debt
(See accompanying statements)
|
370,460 | 281,963 | ||||||
Deferred Credits and Other Liabilities:
|
||||||||
Accumulated deferred income taxes
|
222,324 | 206,818 | ||||||
Deferred credits related to income taxes
|
14,074 | 15,156 | ||||||
Accumulated deferred investment tax credits
|
14,014 | 15,254 | ||||||
Employee benefit obligations
|
142,188 | 88,300 | ||||||
Other cost of removal obligations
|
96,191 | 90,485 | ||||||
Other regulatory liabilities
|
51,340 | 119,458 | ||||||
Other
|
52,216 | 33,252 | ||||||
Total deferred credits and other liabilities
|
592,347 | 568,723 | ||||||
Total Liabilities
|
1,283,464 | 1,081,055 | ||||||
Preferred Stock
(See accompanying statements)
|
32,780 | 32,780 | ||||||
Common Stockholder’s Equity
(See accompanying statements)
|
636,451 | 613,830 | ||||||
Total Liabilities and Stockholder’s Equity
|
$ | 1,952,695 | $ | 1,727,665 | ||||
Commitments and Contingent Matters
(See notes)
|
||||||||
II-331
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in thousands) | (percent of total) | |||||||||||||||
|
||||||||||||||||
Long-Term Debt:
|
||||||||||||||||
Long-term notes payable —
|
||||||||||||||||
6.00% due 2013
|
$ | 50,000 | $ | — | ||||||||||||
5.4% to 5.625% due 2017-2035
|
155,000 | 155,000 | ||||||||||||||
Adjustable rates (1.645% to 2.36% at 1/1/09) due 2009-2011
|
120,000 | 40,000 | ||||||||||||||
Total long-term notes payable
|
325,000 | 195,000 | ||||||||||||||
Other long-term debt —
|
||||||||||||||||
Pollution control revenue bonds:
|
||||||||||||||||
5.15% due 2028
|
42,625 | — | ||||||||||||||
Variable rates (1.20% to 1.60% at 1/1/09) due 2020-2028
|
40,070 | 82,695 | ||||||||||||||
Total other long-term debt
|
82,695 | 82,695 | ||||||||||||||
Capitalized lease obligations
|
4,629 | 5,768 | ||||||||||||||
Unamortized debt discount
|
(634 | ) | (362 | ) | ||||||||||||
Total long-term debt (annual interest requirement — $17.0 million)
|
411,690 | 283,101 | ||||||||||||||
Less amount due within one year
|
41,230 | 1,138 | ||||||||||||||
Long-term debt excluding amount due within one year
|
370,460 | 281,963 | 35.6 | % | 30.4 | % | ||||||||||
Cumulative Preferred Stock:
|
||||||||||||||||
$100 par value
|
||||||||||||||||
Authorized: 1,244,139 shares
|
||||||||||||||||
Outstanding: 334,210 shares
|
||||||||||||||||
4.40% to 5.25% (annual dividend requirement — $1.7 million)
|
32,780 | 32,780 | 3.2 | 3.5 | ||||||||||||
Common Stockholder’s Equity:
|
||||||||||||||||
Common stock, without par value —
|
||||||||||||||||
Authorized: 1,130,000 shares
|
||||||||||||||||
Outstanding: 1,121,000 shares
|
37,691 | 37,691 | ||||||||||||||
Paid-in capital
|
319,958 | 314,324 | ||||||||||||||
Retained earnings
|
278,802 | 261,242 | ||||||||||||||
Accumulated other comprehensive income (loss)
|
— | 573 | ||||||||||||||
Total common stockholder’s equity
|
636,451 | 613,830 | 61.2 | 66.1 | ||||||||||||
Total Capitalization
|
$ | 1,039,691 | $ | 928,573 | 100.0 | % | 100.0 | % | ||||||||
II-332
Accumulated | ||||||||||||||||||||
Common | Paid-In | Retained | Other Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
|
||||||||||||||||||||
Balance at December 31, 2005
|
$ | 37,691 | $ | 299,536 | $ | 227,701 | $ | (3,768 | ) | $ | 561,160 | |||||||||
Net income after dividends on preferred stock
|
— | — | 82,010 | — | 82,010 | |||||||||||||||
Capital contributions from parent company
|
— | 7,483 | — | — | 7,483 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (180 | ) | (180 | ) | |||||||||||||
Adjustment to initially apply
FASB Statement No. 158, net of tax
|
— | — | — | 4,547 | 4,547 | |||||||||||||||
Cash dividends on common stock
|
— | — | (65,200 | ) | — | (65,200 | ) | |||||||||||||
Balance at December 31, 2006
|
37,691 | 307,019 | 244,511 | 599 | 589,820 | |||||||||||||||
Net income after dividends on preferred stock
|
— | — | 84,031 | — | 84,031 | |||||||||||||||
Capital contributions from parent company
|
— | 7,333 | — | — | 7,333 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (26 | ) | (26 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (67,300 | ) | — | (67,300 | ) | |||||||||||||
Other
|
— | (28 | ) | — | — | (28 | ) | |||||||||||||
Balance at December 31, 2007
|
37,691 | 314,324 | 261,242 | 573 | 613,830 | |||||||||||||||
Net income after dividends on preferred stock
|
— | — | 85,960 | — | 85,960 | |||||||||||||||
Capital contributions from parent company
|
— | 5,634 | — | — | 5,634 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | (573 | ) | (573 | ) | |||||||||||||
Cash dividends on common stock
|
— | — | (68,400 | ) | — | (68,400 | ) | |||||||||||||
Other
|
— | — | — | — | — | |||||||||||||||
Balance at December 31, 2008
|
$ | 37,691 | $ | 319,958 | $ | 278,802 | $ | — | $ | 636,451 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Net income after dividends on preferred stock
|
$ | 85,960 | $ | 84,031 | $ | 82,010 | ||||||
Other comprehensive income (loss):
|
||||||||||||
Qualifying hedges:
|
||||||||||||
Changes in fair value, net of tax of $(355), $(16), and $502, respectively
|
(573 | ) | (26 | ) | 810 | |||||||
Pension and other postretirement benefit plans:
|
||||||||||||
Change in additional minimum pension liability, net of tax of $-, $-, and $(614), respectively
|
— | — | (990 | ) | ||||||||
Total other comprehensive income (loss)
|
(573 | ) | (26 | ) | (180 | ) | ||||||
Comprehensive Income
|
$ | 85,387 | $ | 84,005 | $ | 81,830 | ||||||
II-333
II-334
2008 | 2007 | Note | ||||||||||
(in thousands) | ||||||||||||
Hurricane Katrina
|
$ | (143 | ) | $ | (143 | ) | (a | ) | ||||
Underfunded retiree benefit plans
|
87,094 | 28,331 | (b | ) | ||||||||
Property damage
|
(54,241 | ) | (63,804 | ) | (c | ) | ||||||
Deferred income tax charges
|
8,862 | 9,486 | (d | ) | ||||||||
Property tax
|
16,333 | 15,043 | (e | ) | ||||||||
Transmission & distribution deferral
|
7,101 | 9,468 | (f | ) | ||||||||
Vacation pay
|
8,498 | 7,736 | (g | ) | ||||||||
Loss on reacquired debt
|
9,133 | 9,906 | (h | ) | ||||||||
Loss on redeemed preferred stock
|
400 | 571 | (i | ) | ||||||||
Loss on rail cars
|
196 | 274 | (h | ) | ||||||||
Other regulatory assets
|
— | 832 | (c | ) | ||||||||
Fuel-hedging (realized and
unrealized) losses
|
56,516 | 3,298 | (j | ) | ||||||||
Asset retirement obligations
|
8,345 | 7,705 | (d | ) | ||||||||
Deferred income tax credits
|
(14,962 | ) | (17,654 | ) | (d | ) | ||||||
Other cost of removal obligations
|
(96,191 | ) | (90,485 | ) | (d | ) | ||||||
Fuel-hedging (realized and
unrealized) gains
|
(761 | ) | (4,102 | ) | (j | ) | ||||||
Generation screening costs
|
37,857 | 11,196 | (c | ) | ||||||||
Other liabilities
|
(4,894 | ) | (6,596 | ) | (c | ) | ||||||
Overfunded retiree benefit plans
|
— | (53,396 | ) | (b | ) | |||||||
Total assets (liabilities), net
|
$ | 69,143 | $ | (132,334 | ) | |||||||
(a) | For additional information, see Note 3 under “Retail Regulatory Matters — Storm Damage Cost Recovery.” | |
(b) | Recovered and amortized over the average remaining service period which may range up to 14 years. See Note 2 for additional information. | |
(c) | Recorded and recovered as approved by the Mississippi PSC. | |
(d) | Asset retirement and removal liabilities are recorded, deferred income tax assets are recovered and deferred tax liabilities are amortized over the related property lives, which may range up to 50 years. Asset retirement and removal liabilities will be settled and trued up following completion of the related activities. | |
(e) | Recovered through the ad valorem tax adjustment clause over a 12-month period beginning in April of the following year. | |
(f) | Amortized over a four-year period ending 2011. | |
(g) | Recorded as earned by employees and recovered as paid, generally within one year. | |
(h) | Recovered over the remaining life of the original issue/lease or, if refinanced, over the life of the new issue/lease, which may range up to 50 years. | |
(i) | Amortized over a period beginning in 2004 that is not to exceed seven years. | |
(j) | Fuel-hedging assets and liabilities are recorded over the life of the underlying hedged purchase contracts, which generally do not exceed two years. Upon final settlement, costs are recovered through the Energy Cost Management clause (ECM). |
II-335
II-336
2008 | 2007 | |||||||
(in thousands) | ||||||||
Generation
|
$ | 919,149 | $ | 874,585 | ||||
Transmission
|
436,280 | 420,392 | ||||||
Distribution
|
720,124 | 688,715 | ||||||
General
|
159,020 | 147,143 | ||||||
Total plant in service
|
$ | 2,234,573 | $ | 2,130,835 | ||||
II-337
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Balance, beginning of year
|
$ | 17.3 | $ | 15.8 | $ | 15.4 | ||||||
Liabilities incurred
|
— | 0.6 | — | |||||||||
Liabilities settled
|
(0.1 | ) | — | (0.1 | ) | |||||||
Accretion
|
1.0 | 0.9 | 0.8 | |||||||||
Cash flow revisions
|
(0.2 | ) | — | (0.3 | ) | |||||||
Balance, end of year
|
$ | 18.0 | $ | 17.3 | $ | 15.8 | ||||||
II-338
II-339
Carrying Amount | Fair Value | |||||||
(in thousands) | ||||||||
Long-term debt:
|
||||||||
2008
|
$ | 407,061 | $ | 405,957 | ||||
2007
|
277,333 | 270,897 |
II-340
2008 | 2007 | |||||||
(in thousands) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 256,903 | $ | 250,543 | ||||
Service cost
|
8,557 | 6,934 | ||||||
Interest cost
|
19,753 | 14,767 | ||||||
Benefits paid
|
(14,721 | ) | (11,529 | ) | ||||
Actuarial gain and employee transfers
|
(3,613 | ) | (6,001 | ) | ||||
Amendments
|
— | 2,189 | ||||||
Balance at end of year
|
266,879 | 256,903 | ||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
300,866 | 267,276 | ||||||
Actual return (loss)on plan assets
|
(89,420 | ) | 43,849 | |||||
Employer contributions
|
1,785 | 1,270 | ||||||
Benefits paid
|
(14,721 | ) | (11,529 | ) | ||||
Fair value of plan assets at end of year
|
198,510 | 300,866 | ||||||
Funded status at end of year
|
(68,369 | ) | 43,963 | |||||
Fourth quarter contributions
|
— | 423 | ||||||
(Accrued liability) prepaid pension asset, net
|
$ | (68,369 | ) | $ | 44,386 | |||
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
36 | % | 34 | % | 38 | % | ||||||
International equity
|
24 | 23 | 24 | |||||||||
Fixed income
|
15 | 14 | 15 | |||||||||
Real estate
|
15 | 19 | 16 | |||||||||
Private equity
|
10 | 10 | 7 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
II-341
2008 | 2007 | |||||||
(in thousands) | ||||||||
Prepaid pension costs
|
$ | — | $ | 66,099 | ||||
Other regulatory assets
|
66,602 | 11,114 | ||||||
Current liabilities, other
|
(1,498 | ) | (1,393 | ) | ||||
Other regulatory liabilities
|
— | (53,396 | ) | |||||
Employee benefit obligations
|
(66,871 | ) | (20,320 | ) |
Prior Service Cost | Net(Gain)Loss | |||||||
(in thousands) | ||||||||
Balance at December 31, 2008:
|
||||||||
Regulatory asset
|
$ | 10,800 | $ | 55,802 | ||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 10,800 | $ | 55,802 | ||||
Balance at December 31, 2007:
|
||||||||
Regulatory asset
|
$ | 2,674 | $ | 8,440 | ||||
Regulatory liabilities
|
10,212 | (63,608 | ) | |||||
Total
|
$ | 12,886 | $ | (55,168 | ) | |||
Estimated amortization in net
periodic pension cost in 2009:
|
||||||||
Regulatory asset
|
$ | 1,578 | $ | 539 | ||||
Regulatory liabilities
|
— | — | ||||||
Total
|
$ | 1,578 | $ | 539 | ||||
Regulatory | Regulatory | |||||||
Assets | Liabilities | |||||||
(in thousands) | ||||||||
Balance at December 31, 2006
|
$ | 9,707 | $ | (21,319 | ) | |||
Net (gain) loss
|
166 | (30,800 | ) | |||||
Change in prior service costs
|
2,189 | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(314 | ) | (1,277 | ) | ||||
Amortization of net gain
|
(634 | ) | — | |||||
Total reclassification adjustments
|
(948 | ) | (1,277 | ) | ||||
Total change
|
1,407 | (32,077 | ) | |||||
Balance at December 31, 2007
|
$ | 11,114 | $ | (53,396 | ) | |||
Net (gain) loss
|
56,721 | 54,849 | ||||||
Change in prior service costs
|
— | — | ||||||
Reclassification adjustments:
|
||||||||
Amortization of prior service costs
|
(489 | ) | (1,596 | ) | ||||
Amortization of net gain
|
(744 | ) | 143 | |||||
Total reclassification adjustments
|
(1,233 | ) | (1,453 | ) | ||||
Total change
|
55,488 | 53,396 | ||||||
Balance at December 31, 2008
|
$ | 66,602 | $ | — | ||||
II-342
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Service cost
|
$ | 6,846 | $ | 6,934 | $ | 7,207 | ||||||
Interest cost
|
15,802 | 14,767 | 13,727 | |||||||||
Expected return on plan assets
|
(20,611 | ) | (19,099 | ) | (18,107 | ) | ||||||
Recognized net (gain) loss
|
481 | 634 | 773 | |||||||||
Net amortization
|
1,668 | 1,591 | 1,013 | |||||||||
Net periodic pension cost
|
$ | 4,186 | $ | 4,827 | $ | 4,613 | ||||||
Benefit | ||||
Payments | ||||
(in thousands) | ||||
2009
|
$ | 12,947 | ||
2010
|
13,332 | |||
2011
|
13,971 | |||
2012
|
14,916 | |||
2013
|
15,726 | |||
2014 to 2018
|
95,981 | |||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$ | 84,495 | $ | 89,673 | ||||
Service cost
|
1,745 | 1,372 | ||||||
Interest cost
|
6,498 | 5,254 | ||||||
Benefits paid
|
(5,333 | ) | (3,754 | ) | ||||
Actuarial (gain) loss
|
(3,275 | ) | (8,388 | ) | ||||
Retiree drug subsidy
|
603 | 338 | ||||||
Balance at end of year
|
84,733 | 84,495 | ||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
25,593 | 23,689 | ||||||
Actual return (loss) on plan assets
|
(5,653 | ) | 3,470 | |||||
Employer contributions
|
3,414 | 1,851 | ||||||
Benefits paid
|
(4,731 | ) | (3,417 | ) | ||||
Fair value of plan assets at end of year
|
18,623 | 25,593 | ||||||
Funded status at end of year
|
(66,110 | ) | (58,902 | ) | ||||
Fourth quarter contributions
|
— | 906 | ||||||
Accrued liability
|
$ | (66,110 | ) | $ | (57,996 | ) | ||
II-343
Target | 2008 | 2007 | ||||||||||
Domestic equity
|
27 | % | 26 | % | 31 | % | ||||||
International equity
|
18 | 18 | 20 | |||||||||
Fixed income
|
36 | 35 | 30 | |||||||||
Real estate
|
11 | 14 | 13 | |||||||||
Private equity
|
8 | 7 | 6 | |||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Regulatory assets
|
$ | 20,491 | $ | 17,217 | ||||
Employee benefit obligations
|
(66,110 | ) | (57,996 | ) | ||||
Prior Service | Net(Gain) | Transition | ||||||||||
Cost | Loss | Obligation | ||||||||||
(in thousands) | ||||||||||||
Balance at December 31, 2008:
|
||||||||||||
Regulatory assets
|
$ | 1,054 | $ | 18,020 | $ | 1,417 | ||||||
|
||||||||||||
Balance at December 31, 2007:
|
||||||||||||
Regulatory assets
|
$ | 1,187 | $ | 14,180 | $ | 1,850 | ||||||
|
||||||||||||
Estimated amortization as net periodic
postretirement benefit cost in 2009:
|
||||||||||||
Regulatory assets
|
$ | 106 | $ | 540 | $ | 346 | ||||||
II-344
Regulatory | ||||
Assets | ||||
(in thousands) | ||||
Beginning balance
|
$ | 29,107 | ||
Net (gain) loss
|
(10,256 | ) | ||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(346 | ) | ||
Amortization of prior service costs
|
(106 | ) | ||
Amortization of net gain
|
(1,182 | ) | ||
Total reclassification adjustments
|
(1,634 | ) | ||
Total change
|
(11,890 | ) | ||
Balance at December 31, 2007
|
$ | 17,217 | ||
Net (gain) loss
|
4,607 | |||
Change in prior service costs
|
— | |||
Reclassification adjustments:
|
||||
Amortization of transition obligation
|
(433 | ) | ||
Amortization of prior service costs
|
(132 | ) | ||
Amortization of net gain
|
(768 | ) | ||
Total reclassification adjustments
|
(1,333 | ) | ||
Total change
|
3,274 | |||
Balance at December 31, 2008
|
$ | 20,491 | ||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Service cost
|
$ | 1,396 | $ | 1,372 | $ | 1,520 | ||||||
Interest cost
|
5,199 | 5,254 | 4,654 | |||||||||
Expected return on plan assets
|
(1,805 | ) | (1,673 | ) | (1,642 | ) | ||||||
Net amortization
|
1,066 | 1,633 | 1,702 | |||||||||
Net postretirement cost
|
$ | 5,856 | $ | 6,586 | $ | 6,234 | ||||||
Benefit Payments | Subsidy Receipts | Total | ||||||||||
(in thousands) | ||||||||||||
2009
|
$ | 4,629 | $ | (479 | ) | $ | 4,150 | |||||
2010
|
5,122 | (541 | ) | 4,581 | ||||||||
2011
|
5,540 | (616 | ) | 4,924 | ||||||||
2012
|
5,917 | (702 | ) | 5,215 | ||||||||
2013
|
6,343 | (779 | ) | 5,564 | ||||||||
2014 to 2018
|
36,484 | (5,305 | ) | 31,179 | ||||||||
II-345
2008 | 2007 | 2006 | ||||||||||
Discount
|
6.75 | % | 6.30 | % | 6.00 | % | ||||||
Annual salary increase
|
3.75 | 3.75 | 3.50 | |||||||||
Long-term return on plan assets
|
8.50 | 8.50 | 8.50 | |||||||||
1 Percent | 1 Percent | |||||||
Increase | Decrease | |||||||
(in thousands) | ||||||||
Benefit obligation
|
$ | 5,740 | $ | 5,826 | ||||
Service and interest costs
|
360 | 307 | ||||||
II-346
II-347
II-348
II-349
II-350
II-351
II-352
Generating | Percent | Gross | Accumulated | |||||||||
Plant | Ownership | Investment | Depreciation | |||||||||
(in thousands) | ||||||||||||
Greene County
|
40 | % | $ | 83,721 | $ | 43,295 | ||||||
Units 1 and 2
|
||||||||||||
|
||||||||||||
Daniel
|
50 | % | $ | 273,134 | $ | 135,905 | ||||||
Units 1 and 2
|
||||||||||||
II-353
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Federal —
|
||||||||||||
Current
|
$ | 20,834 | $ | 79,127 | $ | 79,332 | ||||||
Deferred
|
22,054 | (34,524 | ) | (36,889 | ) | |||||||
|
42,888 | 44,603 | 42,443 | |||||||||
State —
|
||||||||||||
Current
|
2,675 | 9,274 | 16,300 | |||||||||
Deferred
|
2,786 | (2,047 | ) | (10,646 | ) | |||||||
|
5,461 | 7,227 | 5,654 | |||||||||
Total
|
$ | 48,349 | $ | 51,830 | $ | 48,097 | ||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Deferred tax liabilities —
|
||||||||
Accelerated depreciation
|
$ | 261,091 | $ | 230,379 | ||||
Basis differences
|
29,089 | 39,944 | ||||||
Fuel clause under recovered
|
25,534 | 10,570 | ||||||
Regulatory assets associated with asset retirement obligations
|
7,100 | 6,790 | ||||||
Regulatory assets associated with employee benefit obligations
|
37,003 | 15,139 | ||||||
Other
|
20,915 | 46,442 | ||||||
Total
|
380,732 | 349,264 | ||||||
|
||||||||
Deferred tax assets —
|
||||||||
Federal effect of state deferred taxes
|
10,724 | 9,535 | ||||||
Other property basis differences
|
7,338 | 8,030 | ||||||
Pension and other benefits
|
56,024 | 33,622 | ||||||
Property insurance
|
21,997 | 26,005 | ||||||
Unbilled fuel
|
10,400 | 10,045 | ||||||
Other comprehensive loss
|
0 | (371 | ) | |||||
Asset retirement obligations
|
7,100 | 6,790 | ||||||
Regulatory liabilities associated with employee benefit obligations
|
0 | 20,433 | ||||||
Other
|
36,617 | 29,785 | ||||||
Total
|
150,200 | 143,874 | ||||||
Total deferred tax liabilities, net
|
230,532 | 205,390 | ||||||
Portion included in (accrued) prepaid income taxes, net
|
(8,208 | ) | 1,428 | |||||
Accumulated deferred income taxes
|
$ | 222,324 | $ | 206,818 | ||||
II-354
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction
|
2.6 | 3.0 | 3.0 | |||||||||
Non-deductible book depreciation
|
0.3 | 0.3 | 0.3 | |||||||||
Production activities deduction
|
(0.4 | ) | (0.5 | ) | (0.1 | ) | ||||||
Medicare subsidy
|
(0.5 | ) | (0.5 | ) | (0.5 | ) | ||||||
Amortization of permanent tax items
(a)
|
(0.7 | ) | — | — | ||||||||
Other
|
(0.8 | ) | 0.4 | (1.4 | ) | |||||||
Effective income tax rate
|
35.5 | % | 37.7 | % | 36.3 | % | ||||||
(a) | Amortization of Regulatory Liability Tax Credits. See Note 3 under “Retail Regulatory Matters — Performance Evaluation Plan.” |
2008 | 2007 | |||||||
(in thousands) | ||||||||
Unrecognized tax benefits at beginning of year
|
$ | 935 | $ | 656 | ||||
Tax positions from current periods
|
653 | 177 | ||||||
Tax positions from prior periods
|
265 | 102 | ||||||
Reductions due to settlements
|
(81 | ) | — | |||||
Reductions due to expired statute of limitations
|
— | — | ||||||
Balance at end of year
|
$ | 1,772 | $ | 935 | ||||
II-355
2008 | 2007 | Change | ||||||||||
(in thousands) | ||||||||||||
Tax positions impacting the effective tax rate
|
$ | 1,772 | $ | 935 | $ | 837 | ||||||
Tax positions not impacting the effective tax rate
|
— | — | — | |||||||||
Balance of unrecognized tax benefits
|
$ | 1,772 | $ | 935 | $ | 837 | ||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Interest accrued at beginning of year
|
$ | 106 | $ | 37 | ||||
Interest reclassified due to settlements
|
(17 | ) | — | |||||
Interest accrued during the year
|
114 | 69 | ||||||
Balance at end of year
|
$ | 203 | $ | 106 | ||||
II-356
II-357
2008 | 2007 | |||||||
(in millions) | ||||||||
Regulatory hedges
|
$ | (52.0 | ) | $ | 1.3 | |||
Cash flow hedges
|
— | 0.9 | ||||||
Non-accounting hedges
|
— | (0.2 | ) | |||||
Total fair value
|
$ | (52.0 | ) | $ | 2.0 | |||
II-358
Commitments | ||||||||
Natural Gas | Coal | |||||||
(in thousands) | ||||||||
2009
|
$ | 191,576 | $ | 368,572 | ||||
2010
|
128,270 | 177,351 | ||||||
2011
|
66,372 | 121,436 | ||||||
2012
|
22,326 | 63,795 | ||||||
2013
|
22,282 | 23,005 | ||||||
2014 and thereafter
|
204,944 | 7,800 | ||||||
Total
|
$ | 635,770 | $ | 761,959 | ||||
II-359
Minimum Lease Payments | ||||
(in thousands) | ||||
2009
|
$ | 28,504 | ||
2010
|
28,398 | |||
2011
|
28,291 | |||
2012
|
— | |||
2013
|
— | |||
2014 and thereafter
|
— | |||
Total commitments
|
$ | 85,193 | ||
II-360
Year Ended December 31 | 2008 | 2007 | 2006 | |||||||||
Expected volatility
|
13.1 | % | 14.8 | % | 16.9 | % | ||||||
Expected term
(in years)
|
5.0 | 5.0 | 5.0 | |||||||||
Interest rate
|
2.8 | % | 4.6 | % | 4.6 | % | ||||||
Dividend yield
|
4.5 | % | 4.3 | % | 4.4 | % | ||||||
Weighted average grant-date fair value
|
$ | 2.37 | $ | 4.12 | $ | 4.15 |
Shares Subject | Weighted Average | |||||||
to Option | Exercise Price | |||||||
Outstanding at December 31, 2007
|
1,477,954 | $ | 30.30 | |||||
Granted
|
253,120 | 35.78 | ||||||
Exercised
|
(297,599 | ) | 28.14 | |||||
Cancelled
|
(2,348 | ) | 25.45 | |||||
Outstanding at December 31, 2008
|
1,431,127 | $ | 31.72 | |||||
Exercisable at December 31, 2008
|
937,694 | $ | 29.63 | |||||
II-361
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. |
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. |
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. |
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | ||||||||||||||||
Assets:
|
||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 1.3 | — | $ | 1.3 | |||||||||
Cash equivalents
|
18.5 | — | — | 18.5 | ||||||||||||
Total fair value
|
$ | 18.5 | $ | 1.3 | — | $ | 19.8 | |||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Energy-related derivatives total fair value
|
$ | — | $ | 53.3 | — | $ | 53.3 | |||||||||
Operating | Operating | Net Income After Dividends | ||||||||||
Quarter Ended | Revenues | Income | On Preferred Stock | |||||||||
(in thousands) | ||||||||||||
March 2008
|
$ | 285,416 | $ | 28,712 | $ | 16,172 | ||||||
June 2008
|
297,932 | 39,410 | 24,005 | |||||||||
September 2008
|
381,415 | 58,718 | 36,217 | |||||||||
December 2008
|
291,779 | 20,488 | 9,566 | |||||||||
|
||||||||||||
March 2007
|
$ | 256,826 | $ | 36,824 | $ | 19,636 | ||||||
June 2007
|
273,216 | 41,671 | 26,280 | |||||||||
September 2007
|
333,023 | 59,535 | 34,450 | |||||||||
December 2007
|
250,679 | 9,707 | 3,665 | |||||||||
II-362
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands)
|
$ | 1,256,542 | $ | 1,113,744 | $ | 1,009,237 | $ | 969,733 | $ | 910,326 | ||||||||||
Net Income after Dividends
on Preferred Stock (in thousands)
|
$ | 85,960 | $ | 84,031 | $ | 82,010 | $ | 73,808 | $ | 76,801 | ||||||||||
Cash Dividends
on Common Stock (in thousands)
|
$ | 68,400 | $ | 67,300 | $ | 65,200 | $ | 62,000 | $ | 66,200 | ||||||||||
Return on Average Common Equity (percent)
|
13.75 | 13.96 | 14.25 | 13.33 | 14.24 | |||||||||||||||
Total Assets (in thousands)
|
$ | 1,952,695 | $ | 1,727,665 | $ | 1,708,376 | $ | 1,981,269 | $ | 1,479,113 | ||||||||||
Gross Property Additions (in thousands)
|
$ | 139,250 | $ | 114,927 | $ | 127,290 | $ | 158,084 | $ | 70,063 | ||||||||||
Capitalization (in thousands):
|
||||||||||||||||||||
Common stock equity
|
$ | 636,451 | $ | 613,830 | $ | 589,820 | $ | 561,160 | $ | 545,837 | ||||||||||
Preferred stock
|
32,780 | 32,780 | 32,780 | 32,780 | 32,780 | |||||||||||||||
Long-term debt
|
370,460 | 281,963 | 278,635 | 278,630 | 278,580 | |||||||||||||||
Total (excluding amounts due within one year)
|
$ | 1,039,691 | $ | 928,573 | $ | 901,235 | $ | 872,570 | $ | 857,197 | ||||||||||
Capitalization Ratios (percent):
|
||||||||||||||||||||
Common stock equity
|
61.2 | 66.1 | 65.4 | 64.3 | 63.7 | |||||||||||||||
Preferred stock
|
3.2 | 3.5 | 3.6 | 3.8 | 3.8 | |||||||||||||||
Long-term debt
|
35.6 | 30.4 | 31.0 | 31.9 | 32.5 | |||||||||||||||
Total (excluding amounts due within one year)
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Security Ratings:
|
||||||||||||||||||||
First
Mortgage Bonds —
|
||||||||||||||||||||
Moody’s
|
— | — | — | — | Aa3 | |||||||||||||||
Standard and Poor’s
|
— | — | — | — | A+ | |||||||||||||||
Fitch
|
— | — | — | — | AA | |||||||||||||||
Preferred Stock —
|
||||||||||||||||||||
Moody’s
|
A3 | A3 | A3 | A3 | A3 | |||||||||||||||
Standard and Poor’s
|
BBB+ | BBB+ | BBB+ | BBB+ | BBB+ | |||||||||||||||
Fitch
|
A+ | A+ | A+ | A+ | A+ | |||||||||||||||
Unsecured
Long-Term Debt —
|
||||||||||||||||||||
Moody’s
|
A1 | A1 | A1 | A1 | A1 | |||||||||||||||
Standard and Poor’s
|
A | A | A | A | A | |||||||||||||||
Fitch
|
AA- | AA- | AA- | AA- | AA- | |||||||||||||||
Customers (year-end):
|
||||||||||||||||||||
Residential
|
152,280 | 150,601 | 147,643 | 142,077 | 160,189 | |||||||||||||||
Commercial
|
33,589 | 33,507 | 32,958 | 30,895 | 33,646 | |||||||||||||||
Industrial
|
518 | 514 | 507 | 512 | 522 | |||||||||||||||
Other
|
183 | 181 | 177 | 176 | 183 | |||||||||||||||
Total
|
186,570 | 184,803 | 181,285 | 173,660 | 194,540 | |||||||||||||||
Employees (year-end)
|
1,317 | 1,299 | 1,270 | 1,254 | 1,283 | |||||||||||||||
II-363
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands):
|
||||||||||||||||||||
Residential
|
$ | 248,693 | $ | 230,819 | $ | 214,472 | $ | 209,546 | $ | 199,242 | ||||||||||
Commercial
|
271,452 | 247,539 | 215,451 | 213,093 | 199,127 | |||||||||||||||
Industrial
|
258,328 | 242,436 | 211,451 | 190,720 | 180,516 | |||||||||||||||
Other
|
6,961 | 6,420 | 5,812 | 5,501 | 5,428 | |||||||||||||||
Total retail
|
785,434 | 727,214 | 647,186 | 618,860 | 584,313 | |||||||||||||||
Wholesale — non-affiliates
|
353,793 | 323,120 | 268,850 | 283,413 | 265,863 | |||||||||||||||
Wholesale — affiliates
|
100,928 | 46,169 | 76,439 | 50,460 | 44,371 | |||||||||||||||
Total revenues from sales of electricity
|
1,240,155 | 1,096,503 | 992,475 | 952,733 | 894,547 | |||||||||||||||
Other revenues
|
16,387 | 17,241 | 16,762 | 17,000 | 15,779 | |||||||||||||||
Total
|
$ | 1,256,542 | $ | 1,113,744 | $ | 1,009,237 | $ | 969,733 | $ | 910,326 | ||||||||||
Kilowatt-Hour Sales (in thousands):
|
||||||||||||||||||||
Residential
|
2,121,389 | 2,134,883 | 2,118,106 | 2,179,756 | 2,297,110 | |||||||||||||||
Commercial
|
2,856,744 | 2,876,247 | 2,675,945 | 2,725,274 | 2,969,829 | |||||||||||||||
Industrial
|
4,187,101 | 4,317,656 | 4,142,947 | 3,798,477 | 4,235,290 | |||||||||||||||
Other
|
38,886 | 38,764 | 36,959 | 37,905 | 40,229 | |||||||||||||||
Total retail
|
9,204,120 | 9,367,550 | 8,973,957 | 8,741,412 | 9,542,458 | |||||||||||||||
Sales for resale — non-affiliates
|
5,016,655 | 5,185,772 | 4,624,092 | 4,811,250 | 6,027,666 | |||||||||||||||
Sales for resale — affiliates
|
1,487,083 | 1,026,546 | 1,679,831 | 896,361 | 1,053,471 | |||||||||||||||
Total
|
15,707,858 | 15,579,868 | 15,277,880 | 14,449,023 | 16,623,595 | |||||||||||||||
Average Revenue Per Kilowatt-Hour
(cents):
|
||||||||||||||||||||
Residential
|
11.72 | 10.81 | 10.13 | 9.61 | 8.67 | |||||||||||||||
Commercial
|
9.50 | 8.61 | 8.05 | 7.82 | 6.70 | |||||||||||||||
Industrial
|
6.17 | 5.61 | 5.10 | 5.02 | 4.26 | |||||||||||||||
Total retail
|
8.53 | 7.76 | 7.21 | 7.08 | 6.12 | |||||||||||||||
Wholesale
|
6.99 | 5.94 | 5.48 | 5.85 | 4.38 | |||||||||||||||
Total sales
|
7.90 | 7.04 | 6.50 | 6.59 | 5.38 | |||||||||||||||
Residential Average Annual
Kilowatt-Hour Use Per Customer
|
13,992 | 14,294 | 14,480 | 14,111 | 14,357 | |||||||||||||||
Residential Average Annual
Revenue Per Customer
|
$ | 1,640 | $ | 1,545 | $ | 1,466 | $ | 1,357 | $ | 1,245 | ||||||||||
Plant Nameplate Capacity
Ratings (year-end) (megawatts)
|
3,156 | 3,156 | 3,156 | 3,156 | 3,156 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts):
|
||||||||||||||||||||
Winter
|
2,385 | 2,294 | 2,204 | 2,178 | 2,173 | |||||||||||||||
Summer
|
2,458 | 2,512 | 2,390 | 2,493 | 2,427 | |||||||||||||||
Annual Load Factor (percent)
|
61.5 | 60.9 | 61.3 | 56.6 | 62.4 | |||||||||||||||
Plant Availability Fossil-Steam (percent)
|
91.6 | 92.2 | 81.1 | 82.8 | 91.4 | |||||||||||||||
Source of Energy Supply (percent):
|
||||||||||||||||||||
Coal
|
58.7 | 60.0 | 63.1 | 58.1 | 55.7 | |||||||||||||||
Oil and gas
|
28.6 | 27.1 | 26.1 | 24.4 | 25.5 | |||||||||||||||
Purchased power —
|
||||||||||||||||||||
From non-affiliates
|
4.4 | 3.0 | 3.5 | 5.1 | 6.4 | |||||||||||||||
From affiliates
|
8.3 | 9.9 | 7.3 | 12.4 | 12.4 | |||||||||||||||
Total
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
II-364
II-365
II-366
II-367
II-368
Increase (Decrease) | ||||||||||||||||
Amount | from Prior Year | |||||||||||||||
2008 | 2008 | 2007 | 2006 | |||||||||||||
(in millions) | ||||||||||||||||
Operating revenues
|
$ | 1,313.6 | $ | 341.5 | $ | 195.0 | $ | (4.0 | ) | |||||||
Fuel
|
424.8 | 186.1 | 93.4 | (63.8 | ) | |||||||||||
Purchased power
|
328.0 | 128.1 | 29.3 | 10.7 | ||||||||||||
Other operations and maintenance
|
147.7 | 12.7 | 39.7 | 14.5 | ||||||||||||
Loss on IGCC project
|
— | (17.6 | ) | 17.6 | — | |||||||||||
Gain on sale of property
|
(6.0 | ) | (6.0 | ) | — | — | ||||||||||
Depreciation and amortization
|
88.5 | 14.5 | 8.0 | 11.7 | ||||||||||||
Taxes other than income taxes
|
17.7 | 2.0 | 0.2 | 2.3 | ||||||||||||
Total operating expenses
|
1,000.7 | 319.8 | 188.2 | (24.6 | ) | |||||||||||
Operating income
|
312.9 | 21.7 | 6.8 | 20.6 | ||||||||||||
Other income, net
|
7.6 | 4.3 | 1.1 | (0.2 | ) | |||||||||||
Interest expense
|
83.2 | 4.0 | (1.0 | ) | 0.8 | |||||||||||
Income taxes
|
92.9 | 9.3 | 1.7 | 9.9 | ||||||||||||
Net Income
|
$ | 144.4 | $ | 12.7 | $ | 7.2 | $ | 9.7 | ||||||||
II-369
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
|
||||||||||||
Capacity revenues —
|
||||||||||||
Affiliates
|
$ | 279.2 | $ | 279.7 | $ | 279.1 | ||||||
Non-Affiliates
|
165.2 | 136.9 | 103.3 | |||||||||
Total
|
444.4 | 416.6 | 382.4 | |||||||||
Energy revenues —
|
||||||||||||
Affiliates
|
263.6 | 227.1 | 190.1 | |||||||||
Non-Affiliates
|
249.0 | 189.1 | 144.9 | |||||||||
Total
|
512.6 | 416.2 | 335.0 | |||||||||
Total PPA revenues
|
$ | 957.0 | $ | 832.8 | $ | 717.4 | ||||||
2008 | 2007 | 2006 | ||||||||||
(in millions) | ||||||||||||
Fuel
|
$ | 424.8 | $ | 238.7 | $ | 145.2 | ||||||
Purchased power-non-affiliates
|
132.2 | 64.6 | 53.8 | |||||||||
Purchased power-affiliates
|
195.8 | 135.3 | 116.9 | |||||||||
Total fuel and purchased power expenses
|
$ | 752.8 | $ | 438.6 | $ | 315.9 | ||||||
II-370
II-371
II-372
Contract | ||||||||||||
Date | Megawatts | Plant | Term | |||||||||
2008
|
||||||||||||
North Carolina Municipal Power Agency No. 1 (NCMPA1)
|
December 2008 | 180 | Cleveland | 1/12-12/31 | ||||||||
North Carolina Electric Membership Corporation (NCEMC)
(a)
|
November 2008 | 180 | Cleveland | 1/12-12/36 | ||||||||
NCEMC
(a)
|
November 2008 | 180 | (b) | Cleveland | 1/12-12/36 | |||||||
EnergyUnited
|
November 2008 | 100 | Purchased (c) | 1/12-12/21 | ||||||||
The Energy Authority, Inc.
|
August 2008 | 151 | Rowan | 1/11-12/14 | ||||||||
Georgia Electric Membership Corporations (EMCs)
(d)
|
July 2008 | 500 | (e) | Unassigned | 1/10-12/34 | (d) | ||||||
Florida Municipal Power Agency (FMPA)
(f)
|
July 2008 | 85 | Stanton | 10/13-9/23 | ||||||||
2007
|
||||||||||||
Progress Energy Carolina Inc.
|
December 2007 | 155 | Rowan | 1/10-12/10 | ||||||||
Progress Energy Carolina Inc.
|
December 2007 | 160 | Wansley | 1/11-12/11 | ||||||||
Georgia Power
|
April 2007 | 561 | Wansley | 6/10-5/17 | ||||||||
Georgia Power
|
April 2007 | 292 | Dahlberg | 6/10-5/25 | ||||||||
Progress Energy Carolina Inc.
|
February 2007 | 150 | Rowan | 1/10-12/19 | ||||||||
2006
|
||||||||||||
Gulf Power
|
October 2006 | 292 | Dahlberg | 6/09-5/14 | ||||||||
Duke Power
(g)
|
September 2006 | 152 | Rowan | 9/06-12/10 | ||||||||
Duke Power
(g)
|
September 2006 | 304 | Rowan | 9/06-12/10 | ||||||||
NCMPA1
(g)
|
September 2006 | 50 | Rowan | 9/06-12/10 | ||||||||
NCMPA1
(g)
|
September 2006 | 150 | Rowan | 1/11-12/30 | ||||||||
EnergyUnited
|
May 2006 | 149 | (e) | Unassigned | 9/06-12/10 | |||||||
EnergyUnited
|
May 2006 | 335 | (e) | Unassigned | 1/11-12/25 | |||||||
EnergyUnited
|
May 2006 | 161 | (h) | Rowan | 1/11-12/25 | |||||||
Constellation Energy Group, Inc. (Constellation)
(i)
|
April 2006 | 621 | Franklin | 1/09-12/15 | ||||||||
Seminole Electric Cooperative, Inc.
|
February 2006 | 465 | Oleander | 1/10-12/15 | ||||||||
FMPA
|
February 2006 | 162 | Oleander | 12/07 -12/27 | ||||||||
II-373
(a) | Subject to approval by the Rural Utilities Service. | |
(b) | Power purchases under this agreement will increase over the term of the agreement. 45 MWs will be sold from 2012 through 2016, 90 MWs will be sold from 2017 through 2018, and 180 MWs will be sold from 2019 through 2036. | |
(c) | Power to serve this agreement will be purchased under a third party agreement for resale to EnergyUnited. The purchases will be resold at cost. | |
(d) | These agreements are extensions of current agreements with ten Georgia EMCs. Eight agreements were extended from 2010 through 2031 and two agreements were extended from 2013 through 2034. | |
(e) | Represents average annual capacity purchases. | |
(f) | This agreement is an extension of the current agreement with FMPA for Plant Stanton. | |
(g) | Assumed contract through the Plant Rowan acquisition in 2006. | |
(h) | PPA was amended in 2008 reducing MWs purchased from 205 to 161. | |
(i) | Contract was assumed by Constellation from Progress Ventures, Inc. in 2007. |
2009- | 2011- | 2013- | 2015- | 2017- | ||||||||||||||||
2010 | 2012 | 2014 | 2016 | 2018 | ||||||||||||||||
Average available capacity
(a)
|
7,709 | 8,015 | 8,411 | 8,271 | 8,131 | |||||||||||||||
Average contracted capacity
|
7,171 | 7,064 | 7,348 | 6,617 | 5,325 | |||||||||||||||
Percent contracted
|
93 | % | 88 | % | 87 | % | 80 | % | 66 | % | ||||||||||
(a). | Includes confirmed third party power purchases for 2009 through 2018. |
II-374
II-375
II-376
II-377
II-378
• | Assessing whether a sales contract meets the definition of a lease; | ||
• | Assessing whether a sales contract meets the definition of a derivative; | ||
• | Assessing whether a sales contract meets the definition of a capacity contract; | ||
• | Assessing the probability at inception and throughout the term of the individual contract that the contract will result in physical delivery; | ||
• | Ensuring that the contract quantities do not exceed available generating capacity (including purchased capacity); | ||
• | Identifying the hedging instrument, the hedged transaction, and the nature of the risk being hedged; and | ||
• | Assessing hedge effectiveness at inception and throughout the contract term. |
II-379
• | Future demand for electricity based on projections of economic growth and estimates of available generating capacity; | ||
• | Future power and natural gas prices, which have been quite volatile in recent years; and | ||
• | Future operating costs. |
• | Changes in existing state or federal regulation by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances, hazardous and solid wastes, and other environmental matters. | ||
• | Changes in existing income tax regulations or changes in IRS or state revenue department interpretations of existing regulations. | ||
• | Identification of sites that require environmental remediation or the filing of other complaints in which the Company may be asserted to be a potentially responsible party. | ||
• | Identification and evaluation of other potential lawsuits or complaints in which the Company may be named as a defendant. | ||
• | Resolution or progression of new or existing matters through the legislative process, the court systems, the IRS, the FERC, or the EPA. |
II-380
II-381
II-382
2008 | 2007 | |||||||
Changes | Changes | |||||||
Fair Value | ||||||||
(in millions) | ||||||||
Contracts outstanding at the beginning of the period, assets
(liabilities), net
|
$ | 3.4 | $ | 1.9 | ||||
Contracts realized or settled
|
1.4 | (1.9 | ) | |||||
Current period changes (a)
|
(1.4 | ) | 3.4 | |||||
Contracts outstanding at the end of the period, assets (liabilities), net
|
$ | 3.4 | $ | 3.4 | ||||
(a) | Current period changes also include the changes in fair value of new contracts entered into during the period, if any. |
II-383
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Power (net sold)
|
||||||||
Megawatt hours (MWH) (
in millions
)
|
0.3 | 1.7 | ||||||
Weighted average contract cost per MWH
above (below) market prices
(in dollars
)
|
$ | (2.29 | ) | $ | 1.76 | |||
Natural gas (net purchase)
|
||||||||
Billion cubic feet (Bcf)
|
1.9 | 3.8 | ||||||
Weighted average contract cost per British
thermal unit (mmBtu)
above (below) market prices (
in dollars
)
|
$ | (2.16 | ) | $ | 0.09 | |||
2008 | 2007 | |||||||
(in millions) | ||||||||
Cash flow hedges
|
$ | (0.8 | ) | $ | 0.1 | |||
Non-accounting hedges
|
4.2 | 3.3 | ||||||
Total fair value
|
$ | 3.4 | $ | 3.4 | ||||
December 31, 2008 | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
Total | Maturity | |||||||||||||||
Fair Value | Year 1 | Years 2&3 | Years 4&5 | |||||||||||||
(in millions) | ||||||||||||||||
Level 1
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Level 2
|
3.4 | 3.3 | 0.1 | — | ||||||||||||
Level 3
|
— | — | — | — | ||||||||||||
Fair value of contracts outstanding at end of period
|
$ | 3.4 | $ | 3.3 | $ | 0.1 | $ | — | ||||||||
II-384
2010- | 2012- | After | ||||||||||||||||||
2009 | 2011 | 2013 | 2013 | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Long-term debt
(a)
—
|
||||||||||||||||||||
Principal
|
$ | — | $ | — | $ | 575.0 | $ | 725.0 | $ | 1,300.0 | ||||||||||
Interest
|
74.3 | 148.6 | 112.6 | 344.4 | 679.9 | |||||||||||||||
Energy-related derivative obligations
(b)
|
7.5 | 0.2 | — | — | 7.7 | |||||||||||||||
Operating leases
|
0.4 | 0.8 | 0.8 | 22.3 | 24.3 | |||||||||||||||
Purchase commitments
(c)
—
|
||||||||||||||||||||
Capital
(d)
|
748.9 | 1,427.5 | — | — | 2,176.4 | |||||||||||||||
Natural gas
(e)
|
40.6 | 269.0 | 101.0 | 316.2 | 726.8 | |||||||||||||||
Purchased power
(f)
|
13.5 | 21.4 | 99.6 | 346.9 | 481.4 | |||||||||||||||
Long-term service agreements
(g)
|
34.4 | 96.3 | 84.4 | 986.9 | 1,202.0 | |||||||||||||||
Total
|
$ | 919.6 | $ | 1,963.8 | $ | 973.4 | $ | 2,741.7 | $ | 6,598.5 | ||||||||||
(a) | All amounts are reflected based on final maturity dates. The Company plans to retire higher-cost securities and replace these obligations with lower-cost capital if market conditions permit. | |
(b) | For additional information, see Notes 1 and 6 to the financial statements. | |
(c) | The Company generally does not enter into non-cancelable commitments for other operations and maintenance expenditures. Total other operations and maintenance expenses for the last three years were $147.7 million, $135.0 million, and $95.3 million, respectively. | |
(d) | The Company forecasts capital expenditures over a three-year period. Amounts represent estimates for potential plant acquisitions and new construction as well as ongoing capital improvements. | |
(e) | Natural gas purchase commitments are based on various indices at the time of delivery. Amounts reflected have been estimated based on New York Mercantile Exchange future prices at December 31, 2008. | |
(f) | Purchased power commitments of $71.5 million in 2012-2013 and $316.1 million after 2013 will be resold under a third party agreement to EnergyUnited. The purchases will be resold at cost. | |
(g) | Long-term service agreements include price escalation based on inflation indices. |
II-385
• | the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which the Company is subject, as well as changes in application of existing laws and regulations; | |
• | current and future litigation, regulatory investigations, proceedings, or inquiries, including FERC matters; | |
• | the effects, extent, and timing of the entry of additional competition in the markets in which the Company operates; | |
• | variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; | |
• | available sources and costs of fuels; | |
• | effects of inflation; | |
• | advances in technology; | |
• | state and federal rate regulations; | |
• | the ability to control costs and avoid cost overruns during the development and construction of facilities; | |
• | internal restructuring or other restructuring options that may be pursued; | |
• | potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to the Company; | |
• | the ability of counterparties of the Company to make payments as and when due and to perform as required; | |
• | the ability to obtain new short- and long-term contracts with wholesale customers; | |
• | the direct or indirect effect on the Company’s business resulting from terrorist incidents and the threat of terrorist incidents; | |
• | interest rate fluctuations and financial market conditions and the results of financing efforts, including the Company’s credit ratings; | |
• | the ability of the Company to obtain additional generating capacity at competitive prices; | |
• | catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian influenza, or other similar occurrences; | |
• | the direct or indirect effects on the Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; | |
• | the effect of accounting pronouncements issued periodically by standard-setting bodies; and | |
• | other factors discussed elsewhere herein and in other reports (including the Form 10-K) filed by the Company from time to time with the SEC. |
II-386
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
|
||||||||||||
Operating Revenues:
|
||||||||||||
Wholesale revenues —
|
||||||||||||
Non-affiliates
|
$ | 667,979 | $ | 416,648 | $ | 279,384 | ||||||
Affiliates
|
638,266 | 547,229 | 491,762 | |||||||||
Other revenues
|
7,296 | 8,137 | 5,902 | |||||||||
Total operating revenues
|
1,313,541 | 972,014 | 777,048 | |||||||||
Operating Expenses:
|
||||||||||||
Fuel
|
424,800 | 238,680 | 145,236 | |||||||||
Purchased power —
|
||||||||||||
Non-affiliates
|
132,222 | 64,604 | 53,795 | |||||||||
Affiliates
|
195,743 | 135,336 | 116,902 | |||||||||
Other operations and maintenance
|
147,711 | 134,971 | 95,276 | |||||||||
Gain on sale of property
|
(6,015 | ) | — | — | ||||||||
Loss on IGCC project
|
— | 17,619 | — | |||||||||
Depreciation and amortization
|
88,511 | 73,985 | 65,959 | |||||||||
Taxes other than income taxes
|
17,700 | 15,744 | 15,637 | |||||||||
Total operating expenses
|
1,000,672 | 680,939 | 492,805 | |||||||||
Operating Income
|
312,869 | 291,075 | 284,243 | |||||||||
Other Income and (Expense):
|
||||||||||||
Interest expense, net of amounts capitalized
|
(83,211 | ) | (79,175 | ) | (80,154 | ) | ||||||
Other income (expense), net
|
7,593 | 3,285 | 2,191 | |||||||||
Total other income and (expense)
|
(75,618 | ) | (75,890 | ) | (77,963 | ) | ||||||
Earnings Before Income Taxes
|
237,251 | 215,185 | 206,280 | |||||||||
Income taxes
|
92,892 | 83,548 | 81,811 | |||||||||
Net Income
|
$ | 144,359 | $ | 131,637 | $ | 124,469 | ||||||
II-387
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
|
||||||||||||
Operating Activities:
|
||||||||||||
Net income
|
$ | 144,359 | $ | 131,637 | $ | 124,469 | ||||||
Adjustments to reconcile net income
to net cash provided from operating activities —
|
||||||||||||
Depreciation and amortization
|
102,783 | 89,221 | 82,365 | |||||||||
Deferred income taxes
|
70,338 | 31,665 | 33,150 | |||||||||
Deferred revenues
|
(704 | ) | (4,852 | ) | 2,248 | |||||||
Mark-to-market adjustments
|
(925 | ) | (3,033 | ) | (328 | ) | ||||||
Accumulated billings on construction contract
|
85,619 | 60,417 | 12,810 | |||||||||
Accumulated costs on construction contract
|
(110,096 | ) | (29,645 | ) | (7,198 | ) | ||||||
Loss on IGCC project
|
— | 17,619 | — | |||||||||
Gain on sale of property
|
(6,015 | ) | — | — | ||||||||
Other, net
|
4,852 | 7,874 | 2,484 | |||||||||
Changes in certain current assets and liabilities —
|
||||||||||||
Receivables
|
(11,156 | ) | (3,155 | ) | 38,479 | |||||||
Fossil fuel stock
|
(2,640 | ) | (4,105 | ) | (374 | ) | ||||||
Materials and supplies
|
2,773 | (1,169 | ) | (119 | ) | |||||||
Prepaid income taxes
|
(21,338 | ) | — | — | ||||||||
Other current assets
|
1,413 | (1,863 | ) | (3,003 | ) | |||||||
Accounts payable
|
10,451 | 23,028 | (34,163 | ) | ||||||||
Accrued taxes
|
(1,622 | ) | 1,474 | (8,522 | ) | |||||||
Accrued interest
|
(252 | ) | 319 | 687 | ||||||||
Other current liabilities
|
(3,575 | ) | — | — | ||||||||
Net cash provided from operating activities
|
264,265 | 315,432 | 242,985 | |||||||||
Investing Activities:
|
||||||||||||
Property additions
|
(49,964 | ) | (139,198 | ) | (55,813 | ) | ||||||
Acquisition of plant facilities
|
— | — | (409,213 | ) | ||||||||
Sale of property
|
5,073 | — | — | |||||||||
Sale of property to affiliates
|
— | 4,291 | 15,674 | |||||||||
Change in construction payables
|
(7,530 | ) | (1,960 | ) | 10,965 | |||||||
Payments pursuant to long-term service agreements
|
(31,725 | ) | (44,471 | ) | (35,678 | ) | ||||||
Other
|
(1,624 | ) | (2,514 | ) | — | |||||||
Net cash used for investing activities
|
(85,770 | ) | (183,852 | ) | (474,065 | ) | ||||||
Financing Activities:
|
||||||||||||
Increase (decrease) in notes payable, net
|
(49,748 | ) | (74,004 | ) | 13,060 | |||||||
Proceeds —
|
||||||||||||
Senior notes
|
— | — | 200,000 | |||||||||
Capital contributions
|
3,642 | 3,533 | 108,689 | |||||||||
Redemptions —
|
||||||||||||
Other long-term debt
|
— | (1,209 | ) | (200 | ) | |||||||
Payment of common stock dividends
|
(94,500 | ) | (89,800 | ) | (77,700 | ) | ||||||
Other
|
— | (24 | ) | (10,471 | ) | |||||||
Net cash provided from (used for) financing activities
|
(140,606 | ) | (161,504 | ) | 233,378 | |||||||
Net Change in Cash and Cash Equivalents
|
37,889 | (29,924 | ) | 2,298 | ||||||||
Cash and Cash Equivalents at Beginning of Year
|
5 | 29,929 | 27,631 | |||||||||
Cash and Cash Equivalents at End of Year
|
$ | 37,894 | $ | 5 | $ | 29,929 | ||||||
Supplemental Cash Flow Information:
|
||||||||||||
Cash paid during the period for —
|
||||||||||||
Interest (net of $7,075, $16,541 and $5,648 capitalized,
respectively)
|
$ | 69,716 | $ | 63,766 | $ | 65,206 | ||||||
Income taxes (net of refunds)
|
47,611 | 50,724 | 53,608 | |||||||||
II-388
Assets | 2008 | 2007 | ||||||
(in thousands) | ||||||||
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 37,894 | $ | 5 | ||||
Receivables —
|
||||||||
Customer accounts receivable
|
23,640 | 19,100 | ||||||
Other accounts receivable
|
2,162 | 1,025 | ||||||
Affiliated companies
|
33,401 | 27,004 | ||||||
Fossil fuel stock, at average cost
|
17,801 | 15,160 | ||||||
Materials and supplies, at average cost
|
26,527 | 19,284 | ||||||
Prepaid service agreements — current
|
26,304 | 14,233 | ||||||
Prepaid income taxes
|
18,066 | 135 | ||||||
Other prepaid expenses
|
2,755 | 2,705 | ||||||
Assets from risk management activities
|
10,799 | 16,079 | ||||||
Other
|
4,533 | 4,226 | ||||||
Total current assets
|
203,882 | 118,956 | ||||||
Property, Plant, and Equipment:
|
||||||||
In service
|
2,847,757 | 2,534,507 | ||||||
Less accumulated provision for depreciation
|
351,193 | 280,962 | ||||||
|
2,496,564 | 2,253,545 | ||||||
Construction work in progress
|
8,775 | 283,084 | ||||||
Total property, plant, and equipment
|
2,505,339 | 2,536,629 | ||||||
Deferred Charges and Other Assets:
|
||||||||
Prepaid long-term service agreements
|
81,542 | 87,058 | ||||||
Other—
|
||||||||
Affiliated
|
3,827 | 4,138 | ||||||
Other
|
18,550 | 21,993 | ||||||
Total deferred charges and other assets
|
103,919 | 113,189 | ||||||
Total Assets
|
$ | 2,813,140 | $ | 2,768,774 | ||||
II-389
Liabilities and Stockholder’s Equity | 2008 | 2007 | ||||||
(in thousands) | ||||||||
|
||||||||
Current Liabilities:
|
||||||||
Notes payable
|
$ | — | $ | 49,748 | ||||
Accounts payable —
|
||||||||
Affiliated
|
62,732 | 48,475 | ||||||
Other
|
11,278 | 20,322 | ||||||
Accrued taxes —
|
||||||||
Income taxes
|
88 | 392 | ||||||
Other
|
2,343 | 2,658 | ||||||
Accrued interest
|
29,916 | 30,168 | ||||||
Liabilities from risk management activities
|
7,452 | 12,639 | ||||||
Billings in excess of cost on construction contract
|
11,907 | 36,384 | ||||||
Other
|
224 | 9,523 | ||||||
Total current liabilities
|
125,940 | 210,309 | ||||||
Long-Term Debt:
|
||||||||
Senior notes —
|
||||||||
6.25% due 2012
|
575,000 | 575,000 | ||||||
4.875% due 2015
|
525,000 | 525,000 | ||||||
6.375% due 2036
|
200,000 | 200,000 | ||||||
Unamortized debt discount
|
(2,647 | ) | (2,901 | ) | ||||
Long-term debt
|
1,297,353 | 1,297,099 | ||||||
Deferred Credits and Other Liabilities:
|
||||||||
Accumulated deferred income taxes
|
209,960 | 138,123 | ||||||
Deferred capacity revenues — Affiliated
|
32,211 | 34,801 | ||||||
Other —
|
||||||||
Affiliated
|
6,667 | 7,754 | ||||||
Other
|
2,648 | 2,801 | ||||||
Total deferred credits and other liabilities
|
251,486 | 183,479 | ||||||
Total Liabilities
|
1,674,779 | 1,690,887 | ||||||
Common Stockholder’s Equity:
|
||||||||
Common stock, par value $0.01 per share —
|
||||||||
Authorized - 1,000,000 shares
|
||||||||
Outstanding - 1,000 shares
|
— | — | ||||||
Paid-in capital
|
862,109 | 858,466 | ||||||
Retained earnings
|
302,309 | 253,131 | ||||||
Accumulated other comprehensive income (loss)
|
(26,057 | ) | (33,710 | ) | ||||
Total common stockholder’s equity
|
1,138,361 | 1,077,887 | ||||||
Total Liabilities and Stockholder’s Equity
|
$ | 2,813,140 | $ | 2,768,774 | ||||
Commitments and Contingent Matters
(See notes)
|
||||||||
II-390
Accumulated | ||||||||||||||||||||
Common | Paid-In | Retained | Other Comprehensive | |||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
|
||||||||||||||||||||
Balance at December 31, 2005
|
$ | — | $ | 746,243 | $ | 164,525 | $ | (44,425 | ) | $ | 866,343 | |||||||||
Net income
|
— | — | 124,469 | — | 124,469 | |||||||||||||||
Capital contributions from
parent company
|
— | 108,689 | — | — | 108,689 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | 3,701 | 3,701 | |||||||||||||||
Cash dividends on common stock
|
— | — | (77,700 | ) | — | (77,700 | ) | |||||||||||||
Other
|
— | 1 | 1 | — | 2 | |||||||||||||||
Balance at December 31, 2006
|
— | 854,933 | 211,295 | (40,724 | ) | 1,025,504 | ||||||||||||||
Net income
|
— | — | 131,637 | — | 131,637 | |||||||||||||||
Capital contributions from
parent company
|
— | 3,533 | — | — | 3,533 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | 7,014 | 7,014 | |||||||||||||||
Cash dividends on common stock
|
— | — | (89,800 | ) | — | (89,800 | ) | |||||||||||||
Other
|
— | — | (1 | ) | — | (1 | ) | |||||||||||||
Balance at December 31, 2007
|
— | 858,466 | 253,131 | (33,710 | ) | 1,077,887 | ||||||||||||||
Net income
|
— | — | 144,359 | — | 144,359 | |||||||||||||||
Capital contributions from
parent company
|
— | 3,642 | — | — | 3,642 | |||||||||||||||
Other comprehensive income (loss)
|
— | — | — | 7,653 | 7,653 | |||||||||||||||
Cash dividends on common stock
|
— | — | (94,500 | ) | — | (94,500 | ) | |||||||||||||
Other
|
— | 1 | (681 | ) | — | (680 | ) | |||||||||||||
Balance at December 31, 2008
|
$ | — | $ | 862,109 | $ | 302,309 | $ | (26,057 | ) | $ | 1,138,361 | |||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Net income
|
$ | 144,359 | $ | 131,637 | $ | 124,469 | ||||||
Other comprehensive income (loss):
|
||||||||||||
Qualifying hedges:
|
||||||||||||
Changes in fair value, net of tax of $351, $(558),
and $(2,801), respectively
|
529 | (842 | ) | (4,263 | ) | |||||||
Reclassification adjustment for amounts included in net income,
net of tax of $4,554, $5,244, and $3,992, respectively
|
7,124 | 7,856 | 7,964 | |||||||||
Total other comprehensive income (loss)
|
7,653 | 7,014 | 3,701 | |||||||||
Comprehensive Income
|
$ | 152,012 | $ | 138,651 | $ | 128,170 | ||||||
II-391
II-392
II-393
II-394
Carrying Amount | Fair Value | |||||||
(in millions) | ||||||||
Long-term debt:
|
||||||||
2008
|
$ | 1,297 | $ | 1,270 | ||||
2007
|
1,297 | 1,298 | ||||||
II-395
For the Twelve Months Ended December 31, 2006 | ||||
(in thousands) | ||||
Pro forma revenues
|
$ | 795,701 | ||
Pro forma net income
|
118,703 | |||
II-396
II-397
II-398
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Federal —
|
||||||||||||
Current
|
$ | 18,948 | $ | 42,841 | $ | 39,653 | ||||||
Deferred
|
57,194 | 26,808 | 26,915 | |||||||||
|
76,142 | 69,649 | 66,568 | |||||||||
State —
|
||||||||||||
Current
|
3,605 | 9,042 | 9,008 | |||||||||
Deferred
|
13,145 | 4,857 | 6,235 | |||||||||
|
16,750 | 13,899 | 15,243 | |||||||||
Total
|
$ | 92,892 | $ | 83,548 | $ | 81,811 | ||||||
2008 | 2007 | |||||||
(in thousands) | ||||||||
Deferred tax liabilities—
Accelerated depreciation and other property basis differences
|
$ | 274,098 | $ | 209,036 | ||||
Book/tax basis difference on asset transfers
|
4,312 | 4,564 | ||||||
Other
|
2,493 | — | ||||||
Total
|
280,903 | 213,600 | ||||||
Deferred tax assets—
Federal effect of state deferred taxes
|
12,910 | 8,459 | ||||||
Book/tax basis differences on asset transfers
|
7,962 | 9,027 | ||||||
Other comprehensive loss on interest rate swaps
|
32,386 | 33,966 | ||||||
Levelized capacity revenues
|
14,279 | 14,166 | ||||||
Other
|
— | 9,859 | ||||||
Total
|
67,537 | 75,477 | ||||||
Total deferred tax liabilities, net
|
213,366 | 138,123 | ||||||
Portion included in prepaid income taxes
|
(3,406 | ) | — | |||||
Accumulated deferred income taxes in the balance sheets
|
$ | 209,960 | $ | 138,123 | ||||
II-399
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income tax, net of federal deduction
|
4.6 | 4.2 | 4.8 | |||||||||
Other
|
(0.4 | ) | (0.4 | ) | (0.1 | ) | ||||||
Effective income tax rate
|
39.2 | % | 38.8 | % | 39.7 | % | ||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Unrecognized tax benefits at beginning of year
|
$ | 1.4 | $ | 0.2 | ||||
Tax positions from current periods
|
0.3 | 0.4 | ||||||
Tax positions from prior periods
|
0.1 | 0.8 | ||||||
Reductions due to settlements
|
(1.3 | ) | — | |||||
Reductions due to expired statute of limitations
|
— | — | ||||||
Balance at end of year
|
$ | 0.5 | $ | 1.4 | ||||
2008 | 2007 | Change | ||||||||||
(in millions) | ||||||||||||
Tax positions impacting the effective tax rate
|
$ | 0.5 | $ | 1.4 | $ | 0.9 | ||||||
Tax positions not impacting the effective tax rate
|
— | — | — | |||||||||
Balance of unrecognized tax benefits
|
$ | 0.5 | $ | 1.4 | $ | 0.9 | ||||||
II-400
2008 | 2007 | |||||||
(in millions) | ||||||||
Interest accrued at beginning of year
|
$ | 0.1 | $ | — | ||||
Interest reclassified due to settlements
|
(0.1 | ) | — | |||||
Interest accrued during the year
|
— | 0.1 | ||||||
Balance at end of year
|
$ | — | $ | 0.1 | ||||
II-401
2008 | 2007 | |||||||
(in thousands) | ||||||||
Cash flow hedges
|
$ | (768 | ) | $ | 78 | |||
Non-accounting hedges
|
4,187 | 3,293 | ||||||
Total fair value
|
$ | 3,419 | $ | 3,371 | ||||
II-402
Natural Gas | Purchased Power | |||||||
Commitments | Commitments (a) | |||||||
(in millions) | ||||||||
2009
|
$ | 40.6 | $ | 13.5 | ||||
2010
|
139.7 | 13.6 | ||||||
2011
|
129.3 | 7.8 | ||||||
2012
|
50.1 | 49.2 | ||||||
2013
|
50.9 | 50.4 | ||||||
2014 and beyond
|
316.2 | 346.9 | ||||||
Total
|
$ | 726.8 | $ | 481.4 | ||||
(a) | Represents contractual capacity payments. |
II-403
Operating Lease | ||||
Commitments | ||||
(in millions) | ||||
2009
|
$ | 0.4 | ||
2010
|
0.4 | |||
2011
|
0.4 | |||
2012
|
0.4 | |||
2013
|
0.4 | |||
2014 and beyond
|
22.3 | |||
Total
|
$ | 24.3 | ||
• | Level 1 consists of observable market data in an active market for identical assets or liabilities. | ||
• | Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable. | ||
• | Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company of what a market participant would use in pricing an asset or liability. If there is little available market data, then the Company’s own assumptions are the best available information. The need to use unobservable inputs would typically apply to long-term energy-related derivative contracts and generally results from the nature of the energy industry, as each participant forecasts its own power supply and demand and those of other participants, which directly impact the valuation of each unique contract. |
II-404
At December 31, 2008: | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in millions) | |||||||||||||||||
Assets:
|
|||||||||||||||||
Energy-related derivatives
|
$ | — | $ | 11.1 | $ | — | $ | 11.1 | |||||||||
Cash equivalents
|
37.9 | — | — | 37.9 | |||||||||||||
Total fair value
|
$ | 37.9 | $ | 11.1 | $ | — | $ | 49.0 | |||||||||
Liabilities:
|
|||||||||||||||||
Energy-related derivatives total fair value
|
$ | — | $ | 7.7 | $ | — | $ | 7.7 | |||||||||
Operating | Operating | Net | ||||||||||
Quarter Ended | Revenues | Income | Income | |||||||||
(in thousands) | ||||||||||||
March 2008
|
$ | 215,532 | $ | 52,661 | $ | 28,975 | ||||||
June 2008
|
316,584 | 79,732 | 35,420 | |||||||||
September 2008
|
515,871 | 118,592 | 59,562 | |||||||||
December 2008
|
265,554 | 61,884 | 20,402 | |||||||||
|
||||||||||||
March 2007
|
$ | 192,492 | $ | 74,517 | $ | 32,036 | ||||||
June 2007
|
244,018 | 84,840 | 39,854 | |||||||||
September 2007
|
347,751 | 107,208 | 51,438 | |||||||||
December 2007
|
187,753 | 24,510 | 8,309 |
II-405
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Operating Revenues (in thousands):
|
||||||||||||||||||||
Wholesale — non-affiliates
|
$ | 667,979 | $ | 416,648 | $ | 279,384 | $ | 223,058 | $ | 266,463 | ||||||||||
Wholesale — affiliates
|
638,266 | 547,229 | 491,762 | 556,664 | 425,065 | |||||||||||||||
Total revenues from sales of electricity
|
1,306,245 | 963,877 | 771,146 | 779,722 | 691,528 | |||||||||||||||
Other revenues
|
7,296 | 8,137 | 5,902 | 1,282 | 9,783 | |||||||||||||||
Total
|
$ | 1,313,541 | $ | 972,014 | $ | 777,048 | $ | 781,004 | $ | 701,311 | ||||||||||
Net Income (in thousands)
|
$ | 144,359 | $ | 131,637 | $ | 124,469 | $ | 114,791 | $ | 111,508 | ||||||||||
Cash Dividends
on Common Stock (in thousands)
|
$ | 94,500 | $ | 89,800 | $ | 77,700 | $ | 72,400 | $ | 207,000 | ||||||||||
Return on Average Common Equity (percent)
|
13.03 | 12.52 | 13.16 | 13.68 | 12.23 | |||||||||||||||
Total Assets (in thousands)
|
$ | 2,813,140 | $ | 2,768,774 | $ | 2,690,943 | $ | 2,302,976 | $ | 2,067,013 | ||||||||||
Gross Property Additions/Plant Acquisitions
(in thousands)
|
$ | 49,964 | $ | 139,198 | $ | 465,026 | $ | 241,103 | $ | 115,606 | ||||||||||
Capitalization (in thousands):
|
||||||||||||||||||||
Common stock equity
|
$ | 1,138,361 | $ | 1,077,887 | $ | 1,025,504 | $ | 866,343 | $ | 811,611 | ||||||||||
Long-term debt
|
1,297,353 | 1,297,099 | 1,296,845 | 1,099,520 | 1,099,435 | |||||||||||||||
Total (excluding amounts due within one year)
|
$ | 2,435,714 | $ | 2,374,986 | $ | 2,322,349 | $ | 1,965,863 | $ | 1,911,046 | ||||||||||
Capitalization Ratios (percent):
|
||||||||||||||||||||
Common stock equity
|
46.7 | 45.4 | 44.2 | 44.1 | 42.5 | |||||||||||||||
Long-term debt
|
53.3 | 54.6 | 55.8 | 55.9 | 57.5 | |||||||||||||||
Total (excluding amounts due within one year)
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Security Ratings:
|
||||||||||||||||||||
Unsecured Long-Term Debt —
|
||||||||||||||||||||
Moody’s
|
Baa1 | Baa1 | Baa1 | Baa1 | Baa1 | |||||||||||||||
Standard and Poor’s
|
BBB+ | BBB+ | BBB+ | BBB+ | BBB+ | |||||||||||||||
Fitch
|
BBB+ | BBB+ | BBB+ | BBB+ | BBB+ | |||||||||||||||
Kilowatt-Hour Sales (in thousands):
|
||||||||||||||||||||
Sales for resale — non-affiliates
|
7,573,713 | 6,985,592 | 5,093,527 | 3,932,638 | 5,369,261 | |||||||||||||||
Sales for resale — affiliates
|
9,402,020 | 10,766,003 | 8,493,441 | 6,355,249 | 6,583,017 | |||||||||||||||
Total
|
16,975,733 | 17,751,595 | 13,586,968 | 10,287,887 | 11,952,278 | |||||||||||||||
Average Revenue Per Kilowatt-Hour (cents)
|
7.69 | 5.43 | 5.68 | 7.58 | 5.79 | |||||||||||||||
Plant Nameplate Capacity Ratings (year-end)
(megawatts)
|
7,555 | 6,896 | 6,733 | 5,403 | 4,775 | |||||||||||||||
Maximum Peak-Hour Demand (megawatts):
|
||||||||||||||||||||
Winter
|
3,042 | 2,815 | 2,780 | 2,037 | 2,098 | |||||||||||||||
Summer
|
3,538 | 3,717 | 2,869 | 2,420 | 2,740 | |||||||||||||||
Annual Load Factor (percent)
|
50.0 | 48.2 | 53.6 | 48.9 | 54.4 | |||||||||||||||
Plant Availability (percent)
|
96.0 | 96.7 | 98.3 | 97.6 | 97.9 | |||||||||||||||
Source of Energy Supply (percent):
|
||||||||||||||||||||
Gas
|
75.6 | 70.4 | 68.3 | 72.6 | 61.9 | |||||||||||||||
Purchased power —
|
||||||||||||||||||||
From non-affiliates
|
11.3 | 8.8 | 9.6 | 9.6 | 24.7 | |||||||||||||||
From affiliates
|
13.1 | 20.8 | 22.1 | 17.8 | 13.4 | |||||||||||||||
Total
|
100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
|
II-406
Susan N. Story
|
Fred C. Donovan, Sr. (1) | |
President and Chief Executive Officer
|
Age 68 | |
Age 48
|
Served as Director since 1991 | |
Served as Director since 2003
|
||
|
||
C. LeDon Anchors
(1)
|
William A. Pullum (1) | |
Age 68
|
Age 61 | |
Served as Director since 2001
|
Served as Director since 2001 | |
|
||
William C. Cramer, Jr.
(1)
|
Winston E. Scott (1) | |
Age 56
|
Age 58 | |
Served as Director since 2002
|
Served as Director since 2003 |
(1) | No position other than director. |
III-1
Susan N. Story
|
Theodore J. McCullough | |
President and Chief Executive Officer
|
Vice President — Senior Production Officer | |
Age 48
|
Age 45 | |
Served as Executive Officer since 2003
|
Served as Executive Officer since 2007 | |
|
||
P. Bernard Jacob
|
Bentina C. Terry | |
Vice President — Customer Operations
|
Vice President — External Affairs and Corporate Services | |
Age 54
|
Age 38 | |
Served as Executive Officer since 2003
|
Served as Executive Officer since 2007 | |
|
||
Philip C. Raymond
|
||
Vice President and Chief Financial Officer
|
||
Age 49
|
||
Served as Executive Officer since 2008
|
III-2
III-3
• | Southern Company’s actual earnings per share (EPS) and Gulf Power’s business unit performance, which includes return on equity (ROE), compared to target performance levels established early in the year, determine the ultimate annual incentive payouts. | |
• | Southern Company common stock (Common Stock) price changes result in higher or lower ultimate values of stock options. | |
• | Southern Company’s dividend payout and total shareholder return compared to those of its industry peers lead to higher or lower payouts under the Performance Dividend Program (performance dividends). |
III-4
Intended Role and What the Element | ||||
Pay Element | Rewards | Why We Use the Element | ||
Base Salary
|
Base salary is pay for competence in the executive role, with a focus on scope of responsibilities. |
Market practice.
Provides a threshold level of cash compensation for job performance. |
||
|
||||
Annual Incentive
|
Gulf Power’s annual incentive program rewards achievement of operational, EPS, and business unit financial goals. |
Market practice.
Focuses attention on achievement of short-term goals that ultimately work to fulfill our mission to customers and lead to increased stockholder value in the long-term. |
||
|
||||
Long-Term
Incentive: Stock Options
|
Stock options reward price increases in Common Stock over the market price on the date of grant, over a 10-year term. |
Performance-based compensation.
Aligns executives’ interests with those of Southern Company’s stockholders. |
||
|
||||
|
Market practice. | |||
|
||||
Long-Term
Incentive:
Performance
Dividends
|
Performance dividends provide cash compensation dependent on the number of stock options held at year end, Southern Company’s declared dividends on the Common Stock during the year, and Southern Company’s four-year total shareholder return versus industry peers. |
Performance-based compensation.
Enhances the value of stock options and focuses executives on maintaining a significant dividend yield for Southern Company’s stockholders. Aligns executives’ interests with Southern Company’s stockholders’ interests since payouts are dependent on performance, defined as Common Stock performance vs. industry peers. Market practice. |
||
|
||||
Southern Excellence
Awards
|
An employee may receive
discretionary cash or non-cash
awards based on extraordinary
performance.
Awards are not tied to pre-established goals. |
Provides a means of rewarding, on a current basis, extraordinary performance. | ||
|
||||
Relocation Incentive
|
Lump sum payment of 10% of base salary provides incentive to geographically relocate. | Enhances the value of the relocation program perquisite. | ||
III-5
Intended Role and What the Element | ||||
Pay Element | Rewards | Why We Use the Element | ||
Retirement Benefits
|
The Southern Company
Deferred Compensation Plan
(Deferred Compensation Plan)
provides the opportunity to defer
to future years all or part of
base salary and annual incentive
in either a prime interest rate
account or Common Stock account.
Executives participate in employee benefit plans available to all employees of Gulf Power, including a 401(k) savings plan and the funded Southern Company Pension Plan (Pension Plan). The Supplemental Benefit Plan counts pay, including deferred salary, ineligible to be counted under the Pension Plan and the 401(k) plan due to Internal Revenue Service rules. The Supplemental Executive Retirement Plan counts short-term incentive pay above 15% of base salary for pension purposes. |
Permitting compensation
deferral is a cost-effective method
of providing additional cash flow to
Gulf Power while enhancing the
retirement savings of executives.
The purpose of these supplemental plans is to eliminate the effect of tax limitations on the payment of retirement benefits. Represents an important component of competitive market-based compensation in Southern Company’s peer group and generally. |
||
|
||||
Perquisites and
Other Personal
Benefits
|
Personal financial planning
maximizes the perceived value of
our executive compensation
program to executives and allows
executives to focus on Gulf
Power’s operations.
Home security systems lower the risk of harm to executives. Club memberships are provided primarily for business use. Relocation benefits cover the costs associated with geographic relocation at the request of the employer. |
Perquisites benefit both Gulf Power and executives, at low cost to Gulf Power. | ||
|
||||
Post-Termination Pay
|
Change-in-control plans provide severance pay, accelerated vesting, and payment of short- and long-term incentive awards upon a change-in-control of Gulf Power or Southern Company coupled with involuntary termination not for “Cause” or a voluntary termination for “Good Reason.” |
Providing protections to
senior executives upon a
change-in-control minimizes
disruption during a pending or
anticipated change-in-control.
Payment and vesting occur only in the event of both an actual change-in-control and loss of the executive’s position. |
||
III-6
|
||||
AGL Resources Inc.
|
Energy East Corporation | Pinnacle West Capital Corporation | ||
Allegheny Energy Corporation
|
Entergy Corporation | PPL Corporation | ||
Alliant Energy Corporation
|
Exelon Corporation | Progress Energy, Inc. | ||
Ameren Corporation
|
FirstEnegy Corp. | Public Service Enterprise Group Inc. | ||
American Electric Power Company, Inc.
|
FPL Group, Inc. | Puget Energy Inc. | ||
Atmos Energy Corporation
|
Integrys Energy Company, Inc. | Reliant Energy, Inc. | ||
Calpine Corporation
|
MDU Resources, Inc. | Salt River Project | ||
CenterPoint Energy, Inc
|
Mirant Corporation | SCANA Corporation | ||
CMS Energy Corporation
|
New York Power Authority | Sempra Energy | ||
Consolidated Edison, Inc.
|
Nicor, Inc. | Sierra Pacific Resources | ||
Constellation Energy Group, Inc.
|
Northeast Utilities | Southern Union Company | ||
Dominion Resources Inc.
|
NRG Energy, Inc. | Tennessee Valley Authority | ||
Duke Energy Corporation
|
NSTAR | The Williams Companies, Inc. | ||
Dynegy Inc.
|
OGE Energy Corp. | Wisconsin Energy Corporation | ||
Edison International
|
Pepco Holdings, Inc. | Xcel Energy Inc. | ||
|
||||
III-7
Total Target | ||||||||||||||||
Long-Term | Compensation | |||||||||||||||
Name | Salary | Annual Incentive | Incentive | Opportunity | ||||||||||||
S. N. Story
|
$ | 396,084 | $ | 237,650 | $ | 348,550 | $ | 982,284 | ||||||||
R. R. Labrato
|
$ | 262,500 | $ | 118,126 | $ | 129,933 | $ | 510,559 | ||||||||
P. C. Raymond
|
$ | 228,433 | $ | 99,825 | $ | 72,109 | $ | 400,367 | ||||||||
P. B. Jacob
|
$ | 230,346 | $ | 103,656 | $ | 110,694 | $ | 444,696 | ||||||||
T. J. McCullough
|
$ | 182,973 | $ | 73,189 | $ | 70,439 | $ | 326,601 | ||||||||
B. C. Terry
|
$ | 228,433 | $ | 102,795 | $ | 103,732 | $ | 434,960 |
III-8
• | Continued industry-leading reliability and customer satisfaction, while maintaining our low retail prices relative to the national average; and | ||
• | Meeting energy demand with the best economic and environmental choices. |
• | Southern Company EPS Growth; | ||
• | Gulf Power ROE in the top quartile of comparable electric utilities; |
III-9
• | Common Stock dividend growth; | ||
• | Long-term, risk-adjusted Southern Company total shareholder return; and | ||
• | Financial Integrity — an attractive risk-adjusted return, sound financial policy, and a stable “A” credit rating. |
• | Operational goals for 2008 were safety, customer service, plant availability, transmission and distribution system reliability, inclusion, and, for Southern Company Generation, net income. Each of these operational goals is explained in more detail under “Goal Details” below. The result of all operational goals is averaged and multiplied by the bonus impact of the EPS and business unit financial goals. The amount for each goal can range from 0.90 to 1.10 or can be 0.00 if a threshold performance level is not achieved as more fully described below. The level of achievement for each operational goal is determined and the results are averaged. | ||
• | Southern Company EPS is weighted at 50% of the financial goals. EPS is defined as earnings from continuing operations divided by average shares outstanding during the year. The EPS performance measure is applicable to all participants in the Performance Pay Program, including the named executive officers. |
III-10
• | Business unit financial performance is weighted at 50% of the financial goals. Gulf Power’s financial performance goal is ROE, which is defined as Gulf Power’s net income divided by average equity for the year. For Southern Company Generation, it is calculated using a corporate-wide weighted average of all the business unit financial performance goals, including primarily the ROE of Gulf Power and affiliated companies, Alabama Power, Georgia Power, and Mississippi Power. For Mr. McCullough, the business unit financial goal was weighted 30% Gulf Power ROE and 20% Southern Company Generation financial goal. The business unit financial goal for corporate-level employees of SCS was the Southern Company corporate-wide weighted average of all the business unit financial goals. Because Messrs. Labrato and Raymond were employed during 2008, by Gulf Power and SCS, and Alabama Power and Gulf Power, respectively, the business unit financial goals were pro-rated based upon the period of time spent with each employing company. |
III-11
Availability - | Safety - | |||||||||
Gulf Power/ | Gulf Power/ | |||||||||
Southern | Southern | |||||||||
Company | Company | |||||||||
Level of | Customer | Generation/ | Generation/ | |||||||
Performance | Service | Reliability | Alabama Power % | Alabama Power | Inclusion | |||||
Maximum (1.10)
|
Top quartile for each
customer segment |
Improve historical
performance |
2.25/2.00/2.00 | 0.95/0.20/0.95 |
Significant
improvement |
|||||
|
||||||||||
Target (1.00)
|
Top quartile |
Maintain historical
performance |
3.00/2.75/2.75 | 1.25/0.50/1.25 | Improve | |||||
|
||||||||||
Threshold (0.90)
|
3 rd quartile |
Below historical
performance |
4.00/3.75/3.75 | 1.50/0.80/1.50 | Below expectations | |||||
|
||||||||||
0 Trigger
|
4 th quartile | Significant issues | 9.00/6.00/6.00 | >1.50/>0.80/>1.50 | Significant issues |
Payout Factor | Payout Below | |||||||||||||||||||
at Highest | Threshold for | |||||||||||||||||||
Business unit | Level of | Operational | ||||||||||||||||||
Level of | financial | Payout | Operational | Goal | ||||||||||||||||
Performance | EPS | performance ROE | Factor | Goal Achievement | Achievement | |||||||||||||||
Maximum
|
$ | 2.45 | 14.25 | % | 2.00 | 2.20 | 0.00 | |||||||||||||
Target
|
$ | 2.32 | 13.25 | % | 1.00 | 1.10 | 0.00 | |||||||||||||
Threshold
|
$ | 2.24 | 11.00 | % | 0.50 | 0.275 | 0.00 | |||||||||||||
Below threshold
|
<$ | 2.24 | <11.00 | % | 0.00 | 0.00 | 0.00 |
III-12
Business | ||||||||||||||||||||||||||||
Unit | Total | |||||||||||||||||||||||||||
Financial | Weighted | |||||||||||||||||||||||||||
Operational | EPS Goal | Business | Performance | Financial | Total | |||||||||||||||||||||||
Goal | Performance | Unit | Factor | Performance | Payout | |||||||||||||||||||||||
Business | Multiplier | Factor (50% | Financial | (50% | Factor | Factor | ||||||||||||||||||||||
Unit | (A) | EPS | Weight) | Performance | Weight) | (B) | (AxB) | |||||||||||||||||||||
Gulf Power
|
1.02 | $ | 2.37 | 1.54 | 12.66 | % | 0.87 | 1.20 | 1.23 | |||||||||||||||||||
|
||||||||||||||||||||||||||||
Southern Company
|
Corporate | |||||||||||||||||||||||||||
Generation
|
1.09 | $ | 2.37 | 1.54 | Average | 1.24 | 1.39 | 1.51 | ||||||||||||||||||||
|
||||||||||||||||||||||||||||
Alabama Power
|
1.07 | $ | 2.37 | 1.54 | 13.30% ROE | 1.05 | 1.29 | 1.39 | ||||||||||||||||||||
|
||||||||||||||||||||||||||||
|
Corporate | |||||||||||||||||||||||||||
SCS
|
1.07 | $ | 2.37 | 1.54 | Average | 1.24 | 1.39 | 1.49 |
Name | Target Annual Incentive Opportunity ($) | Actual Annual Incentive Payout ($) | ||||||
S. N. Story
|
237,650 | 292,310 | ||||||
R. R. Labrato
|
118,126 | 168,021 | ||||||
P. C. Raymond
|
99,825 | 126,586 | ||||||
P. B. Jacob
|
103,656 | 127,496 | ||||||
T. J. McCullough
|
73,189 | 98,073 | ||||||
B. C. Terry
|
102,795 | 126,438 |
III-13
Number of Stock | ||||||||||||||||||||
Options Granted | ||||||||||||||||||||
(Guideline | ||||||||||||||||||||
Amount/Average | ||||||||||||||||||||
Guideline | Average Daily | Daily Stock | ||||||||||||||||||
Name | Guideline % | Salary | Amount | Stock Price | Price) | |||||||||||||||
S. N. Story
|
400% of Salary | $ | 396,084 | $ | 1,584,336 | $ | 36.50 | 43,406 | ||||||||||||
R. R. Labrato
|
225% of Salary | $ | 262,500 | $ | 590,625 | $ | 36.50 | 16,181 | ||||||||||||
P. C. Raymond
|
175% of Salary | $ | 187,297 | $ | 327,770 | $ | 36.50 | 8,980 | ||||||||||||
P. B. Jacob
|
225% of Salary | $ | 223,623 | $ | 503,152 | $ | 36.50 | 13,785 | ||||||||||||
T. J. McCullough
|
175% of Salary | $ | 182,973 | $ | 320,203 | $ | 36.50 | 8,772 | ||||||||||||
B. C. Terry
|
225% of Salary | $ | 209,557 | $ | 471,503 | $ | 36.50 | 12,918 |
III-14
|
||||
Allegheny Energy, Inc.
|
Exelon Corporation | Progress Energy, Inc. | ||
Alliant Energy Corporation
|
FirstEnergy Corporation | Public Service Enterprise Group Inc. | ||
Ameren Corporation
|
FPL Group, Inc. | Puget Energy, Inc. | ||
American Electric Power Company, Inc.
|
NiSource Inc. | SCANA Corporation | ||
Consolidated Edison, Inc.
|
NSTAR | Sempra Energy | ||
DTE Energy Company
|
OGE Energy Corp. | Sierra Pacific Resources | ||
Energy East Corporation
|
Pepco Holdings, Inc. | Wisconsin Energy Corporation | ||
Entergy Corporation
|
Pinnacle West Capital Corp. | Xcel Energy Inc. | ||
|
||||
Performance vs. Peer Group | Payout (% of Each Quarterly Dividend Paid) | |||
90
th
percentile or higher
|
100 | % | ||
50
th
percentile
|
50 | % | ||
10
th
percentile or lower
|
0 | % |
III-15
|
||||
Allegheny Energy, Inc.
|
Edison International | Progress Energy, Inc. | ||
Alliant Energy Corporation
Ameren Corporation |
Energy East Corporation
Entergy Corporation |
Public Service Enterprise
Group Inc.
Puget Energy, Inc. |
||
American Electric Power
Company, Inc.
|
Exelon Corporation | SCANA Corporation | ||
Aquila, Inc.
|
FPL Group, Inc. | Sierra Pacific Resources | ||
Avista Corporation
|
Hawaiian Electric Industries, Inc. | TECO Energy, Inc. | ||
CMS Energy Corporation
|
NiSource Inc. | UIL Holdings Corporation | ||
Consolidated Edison, Inc.
|
Northeast Utilities | Unisource Energy Corporation | ||
Dominion Resources Inc.
|
NSTAR | Vectren Corporation | ||
DPL Inc.
|
Pepco Holdings, Inc. | Westar Energy, Inc. | ||
DTE Energy Company
|
PG&E Corporation | Wisconsin Energy Corporation | ||
Duke Energy Corporation
|
Pinnacle West Capital Corp. | Xcel Energy Inc. | ||
|
||||
Performance vs. Peer Group | Payout (% of Each Quarterly Dividend Paid) | |||
90
th
percentile or higher
|
100 | % | ||
50
th
percentile
|
50 | % | ||
10
th
percentile or lower
|
0 | % |
III-16
III-17
Multiple of Salary Without | Multiple of Salary Counting | |||
Name | Counting Stock Options | 1/3 of Vested Options | ||
S. N. Story
|
3 Times | 6 Times | ||
R. R. Labrato
|
2 Times | 4 Times | ||
P. C. Raymond
|
2 Times | 4 Times | ||
P. B. Jacob
|
2 Times | 4 Times | ||
T. J. McCullough
|
1 Time | 2 Times | ||
B. C. Terry
|
2 Times | 4 Times |
III-18
Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||||||
Nonquali- | ||||||||||||||||||||||||||||||||||||
Non- | fied | |||||||||||||||||||||||||||||||||||
Equity | Deferred | All | ||||||||||||||||||||||||||||||||||
Incentive | Compensa | Other | ||||||||||||||||||||||||||||||||||
Stock | Option | Plan | -tion | Compen | ||||||||||||||||||||||||||||||||
Name and | Salary | Bonus | Awards | Awards | Compensation | Earnings | -sation | Total | ||||||||||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Susan N. Story
|
2008 | 390,602 | 0 | 0 | 170,536 | 509,067 | 128,423 | 39,109 | 1,237,737 | |||||||||||||||||||||||||||
President, Chief
|
2007 | 366,578 | 0 | 0 | 164,686 | 404,421 | 231,120 | 37,196 | 1,204,001 | |||||||||||||||||||||||||||
Executive Officer,
|
2006 | 349,187 | 0 | 0 | 144,347 | 383,590 | 65,344 | 29,330 | 971,798 | |||||||||||||||||||||||||||
and Director
|
||||||||||||||||||||||||||||||||||||
Ronnie R. Labrato*
|
2008 | 256,390 | 250 | 0 | 38,349 | 268,859 | 147,939 | 198,700 | 910,487 | |||||||||||||||||||||||||||
Vice President and
|
2007 | 231,132 | 0 | 0 | 63,580 | 189,469 | 166,084 | 25,849 | 676,114 | |||||||||||||||||||||||||||
Chief Financial Officer
|
2006 | 219,732 | 7,500 | 0 | 60,598 | 182,948 | 71,618 | 25,945 | 568,341 | |||||||||||||||||||||||||||
Philip C. Raymond**
|
2008 | 215,880 | 23,731 | 0 | 38,676 | 181,206 | 48,120 | 44,446 | 552,059 | |||||||||||||||||||||||||||
Vice President and
Chief Financial
Officer
|
||||||||||||||||||||||||||||||||||||
P. Bernard Jacob
|
2008 | 227,419 | 0 | 0 | 32,670 | 181,151 | 103,293 | 22,219 | 566,752 | |||||||||||||||||||||||||||
Vice President
|
2007 | 213,374 | 0 | 0 | 57,371 | 152,730 | 125,674 | 22,726 | 571,875 | |||||||||||||||||||||||||||
|
2006 | 199,142 | 0 | 0 | 54,938 | 156,439 | 53,935 | 18,699 | 483,153 | |||||||||||||||||||||||||||
Theodore J. McCullough***
|
2008 | 180,717 | 0 | 0 | 21,540 | 139,937 | 30,798 | 78,720 | 451,712 | |||||||||||||||||||||||||||
Vice President
|
2007 | 154,087 | 17,000 | 0 | 21,345 | 107,045 | 30,674 | 29,962 | 360,113 | |||||||||||||||||||||||||||
Bentina C. Terry
***
|
2008 | 222,172 | 5,150 | 0 | 35,751 | 166,985 | 13,845 | 26,250 | 470,153 | |||||||||||||||||||||||||||
Vice President
|
2007 | 193,869 | 18,232 | 0 | 36,417 | 140,268 | 13,802 | 64,210 | 466,798 |
* | Mr. Labrato transferred to SCS to become the Vice President of Internal Auditing effective April 1, 2008. |
III-19
** | Mr. Raymond transferred from Alabama Power to become Vice President and Chief Financial Officer of Gulf Power effective April 1, 2008. | |
*** | Ms. Terry and Mr. McCullough became executive officers of Gulf Power in March 2007 and August 2007, respectively. |
Amount Expensed in 2008 ($) | ||||||||||||||||
Grant Date | S. N. Story | P. C. Raymond | T. J. McCullough | B. C. Terry | ||||||||||||
2005
|
6,718 | 1,650 | 953 | 1,678 | ||||||||||||
2006
|
57,192 | 12,292 | 7,070 | 12,322 | ||||||||||||
2007
|
60,809 | 14,025 | 7,490 | 12,876 | ||||||||||||
2008
|
45,817 | 10,709 | 6,027 | 8,875 | ||||||||||||
|
||||||||||||||||
TOTAL
|
170,536 | 38,676 | 21,540 | 35,751 |
Name | Annual Incentive ($) | Performance Dividends ($) | Total ($) | |||||||||
S. N. Story
|
292,310 | 216,757 | 509,067 | |||||||||
R. R. Labrato
|
168,021 | 100,838 | 268,859 | |||||||||
P. C. Raymond
|
126,586 | 54,620 | 181,206 | |||||||||
P. B. Jacob
|
127,496 | 53,655 | 181,151 | |||||||||
T. J. McCullough
|
98,073 | 41,864 | 139,937 | |||||||||
B. C. Terry
|
126,438 | 40,547 | 166,985 |
III-20
§ | Discount rate was increased to 6.75% as of December 31, 2008 from 6.3% as of September 30, 2007. | |
§ | 15-month measurement period, as described above. |
III-21
Change in | Above-Market | |||||||||||||||
Pension | Earnings on Deferred | |||||||||||||||
Value | Compensation | Total | ||||||||||||||
Name | Year | ($) | ($) | ($) | ||||||||||||
S. N. Story
|
2008 | 128,423 | 0 | 128,423 | ||||||||||||
|
2007 | 221,213 | 9,907 | 231,120 | ||||||||||||
|
2006 | 56,406 | 8,938 | 65,344 | ||||||||||||
R. R. Labrato
|
2008 | 147,939 | 0 | 147,939 | ||||||||||||
|
2007 | 165,758 | 326 | 166,084 | ||||||||||||
|
2006 | 71,618 | 0 | 71,618 | ||||||||||||
P. C. Raymond
|
2008 | 48,120 | 0 | 48,120 | ||||||||||||
P.B. Jacob
|
2008 | 103,293 | 0 | 103,293 | ||||||||||||
|
2007 | 125,316 | 358 | 125,674 | ||||||||||||
|
2006 | 53,721 | 214 | 53,935 | ||||||||||||
T. J. McCullough
|
2008 | 30,798 | 0 | 30,798 | ||||||||||||
|
2007 | 30,607 | 67 | 30,674 | ||||||||||||
B. C. Terry
|
2008 | 13,845 | 0 | 13,845 | ||||||||||||
|
2007 | 13,729 | 73 | 13,802 |
Tax | ||||||||||||||||||||
Perquisites | Reimbursements | ESP | SBP | Total | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
S. N. Story
|
13,225 | 5,963 | 11,730 | 8,191 | 39,109 | |||||||||||||||
R. R. Labrato
|
120,364 | 65,651 | 11,339 | 1,346 | 198,700 | |||||||||||||||
P. C. Raymond
|
30,014 | 3,422 | 11,010 | 0 | 44,446 | |||||||||||||||
P. B. Jacob
|
9,339 | 2,969 | 9,911 | 0 | 22,219 | |||||||||||||||
T. J. McCullough
|
62,074 | 7,430 | 9,216 | 0 | 78,720 | |||||||||||||||
B. C. Terry
|
9,993 | 6,327 | 9,930 | 0 | 26,250 |
III-22
Grant | ||||||||||||||||||||||||||||||||||||
Closing | Date | |||||||||||||||||||||||||||||||||||
All Other | Price | Fair | ||||||||||||||||||||||||||||||||||
Option | on Last | Value | ||||||||||||||||||||||||||||||||||
Awards: | Exercise | Trading | of | |||||||||||||||||||||||||||||||||
Number of | or Base | Date | Stock | |||||||||||||||||||||||||||||||||
Estimated Possible Payouts Under Non-Equity | Securities | Price of | Prior to | and | ||||||||||||||||||||||||||||||||
Incentive Plan Awards | Underlying | Option | Grant | Option | ||||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Options | Awards | Date | Awards | |||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | ($/Sh) | ($/Sh) | ($) | ||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||
S. N. Story
|
2/18/2008 | PPP | 106,943 | 237,650 | 522,831 | 43,406 | 35.78 | 35.78 | 102,872 | |||||||||||||||||||||||||||
|
PDP | 13,860 | 138,599 | 277,199 | ||||||||||||||||||||||||||||||||
R. R. Labrato
|
2/18/2008 | PPP | 53,156 | 118,125 | 259,875 | 16,181 | 35.78 | 35.78 | 38,349 | |||||||||||||||||||||||||||
|
PDP | 6,448 | 64,478 | 128,957 | ||||||||||||||||||||||||||||||||
P. C. Raymond
|
2/18/2008 | PPP | 44,921 | 99,825 | 219,615 | 8,980 | 35.78 | 35.78 | 21,283 | |||||||||||||||||||||||||||
|
PDP | 3,492 | 34,925 | 69,850 | ||||||||||||||||||||||||||||||||
P. B. Jacob
|
2/18/2008 | PPP | 46,645 | 103,656 | 228,043 | 13,785 | 35.78 | 35.78 | 32,670 | |||||||||||||||||||||||||||
|
PDP | 3,431 | 34,308 | 68,616 | ||||||||||||||||||||||||||||||||
T. J. McCullough
|
2/18/2008 | PPP | 32,935 | 73,189 | 161,016 | 8,772 | 35.78 | 35.78 | 20,790 | |||||||||||||||||||||||||||
|
PDP | 2,677 | 26,769 | 53,537 | ||||||||||||||||||||||||||||||||
B. C. Terry
|
2/18/2008 | PPP | 46,258 | 102,795 | 226,149 | 12,918 | 35.78 | 35.78 | 30,616 | |||||||||||||||||||||||||||
|
PDP | 2,593 | 25,927 | 51,853 |
III-23
III-24
Stock | ||||||||||||||||
Options Held | Performance Dividend | Performance Dividend | ||||||||||||||
as of | Per Option | Performance Dividend | Per Option Paid at | |||||||||||||
December | Paid at Threshold | Per Option Paid at | Maximum | |||||||||||||
31, 2008 | Performance | Target Performance | Performance | |||||||||||||
Name | (#) | ($) | ($) | ($) | ||||||||||||
S. N. Story
|
166,736 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
R. R. Labrato
|
77,568 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
P. C. Raymond
|
42,015 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
P. B. Jacob
|
41,273 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
T. J. McCullough
|
32,203 | 0.083125 | 0.83125 | 1.6625 | ||||||||||||
B. C. Terry
|
31,190 | 0.083125 | 0.83125 | 1.6625 |
III-25
Stock Awards | ||||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||||||
Incentive | Plan | |||||||||||||||||||||||||||||||||||
Plan | Awards: | |||||||||||||||||||||||||||||||||||
Awards: | Market or | |||||||||||||||||||||||||||||||||||
Option Awards | Number | Number | Payout | |||||||||||||||||||||||||||||||||
Equity | of | of | Value of | |||||||||||||||||||||||||||||||||
Incentive Plan | Shares | Market | Unearned | Unearned | ||||||||||||||||||||||||||||||||
Number | Awards: | or Units | Value of | Shares, | Shares, | |||||||||||||||||||||||||||||||
of | Number of | Number of | of | Shares or | Units or | Units or | ||||||||||||||||||||||||||||||
Securities | Securities | Securities | Stock | Units of | Other | Other | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | That | Stock | Rights | Rights | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Have | That Have | That Have | That Have | |||||||||||||||||||||||||||||
Options | Options | Unearned | Exercise | Option | Not | Not | Not | Not | ||||||||||||||||||||||||||||
(#) | (#) | Options | Price | Expiration | Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
S. N. Story
|
38,529 | 0 | 0 | 32.70 | 02/18/2015 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
27,553 | 13,776 | 33.81 | 02/20/2016 | ||||||||||||||||||||||||||||||||
|
14,491 | 28,981 | 36.42 | 02/19/2017 | ||||||||||||||||||||||||||||||||
|
0 | 43,406 | 35.78 | 02/18/2018 | ||||||||||||||||||||||||||||||||
R. R. Labrato
|
15,646 | 0 | 0 | 29.50 | 02/13/2014 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
15,707 | 0 | 32.70 | 02/18/2015 | ||||||||||||||||||||||||||||||||
|
9,735 | 4,867 | 33.81 | 02/20/2016 | ||||||||||||||||||||||||||||||||
|
5,144 | 10,288 | 36.42 | 02/19/2017 | ||||||||||||||||||||||||||||||||
|
0 | 16,181 | 35.78 | 02/18/2018 | ||||||||||||||||||||||||||||||||
P. C. Raymond
|
1,230 | 0 | 0 | 27.975 | 02/14/2013 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
4,196 | 0 | 29.50 | 02/13/2014 | ||||||||||||||||||||||||||||||||
|
9,463 | 0 | 32.70 | 02/18/2015 | ||||||||||||||||||||||||||||||||
|
5,921 | 2,961 | 33.81 | 02/20/2016 | ||||||||||||||||||||||||||||||||
|
3,088 | 6,176 | 36.42 | 02/19/2017 | ||||||||||||||||||||||||||||||||
|
0 | 8,980 | 35.78 | 02/18/2018 | ||||||||||||||||||||||||||||||||
P. B. Jacob
|
4,738 | 0 | 0 | 32.70 | 02/18/2015 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
4,412 | 4,413 | 33.81 | 02/20/2016 | ||||||||||||||||||||||||||||||||
|
4,642 | 9,283 | 36.42 | 02/19/2017 | ||||||||||||||||||||||||||||||||
|
0 | 13,785 | 35.78 | 02/18/2018 | ||||||||||||||||||||||||||||||||
T. J. McCullough
|
1,985 | 0 | 0 | 27.975 | 02/14/2013 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
5,421 | 0 | 29.50 | 02/13/2014 | ||||||||||||||||||||||||||||||||
|
5,468 | 0 | 32.70 | 02/18/2015 | ||||||||||||||||||||||||||||||||
|
3,405 | 1,703 | 33.81 | 02/20/2016 | ||||||||||||||||||||||||||||||||
|
1,817 | 3,632 | 36.42 | 02/19/2017 | ||||||||||||||||||||||||||||||||
|
0 | 8,772 | 35.78 | 02/18/2018 | ||||||||||||||||||||||||||||||||
B. C. Terry
|
5,937 | 2,968 | 0 | 33.81 | 02/20/2016 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
|
3,123 | 6,244 | 36.42 | 02/19/2017 | ||||||||||||||||||||||||||||||||
|
0 | 12,918 | 35.78 | 02/18/2018 |
III-26
Year Option Granted | Expiration Date | Date Fully Vested | ||
2006
|
February 20, 2016 | February 20, 2009 | ||
2007 | February 19, 2017 | February 19, 2010 | ||
2008 | February 18, 2018 | February 18, 2011 |
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Number of Shares | |||||||||||||||
Acquired on | Value Realized on | Acquired on | Value Realized on | |||||||||||||
Name | Exercise (#) | Exercise ($) | Vesting (#) | Vesting ($) | ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
S. N. Story
|
37,837 | 218,149 | 0 | 0 | ||||||||||||
R. R. Labrato
|
11,530 | 138,648 | 0 | 0 | ||||||||||||
P. C. Raymond
|
0 | 0 | 0 | 0 | ||||||||||||
P. B. Jacob
|
0 | 0 | 0 | 0 | ||||||||||||
T. J. McCullough
|
3,596 | 45,400 | 0 | 0 | ||||||||||||
B. C. Terry
|
9,625 | 42,559 | 0 | 0 |
Payments | ||||||||||||||
Number of | Present Value of | During | ||||||||||||
Years Credited | Accumulated | Last Fiscal | ||||||||||||
Name | Plan Name | Service (#) | Benefit ($) | Year ($) | ||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||
S. N. Story
|
Pension Plan | 26.00 | 348,397 | 0 | ||||||||||
|
SBP-P | 26.00 | 589,275 | 0 | ||||||||||
|
SERP | 26.00 | 238,648 | 0 | ||||||||||
R. R. Labrato
|
Pension Plan | 28.75 | 579,765 | 0 | ||||||||||
|
SBP-P | 28.75 | 276,849 | 0 | ||||||||||
|
SERP | 28.75 | 183,696 | 0 | ||||||||||
P. C. Raymond
|
Pension Plan | 17.00 | 191,680 | 0 | ||||||||||
|
SBP-P | 17.00 | 60,181 | 0 | ||||||||||
|
SERP | 17.00 | 52,713 | 0 | ||||||||||
P. B. Jacob
|
Pension Plan | 25.42 | 448,190 | 0 | ||||||||||
|
SBP-P | 25.42 | 173,149 | 0 | ||||||||||
|
SERP | 25.42 | 131,237 | 0 | ||||||||||
T. J. McCullough
|
Pension Plan | 20.75 | 167,610 | 0 | ||||||||||
|
SBP-P | 20.75 | 31,768 | 0 | ||||||||||
|
SERP | 20.75 | 41,183 | 0 | ||||||||||
B. C. Terry
|
Pension Plan | 6.50 | 40,633 | 0 | ||||||||||
|
SBP-P | 6.50 | 10,863 | 0 | ||||||||||
|
SERP | 6.50 | 12,620 | 0 |
III-27
III-28
• | Discount rate — 6.75% as of December 31, 2008 | |
• | Retirement date — Normal retirement age (65 for all named executive officers) | |
• | Mortality after normal retirement — RP2000 Combined Healthy with generational projections | |
• | Mortality, withdrawal, disability and retirement rates prior to normal retirement — None | |
• | Form of payment for Pension Benefits |
o | Unmarried retirees: 100% elect a single life annuity | ||
o | Married retirees: 20% elect a single life annuity; 40% elect a joint and 50% survivor annuity; and 40% elect a joint and 100% survivor annuity |
• | Percent married at retirement — 80% of males and 70% of females | |
• | Spouse ages — Wives two years younger than their husbands | |
• | Incentives earned but unpaid as of the measurement date — 135% of target percentages times base rate of pay for year incentive is earned. | |
• | Installment determination—4.75% discount rate for single sum calculation and 6.75% prime rate during installment payment period |
III-29
Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions | Contributions | Earnings | Withdrawals/ | Balance | ||||||||||||||||
in Last FY | in Last FY | in Last FY | Distributions | at Last FYE | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
S. N. Story
|
0 | 8,191 | 56,719 | 0 | 1,561,209 | |||||||||||||||
R. R. Labrato
|
44,153 | 1,346 | 4,228 | 0 | 106,305 | |||||||||||||||
P. C. Raymond
|
0 | 0 | 0 | 0 | 497 | |||||||||||||||
P. B. Jacob
|
15,943 | 0 | 2,878 | 0 | 66,086 | |||||||||||||||
T. J. McCullough
|
9,137 | 0 | 849 | 0 | 45,410 | |||||||||||||||
B. C. Terry
|
62,044 | 0 | 2,408 | 0 | 66,196 |
III-30
Amounts Deferred under | ||||||||||||
the DCP Prior to 2008 | Employer Contributions | |||||||||||
and Reported in Prior | under the SBP Prior to | |||||||||||
Years’ Information | 2008 and Reported in Prior Years’ | |||||||||||
Statements or Annual | Information Statements or | |||||||||||
Reports on Form 10-K | Annual Reports on Form 10-K | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
S. N. Story
|
18,373 | 258,601 | 276,974 | |||||||||
R. R. Labrato
|
47,951 | 313 | 48,264 | |||||||||
P. C. Raymond
|
0 | 0 | 0 | |||||||||
P. B. Jacob
|
27,927 | 22,674 | 50,601 | |||||||||
T. J. McCullough
|
9,516 | 0 | 9,516 | |||||||||
B. C. Terry
|
59,383 | 0 | 59,383 |
III-31
• | Retirement or Retirement Eligible – Termination of a named executive officer who is at least 50 years old and has at least 10 years of credited service. | |
• | Resignation – Voluntary termination of a named executive officer who is not retirement eligible. | |
• | Lay Off – Involuntary termination of a named executive officer not for cause, who is not retirement eligible. | |
• | Involuntary Termination – Involuntary termination of a named executive officer for cause. Cause includes individual performance below minimum performance standards and misconduct, such as violation of Gulf Power’s Drug and Alcohol Policy. | |
• | Death or Disability – Termination of a named executive officer due to death or disability. |
• | Southern Company Change-in-Control I – Acquisition by another entity of 20% or more of Common Stock, or following a merger with another entity Southern Company’s stockholders own 65% or less of the entity surviving the merger. | |
• | Southern Company Change-in-Control II – Acquisition by another entity of 35% or more of Common Stock, or following a merger with another entity Gulf Power’s stockholders own less than 50% of Gulf Power surviving the merger. | |
• | Southern Company Termination – A merger or other event and Southern Company is not the surviving company or the Common Stock is no longer publicly traded. | |
• | Gulf Power Change-in-Control – Acquisition by another entity, other than another subsidiary of Southern Company, of 50% or more of the stock of Gulf Power, a merger with another entity and Gulf Power is not the surviving company, or the sale of substantially all the assets of Gulf Power. |
• | Involuntary Change-in-Control Termination or Voluntary Change-in-Control Termination for Good Reason – Employment is terminated within two years of a change-in-control, other than for cause, or the employee voluntarily terminates for Good Reason. Good Reason for voluntary termination within two years of a change-in-control is generally satisfied when there is a material reduction in salary, incentive compensation opportunity or benefits, relocation of over 50 miles, or a diminution in duties and responsibilities. |
III-32
Lay Off | ||||||||||
Retirement/ | (Involuntary | Involuntary | ||||||||
Retirement | Termination | Termination | ||||||||
Program | Eligible | Not For Cause) | Resignation | Death or Disability | (For Cause) | |||||
Pension Benefits
Plans |
Benefits payable as described in the notes following the Pension Benefits Table. | Same as Retirement. | Same as Retirement. | Same as Retirement. | Same as Retirement. | |||||
|
||||||||||
|
||||||||||
Annual Incentive
Program |
Pro-rated if terminate before 12/31. | Same as Retirement. | Forfeit. | Same as Retirement. | Forfeit. | |||||
|
||||||||||
|
||||||||||
Performance
Dividend Program |
Paid year of retirement plus two additional years. | Forfeit. | Forfeit. | Payable until options expire or exercised. | Forfeit. | |||||
|
||||||||||
|
||||||||||
Stock Options
|
Vest; expire earlier of original expiration date or five years. | Vested options expire in 90 days; unvested are forfeited. | Same as Lay Off. | Vest; expire earlier of original expiration or three years. | Forfeit. | |||||
|
||||||||||
|
||||||||||
Financial Planning
Perquisite |
Continues for one year. | Terminates. | Terminates. | Same as Retirement. | Terminates. | |||||
|
||||||||||
|
||||||||||
Deferred
Compensation Plan |
Payable per prior elections (lump sum or up to 10 annual installments). | Same as Retirement. | Same as Retirement. | Payable to beneficiary or disabled participant per prior elections; amounts deferred prior to 2005 can be paid as a lump sum per benefit administration committee’s discretion. | Same as Retirement. | |||||
|
||||||||||
|
||||||||||
Supplemental
Benefit Plan – non-pension related |
Payable per prior elections (lump sum or up to 20 annual installments). | Same as Retirement. | Same as Retirement. | Same as the Deferred Compensation Plan. | Same as Retirement. | |||||
|
||||||||||
III-33
Involuntary Change- | ||||||||
in-Control-Related | ||||||||
Termination or | ||||||||
Southern Company | Voluntary Change- | |||||||
Termination or Gulf | in-Control-Related | |||||||
Southern Company | Southern Company | Power Change-in- | Termination for | |||||
Program | Change-in-Control I | Change-in-Control II | Control | Good Reason | ||||
Nonqualified
Pension Benefits |
All SERP-related benefits vest if participants vested in tax-qualified pension benefits; otherwise, no impact. | Benefits vest for all participants and single sum value of benefits earned to the change-in-control date paid following termination or retirement. | Same as Southern Company Change-in-Control II. | Based on type of change-in-control event. | ||||
|
||||||||
|
||||||||
Annual Incentive
|
No plan termination is paid at greater of target or actual performance. If plan terminated within two years of change-in-control, pro-rated at target performance level. | Same as Southern Company Change-in-Control I. | Pro-rated at target performance level. | If not otherwise eligible for payment, if annual incentive still in effect, pro-rated at target performance level. | ||||
|
||||||||
|
||||||||
Performance Dividend
|
No plan termination is paid at greater of target or actual performance. If plan terminated within two years of change-in-control, pro-rated at greater of target or actual performance level. | Same as Southern Company Change-in-Control I. | Pro-rated at greater of actual or target performance level. | If not otherwise eligible for payment, if the performance dividend program is still in effect, greater of actual or target performance level for year of severance only. | ||||
|
||||||||
|
||||||||
Stock Options
|
Not affected by change-in-control events. | Not affected by change-in-control events. | Vest and convert to surviving company’s securities; if cannot convert, pay spread in cash. | Vest. | ||||
|
||||||||
|
||||||||
DCP
|
Not affected by change-in-control events. | Not affected by change-in-control events. | Not affected by change-in-control events. | Not affected by change-in-control events. | ||||
|
||||||||
|
||||||||
SBP
|
Not affected by change-in-control events. | Not affected by change-in-control events. | Not affected by change-in-control events. | Not affected by change-in-control events. | ||||
|
||||||||
III-34
Involuntary Change- | ||||||||
in-Control-Related | ||||||||
Termination or | ||||||||
Southern Company | Voluntary Change- | |||||||
Termination or Gulf | in-Control-Related | |||||||
Southern Company | Southern Company | Power Change-in- | Termination for | |||||
Program | Change-in-Control I | Change-in-Control II | Control | Good Reason | ||||
Severance Benefits
|
Not applicable. | Not applicable. | Not applicable. | Two or three times base salary plus target annual incentive plus tax gross up for certain named executive officers if a severance amount exceeds the Code Section 280G - “excess parachute payment” by 10% or more. | ||||
Health Benefits
|
Not applicable. | Not applicable. | Not applicable. | Up to five years participation in group health plan plus payment of two or three years’ premium amounts. | ||||
Outplacement
Services |
Not applicable. | Not applicable. | Not applicable. | Six months. | ||||
III-35
Resignation or | ||||||||||||||
Involuntary | Death | |||||||||||||
Retirement | Termination | (payments to a spouse) | ||||||||||||
Name | ($) | ($) | ($) | |||||||||||
S. N. Story
|
Pension | n/a | 2,185 | 3,588 | ||||||||||
|
SBP-P | 823,105 | 102,196 | |||||||||||
|
SERP | 0 | 41,388 | |||||||||||
R. R. Labrato
|
Pension | 5,751 | All plans treated as | 3,845 | ||||||||||
|
SBP-P | 41,035 | retiring | 41,035 | ||||||||||
|
SERP | 27,228 | 27,228 | |||||||||||
P.C. Raymond
|
Pension | n/a | 1,198 | 1,968 | ||||||||||
|
SBP-P | 83,802 | 10,324 | |||||||||||
|
SERP | 0 | 9,043 | |||||||||||
P.B. Jacob
|
Pension | 4,500 | All plans treated as | 3,256 | ||||||||||
|
SBP-P | 26,605 | retiring | 26,605 | ||||||||||
|
SERP | 20,165 | 20,165 | |||||||||||
T. J. McCullough
|
Pension | n/a | 1,331 | 2,185 | ||||||||||
|
SBP-P | 47,421 | 6,962 | |||||||||||
|
SERP | 0 | 9,026 | |||||||||||
B C. Terry
|
Pension | n/a | 493 | 809 | ||||||||||
|
SBP-P | 18,299 | 3,680 | |||||||||||
|
SERP | 0 | 4,275 |
SBP-P | SERP | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
S. N. Story
|
800,944 | 324,370 | 1,125,314 | |||||||||
R. R. Labrato
|
410,353 | 272,279 | 682,632 | |||||||||
P. C. Raymond
|
81,546 | 71,427 | 152,973 | |||||||||
P. B. Jacob
|
266,054 | 201,654 | 467,708 | |||||||||
T. J. McCullough
|
46,144 | 59,820 | 105,964 | |||||||||
B. C. Terry
|
17,807 | 20,686 | 38,493 |
III-36
Total Payable in | ||||||||||||
Total Number of | Cash under a | |||||||||||
Options Following | Southern Company | |||||||||||
Number of Options | Accelerated Vesting | Termination without | ||||||||||
with Accelerated | under a Southern | Conversion of Stock | ||||||||||
Vesting | Company Termination | Options | ||||||||||
Name | (#) | (#) | ($) | |||||||||
S. N. Story
|
86,163 | 166,736 | 375,683 | |||||||||
R. R. Labrato
|
31,336 | 77,568 | 260,157 | |||||||||
P. C. Raymond
|
18,117 | 42,015 | 127,924 | |||||||||
P. B. Jacob
|
27,481 | 41,273 | 73,419 | |||||||||
T. J. McCullough
|
14,107 | 32,203 | 112,241 | |||||||||
B. C. Terry
|
22,130 | 31,190 | 49,600 |
III-37
III-38
Name | Severance Amount ($ ) | |||
S. N. Story
|
1,901,203 | |||
R. R. Labrato
|
761,250 | |||
P. C. Raymond
|
662,456 | |||
P. B. Jacob
|
668,003 | |||
T. J. McCullough
|
512,324 | |||
B. C. Terry
|
662,456 |
• | $12,000 annual retainer |
• | 340 shares of Common Stock in quarterly grants of 85 shares |
• | $1,200 for participation in a meeting of the board | ||
• | $1,000 for participation in a meeting of a committee of the board |
• | in Common Stock units which earn dividends as if invested in Common Stock and are distributed in shares of Common Stock upon leaving the board | |
• | in Common Stock units which earn dividends as if invested in Common Stock and are distributed in cash upon leaving the board | |
• | at prime interest which is paid in cash upon leaving the board |
III-39
Change in | ||||||||||||||||||||
Pension | ||||||||||||||||||||
Value and | ||||||||||||||||||||
Nonqualified | ||||||||||||||||||||
Deferred | ||||||||||||||||||||
Fees Earned or Paid | Stock | Compensation | All Other | |||||||||||||||||
in Cash | Awards | Earnings | Compensation | Total | ||||||||||||||||
Name | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($) | |||||||||||||||
C. LeDon Anchors
|
17,800 | 18,536 | 0 | 123 | 36,459 | |||||||||||||||
William C. Cramer, Jr.
|
0 | 36,336 | 0 | 421 | 36,757 | |||||||||||||||
Fred C. Donovan, Sr.
|
0 | 36,336 | 0 | 123 | 36,459 | |||||||||||||||
William A. Pullum
|
0 | 36,336 | 0 | 123 | 36,459 | |||||||||||||||
Winston E. Scott
|
36,294 | 0 | 0 | 123 | 36,417 |
(1) | Includes amounts voluntarily deferred in the Director Deferred Compensation Plan. | |
(2) | Includes fair market value of equity grants on grant dates. All such stock awards are vested immediately upon grant. | |
(3) | Above-market earnings on amounts invested in the Director Deferred Compensation Plan. Above-market earnings are defined by the SEC as any amount above 120% of the applicable federal long-term rate as prescribed under Section 1274(d) of the Code. | |
(4) | Consists of reimbursement for taxes on imputed income associated with gifts. |
III-40
Amount and | ||||||||||
Name and Address | Nature of | Percent | ||||||||
of Beneficial | Beneficial | of | ||||||||
Title of Class | Owner | Ownership | Class | |||||||
Common Stock |
The Southern Company
|
|||||||||
30 Ivan Allen Jr. Boulevard, N.W.
|
||||||||||
Atlanta, Georgia 30308
|
100 | % | ||||||||
Registrant:
|
||||||||||
Gulf Power
|
3,142,717 |
Shares Beneficially Owned Include: | ||||||||||||
Shares | ||||||||||||
Individuals | ||||||||||||
Have Rights | ||||||||||||
Name of Directors, | Shares | to Acquire | ||||||||||
Nominees, and | Beneficially | Deferred Stock | Within 60 | |||||||||
Executive Officers | Owned (1) | Units (2) | Days (3) | |||||||||
Susan N. Story
|
129,225 | 0 | 42,735 | |||||||||
C. LeDon Anchors
|
6,365 | 4,912 | 0 | |||||||||
William C. Cramer, Jr.
|
7,566 | 7,566 | 0 | |||||||||
Fred C. Donovan, Sr.
|
4,943 | 4,943 | 0 | |||||||||
William A. Pullum
|
8,835 | 8,835 | 0 | |||||||||
Winston E. Scott
|
611 | 0 | 0 | |||||||||
P. Bernard Jacob
|
33,061 | 0 | 13,649 | |||||||||
Theodore J. McCullough
|
24,764 | 0 | 6,443 | |||||||||
Philip C. Raymond
|
35,155 | 0 | 9,043 | |||||||||
Bentina C. Terry
|
19,837 | 0 | 10,396 | |||||||||
Directors, Nominees,
and Executive
Officers as a group
(10 people)
|
270,362 | 26,256 | 82,266 | |||||||||
(1) | “Beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security and/or investment power with respect to a security or any combination thereof. | |
(2) | Indicates the number of deferred stock units held under the Director Deferred Compensation Plan. | |
(3) | Indicates shares of Common Stock that certain executive officers have the right to acquire within 60 days. Shares indicated are included in the Shares Beneficially Owned column. |
III-41
Number of securities | ||||||||||||
remaining available | ||||||||||||
for future issuance | ||||||||||||
under equity | ||||||||||||
Number of securities | Weighted-average | compensation plans | ||||||||||
to be issued upon | exercise price of | (excluding | ||||||||||
exercise of | outstanding | securities | ||||||||||
outstanding options, | options, warrants, | reflected in | ||||||||||
warrants, and rights | and rights | column (a)) | ||||||||||
Plan category | (a) | (b) | (c) | |||||||||
Equity compensation
plans approved by
security holders
|
36,952,419 | $32.09 | 34,843,588 | |||||||||
Equity compensation
plans not approved
by security holders
|
N/A | N/A | N/A |
(1) | Includes shares available for future issuances under the Omnibus Incentive Compensation Plan, the 2006 Omnibus Incentive Compensation Plan, and the Outside Directors Stock Plan. | |
(2) | Includes shares available for future issuance under the 2006 Omnibus Incentive Compensation Plan (33,222,128) and the Outside Directors Stock Plan (1,621,460). |
III-42
2008 | 2007 | |||||||
(in thousands) | ||||||||
Gulf Power
|
||||||||
Audit Fees (1)
|
$ | 1,324 | $ | 1,113 | ||||
Audit-Related Fees (2)
|
0 | 27 | ||||||
Tax Fees
|
0 | 0 | ||||||
All Other Fees
|
0 | 0 | ||||||
|
||||||||
Total
|
$ | 1,324 | $ | 1,140 | ||||
|
||||||||
Southern Power
|
||||||||
Audit Fees (1)
|
$ | 943 | $ | 1,016 | ||||
Audit-Related Fees (2)
|
0 | 64 | ||||||
Tax Fees
|
0 | 0 | ||||||
All Other Fees
|
0 | 0 | ||||||
|
||||||||
Total
|
$ | 943 | $ | 1,080 | ||||
|
(1) | Includes services performed in connection with financing transactions. | |
(2) | Includes other non-statutory audit services and accounting consultations. |
III-43
(a) | The following documents are filed as a part of this report on Form 10-K: |
(1) | Financial Statements: | ||
Management’s Report on Internal Control Over Financial Reporting for Southern Company and Subsidiary Companies is listed under Item 8 herein. | |||
Management’s Report on Internal Control Over Financial Reporting for Alabama Power is listed under Item 8 herein. | |||
Management’s Report on Internal Control Over Financial Reporting for Georgia Power is listed under Item 8 herein. | |||
Management’s Report on Internal Control Over Financial Reporting for Gulf Power is listed under Item 8 herein. | |||
Management’s Report on Internal Control Over Financial Reporting for Mississippi Power is listed under Item 8 herein. | |||
Management’s Report on Internal Control Over Financial Reporting for Southern Power and Subsidiary Companies is listed under Item 8 herein. | |||
Reports of Independent Registered Public Accounting Firm on the financial statements for Southern Company and Subsidiary Companies, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power and Subsidiary Companies are listed under Item 8 herein. | |||
The financial statements filed as a part of this report for Southern Company and Subsidiary Companies, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power and Subsidiary Companies are listed under Item 8 herein. |
(2) | Financial Statement Schedules: |
Reports of Independent Registered Public Accounting Firm as to Schedules for Southern Company and Subsidiary Companies, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power are included herein on pages IV-8, IV-9, IV-10, IV-11, and IV-12. | |||
Financial Statement Schedules for Southern Company and Subsidiary Companies, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power are listed in the Index to the Financial Statement Schedules at page S-1. |
(3) | Exhibits: |
Exhibits for Southern Company, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Southern Power are listed in the Exhibit Index at page E-1. |
IV-1
THE SOUTHERN COMPANY | ||||||
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By: | David M. Ratcliffe | ||||
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Chairman, President, and | |||||
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Chief Executive Officer | |||||
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By: | /s/ Wayne Boston | ||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: February 25, 2009 |
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Directors: | |||||
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Juanita Powell Baranco | Warren A. Hood, Jr. | ||||
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Francis S. Blake | Donald M. James | ||||
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Jon A. Boscia | J. Neal Purcell | ||||
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Thomas F. Chapman | William G. Smith, Jr. | ||||
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H. William Habermeyer, Jr. | Gerald J. St. Pé | ||||
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Veronica M. Hagen |
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By: | /s/ Wayne Boston | ||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: | February 25, 2009 |
IV-2
ALABAMA POWER COMPANY | ||||||
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By: | Charles D. McCrary | ||||
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President and Chief Executive Officer | |||||
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By: | /s/ Wayne Boston | ||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: February 25, 2009 |
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Directors: | |||||
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Whit Armstrong | Malcolm Portera | ||||
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Ralph D. Cook | Robert D. Powers | ||||
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David J. Cooper, Sr. | David M. Ratcliffe | ||||
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John D. Johns | C. Dowd Ritter | ||||
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Patricia M. King | James H. Sanford | ||||
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James K. Lowder | John Cox Webb, IV |
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By: | /s/ Wayne Boston | ||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: | February 25, 2009 |
IV-3
GEORGIA POWER COMPANY | ||||||||
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By: | Michael D. Garrett | ||||||
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President and Chief Executive Officer | |||||||
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By: | /s/ Wayne Boston | ||||||
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(Wayne Boston, Attorney-in-fact) | |||||||
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Date: February 25, 2009 |
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Directors: | |||||
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Robert L. Brown, Jr. | D. Gary Thompson | ||||
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Anna R. Cablik | Richard W. Ussery | ||||
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Stephen S. Green | W. Jerry Vereen | ||||
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Jimmy C. Tallent | E. Jenner Wood, III | ||||
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Beverly D. Tatum | |||||
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By: | /s/ Wayne Boston | ||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: | February 25, 2009 |
IV-4
GULF POWER COMPANY | ||||
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By: | Susan N. Story | ||
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President and Chief Executive Officer | |||
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By: | /s/ Wayne Boston | ||
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(Wayne Boston, Attorney-in-fact) | |||
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Date: February 25, 2009 |
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Directors: | |||||
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C. LeDon Anchors | William A. Pullum | ||||
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William C. Cramer, Jr. | Winston E. Scott | ||||
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Fred C. Donovan, Sr. |
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By: | /s/ Wayne Boston | ||||
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||||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: February 25, 2009 |
IV-5
MISSISSIPPI POWER COMPANY | ||||||
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By: | Anthony J. Topazi | ||||
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President and Chief Executive Officer | |||||
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||||||
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By: | /s/ Wayne Boston | ||||
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||||||
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(Wayne Boston, Attorney-in-fact) | |||||
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||||||
Date: February 25, 2009 |
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Directors: | |||||
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Roy Anderson, III | Martha D. Saunders | ||||
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Tommy E. Dulaney | George A. Schloegel | ||||
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Aubrey B. Patterson, Jr. | Philip J. Terrell | ||||
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Christine L. Pickering |
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By: | /s/ Wayne Boston | ||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: | February 25, 2009 |
IV-6
SOUTHERN POWER COMPANY | ||||||
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By: | Ronnie L. Bates | ||||
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President and Chief Executive Officer | |||||
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By: | /s/ Wayne Boston | ||||
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||||||
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(Wayne Boston, Attorney-in-fact) | |||||
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||||||
Date: February 25, 2009 |
Directors: | |||||
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W. Paul Bowers | G. Edison Holland, Jr. | |||
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Thomas A. Fanning | David M. Ratcliffe |
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By: | /s/ Wayne Boston | ||||
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||||||
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(Wayne Boston, Attorney-in-fact) | |||||
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Date: | February 25, 2009 |
IV-7
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Member of | |
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Deloitte Touche Tohmatsu |
IV-8
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Member of | |
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Deloitte Touche Tohmatsu |
IV-9
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Member of | |
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Deloitte Touche Tohmatsu |
IV-10
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Member of | |
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Deloitte Touche Tohmatsu |
IV-11
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Member of | |
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Deloitte Touche Tohmatsu |
IV-12
Schedule II
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Page | |||
Valuation and Qualifying Accounts and Reserves 2008, 2007, and 2006
|
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S-2 | ||||
S-3 | ||||
S-4 | ||||
S-5 | ||||
S-6 |
S-1
Balance | Additions | |||||||||||||||||||
at Beginning | Charged to | Charged to | Balance at End | |||||||||||||||||
Description | of Period | Income | Other Accounts | Deductions | of Period | |||||||||||||||
Provision for
uncollectible accounts
|
||||||||||||||||||||
2008
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$ | 22,142 | $ | 60,184 | $ | — | $ | 56,000 | (a) | $ | 26,326 | |||||||||
2007
|
34,901 | 34,471 | — | 47,230 | (a) | 22,142 | ||||||||||||||
2006
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37,510 | 49,226 | 1,230 | 53,065 | (a) | 34,901 | ||||||||||||||
Tax valuation allowance
|
||||||||||||||||||||
2008 (b)
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
2007 (b)
|
— | — | — | — | — | |||||||||||||||
2006
|
10,160 | 53,164 | — | — | 63,324 |
(a) | Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off. | |
(b) | See Note 5 to the financial statements of Southern Company in Item 8 herein. |
S-2
Additions | ||||||||||||||||||||
Balance at Beginning | Charged to | Charged to Other | Balance at End | |||||||||||||||||
Description | of Period | Income | Accounts | Deductions | of Period | |||||||||||||||
Provision for
uncollectible
accounts
|
||||||||||||||||||||
2008
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$ | 7,988 | $ | 20,824 | $ | — | $19,930 (Note) | $ | 8,882 | |||||||||||
2007
|
7,091 | 16,678 | — | 15,781 (Note) | 7,988 | |||||||||||||||
2006
|
7,560 | 14,130 | — | 14,599 (Note) | 7,091 |
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off. |
S-3
Additions | ||||||||||||||||||||
Balance at Beginning | Charged to | Charged to Other | Balance at End | |||||||||||||||||
Description | of Period | Income | Accounts | Deductions | of Period | |||||||||||||||
Provision for
uncollectible accounts
|
||||||||||||||||||||
2008
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$ | 7,636 | $ | 31,219 | $ | — | $ | 28,123 | (a) | $ | 10,732 | |||||||||
2007
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10,030 | 20,336 | — | 22,730 | (a) | 7,636 | ||||||||||||||
2006
|
9,563 | 26,503 | — | 26,036 | (a) | 10,030 | ||||||||||||||
Tax valuation allowance
|
||||||||||||||||||||
2008 (b)
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
2007 (b)
|
— | — | — | — | — | |||||||||||||||
2006
|
10,160 | 53,164 | — | — | 63,324 |
(a) | Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off. | |
(b) | See Note 5 to the financial statements of Georgia Power in Item 8 herein. |
S-4
Additions | ||||||||||||||||||||
Balance at Beginning | Charged to | Charged to Other | Balance at End | |||||||||||||||||
Description | of Period | Income | Accounts | Deductions | of Period | |||||||||||||||
Provision for
uncollectible
accounts
|
||||||||||||||||||||
2008
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$ | 1,711 | $ | 3,893 | $ | — | $3,416 (Note) | $ | 2,188 | |||||||||||
2007
|
1,279 | 3,315 | — | 2,883 (Note) | 1,711 | |||||||||||||||
2006
|
1,134 | 2,612 | — | 2,467 (Note) | 1,279 |
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off. |
S-5
Additions | ||||||||||||||||||||
Balance at Beginning | Charged to | Charged to Other | Balance at End | |||||||||||||||||
Description | of Period | Income | Accounts | Deductions | of Period | |||||||||||||||
Provision for
uncollectible
accounts
|
||||||||||||||||||||
2008
|
$ | 924 | $ | 2,372 | $ | — | $2,257 (Note) | $ | 1,039 | |||||||||||
2007
|
855 | 1,896 | — | 1,827 (Note) | 924 | |||||||||||||||
2006
|
2,321 | 1,071 | — | 2,537 (Note) | 855 |
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off. |
S-6
(3) | Articles of Incorporation and By-Laws | |||||||||||
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Southern Company | ||||||||||||
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(a) | 1 | - | Composite Certificate of Incorporation of Southern Company, reflecting all amendments thereto through January 5, 1994. (Designated in Registration No. 33-3546 as Exhibit 4(a), in Certificate of Notification, File No. 70-7341, as Exhibit A, and in Certificate of Notification, File No. 70-8181, as Exhibit A.) | ||||||||
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(a) | 2 | - | By-laws of Southern Company as amended effective February 17, 2003, and as presently in effect. (Designated in Southern Company’s Form 10-Q for the quarter ended June 30, 2003, File No. 1-3526, as Exhibit 3(a)1.) | ||||||||
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Alabama Power | ||||||||||||
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(b) | 1 | - | Charter of Alabama Power and amendments thereto through April 25, 2008. (Designated in Registration Nos. 2-59634 as Exhibit 2(b), 2-60209 as Exhibit 2(c), 2-60484 as Exhibit 2(b), 2-70838 as Exhibit 4(a)-2, 2-85987 as Exhibit 4(a)-2, 33-25539 as Exhibit 4(a)-2, 33-43917 as Exhibit 4(a)-2, in Form 8-K dated February 5, 1992, File No. 1-3164, as Exhibit 4(b)-3, in Form 8-K dated July 8, 1992, File No. 1-3164, as Exhibit 4(b)-3, in Form 8-K dated October 27, 1993, File No. 1-3164, as Exhibits 4(a) and 4(b), in Form 8-K dated November 16, 1993, File No. 1-3164, as Exhibit 4(a), in Certificate of Notification, File No. 70-8191, as Exhibit A, in Alabama Power’s Form 10-K for the year ended December 31, 1997, File No. 1-3164, as Exhibit 3(b)2, in Form 8-K dated August 10, 1998, File No. 1-3164, as Exhibit 4.4, in Alabama Power’s Form 10-K for the year ended December 31, 2000, File No. 1-3164, as Exhibit 3(b)2, in Alabama Power’s Form 10-K for the year ended December 31, 2001, File No. 1-3164, as Exhibit 3(b)2, in Form 8-K dated February 5, 2003, File No. 1-3164, as Exhibit 4.4, in Alabama Power’s Form 10-Q for the quarter ended March 31, 2003, File No 1-3164, as Exhibit 3(b)1, in Form 8-K dated February 5, 2004, File No. 1-3164, as Exhibit 4.4, in Alabama Power’s Form 10-Q for the quarter ended March 31, 2006, File No. 1-3164, as Exhibit 3(b)(1), in Form 8-K dated December 5, 2006, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated September 12, 2007, File No. 1-3164, as Exhibit 4.5, in Form 8-K dated October 17, 2007, File No. 1-3164, as Exhibit 4.5, and in Alabama Power’s Form 10-Q for the quarter ended March 31, 2008, File No. 1-3164, as Exhibit 3(b)1.) | ||||||||
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(b) | 2 | - | By-laws of Alabama Power as amended effective January 26, 2007, and as presently in effect. (Designated in Form 8-K dated January 26, 2007, File No 1-3164, as Exhibit 3(b)2.) | ||||||||
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Georgia Power | ||||||||||||
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(c) | 1 | - | Charter of Georgia Power and amendments thereto through October 9, 2007. (Designated in Registration Nos. 2-63392 as Exhibit 2(a)-2, 2-78913 as Exhibits 4(a)-(2) and 4(a)-(3), 2-93039 as Exhibit 4(a)-(2), 2-96810 as Exhibit 4(a)-2, 33-141 as Exhibit 4(a)-(2), 33-1359 as Exhibit 4(a)(2), 33-5405 as Exhibit 4(b)(2), 33-14367 as Exhibits 4(b)-(2) and 4(b)-(3), 33-22504 as Exhibits 4(b)-(2), 4(b)-(3) and 4(b)-(4), in Georgia Power’s Form 10-K for the year ended December 31, 1991, File No. 1-6468, as Exhibits 4(a)(2) and 4(a)(3), in |
E-1
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Registration No. 33-48895 as Exhibits 4(b)-(2) and 4(b)-(3), in Form 8-K dated December 10, 1992, File No. 1-6468 as Exhibit 4(b), in Form 8-K dated June 17, 1993, File No. 1-6468, as Exhibit 4(b), in Form 8-K dated October 20, 1993, File No. 1-6468, as Exhibit 4(b), in Georgia Power’s Form 10-K for the year ended December 31, 1997, File No. 1-6468, as Exhibit 3(c)2, in Georgia Power’s Form 10-K for the year ended December 31, 2000, File No. 1-6468, as Exhibit 3(c)2, in Form 8-K dated June 27, 2006, File No. 1-6468, as Exhibit 3.1, and in Form 8-K dated October 3, 2007, File No. 1-6468, as Exhibit 4.5.) | |||||||||||
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(c) | 2 | - | By-laws of Georgia Power as amended effective August 17, 2005, and as presently in effect. (Designated in Form 8-K dated August 17, 2005, File No. 1-6468, as Exhibit 3(c)2.) | ||||||||
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Gulf Power | ||||||||||||
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(d) | 1 | - | Amended and Restated Articles of Incorporation of Gulf Power and amendments thereto through October 17, 2007. (Designated in Form 8-K dated October 27, 2005, File No. 0-2429, as Exhibit 3.1, in Form 8-K dated November 9, 2005, File No. 0-2429, as Exhibit 4.7, and in Form 8-K dated October 16, 2007, File No. 0-2429, as Exhibit 4.5.) | ||||||||
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(d) | 2 | - | By-laws of Gulf Power as amended effective November 2, 2005, and as presently in effect. (Designated in Form 8-K dated November 2, 2005, File No. 0-2429, as Exhibit 3.2.) | ||||||||
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Mississippi Power | ||||||||||||
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(e) | 1 | - | Articles of Incorporation of Mississippi Power, articles of merger of Mississippi Power Company (a Maine corporation) into Mississippi Power and articles of amendment to the articles of incorporation of Mississippi Power through April 2, 2004. (Designated in Registration No. 2-71540 as Exhibit 4(a)-1, in Form U5S for 1987, File No. 30-222-2, as Exhibit B-10, in Registration No. 33-49320 as Exhibit 4(b)-(1), in Form 8-K dated August 5, 1992, File No. 0-6849, as Exhibits 4(b)-2 and 4(b)-3, in Form 8-K dated August 4, 1993, File No. 0-6849, as Exhibit 4(b)-3, in Form 8-K dated August 18, 1993, File No. 0-6849, as Exhibit 4(b)-3, in Mississippi Power’s Form 10-K for the year ended December 31, 1997, File No. 0-6849, as Exhibit 3(e)2, in Mississippi Power’s Form 10-K for the year ended December 31, 2000, File No. 0-6849, as Exhibit 3(e)2, and in Form 8-K dated March 3, 2004, File No. 0-6849, as Exhibit 4.6.) | ||||||||
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(e) | 2 | - | By-laws of Mississippi Power as amended effective February 28, 2001, and as presently in effect. (Designated in Mississippi Power’s Form 10-K for the year ended December 31, 2001, File No. 0-6849, as Exhibit 3(e)2.) | ||||||||
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Southern Power | ||||||||||||
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(f) | 1 | - | Certificate of Incorporation of Southern Power dated January 8, 2001. (Designated in Registration No. 333-98553 as Exhibit 3.1.) | ||||||||
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(f) | 2 | - | By-laws of Southern Power effective January 8, 2001. (Designated in Registration No. 333-98553 as Exhibit 3.2.) |
E-2
(4) | Instruments Describing Rights of Security Holders, Including Indentures | |||||||||||
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Southern Company | ||||||||||||
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(a) | 1 | - | Senior Note Indenture dated as of February 1, 2002, among Southern Company, Southern Company Capital Funding, Inc. and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through November 16, 2005. (Designated in Form 8-K dated January 29, 2002, File No. 1-3526, as Exhibits 4.1 and 4.2, in Form 8-K dated January 30, 2002, File No. 1-3526, as Exhibit 4.2 and in Form 8-K dated November 8, 2005, File No. 1-3526, as Exhibit 4.2.) | ||||||||
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(a) | 2 | - | Senior Note Indenture dated as of January 1, 2007, between Southern Company and Wells Fargo Bank, National Association, as Trustee, and indentures supplemental thereto through August 21, 2008. (Designated in Form 8-K dated January 11, 2006, File No. 1-3526, as Exhibits 4.1 and 4.2, in Form 8-K dated March 20, 2007, File No. 1-3526, as Exhibit 4.2, and in Form 8-K dated August 13, 2008, File No. 1-3526, as Exhibit 4.2.) | ||||||||
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Alabama Power | ||||||||||||
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(b) | 1 | - | Subordinated Note Indenture dated as of January 1, 1997, between Alabama Power and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through October 2, 2002. (Designated in Form 8-K dated January 9, 1997, File No. 1-3164, as Exhibits 4.1 and 4.2, in Form 8-K dated February 18, 1999, File No. 3164, as Exhibit 4.2 and in Form 8-K dated September 26, 2002, File No. 3164, as Exhibits 4.9-A and 4.9-B.) | ||||||||
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(b) | 2 | - | Senior Note Indenture dated as of December 1, 1997, between Alabama Power and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through November 14, 2008. (Designated in Form 8-K dated December 4, 1997, File No. 1-3164, as Exhibits 4.1 and 4.2, in Form 8-K dated February 20, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated April 17, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated August 11, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated September 8, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated September 16, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated October 7, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated October 28, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated November 12, 1998, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated May 19, 1999, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated August 13, 1999, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated September 21, 1999, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated May 11, 2000, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated August 22, 2001, File No. 1-3164, as Exhibits 4.2(a) and 4.2(b), in Form 8-K dated June 21, 2002, File No. 1-3164, as Exhibit 4.2(a), in Form 8-K dated October 16, 2002, File No. 1-3164, as Exhibit 4.2(a), in Form 8-K dated November 20, 2002, File No. 1-3164, as Exhibit 4.2(a), in Form 8-K dated December 6, 2002, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated February 11, 2003, File No. 1-3164, as Exhibits 4.2(a) and 4.2(b), in Form 8-K dated March 12, 2003, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated April 15, 2003, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated May 1, 2003, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated November 14, 2003, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated February 10, 2004, File No. 1-3164, as Exhibit 4.2 in Form 8-K dated April 7, 2004, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated August 19, 2004, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated November 9, 2004, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated March 8, 2005, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated January 11, 2006, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated January 13, 2006, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated February 1, 2006, File No. 1-3164, as Exhibits |
E-3
|
4.2(a) and 4.2(b), in Form 8-K dated March 9, 2006, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated June 7, 2006, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated January 30, 2007, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated April 4, 2007, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated October 11, 2007, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated December 4, 2007, File No. 1-3164, as Exhibit 4.2, in Form 8-K dated May 8, 2008, File No. 1-3164, as Exhibit 4.2, and in Form 8-K dated November 14, 2008, File No. 1-3164 as Exhibit 4.2.) | |||||||||||
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(b) | 3 | - | Amended and Restated Trust Agreement of Alabama Power Capital Trust V dated as of September 1, 2002. (Designated in Form 8-K dated September 26, 2002, File No. 1-3164, as Exhibit 4.12-B.) | ||||||||
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(b) | 4 | - | Guarantee Agreement relating to Alabama Power Capital Trust V dated as of September 1, 2002. (Designated in Form 8-K dated September 26, 2002, File No. 1-3164, as Exhibit 4.16-B.) | ||||||||
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Georgia Power | ||||||||||||
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(c) | 1 | - | Subordinated Note Indenture dated as of June 1, 1997, between Georgia Power and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through January 23, 2004. (Designated in Certificate of Notification, File No. 70-8461, as Exhibits D and E, in Form 8-K dated February 17, 1999, File No. 1-6468, as Exhibit 4.4, in Form 8-K dated June 13, 2002, File No. 1-6468, as Exhibit 4.4, in Form 8-K dated October 30, 2002, File No. 1-6468, as Exhibit 4.4 and in Form 8-K dated January 15, 2004, File No. 1-6468, as Exhibit 4.4.) | ||||||||
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(c) | 2 | - | Senior Note Indenture dated as of January 1, 1998, between Georgia Power and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through February 10, 2009. (Designated in Form 8-K dated January 21, 1998, File No. 1-6468, as Exhibits 4.1 and 4.2, in Forms 8-K each dated November 19, 1998, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated March 3, 1999, File No. 1-6469 as Exhibit 4.2, in Form 8-K dated February 15, 2000, File No. 1-6469 as Exhibit 4.2, in Form 8-K dated January 26, 2001, File No. 1-6469 as Exhibits 4.2(a) and 4.2(b), in Form 8-K dated February 16, 2001, File No. 1-6469 as Exhibit 4.2, in Form 8-K dated May 1, 2001, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated June 27, 2002, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated November 15, 2002, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated February 13, 2003, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated February 21, 2003, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated April 10, 2003, File No. 1-6468, as Exhibits 4.1, 4.2 and 4.3, in Form 8-K dated September 8, 2003, File No. 1-6468, as Exhibit 4.1, in Form 8-K dated September 23, 2003, File No. 1-6468, as Exhibit 4.1, in Form 8-K dated January 12, 2004, File No. 1-6468, as Exhibits 4.1 and 4.2, in Form 8-K dated February 12, 2004, File No. 1-6468, as Exhibit 4.1, in Form 8-K dated August 11, 2004, File No. 1-6468, as Exhibits 4.1 and 4.2, in Form 8-K dated January 13, 2005, File No. 1-6468, as Exhibit 4.1, in Form 8-K dated April 12, 2005, File No. 1-6468, as Exhibit 4.1, in Form 8-K dated November 30, 2005, File No. 1-6468, as Exhibit 4.1, in Form 8-K dated December 8, 2006, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated March 6, 2007, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated June 4, 2007, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated June 18, 2007, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated July 10, 2007, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated October 23, 2007, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated November 29, 2007, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated March 12, 2008, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated June 5, 2008, File No. 1-6468, as Exhibit 4.2, in Form 8-K dated November 12, 2008, File No. 1-6468, as Exhibits 4.2(a) and 4.2(b), and in Form 8-K dated February 4, 2009, File No. 1-6468, as Exhibit 4.2.) |
E-4
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(c) | 3 | - | Senior Note Indenture dated as of March 1, 1998 between Georgia Power, as successor to Savannah Electric, and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through June 30, 2006. (Designated in Form 8-K dated March 9, 1998, File No. 1-5072, as Exhibits 4.1 and 4.2, in Form 8-K dated May 8, 2001, File No. 1-5072, as Exhibits 4.2(a) and 4.2(b), in Form 8-K dated March 4, 2002, File No. 1-5072, as Exhibit 4.2, in Form 8-K dated November 4, 2002, File No. 1-5072, as Exhibit 4.2, in Form 8-K dated December 10, 2003, File No. 1-5072, as Exhibits 4.1 and 4.2, in Form 8-K dated December 2, 2004, File No. 1-5072, as Exhibit 4.1 and in Form 8-K dated June 27, 2006, File No. 1-6468, as Exhibit 4.2.) | ||||||||
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(c) | 4 | - | Amended and Restated Trust Agreement of Georgia Power Capital Trust VII dated as of January 1, 2004. (Designated in Form 8-K dated January 15, 2004, as Exhibit 4.7-A.) | ||||||||
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(c) | 5 | - | Guarantee Agreement relating to Georgia Power Capital Trust VII dated as of January 1, 2004. (Designated in Form 8-K dated January 15, 2004, as Exhibit 4.11-A.) | ||||||||
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Gulf Power | ||||||||||||
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(d) | 1 | - | Senior Note Indenture dated as of January 1, 1998, between Gulf Power and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through June 12, 2007. (Designated in Form 8-K dated June 17, 1998, File No. 0-2429, as Exhibits 4.1 and 4.2, in Form 8-K dated August 17, 1999, File No. 0-2429, as Exhibit 4.2, in Form 8-K dated July 31, 2001, File No. 0-2429, as Exhibit 4.2, in Form 8-K dated October 5, 2001, File No. 0-2429, as Exhibit 4.2, in Form 8-K dated January 18, 2002, File No. 0-2429, as Exhibit 4.2, in Form 8-K dated March 21, 2003, File No. 0-2429, as Exhibit 4.2, in Form 8-K dated July 10, 2003, File No. 0-2429, as Exhibits 4.1 and 4.2, in Form 8-K dated September 5, 2003, File No. 0-2429, as Exhibit 4.1, in Form 8-K dated April 6, 2004, File No. 0-2429, as Exhibit 4.1, in Form 8-K dated September 13, 2004, File No. 0-2429, as Exhibit 4.1, in Form 8-K dated August 11, 2005, File No. 0-2429, as Exhibit 4.1, in Form 8-K dated October 27, 2005, File No. 0-2429, as Exhibit 4.1, in Form 8-K dated November 28, 2006, File No. 0-2429, as Exhibit 4.2, and in Form 8-K dated June 5, 2007, File No. 0-2429, as Exhibit 4.2.) | ||||||||
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Mississippi Power | ||||||||||||
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(e) | 1 | - | Senior Note Indenture dated as of May 1, 1998 between Mississippi Power and Wells Fargo Bank, National Association, as Successor Trustee, and indentures supplemental thereto through November 21, 2008. (Designated in Form 8-K dated May 14, 1998, File No. 0-6849, as Exhibits 4.1, 4.2(a) and 4.2(b), in Form 8-K dated March 22, 2000, File No. 0-6849, as Exhibit 4.2, in Form 8-K dated March 12, 2002, File No. 0-6849, as Exhibit 4.2, in Form 8-K dated April 24, 2003, File No. 001-11229, as Exhibit 4.2, in Form 8-K dated March 3, 2004, File No. 001-11229, as Exhibit 4.2, in Form 8-K dated June 24, 2005, File No. 001-11229, as Exhibit 4.2, in Form 8-K dated November 8, 2007, File No. 001-11229, as Exhibit 4.2, and in Form 8-K dated November 14, 2008, File No. 001-11229, as Exhibit 4.2.) |
E-5
Southern Power | ||||||||||||
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(f) | 1 | - | Senior Note Indenture dated as of June 1, 2002, between Southern Power and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)), as Trustee, and indentures supplemental thereto through November 21, 2006. (Designated in Registration No. 333-98553 as Exhibits 4.1 and 4.2 and in Southern Power’s Form 10-Q for the quarter ended June 30, 2003, File No. 333-98553, as Exhibit 4(g)1, and in Form 8-K dated November 13, 2006, File No. 333-98553, as Exhibit 4.2.) |
E-6
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(a) | 13 | - | Indemnification and Insurance Matters Agreement dated as of September 1, 2000 between Southern Company and Mirant. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2000, File No. 1-3526, as Exhibit 10(a)101.) | ||||||||
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(a) | 14 | - | Tax Indemnification Agreement dated as of September 1, 2000 among Southern Company and its affiliated companies and Mirant and its affiliated companies. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2000, File No. 1-3526, as Exhibit 10(a)102.) | ||||||||
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# | (a) | 15 | - | Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2000, File No. 1-3526, as Exhibit 10(a)103.) | |||||||
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# | * (a) | 16 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. | |||||||
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# | (a) | 17 | - | Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2000, File No. 1-3526, as Exhibit 10(a)104.) | |||||||
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# | * (a) | 18 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. | |||||||
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# | (a) | 19 | - | Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2001, File No. 1-3526, as Exhibit 10(a)92.) | |||||||
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# | * (a) | 20 | - | First Amendment effective January 1, 2009 to the Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. | |||||||
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# | * (a) | 21 | - | Amended and Restated Change in Control Agreement effective December 31, 2008 between Southern Company, SCS, and Thomas A. Fanning. | |||||||
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# | (a) | 22 | - | Amended Deferred Compensation Agreement among Southern Company, SCS, Georgia Power, Gulf Power, and G. Edison Holland, Jr. effective December 31, 2008. (Designated in Form 8-K dated December 31, 2008, File No. 1-3526, as Exhibit 10.2.) | |||||||
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# | * (a) | 23 | - | Amended and Restated Southern Company Senior Executive Change in Control Severance Plan effective December 31, 2008. | |||||||
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# | * (a) | 24 | - | Southern Company Executive Change in Control Severance Plan, Amended and Restated effective December 31, 2008. |
E-7
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# | * (a) | 25 | - | Amended and Restated Change in Control Agreement effective December 31, 2008 between Southern Company, Georgia Power, and Michael D. Garrett. | |||||||
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# | * (a) | 26 | - | Amended and Restated Change in Control Agreement effective December 31, 2008 between Southern Company, SCS, and William Paul Bowers. | |||||||
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# | (a) | 27 | - | Form of Restricted Stock Award Agreement. (Designated in Form 10-Q for the quarter ended September 30, 2007, File No. 1-3526, as Exhibit 10(a)1.) | |||||||
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# | (a) | 28 | - | Compensation and Retention Agreement between SCS and C. Alan Martin effective as of February 1, 2008. (Designated in Form 10-Q for the quarter ended September 30, 2008, File No. 1-3526, as Exhibit 10(a)1.) | |||||||
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# | * (a) | 29 | - | Base Salaries of Named Executive Officers. | |||||||
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# | (a) | 30 | - | Summary of Non-Employee Director Compensation Arrangements. (Designated in Form 10-K for the year ended December 31, 2007, File No. 1-3526, as Exhibit 10(a)27.) | |||||||
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Alabama Power | ||||||||||||
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(b) | 1 | - | Intercompany Interchange Contract as revised effective May 1, 2007, among Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, and SCS. (Designated in Form 10-Q for the quarter ended March 31, 2007, File No. 1-3164, as Exhibit 10(b)5.) | ||||||||
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# | (b) | 2 | - | Amended and Restated Southern Company 2006 Omnibus Incentive Compensation Plan, effective January 1, 2007. See Exhibit 10(a)1 herein. | |||||||
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# | (b) | 3 | - | Forms of Award Agreement under the Southern Company 2006 Omnibus Incentive Compensation Plan effective January 1, 2006. See Exhibit 10(a)2 herein. | |||||||
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# | (b) | 4 | - | Southern Company Deferred Compensation Plan as amended and restated effective January 1, 2009. See Exhibit 10(a)4 herein. | |||||||
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# | (b) | 5 | - | Outside Directors Stock Plan for The Southern Company and its Subsidiaries, effective May 26, 2004. See Exhibit 10(a)5 herein. | |||||||
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# | (b) | 6 | - | The Southern Company Supplemental Executive Retirement Plan, Amended and Restated effective as of January 1, 2009. See Exhibit 10(a)6 herein. | |||||||
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# | (b) | 7 | - | The Southern Company Supplemental Benefit Plan, Amended and Restated effective as of January 1, 2009. See Exhibit 10(a)7 herein. | |||||||
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# | (b) | 8 | - | Southern Company Executive Change in Control Severance Plan, Amended and Restated effective December 31, 2008. See Exhibit 10(a)24 herein. | |||||||
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# | (b) | 9 | - | Deferred Compensation Plan for Directors of Alabama Power Company, Amended and Restated effective January 1, 2008. (Designated in Alabama Power’s Form 10-Q for the quarter ended June 30, 2008, File No. 1-3164, as Exhibit 10(b)1.) | |||||||
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# | (b) | 10 | - | The Southern Company Change in Control Benefits Protection Plan, effective December 31, 2008. See Exhibit 10(a)11 herein. | |||||||
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# | (b) | 11 | - | Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, |
E-8
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Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)15 herein. | |||||||||||
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# | (b) | 12 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)16 herein. | |||||||
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# | (b) | 13 | - | Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)17 herein. | |||||||
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# | (b) | 14 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)18 herein. | |||||||
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# | (b) | 15 | - | Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)19 herein. | |||||||
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# | (b) | 16 | - | First Amendment effective January 1, 2009 to the Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)20 herein. | |||||||
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# | (b) | 17 | - | Amended and Restated Southern Company Senior Executive Change in Control Severance Plan effective December 31, 2008. See Exhibit 10(a)23 herein. | |||||||
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# | (b) | 18 | - | Amended and Restated Change in Control Agreement dated December 31, 2008 between Southern Company, Alabama Power, and Charles D. McCrary. See Exhibit 10(a)9 herein. | |||||||
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# | (b) | 19 | - | Amended and Restated Change in Control Agreement between Southern Company, Alabama Power, and C. Alan Martin, effective June 1, 2004. (Designated in Alabama Power’s Form 10-Q for the quarter ended June 30, 2004, File No. 1-3526, as Exhibit 10(b)4.) | |||||||
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# | * (b) | 20 | - | Base Salaries of Named Executive Officers. | |||||||
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|
# | (b) | 21 | - | Summary of Non-Employee Director Compensation Arrangements. (Designated in Alabama Power’s Form 10-K for the year ended December 31, 2004, File No. 1-3164, as Exhibit 10(b)20.) | |||||||
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# | (b) | 22 | - | Form of Restricted Stock Award Agreement. See Exhibit 10(a)27 herein. |
E-9
Georgia Power | ||||||||||||
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(c) | 1 | - | Intercompany Interchange Contract as revised effective May 1, 2007, among Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, and SCS. See Exhibit 10(b)1 herein. | ||||||||
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(c) | 2 | - | Revised and Restated Integrated Transmission System Agreement dated as of November 12, 1990, between Georgia Power and OPC. (Designated in Georgia Power’s Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(g).) | ||||||||
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(c) | 3 | - | Revised and Restated Integrated Transmission System Agreement between Georgia Power and Dalton dated as of December 7, 1990. (Designated in Georgia Power’s Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(gg).) | ||||||||
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(c) | 4 | - | Revised and Restated Integrated Transmission System Agreement between Georgia Power and MEAG dated as of December 7, 1990. (Designated in Georgia Power’s Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(hh).) | ||||||||
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# | (c) | 5 | - | Amended and Restated Southern Company 2006 Omnibus Incentive Compensation Plan, effective January 1, 2007. See Exhibit 10(a)1 herein. | |||||||
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# | (c) | 6 | - | Forms of Award Agreement under the Southern Company 2006 Omnibus Incentive Compensation Plan effective January 1, 2006. See Exhibit 10(a)2 herein. | |||||||
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# | (c) | 7 | - | Southern Company Deferred Compensation Plan as amended and restated effective January 1, 2009. See Exhibit 10(a)4 herein. | |||||||
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# | (c) | 8 | - | Outside Directors Stock Plan for The Southern Company and its Subsidiaries, effective May 26, 2004. See Exhibit 10(a)5 herein. | |||||||
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# | (c) | 9 | - | The Southern Company Supplemental Executive Retirement Plan, Amended and Restated as of January 1, 2009. See Exhibit 10(a)6 herein. | |||||||
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# | (c) | 10 | - | The Southern Company Supplemental Benefit Plan, Amended and Restated effective as of January 1, 2009. See Exhibit 10(a)7 herein. | |||||||
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# | (c) | 11 | - | Southern Company Executive Change in Control Severance Plan, Amended and Restated effective December 31, 2008. See Exhibit 10(a)24 herein. | |||||||
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# | (c) | 12 | - | Deferred Compensation Plan For Directors of Georgia Power Company, Amended and Restated Effective January 1, 2008. (Designated in Form 10-K for the year ended December 31, 2007, File No. 1-6468, as Exhibit 10(c)12.) | |||||||
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|
# | (c) | 13 | - | The Southern Company Change in Control Benefits Protection Plan, effective December 31, 2008. See Exhibit 10(a)11 herein. | |||||||
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|
# | (c) | 14 | - | Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001, between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)15 herein. |
E-10
|
# | (c) | 15 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)16 herein. | |||||||
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# | (c) | 16 | - | Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)17 herein. | |||||||
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# | (c) | 17 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)18 herein. | |||||||
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# | (c) | 18 | - | Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)19 herein. | |||||||
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# | (c) | 19 | - | First Amendment effective January 1, 2009 to the Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)20 herein. | |||||||
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# | (c) | 20 | - | Amended and Restated Southern Company Senior Executive Change in Control Severance Plan effective December 31, 2008. See Exhibit 10(a)23 herein. | |||||||
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# | (c) | 21 | - | Deferred Compensation Agreement between Southern Company, SCS, and Christopher C. Womack dated May 31, 2002. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2002, File No. 1-3526, as Exhibit 10(a)118.) | |||||||
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# | (c) | 22 | - | Amended and Restated Supplemental Pension Agreement among SCS, Southern Nuclear, Alabama Power, and James H. Miller, III. (Designated in Alabama Power’s Form 10-Q for the quarter ended June 30, 2003, File No. 1-3164, as Exhibit 10(b)1.) | |||||||
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|
# | (c) | 23 | - | Amended and Restated Change in Control Agreement effective December 31, 2008 between Southern Company, Georgia Power, and Michael D. Garrett. See Exhibit 10(a)25 herein. | |||||||
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# | (c) | 24 | - | Amended Deferred Compensation Agreement among Southern Company, SCS, Georgia Power, Gulf Power, and G. Edison Holland, Jr. effective December 31, 2008. See Exhibit 10(a)22 herein. | |||||||
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|
# | * (c) | 25 | - | Base Salaries of Named Executive Officers. | |||||||
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|
# | (c) | 26 | - | Summary of Non-Employee Director Compensation Arrangements. (Designated in Georgia Power’s Form 10-K for the year ended December 31, 2004, File No. 1-6468, as Exhibit 10(c)24.) | |||||||
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# | (c) | 27 | - | Form of Restricted Stock Award Agreement. See Exhibit 10(a)27 herein. |
E-11
E-12
|
# | (d) | 13 | - | The Southern Company Change in Control Benefits Protection Plan, effective December 31, 2008. See Exhibit 10(a)11 herein. | |||||||
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|
# | (d) | 14 | - | Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)15 herein. | |||||||
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|
# | (d) | 15 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)16 herein. | |||||||
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# | (d) | 16 | - | Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)17 herein. | |||||||
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# | (d) | 17 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)18 herein. | |||||||
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# | (d) | 18 | - | Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)19 herein. | |||||||
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|
# | (d) | 19 | - | First Amendment effective January 1, 2009 to the Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)20 herein. | |||||||
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|
# | (d) | 20 | - | Amended and Restated Southern Company Senior Executive Change in Control Severance Plan effective December 31, 2008. See Exhibit 10(a)23 herein. | |||||||
|
||||||||||||
|
# | * (d) | 21 | - | Base Salaries of Named Executive Officers. | |||||||
|
||||||||||||
|
# | (d) | 22 | - | Summary of Non-Employee Director Compensation Arrangements. (Designated in Gulf Power’s Form 10-K for the year ended December 31, 2004, File No. 0-2429, as Exhibit 10(d)20.) | |||||||
|
||||||||||||
|
# | (d) | 23 | - | Form of Restricted Stock Award Agreement. See Exhibit 10(a)27 herein. | |||||||
|
||||||||||||
Mississippi Power | ||||||||||||
|
||||||||||||
|
(e) | 1 | - | Intercompany Interchange Contract as revised effective May 1, 2007, among Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, and SCS. See Exhibit 10(b)1 herein. |
E-13
|
(e) | 2 | - | Transmission Facilities Agreement dated February 25, 1982, Amendment No. 1 dated May 12, 1982 and Amendment No. 2 dated December 6, 1983, between Entergy Corporation (formerly Gulf States) and Mississippi Power. (Designated in Mississippi Power’s Form 10-K for the year ended December 31, 1981, File No. 0-6849, as Exhibit 10(f), in Mississippi Power’s Form 10-K for the year ended December 31, 1982, File No. 0-6849, as Exhibit 10(f)(2), and in Mississippi Power’s Form 10-K for the year ended December 31, 1983, File No. 0-6849, as Exhibit 10(f)(3).) | ||||||||
|
||||||||||||
|
# | (e) | 3 | - | Amended and Restated Southern Company 2006 Omnibus Incentive Compensation Plan, effective January 1, 2007. See Exhibit 10(a)1 herein. | |||||||
|
||||||||||||
|
# | (e) | 4 | - | Forms of Award Agreement under the Southern Company 2006 Omnibus Incentive Compensation Plan effective January 1, 2006. See Exhibit 10(a)2 herein. | |||||||
|
||||||||||||
|
# | (e) | 5 | - | Southern Company Deferred Compensation Plan as amended and restated effective January 1, 2009. See Exhibit 10(a)4 herein. | |||||||
|
||||||||||||
|
# | (e) | 6 | - | Outside Directors Stock Plan for The Southern Company and its Subsidiaries, effective May 26, 2004. See Exhibit 10(a)5 herein. | |||||||
|
||||||||||||
|
# | (e) | 7 | - | The Southern Company Supplemental Benefit Plan, Amended and Restated effective as of January 1, 2009. See Exhibit 10(a)7 herein. | |||||||
|
||||||||||||
|
# | (e) | 8 | - | Southern Company Executive Change in Control Severance Plan, Amended and Restated effective December 31, 2008. See Exhibit 10(a)24 herein. | |||||||
|
||||||||||||
|
# | (e) | 9 | - | The Southern Company Supplemental Executive Retirement Plan, Amended and Restated effective as of January 1, 2009. See Exhibit 10(a)6 herein. | |||||||
|
||||||||||||
|
# | (e) | 10 | - | Deferred Compensation Plan for Outside Directors of Mississippi Power Company, Amended and Restated effective January 1, 2008. (Designated in Mississippi Power’s Form 10-Q for the quarter ended March 31, 2008, File No. 0-6849 as Exhibit 10(e)1.) | |||||||
|
||||||||||||
|
# | (e) | 11 | - | The Southern Company Change in Control Benefits Protection Plan, effective December 31, 2008. See Exhibit 10(a)11 herein. | |||||||
|
||||||||||||
|
# | (e) | 12 | - | Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)15 herein. | |||||||
|
||||||||||||
|
# | (e) | 13 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Compensation Trust Agreement as amended and restated effective January 1, 2001 between Wachovia Bank, N.A., Southern Company, SCS, Alabama Power, Georgia Power, Gulf Power, Mississippi Power, SouthernLINC Wireless, Southern Company Energy Solutions, LLC, and Southern Nuclear. See Exhibit 10(a)16 herein. | |||||||
|
||||||||||||
|
# | (e) | 14 | - | Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)17 herein. |
E-14
|
# | (e) | 15 | - | First Amendment effective January 1, 2009 to the Southern Company Deferred Stock Trust Agreement for Directors of Southern Company and its subsidiaries, dated as of January 1, 2000, between Reliance Trust Company, Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)18 herein. | |||||||
|
||||||||||||
|
# | (e) | 16 | - | Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)19 herein. | |||||||
|
||||||||||||
|
# | (e) | 17 | - | First Amendment effective January 1, 2009 to the Amended and Restated Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its subsidiaries, effective September 1, 2001, between Wachovia Bank, N.A., Southern Company, Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. See Exhibit 10(a)20 herein. | |||||||
|
||||||||||||
|
# | (e) | 18 | - | Amended and Restated Southern Company Senior Executive Change in Control Severance Plan effective December 31, 2008. See Exhibit 10(a)23 herein. | |||||||
|
||||||||||||
|
# | * (e) | 19 | - | Base Salaries of Named Executive Officers. | |||||||
|
||||||||||||
|
# | (e) | 20 | - | Summary of Non-Employee Director Compensation Arrangements. (Designated in Mississippi Power’s Form 10-K for the year ended December 31, 2004, File No. 001-11229, as Exhibit 10(e)20.) | |||||||
|
||||||||||||
|
# | (e) | 21 | - | Form of Restricted Stock Award Agreement. See Exhibit 10(a)27 herein. | |||||||
|
||||||||||||
|
* (e) | 22 | - | Cooperative Agreement between the DOE and SCS dated as of December 12, 2008. (Mississippi Power has requested confidential treatment for certain portions of this document pursuant to an application for confidential treatment sent to the SEC. Mississippi Power has omitted such portions from this filing and filed them separately with the SEC.) |
Southern Power | ||||||||||||
|
||||||||||||
|
(f) | 1 | - | Service contract dated as of January 1, 2001, between SCS and Southern Power. (Designated in Southern Company’s Form 10-K for the year ended December 31, 2001, File No. 1-3526, as Exhibit 10(a)(2).) | ||||||||
|
||||||||||||
|
(f) | 2 | - | Intercompany Interchange Contract as revised effective May 1, 2007, among Alabama Power, Georgia Power, Gulf Power, Mississippi Power, Southern Power, and SCS. See Exhibit 10(b)1 herein. | ||||||||
|
||||||||||||
|
(f) | 3 | - | Power Purchase Agreement between Southern Power and Alabama Power dated as of June 1, 2001. (Designated in Registration No. 333-98553 as Exhibit 10.18.) | ||||||||
|
||||||||||||
|
(f) | 4 | - | Amended and Restated Power Purchase Agreement between Southern Power and Georgia Power at Plant Autaugaville dated as of August 6, 2001. (Designated in Registration No. 333-98553 as Exhibit 10.19.) | ||||||||
|
||||||||||||
|
(f) | 5 | - | Contract for the Purchase of Firm Capacity and Energy between Southern Power and Georgia Power dated as of July 26, 2001. (Designated in Registration No. 333-98553 as Exhibit 10.21.) | ||||||||
|
||||||||||||
|
(f) | 6 | - | Power Purchase Agreement between Southern Power and Georgia Power at Plant Goat Rock dated as of March 30, 2001. (Designated in Registration No. 333-98553 as Exhibit 10.22.) |
E-15
|
(f) | 7 | - | Purchase and Sale Agreement, by and between CP Oleander, LP and CP Oleander I, Inc., as Sellers, Constellation Power, Inc. and SP Newco I LLC and SP Newco II LLC, as Purchasers, and Southern Power, as Purchaser’s Parent, for the Sale of Partnership Interests of Oleander Power Project, LP, dated as of April 8, 2005. (Designated in Form 8-K dated June 7, 2005, File No. 333-98553, as Exhibit 2.1) | ||||||||
|
||||||||||||
|
(f) | 8 | - | Multi-Year Credit Agreement dated as of July 7, 2006 by and among Southern Power, the Lenders (as defined therein), Citibank, N.A., as Administrative Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Initial Issuing Bank and Amendment Number One thereto. (Designated in Southern Power’s Form 10-Q for the quarter ended June 30, 2006, File No. 333-98553, as Exhibit 10(f)1 and in Form 10-Q for the quarter ended June 30, 2007, File No. 333-98553, as Exhibit 10(f)2.) (Omits schedules and exhibits. Southern Power agreed to provide supplementally the omitted schedules and exhibits to the SEC upon request.) | ||||||||
|
||||||||||||
|
(f) | 9 | - | Purchase and Sale Agreement by and between Progress Genco Ventures, LLC and Southern Power Company — DeSoto LLC dated May 8, 2006. (Designated in Form 8-K dated May 31, 2006, File No. 333-98553, as Exhibit 2.1.) (Omits schedules and exhibits. Southern Power agreed to provide supplementally the omitted schedules and exhibits to the SEC upon request.) (Southern Power requested confidential treatment for certain portions of this document pursuant to an application for confidential treatment sent to the SEC. Southern Power omitted such portions from the filing and filed them separately with the SEC.) | ||||||||
|
||||||||||||
|
(f) | 10 | - | Assignment and Assumption Agreement between Southern Power Company — Desoto LLC and Southern Power effective May 24, 2006. (Designated in Form 8-K dated May 31, 2006, File No. 333-98553, as Exhibit 2.2.) | ||||||||
|
||||||||||||
|
(f) | 11 | - | Purchase and Sale Agreement by and between Progress Genco Ventures, LLC and Southern Power Company — Rowan LLC dated May 8, 2006. (Designated in Southern Power’s Form 10-Q for the quarter ended June 30, 2006, File No. 333-98553, as Exhibit 10(f)4.) (Omits schedules and exhibits. Southern Power agrees to provide supplementally the omitted schedules and exhibits to the SEC upon request.) (Southern Power requested confidential treatment for certain portions of this document pursuant to an application for confidential treatment sent to the SEC. Southern Power omitted such portions from the filing and filed them separately with the SEC.) | ||||||||
|
||||||||||||
|
(f) | 12 | - | Assignment and Assumption Agreement between Southern Power Company — Rowan LLC and Southern Power effective May 24, 2006. (Designated in Southern Power’s Form 10-Q for the quarter ended June 30, 2006, File No. 333-98553, as Exhibit 10(f)5.) |
(14) | Code of Ethics | |||||||||
|
||||||||||
Southern Company | ||||||||||
|
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|
* (a) | - | The Southern Company Code of Ethics. | |||||||
|
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Alabama Power | ||||||||||
|
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|
(b) | - | The Southern Company Code of Ethics. See Exhibit 14(a) herein. | |||||||
|
||||||||||
Georgia Power | ||||||||||
|
||||||||||
|
(c) | - | The Southern Company Code of Ethics. See Exhibit 14(a) herein. |
E-16
Gulf Power | |||||||||||
|
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|
(d) | - | The Southern Company Code of Ethics. See Exhibit 14(a) herein. | ||||||||
|
|||||||||||
Mississippi Power | |||||||||||
|
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|
(e) | - | The Southern Company Code of Ethics. See Exhibit 14(a) herein. | ||||||||
|
|||||||||||
Southern Power | |||||||||||
|
|||||||||||
|
(f) | - | The Southern Company Code of Ethics. See Exhibit 14(a) herein. | ||||||||
|
|||||||||||
(21) | Subsidiaries of Registrants | ||||||||||
|
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Southern Company | |||||||||||
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|
* (a) | - | Subsidiaries of Registrant. | ||||||||
|
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Alabama Power | |||||||||||
|
|||||||||||
|
(b) | - | Subsidiaries of Registrant. See Exhibit 21(a) herein. | ||||||||
|
|||||||||||
Georgia Power | |||||||||||
|
|||||||||||
|
(c) | - | Subsidiaries of Registrant. See Exhibit 21(a) herein. | ||||||||
|
|||||||||||
Gulf Power | |||||||||||
|
|||||||||||
|
(d) | - | Subsidiaries of Registrant. See Exhibit 21(a) herein. | ||||||||
|
|||||||||||
Mississippi Power | |||||||||||
|
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|
(e) | - | Subsidiaries of Registrant. See Exhibit 21(a) herein. | ||||||||
|
|||||||||||
Southern Power | |||||||||||
|
|||||||||||
|
Omitted pursuant to General Instruction I(2)(b) of Form 10-K. | ||||||||||
|
|||||||||||
(23) | Consents of Experts and Counsel | ||||||||||
|
|||||||||||
Southern Company | |||||||||||
|
|||||||||||
|
* (a) | 1 | - | Consent of Deloitte & Touche LLP. | |||||||
|
|||||||||||
Alabama Power | |||||||||||
|
|||||||||||
|
* (b) | 1 | - | Consent of Deloitte & Touche LLP. | |||||||
|
|||||||||||
Georgia Power | |||||||||||
|
|||||||||||
|
* (c) | 1 | - | Consent of Deloitte & Touche LLP. |
E-17
Gulf Power | ||||||||||
|
||||||||||
|
* (d) | 1 | - | Consent of Deloitte & Touche LLP. | ||||||
|
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Mississippi Power | ||||||||||
|
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|
* (e) | 1 | - | Consent of Deloitte & Touche LLP. | ||||||
|
||||||||||
Southern Power | ||||||||||
|
||||||||||
|
* (f) | 1 | - | Consent of Deloitte & Touche LLP. | ||||||
|
||||||||||
(24) | Powers of Attorney and Resolutions | |||||||||
|
||||||||||
Southern Company | ||||||||||
|
||||||||||
|
* (a) | - | Power of Attorney and resolution. | |||||||
|
||||||||||
Alabama Power | ||||||||||
|
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|
* (b) | - | Power of Attorney and resolution. | |||||||
|
||||||||||
Georgia Power | ||||||||||
|
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|
* (c) | - | Power of Attorney and resolution. | |||||||
|
||||||||||
Gulf Power | ||||||||||
|
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|
* (d) | - | Power of Attorney and resolution. | |||||||
|
||||||||||
Mississippi Power | ||||||||||
|
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|
* (e) | - | Power of Attorney and resolution. | |||||||
|
||||||||||
Southern Power | ||||||||||
|
||||||||||
|
* (f) | - | Power of Attorney and resolution. | |||||||
|
||||||||||
(31) | Section 302 Certifications | |||||||||
|
||||||||||
Southern Company | ||||||||||
|
||||||||||
|
* (a) | 1 | - | Certificate of Southern Company’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
|
* (a) | 2 | - | Certificate of Southern Company’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. |
E-18
Alabama Power | ||||||||||
|
||||||||||
|
* (b) | 1 | - | Certificate of Alabama Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
|
* (b) | 2 | - | Certificate of Alabama Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
Georgia Power | ||||||||||
|
||||||||||
|
* (c) | 1 | - | Certificate of Georgia Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
|
* (c) | 2 | - | Certificate of Georgia Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
Gulf Power | ||||||||||
|
||||||||||
|
* (d) | 1 | - | Certificate of Gulf Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
|
* (d) | 2 | - | Certificate of Gulf Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
Mississippi Power | ||||||||||
|
||||||||||
|
* (e) | 1 | - | Certificate of Mississippi Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
|
* (e) | 2 | - | Certificate of Mississippi Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
Southern Power | ||||||||||
|
||||||||||
|
* (f) | 1 | - | Certificate of Southern Power’s Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
|
* (f) | 2 | - | Certificate of Southern Power’s Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
|
||||||||||
(32) | Section 906 Certifications | |||||||||
|
||||||||||
Southern Company | ||||||||||
|
||||||||||
|
* (a) | - | Certificate of Southern Company’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
|
||||||||||
Alabama Power | ||||||||||
|
||||||||||
|
* (b) | - | Certificate of Alabama Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
|
||||||||||
Georgia Power | ||||||||||
|
||||||||||
|
* (c) | - | Certificate of Georgia Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. |
E-19
Gulf Power | ||||||||||
|
||||||||||
|
* (d) | - | Certificate of Gulf Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
|
||||||||||
Mississippi Power | ||||||||||
|
||||||||||
|
* (e) | - | Certificate of Mississippi Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
|
||||||||||
Southern Power | ||||||||||
|
||||||||||
|
* (f) | - | Certificate of Southern Power’s Chief Executive Officer and Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. |
E-20
Exhibit 10(a)1
SOUTHERN COMPANY
2006 OMNIBUS INCENTIVE COMPENSATION PLAN
Amended and Restated Effective January 1, 2007
Contents
Article 1. Establishment, Objectives, and Duration |
1 |
Article 2. Definitions |
1 |
Article 3. Administration |
4 |
Article 4. Shares Subject to the Plan and Maximum Awards |
5 |
Article 5. Eligibility and Participation |
7 |
Article 6. Stock Options |
7 |
Article 7. Stock Appreciation Rights |
9 |
Article 8. Restricted Stock and Restricted Stock Units |
10 |
Article 9. Performance Units, Performance Shares, and Cash-Based Awards |
11 |
Article 10. Performance Measures |
13 |
Article 11. Beneficiary Designation |
15 |
Article 12. Deferrals |
15 |
Article 13. Rights of Employees/Directors |
15 |
Article 14. Amendment, Modification, and Termination |
16 |
Article 15. Withholding |
17 |
Article 16. Indemnification |
17 |
Article 17. Successors |
17 |
Article 18. General Provisions |
17 |
Southern Company
2006 Omnibus Incentive Compensation Plan
Article 1. |
Establishment, Objectives, and Duration |
1.1. Establishment of the Plan . The Southern Company (hereinafter referred to as the “Company”), hereby establishes this “Southern Company 2006 Omnibus Incentive Compensation Plan” (hereinafter referred to as the “Plan”), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Cash-Based Awards.
Subject to approval by the Company’s stockholders, the Plan shall become effective as of January 1, 2006 (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.
1.2. Objectives of the Plan . The objectives of the Plan are to optimize the profitability and growth of the Company through annual and long-term incentives that are consistent with the Company’s goals and that link the personal interests of Participants to those of the Company’s stockholders; to provide Participants with an incentive for excellence in individual performance; and to promote teamwork among Participants.
The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Employees and Directors who make significant contributions to the Company’s success and to allow those individuals to share in the success of the Company.
1.3. Duration of the Plan . The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 14 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan’s provisions. However, in no event may an Award be granted under the Plan on or after the tenth anniversary of the Effective Date.
Article 2. |
Definitions |
Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
|
2.1. |
“Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, or Cash-Based Awards. |
|
2.2. |
“Award Agreement” means an agreement entered into by the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Plan, which agreement may be delivered and executed in electronic form. |
|
2.3. |
“Board” or “Board of Directors” means the Board of Directors of the Company. |
|
2.4. |
“ Cash-Based Award” means an Award granted to a Participant, as described in Article 9 herein. |
|
2.5. |
“ Change in Control Benefit Plan Determination Policy” shall mean the change in control benefit plan determination policy, as approved by the Board of Directors of Southern Company Services, Inc., as it may be amended from time to time in accordance with the provisions therein. |
|
2.6. |
“Code” means the Internal Revenue Code of 1986, as amended from time to time. |
|
2.7. |
“Committee” means any committee appointed by the Board to administer Awards to Employees, as specified in Article 3 herein. The Committee shall at all times maintain compliance with Code Section 162(m), or any successor statute thereto, as to the composition of the Committee. |
|
2.8. |
“ Common Stock” shall mean the common stock of the Company. |
|
2.9. |
“Company” means The Southern Company, a Delaware corporation, and any successor thereto as provided in Article 17 herein. |
|
2.10. |
“Covered Employee” means a Participant who, as of the date of vesting and/or payout of an Award, as applicable, is one of the group of “covered employees,” as defined in the regulations promulgated under Code Section 162(m), or any successor statute. |
|
2.11. |
“Director” means any individual who is a member of the Board of Directors of the Company or any Subsidiary; provided, however, that any Director who is employed by the Company or any Subsidiary shall be considered an Employee under the Plan. |
|
2.12. |
“Disability” shall have the meaning ascribed to such term in the Participant’s governing long-term disability plan, or if no such plan exists, at the discretion of the Committee. |
|
2.13. |
“Effective Date” means January 1, 2006. |
|
2.14. |
“Employee” means any employee of the Company or its Subsidiaries. Directors who are employed by the Company or its Subsidiaries shall be considered Employees under this Plan. |
|
2.15. |
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. |
|
2.16. |
“Fair Market Value” shall mean the closing price at which a share of Common Stock shall have been traded on the respective measurement date, such as the date of |
grant or the exercise of an Award, or on the next preceding trading day if such date was not a trading date, as reported by the principal securities exchange on which the Shares are traded or, if there is no such sale on the relevant date, then on the last previous day on which a sale was reported. If the Shares are not listed for trading on a national securities exchange, the fair market value of the Shares shall be determined by the Committee in good faith and in accordance with a reasonable valuation method as determined under Code Section 409A and the rules and regulations promulgated thereunder.
|
2.17. |
“Freestanding SAR” means an SAR that is granted independently of any Options, as described in Article 7 herein. |
|
2.18. |
“Incentive Stock Option” or “ISO” means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Code Section 422. |
|
2.19. |
“Insider” shall mean an individual who is, on the relevant date, an officer, director or more than ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act. |
|
2.20. |
“Nonqualified Stock Option” or “NQSO” means an option to purchase Shares granted under Article 6 herein and which is not intended to meet the requirements of Code Section 422. |
|
2.21. |
“Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein. |
|
2.22. |
“Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option. |
|
2.23. |
“Participant” means an Employee or Director who has been selected to receive an Award or with respect to whom an Award is outstanding under the Plan. |
|
2.24. |
“ Performance-Based Exception” means the performance-based exception from the tax deductibility limitations of Code Section 162(m). |
|
2.25. |
“Performance Period” means with respect to Performance Units, Performance Shares and, if applicable, Cash-Based Awards, the time period during which any performance goals will be measured. |
|
2.26. |
“Performance Share” means an Award granted to a Participant, as described in Article 9 herein. |
|
2.27. |
“ Performance Unit” means an Award granted to a Participant, as described in Article 9 herein. |
|
2.28. |
“Period of Restriction” means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 8 herein. |
|
2.29. |
“Restricted Stock” means an Award granted to a Participant, as described in Article 8 herein. |
|
2.30. |
“Restricted Stock Unit” means an Award granted to a Participant, as described in Article 8 herein. |
|
2.31. |
“Retirement” shall have the meaning ascribed to such term in The Southern Company Pension Plan. |
|
2.32. |
“Shares” means the shares of Common Stock. |
|
2.33. |
“Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein. |
|
2.34. |
“ Subsidiary” means any corporation, partnership, joint venture, limited liability company, or other entity (other than the Company) which is part of an unbroken chain of entities beginning with the Company if, at the time of the granting of an Award, each of the entities in the unbroken chain (other than the last entity) owns more than 50% of the total combined voting power in one of the other entities in such chain. |
|
2.35. |
“Tandem SAR” means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled). |
Article 3. |
Administration |
3.1. General . The Plan shall be administered by a Committee. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. The Committee shall be responsible for administration of the Plan; provided, however, that the determination of the number of Awards to be granted to Directors shall remain vested in the Board of Directors. The Committee shall have the authority to delegate administrative duties to one or more officers, Employees or Directors of the Company or Subsidiaries to the extent that such delegation would not jeopardize the Performance-Based Exception with respect to any Award.
3.2. Authority of the Committee . Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall have full power to select Employees and Directors who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent
with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; determine and certify whether Award requirements have been met; and (subject to the provisions of Articles 13 and 14 herein) amend the terms and conditions of any outstanding Award as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law (and subject to Section 3.1 herein), the Committee may delegate its authority as identified herein.
3.3. Underpayments/Overpayments. If any Participant or beneficiary receives an underpayment of Shares or cash payable under the terms of any Award, payment of any such shortfall shall be made as soon as administratively practicable. If any Participant or beneficiary receives an overpayment of Shares or cash payable under the terms of any Award for any reason, the Committee or its delegate shall have the right, in its sole discretion, to take whatever action it deems appropriate, including but not limited to the right to require repayment of such amount or to reduce future payments under this Plan, to recover any such overpayment. Notwithstanding the foregoing, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, and if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve- (12-) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.
3.4. Decisions Binding . All determinations and decisions made by the Board or the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board or the Committee shall be final, conclusive and binding on all persons, including the Company, its stockholders, Directors, Employees, Participants, their estates and beneficiaries and the Subsidiaries.
Article 4. |
Shares Subject to the Plan and Maximum Awards |
4.1. Number of Shares Available for Grants . Subject to adjustment as provided in Section 4.3 herein, the number of Shares hereby reserved for issuance to Participants under the Plan shall be 28,000,000 (twenty-eight million). Additionally, any Shares available for issuance under the Southern Company Omnibus Incentive Compensation Plan effective May 23, 2001, as amended, (the “2001 Plan”) on May 24, 2006 in excess of 10,000,000 (ten million) Shares shall be transferred to the Plan, added to the reserved Shares and available for issuance to Participants under the Plan. Any remaining Shares under the 2001 Plan shall be cancelled and no further Shares will be granted under the 2001 Plan after May 24, 2006. No more than one-half of the Shares available for issuance under the Plan may be granted in the form of Awards other than Stock Options or Stock Appreciation Rights. The Shares available for issuance under this Plan may be authorized and unissued Shares, treasury Shares (if provided for in the Company’s Articles of Incorporation), or previously issued Shares reacquired by the Company, including Shares purchased on the open market.
Unless and until the Committee determines that an Award to a Covered Employee shall not be designed to comply with the Performance-Based Exception, the following rules shall apply to grants of such Awards under the Plan:
|
(a) |
Stock Options : The maximum aggregate number of Shares that may be granted in the form of Stock Options, pursuant to any Award granted in any one fiscal year to any one single Participant shall be 5,000,000 (five million). |
|
(b) |
SARs : The maximum aggregate number of Shares that may be granted in the form of Stock Appreciation Rights, pursuant to any Award granted in any one fiscal year to any one single Participant shall be 5,000,000 (five million). |
|
(c) |
Restricted Stock : The maximum aggregate grant with respect to Awards of Restricted Stock granted in any one fiscal year to any one Participant shall be 1,000,000 (one million). |
|
(d) |
Restricted Stock Units : The maximum aggregate payout (determined as of the end of the applicable restriction period) with respect to Awards of Restricted Stock Units granted in any one fiscal year to any one Participant shall be the greater of $10,000,000 (ten million dollars) or 1,000,000 (one million) shares. |
|
(e) |
Performance Shares. The maximum aggregate payout (determined as of the end of the applicable performance period) with respect to Awards of Performance Shares granted in any one fiscal year to any one Participant shall be $10,000,000 (ten million dollars) or 1,000,000 (one million) shares. |
|
(f) |
Performance Units and Cash-Based Awards : The maximum aggregate payout (determined as of the end of the applicable performance period) with respect to Performance Units or Cash-Based Awards awarded in any one fiscal year to any one Participant shall be $10,000,000 (ten million dollars). |
4.2. Incentive Stock Option Limit. The maximum number of Shares of the share authorization that may be issued pursuant to ISOs under this Plan shall be one-half of the Shares available for issuance under the Plan
4.3. Adjustments in Authorized Shares . In the event of any change in corporate capitalization, such as a stock split, stock dividend or reclassification, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class of Shares which may be delivered under Section 4.1, in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and in the Award limits set forth in Section 4.1 as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number. The Committee shall not make any adjustment pursuant to this Section 4.3 that would cause an Award that is otherwise exempt from Code Section 409A to become subject to
Section 409A; or that would cause an Award that is subject to Code Section 409A to fail to satisfy the requirements of Section 409A.
4.4. Share Usage. Any Shares covered by an Award shall be counted as used as of the date of the grant. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. The following Shares, however, may not again be made available for issuance as Awards under this Plan: (i) Shares not issued or delivered as a result of the net settlement of an outstanding Stock Appreciation Right, (ii) Shares used to pay the exercise price or withholding taxes related to an outstanding Award or (iii) Shares repurchased on the open market with the proceeds of the option exercise price.
Article 5. |
Eligibility and Participation |
5.1. Eligibility . Persons eligible to participate in this Plan include all Employees and Directors.
5.2. Actual Participation . Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees and Directors, those to whom Awards shall be granted and shall determine the nature and amount of each Award.
Article 6. |
Stock Options |
6.1. Grant of Options . Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee; provided that an ISO may be granted only to an eligible Employee.
6.2. Award Agreement . Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO within the meaning of Code Section 422, or an NQSO whose grant is intended not to fall under the provisions of Code Section 422.
The Committee, in its sole discretion, shall have the ability to require in the Award Agreement that the Participant must certify in a manner acceptable to the Committee that he/she is in compliance with the terms and conditions of the Plan and the Award Agreement. In the event that a Participant fails to comply with the provisions of this Section 6.2 prior to, or during the six (6) month period after any exercise, payment, or delivery pursuant to an Option, such exercise, payment, or delivery may be rescinded by the Committee within two (2) years thereafter. In the event of such rescission, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of the rescinded exercise, payment, or delivery, in such manner and or such terms and conditions as may be required, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company.
6.3. Option Price . The Option Price for each grant of an Option under this Plan shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement; provided that the Option Price shall in no event be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant of the Option.
6.4. Term of Options . Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided that no Option shall be exercisable later than the tenth (10 th ) anniversary of the date of grant of the Option.
6.5. Exercise of Options . Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6. Payment . Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company and/or the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, (b) except with regard to Executive Officers as defined in the Exchange Act, by forgoing compensation that the Committee agrees otherwise would be owed, (c) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, (d) by the attestation of Shares, or (e) by any combination of (a), (b), (c) or (d).
The Committee also may allow cashless exercise as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law.
Subject to any governing rules or regulations, after receipt of a written notification of exercise and full payment, the Company may deliver to the Participant, in the Participant’s name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
All payments under all of the methods indicated above shall be paid in United States dollars.
6.7. Restrictions on Share Transferability . The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.
6.8. Termination of Employment/Directorship . Each Participant’s Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or directorship with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.
Article 7. |
Stock Appreciation Rights |
7.1. Grant of SARs . Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
The grant price of a Freestanding SAR or a Tandem SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR.
7.2. Exercise of Tandem SARs . Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.
Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.
7.3. Exercise of Freestanding SARs . Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.
7.4. SAR Agreement . Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.
7.5. Term of SARs . The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion, at the time of grant; provided, however, that such term shall not exceed ten (10) years.
7.6. Payment of SAR Amount . Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
|
(a) |
The difference between the Fair Market Value of a Share on the date of exercise over the Fair Market Value of a Share on the date of grant; by |
|
(b) |
The number of Shares with respect to which the SAR is exercised. |
At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The Committee’s discretionary authority regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
7.7. Termination of Employment/Directorship . Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, and need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
Article 8. |
Restricted Stock and Restricted Stock Units |
8.1. Grant of Restricted Stock/Units . Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no shares are actually awarded to the Participant except that the Committee may designate that a portion of the Restricted Stock Unit be paid out in Shares.
8.2. Award Agreement . Each Restricted Stock and Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or Restricted Stock Units granted, and such other provisions as the Committee shall determine.
8.3. Other Restrictions . Except as provided in Article 12, each Restricted Stock Unit shall be paid in full to the Participant no later than the fifteenth (15 th ) day of the third month following the end of the first calendar year in which the Period of Restriction lapses. Subject to Article 10 herein, the Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable federal or state securities laws.
The Company, directly or through its designee, may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction.
8.4. Voting Rights . Subject to the terms of the Award Agreements, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant has no voting rights with Restricted Stock Units.
8.5. Dividends and Other Distributions . Subject to the terms of the Award Agreements, during the Period of Restriction, Participants holding Shares of Restricted Stock or Restricted Stock Units granted hereunder may be credited with regular cash dividends paid with respect to the underlying Shares while they are so held. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Shares or Restricted Stock Units granted to a Covered Employee is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Restricted Shares or Restricted Stock Units, such that the dividends and/or the Restricted Shares or Restricted Stock Units maintain eligibility for the Performance-Based Exception. Except as provided in Article 12, any cash dividends credited with respect to Restricted Stock or Restricted Stock Units shall be paid in full to the Participant no later than the fifteenth (15 th ) day of the third month following the end of the first calendar year in which such dividends are no longer subject to a Period of Restriction or other substantial risk of forfeiture.
8.6. Termination of Employment/Directorship . Each Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Restricted Shares or Restricted Stock Units following termination of the Participant’s employment or directorship with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan, and may reflect distinctions based on the reasons for termination; provided, however that, except in the cases of terminations connected with a “Change in Control” (as defined in the Change in Control Benefit Plan Determination Policy) and terminations by reason of retirement, death or Disability, the vesting of Shares of Restricted Stock or Restricted Stock Units which qualify for the Performance-Based Exception and which are held by Covered Employees shall not be accelerated.
Article 9. |
Performance Units, Performance Shares, and Cash-Based Awards |
9.1. Grant of Performance Units/Shares and Cash-Based Awards . Subject to the terms of the Plan, Performance Units, Performance Shares, and/or Cash-Based Awards may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.
9.2. Value of Performance Units/Shares and Cash-Based Awards . Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. Each Cash-Based Award shall have a value as may be determined by the Committee. The Committee shall set performance or other goals, including without limitation time-based goals, in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Shares and Cash-Based Awards which will be paid out to the Participant.
9.3. Earning of Performance Units/Shares and Cash-Based Awards . Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Shares and Cash-Based Awards shall be entitled to receive payout on the number and value of Performance Units/Shares and Cash-Based Awards earned by the Participant as of the end of the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.
9.4. Determination of Awards. The factors required to determine Awards under the Plan shall be fixed in all events by the end of the applicable performance period established by the Committee.
9.5. Form and Timing of Payment of Performance Units/Shares and Cash-Based Awards . Payment of earned Performance Units/Shares and Cash-Based Awards shall be made in such form and at such time as the Committee shall determine at the time of the Award. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Shares and Cash-Based Awards in the form of cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares and Cash-Based Awards at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. The discretionary authority of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award. Notwithstanding anything in this Section 9.5 to the contrary and subject to Article 12, payment of any Performance Units/Shares and Cash-Based Awards shall be made no later than the fifteenth (15 th ) day of the third month following the end of the first calendar year in which the Performance Period ends or such Awards are no longer subject to a substantial risk of forfeiture.
At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units and/or Performance Shares which have been earned, but not yet distributed to Participants (such dividends shall be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares of Restricted Stock, as set forth in Section 8.5 herein). In addition, Participants may, at the discretion of the Committee, be entitled to exercise their voting rights with respect to such Shares. Subject to Article 12, a ny dividends which a Participant is entitled to receive with respect to Shares that have been earned in connection with grants of Performance Units/Shares shall be paid no later than the fifteenth (15 th ) day of the third month following the end of the first calendar year in which the Performance Period for such dividends ends or such dividends are no longer subject to a substantial risk of forfeiture.
To the extent that any Performance Units/Shares or Cash-Based Award provides for the payment of all or a portion of any dividend based upon the number of shares underlying an Option or SAR, the right to such dividends shall be a separate and distinct arrangement from such Option or SAR and shall not be contingent upon the exercise of such Option or SAR. Subject to Article 12, any such dividend shall be paid no later than the fifteenth (15 th ) day of the third month following the end of the first calendar year in which the Performance Period for such dividends ends or such dividends are no longer subject to a substantial risk of forfeiture.
9.6. Termination of Employment/Directorship Due to Death, Disability, or Retirement . Unless determined otherwise by the Committee and set forth in the Award Agreement or the administrative specifications for such Award, in the event the employment or directorship of a Participant is terminated by reason of death, Disability, or Retirement during a Performance Period, the Participant shall receive a payout of the Performance Units/Shares or Cash-Based Awards which is prorated, as specified by the Committee in its discretion.
Payment of earned Performance Units/Shares or Cash-Based Awards shall be made at a time specified by the Committee in its sole discretion following the Performance Period subject to the limitations set forth in Section 9.5. Notwithstanding the foregoing, with respect to Covered Employees who retire during a Performance Period, payments shall be made at the same time as payments are made to Participants who did not retire during the applicable Performance Period.
9.7. Termination of Employment/Directorship for Other Reasons . In the event that a Participant’s employment or directorship terminates for any reason other than those reasons set forth in Section 9.6 herein, all Performance Units/Shares and Cash-Based Awards shall be forfeited by the Participant to the Company unless determined otherwise by the Committee as set forth in the Participant’s Award Agreement or in the administrative specifications for such Award.
Article 10. |
Performance Measures |
Unless and until the Committee proposes for shareholder vote and shareholders approve a change in the general performance measures set forth in this Article 10, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Covered Employees which are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants shall be chosen from among:
|
(a) |
Earnings per share; |
|
(b) |
Net income or net operating income (before or after taxes and before or after extraordinary items); |
|
(c) |
Return measures (including, but not limited to, return on assets, equity, or sales); |
|
(d) |
Cash flow return on investments which equals net cash flows divided by owners’ equity; |
|
(e) |
Earnings before or after taxes; |
|
(f) |
Gross revenues; |
|
(g) |
Gross margins; |
|
(h) |
Share price (including, but not limited to, growth measures and total shareholder return); |
|
(i) |
Economic Value Added, which equals net income or net operating income minus a charge for use of capital; |
|
(j) |
Operating margins; |
|
(k) |
Market share; |
|
(l) |
Gross revenues or revenues growth; |
|
(m) |
Capacity utilization; |
|
(n) |
Increase in customer base including associated costs; |
|
(o) |
Environmental, Health and Safety; |
|
(p) |
Reliability |
|
(q) |
Price |
|
(r) |
Bad debt expense |
|
(s) |
Customer satisfaction |
|
(t) |
Operations and maintenance expense |
|
(u) |
Accounts receivable |
|
(v) |
Diversity/Inclusion; and |
|
(w) |
Quality. |
The Committee, in its sole discretion, shall have the ability to set such performance measures at the corporate level or the subsidiary/business unit level. If the Company’s Shares are traded on an established securities market, any Awards issued to Covered Employees are intended but not required to meet the requirements of the Treasury Regulations under Code Section 162(m) necessary to satisfy the Performance-Based Exception.
The Committee shall have the discretion to adjust the determinations of the degree of attainment of the preestablished performance goals; provided, however, that Awards which are designed to qualify for the Performance-Based Exception, and which are held by Covered Employee, may not be adjusted upward (the Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the Committee may make such grants without satisfying the requirements of Code Section 162(m).
No Award shall be paid unless the Committee certifies that the requirements necessary to receive the Award have been met.
Article 11. |
Beneficiary Designation |
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company or the Committee, and will be effective only when filed by the Participant in writing with the Company or the Committee during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
Article 12. |
Deferrals |
12.1. Deferred Compensation Plan. To the extent permitted under the Southern Company Deferred Compensation Plan, a Participant may elect to defer his or her receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant with respect to Restricted Stock Units, Performance Units, Performance Shares or Cash-Based Awards (and any cash dividends credited with respect to any such Award). Any such deferral shall be made in accordance with the rules and procedures established under the Southern Company Deferred Compensation Plan.
12.2. Award Agreement. The Committee may require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant with respect to Restricted Stock Units, Performance Units, Performance Shares or Cash-Based Awards (and any cash dividends credited with respect to any such Award). Any such requirement shall be set forth in an Award Agreement or in the administrative specifications for such Award, which shall include terms that are designed to satisfy the requirements of Code Section 409A.
Article 13. |
Rights of Employees/Directors |
13.1. Employment . Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.
13.2. Participation . No Employee or Director shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
13.3. Rights as a Stockholder . Except as otherwise provided in an Award Agreement, a Participant shall have none of the rights of a shareholder with respect to shares of Common Stock covered by any Award until the Participant becomes the record holder of such shares.
Article 14. |
Amendment, Modification, and Termination |
14.1. Amendment, Modification, and Termination . Subject to Section 14.3, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders and except as provided in Section 4.3, Options or SARs issued under this Plan will not be repriced, replaced, or regranted through cancellation, or by lowering the Option Price of a previously granted Option or the grant price of a previously granted SAR, and no material amendment of this Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or stock exchange rule. Notwithstanding the foregoing, Section 18.4 of the Plan may not be amended following a “Change in Control” or “Southern Termination” (as such terms are defined in the Change in Control Benefit Plan Determination Policy).
14.2. Adjustment of Awards upon the Occurrence of Certain Unusual or Nonrecurring Events . The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.3 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that, unless the Committee determines otherwise at the time such adjustment is considered, no such adjustment shall be authorized to the extent that such authority would be inconsistent with the Plan’s meeting the requirements of Section 162(m) of the Code, as from time to time amended.
14.3. Awards Previously Granted . Notwithstanding any other provision of the Plan to the contrary, to the extent specifically set forth in an Award Agreement, no termination, amendment, or modification of the Plan shall adversely affect in any material way any such Award previously granted under the Plan without the written consent of the Participant holding such Award.
14.4. Compliance with Code Section 162(m) . At all times when Code Section 162(m) is applicable, all Awards granted under this Plan shall comply with the requirements of Code Section 162(m); provided, however, that in the event the Board determines that such compliance is not desired with respect to any Award or Awards available for grant under the Plan, and such determination is communicated to the Committee, then compliance with Code Section 162(m) will not be required. In addition, in the event that changes are made to Code Section 162(m) to permit greater flexibility with respect to any Award or Awards available under the Plan, the Board or the Committee may, subject to this Article 14, make any adjustments it deems appropriate.
Article 15. Withholding
15.1. Tax Withholding . The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
15.2. Share Withholding . With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
Article 16. |
Indemnification |
Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation of Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
Article 17. |
Successors |
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
Article 18. |
General Provisions |
18.1. Gender and Number . Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
18.2. Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included, provided that the remaining provisions shall be construed in a manner necessary to accomplish the intentions of the Company upon execution of the Plan.
18.3. Requirements of Law . The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
18.4. Change in Control . The provisions of the Change in Control Benefit Plan Determination Policy are incorporated herein by reference to determine the occurrence of a change in control or preliminary change in control of Southern Company or a Subsidiary, the funding of any trust and the benefits to be provided hereunder in the event of such a change in control. Any modifications to the Change in Control Benefit Plan Determination Policy are likewise incorporated herein.
18.5. Delivery of Title . The Company shall have no obligation to issue or deliver evidence of title for Shares under the Plan prior to:
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(a) |
Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and |
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(b) |
Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. |
18.6. Securities Law Compliance . With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions or Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the plan or action by the Board or Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board or Committee.
18.7. No Additional Rights . Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, or confer upon any Participant any right to continue in the employ of the Company.
No Employee or Director shall have the right to be selected to receive an Award under this Plan or having been so selected, to be selected to receive a future Award.
Neither the Award nor any benefits arising under this Plan shall constitute part of a Participant’s employment contract with the Company or any Subsidiary, and accordingly, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to liability on the part of the Company or any Subsidiary for severance payments.
18.8. No Effect on Other Benefits . This receipt of Awards under the Plan shall have no effect on any benefits and obligations to which a Participant may be entitled from the Company or any Subsidiary, under another plan or otherwise, or preclude a Participant from receiving any such benefits.
18.9. Employees Based Outside of the United States . Notwithstanding any provision of the Plan to the contrary, in order to comply with provisions of laws in other countries in which the Company and its Subsidiaries operate or have Employees, the Board or the Committee, in their sole discretion, shall have the power and authority to:
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(a) |
Determine which Employees employed outside the United States are eligible to participate in the Plan; |
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(b) |
Modify the terms and conditions of any Award granted to Employees who are employed outside the United States; and |
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(c) |
Establish subplans, modified exercise procedures, and other terms and procedures to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 18.9 by the Board or the Committee shall be attached to this Plan document as Appendices. |
18.10. No Guarantee of Favorable Tax Treatment. Although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Code Section 409A, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Code Section 409A or any other provision of federal, state, local, or foreign law. The Company shall not be liable to any Participant for any tax the Participant might owe as a result of the grant, holding, vesting, exercise, or payment of any Award under the Plan.
18.11. Transferability. During a Participant’s lifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution; no Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported transfer in violation hereof shall be null and void. Notwithstanding the forgoing, the Committee may, in its discretion, provide in an Award Agreement or in the administrative specifications for an Award that any or all Awards (other than ISOs) shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate; provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8).
18.12. Shareholder Approval . Notwithstanding anything in the Plan to the contrary, the ISO portion of this Plan shall be effective only if approved by the shareholders of the Company (excluding a Subsidiary) within 12 months before or after the date the Plan is adopted. If not so approved, any Options which were designated as ISOs hereunder shall be automatically be converted to NQSOs.
18.13. Governing Law . To the extent not preempted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.
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SOUTHERN COMPANY |
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By: /s/Patricia L. Roberts |
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Assistant Secretary |
Exhibit 10(a)4
SOUTHERN COMPANY
DEFERRED COMPENSATION PLAN
Amended and Restated as of January 1, 2009
SOUTHERN COMPANY
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE I |
Purpose and Adoption of Plan |
1 |
ARTICLE II |
Definitions |
2 |
ARTICLE III |
Administration of Plan |
7 |
ARTICLE IV |
Eligibility |
11 |
ARTICLE V |
Deferral Election |
12 |
ARTICLE VI |
Participants’ Accounts |
13 |
ARTICLE VII |
Account Distribution |
16 |
ARTICLE VIII |
Miscellaneous Provisions |
19 |
SOUTHERN COMPANY
DEFERRED COMPENSATION PLAN
ARTICLE I
Purpose and Adoption of Plan
1.1 Adoption : Southern Company Services, Inc. and the other Employing Companies established the Deferred Compensation Plan for The Southern Electric System effective October 1, 1988. The Plan has been amended from time to time including the good faith amendment and restatement effective January 1, 2005 and then again this amendment and restatement effective January 1, 2009 both of which were adopted to comply with Code Section 409A, including the proposed, temporary, or final regulations, or other guidance issued by the Secretary of Treasury and the Internal Revenue Service with respect thereto (collectively “409A Guidance”). Except as otherwise provided herein and consistent with Section 1.3, the terms of the Plan as in effect prior to January 1, 2005 shall continue to be applicable to deferrals made pursuant to the Plan prior to such January 1, 2005.
1.2 Purpose : This Southern Company Deferred Compensation Plan is designed to permit a select group of management or highly compensated employees (“Top-Hat Employees”) within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) to elect to defer a portion of their regular compensation during each payroll period and to defer all or a portion of certain short-term and long-term incentive payments until a specified date or until their death, retirement, or other Separation from Service with an Employing Company. The Plan is intended to constitute a non-qualified deferred compensation plan that complies with the provisions of Code Section 409A and an unfunded deferred compensation arrangement for Top-Hat Employees governed by ERISA whose benefits shall be paid solely from the general assets of the Employing Companies.
1.3 Schedule of Provisions for Pre-2005 Deferrals : The attached Schedule sets forth the operative provisions of the Plan applicable to “grandfathered” deferrals of Compensation and Incentive Pay made by Participants which are treated by the Employing Companies as not subject to Section 409A of the Code. The Account balance (plus earnings thereon) of the grandfathered deferrals shall only be subject to the provisions set forth in the Schedule. In accordance with transition rules under the 409A Guidance, these provisions are only intended to preserve the rights and features of the “grandfathered” deferrals and are, therefore, not intended to “materially modify” any aspect of such rights and features. Provisions of the Schedule should be so construed whenever necessary or appropriate. Provisions in the Schedule shall only be amended in accordance with the Schedule’s terms.
1.4 409A Transition Elections : At a time and in a manner determined by the Committee, Participants shall make timely elections to conform to the Plan’s terms effective on and after January 1, 2005. Where a Participant fails to make such elections required by the Committee, with regard to the form of distribution ( i.e. , lump sum or installment), the Committee shall establish a default distribution form based on the following hierarchy: first, the most current distribution form in effect applicable to the Account balance governed by the Schedule of Provisions for Pre-2005 Deferrals; if none, lump sum. Such elections are intended to meet the transition requirements of Section 409A of the Code and Internal Revenue Service Notice 2005-1.
ARTICLE II
Definitions
For purposes of the Plan, the following terms shall have the following meanings unless a different meaning is plainly required by the context:
2.1 “Account” shall mean the account or accounts established and maintained by an Employing Company to reflect the interest of a Participant in the Plan resulting from a Participant’s deferral of Compensation and/or Incentive Pay each Plan Year and adjustments thereto to reflect income, gains, losses, and other credits or charges. Charges to a Participant’s Account for distributions shall be posted as of the date the Account is valued in accordance with Section 7.1(a).
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2.2 |
“Board of Directors” shall mean the Board of Directors of the Company. |
2.3 “Change in Control Benefits Protection Plan” shall mean the Change in Control Benefits Protection Plan, as approved by the Southern Board, as it may be amended from time to time in accordance with the provisions therein.
2.4 “Closing Price” shall mean the closing price on any trading day of a share of Common Stock based on consolidated trading as defined by the Consolidated Tape Association and reported as part of the consolidated trading prices of New York Stock Exchange listed securities.
2.5 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
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2.6 |
“Committee” shall mean the committee referred to in Section 3.1 hereof. |
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2.7 |
“Common Stock” shall mean the common stock of Southern. |
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2.8 |
“Company” shall mean Southern Company Services, Inc. |
2.9 “Compensation” shall mean the rate of an Employee’s base wages or salary paid by any Employing Company to an Employee, including amounts contributed by an Employing Company to the Employee Savings Plan as Elective Employer Contributions, as said term is defined in the Employee Savings Plan, pursuant to the Employee’s exercise of his or her deferral
option made in accordance with Section 401(k) of the Internal Revenue Code, amounts contributed by an Employing Company to the Employee Savings Plan as catch-up contributions pursuant to the Employee’s exercise of his deferral option made thereunder in accordance with the requirements of Section 414(v) of the Internal Revenue Code, and amounts contributed by an Employing Company to The Southern Company Flexible Benefits Plan on behalf of the Employee pursuant to his or her salary reduction election under such plan; but disregarding overtime and any reimbursements to an Employee paid by any Employing Company including, but not limited to, reimbursements for such items as moving expenses, automobile expenses, tax preparation expenses, travel and entertainment expenses, and health and life insurance premiums.
2.10 “Deferral Election” shall mean the Participant’s election to defer a portion of his or her Compensation and/or Incentive Pay pursuant to Article V hereof.
2.11 “Distribution Election” shall mean the election under Article VII hereof, pursuant to which a Participant elects the distribution of his or her Account.
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2.12 |
“Effective Date” of this amendment and restatement shall mean January 1, 2009. |
2.13 “Employee” shall mean any person who is currently employed by an Employing Company.
2.14 “Employee Savings Plan” shall mean The Southern Company Employee Savings Plan, as amended from time to time.
2.15 “Employee Stock Ownership Plan” shall mean The Southern Company Employee Stock Ownership Plan, as amended from time to time until merged into the Employee Savings Plan effective December 20, 2006.
2.16 “Employing Company” shall mean the Company, or any affiliate or subsidiary (direct or indirect) of The Southern Company, which the Board of Directors may from time to
time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them. The Employing Companies are set forth in Appendix A of the Plan, as may be amended from time to time.
2.17 “Enrollment Date” shall mean January 1 of each Plan Year, and such other dates permitted by the terms of the Plan or as may be determined from time to time by the Committee. No enrollment date shall violate Code Section 409A.
2.18 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
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2.19 |
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. |
2.20 “Incentive Pay” shall mean such long-term or short-term incentive pay as the Committee shall permit to be deferred under this Plan for any Plan Year and in all events includes retention compensation where the written retention agreement expressly provides that the retention compensation is to be treated as “incentive pay” which is deferrable under this Plan.
2.21 “Investment Election” shall mean the Participant’s election to have his or her deferred Compensation or Incentive Pay invested pursuant to Section 6.2 or Section 6.3 hereof.
2.22 “Key Employee” shall have the meaning ascribed to the term “specified employee” under Code Section 409A(a)(2)(B)(i) and the regulations promulgated thereunder as it applies to a Participant. The Committee shall establish the time period required to determine key employee status.
2.23 “Key-Employee Delay” shall mean the six (6) month delay in the commencement of benefits applicable to Key Employees pursuant to the requirements of Code Section 409A(a)(2)(B)(i) and the regulations promulgated thereunder.
2.24 “Modification Delay” shall mean the requirements permitting a change in time or form of payment as allowed under Code Section 409A(a)(4)(C) and the regulations promulgated thereunder.
2.25 “Non-adopting Company” shall mean any subsidiary or affiliate of Southern which is not an Employing Company.
2.26 “Participant” shall mean an Employee or former employee of an Employing Company who is eligible to and defers Compensation and/or Incentive Pay under the Plan or who was so eligible and had an unpaid Account balance upon his or her death, retirement, or other Separation from Service with an Employing Company.
2.27 “Pension Plan” shall mean The Southern Company Pension Plan, as amended from time to time.
2.28 “Plan” shall mean the Southern Company Deferred Compensation Plan, amended and restated as of January 1, 2009, as further amended from time to time.
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2.29 |
“Plan Year” shall mean the calendar year. |
2.30 “Retirement Income” shall have the same meaning as set forth in the Pension Plan.
2.31 “Separation from Service” shall have the meaning ascribed to this term under Code Section 409A(a)(2)(A)(i) and the regulations promulgated thereunder. For this purpose, Separation from Service shall include a permanent decrease in the level of bona fide services performed by the Participant after a certain date to a level that is twenty percent (20%) or less of the average level of bona fide services performed by the Participant over the immediately preceding thirty-six (36) month period.
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2.32 |
“Southern” shall mean Southern Company, its successors and assigns. |
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2.33 |
“Southern Board” shall mean the board of directors of Southern. |
2.34 “Total Disability” shall mean a total disability as determined by the Social Security Administration and meeting the requirements of Code Section 409A(a)(2).
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2.35 |
Trust” shall mean the Southern Company Deferred Compensation Trust. |
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2.36 |
“Trustee” shall mean the entity designated as such in the Trust. |
2.37 “Unforeseeable Emergency” shall mean a severe financial hardship meeting the requirements of Code Section 409A(a)(2)(B)(ii).
2.38 “Valuation Date” shall mean each trading day of the New York Stock Exchange, or any successor national exchange on which the Common Stock is traded and with respect to which a Closing Price may be determined.
Where the context requires, the definitions of all terms set forth in the Pension Plan, the Employee Savings Plan, and the Employee Stock Ownership Plan shall apply with equal force and effect for purposes of interpretation and administration of the Plan, unless said terms are otherwise specifically defined in the Plan. Words in the masculine gender shall include the feminine and neuter genders, words in the singular shall include the plural, and words in the plural shall include the singular.
ARTICLE III
Administration of Plan
3.1 Effective May 31, 2007, the general administration of the Plan shall be placed in the “Committee” which shall consist of the Benefits Administration Committee, the members of which shall be appointed from time to time by the Fiduciary Oversight Committee of the Board of Directors. The Committee shall govern itself in accordance with the terms of the Charter for
the Benefits Administration Committee approved by the Fiduciary Oversight Committee of the Board of Directors.
3.2 No member of the Committee shall receive any compensation from the Plan for his or her service.
3.3 (a) The Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan as may be more particularly set forth herein. The Committee shall interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination by the Committee shall be conclusive and binding on all persons. The Committee shall be the Plan’s agent for service of process.
(b) If a claim for benefits under the Plan is denied, in whole or in part, the Committee will provide a written notice of the denial within a reasonable period of time, but not later than 90 days after the claim is received. If special circumstances require more time to process the claim, the Committee will issue a written explanation of the special circumstances prior to the end of the 90 day period and a decision will be made as soon as possible, but not later than 180 days after the claim is received.
The written notice of claim denial will include:
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• |
Specific reasons why the claim was denied; |
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• |
Specific references to applicable provisions of the Plan document or other relevant records or papers on which the denial is based, and information about where a Participant or his or her beneficiary may see them; |
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• |
A description of any additional material or information needed to process the claim, and an explanation of why such material or information is necessary; |
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An explanation of the claims review procedure, including the time limits applicable to such procedure, as well as a statement notifying the Participant or his or her beneficiary of their right to file suit if the claim for benefits is denied, in whole or in part, on review. |
Upon request, a Participant or his or her beneficiary will be provided without charge, reasonable access to, and copies of, all non-confidential documents that are relevant to any denial of benefits. A claimant has 60 days from the day he or she receives the original denial to request a review. Such request must be made in writing and sent to the Committee. The request should state the reasons why the claim should be reviewed and may also include evidence or documentation to support the claimant’s position.
The Committee will reconsider the claimant’s claim, taking into account all evidence, documentation, and other information related to the claim and submitted on the claimant’s behalf, regardless of whether such information was submitted or considered in the initial denial of the claim. The Committee will make a decision within 60 days. If special circumstances require more time for this process, the claimant will receive written explanation of the special circumstances prior to the end of the initial 60 day period and a decision will be sent as soon as possible, but not later than 120 days after the Committee receives the request.
No legal action to recover benefits or enforce or clarify rights under a Plan can be commenced until the Participant or his or her beneficiary has first exhausted the claims and review procedures provided under the Plan.
3.4 The Committee may adopt such regulations as it deems desirable for the conduct of its affairs and may appoint such accountants, counsel, actuaries, specialists, and other persons as it deems necessary or desirable in connection with the administration of this Plan.
3.5 The Committee shall be reimbursed by the Employing Companies for all reasonable expenses incurred by it in the fulfillment of its duties, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.
3.6 (a) The Committee is responsible for the daily administration of the Plan and may appoint other persons or entities to perform any of its fiduciary functions. The Committee and any such appointee may employ advisors and other persons necessary or convenient to help the Committee carry out its duties, including its fiduciary duties. The Committee shall review the work and performance of each such appointee, and shall have the right to remove any such appointee from his or her position. Any person, group of persons, or entity may serve in more than one fiduciary capacity.
(b) The Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers, and other transactions concerning the Plan. Such accounts, books, and records relating thereto shall be open at all reasonable times to inspection and audit by the Board of Directors and by any persons designated thereby.
(c) The Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants’ records; recording and transmission of all notices required to be given to
Participants and their beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Employing Company; securing of such fidelity bonds as may be required by law; and doing such other acts necessary for the proper administration of the Plan. The Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records, and other data as may be necessary for proper administration of the Plan. The Committee shall notify the Employing Companies upon their request of any action taken by the Committee, and when required, shall notify any other interested person or persons.
ARTICLE IV
Eligibility
4.1 Any Employee who is determined eligible to participate in accordance with Section 4.2 of the Plan and whose base compensation and salary grade level equals or exceeds such minimum threshold as may be established by the Committee from time to time may elect to participate in the Plan beginning on any Enrollment Date by electing to have his or her Compensation and/or Incentive Pay reduced and such amounts contributed to the Plan in accordance with Article V hereof, and directing the investment of such contributions in accordance with Article VI hereof. An Employee who is eligible to participate and elects to defer Compensation and/or Incentive Pay shall be a Participant in the Plan. The Committee shall be authorized to establish the minimum base compensation and the salary grade level required for eligibility to participate in the Plan, to be effective as of the first day of the next succeeding Plan Year. Notwithstanding the foregoing, any Employee eligible to participate in any similar group employee deferred compensation plan maintained by an Employing Company or maintained by a Non-adopting Company shall be ineligible to defer Compensation or Incentive Pay under this Plan, unless the Committee in its sole discretion shall determine otherwise.
4.2 The Committee shall determine which Employees are eligible to participate in the Plan. Additionally, the Committee shall be authorized to modify the minimum base compensation and the salary grade threshold described in Section 4.1 of the Plan and to rescind the eligibility of any Participant to continue deferrals if this is necessary or advisable to ensure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees, as such terms are defined by the ERISA. A Participant whose eligibility is rescinded or who loses eligibility for any reason shall not be eligible to defer Compensation or Incentive Pay until eligibility is restored in accordance with the guidelines established by the Committee.
4.3 The Committee shall have the authority to permit, if it deems appropriate, separate Deferral Elections under Article V hereof, Investment Elections under Article VI hereof, and Distribution Elections under Article VII hereof for Compensation and/or Incentive Pay, respectively.
ARTICLE V
Deferral Election
5.1 A Participant may elect to defer payment of a portion of his or her Compensation otherwise payable to him by his or her Employing Company during each payroll period of the next succeeding Plan Year by any whole percentage not to exceed fifty percent (50%) of his or her Compensation, or such greater or lesser amount as shall be determined by the Committee from time to time. A Participant may also elect to defer payment of up to one hundred percent (100%), by whole percentages, of any Incentive Pay otherwise payable to him or her by his or her Employing Company.
5.2 The Deferral Election shall be made in a manner prescribed by the Committee and shall state as follows:
(a) That the Participant wishes to make an election to defer the receipt of a portion of his or her Compensation and/or all or a portion of his or her Incentive Pay;
(b) The whole percentage of his or her Compensation and/or Incentive Pay which the Participant elects to defer; and
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(c) |
The Distribution Election under Article VII hereof. |
5.3 The Deferral Election of a Participant shall be made by the Participant in a manner prescribed by the Committee and delivered by the date established by the Committee and shall be effective on the first day of the Plan Year immediately following the date of the Deferral Election. A Deferral Election with respect to the deferral of future Compensation and/or Incentive Pay shall be an annual election for each Plan Year; except that, with respect to certain Incentive Pay that is retention compensation, the deferral of such compensation may be set forth in writing in the retention arrangement at the time such arrangement is established. The termination of a Participant’s participation in the Plan shall not affect the Participant’s Compensation or Incentive Pay previously deferred under the Plan, which shall be invested and distributed in accordance with the Participant’s elections and the terms and conditions of the Plan. Such terminated Participant shall become an inactive Participant with respect to eligibility to make future deferrals under this Plan.
ARTICLE VI
Participants’ Accounts
6.1 Upon the Committee’s receipt of a Participant’s valid Deferral Election under Article V hereof, beginning as of the Enrollment Date, the designated portion of Compensation
and/or Incentive Pay shall be credited to the Participant’s Account in accordance with the provisions of this Article VI.
6.2 On the last business day of each month, the Account of each Participant electing in a manner prescribed by the Committee to invest his or her deferred Compensation and/or Incentive Pay for a Plan Year in accordance with this Section 6.2 shall be credited by the Employing Company with a deemed amount equal to the monthly equivalent of the per annum prime rate of interest as published by the Wall Street Journal as the base rate on corporate loans posted as of the last business day of each month by at least seventy five (75%) percent of the United States’ largest banks, compounded monthly on any Account balance so invested until such balance is fully distributed.
6.3 The designated portion of the Account of each Participant electing in a manner prescribed by the Committee to invest his or her deferred Compensation and/or Incentive Pay for a Plan Year in accordance with this Section 6.3 shall be credited on the effective date of investment with the deemed number of shares (including fractional shares) of Common Stock which could have been purchased on such date with the dollar amount of such deferral, based upon the Common Stock’s Closing Price on the Valuation Date coincident with the date of investment. As of the date on which occurs the payment of dividends on the Common Stock, if any, there shall be credited with respect to the deemed number of shares of Common Stock in the Participant’s Account on the applicable dividend record date such additional deemed shares (including fractional shares) of Common Stock as follows:
(a) In the case of cash dividends, such additional deemed shares as could be purchased at the Closing Price on the Valuation Date coincident with the dividend
payment date with the dividends which would have been payable on the deemed number of shares previously credited to the Participant’s Account as of the dividend record date;
(b) In the case of dividends payable in property other than cash or Common Stock, such additional deemed shares as could be purchased at the Closing Price on the Valuation Date coincident with the dividend payment date with the fair market value of the property which would have been payable on the deemed number of shares previously credited to the Participant’s Account as of the dividend record date; or
(c) In the case of dividends payable in Common Stock, such additional deemed shares as would have been payable on the deemed number of shares previously credited to the Participant’s Account as of the dividend record date.
6.4 (a) The initial Investment Election by a Participant with respect to deferrals into and earnings on his or her Account shall be made in a manner prescribed by the Committee. Such Investment Elections shall be delivered in accordance with such instructions and shall be effective on the first day of such succeeding Plan Year.
(b) The Participant may transfer in accordance with procedures prescribed by the Committee all or a portion of his Account between investment options. Any such transfer shall constitute an Investment Election as to the amount transferred and shall be effective immediately upon transfer. The timing of transfers between investment options, the procedures for transfer and the valuation of transferred Accounts or portions of Accounts shall be determined by the Committee. In any event, any Participant who is required to file reports pursuant to Section 16(a) of the Exchange Act with respect to equity securities of Southern shall not be permitted to transfer between investment options during any restricted period as determined by the Committee in its sole discretion.
6.5 The Committee shall issue a report at least annually to each Participant holding an Account, setting forth at least the following:
(a) with respect to amounts invested under Section 6.2 hereof, as of the last day of the Plan Year, the Account Balance, the dollar amount of deferrals, and earnings thereon, and
(b) with respect to amounts invested under Section 6.3 hereof, the Closing Price of shares of Common Stock credited to each Participant’s Account as of the Valuation Date coincident with the last business day of the Plan Year, the total number of deemed shares of Common Stock (and fractions thereof), and the total value of the Participant’s deemed investment in Common Stock as of such Valuation Date.
ARTICLE VII
Account Distribution
7.1 (a) When a Participant Separates from Service with an Employing Company or otherwise becomes entitled to commence the distribution of all or a portion of his or her Account, he or she shall be entitled to receive in cash an amount equal to the dollar amount of any deferrals and any amounts in lieu of interest thereon credited to his or her Account under Section 6.2 hereof, and the dollar value of the product of the Closing Price multiplied by the number of deemed shares of Common Stock (and fractions thereof) credited to his or her Account in accordance Section 6.3 hereof, determined as of the date the Account is valued for distribution. If such date is a non-business day, the Account shall be valued as of the next business day. Such amounts shall be paid in accordance with the Participant’s Distribution Elections made in accordance with Section 7.4. No portion of a Participant’s Account shall be distributed in Common Stock.
(b) The transfer by a Participant between subsidiaries or affiliates of Southern shall not be deemed to be a termination of employment with an Employing Company for purposes of the Plan.
7.2 In the event that a Participant has made or is deemed to have made a Distribution Election to receive a lump sum distribution of his or her Account, the dollar amount determined under Section 7.1 hereof shall be paid to the Participant as soon as practicable but not later than seventy-five (75) days following the date on which the Participant’s Separation from Service occurs or such specified date, if any, elected by the Participant in accordance with Section 7.6. Notwithstanding the foregoing, if a Participant is a Key Employee, such Participant shall be subject to the Key-Employee Delay and the payment of the lump sum following Separation from Service shall be as of the beginning of the seventh full calendar month. Such delay shall not apply to a Participant’s election under Section 7.6.
7.3 In the event that a Participant has made a Distribution Election to receive the distribution of his or her Account in annual installments, the first payment shall be made as soon as practicable but not later than seventy-five (75) days following the date on which the Participant’s Separation from Service occurs and shall be in an amount equal to the dollar balance in the Participant’s Account determined under Section 7.1 hereof, divided by the number of annual installments elected. Subsequent annual installments shall be in an amount equal to the dollar value of the Participant’s Account determined under Section 7.1 hereof divided by the number of the remaining annual payments, and shall be paid as of each anniversary of the initial payment date (or what would have been the initial payment date but for the Key-Employee Delay) until the balance of the Participant’s Account is paid in full. For purposes of Section 409A of the Code, installments shall be treated as a single payment. Notwithstanding the
foregoing, if a Participant is a Key Employee, such Participant shall be subject to the Key-Employee Delay and the first installment payment following Separation from Service shall be as of the beginning of the seventh full calendar month.
7.4 When a Participant makes a Deferral Election, he or she shall make a Distribution Election in a manner prescribed by the Committee. Such Distribution Election shall apply only to the amounts attributable to that specified Deferral Election and may not be subsequently revoked, except that one or more Distribution Elections may be modified by a Participant but only if such modification meets the requirements of a Modification Delay.
7.5 Upon the death of a Participant prior to Separation from Service, the Account balance shall be paid in the form of a lump sum as soon as practicable but not more than seventy-five (75) days following the date of the Participant’s death.
7.6 In addition to distributions commencing upon a Separation from Service, Participants may elect in a manner prescribed by the Committee to commence payment of all or a portion of his or her Deferral Election as of a specified date.
7.7 Upon the Total Disability of a Participant, the balance of his or her Account shall be paid in accordance with Participant’s Deferral Election commencing as of such Participant’s Separation from Service and, if applicable, as of any date specified by the Participant pursuant to an election under Section 7.6.
7.8 Upon the occurrence of an Unforeseeable Emergency and an application made by a Participant or his or her beneficiary, the Committee may in its sole discretion determine to make a lump-sum payment up to the amount in the Participant’s Account in accordance with the requirements of Code Section 409A to satisfy such Unforeseeable Emergency. Such lump-sum
payment shall reduce pro rata the amount attributable to each annual Deferral Election made by the Participant.
7.9 Beneficiary designations may be made or changed by the Participants in a manner prescribed by the Committee at any time without the consent of any prior beneficiary. In the event a beneficiary designation is not on file or the designated beneficiary is deceased or cannot be located following the death of the Participant, payment will be made to the Participant’s estate.
7.10 In the event a Participant who is employed on or after January 1, 1999 with an “Employing Company” (as defined in the Change in Control Benefits Protection Plan) disputes the calculation of his Account or payment of amounts due under the terms of the Plan, such Participant has recourse against the Company, the Employing Company by which Participant is employed, if different, the Plan, and the Trust for the payment of benefits to the extent the Trust so provides.
7.11 The provisions of the Change in Control Benefits Protection Plan are incorporated herein by reference to determine the occurrence of a change in control or preliminary change in control of Southern or an Employing Company, the benefits to be provided hereunder, and the funding of the Trust in the event of such a change in control. Any modifications to the Change in Control Benefits Protection Plan are likewise incorporated herein and are otherwise intended to comply with 409A of the Code.
ARTICLE VIII
Miscellaneous Provisions
8.1 Neither the Participant, his or her beneficiary, nor his or her legal 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 non-assignable and nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.
8.2 Except as expressly limited under the terms of the Trust, an Employing Company maintaining an Account for the benefit of a Participant shall neither reserve nor specifically set aside funds for the payment of its obligations under the Plan. In any event, such obligations shall be paid or deemed to be paid solely from the general assets of the Employing Companies. Participants shall only have the status of a general, unsecured creditor of the Employing Company(ies). Notwithstanding that a Participant shall be entitled to receive the balance of his or her Account under the Plan, the assets from which such amount may be paid shall at all times be subject to the claims of the creditors of the Participants’ Employing Companies.
8.3 Except for the provisions of Section 7.10 hereof, which may not be amended following a “Southern Change in Control” or “Subsidiary Change in Control” (as defined in the Change in Control Benefits Protection Plan), the Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to any amounts which have been earned or deferred under the Plan prior to such amendment, modification, or termination. Effective March 1, 2006, the Plan may also be amended by the Committee (a) if such amendment does not involve a substantial increase in cost to any Employing Company, or (b) as may be necessary, proper, or desirable in order to comply with laws or regulations enacted or promulgated by any federal or state governmental authority.
8.4 It is expressly understood and agreed that the payments 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 or she may be eligible, whether funded or unfunded, by reason of his or her employment with any Employing Company.
8.5 There may be deducted from any payment under the Plan in accordance with the requirements of 409A of the Code the amount of any tax owed by the Participant required by any governmental authority to be withheld and paid over by an Employing Company to such governmental authority for the account of the person entitled to such distribution. The Employing Company may also seek payment for tax owed by the Participant directly from such Participant or may withhold such tax from compensation otherwise paid to such Participant.
8.6 Any Compensation or Incentive Pay deferred by a Participant while employed by an Employing Company and any Transferred Amounts shall not be considered “compensation,” as the term is defined in the Employee Savings Plan, the Employee Stock Ownership Plan, or the Pension Plan unless any one or all of those plans expressly provides otherwise. Distributions from a Participant’s Account shall not be considered wages, salaries, or compensation under any other employee benefit plan.
8.7 No provision of this Plan shall be construed to affect in any manner the existing rights of an Employing Company to suspend, terminate, alter, modify, whether or not for cause, the employment relationship of the Participant and his or her Employing Company.
8.8 For the avoidance of doubt, the provisions of the Plan effective in the Plan’s amendment and restatement dated January 1, 2004 (“2004 Plan”) concerning Mirant Shares were applied through the liquidation of Mirant Shares as a form of investment in the Plan as of June 30, 2006. Although these provisions concerning Mirant Shares are not restated in this amendment and restatement, a Participant’s rights concerning Mirant Shares are as set forth in
such 2004 Plan. To this limited extent, the provisions in the 2004 Plan concerning Mirant Shares are incorporated herein.
8.9 This Plan, and all rights under it, shall be governed by and construed in accordance with the laws of the State of Georgia without regard to conflict of laws principles to the extent not preempted by ERISA.
IN WITNESS WHEREOF, the amended and restated Plan has been executed by duly authorized officers of Southern Company Services, Inc. pursuant to resolutions of the Board of Directors and the Committee, this 31st day of December, 2008.
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SOUTHERN COMPANY SERVICES, INC. |
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By: /s/Patricia L. Roberts |
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Its: Vice President & Associate General Counsel |
APPENDIX A
THE SOUTHERN COMPANY
DEFERRED COMPENSATION PLAN
EMPLOYING COMPANIES AS OF JANUARY 1, 2009
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Southern Communications Services, Inc.
Southern Company Energy Solutions, LLC
Southern Company Services, Inc.
Southern Nuclear Operating Company, Inc.
SCHEDULE OF PROVISIONS
FOR PRE-2005 DEFERRALS
ARTICLE I
Purpose
1.1 Schedule of Provisions for Pre-2005 Deferrals : This Schedule sets forth the operative provisions of the Plan applicable to “grandfathered” deferrals of Compensation and Incentive Pay made by Participants which are treated by the Employing Companies as not subject to Section 409A of the Code. The Account balance (plus earnings thereon) of the grandfathered deferrals shall only be subject to the provisions set forth in this Schedule. In accordance with the 409A Guidance, these provisions are only intended to preserve the rights and features of the “grandfathered” deferrals and are, therefore, not intended to “materially modify” any aspect of such rights and features. Provisions of this Schedule should be so construed whenever necessary or appropriate. Provisions in this Schedule shall only be amended in accordance with this Schedule’s terms.
ARTICLE II
Definitions
For purposes of this Schedule, the following terms shall have the following meanings unless a different meaning is plainly required by the context:
2.1 “Account” shall mean the account or accounts established and maintained by an Employing Company to reflect the interest of a Participant in the Plan solely pursuant to the terms of this Schedule resulting from a Participant’s deferral of Compensation and/or Incentive Pay and adjustments thereto to reflect income, gains, losses, and other credits or charges. The Account amount is attributable to those deferrals which are not subject to Section 409A of the
Code. Charges to Participant’s Accounts for distributions shall be posted as of the date the Account is valued for distribution.
2.2 “Change in Control Benefits Protection Plan” shall mean the Change in Control Benefits Protection Plan, as approved by the board of directors of Southern, as it may be amended from time to time in accordance with the provisions therein.
2.3 “Closing Price” shall mean the closing price on any trading day of a share of the Common Stock based on consolidated trading as defined by the Consolidated Tape Association and reported as part of the consolidated trading prices of New York Stock Exchange listed securities.
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2.4 |
“Committee” shall mean the committee referred to in Section 3.1 of this Schedule. |
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2.5 |
“Common Stock” shall mean the common stock of Southern. |
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2.6 |
“Company” shall mean Southern Company Services, Inc. |
2.7 “Compensation” shall mean the rate of an Employee’s base wages or salary paid by any Employing Company to an Employee, including amounts contributed by an Employing Company to the Employee Savings Plan as Elective Employer Contributions, as said term is defined in the Employee Savings Plan, pursuant to the Employee’s exercise of his or her deferral option made in accordance with Section 401(k) of the Internal Revenue Code, amounts contributed by an Employing Company to the Employee Savings Plan as catch-up contributions pursuant to the Employee’s exercise of his deferral option made thereunder in accordance with the requirements of Section 414(v) of the Internal Revenue Code, and amounts contributed by an Employing Company to The Southern Company Flexible Benefits Plan on behalf of the Employee pursuant to his or her salary reduction election under such plan; but disregarding overtime and any reimbursements to an Employee paid by any Employing Company including,
but not limited to, reimbursements for such items as moving expenses, automobile expenses, tax preparation expenses, travel and entertainment expenses, and health and life insurance premiums.
2.8 “Deferral Election” shall mean the Participant’s election to defer a portion of his or her Compensation and/or Incentive Pay pursuant to Article V of the main body of the Plan.
2.9 “Distribution Election” shall mean the election under Article VII of this Schedule, pursuant to which a Participant elects the distribution of the balance of his or her Account to be made in either a lump sum or in up to ten (10) annual installments following the Participant’s death, disability, retirement, or other termination of Employment with an Employing Company.
2.10 “Employee Savings Plan” shall mean The Southern Company Employee Savings Plan, as amended from time to time.
2.11 “Employee Stock Ownership Plan” shall mean The Southern Company Employee Stock Ownership Plan, as amended from time to time.
2.12 “Employing Company” shall mean the Company, or any affiliate or subsidiary (direct or indirect) of Southern Company, which the board of directors of the Company may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them. The Employing Companies are set forth in Appendix A of the Plan, as may be amended from time to time.
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2.13 |
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. |
2.14 “Incentive Pay” shall mean such long-term or short-term incentive pay as the Committee shall permit to be deferred under the Plan for any Plan Year.
2.15 “Investment Election” shall mean the Participant’s election to have his or her deferred Compensation or Incentive Pay invested pursuant to Section 6.1 or Section 6.2 of this Schedule.
2.16 “Participant” shall mean for purposes of this Schedule an Employee or former employee of an Employing Company who has an unpaid Account balance governed by the terms of this Schedule upon his or her death, disability, retirement, or other termination of employment with an Employing Company.
2.17 “Plan” shall mean the Southern Company Deferred Compensation Plan, amended and restated as of January 1, 2009 which includes this Schedule, as may be further amended from time to time.
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2.18 |
“Plan Year” shall mean the calendar year. |
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2.19 |
“Southern” shall mean Southern Company, its successors and assigns. |
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2.20 |
“Trust” shall mean the Southern Company Deferred Compensation Trust. |
2.21 “Valuation Date” shall mean each trading day of the New York Stock Exchange, or any successor national exchange on which the Common Stock is traded and with respect to which a Closing Price may be determined.
Where the context requires, the definitions of all terms set forth in the Pension Plan, the Employee Savings Plan, and the Employee Stock Ownership Plan shall apply with equal force and effect for purposes of interpretation and administration of the Plan, unless said terms are otherwise specifically defined in the Plan. Words in the masculine gender shall include the feminine and neuter genders, words in the singular shall include the plural, and words in the plural shall include the singular.
ARTICLE III
Administration of Schedule
3.1 Article III of the main body of the Plan is herein incorporated into this Schedule by reference. Any amendment to Article III of the main body of the Plan shall operate as amendment to this Article III of the Schedule.
ARTICLE IV
Eligibility
4.1 For so long as an Employee has an Account balance governed by this Schedule, he or she shall be a Participant in the Plan for purposes of this Schedule, and such Account balance shall be maintained and administered solely in accordance with the terms of this Schedule.
ARTICLE V
Deferral Election
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5.1 |
No new deferral elections may be made which are subject to this Schedule. |
ARTICLE VI
Participants’ Accounts
6.1 On the last business day of each month, the Account of each Participant electing in a manner prescribed by the Committee to invest his or her deferred Compensation and/or Incentive Pay for a Plan Year in accordance with this Section 6.1 shall be credited by the Employing Company with a deemed amount equal to the monthly equivalent of the per annum prime rate of interest as published by the Wall Street Journal as the base rate on corporate loans posted as of the last business day of each month by at least seventy five (75%) percent of the
United States’ largest banks, compounded monthly on any Account balance so invested until such balance is fully distributed.
6.2 The designated portion of the Account of each Participant electing in a manner prescribed by the Committee to invest his or her deferred Compensation and/or Incentive Pay for a Plan Year in accordance with this Section 6.2 shall be credited on the effective date of investment with the deemed number of shares (including fractional shares) of Common Stock which could have been purchased on such date with the dollar amount of such deferral, based upon the Common Stock’s Closing Price on the Valuation Date coincident with the date of investment. As of the date on which occurs the payment of dividends on the Common Stock, if any, there shall be credited with respect to the deemed number of shares of Common Stock in the Participant’s Account on the applicable dividend record date such additional deemed shares (including fractional shares) of Common Stock as follows:
(a) In the case of cash dividends, such additional deemed shares as could be purchased at the Closing Price on the Valuation Date coincident with the dividend payment date with the dividends which would have been payable on the deemed number of shares previously credited to the Participant’s Account as of the dividend record date;
(b) In the case of dividends payable in property other than cash or Common Stock, such additional deemed shares as could be purchased at the Closing Price on the Valuation Date coincident with the dividend payment date with the fair market value of the property which would have been payable on the deemed number of shares previously credited to the Participant’s Account as of the dividend record date; or
(c) In the case of dividends payable in Common Stock, such additional deemed shares as would have been payable on the deemed number of shares previously credited to the Participant’s Account as of the dividend record date.
6.3 The Participant may transfer in accordance with procedures prescribed by the Committee all or a portion of his Account between investment options. Any such transfer shall constitute an Investment Election as to the amount transferred and shall be effective immediately upon transfer. The timing of transfers between investment options, the procedures for transfer, and the valuation of transferred Accounts or portions of Accounts shall be determined by the Committee.
6.4 The Committee shall issue a report at least annually to each Participant holding an Account, setting forth at least the following:
(a) with respect to amounts invested under Section 6.1 hereof, as of the last day of the Plan Year, the Account Balance, the dollar amount of deferrals, and earnings thereon, and
(b) with respect to amounts invested under Section 6.2 hereof, the Closing Price of shares of Common Stock credited to each Participant’s Account as of the Valuation Date coincident with the last business day of the Plan Year, the total number of deemed shares of Common Stock (and fractions thereof), and the total value of the Participant’s deemed investment in Common Stock as of such Valuation Date.
ARTICLE VII
Account Distribution
7.1 (a) When a Participant retires or terminates his or her employment with an Employing Company, he or she shall be entitled to receive in cash an amount equal to the dollar amount of any deferrals and any amounts in lieu of interest thereon credited to his or her
Account under Section 6.1 hereof, and the dollar value of the product of the Closing Price multiplied by the number of deemed shares of Common Stock (and fractions thereof) credited to his or her Account in accordance Section 6.2 hereof, determined as of the date the Account is valued for distribution. If such date is a non-business day, the Account shall be valued as of the next business day. Such amounts shall be paid in accordance with the Participant’s most recent Distribution Election effective in accordance with Section 7.4. No portion of a Participant’s Account shall be distributed in Common Stock.
(b) The transfer by a Participant between subsidiaries or affiliates of Southern shall not be deemed to be a termination of employment with an Employing Company for purposes of the Plan.
7.2 In the event that a Participant’s most recent Distribution Election effective in accordance with Section 7.4 is to receive a lump-sum distribution of his or her Account, the dollar amount determined under Section 7.1 hereof shall be paid to the Participant not later than sixty (60) days following the date on which the Participant’s termination of employment occurs, or as soon as reasonably practicable thereafter.
7.3 In the event that a Participant’s most recent Distribution Election effective in accordance with Section 7.4 is to receive the distribution of his or her Account in annual installments, the first payment shall be made not later than sixty (60) days following the date on which the Participant’s termination of employment occurs, or as soon as reasonably practicable thereafter, and shall be in an amount equal to the dollar balance in the Participant’s Account determined under Section 7.1 hereof, divided by the number of annual installments elected. Subsequent annual installments shall be in an amount equal to the dollar value of the Participant’s Account determined under Section 7.1 hereof divided by the number of the
remaining annual payments, and shall be paid as soon as practicable following each anniversary of the initial payment date until the balance of the Participant’s Account is paid in full.
7.4 The Participants’ initial Distribution Elections may not be revoked and shall govern the distribution of the Participants’ Accounts. Notwithstanding the foregoing, and except as otherwise provided herein, the Committee may, in its sole discretion, upon application by a Participant, accept an amended Distribution Election from a Participant provided the election is made not later than the 366th day prior to a distribution of such Participant’s Account in accordance with the terms of the Plan; provided further, however, that any Participant who is required to file reports pursuant to Section 16(a) of the Securities and Exchange Act of 1934, as amended, with respect to equity securities of Southern shall not be permitted to amend his or her Distribution Election during any time period for which such Participant is required to file any such reports with respect to the portion of his or her Account invested in accordance with the provisions of Section 6.2 of this Schedule, unless the Committee in its sole discretion shall determine otherwise.
7.5 Upon the death of a Participant prior to the complete distribution of his or her Account, the unpaid Account balance shall be paid in the sole discretion of the Committee (a) in a lump sum to the Participant’s designated beneficiary within sixty (60) days following the date on which the Committee is provided evidence of the Participant’s death (or as soon as reasonably practicable thereafter) or (b) in accordance with the Distribution Election made by such Participant. In the event a beneficiary designation is not on file or the designated beneficiary is deceased or cannot be located, payment will be made to the Participant’s estate.
7.6 Beneficiary designations may be changed by the Participants at any time without the consent of any prior beneficiary.
7.7 Upon the total disability of a Participant, as determined by the Social Security Administration, prior to the complete distribution of his or her Account, the unpaid balance of his or her Account shall be paid in the sole discretion of the Committee (a) in a lump sum to the Participant or his or her legal representative within sixty (60) days following the date on which the Committee receives notification of the determination of disability by the Social Security Administration (or as soon as reasonable practicable thereafter) or (b) in accordance with the Participant’s Deferral Election.
7.8 Upon application made by a Participant, his or her designated beneficiary, or an authorized legal representative, the Committee may in its sole discretion determine to accelerate payments or, in the event of death or total disability (as determined by Social Security Administration), may extend or otherwise make payments in a manner different from the manner in which such payment would otherwise be made under the Participant’s Deferral Election in the absence of such determination.
7.9 In the event a Participant who is employed on or after January 1, 1999 with an “Employing Company” (as defined in the Change in Control Benefits Protection Plan) disputes the calculation of his Account or payment of amounts due under the terms of this Plan, such Participant has recourse against the Company, the Employing Company by which Participant is employed, if different, the Plan, and the Trust for the payment of benefits to the extent the Trust so provides.
7.10 The provisions of the Change in Control Benefit Benefits Protection Plan are incorporated herein by reference to determine the occurrence of a change in control or preliminary change in control of Southern or an Employing Company, the benefits to be
provided hereunder, and the funding of the Trust in the event of such a change in control. Any modifications to the Change in Control Benefits Protection Plan are likewise incorporated herein.
ARTICLE VIII
Miscellaneous Provisions
8.1 Except for Section 8.3 of the main body of the Plan, Article VIII is hereby incorporated by reference into this Schedule. Any amendment to Article VIII of the main body of the Plan shall operate as an amendment to this Article VIII of the Schedule except that Section 8.2 below shall set forth the sole method for amending and/or terminating this Schedule.
8.2 This Schedule may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time by resolution expressly modifying this Schedule; provided, however, that (a) Section 7.10 of this Schedule may not be amended following a “Southern Change in Control” or “Subsidiary Change in Control” (as defined in the Change in Control Benefits Protection Plan), (b) no such amendment, modification, or termination shall impair any rights to any amounts which have been earned or deferred under the Plan prior to such amendment, modification, or termination and/or (c) Article III and Section 8.1 of this Schedule may be amended in accordance with their terms. Payment in full in cash of the amount credited to a Participant’s Account governed by this Schedule as of the date of any amendment, modification, or termination of the Plan shall not be deemed to be an impairment of the Participant’s rights under the Plan. It is the Company’s intent that any modification to this Schedule shall not constitute nor shall it be interpreted to be a “material modification” of any right or feature of this Schedule as such term is defined under the 409A Guidance.
Exhibit 10(a)6
THE SOUTHERN COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Amended and Restated Effective January 1, 2009
THE SOUTHERN COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption : The Southern Company Supplemental Executive Retirement Plan, effective as of January 1, 2009 and hereinafter set forth (the “Plan”), is a modification and continuation of The Southern Company Supplemental Executive Retirement Plan which originally became effective January 1, 1997, and was last amended and restated effective January 1, 2005. This amendment and restatement and the January 1, 2005 amendment and restatement are intended to bring the Plan into compliance with Code Section 409A. The Plan should be construed to satisfy this intent. The Plan shall be an unfunded deferred compensation arrangement as contemplated by the Employee Retirement Income Security Act, as amended, under which benefits shall be paid solely from the general assets of the Company. At a time and in a manner determined by the Administrative Committee, Participants shall make timely elections to conform to the Plan’s terms effective as of the January 1, 2005 amendment and restatement. Such elections are intended to meet the transition requirements of Code Section 409A, including proposed, temporary, or final regulations, or other guidance issued by the Secretary of Treasury and the Internal Revenue Service with respect thereto (collectively “409A Guidance”).
1.2 Purpose : The Plan provides deferred compensation primarily to a select group of management or highly compensated employees to supplement such employees’ accrued benefits under The Southern Company Pension Plan (“Pension Plan”). The supplement under this Plan is generally intended to make up the difference, if any, between each such employee’s actual accrued benefit under the Pension Plan and the benefit he would have accrued under such plan if certain incentive pay were included in Earnings when determining Average Monthly Earnings for all methods of calculating Retirement Income under the Pension Plan.
ARTICLE II - DEFINITIONS
2.1 “Actuarial Basis” shall mean an actuarial adjustment to SERP Benefits that must be made as required by Code Section 409A when there is a change made by a Participant to a previously elected or deemed-elected form of payment paid over a lifetime. Reasonable actuarial assumptions to make such adjustment shall be established in writing from time to time by the Administrative Committee.
2.2 “Administrative Committee” shall mean the committee referred to in Section 3.1 hereof.
2.3 “Affiliated Employer” shall mean any corporation which is a member of the controlled group of corporations of which Southern Company is the common parent corporation which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them. The Affiliated Employers are set forth in
Appendix A to the Plan, as amended from time to time.
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2.4 |
“Board of Directors” shall mean the Board of Directors of the Company. |
2.5 “Change in Control Benefits Protection Plan” shall mean the Change in Control Benefits Protection Plan, as approved by the Southern Board, as it may be amended from time to time in accordance with the provisions therein.
2.6 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
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2.7 |
“Company” shall mean Southern Company Services, Inc. |
2.8 “Designated Beneficiary” shall have the same meaning and shall be the same person(s) or entity(ies) designated by the Participant under The Southern Company Supplemental Benefit Plan with respect to the Pension Benefit provided thereunder.
2.9 “Discount Rate” shall mean the thirty (30) year Treasury yield as published by the Department of Treasury for purposes of compliance with Code Section 417(e) determined for September of the calendar year prior to the calendar year in which a Participant Separates from Service provided that the maximum rate shall not exceed six percent (6%).
2.10 “Earnings” shall mean the total accumulated interest on a Participant’s Single-Sum Amount. Unless otherwise stated, Earnings accrue from the date as of which a Participant’s first installment is payable (ignoring for this purpose any Key-Employee Delay) until all of the Participant’s Single-Sum Amount (and monthly interest accretion thereon) has been paid. Interest shall compound monthly based on the rate of interest accretion for each month and the unpaid portion of a Participant’s Single-Sum Amount (including any unpaid portion of any prior month’s interest accretion). The rate of such interest accretion for a month shall be the monthly equivalent of the per annum prime rate of interest published in the Wall Street Journal as the base rate on the corporate loans posted as of the last business day of each month by at least seventy-five percent (75%) of the United States largest banks as of the last business day of the month (or such other day of a month as the Administrative Committee may determine).
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2.11 |
“Effective Date” of this amendment and restatement shall mean January 1, 2009. |
2.12 “Employee” shall mean any person who is employed by an Affiliated Employer excluding any persons represented by a collective bargaining agent.
2.13 “Expected Average Lifetime” shall mean the life expectancy of a Participant in months using the Table of Unisex Mortality Rates promulgated by the Internal Revenue Service for use to determine lump-sum payments from qualified pension plans in accordance with Code Section 417(e) as of the 2007 calendar year.
2.14 “Incentive Pay” shall mean all awards earned while an Employee under any annual group incentive plans, as defined in Section 5.1 of the Pension Plan, provided such incentive award was earned on or after January 1, 1994. Alternatively, if it produces a greater
benefit to the Participant, Incentive Pay shall mean all awards paid or that would have been paid but for an election to defer such incentive award under The Southern Company Deferred Compensation Plan, under any annual group incentive plan, as defined in Section 5.1 of the Pension Plan, provided such incentive award was paid or deferred on or after January 1, 1995. If a person was formerly represented by a collective bargaining agent with respect to any corporation which is a member of the controlled group of corporations of which Southern Company is the common parent and such person subsequently becomes an Employee, incentive awards described in the preceding sentence shall include awards earned on and after January 1, 1994 while represented by such collective bargaining agent.
2.15 “Key Employee” shall have the meaning ascribed to the term “specified employee” under Code Section 409A(a)(2)(B)(i) and the regulations promulgated thereunder as it applies to a Participant. The Administrative Committee shall establish the time period required to determine key-employee status.
2.16 “Key-Employee Delay” shall mean the six (6) month delay in the commencement of benefits applicable to Key Employees pursuant to the requirements of Code Section 409A(a)(2)(B)(i) and the regulations promulgated thereunder.
2.17 “Participant” shall mean an Employee or former Employee of an Affiliated Employer who is eligible and participates in the Plan pursuant to Sections 4.1 and 4.2.
2.18 “Pension Plan” shall mean The Southern Company Pension Plan, as amended from time to time.
2.19 “Plan” shall mean The Southern Company Supplemental Executive Retirement Plan, as amended and restated as of January 1, 2009 and as may be amended from time to time thereafter.
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2.20 |
“Plan Year” shall mean the calendar year. |
2.21 “Provisional Payee” shall have the same meaning ascribed to this term in the Pension Plan.
2.22 “Separation from Service” shall have the meaning ascribed to this term under Code Section 409A(a)(2)(A)(i) and the regulations promulgated thereunder. For this purpose, Separation from Service shall include a permanent decrease in the level of bona fide services performed by the Participant after a certain date to a level that is twenty percent (20%) or less of the average level of bona fide services performed by the Participant over the immediately preceding thirty-six (36) month period.
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2.23 |
“SERP Benefit” shall mean the benefit described in Section 5.1. |
2.24 “Single-Sum Amount” shall mean the discounted value of the SERP Benefit based on a single life annuity form of benefit payable for an Expected Average Lifetime calculated using the Discount Rate. This Single-Sum Amount calculation shall be determined effective as of the first installment to be made under Section 5.2 (ignoring for this purposes any
Key-Employee Delay) taking into account the following: (a) reductions for charges related to any Qualified Pre-retirement Survivor Annuity form of benefit under the Pension Plan shall not apply; and (b) the SERP Benefit and Expected Average Lifetime shall be based on the Participant’s age as of such first installment date.
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2.25 |
“Southern Board” shall mean the board of directors of Southern Company. |
2.26 “Supplemental Benefit Plan” shall mean The Southern Company Supplemental Benefit Plan, as amended from time to time.
2.27 “Supplemental Pension Benefit” shall mean the “Pension Benefit”, if any, that is payable to a Participant under the Supplemental Benefit Plan.
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2.28 |
“Trust” shall mean the Southern Company Deferred Compensation Trust. |
Where the context requires, the definitions of all terms set forth in the Pension Plan shall apply with equal force and effect for purposes of interpretation and administration of the Plan, unless said terms are otherwise specifically defined in the Plan. The masculine pronoun shall be construed to include the feminine pronoun and the singular shall include the plural, where the context so requires.
ARTICLE III - ADMINISTRATION OF PLAN
3.1 Administrator . Effective May 31, 2007, the general administration of the Plan shall be placed in the “Committee” which shall consist of the Benefits Administration Committee, the members of which shall be appointed from time to time by the Fiduciary Oversight Committee of the Board of Directors. The Committee shall govern itself in accordance with the terms of the Charter for the Benefits Administration Committee approved by the Fiduciary Oversight Committee of the Board of Directors.
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3.2 |
Powers . |
(a) The Administrative Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan more particularly set forth herein. It shall have the discretion to interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination by it shall be conclusive and binding on all persons. The Administrative Committee shall be the agent for the service of process.
(b) If a claim for benefits under the Plan is denied, in whole or in part, the Administrative Committee will provide a written notice of the denial within a reasonable period of time, but not later than 90 days after the claim is received. If special circumstances require more time to process the claim, the Administrative Committee will issue a written explanation of the special circumstances prior to the end of the 90-day period and a decision will be made as soon as possible, but not later than 180 days after the claim is received.
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The written notice of claim denial will include: |
|
• |
Specific reasons why the claim was denied; |
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• |
Specific references to applicable provisions of the Plan document or other relevant records or papers on which the denial is based, and information about where a Participant or his or her Designated Beneficiary may see them; |
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• |
A description of any additional material or information needed to process the claim and an explanation of why such material or information is necessary; |
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• |
An explanation of the claims review procedure, including the time limits applicable to such procedure, as well as a statement notifying the Participant or his or her Designated Beneficiary of their right to file suit if the claim for benefits is denied, in whole or in part, on review. |
Upon request, a Participant or his or her Designated Beneficiary will be provided without charge, reasonable access to, and copies of, all non-confidential documents that are relevant to any denial of benefits. A claimant has 60 days from the day he or she receives the original denial to request a review. Such request must be made in writing and sent to the Administrative Committee. The request should state the reasons why the claim should be reviewed and may also include evidence or documentation to support the claimant’s position.
The Administrative Committee will reconsider the claimant’s claim, taking into account all evidence, documentation, and other information related to the claim and submitted on the claimant’s behalf, regardless of whether such information was submitted or considered in the initial denial of the claim. The Administrative Committee will make a decision within 60 days. If special circumstances require more time for this process, the claimant will receive written explanation of the special circumstances prior to the end of the initial 60-day period and a decision will be sent as soon as possible, but not later than 120 days after the Administrative Committee receives the request.
No legal action to receiver benefits or enforce or clarify rights under a Plan can be commenced until the Participant or his or her Designated Beneficiary has first exhausted the claims and review procedures provided under the Plan.
(c) The Administrative Committee may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists, and other persons as it deems necessary or desirable in connection with the administration of this Plan.
3.3 Duties of the Administrative Committee .
(a) The Administrative Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary functions. The Administrative Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including its fiduciary duties. The Administrative Committee shall have the right to remove any such appointee from his position. Any person, group of persons, or entity may serve in more than one fiduciary capacity.
(b) The Administrative Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers, and other transactions concerning the Plan. Such accounts, books, and records relating thereto shall be open at all reasonable times to inspection and audit by persons designated by the Administrative Committee.
(c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants’ records; recording and transmission of all notices required to be given to Participants and their Designated Beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Affiliated Employer; securing of such fidelity bonds as may be required by law; and doing such other acts necessary for the proper administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records, and other data as may be necessary for proper administration of the Plan.
3.4 Indemnification . The Affiliated Employers shall indemnify the Administrative Committee against any and all claims, losses, damages, expenses, and liability arising from an action or failure to act, except when the same is finally judicially determined to be due to gross negligence or willful misconduct. The Affiliated Employers may purchase at its own expense sufficient liability insurance for the Administrative Committee to cover any and all claims, losses, damages, and expenses arising from any action or failure to act in connection with the execution of the duties as Administrative Committee. No member of the Administrative Committee who is also an Employee of an Affiliated Employer shall receive any compensation from the Plan for his services in administering the Plan.
ARTICLE IV - ELIGIBILITY
4.1 Eligibility Requirements . All Employees who are determined to be eligible to participate in the Plan in accordance with Section 4.2 shall be eligible to receive benefits under the Plan provided such Employees are (a) participating in the Plan at the time they terminate from an Affiliated Employer and are retirement eligible or (b) die while in active service while with an Affiliated Employer provided each such Employee’s spouse is eligible to receive a survivor benefit under Article VII of the Pension Plan at such eligible Employee’s death.
4.2 Determination of Eligibility . The Administrative Committee shall determine which Employees are eligible to participate. Upon becoming a Participant, an Employee shall be deemed to have assented to the Plan and to any amendments hereafter adopted. The Administrative Committee shall be authorized to rescind the eligibility of any Participant if necessary to ensure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees under the Employee Retirement Income Security Act of 1974, as amended. A Participant whose eligibility is rescinded or who loses eligibility for any reason shall not be eligible thereafter until eligibility is restored in accordance with guidelines established by the Administrative Committee.
If an Employee who was employed by Mirant Corporation (f/k/a Southern Energy, Inc.) (“Mirant”) or an affiliate thereof on or after April 2, 2001 is employed by an Affiliated Employer, he shall be treated as a new hire and none of his service with Mirant shall be considered as Accredited Service under Article V.
ARTICLE V - BENEFITS
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5.1 |
SERP Benefit . |
(a) Subject to the terms of the Pension Plan, a Participant shall be entitled to a monthly SERP Benefit equal to:
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(1) |
the greater of (A) or (B) below, if applicable: |
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(A) |
1.70% of the Participant’s Average Monthly Earnings multiplied by his years (and fraction of a year) of Accredited Service to his Retirement Date, death, or other termination of service, including a Social Security Offset. |
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(B) |
1.25% of the Participant’s Average Monthly Earnings multiplied by his years (and fraction of a year) of Accredited Service to his Retirement Date, death, or other termination of service. |
reduced by such Participant’s Supplemental Pension Benefit before any offset attributable to the Pension Plan benefit as provided under the terms of the Supplemental Benefit Plan.
The benefit determined in this subsection (1) shall be adjusted, if necessary, under the terms of the Pension Plan for commencement prior to the Participant’s Normal Retirement Date. This adjustment shall be made before the reduction described above is subtracted from such benefit. For the avoidance of doubt, the SERP Benefit shall be determined at the time the Participant commences such SERP Benefit under Section 5.2 or 5.3, as the case may be, regardless of whether such Participant commences his Retirement Income at that time under the Pension Plan.
(b) For purposes of Section 5.1(a)(1), the Participant’s Average Monthly Earnings shall be those considered under the Pension Plan in calculating his Retirement Income, but without regard to the limitation of Section 401(a)(17) of the Code, and including the following additional amounts:
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(1) |
For purposes of Section 5.1(a)(1)(A) - |
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(A) |
any portion of such Participant’s base pay that he may have elected to defer under The Southern Company Deferred Compensation Plan; and |
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(B) |
any Incentive Pay as of the applicable Plan Year in excess of 15% of the Participant’s corresponding base pay for the applicable Plan Year determined under this Section 5.1(b). |
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(2) |
For purposes of Section 5.1(a)(1)(B) – any portion of such Participant’s base pay and incentive pay that would be considered for Pension Plan benefit calculations (ignoring all compensation limits) that he may have elected to defer under The Southern Company Deferred Compensation Plan. |
(c) For purposes of Section 5.1(b) above, to determine the Plan Years which produce the highest monthly average to calculate Average Monthly Earnings under the Plan, a Participant’s Average Monthly Earnings should include those additional amounts provided therein.
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5.2 |
Distribution of Benefits . |
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(a) |
General Rule . |
Subject to the transition rules set forth in Section 5.3, effective for Participants who have not commenced their SERP Benefit on or before March 1, 2007, the SERP Benefit, as determined in accordance with Section 5.1, shall be converted to a Single-Sum Amount and paid in ten (10) annual installments commencing in all events on or after January 1, 2008. The first installment shall be derived from the Single-Sum Amount plus Earnings, if any, divided by ten (10). Subsequent annual installments shall be an amount equal to the Participant’s unpaid Single-Sum Amount plus Earnings divided by the number of remaining annual payments.
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(b) |
Payment of Installments after Retirement. |
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(1) |
Commencement of Installment Payments. With respect to a Participant who retires under the terms of the Pension Plan, the first annual installment shall be paid as of the first day of the second full calendar month following the Participant’s Separation from Service but not sooner than January 1, 2008. Notwithstanding the foregoing, if a Participant is a Key-Employee, such Participant shall be subject to the Key-Employee |
Delay and the first installment payment shall be as of the first day of the seventh full calendar month following the Participant’s Separation from Service.
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(2) |
Subsequent Nine Installment Payments. One additional installment, until ten (10) are paid in total, shall be paid as of each anniversary of the date the initial payment was made. For a Participant who is a Key Employee, the anniversary date of the initial payment will be deemed to be the date the first payment would have been made had the Key-Employee Delay not applied. The second through the tenth installments will be paid on the anniversary of this deemed initial payment date. |
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(c) |
Death of Participant . |
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(1) |
Death After Retirement . If a retirement-eligible Participant dies after Separation from Service but before receiving all ten (10) installments, the remaining installment payments shall be paid to the Designated Beneficiary of the Participant at the same times and in the same amounts that the Participant would have received if the Participant had not died. Notwithstanding the foregoing, if a retired Key Employee dies during the Key-Employee Delay and before receiving the first installment, then the first installment shall be paid to the Designated Beneficiary as of the beginning of the second full calendar month following the death of the Participant or as soon as practical thereafter. |
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(2) |
Death Before Retirement . If a Participant dies on or after March 1, 2007, while actively employed and has a vested benefit in the Pension Plan, one-hundred percent (100%) of the Single-Sum Amount determined in accordance with Section 5.2(a) above shall be paid to the Participant’s Provisional Payee, if any, in ten (10) annual installments commencing in all events on or after January 1, 2008. Such installments shall be determined and payable as if the Participant survived to his fiftieth (50 th ) birthday, or actual date of death if later, and Separated from Service. If such a Provisional Payee dies simultaneously with or after the Participant but before receipt of all installments, the remaining payments shall be paid to the Participant’s Designated Beneficiary. |
(d) FICA Tax Adjustment . A payment in addition to the ten (10) installments described in Section 5.2(a) shall be made from the remaining Single-Sum Amount which payment shall be based on the following adjustments as permitted under Code Section 409A and the regulations promulgated thereunder: (1) the amount necessary to pay the tax due under the Federal Insurance Contributions Act (“FICA”) with respect to the accrued SERP Benefit determined upon retirement (or such other appropriate “resolution date” as defined under Treasury Regulation Section 31.3121(v)(2)); and (2) the amount estimated to pay the Federal and State income tax withholding liability due on the amount paid in subsection (1) plus the Federal and State income tax withholding liability due on the amount paid in this subsection (2).
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5.3 |
Code Section 409A Transition Election and Other Related Rules . |
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(a) |
Election General Rules |
At a time and in a manner prescribed by the Administrative Committee, Participants who are actively employed on March 1, 2007, shall be eligible to make an election to receive SERP Benefits in the form described in Section 5.2(a) or in the form described in Section 5.3(c) below. In the event a Participant designated in accordance with the preceding sentence fails to make such election for any reason, including but not limited to death, such Participant’s SERP Benefit shall be in the form described in Section 5.2(a).
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(b) |
Transitioning Participants Electing Installments. |
The following provisions apply to Participants described in Section 5.3(a) who have elected the form of payment described in Section 5.2(a) or are deemed to have made such election .
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(1) |
General Rules. The first installment payment shall commence as of January 1, 2008 or later and shall otherwise be paid in accordance with Section 5.2(b). If a Participant commences payment of SERP Benefits in conjunction with his benefit under the Pension Plan prior to January 1, 2008, such SERP Benefit shall be payable for the remainder of 2007 in monthly increments starting at the same time and payable in the same form elected by the Participant under the Pension Plan. With respect to a Participant subject to the preceding sentence, the Participant’s Single-Sum Amount shall be computed as of the first day of the second full calendar month following the Participant’s Separation from Service and shall be decreased by any monthly benefits actually paid to the Participant or a Provisional Payee and increased by Earnings. For the avoidance of doubt, a Participant subject to this Section 5.3(b)(1) whose SERP Benefit payments start prior to January 1, 2008 will receive his first installment on January 1, 2008, and subsequent installments will be paid as of the next nine anniversaries of that payment. |
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(2) |
Installment Payment Commencement for Key Employees. If a Participant to which Section 5.3(b) applies is a Key Employee, such Participant shall be subject to the Key-Employee Delay and the first installment payment made in accordance with Section 5.3(b)(1) shall be as of the first day of the seventh full calendar month following the Participant’s Separation from Service but in no event earlier than as of January 1, 2008. If such a Key Employee retires in 2007 and commences his SERP Benefit in conjunction with his benefit under the Pension Plan before 2008, such Key Employee’s SERP Benefit shall be paid in monthly increments starting at the same time and payable in the same form elected by the Participant under the Pension Plan until his first installment is paid in accordance with the preceding sentence. Under no circumstances are payments of SERP Benefits made in conjunction with the Pension Plan commencing in 2007 subject to the Key-Employee Delay. For the avoidance of doubt, a |
Participant subject to this Section 5.3(b)(2) whose SERP Benefit payments start prior to 2008 shall receive his first installment as of the later of January 1, 2008 or the first day of the calendar month following the applicable Key-Employee Delay; subsequent installments will be paid as of the first day of the next nine calendar years.
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(3) |
Death of Participant |
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(A) |
Death Before Retirement . The provisions of Section 5.2(c)(2) apply to a Participant described in this Section 5.3(b) who dies while actively employed. The Provisional Payee of such a Participant who dies prior to December 1, 2007 and could have commenced payments in 2007 shall receive prior to the first installment a survivor benefit in accordance with the form of benefit elected by the Participant or deemed elected under the Pension Plan as applicable. Thereafter, the Provisional Payee shall receive the installment payments the Participant would have received under Section 5.3(b)(1). |
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(B) |
Death After Retirement. The provisions of Section 5.2(c)(1) apply to a Participant described in this Section 5.3(b) who is retirement eligible and dies after Separation from Service. However, the Provisional Payee of any Participant who commences SERP Benefits in 2007 in conjunction with his benefit under the Pension Plan and who dies during 2007 prior to payment of his first installment shall receive prior to such first installment a survivor benefit in accordance with the form of benefit elected by the Participant or deemed elected under the Pension Plan as applicable. Thereafter, installment payments that the Participant would have received shall be paid to the Participant’s Designated Beneficiary. |
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(c) |
Transitioning Participants Electing Annuity Forms. |
The following rules apply to Participants described in Section 5.3(a) who have elected the annuity form of payment. The election provided for in subparagraph (1) below shall be subject to the provisions of subparagraphs (2)-(5), as applicable.
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(1) |
General Rule. If determined eligible to do so by the Administrative Committee at a time and in a manner determined by the Administrative Committee during 2007, such a Participant may elect to receive his SERP Benefit in the form of a single life annuity, 50% joint and survivor annuity, 100% joint and survivor annuity, 50% joint and survivor annuity with pop-up, or 100% joint and survivor annuity with pop-up (and with respect to SEPCO Employees those other forms available under the Pension Plan except any form coordinated with payment of Social Security benefits). In the event that such a Participant elects an annuity |
but fails to designate a form, such Participant shall be deemed to have designated a single life annuity. These annuity forms shall be as described in the Pension Plan and if a form other than a single life annuity is selected, the SERP Benefit payable will be adjusted as described in the Pension Plan. Payments shall commence as of the first day of the first full calendar month following the Participant’s Separation from Service.
The Participants who have elected the form of payment described in this Section 5.3(c) shall receive an additional payment equal to (A) and (B) below. Subsequent payments shall be adjusted as provided in subsection (C) below as permitted under Code Section 409A and the regulations promulgated thereunder.
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(A) |
The amount necessary to pay the tax due under the Federal Insurance Contributions Act (FICA) with respect to the accrued SERP Benefit determined in accordance with the requirements under Treasury Regulation Section 31.3121(v)(2) upon retirement (or such other appropriate “resolution date” as defined under Treasury Regulation Section 31.3121(v)(2)) calculated in accordance with Section 5.1; |
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(B) |
The amount estimated to pay the Federal and State income tax withholding liability due on the amount paid under subsection (A) above plus the amount of Federal and State income tax withholding liability due on the amount paid under this subsection (B); and |
(C) An adjusted monthly benefit determined in a manner and on an actuarially equivalent basis in accordance with the methodology and assumptions used to calculate the tax due under subsection (A) above which takes into account the amounts paid under subsections (A) and (B) above and the form of benefit elected by the Participant.
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(2) |
Form of Annuity |
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(A) |
Pre-2008 Commencement. Notwithstanding Section 5.3(c)(1), if a Participant to which this Section 5.3(c) applies retires in 2007 and commences receipt of his SERP Benefit in conjunction with his benefit under the Pension Plan before January 1, 2008, the Participant’s SERP Benefit shall be payable only in the form elected under the Pension Plan and shall be calculated using the same annuity form of payment factors as provided for under the terms of the Pension Plan as in effect during 2007. |
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(B) |
Post-2007 Commencement. A Participant described in the first full paragraph of Section 5.3(c)(1) who has not commenced payment of his SERP Benefit prior to 2008 may change the form of payment previously elected in Section 5.3(c)(1) to another permitted form described in that Section (plus may instead elect a |
75% joint and survivor annuity or a 75% joint and survivor annuity with pop-up) at a time and in a manner prescribed by the Administrative Committee. If the form of payment is changed, the SERP Benefit payable pursuant to the original election will be actuarially adjusted using the Actuarial Basis to reflect the new form selected.
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(3) |
Key Employee Rules. If a Participant to which this Section 5.3(c) applies is a Key Employee and the commencement date of his SERP Benefit is on or after January 1, 2008, such Participant will be subject to the Key-Employee Delay and shall receive a lump-sum payment as of the first day of the seventh full month following the Participant’s Separation from Service in an amount equal to six (6) monthly payments due to the Participant under the Plan, plus the monthly payment then due to the Participant for the seventh month. Thereafter, the appropriate monthly benefit shall be paid to the Key Employee and his Provisional Payee, if any. If such a Participant is a Key Employee and the commencement date of his SERP Benefit is before January 1, 2008, the SERP Benefit shall be paid in accordance with Section 5.3(c)(2)(A); the Key-Employee Delay will not apply. If a Key Employee dies during the Key-Employee Delay, the Designated Beneficiary shall receive any benefits that would have been paid if there were no Key-Employee Delay up to the date of death as of the first of the month following the Participant’s death or as soon as practicable thereafter. Interest shall not be added to such benefits. In addition, if such deceased Key Employee elected a form of payment providing for payment to continue to a Provisional Payee pursuant to Section 5.3(c)(1), subject to Section 5.3(c)(2), those payments will begin as of the first of the month following such Key Employee’s death or as soon as practicable thereafter. |
(4) Death of Participant
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(A) |
Death After Retirement. If a retirement-eligible Participant to which Section 5.3(c)(1) applies dies after Separation from Service, such Participant’s Provisional Payee, if any, shall receive monthly payments for the remainder of the Provisional Payee’s life based on the annuity form of payment the Participant elected or is deemed to have elected pursuant to Section 5.3(c)(1), subject to Section 5.3(c)(2). Such Payments will commence as of the first of the month following such Participant’s death or as soon as practicable thereafter. |
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(B) |
Death Before Retirement. If a Participant to which Section 5.3(c) applies dies while actively employed and has a vested benefit in the Pension Plan, then Section 5.2(c)(2) shall apply. |
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(5) |
QPSA Charges Waived. Any benefit paid in accordance with this Section 5.3(c) shall be calculated without regard to the charge associated with any Qualified Pre-retirement Survivor Annuity form elected. |
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(d) |
Inactive Employee Transition Election |
In the event a Participant has Separated from Service and is eligible to receive a SERP Benefit on or before March 1, 2007, but has deferred commencement until after March 1, 2007, and is eligible to receive a benefit under the Pension Plan on or before January 1, 2008, such Participant must make an election in accordance with Section 5.3(a) at a time and in a manner prescribed by the Administrative Committee and must commence payment by no later than January 1, 2008. The requirements of Section 5.3(b) or Section 5.3(c) (ignoring the fact that the Participant previously incurred a Separation from Service) apply as the case may be based on the Participant’s ultimate election under Section 5.3(a). If a Participant dies before making an election under this Section 5.3(a), SERP Benefit payments shall be made consistent with Section 5.3(b)(3)(B) if the Participant dies prior to making his election to commence his SERP Benefit in conjunction with the commencement of his benefit under the Pension Plan or shall be made consistent with Section 5.3(c)(4)(A) if made after making his election to commence his SERP Benefit in conjunction with the commencement of his benefit under the Pension Plan.
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(e) |
Survivor Benefits in the case of Pre-effective Date Deaths. If a Participant died prior to March 1, 2007 while actively employed and had a vested benefit in the Pension Plan, the Provisional Payee, if any, shall receive the form of benefit provided under the Pension Plan commencing the first of the month following the date the Participant would have attained age 50. |
5.4 Allocation of SERP Benefit Liability . In the event that a Participant eligible to receive a SERP Benefit has been employed at more than one Affiliated Employer, the SERP Benefit liability shall be apportioned so that each such Affiliated Employer is obligated in accordance with Section this 5.4 to cover the percentage of the total SERP Benefit as determined below. Each Affiliated Employer’s share of the SERP Benefit liability shall be calculated by multiplying the
SERP Benefit by a fraction where the numerator of such fraction is the base rate of pay, as defined by the Administrative Committee, received by the Participant at the respective Affiliated Employer on his date of termination of employment or transfer, as applicable, multiplied by the Accredited Service earned by the Participant at the respective Affiliated Employer and where the denominator of such fraction is the sum of all numerators calculated for each respective Affiliated Employer by which the Participant has been employed.
5.5 Funding of Benefits . Except as expressly limited under the terms of the Trust, neither the Company nor any Affiliated Employer hereunder shall reserve or otherwise set aside funds for the payment of its obligations under the Plan. In any event, such obligations shall be paid or deemed to be paid solely from the general assets of the Affiliated Employers. Participants shall only have the status of general, unsecured creditors of the Affiliated Employers. Notwithstanding that a Participant shall be entitled to receive the balance of his SERP Benefit under the Plan, the assets from which such amount shall be paid shall at all times remain subject to the claims of the creditors of the Participant’s Affiliated Employer.
5.6 Withholding . There shall be deducted as permitted under Code Section 409A and the regulations promulgated thereunder from Plan payments and, if necessary, from the payment of any SERP Benefit due under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of the Participant or Designated Beneficiary entitled to such payment.
5.7 Recourse Against Deferred Compensation Trust . In the event a Participant who is employed on or after January 1, 1999 with an “Employing Company” (as such term is defined in the Change in Control Benefits Protection Plan) disputes the calculation of his SERP Benefit, the Participant has recourse against the Company, the Affiliated Employer by which the Participant is or was employed, if different, the Plan, and the Trust for payment of benefits to the extent the Trust so provides.
5.8 Change in Control . The provisions of the Change in Control Benefits Protection Plan are incorporated herein by reference to determine the occurrence of a change in control or preliminary change in control of Southern Company or an Employing Company, the benefits to be provided hereunder, and the funding of the Trust in the event of such a change in control. Any modifications to the Change in Control Benefits Protection Plan are likewise incorporated herein and are otherwise intended to comply with 409A of the Code.
ARTICLE VI - MISCELLANEOUS
6.1 Assignment . Neither the Participant, his Designated Beneficiary, nor his legal representative shall have any rights to sell, assign, transfer, or otherwise convey the right to receive the payment of any SERP Benefit due hereunder, which payment and the right thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payment under the Plan shall be null and void and of no effect.
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6.2 |
Amendment and Termination . Except for the provisions of Section 5.8 hereof, |
which may not be amended following a “Southern Change in Control” or “Subsidiary Change in Control” (as defined in the Change in Control Benefits Protection Plan), the Plan may be amended or terminated at any time by the Board of Directors, provided that no amendment or termination shall cause a forfeiture or reduction in any benefits accrued as of the date of such amendment or termination. The Plan may also be amended by the Administrative Committee (a) if such amendment does not involve a substantial increase in cost to any Affiliated Employer, or (b) as may be necessary, proper, or desirable in order to comply with laws or regulations enacted or promulgated by any federal or state governmental authority. During the compliance transition period provided for by the 409A Guidance, the Administrative Committee may enter into transition elections as to time and form of payment under this Plan and, subject to the preceding authority, shall be treated as amendments to the Plan.
6.3 No Guarantee of Employment . Participation hereunder shall not be construed as creating any contract of employment between an Affiliated Employer and a Participant, nor shall it limit the right of an Affiliated Employer to suspend, terminate, alter, or modify, whether or not for cause, the employment relationship between the Affiliated Employer and a Participant.
6.4 Construction . This Plan shall be construed in accordance with and governed by the laws of the State of Georgia, to the extent such laws are not otherwise superseded by the laws of the United States.
IN WITNESS WHEREOF, the amended and restated Plan has been executed by a duly authorized officer of Southern Company Services, Inc. pursuant to resolutions of the Board of Directors of Southern Company Services, Inc. this 31st day of December, 2008.
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SOUTHERN COMPANY SERVICES, INC.
By:/s/Patricia L. Roberts Its: Vice President and Associate General Counsel |
APPENDIX A
THE SOUTHERN COMPANY SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
AFFILIATED EMPLOYERS AS OF JANUARY 1, 2009
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Southern Communications Services, Inc.
Southern Company Energy Solutions, LLC
Southern Company Services, Inc.
Southern Nuclear Operating Company, Inc.
Exhibit 10(a)7
THE SOUTHERN COMPANY
SUPPLEMENTAL BENEFIT PLAN
Amended and Restated Effective as of January 1, 2009
THE SOUTHERN COMPANY
SUPPLEMENTAL BENEFIT PLAN
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|
Page |
ARTICLE I |
- PURPOSE AND ADOPTION OF PLAN |
1 |
|
1.1 |
Adoption |
1 |
|
1.2 |
Purpose |
2 |
|
1.3 |
Schedule of Provisions for Pre-2005 Non-Pension Benefits |
2 |
|
1.4 |
409A Transition Elections |
2 |
ARTICLE II |
- DEFINITIONS |
2 |
|
2.1 |
Account |
2 |
|
2.2 |
Actuarial Basis |
2 |
|
2.3 |
Administrative Committee |
2 |
|
2.4 |
Board of Directors |
2 |
|
2.5 |
Change in Control Benefits Protection Plan |
2 |
|
2.6 |
Code |
2 |
|
2.7 |
Common Stock |
3 |
|
2.8 |
Company |
3 |
|
2.9 |
Deferred Compensation Plan |
3 |
|
2.10 |
Designated Beneficiary |
3 |
|
2.11 |
Discount Rate |
3 |
|
2.12 |
Earnings |
3 |
|
2.13 |
Effective Date |
3 |
|
2.14 |
Employee |
3 |
|
2.15 |
Employing Company |
4 |
|
2.16 |
ESOP |
4 |
|
2.17 |
Expected Average Lifetime |
4 |
|
2.18 |
Key Employee |
4 |
|
2.19 |
Key-Employee Delay |
4 |
|
2.20 |
Modification Delay |
4 |
|
2.21 |
Non-Pension Benefit |
4 |
|
2.22 |
Participant |
4 |
|
2.23 |
Pension Benefit |
4 |
|
2.24 |
Pension Plan |
4 |
|
2.25 |
Phantom Common Stock |
4 |
|
2.26 |
Plan |
4 |
|
2.27 |
Plan Year |
4 |
|
2.28 |
Purchase Price |
4 |
|
2.29 |
Sales Price |
5 |
|
2.30 |
Savings Plan |
5 |
|
2.31 |
Separation from Service |
5 |
|
2.32 |
Single-Sum Amount |
5 |
|
2.33 |
Southern Board |
5 |
|
2.34 |
Southern Company |
5 |
|
2.35 |
Total Disability |
5 |
|
2.36 |
Trust |
5 |
|
2.37 |
Valuation Date |
5 |
ARTICLE III |
- ADMINISTRATION OF PLAN |
6 |
|
3.1 |
Administrator |
6 |
|
3.2 |
Powers |
6 |
|
3.3 |
Duties of the Administrative Committee |
7 |
|
3.4 |
Indemnification |
8 |
ARTICLE IV |
- ELIGIBILITY |
8 |
|
4.1 |
Eligibility Requirements |
8 |
|
4.2 |
Determination of Eligibility |
8 |
ARTICLE V |
- BENEFITS |
8 |
|
5.1 |
Pension Benefit |
8 |
|
5.2 |
Distribution of Pension Benefits |
9 |
|
5.3 |
Code Section 409A Transition Election and
|
11 |
|
5.4 |
Non-Pension Benefit |
15 |
|
5.5 |
Distribution of Non-Pension Benefits |
17 |
|
5.6 |
Allocation of Pension Benefit Liability |
18 |
|
5.7 |
Funding of Benefits |
18 |
|
5.8 |
Withholding |
18 |
|
5.9 |
Recourse Against Deferred Compensation Trust |
19 |
|
5.10 |
Change in Control |
19 |
ARTICLE VI |
- MISCELLANEOUS |
19 |
|
6.1 |
Assignment |
19 |
|
6.2 |
Amendment and Termination |
19 |
|
6.3 |
No Guarantee of Employment |
19 |
|
6.4 |
Mirant |
19 |
|
6.5 |
Construction |
20 |
APPENDIX A - EMPLOYING COMPANIES AS OF JANUARY 1, 2009 |
24 |
SCHEDULE OF PROVISIONS FOR PRE-2005 NON-PENSION BENEFITS |
25 |
THE SOUTHERN COMPANY
SUPPLEMENTAL BENEFIT PLAN
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption . The Southern Company Supplemental Benefit Plan, effective as of January 1, 2009 and hereinafter set forth (the “Plan”), is a modification and continuation of the Supplemental Benefit Plan for Southern Company Services, Inc. which originally became effective January 1, 1983, and was last amended and restated effective January 1, 2005. This amendment and restatement and the January 1, 2005 amendment and restatement are intended to bring the Plan into compliance with Code Section 409A. The Plan should be construed to satisfy this intent.
Effective January 1, 1998, the following other plans were merged into the Plan:
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• |
Supplemental Benefit Plan for Alabama Power Company |
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• |
Supplemental Benefit Plan for Georgia Power Company |
|
• |
Supplemental Benefit Plan for Gulf Power Company |
|
• |
Supplemental Benefit Plan for Mississippi Power Company |
|
• |
Supplemental Benefit Plan for Southern Company Services, Inc. and Southern Electric International, Inc., as adopted by Southern Communications Services, Inc. |
|
• |
Supplemental Benefit Plan for Southern Company Services, Inc. and Southern Electric International, Inc., as adopted by Southern Development and Investment Group, Inc. |
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• |
Supplemental Benefit Plan for Southern Nuclear Operating Company, Inc. |
Employees participating in the merged plans and employed by an Employing Company on January 1, 1998 became immediately covered under the Plan; provided, however, that the terms of the prior plans govern an Employee’s circumstances with regard to actions taken or occurring before January 1, 1998.
The Plan shall be an unfunded deferred compensation arrangement as contemplated by the Employee Retirement Income Security Act, as amended, under which benefits shall be paid solely from the general assets of the Employing Companies. At a time and in a manner determined by the Administrative Committee, Participants shall make timely elections to conform to the Plan’s terms effective as of the January 1, 2005 amendment and restatement. Such elections are intended to meet the transition requirements of Code Section 409A, including proposed, temporary, or final regulations, or other guidance issued by the Secretary of Treasury and the Internal Revenue Service with respect thereto (collectively “409A Guidance”).
1.2 Purpose . The Plan is designed to provide certain retirement and other deferred compensation benefits primarily for a select group of management or highly compensated employees which are not otherwise payable or cannot otherwise be provided through contributions by the Employing Companies (1) under The Southern Company Pension Plan, The Southern Company Employee Savings Plan (“ESP”), and The Southern Company Employee Stock Ownership Plan (until its merger into the Savings Plan effective December 20, 2006), as a result of the limitations set forth under Sections 401(a)(4), 401(a)(17), 401(k), 401(m), 402(g), or 415 of the Internal Revenue Code of 1986, as amended from time to time.
1.3 Schedule of Provisions for Pre-2005 Non-Pension Benefits . Attached to this Plan is a Schedule that sets forth the operative provisions of the Plan applicable to “grandfathered” Non-Pension Benefits which are treated by the Employing Companies as not subject to Section 409A of the Code. The Account balance (plus earnings thereon) of the grandfathered Non-Pension Benefits shall only be subject to the provisions set forth in the Schedule. In accordance with the 409A Guidance, these provisions are only intended to preserve the rights and features of the “grandfathered” Non-Pension Benefits and are, therefore, not intended to “materially modify” any aspect of such rights and features. Provisions of the Schedule should be so construed whenever necessary or appropriate. Provisions in the Schedule shall only be amended in accordance with the Schedule’s terms.
1.4 409A Transition Elections . At a time and in a manner determined by the Administrative Committee, Participants shall make timely elections to conform to the Plan’s terms effective on and after January 1, 2005. Such elections are intended to meet the requirements of the 409A Guidance.
ARTICLE II - DEFINITIONS
2.1 “Account” shall mean the total amount credited to the account of a Participant to reflect the interest of a Participant in the Plan resulting from a Participant’s Non-Pension Benefit calculated in accordance with Section 5.4.
2.2 “Actuarial Basis” shall mean an actuarial adjustment to Pension Benefits that must be made as required by Code Section 409A when there is a change made by a Participant to a previously elected or deemed-elected form of payment paid over a lifetime. Reasonable actuarial assumptions to make such adjustment shall be established in writing from time to time by the Administrative Committee.
2.3 “Administrative Committee” shall mean the committee referred to in Section 3.1 hereof.
2.4 “Board of Directors” shall mean the Board of Directors of the Company.
2.5 “Change in Control Benefits Protection Plan” shall mean the Change in Control Benefits Protection Plan, as approved by the Southern Board, as it may be amended from time to time in accordance with the provisions therein.
2.6 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
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2.7 |
“Common Stock” shall mean common stock of Southern Company. |
|
2.8 |
“Company” shall mean Southern Company Services, Inc. |
2.9 “Deferred Compensation Plan” shall mean The Southern Company Deferred Compensation Plan, as amended from time to time.
2.10 “Designated Beneficiary” shall mean the person(s) or entity(ies) identified by the Participant in a manner prescribed by the Administrative Committee as eligible to receive the Pension Benefit, the Non-Pension Benefit, or both. In the event no such designation is made by a Participant either as to the Pension Benefit, the Non-Pension Benefit, or both, or if such beneficiary shall not be living or in existence at the time for commencement or continuance of such payment under the Plan following the Participant’s death, such payment, solely as to the benefit for which no beneficiary was designated or living, shall be made to the person or persons in the first of the following classes of successive preference, if then living:
|
(a) |
the Participant’s spouse on the date of his death; |
|
(b) |
the Participant’s legally recognized children, equally; |
|
(c) |
the Participant’s parents, equally; |
|
(d) |
the Participant’s brothers and sisters, equally; or |
|
(e) |
the Participant’s executors or administrators.Payment to such one or more persons shall completely discharge the Plan with respect to the amount so paid. |
2.11 “Discount Rate” shall mean the thirty (30) year Treasury yield as published by the Department of Treasury for purposes of compliance with Code Section 417(e) determined for September of the calendar year prior to the calendar year in which a Participant Separates from Service provided that the maximum rate shall not exceed six percent (6%).
2.12 “Earnings” shall mean the total accumulated interest on a Participant’s Single-Sum Amount. Unless otherwise stated, Earnings accrue from the date as of which a Participant’s first installment is payable (ignoring for this purpose any Key-Employee Delay) until all of the Participant’s Single-Sum Amount (and monthly interest accretion thereon) has been paid. Interest shall compound monthly based on the rate of interest accretion for each month and the unpaid portion of a Participant’s Single-Sum Amount (including any unpaid portion of any prior month’s interest accretion). The rate of such interest accretion for a month shall be the monthly equivalent of the per annum prime rate of interest published in the Wall Street Journal as the base rate on the corporate loans posted as of the last business day of each month by at least seventy-five percent (75%) of the United States largest banks as of the last business day of the month (or such other day of a month as the Administrative Committee may determine).
2.13 “Effective Date” of this amendment and restatement shall mean January 1, 2009.
2.14 “Employee” shall mean any person who is currently employed by an Employing Company.
2.15 “Employing Company” shall mean the Company and any affiliate or subsidiary of Southern Company which the Board of Directors may from time to time determine to bring under the Plan and any successor to them. The Employing Companies are set forth in Appendix A to the Plan, as amended from time to time.
2.16 “ESOP” shall mean The Southern Company Employee Stock Ownership Plan, as amended from time to time until it merged into the Savings Plan effective December 20, 2006.
2.17 “Expected Average Lifetime” shall mean the life expectancy of a Participant in months using the Table of Unisex Mortality Rates promulgated by the Internal Revenue Service for use to determine lump-sum payments from qualified pension plans in accordance with Code Section 417(e) as of the 2007 calendar year.
2.18 “Key Employee” shall have the meaning ascribed to the term “specified employee” under Code Section 409A(a)(2)(B)(i) and the regulations promulgated thereunder as it applies to a Participant. The Administrative Committee shall establish the time period required to determine key-employee status.
2.19 “Key-Employee Delay” shall mean the six (6) month delay in the commencement of benefits applicable to Key Employees pursuant to the requirements of Code Section 409A(a)(2)(B)(i) and the regulations promulgated thereunder.
2.20 “Modification Delay” shall mean the requirements permitting a change in time or form of payment as allowed under Code Section 409A(a)(4)(C) and the regulations promulgated thereunder.
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2.21 |
“Non-Pension Benefit” shall mean the benefit described in Section 5.4. |
2.22 “Participant” shall mean an Employee or former Employee of an Employing Company who is eligible and participates in the Plan pursuant to Sections 4.1 and 4.2.
|
2.23 |
“Pension Benefit” shall mean the benefit described in Section 5.1. |
2.24 “Pension Plan” shall mean The Southern Company Pension Plan, as amended from time to time.
2.25 “Phantom Common Stock” shall mean the Common Stock in which a Participant is deemed to invest his Non-Pension Benefit as if such Common Stock had been purchased upon contribution to the Savings Plan and/or the ESOP, as the case may be.
2.26 “Plan” shall mean The Southern Company Supplemental Benefit Plan, as amended and restated as of January 1, 2009 and as may be amended from time to time thereafter.
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2.27 |
“Plan Year” shall mean the calendar year. |
2.28 “Purchase Price” shall mean for purposes of deemed purchases of Phantom Common Stock the following: (a) with respect to the Savings Plan, the purchase price of a share of the Common Stock under the Savings Plan as of the applicable Valuation Date; (b) with
respect to any investment of dividends attributable to Phantom Common Stock in either the Savings Plan or the ESOP, the dividend reinvestment price of a share of the Common Stock under the Savings Plan as of the applicable Valuation Date; and (c) with respect to the ESOP, the price at which a share of Common Stock is purchased with regard to a contribution made for each applicable Plan Year.
2.29 “Sales Price” shall mean the closing price on any trading day of a share of Common Stock based on consolidated trading as defined by the Consolidated Tape Association and reported as part of the consolidated trading prices of New York Stock Exchange listed securities.
2.30 “Savings Plan” shall mean The Southern Company Employee Savings Plan, as amended from time to time.
2.31 “Separation from Service” shall have the meaning ascribed to this term under Code Section 409A(a)(2)(A)(i) and the regulations promulgated thereunder. For this purpose, Separation from Service shall include a permanent decrease in the level of bona fide services performed by the Participant after a certain date to a level that is twenty percent (20%) or less of the average level of bona fide services performed by the Participant over the immediately preceding thirty-six (36) month period.
2.32 “Single-Sum Amount” shall mean the discounted value of the Pension Benefit based on a single life annuity form of benefit payable for an Expected Average Lifetime calculated using the Discount Rate. This Single-Sum Amount calculation shall be determined effective as of the first installment to be made under Section 5.2 (ignoring for this purposes any Key-Employee Delay) taking into account the following: (a) reductions for charges related to any Qualified Pre-retirement Survivor Annuity form of benefit under the Pension Plan shall not apply; and (b) the Pension Benefit and Expected Average Lifetime shall be based on the Participant’s age as of such first installment date.
|
2.33 |
“Southern Board” shall mean the board of directors of Southern Company. |
|
2.34 |
“Southern Company” shall mean Southern Company, its successors and assigns. |
2.35 “Total Disability” shall mean a total disability as determined by the Social Security Administration and meeting the requirements of Code Section 409A(a)(2) and the regulations promulgated thereunder.
|
2.36 |
“Trust” shall mean the Southern Company Deferred Compensation Trust. |
2.37 “Valuation Date” shall mean each trading day of the New York Stock Exchange, or any successor national exchange on which the Common Stock is traded and with respect to which a Sales Price may be determined.
Where the context requires, the definitions of all terms set forth in the Pension Plan, the ESOP, the Savings Plan, and the Deferred Compensation Plan shall apply with equal force and effect for purposes of interpretation and administration of the Plan, unless said terms are
otherwise specifically defined in the Plan. The masculine pronoun shall be construed to include the feminine pronoun and the singular shall include the plural, where the context so requires.
ARTICLE III - ADMINISTRATION OF PLAN
3.1 Administrator . Effective May 31, 2007, the general administration of the Plan shall be placed in the “Committee” which shall consist of the Benefits Administration Committee, the members of which shall be appointed from time to time by the Fiduciary Oversight Committee of the Board of Directors. The Committee shall govern itself in accordance with the terms of the Charter for the Benefits Administration Committee approved by the Fiduciary Oversight Committee of the Board of Directors.
|
3.2 |
Powers . |
(a) The Administrative Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan more particularly set forth herein. It shall have the discretion to interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination by it shall be conclusive and binding on all persons. The Administrative Committee shall be the agent for the service of process.
(b) If a claim for benefits under the Plan is denied, in whole or in part, the Administrative Committee will provide a written notice of the denial within a reasonable period of time, but not later than 90 days after the claim is received. If special circumstances require more time to process the claim, the Administrative Committee will issue a written explanation of the special circumstances prior to the end of the 90-day period and a decision will be made as soon as possible, but not later than 180 days after the claim is received.
The written notice of claim denial will include:
|
• |
Specific reasons why the claim was denied; |
|
• |
Specific references to applicable provisions of the Plan document or other relevant records or papers on which the denial is based, and information about where a Participant or his or her Designated Beneficiary may see them; |
|
• |
A description of any additional material or information needed to process the claim and an explanation of why such material or information is necessary; |
|
• |
An explanation of the claims review procedure, including the time limits applicable to such procedure, as well as a statement notifying the Participant or his or her Designated Beneficiary of their right to file suit if the claim for benefits is denied, in whole or in part, on review. |
Upon request, a Participant or his or her Designated Beneficiary will be provided without charge, reasonable access to, and copies of, all non-confidential documents that are relevant to any denial of benefits. A claimant has 60 days from the day he or she receives the original denial to request a review. Such request must be made in writing and sent to the Administrative Committee. The request should state the reasons why the claim should be reviewed and may also include evidence or documentation to support the claimant’s position.
The Administrative Committee will reconsider the claimant’s claim, taking into account all evidence, documentation, and other information related to the claim and submitted on the claimant’s behalf, regardless of whether such information was submitted or considered in the initial denial of the claim. The Administrative Committee will make a decision within 60 days. If special circumstances require more time for this process, the claimant will receive written explanation of the special circumstances prior to the end of the initial 60-day period and a decision will be sent as soon as possible, but not later than 120 days after the Administrative Committee receives the request.
No legal action to receiver benefits or enforce or clarify rights under a Plan can be commenced until the Participant or his or her Designated Beneficiary has first exhausted the claims and review procedures provided under the Plan.
(c) The Administrative Committee may adopt such regulations as it deems desirable for the conduct of its affairs. It may appoint such accountants, counsel, actuaries, specialists, and other persons as it deems necessary or desirable in connection with the administration of this Plan.
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3.3 |
Duties of the Administrative Committee . |
(a) The Administrative Committee is responsible for the daily administration of the Plan. It may appoint other persons or entities to perform any of its fiduciary functions. The Administrative Committee and any such appointee may employ advisors and other persons necessary or convenient to help it carry out its duties, including its fiduciary duties. The Administrative Committee shall have the right to remove any such appointee from his position. Any person, group of persons, or entity may serve in more than one fiduciary capacity.
(b) The Administrative Committee shall maintain accurate and detailed records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers, and other transactions concerning the Plan. Such accounts, books, and records relating thereto shall be open at all reasonable times to inspection and audit by persons designated by the Administrative Committee.
(c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times. These steps shall include such items as the preparation and filing of all documents and forms required by any governmental agency; maintaining of adequate Participants’ records; recording and transmission of all notices required to be given to Participants and their Designated Beneficiaries; the receipt and dissemination, if required, of all reports and information received from an Employing Company; securing of such fidelity bonds as may be required by law; and doing such other acts necessary for the proper
administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of account, records, and other data as may be necessary for proper administration of the Plan.
3.4 Indemnification . The Employing Companies shall indemnify the Administrative Committee against any and all claims, losses, damages, expenses, and liability arising from an action or failure to act, except when the same is finally judicially determined to be due to gross negligence or willful misconduct. The Employing Companies may purchase at their own expense sufficient liability insurance for the Administrative Committee to cover any and all claims, losses, damages, and expenses arising from any action or failure to act in connection with the execution of the duties as Administrative Committee. No member of the Administrative Committee who is also an Employee of the Employing Companies shall receive any compensation from the Plan for his services in administering the Plan.
ARTICLE IV - ELIGIBILITY
4.1 Eligibility Requirements . All Employees who are determined eligible to participate in accordance with Section 4.2 and who meet one or more of the following criteria shall be eligible to receive benefits under the Plan: (a) whose benefits under the Pension Plan are limited by the limitations set forth in Code Sections 401(a)(17), 415 or 401(a)(4), (b) whose matching contributions by their Employing Company to the Savings Plan are limited by the limitations set forth in Code Sections 401(a)(17), 401(k), 401(m), 402(g), or 415, or (c) whose contributions by their Employing Company to the ESOP (until its merger into the Savings Plan effective December 20, 2006) are limited by the limitations set forth in Code Sections 401(a)(17) or 415.
4.2 Determination of Eligibility . The Administrative Committee shall determine which Employees are eligible to participate. Upon becoming a Participant, an Employee shall be deemed to have assented to the Plan and to any amendments hereafter adopted. The Administrative Committee shall be authorized to rescind the eligibility of any Participant if necessary to ensure that the Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees under the Employee Retirement Income Security Act of 1974, as amended. In addition, a Participant shall not be eligible for a Pension Benefit under the Plan unless such Participant shall be entitled to a vested benefit under the Pension Plan. If an Employee who was employed by Mirant Corporation (f/k/a Southern Energy, Inc.) (“Mirant”) or an affiliate thereof on or after April 2, 2001 is thereafter employed by an Employing Company, he shall be treated the same as a new hire and none of his service with Mirant shall be considered as Accredited Service under Section 5.1.
ARTICLE V - BENEFITS
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5.1 |
Pension Benefit . |
(a) Each Participant shall be entitled to a Pension Benefit equal to that portion of his Retirement Income under the Pension Plan which is not payable under the Pension Plan as a result of the limitations imposed by Code Sections 401(a)(17), 415(b) or 401(a)(4). The Pension Benefit shall be determined when the Participant commences such Pension Benefit in
accordance with Section 5.2 or 5.3, as the case may be, taking into account the Retirement Income then payable under the Pension Plan regardless of whether the Participant commences his Retirement Income at that time under the Pension Plan.
(b) For purposes of this Section 5.1, the Pension Benefit of a Participant shall be calculated based on the Participant’s Earnings that are considered under the Pension Plan in calculating his Retirement Income (assuming, if necessary, that Earnings include any deferrals by the Participant into the Deferred Compensation Plan), as modified below, without regard to the limitation of Section 401(a)(17) of the Code. For purposes of determining the Participant’s Earnings, all incentive pay earned while he is an Employee under any annual group incentive plans, as defined in Section 5.1 of the Pension Plan, shall be considered, provided such incentive award was earned on or after January 1, 1994. However, incentive pay shall only be included in the Participant’s Earnings for purposes of calculating the Participant’s Pension Benefit using the 1.25% formula described in Section 5.1 of the Pension Plan.
|
5.2 |
Distribution of Pension Benefits . |
|
(a) |
General Rule. |
Subject to the transition rules set forth in Section 5.3, effective for Participants who have not commenced their Pension Benefit on or before March 1, 2007, the Pension Benefit, as determined in accordance with Section 5.1, shall be converted to a Single-Sum Amount and paid in ten (10) annual installments commencing in all events on or after January 1, 2008. The first installment shall be derived from the Single-Sum Amount plus Earnings, if any, divided by ten (10). Subsequent annual installments shall be an amount equal to the Participant’s unpaid Single-Sum Amount plus Earnings divided by the number of remaining annual payments.
|
(b) |
Payment of Installments after Retirement . |
(1) Commencement of Installment Payments. With respect to a Participant who retires under the terms of the Pension Plan, the first annual installment shall be paid as of the first day of the second full calendar month following the Participant’s Separation from Service but not sooner than January 1, 2008. Notwithstanding the foregoing, if a Participant is a Key-Employee, such Participant shall be subject to the Key-Employee Delay and the first installment payment shall be as of the first day of the seventh full calendar month following the Participant’s Separation from Service.
(2) Subsequent Nine Installment Payments. One additional installment, until ten (10) are paid in total, shall be paid as of each anniversary of the date the initial payment was made. For a Participant who is a Key Employee, the anniversary date of the initial payment will be deemed to be the date the first payment would have been made had the Key-Employee Delay not applied. The second through the tenth installments will be paid on the anniversary of this deemed initial payment date.
|
(c) |
Death of Participant . |
(1) Death After Retirement . If a retirement-eligible Participant dies after Separation from Service but before receiving all ten (10) installments, the remaining installment payments shall be paid to the Designated Beneficiary of the Participant at the same times and in the same amounts that the Participant would have received if the Participant had not died. Notwithstanding the foregoing, if a retired Key Employee dies during the Key-Employee Delay and before receiving the first installment, then the first installment shall be paid to the Designated Beneficiary as of the beginning of the second full calendar month following the death of the Participant or as soon as practical thereafter.
(2) Death Before Retirement . If a Participant dies on or after March 1, 2007, while actively employed and has a vested benefit in the Pension Plan, one-hundred percent (100%) of the Single-Sum Amount determined in accordance with Section 5.2(a) above shall be paid to the Participant’s Provisional Payee, if any, in ten (10) annual installments commencing in all events on or after January 1, 2008. Such installments shall be determined and payable as if the Participant survived to his fiftieth (50 th ) birthday, or actual date of death if later, and Separated from Service. If such a Provisional Payee dies simultaneously with or after the Participant but before receipt of all installments, the remaining payments shall be paid to the Participant’s Designated Beneficiary.
(d) FICA Tax Adjustment . A payment in addition to the ten (10) installments described in Section 5.2(a) shall be made from the remaining Single-Sum Amount which payment shall be based on the following adjustments as permitted under Code Section 409A and the regulations promulgated thereunder: (1) the amount necessary to pay the tax due under the Federal Insurance Contributions Act (“FICA”) with respect to the accrued Pension Benefit determined upon retirement (or such other appropriate “resolution date” as defined under Treasury Regulation Section 31.3121(v)(2)); and (2) the amount estimated to pay the Federal and State income tax withholding liability due on the amount paid in subsection (1) plus the Federal and State income tax withholding liability due on the amount paid in this subsection (2).
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(e) |
Participants Who Terminate with Vested Benefits . |
(1) General Rule . With respect to a Participant who Separates from Service on or after March 1, 2007, who is not eligible to retire under Article III of the Pension Plan, but who is vested in his Retirement Income under Section 8.1 of the Pension Plan, notwithstanding anything to the contrary, such Participant shall receive a Pension Benefit in the form of a single payment made as of September 1 of the calendar year following the calendar year of termination from employment equal to (1) divided by (2) below:
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(A) |
The Single-Sum Amount determined as if the Participant’s first installment date was to be coincident with his Normal Retirement Date. |
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(B) |
The sum of one (1) plus the Discount Rate raised to a power equal to the number of years and months between |
the Participant’s Normal Retirement Date and the September 1 of the calendar year following the calendar year of termination from employment.
For the avoidance of doubt, the Discount Rate used for this calculation is to be the Discount Rate applicable for the calendar year the Participant Separates from Service.
(2) Death Benefits. With respect to a Participant to which this Section 5.2(e) applies, if such a Participant dies after Separation from Service but prior to payment in accordance with Section 5.2(e)(1) above, the Provisional Payee, if any, shall receive the single payment provided in Section 5.2(e)(1) above at the same time the Participant would have received such payment if he had not died.
5.3 Code Section 409A Transition Election and Other Related Rules Applicable to Pension Benefit .
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(a) |
Election General Rules. |
At a time and in a manner prescribed by the Administrative Committee, Participants who are actively employed on March 1, 2007, shall be eligible to make an election to receive Pension Benefits in the form described in Section 5.2(a) or in the form described in Section 5.3(c) below. In the event a Participant designated in accordance with the preceding sentence fails to make such election for any reason, including but not limited to death, such Participant’s Pension Benefit shall be in the form described in Section 5.2(a).
(b) Transitioning Participants Electing Installments . The following provisions apply to Participants described in Section 5.3(a) who have elected the form of payment described in Section 5.2(a) or are deemed to have made such election .
(1) General Rules. The first installment payment shall commence as of January 1, 2008 or later and shall otherwise be paid in accordance with Section 5.2(b). If a Participant commences payment of Pension Benefits in conjunction with his benefit under the Pension Plan prior to January 1, 2008, such Pension Benefit shall be payable for the remainder of 2007 in monthly increments starting at the same time and payable in the same form elected by the Participant under the Pension Plan. With respect to a Participant subject to the preceding sentence, the Participant’s Single-Sum Amount shall be computed as of the first day of the second full calendar month following the Participant’s Separation from Service and shall be decreased by any monthly benefits actually paid to the Participant or a Provisional Payee and increased by Earnings. For the avoidance of doubt, a Participant subject to this Section 5.3(b)(1) whose Pension Benefit payments start prior to January 1, 2008, will receive his first installment on January 1, 2008 and subsequent installments will be paid as of the next nine anniversaries of that payment.
(2) Installment Payment Commencement for Key Employees. If a Participant to which Section 5.3(b) applies is a Key Employee, such Participant shall be subject to the Key-Employee Delay and the first installment payment made in accordance with Section 5.3(b)(1) shall be as of the first day of the seventh full calendar month
following the Participant’s Separation from Service but in no event earlier than as of January 1, 2008. If such a Key Employee retires in 2007 and commences his Pension Benefit in conjunction with his benefit under the Pension Plan before 2008, such Key Employee’s Pension Benefit shall be paid in monthly increments starting at the same time and payable in the same form elected by the Participant under the Pension Plan until his first installment is paid in accordance with the preceding sentence. Under no circumstances are payments of Pension Benefits made in conjunction with the Pension Plan commencing in 2007 subject to the Key-Employee Delay. For the avoidance of doubt, a Participant subject to this Section 5.3(b)(2) whose Pension Benefit payments start prior to 2008 shall receive his first installment as of the later of January 1, 2008 or the first day of the calendar month following the applicable Key-Employee Delay; subsequent installments will be paid as of the first day of the next nine calendar years.
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(3) |
Death of Participant . |
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(A) |
Death Before Retirement . The provisions of Section 5.2(c)(2) apply to a Participant described in this Section 5.3(b) who dies while actively employed. The Provisional Payee of such a Participant who dies prior to December 1, 2007 and could have commenced payments in 2007 shall receive prior to the first installment a survivor benefit in accordance with the form of benefit elected by the Participant or deemed elected under the Pension Plan as applicable. Thereafter, the Provisional Payee shall receive the installment payments the Participant would have received under Section 5.3(b)(1). |
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(B) |
Death After Retirement. The provisions of Section 5.2(c)(1) apply to a Participant described in this Section 5.3(b) who is retirement eligible and dies after Separation from Service. However, the Provisional Payee of any Participant who commences Pension Benefits in 2007 in conjunction with his benefit under the Pension Plan and who dies during 2007 prior to payment of his first installment shall receive prior to such first installment a survivor benefit in accordance with the form of benefit elected by the Participant or deemed elected under the Pension Plan as applicable. Thereafter, installment payments that the Participant would have received shall be paid to the Participant’s Designated Beneficiary. |
(c) Transitioning Participants Electing Annuity Forms . The following rules apply to Participants described in Section 5.3(a) who have elected the annuity form of payment. The election provided for in subparagraph (1) below shall be subject to the provisions of subparagraphs (2)-(5), as applicable.
(1) General Rule. If determined eligible to do so by the Administrative Committee, at a time and in a manner determined by the Administrative Committee during 2007, such a Participant may elect to receive his Pension Benefit in the form of a single life annuity, 50% joint and survivor annuity, 100% joint and survivor annuity, 50% joint and survivor annuity with pop-up, or 100% joint and survivor annuity with pop-up (and with respect to SEPCO Employees those other forms available under the Pension Plan except any form coordinated with payment of Social Security benefits). In the event that such a Participant elects an annuity but fails to designate a form, such Participant shall be deemed to have designated a single life annuity. These annuity forms shall be as described in the Pension Plan and if a form other than a single life annuity is selected, the Pension Benefit payable will be adjusted as described in the Pension Plan. Payments shall commence as of the first day of the first full calendar month following the Participant’s Separation from Service.
The Participants who have elected the form of payment described in this Section 5.3(c) shall receive an additional payment equal to (A) and (B) below. Subsequent payments shall be adjusted as provided in subsection (C) below as permitted under Code Section 409A and the regulations promulgated thereunder.
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(A) |
The amount necessary to pay the tax due under the Federal Insurance Contributions Act (FICA) with respect to the accrued Pension Benefit determined in accordance with the requirements under Treasury Regulation Section 31.3121(v)(2) upon retirement (or such other appropriate “resolution date” as defined under Treasury Regulation Section 31.3121(v)(2)) calculated in accordance with Section 5.1; |
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(B) |
The amount estimated to pay the Federal and State income tax withholding liability due on the amount paid under subsection (A) above plus the amount of Federal and State income tax withholding liability due on the amount paid under this subsection (B); and |
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(C) |
An adjusted monthly benefit determined in a manner and on an actuarially equivalent basis in accordance with the methodology and assumptions used to calculate the tax due under subsection (A) above which takes into account the amounts paid under subsections (A) and (B) above and the form of benefit elected by the Participant. |
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(2) |
Form of Annuity . |
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(A) |
Pre-2008 Commencement. Notwithstanding Section 5.3(c)(1), if a Participant to which this Section 5.3(c) applies retires in 2007 and commences receipt of his Pension Benefit in conjunction with his benefit under the |
Pension Plan before January 1, 2008, the Participant’s Pension Benefit shall be payable only in the form elected under the Pension Plan and shall be calculated using the same annuity form of payment factors as provided for under the terms of the Pension Plan as in effect during 2007.
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(B) |
Post-2007 Commencement . A Participant described in the first full paragraph of Section 5.3(c)(1) who has not commenced payment of his Pension Benefit prior to 2008 may change the form of payment previously elected to another permitted form described in that paragraph (plus may instead elect a 75% joint and survivor annuity or a 75% joint and survivor annuity with pop-up) at a time and in a manner prescribed by the Administrative Committee. If the form of payment is changed, the Pension Benefit payable pursuant to the original election will be actuarially adjusted using the Actuarial Basis to reflect the new form selected. |
(3) Key Employee Rules. If a Participant to which this Section 5.3(c) applies is a Key Employee and the commencement date of his Pension Benefit is on or after January 1, 2008, such Participant will be subject to the Key-Employee Delay and shall receive a lump-sum payment as of the first day of the seventh full month following the Participant’s Separation from Service in an amount equal to six (6) monthly payments due to the Participant under the Plan, plus the monthly payment then due to the Participant for the seventh month. Thereafter, the appropriate monthly benefit shall be paid to the Key Employee and his Provisional Payee, if any. If such a Participant is a Key Employee and the commencement date of his Pension Benefit is before January 1, 2008, the Pension Benefit shall be paid in accordance with Section 5.3(c)(2)(A); the Key-Employee Delay will not apply. If a Key Employee dies during the Key-Employee Delay, the Designated Beneficiary shall receive any benefits that would have been paid if there were no Key-Employee Delay up to the date of death as of the first of the month following the Participant’s death or as soon as practicable thereafter. Interest shall not be added to such benefits. In addition, if such deceased Key Employee elected a form of payment providing for payment to continue to a Provisional Payee pursuant to Section 5.3(c)(1), subject to Section 5.3(c)(2), those payments will begin as of the first of the month following such Key Employee’s death or as soon as practicable thereafter.
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(4) |
Death of Participant . |
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(A) |
Death After Retirement. If a retirement-eligible Participant to which Section 5.3(c)(1) applies dies after Separation from Service, such Participant’s Provisional Payee, if any, shall receive monthly payments for the remainder of the Provisional Payee’s life based on the annuity form of payment the Participant elected or is deemed to have |
elected pursuant to Section 5.3(c)(1), subject to Section 5.3(c)(2). Such Payments will commence as of the first of the month following such Participant’s death or as soon as practicable thereafter.
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(B) |
Death Before Retirement. If a Participant to which Section 5.3(c) applies dies while actively employed and has a vested benefit in the Pension Plan, then Section 5.2(c)(2) shall apply. |
(5) QPSA Charges Waived. Any benefit paid in accordance with this Section 5.3(c) shall be calculated without regard to the charge associated with any Qualified Pre-retirement Survivor Annuity form elected.
(d) Inactive Employee Transition Election . In the event a Participant has Separated from Service prior to March 1, 2007, has deferred commencement until after March 1, 2007, and is eligible to receive a benefit under the Pension Plan on or before January 1, 2008, such Participant must make an election in accordance with Section 5.3(a) at a time and in a manner prescribed by the Administrative Committee and must commence payment by no later than January 1, 2008. The requirements of Section 5.3(b) or Section 5.3(c) (ignoring the fact that the Participant previously incurred a Separation from Service) apply as the case may be based on the Participant’s ultimate election under Section 5.3(a). If a Participant dies before making an election under this Section 5.3(a), Pension Benefit payments shall be made consistent with Section 5.3(b)(3)(B) if the Participant dies prior to making his election to commence his Pension Benefit in conjunction with the commencement of his benefit under the Pension Plan or shall be made consistent with Section 5.3(c)(4)(A) if made after making his election to commence his Pension Benefit in conjunction with the commencement of his benefit under the Pension Plan.
(e) Survivor Benefits in the case of Pre-effective Date Deaths . If a Participant died prior to March 1, 2007 while actively employed and had a vested benefit in the Pension Plan, the Provisional Payee, if any, shall receive the form of benefit provided under the Pension Plan commencing the first of the month following the date the Participant would have attained age 50.
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(f) |
Participants Who Terminate with Vested Benefits . |
(1) General Rule . With respect to a Participant who Separated from Service before March 1, 2007, who was not eligible to retire under Article III of the Pension Plan before January 1, 2008, but who was vested in his Retirement Income under Section 8.1 of the Pension Plan, notwithstanding anything to the contrary, such Participant shall receive a Pension Benefit in the form described in Section 5.2(e)(1) paid as of September 1, 2008 based on a Discount Rate determined as of September 2006.
(2) Death Benefits. With respect to a Participant to which this Section 5.3(f) applies, if such a Participant dies prior to payment in accordance with Section 5.3 (f)(1) above, the Provisional Payee, if any, shall receive the single payment provided in
Section 5.3(f)(1) the first of the month following the date the Participant would have attained age 50.
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5.4 |
Non-Pension Benefit . |
(a) A Participant shall be entitled to a Non-Pension Benefit which is determined under this Section 5.4. An Account shall be established for the Participant as of his initial Plan Year of participation in the Plan. Each Plan Year, such Account shall be credited with an amount equal to the matching contribution amount that his Employing Company is prohibited from contributing to the Savings Plan on behalf of the Participant as a result of the limitations imposed by Sections 401(a)(17), 401(k), 401(m), 402(g), or 415(c) of the Code.
(b) (1) For purposes of this Section 5.4, for the period prior to January 1, 2009, the Non-Pension Benefit of a Participant shall be calculated based on the Participant’s compensation that would have been considered in calculating contributions to his accounts under the Savings Plan and ESOP without regard to the limitations of Section 401(a)(17) or Section 402(g) of the Code including any portion of his compensation he may have elected to defer under the Deferred Compensation Plan, but with respect to only the Savings Plan excluding incentive pay he deferred under the Deferred Compensation Plan.
(2) For purposes of this Section 5.4, for the period on and after January 1, 2009, the Non-Pension Benefit of a Participant shall be calculated based on the Participant’s compensation including base compensation deferred into the Deferred Compensation Plan that would have been considered in calculating contributions to his accounts under the Savings Plan; provided that with respect to deferred base compensation, such deferrals shall only be taken into account once the Code Section 401(a)(17) limit is reached in the Savings Plan and only such deferred base compensation which exceeds the Code Section 401(a)(17) limit shall be taken into account for this purpose. All other deferred base compensation shall be disregarded. In addition, incentive pay a Participant defers into the Deferred Compensation Plan shall not be taken into account.
(c) The Non-Pension Benefit of the Participant shall be deemed to be invested in Phantom Common Stock. On each such date of investment, a Participant’s Account shall be credited with the number of shares (including fractional shares) of Phantom Common Stock which could have been purchased on such date, based upon the Common Stock’s Purchase Price. As of the date upon which occurs the payment of dividends on the Common Stock, if any, there shall be credited with respect to shares of Phantom Common Stock in the Participant’s Account on the applicable dividend record date, such additional shares (including fractional shares) of Phantom Common Stock as follows:
(1) In the case of cash dividends, such additional shares as could be purchased at the Purchase Price with the dividends which would have been payable if the credited shares had been outstanding;
(2) In the case of dividends payable in property other than cash or Common Stock, such additional shares as could be purchased at the Purchase Price with the fair market value of the property which would have been payable if the credited shares had been outstanding; or
(3) In the case of dividends payable in Common Stock, such additional shares as would have been payable on the credited shares if they had been outstanding.
(d) As soon as practicable (but within the period required by Code Section 409A taking into account the period allowed for excess plans under Treasury Regulation Section 1.409A-2(a)(7)(iii)) following the first day of his eligibility to have benefits credited to his Account, a Participant shall designate in a form to be prescribed by the Administrative Committee the method of payment of his Account, which shall be the payment of a single lump sum or a series of annual installments not to exceed twenty (20). If the Participant fails to designate a method of payment, the form shall be a single lump sum. The method of distribution initially designated by a Participant (or the deemed form as the case may be) shall not be revoked and shall govern the distribution of a Participant’s Account, except that such method of distribution may be modified by the Participant but only if such modification meets the requirements of a Modification Delay. Each Participant, his Designated Beneficiary, and legal representative shall be bound as to any action taken pursuant to the method of distribution elected by a Participant and the terms of the Plan.
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5.5 |
Distribution of Non-Pension Benefits . |
(a) In the event a Participant elects to receive the distribution of his Account in a lump sum, such payment shall be made as soon as reasonably practicable but not later than seventy-five (75) days after Separation from Service. As permitted under Code Section 409A and the regulations promulgated thereunder the tax due under the Federal Insurance Contributions Act under Treasury Regulation Section 31.312(v)(2) shall be withheld from this payment or from the Participant’s Account, as necessary. Notwithstanding the foregoing, if a Participant is a Key Employee, such Participant shall be subject to the Key-Employee Delay and the payment of the lump sum following Separation from Service shall be as of the beginning of the seventh full calendar month.
(b) In the event a Participant elects to receive the distribution of his Account in annual installments, the first payment shall be made as soon as practicable but not later than seventy-five (75) days following his Separation from Service. The first installment shall equal the market value of any shares of Phantom Common Stock (and fractions thereof) credited to said Participant’s Account based on the Sales Price first deducting as permitted under Code Section 409A and the regulations promulgated thereunder the amount calculated as the tax due under the Federal Insurance Contributions Act under Treasury Regulation Section 31.3121(v)(2), second dividing the resulting number by the number of annual installment payments, and finally summing such tax calculated and the quotient of such division. Each subsequent annual payment shall be an amount equal to the market value of any shares of Phantom Common Stock (and fractions thereof) credited to said Participant’s Account based on the Sales Price, divided by the number of the remaining annual payments and shall be paid as soon as practicable following each anniversary of the initial payment date (or what would have been the initial payment date
but for the Key-Employee Delay) until the balance of the Participant’s Account is paid in full. For purposes of Section 409A of the Code, installments shall be treated as a single payment. Notwithstanding the foregoing, if a Participant is a Key Employee, such Participant shall be subject to the Key-Employee Delay and the first installment payment following Separation from Service shall be as of the beginning of the seventh full calendar month.
(c) The transfer by a Participant between companies within The Southern Company shall not be deemed to be a Separation from Service with an Employing Company. With regard to any distribution made under this Article, the market value of any shares of Phantom Common Stock credited to a Participant’s Account shall be based on the Sales Price. No portion of a Participant’s Account shall be distributed in Common Stock.
(d) Upon the death of a Participant or a former Participant prior to the payment of his entire Account balance, the unpaid balance of the market value of any shares of Phantom Common Stock (and fractions thereof) credited to said Participant’s Account based on the Sales Price shall be paid to the Designated Beneficiary in a lump sum within seventy-five (75) days of Participant’s date of death. The Designated Beneficiary selection may be changed in a manner prescribed by the Administrative Committee by the Participant or former Participant at any time without the consent of the prior Beneficiary.
(e) Upon the Total Disability of a Participant or former Participant prior to the payment of his entire Account balance, the unpaid balance of the market value of any shares of Phantom Common Stock (and fractions thereof) credited to said Participant’s Account based on the Sales Price of his Account shall be paid in accordance with the distribution method elected by such Participant or former Participant commencing as of such Participant’s Separation from Service.
5.6 Allocation of Pension Benefit Liability . In the event that a Participant eligible to receive a Pension Benefit has been employed at more than one Employing Company, the Pension Benefit liability shall be apportioned so that each such Employing Company is obligated in accordance with this Section 5.6 to cover the percentage of the total Pension Benefit as determined below. Each Employing Company’s share of the Pension Benefit liability shall be calculated by multiplying the Pension Benefit by a fraction where the numerator of such fraction is the base rate of pay, as defined by the Administrative Committee, received by the Participant at the respective Employing Company on his date of termination of employment or transfer, as applicable, multiplied by the Accredited Service earned by the Participant at the respective Employing Company and where the denominator of such fraction is the sum of all numerators calculated for each respective Employing Company by which the Participant has been employed.
5.7 Funding of Benefits . Except as expressly limited under the terms of the Trust, neither the Company nor any Employing Company hereunder shall reserve or otherwise set aside funds for the payment of its obligations under the Plan. In any event, such obligations shall be paid or deemed to be paid solely from the general assets of the Employing Companies. Participants shall only have the status of general, unsecured creditors of the Company and their respective Employing Companies. Notwithstanding that a Participant shall be entitled to receive the balance of his Account under the Plan, the assets from which such amount shall be paid shall
at all times remain subject to the claims of the creditors of the Participant’s Employing Company.
5.8 Withholding . There shall be deducted as permitted under Code Section 409A and the regulations promulgated thereunder from Plan payments and, if necessary, from the Non-Pension Account under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by an Employing Company to such governmental authority for the account of the Participant or Designated Beneficiary entitled to such payment.
5.9 Recourse Against Deferred Compensation Trust . In the event a Participant who is employed on or after January 1, 1999 with an “Employing Company” (as such term is defined in the Change in Control Benefits Protection Plan) disputes the calculation of his Pension Benefit or Non-Pension Benefit, or payment of amounts due under the terms of the Plan, the Participant has recourse against the Company, the Employing Company by which the Participant is or was employed, if different, the Plan, and the Trust for payment of benefits to the extent the Trust so provides.
5.10 Change in Control . The provisions of the Change in Control Benefits Protection Plan are incorporated herein by reference to determine the occurrence of a change in control or preliminary change in control of Southern Company or an Employing Company, the benefits to be provided hereunder, and the funding of the Trust in the event of such a change in control. Any modifications to the Change in Control Benefits Protection Plan are likewise incorporated herein and are otherwise intended to comply with 409A of the Code.
ARTICLE VI - MISCELLANEOUS
6.1 Assignment . Neither the Participant, his Designated Beneficiary, nor his legal representative shall have any rights to sell, assign, transfer, or otherwise convey the right to receive the payment of any Pension Benefit or Non-Pension Benefit due hereunder, which payment and the right thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payment under the Plan shall be null and void and of no effect.
6.2 Amendment and Termination . Except for the provisions of Section 5.10 hereof, which may not be amended following a “Southern Change in Control” or “Subsidiary Change in Control”, as defined in the Change in Control Benefits Protection Plan, the Plan may be amended or terminated at any time by the Board of Directors, provided, however, that no amendment or termination shall cause a forfeiture or reduction in any benefits accrued as of the date of such amendment or termination. The Plan may also be amended by the Administrative Committee (a) if such amendment does not involve a substantial increase in cost to any Employing Company, or (b) as may be necessary, proper, or desirable in order to comply with laws or regulations enacted or promulgated by any federal or state governmental authority. During the compliance transition period provided for by the 409A Guidance, the Administrative Committee may enter into transition elections as to time and form of payment under this Plan and, subject to the preceding authority, shall be treated as amendments to the Plan.
6.3 No Guarantee of Employment . Participation hereunder shall not be construed as creating any contract of employment between any Employing Company and a Participant, nor shall it limit the right of an Employing Company to suspend, terminate, alter, or modify, whether or not for cause, the employment relationship between such Employing Company and a Participant.
6.4 Mirant . For the avoidance of doubt, the provisions of the Plan effective in the Plan’s amendment and restatement dated May 1, 2000 (“2000 Plan”) concerning Mirant Shares were applied through the liquidation of Mirant Shares as a form of investment in the Plan as of June 30, 2006. Although these provisions concerning Mirant Shares are not restated in this amendment and restatement, a Participant’s rights concerning Mirant Shares are as set forth in such 2000 Plan. To this limited extent, the provisions in the 2000 Plan concerning Mirant Shares are incorporated herein.
6.5 Construction . This Plan shall be construed in accordance with and governed by the laws of the State of Georgia, to the extent such laws are not otherwise superseded by the laws of the United States.
IN WITNESS WHEREOF, the amended and restated Plan has been executed by a duly authorized officer of Southern Company Services, Inc., pursuant to resolutions of the Board of Directors of the Company, this 31st day of December, 2008.
SOUTHERN COMPANY SERVICES, INC.
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By: /s/Patricia L. Roberts |
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Its: Vice President and Associate General Counsel |
APPENDIX A
THE SOUTHERN COMPANY SUPPLEMENTAL BENEFIT PLAN
EMPLOYING COMPANIES AS OF JANUARY 1, 2009
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Southern Communications Services, Inc.
Southern Company Energy Solutions, LLC
Southern Company Services, Inc.
Southern Nuclear Operating Company, Inc.
SCHEDULE OF PROVISIONS
FOR PRE-2005 NON-PENSION BENEFITS
ARTICLE I - PURPOSE
1.1 Schedule of Provisions for Pre-2005 Non-Pension Benefits . This Schedule sets forth the operative provisions of the Plan applicable to “grandfathered” Non-Pension Benefits which are treated by the Employing Companies as not subject to Section 409A of the Code. The Account balance (plus earnings thereon) of the grandfathered Non-Pension Benefits shall only be subject to the provisions set forth in this Schedule. In accordance with transition rules under the 409A Guidance, these provisions are only intended to preserve the rights and features of the “grandfathered” Non-Pension Benefits and are, therefore, not intended to “materially modify” any aspect of such rights and features. Provisions of this Schedule should be so construed whenever necessary or appropriate. Provisions in this Schedule shall only be amended in accordance with this Schedule’s terms.
ARTICLE II - DEFINITIONS
2.1 “Account” shall mean for purposes of this Schedule the amount credited to the account of a Participant to reflect the interest of a Participant in the Plan solely pursuant to the terms of this Schedule resulting from a Participant’s Non-Pension Benefit calculated in accordance with Section 5.2. This Account amount is attributable to those deferrals which are not subject to Section 409A of the Code.
2.2 “Administrative Committee” shall mean the committee referred to in Section 3.1 of this Schedule.
2.3 “Beneficiary shall have the same meaning as set forth for “Designated Beneficiary” in the main body of the Plan.
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2.4 |
“Board of Directors shall mean the Board of Directors of the Company. |
2.5 “Change in Control Benefits Protection Plan shall mean the Change in Control Benefits Protection Plan, as approved by the Southern Board, as it may be amended from time to time in accordance with the provisions therein.
2.6 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
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2.7 |
“Common Stock shall mean common stock of Southern Company. |
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2.8 |
“Company” shall mean Southern Company Services, Inc. |
2.9 “Deferred Compensation Plan” shall mean The Southern Company Deferred Compensation Plan, as amended from time to time.
2.10 “Employee” shall mean any person who is currently employed by an Employing Company.
2.11 “Employing Company” shall mean the Company and any affiliate or subsidiary of Southern Company which the Board of Directors may from time to time determine to bring under the Plan and any successor to them. The Employing Companies are set forth in Appendix A to the Plan, as amended from time to time.
2.12 “ESOP” shall mean The Southern Company Employee Stock Ownership Plan, as amended from time to time.
2.13 “Non-Pension Benefit” shall mean the benefit described in Section 5.2 of this Schedule.
2.14 “Participant” shall mean an Employee or former Employee of an Employing Company who is eligible and participates in the Plan pursuant to Article IV of this Schedule.
2.15 “Pension Benefit” shall mean the benefit described in Section 5.1 of this Schedule.
2.16 “Pension Plan” shall mean The Southern Company Pension Plan, as amended from time to time.
2.17 “Phantom Common Stock” shall mean the Common Stock in which a Participant is deemed to invest his Non-Pension Benefit as if such Common Stock had been purchased upon contribution to the Savings Plan, the ESOP, and/or the Performance Sharing Plan, as the case may be.
2.18 “Plan” shall mean The Southern Company Supplemental Benefit Plan, as amended and restated effective January 1, 2009, which includes this Schedule, as may be further amended from time to time.
2.19 “Performance Sharing Plan” shall mean The Southern Company Performance Sharing Plan, as amended from time to time prior to its merger into the Savings Plan.
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2.20 |
“Plan Year” shall mean the calendar year. |
2.21 “Purchase Price” shall mean for purposes of deemed purchases of Phantom Common Stock the following: (a) with respect to the Savings Plan and the Performance Sharing Plan, the purchase price of a share of the Common Stock under the Savings Plan as of the applicable Valuation Date; (b) with respect to any investment of dividends attributable to Phantom Common Stock, the dividend reinvestment price of a share of the Common Stock under the Savings Plan as of the applicable Valuation Date; and (c) with respect to the ESOP, the price at which a share of Common Stock is purchased with regard to a contribution made for each applicable Plan Year.
2.22 “Sales Price” shall mean the closing price on any trading day of a share of Common Stock based on consolidated trading as defined by the Consolidated Tape Association
and reported as part of the consolidated trading prices of New York Stock Exchange listed securities.
2.23 “Savings Plan” shall mean The Southern Company Employee Savings Plan, as amended from time to time.
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2.24 |
“Southern Board” shall mean the board of directors of Southern Company. |
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2.25 |
“Southern Company” shall mean Southern Company, its successors and assigns. |
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2.26 |
“Trust” shall mean the Southern Company Deferred Compensation Trust. |
2.27 “Valuation Date” shall mean each trading day of the New York Stock Exchange, or any successor national exchange on which the Common Stock is traded and with respect to which a Sales Price may be determined.
Where the context requires, the definitions of all terms set forth in the Pension Plan, the ESOP, the Performance Sharing Plan, the Savings Plan, and the Deferred Compensation Plan shall apply with equal force and effect for purposes of interpretation and administration of the Plan, unless said terms are otherwise specifically defined in the Plan. The masculine pronoun shall be construed to include the feminine pronoun and the singular shall include the plural, where the context so requires.
ARTICLE III - ADMINISTRATION OF SCHEDULE
3.1 Article III of the main body of the Plan is herein incorporated into this Schedule by reference. Any amendment to Article III of the main body of the Plan shall operate as amendment to this Article III of the Schedule.
ARTICLE IV - ELIGIBILITY
4.1 For so long as an Employee has an Account balance governed by this Schedule, he shall be a Participant in the Plan for purposes of this Schedule, and such Account balance shall be maintained and administered solely in accordance with the terms of this Schedule.
ARTICLE V - BENEFITS
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5.1 |
Pension Benefit . |
Pension Benefits are not subject to grandfather provisions set forth in this Schedule. Plan provisions concerning Pension Benefits are set forth in the main body of the Plan.
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5.2 |
Non-Pension Benefit . |
(a) No Non-Pension Benefits which are subject to Section 409A of the Code shall be credited to the Account of a participant for purposes of the provisions of this Schedule. The Non-Pension Benefit Account of the Participant governed by this Schedule shall be deemed to be invested in Phantom Common Stock. On each such date of investment, a Participant’s
Account shall be credited with the number of shares (including fractional shares) of Phantom Common Stock which could have been purchased on such date, based upon the Common Stock’s Purchase Price. As of the date upon which occurs the payment of dividends on the Common Stock, there shall be credited with respect to shares of Phantom Common Stock in the Participant’s Account on the applicable dividend record date, such additional shares (including fractional shares) of Phantom Common Stock as follows:
(1) In the case of cash dividends, such additional shares as could be purchased at the Purchase Price with the dividends which would have been payable if the credited shares had been outstanding;
(2) In the case of dividends payable in property other than cash or Common Stock, such additional shares as could be purchased at the Purchase Price with the fair market value of the property which would have been payable if the credited shares had been outstanding; or
(3) In the case of dividends payable in Common Stock, such additional shares as would have been payable on the credited shares if they had been outstanding.
(b) As soon as practicable following the first day of his eligibility to have benefits credited to his Account, a Participant shall designate in a form to be prescribed by the Administrative Committee the method of payment of his Account, which shall be the payment of a single lump sum or a series of annual installments not to exceed twenty (20). The method of distribution initially designated by a Participant shall not be revoked and shall govern the distribution of a Participant’s Account. Notwithstanding the foregoing, in the sole discretion of the Administrative Committee, upon application by the Participant, the method of distribution designated by such Participant may be modified, provided the Participant requests such modification not later than the 366th day prior to a distribution of such Participant’s Account in accordance with the terms of the Plan, provided, however, that any Participant who is required to file reports pursuant to Section 16(a) of the Securities and Exchange Act of 1934, as amended, with respect to equity securities of The Southern Company shall not be permitted to amend his distribution election during any time period for which such Participant is required to file any such reports with respect to his Non-Pension Benefit unless such amendment is specifically approved by the Administrative Committee in its sole discretion. Each Participant, his Beneficiary, and legal representative shall be bound as to any action taken pursuant to the method of distribution elected by a Participant and the terms of the Plan. Notwithstanding any provision of the Plan to the contrary, if a Participant has elected to receive his Plan distribution in annual installment payments and such Participant’s Plan Account does not exceed five thousand dollars ($5,000) (as adjusted from time to time by Treasury regulations applicable to tax-qualified retirement plans) at the time such benefit is valued for distribution, such payment shall be made as a single, lump-sum payment to the Participant.
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5.3 |
Distribution of Non-Pension Benefits . |
(a) When a Participant terminates his employment with an Employing Company, such Participant shall be entitled to receive the market value of any shares of Phantom Common Stock (and fractions thereof) reflected in his Account in a single, lump sum distribution
or annual installments not to exceed twenty (20). Such distribution shall be made not later than seventy-five (75) days following the date on which his termination of employment occurs, or as soon as reasonably practicable thereafter. The transfer by a Participant between companies within The Southern Company shall not be deemed to be a termination of employment with an Employing Company. With regard to any distribution made under this Article of the Schedule, the market value of any shares of Phantom Common Stock credited to a Participant’s Account shall be based on the Sales Price. No portion of a Participant’s Account shall be distributed in Common Stock.
(b) In the event a Participant elects to receive the distribution of his Account in annual installments, the first payment shall be made not later than seventy-five (75) days following the date on which his termination of employment occurs, or as soon as reasonably practicable thereafter, subject however to the cash-out provisions of Section 5.2(d) of this Schedule. Installments shall equal the balance in the Participant’s Account taking into account the tax due under the Federal Insurance Contributions Act divided by the number of annual installment payments. Each subsequent annual payment shall be an amount equal to the balance in the Participant’s Account as of the Valuation Date, divided by the number of the remaining annual payments and shall be due on the anniversary of the preceding payment date.
(c) Upon the death of a Participant or a former Participant prior to the payment of the market value of any shares of Phantom Common Stock (and fractions thereof) credited to said Participant’s Account based on the Sales Price, the unpaid balance shall be paid in the sole discretion of the Administrative Committee (1) in a lump sum to the designated Beneficiary of a Participant or former Participant within seventy-five (75) days following the date on which the Administrative Committee is provided evidence of the Participant’s death (or as soon as reasonably practicable thereafter) or (2) in accordance with the distribution method chosen by such Participant or former Participant. The Beneficiary designation may be changed by the Participant or former Participant at any time without the consent of the prior Beneficiary
(d) Upon the total disability of a Participant or former Participant, as determined by the Social Security Administration, prior to the payment of the market value of any shares of Phantom Common Stock (and fractions thereof) credited to such Participant’s Account based on the Sales Price, the unpaid balance of his Account shall be paid in the sole discretion of the Administrative Committee (1) in a lump sum to the Participant or former Participant, or his legal representative within seventy-five (75) days following the date on which the Administrative Committee receives notification of the determination of a disability by the Social Security Administration (or as soon as reasonably practicable thereafter) or (2) in accordance with the distribution method elected by such Participant or former Participant.
(e) The Administrative Committee, in its sole discretion upon application made by the Participant, a designated Beneficiary, or their legal representative, may determine to accelerate payments or, in the event of death or total disability (as determined by Social Security Administration), to extend or otherwise make payments in a manner different from the manner in which such payment would be made under the method of distribution elected by the Participant in the absence of such determination. Notwithstanding any provision of the Plan to the contrary, if a Participant has elected to receive his Plan distribution in annual installment payments and such Participant’s Plan Account does not exceed five thousand dollars ($5,000) (as adjusted from
time to time by Treasury regulations applicable to tax-qualified retirement plans) at the time such benefit is valued for distribution, such payment shall be made as a single, lump-sum payment to the Participant.
5.4 Recourse Against Deferred Compensation Trust . In the event a Participant who is employed on or after January 1, 1999 with an “Employing Company” (as such term is defined in the Change in Control Benefits Protection Plan) disputes the calculation of his Non-Pension Benefit under this Schedule, or payment of amounts due under the terms of the Plan, the Participant has recourse against the Company, the Employing Company by which the Participant is or was employed, if different, the Plan, and the Trust for payment of benefits to the extent the Trust so provides.
5.5 Change in Control . The provisions of the Change in Control Benefits Protection Plan are incorporated herein by reference to determine the occurrence of a change in control or preliminary change in control of Southern Company or an Employing Company, the benefits to be provided hereunder and the funding of the Trust in the event of such a change in control. Any modifications to the Change in Control Benefits Protection Plan are likewise incorporated herein.
ARTICLE VI - MISCELLANEOUS
6.1 Except for Section 6.2 of the main body of the Plan, Article VI is hereby incorporated by reference into this Schedule. Any amendment to Article VI of the main body of the Plan shall operate as an amendment to this Article VI of the Schedule except that Section 6.2 below shall set forth the sole method for amending and/or terminating this Schedule.
6.2 This Schedule may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time by resolution expressly modifying this Schedule; provided, however, that (a) Section 5.5 of this Schedule may not be amended following a “Southern Change in Control” or “Subsidiary Change in Control” (as defined in the Change in Control Benefits Protection Plan), (b) no such amendment, modification, or termination shall cause a forfeiture or reduction in any benefits accrued as of the date of such amendment, modification, or termination and/or (c) Article III and Section 6.1 of this Schedule may be amended in accordance with their terms. It is the Company’s intent that any modification to this Schedule shall not constitute nor shall it be interpreted to be a “material modification” of any right or feature of this Schedule as such term is defined under the Section 409A Guidance.
Exhibit 10(a)8
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") made and entered into by and between The Southern Company ("Southern"), Southern Company Services, Inc. (the "Company") and Mr. G. Edison Holland ("Mr. Holland") (hereinafter collectively referred to as the "Parties") is effective December 31 , 2008. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Holland, Southern and the Company, effective January 1, 2007.
WITNESSETH :
WHEREAS, Mr. Holland is the Executive Vice President and General Counsel of the Company;
WHEREAS, the Company wishes to provide to Mr. Holland certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of the Parties set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I – DEFINITIONS.
For purposes of this Agreement, the following terms shall have the following meanings:
1.1 “ Annual Compensation ” shall mean Mr. Holland’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.
1.2 “ Base Salary ” shall mean Mr. Holland’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
1.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
1.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
1.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
1.6 “ Board of Directors ” shall mean the board of directors of the Company.
1.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.
1.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);
(ii) 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
(iii) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to the Company, the occurrence of any of the following:
(i) 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 the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. Holland, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
1.9 “ COBRA Coverage ” shall mean any continuation coverage to which Mr. Holland or his dependents may be entitled pursuant to Code Section 4980B.
1.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
1.11 “ Common Stock ” shall mean the common stock of Southern.
1.12 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
1.14 “ 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 governmental agencies.
1.15 “ 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.
1.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.
1.17 “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
1.18 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.19 “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.
1.20 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
1.21 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
1.22 “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.
1.23 “ Good Reason ” shall mean, without Mr. Holland’s express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the
Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. Holland claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Holland provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. Holland of its decision within thirty (30) days of receipt of Mr. Holland’s written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties. Change in Control . A meaningful and detrimental alteration in Mr. Holland’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(i) Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. Holland’s job title, duties and status in effect at the Company as of the date the offer of employment is received.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees eligible for such compensation:
(A) Mr. Holland’s Base Salary;
(B) the sum of Mr. Holland’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of Mr. Holland’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(b)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Holland’s Base Salary plus Target Bonus under the
Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;
(c) Relocation .
(i) Company . A change in Mr. Holland’s work location to a location more than fifty (50) miles from the facility where Mr. Holland was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. Holland’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Holland of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. Holland’s right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Holland’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Holland’s work location at the Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. Holland is entitled under the Company’s Retirement and Welfare Benefit plans in which Mr. Holland was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Company to provide Mr. Holland with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. Holland is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).
(iii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.
(e) Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer
does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.
(f) Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. Holland is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. Holland would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall
request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Company shall provide to the Benefit Consultant actual data for its Employees.
(iv) The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. Holland by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
1.24 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
1.25 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
1.26 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
1.27 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who 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 February 23, 2006 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.
1.28 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
1.29 “ Month of Service ” shall mean any calendar month during which Mr. Holland has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.
1.30 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. Holland by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
1.31 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
1.32 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
1.33 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.34 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.35 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
1.36 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
1.37 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
1.38 “ Separation Date ” shall mean the date on which Mr. Holland’s employment with the Company is terminated; provided, however, that solely for purposes of Section 2.2(c) hereof, if, upon termination of employment with the Company, Mr. Holland is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Holland’s Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.
1.39 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
1.40 “ Southern ” shall mean The Southern Company, its successors and assigns.
1.41 “ Southern Board ” shall mean the board of directors of Southern.
1.42 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
1.43 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
1.44 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 1.8(b)(iii) hereof.
1.45 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
1.46 “ Termination for Cause ” or “ Cause ” shall mean Mr. Holland’s termination of employment with the Company upon the occurrence of any of the following:
(a) The willful and continued failure by Mr. Holland to substantially perform his duties with the Company (other than any such failure resulting from Mr. Holland’s Total Disability or from Mr. Holland’s retirement or any such actual or anticipated failure resulting from termination by Mr. Holland for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes Mr. Holland has not substantially performed his duties; or
(b) The willful engaging by Mr. Holland in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of Mr. Holland’s employment by the Company;
(ii) the willful carrying out of any activity or the making of any statement by Mr. Holland which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by Mr. Holland at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of the Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Company’s safety officer;
(v) assault or other act of violence by Mr. Holland against any person during the course of employment; or
(vi) Mr. Holland’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by Mr. Holland shall be deemed “willful” unless done, or omitted to be done, by Mr. Holland not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Mr. Holland shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Holland and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, Mr. Holland was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail.
1.47 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
1.48 “ 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.
1.49 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
1.50 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE II - SEVERANCE BENEFITS
2.1 Eligibility .
(a) Except as otherwise provided herein, if Mr. Holland’s employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Holland voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II.
(b) Limits on Eligibility . Notwithstanding anything to the contrary herein, Mr. Holland shall not be eligible to receive benefits under this Plan if Mr. Holland :
(i) is not actively at work on his Separation Date, unless Mr. Holland is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with the Company for other than Good Reason;
(iii) has his employment terminated by the Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Holland would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Holland shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by
the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement; or
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his Separation Date.
2.2 Severance Benefits . Upon the Company’s receipt of an effective Waiver and Release, Mr. Holland shall be entitled to receive the following severance benefits:
(a) Employee Outplacement Services . Mr. Holland shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Holland’s Separation Date.
(b) Severance Amount . Mr. Holland shall be paid in cash an amount equal to three times his Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Company shall pay to Mr. Holland an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal determined by adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the
Severance Amount plus all other “parachute payments” to Mr. Holland under Code Section 280G exceeds three (3) times Mr. Holland’s “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times Mr. Holland’s Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by Mr. Holland, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 2.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Holland, Southern and the Company.
(c) Welfare Benefit .
(i) Except as provided in Section 2.3 hereof, Mr. Holland shall be eligible to participate in the Company’s Group Health Plan for a period of six (6) months for each of Mr. Holland’s Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. Holland’s Separation Date unless otherwise specifically provided under such plan, upon Mr. Holland’s payment of both the Company’s and Mr. Holland’s premium under such plan. Mr. Holland shall also be entitled to elect coverage under the Group Health Plan for his
dependents who are participating in the Group Health Plan on Mr. Holland’s Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of Mr. Holland’s extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to Mr. Holland pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Holland in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by Mr. Holland in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Holland fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Holland or his dependent may elect. In the event that Mr. Holland or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Company’s Group Health Plan available to Mr. Holland or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by
law, and shall not be renewed. It shall be the duty of Mr. Holland to inform the Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Holland elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Holland a cash amount equal to the Company’s and Mr. Holland’s cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference.
(i) Any of Mr. Holland’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Holland is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to Mr. Holland under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of Mr. Holland’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Holland is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Holland’s Separation Date and to the extent Mr. Holland is entitled to participate therein, Mr. Holland shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Holland is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Holland’s Separation Date and to the extent Mr. Holland is entitled to participate therein, Mr. Holland shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to
the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which Mr. Holland’s Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Holland and no payment to Mr. Holland shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Holland is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Holland shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 2.2(h) shall apply to Mr. Holland to the extent that he, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 2.2. Provided Mr. Holland is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through Mr. Holland’s Separation Date and to the extent Mr. Holland is entitled to participate therein, Mr. Holland shall be entitled to receive cash in an amount equal to his award under the Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred,
at Mr. Holland’s target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by the Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Holland has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes Mr. Holland’s Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP.
2.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, if Mr. Holland is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans
sponsored by the Company of which Mr. Holland is a participant. If Mr. Holland is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Holland becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
2.4 Payment of Benefits .
(a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Holland in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Holland’s Separation Date, or (b) the tender to the Company by Mr. Holland of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such waiver. In the case of a Separation Date occurring in December, payment under this Article II will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Agreement are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-3(a)). In the event of a dispute with respect to liability or amount of any benefit due hereunder, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Company.
(b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this
Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee.
2.5 Benefits in the Event of Death . In the event of Mr. Holland’s death prior to the payment of all benefits due under this Article II, Mr. Holland’s estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
2.6 Legal Fees . In the event of a bona fide legal dispute between Mr. Holland and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Holland’s favor, the Company shall reimburse Mr. Holland’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
2.7 No Mitigation . Mr. Holland shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Holland hereunder shall not be reduced or suspended if he accepts such subsequent employment.
2.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by Mr. Holland for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Holland’s favor, the Company shall reimburse Mr. Holland’s legal fees in the manner provided in Section 2.6 hereof.
ARTICLE III - ARBITRATION
3.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Agreement, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Holland’s employment by the Company or the termination thereof.
3.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Holland, in the case of the Company, or to the Compensation Committee, in the case of Mr. Holland.
3.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
3.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by Mr. Holland, one arbitrator shall be appointed by the Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
3.5 Costs . The arbitration filing fee shall be paid by Mr. Holland. All other costs of arbitration shall be borne equally by Mr. Holland and the Company, provided, however, that the Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. Holland’s favor and Mr. Holland is reimbursed legal fees under Section 2.6 hereof.
3.6 Interim and Injunctive Relief . Nothing in this Article III is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article III.
ARTICLE IV – TRANSFER OF EMPLOYMENT
4.1 Transfer of Employment . In the event that Mr. Holland’s employment by the Company is terminated during the two year period following a Change in Control and Mr. Holland accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the “Company” for all purposes hereunder.
ARTICLE V - MISCELLANEOUS
5.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Holland under the this Agreement shall not be funded in any manner and shall be paid by the Company out of its general assets, which assets are subject to the claims of the Company’s creditors.
5.2 Withholding . There shall be deducted from the payment of any amount due under this Agreement the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of Mr. Holland.
5.3 Assignment . Neither Mr. Holland nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
5.4 Interpretation . This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
5.5 Amendment and Termination . The Agreement may be amended or terminated only by a writing executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 19th day of December, 2008.
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THE SOUTHERN COMPANY
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SOUTHERN COMPANY SERVICES, INC.
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MR. HOLLAND
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Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Holland upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, G. Edison Holland, understand that I am entitled to receive the severance benefits described in Article II of the Change in Control Agreement (the “Agreement”) if I execute this Waiver and Release (“Waiver”) within thirty (30) days of my Separation Date. I understand that the benefits I will receive under the Agreement are in excess of those I would have received from The Southern Company and Southern Company Services, Inc. (collectively, the “Company”) if I had not elected to sign this Waiver.
I recognize that I may have a claim against the Company under the Civil Rights Act of 1964 and 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Energy Reorganization Act of 1974, as amended, the Americans with Disabilities Act or other federal, state and local laws.
In exchange for receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the “Releasees”), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act;
(b) claims for violations of any other federal or state statute or regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or
(e) any other claims under state law arising in tort or contract.
In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement.
I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers’ compensation laws. However, I understand and acknowledge that nothing herein is intended to or shall be construed to require the Company to institute or continue in effect any particular plan or benefit sponsored by the Company and the Company hereby reserves the right to amend or terminate any of its benefit programs at any time in accordance with the procedures set forth in such plans.
Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law.
I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees’ business that is not generally known by or readily available to Releasees’ competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law.
I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof).
I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement.
I have carefully read this agreement and I fully understand all of the provisions of this Waiver.
I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice.
I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it.
I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. Revocation of this Waiver will not alter or change the termination of my employment by the Company.
In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise.
I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will.
I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____.
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___________________________ |
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G. Edison Holland |
Sworn to and subscribed to me this
___day of _________, ____
__________________________
Notary Public
My Commission Expires:
___________________________
(Notary Seal)
Acknowledged and Accepted by the Company.
By: |
Date: |
Exhibit 10(a)9
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") made and entered into by and between The Southern Company ("Southern"), Alabama Power Company (the "Company") and Mr. Charles Douglas McCrary ("Mr. McCrary") (hereinafter collectively referred to as the "Parties") is effective December 31 , 2008. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. McCrary, Southern and the Company, effective January 1, 2007.
WITNESSETH :
WHEREAS, Mr. McCrary is the President and Chief Executive Officer of the Company;
WHEREAS, the Company wishes to provide to Mr. McCrary certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of the Parties set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I – DEFINITIONS.
For purposes of this Agreement, the following terms shall have the following meanings:
1.1 “ Annual Compensation ” shall mean Mr. McCrary’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.
1.2 “ Base Salary ” shall mean Mr. McCrary’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
1.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
1.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
1.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
1.6 “ Board of Directors ” shall mean the board of directors of the Company.
1.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.
1.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);
(ii) 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
(iii) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to the Company, the occurrence of any of the following:
(i) 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 the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. McCrary, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
1.9 “ COBRA Coverage ” shall mean any continuation coverage to which Mr. McCrary or his dependents may be entitled pursuant to Code Section 4980B.
1.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
1.11 “ Common Stock ” shall mean the common stock of Southern.
1.12 “ Company ” shall mean Alabama Power Company, its successors and assigns.
1.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
1.14 “ 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 governmental agencies.
1.15 “ 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.
1.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.
1.17 “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
1.18 “ Company ” shall mean Alabama Power Company, its successors and assigns.
1.19 “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.
1.20 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
1.21 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
1.22 “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.
1.23 “ Good Reason ” shall mean, without Mr. McCrary’s express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. McCrary claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. McCrary provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a
determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. McCrary of its decision within thirty (30) days of receipt of Mr. McCrary’s written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties.
(i) Change in Control . A meaningful and detrimental alteration in Mr. McCrary’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. McCrary’s job title, duties and status in effect at the Company as of the date the offer of employment is received.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-
five percent (95%) or more of the Executive Employees eligible for such compensation:
(A) Mr. McCrary’s Base Salary;
(B) the sum of Mr. McCrary’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of Mr. McCrary’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(b)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. McCrary’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;
(c) Relocation .
(i) Company . A change in Mr. McCrary’s work location to a location more than fifty (50) miles from the facility where Mr. McCrary was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. McCrary’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. McCrary of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. McCrary’s right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. McCrary’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. McCrary’s work location at the Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. McCrary is entitled
under the Company’s Retirement and Welfare Benefit plans in which Mr. McCrary was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Company to provide Mr. McCrary with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. McCrary is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).
(iii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.
(e) Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.
(f) Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered
Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. McCrary is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. McCrary would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Company shall provide to the Benefit Consultant actual data for its Employees.
(iv) The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. McCrary by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
1.24 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
1.25 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
1.26 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
1.27 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who 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 February 23, 2006 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.
1.28 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
1.29 “ Month of Service ” shall mean any calendar month during which Mr. McCrary has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.
1.30 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. McCrary by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
1.31 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
1.32 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
1.33 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.34 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.35 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
1.36 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
1.37 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
1.38 “ Separation Date ” shall mean the date on which Mr. McCrary’s employment with the Company is terminated; provided, however, that solely for purposes of Section 2.2(c) hereof, if, upon termination of employment with the Company, Mr. McCrary is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. McCrary’s Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.
1.39 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
1.40 “ Southern ” shall mean The Southern Company, its successors and assigns.
1.41 “ Southern Board ” shall mean the board of directors of Southern.
1.42 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
1.43 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
1.44 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 1.8(b)(iii) hereof.
1.45 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
1.46 “ Termination for Cause ” or “ Cause ” shall mean Mr. McCrary’s termination of employment with the Company upon the occurrence of any of the following:
(a) The willful and continued failure by Mr. McCrary to substantially perform his duties with the Company (other than any such failure resulting from Mr. McCrary’s Total Disability or from Mr. McCrary’s retirement or any such actual or anticipated failure resulting from termination by Mr. McCrary for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes Mr. McCrary has not substantially performed his duties; or
(b) The willful engaging by Mr. McCrary in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of Mr. McCrary’s employment by the Company;
(ii) the willful carrying out of any activity or the making of any statement by Mr. McCrary which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by Mr. McCrary at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of the Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Company’s safety officer;
(v) assault or other act of violence by Mr. McCrary against any person during the course of employment; or
(vi) Mr. McCrary’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by Mr. McCrary shall be deemed “willful” unless done, or omitted to be done, by Mr. McCrary not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Mr. McCrary shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a
meeting called and held for such purpose (after reasonable notice to Mr. McCrary and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, Mr. McCrary was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail.
1.47 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
1.48 “ 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.
1.49 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
1.50 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE II - SEVERANCE BENEFITS
2.1 Eligibility .
(a) Except as otherwise provided herein, if Mr. McCrary’s employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. McCrary voluntarily terminates his employment with the Company for Good Reason at
any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II.
(b) Limits on Eligibility . Notwithstanding anything to the contrary herein, Mr. McCrary shall not be eligible to receive benefits under this Plan if Mr. McCrary :
(i) is not actively at work on his Separation Date, unless Mr. McCrary is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with the Company for other than Good Reason;
(iii) has his employment terminated by the Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. McCrary would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. McCrary shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement; or
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his Separation Date.
2.2 Severance Benefits . Upon the Company’s receipt of an effective Waiver and Release, Mr. McCrary shall be entitled to receive the following severance benefits:
(a) Employee Outplacement Services . Mr. McCrary shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. McCrary’s Separation Date.
(b) Severance Amount . Mr. McCrary shall be paid in cash an amount equal to three times his Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Company shall pay to Mr. McCrary an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal determined by adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the Severance Amount plus all other “parachute payments” to Mr. McCrary under Code Section 280G exceeds three (3) times Mr. McCrary’s “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times Mr. McCrary’s Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by Mr. McCrary, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 2.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. McCrary, Southern and the Company.
(c) Welfare Benefit .
(i) Except as provided in Section 2.3 hereof, Mr. McCrary shall be eligible to participate in the Company’s Group Health Plan for a period of six (6) months for each of Mr. McCrary’s Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. McCrary’s Separation Date unless otherwise specifically provided under such plan, upon Mr. McCrary’s payment of both the Company’s and Mr. McCrary’s premium under such plan. Mr. McCrary shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. McCrary’s Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of Mr. McCrary’s extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to Mr. McCrary pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. McCrary in connection
with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by Mr. McCrary in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. McCrary fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. McCrary or his dependent may elect. In the event that Mr. McCrary or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Company’s Group Health Plan available to Mr. McCrary or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. McCrary to inform the Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. McCrary elects the extended coverage described in Section 2.3(c) hereof, the Company shall pay to Mr. McCrary a cash amount equal to the Company’s and Mr. McCrary’s cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference.
(i) Any of Mr. McCrary’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. McCrary is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to Mr. McCrary under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of Mr. McCrary’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 2.2(f) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. McCrary is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. McCrary’s Separation Date and to the extent Mr. McCrary is entitled to participate therein, Mr. McCrary shall be
entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. McCrary is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. McCrary’s Separation Date and to the extent Mr. McCrary is entitled to participate therein, Mr. McCrary shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which Mr. McCrary’s Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. McCrary and no payment to Mr. McCrary shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 2.2(h) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. McCrary is not otherwise entitled to a Performance
Unit/Share award under the Omnibus Plan, Mr. McCrary shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 2.2(h) shall apply to Mr. McCrary to the extent that he, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 2.2. Provided Mr. McCrary is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through Mr. McCrary’s Separation Date and to the extent Mr. McCrary is entitled to participate therein, Mr. McCrary shall be entitled to receive cash in an amount equal to his award under the Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred, at Mr. McCrary’s target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by the Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. McCrary has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes Mr. McCrary’s Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP.
2.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, if Mr. McCrary is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. McCrary is a participant. If Mr. McCrary is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. McCrary becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
2.4 Payment of Benefits .
(a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. McCrary in one (1) lump sum payment
within two (2) payroll periods of the later of the following to occur: (a) Mr. McCrary’s Separation Date, or (b) the tender to the Company by Mr. McCrary of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such waiver. In the case of a Separation Date occurring in December, payment under this Article II will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Agreement are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-3(a)). In the event of a dispute with respect to liability or amount of any benefit due hereunder, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Company.
(b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee.
2.5 Benefits in the Event of Death . In the event of Mr. McCrary’s death prior to the payment of all benefits due under this Article II, Mr. McCrary’s estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
2.6 Legal Fees . In the event of a bona fide legal dispute between Mr. McCrary and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. McCrary’s favor, the Company shall reimburse Mr. McCrary’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
2.7 No Mitigation . Mr. McCrary shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. McCrary hereunder shall not be reduced or suspended if he accepts such subsequent employment.
2.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by Mr. McCrary for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. McCrary’s favor, the Company shall reimburse Mr. McCrary’s legal fees in the manner provided in Section 2.6 hereof.
ARTICLE III - ARBITRATION
3.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Agreement, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article III are not intended to
apply to any other disputes, claims or controversies arising out of or relating to Mr. McCrary’s employment by the Company or the termination thereof.
3.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. McCrary, in the case of the Company, or to the Compensation Committee, in the case of Mr. McCrary.
3.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
3.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by Mr. McCrary, one arbitrator shall be appointed by the Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
3.5 Costs . The arbitration filing fee shall be paid by Mr. McCrary. All other costs of arbitration shall be borne equally by Mr. McCrary and the Company, provided, however, that the Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. McCrary’s favor and Mr. McCrary is reimbursed legal fees under Section 2.6 hereof.
3.6 Interim and Injunctive Relief . Nothing in this Article III is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim
measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article III.
ARTICLE IV – TRANSFER OF EMPLOYMENT
4.1 Transfer of Employment . In the event that Mr. McCrary’s employment by the Company is terminated during the two year period following a Change in Control and Mr. McCrary accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the “Company” for all purposes hereunder.
ARTICLE V - MISCELLANEOUS
5.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. McCrary under the this Agreement shall not be funded in any manner and shall be paid by the Company out of its general assets, which assets are subject to the claims of the Company’s creditors.
5.2 Withholding . There shall be deducted from the payment of any amount due under this Agreement the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of Mr. McCrary.
5.3 Assignment . Neither Mr. McCrary nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
5.4 Interpretation . This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
5.5 Amendment and Termination . The Agreement may be amended or terminated only by a writing executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 19th day of December, 2008.
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THE SOUTHERN COMPANY
By: /s/Patricia L. Roberts Assistant Secretary
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ALABAMA POWER COMPANY
By: /s/Wayne Boston Assistant Secretary
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MR. MCCRARY
/s/Charles D. McCrary Charles Douglas McCrary
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Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. McCrary upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, Charles Douglas McCrary, understand that I am entitled to receive the severance benefits described in Article II of the Change in Control Agreement (the “Agreement”) if I execute this Waiver and Release (“Waiver”) within thirty (30) days of my Separation Date. I understand that the benefits I will receive under the Agreement are in excess of those I would have received from The Southern Company and Alabama Power Company (collectively, the “Company”) if I had not elected to sign this Waiver.
I recognize that I may have a claim against the Company under the Civil Rights Act of 1964 and 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Energy Reorganization Act of 1974, as amended, the Americans with Disabilities Act or other federal, state and local laws.
In exchange for receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the “Releasees”), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act;
(b) claims for violations of any other federal or state statute or regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or
(e) any other claims under state law arising in tort or contract.
In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement.
I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers’ compensation laws. However, I understand and acknowledge that nothing herein is intended to or shall be construed to require the Company to institute or continue in effect any particular plan or benefit sponsored by the Company and the Company hereby reserves the right to amend or terminate any of its benefit programs at any time in accordance with the procedures set forth in such plans.
Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law.
I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees’ business that is not generally known by or readily available to Releasees’ competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law.
I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof).
I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement.
I have carefully read this agreement and I fully understand all of the provisions of this Waiver.
I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice.
I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it.
I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. Revocation of this Waiver will not alter or change the termination of my employment by the Company.
In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise.
I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will.
I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____.
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___________________________ |
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Charles Douglas McCrary |
Sworn to and subscribed to me this
___day of _________, ____
__________________________
Notary Public
My Commission Expires:
___________________________
(Notary Seal)
Acknowledged and Accepted by the Company.
By: |
Date: |
Exhibit 10(a)10
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (“Agreement”) made and entered into by and between The Southern Company (“Southern”), Southern Company Services, Inc. (the “Company”) and Mr. David M. Ratcliffe (“Mr. Ratcliffe”) (hereinafter collectively referred to as the “Parties”) is effective December 31 , 2008. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Ratcliffe, Southern and the Company, effective January 1, 2007.
WITNESSETH :
WHEREAS, Mr. Ratcliffe is the President and Chief Executive Officer of the Company;
WHEREAS, the Company wishes to provide to Mr. Ratcliffe certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of the Parties set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I – DEFINITIONS.
For purposes of this Agreement, the following terms shall have the following meanings:
1.1 “ Annual Compensation ” shall mean Mr. Ratcliffe’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.
1.2 “ Base Salary ” shall mean Mr. Ratcliffe’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
1.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
1.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
1.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
1.6 “ Board of Directors ” shall mean the board of directors of the Company.
1.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.
1.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);
(ii) 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
(iii) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to the Company, the occurrence of any of the following:
(i) 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 the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. Ratcliffe, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
1.9 “ COBRA Coverage ” shall mean any continuation coverage to which Mr. Ratcliffe or his dependents may be entitled pursuant to Code Section 4980B.
1.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
1.11 “ Common Stock ” shall mean the common stock of Southern.
1.12 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
1.14 “ 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 governmental agencies.
1.15 “ 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.
1.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.
1.17 “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
1.18 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.19 “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.
1.20 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
1.21 “Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
1.22 “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.
1.23 “ Good Reason ” shall mean, without Mr. Ratcliffe’s express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. Ratcliffe claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Ratcliffe provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. Ratcliffe of its decision within thirty (30) days of receipt of Mr. Ratcliffe’s written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties.
(i) Change in Control . A meaningful and detrimental alteration in Mr. Ratcliffe’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. Ratcliffe’s job title, duties and status in effect at the Company as of the date the offer of employment is received.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees eligible for such compensation:
(A) Mr. Ratcliffe’s Base Salary;
(B) the sum of Mr. Ratcliffe’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of Mr. Ratcliffe’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(b)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Ratcliffe’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;
(c) Relocation .
(i) Company . A change in Mr. Ratcliffe’s work location to a location more than fifty (50) miles from the facility where Mr. Ratcliffe was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. Ratcliffe’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Ratcliffe of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. Ratcliffe’s right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Ratcliffe’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Ratcliffe’s work location at the Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. Ratcliffe is entitled under the Company’s Retirement and Welfare Benefit plans in which Mr. Ratcliffe was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Company to provide Mr. Ratcliffe with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. Ratcliffe is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).
(iii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.
(e) Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.
(f) Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. Ratcliffe is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. Ratcliffe would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan
provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Company shall provide to the Benefit Consultant actual data for its Employees.
(iv) The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. Ratcliffe by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
1.24 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
1.25 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
1.26 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
1.27 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who 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 February 23, 2006 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.
1.28 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
1.29 “ Month of Service ” shall mean any calendar month during which Mr. Ratcliffe has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.
1.30 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. Ratcliffe by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in
accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
1.31 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
1.32 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
1.33 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.34 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.35 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
1.36 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
1.37 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
1.38 “ Separation Date ” shall mean the date on which Mr. Ratcliffe’s employment with the Company is terminated; provided, however, that solely for purposes of Section 2.2(c) hereof, if, upon termination of employment with the Company, Mr. Ratcliffe is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Ratcliffe’s Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.
1.39 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
1.40 “ Southern ” shall mean The Southern Company, its successors and assigns.
1.41 “ Southern Board ” shall mean the board of directors of Southern.
1.42 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
1.43 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
1.44 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 1.8(b)(iii) hereof.
1.45 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
1.46 “ Termination for Cause ” or “ Cause ” shall mean Mr. Ratcliffe’s termination of employment with the Company upon the occurrence of any of the following:
(a) The willful and continued failure by Mr. Ratcliffe to substantially perform his duties with the Company (other than any such failure resulting from Mr. Ratcliffe’s
Total Disability or from Mr. Ratcliffe’s retirement or any such actual or anticipated failure resulting from termination by Mr. Ratcliffe for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes Mr. Ratcliffe has not substantially performed his duties; or
(b) The willful engaging by Mr. Ratcliffe in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of Mr. Ratcliffe’s employment by the Company;
(ii) the willful carrying out of any activity or the making of any statement by Mr. Ratcliffe which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by Mr. Ratcliffe at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of the Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Company’s safety officer;
(v) assault or other act of violence by Mr. Ratcliffe against any person during the course of employment; or
(vi) Mr. Ratcliffe’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by Mr. Ratcliffe shall be deemed “willful” unless done, or omitted to be done, by Mr. Ratcliffe not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Mr. Ratcliffe shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Ratcliffe and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, Mr. Ratcliffe was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail.
1.47 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
1.48 “ 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.
1.49 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
1.50 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an
Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE II - SEVERANCE BENEFITS
2.1 Eligibility .
(a) Except as otherwise provided herein, if Mr. Ratcliffe’s employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Ratcliffe voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II.
(b) Limits on Eligibility . Notwithstanding anything to the contrary herein, Mr. Ratcliffe shall not be eligible to receive benefits under this Plan if Mr. Ratcliffe :
(i) is not actively at work on his Separation Date, unless Mr. Ratcliffe is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with the Company for other than Good Reason;
(iii) has his employment terminated by the Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Ratcliffe would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Ratcliffe shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not
provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement; or
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his Separation Date.
2.2 Severance Benefits . Upon the Company’s receipt of an effective Waiver and Release, Mr. Ratcliffe shall be entitled to receive the following severance benefits:
(a) Employee Outplacement Services . Mr. Ratcliffe shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Ratcliffe’s Separation Date.
(b) Severance Amount . Mr. Ratcliffe shall be paid in cash an amount equal to three times his Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Company shall pay to Mr. Ratcliffe an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal
determined by adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the Severance Amount plus all other “parachute payments” to Mr. Ratcliffe under Code Section 280G exceeds three (3) times Mr. Ratcliffe’s “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times Mr. Ratcliffe’s Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by Mr. Ratcliffe, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 2.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Ratcliffe, Southern and the Company.
(c) Welfare Benefit .
(i) Except as provided in Section 2.3 hereof, Mr. Ratcliffe shall be eligible to participate in the Company’s Group Health Plan for a period of six (6) months for each of Mr. Ratcliffe’s Years of Service, not to exceed a period of five
(5) years, beginning on the first day of the first month following Mr. Ratcliffe’s Separation Date unless otherwise specifically provided under such plan, upon Mr. Ratcliffe’s payment of both the Company’s and Mr. Ratcliffe’s premium under such plan. Mr. Ratcliffe shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. Ratcliffe’s Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of Mr. Ratcliffe’s extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to Mr. Ratcliffe pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Ratcliffe in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by Mr. Ratcliffe in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Ratcliffe fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Ratcliffe or his dependent may elect. In the event that Mr. Ratcliffe or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-
sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Company’s Group Health Plan available to Mr. Ratcliffe or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. Ratcliffe to inform the Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Ratcliffe elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Ratcliffe a cash amount equal to the Company’s and Mr. Ratcliffe’s cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference.
(i) Any of Mr. Ratcliffe’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Ratcliffe is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to Mr. Ratcliffe under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the
rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of Mr. Ratcliffe’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Ratcliffe is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Ratcliffe’s Separation Date and to the extent Mr. Ratcliffe is entitled to participate therein, Mr. Ratcliffe shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Ratcliffe is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Ratcliffe’s Separation Date and to the extent Mr. Ratcliffe is entitled to participate therein, Mr.
Ratcliffe shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which Mr. Ratcliffe’s Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Ratcliffe and no payment to Mr. Ratcliffe shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Ratcliffe is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Ratcliffe shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 2.2(h) shall apply to Mr. Ratcliffe to the extent that he, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 2.2. Provided Mr. Ratcliffe is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the
“short term incentive compensation plan” is in place through Mr. Ratcliffe’s Separation Date and to the extent Mr. Ratcliffe is entitled to participate therein, Mr. Ratcliffe shall be entitled to receive cash in an amount equal to his award under the Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred, at Mr. Ratcliffe’s target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by the Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Ratcliffe has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes Mr. Ratcliffe’s Separation Date, then the amount of
any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP.
2.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, if Mr. Ratcliffe is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Ratcliffe is a participant. If Mr. Ratcliffe is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Ratcliffe becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
2.4 Payment of Benefits .
(a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Ratcliffe in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Ratcliffe’s Separation Date, or (b) the tender to the Company by Mr. Ratcliffe of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such waiver. In the case of a Separation Date occurring in December, payment under this Article II will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Agreement are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-3(a)). In the event of a dispute with respect
to liability or amount of any benefit due hereunder, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Company.
(b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee.
2.5 Benefits in the Event of Death . In the event of Mr. Ratcliffe’s death prior to the payment of all benefits due under this Article II, Mr. Ratcliffe’s estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
2.6 Legal Fees . In the event of a bona fide legal dispute between Mr. Ratcliffe and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Ratcliffe’s favor, the Company shall reimburse Mr. Ratcliffe’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
2.7 No Mitigation . Mr. Ratcliffe shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Ratcliffe hereunder shall not be reduced or suspended if he accepts such subsequent employment.
2.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by Mr. Ratcliffe for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Ratcliffe’s favor, the Company shall reimburse Mr. Ratcliffe’s legal fees in the manner provided in Section 2.6 hereof.
ARTICLE III - ARBITRATION
3.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Agreement, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Ratcliffe’s employment by the Company or the termination thereof.
3.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Ratcliffe, in the case of the Company, or to the Compensation Committee, in the case of Mr. Ratcliffe.
3.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
3.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by Mr. Ratcliffe, one arbitrator shall be appointed by the Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
3.5 Costs . The arbitration filing fee shall be paid by Mr. Ratcliffe. All other costs of arbitration shall be borne equally by Mr. Ratcliffe and the Company, provided, however, that the Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. Ratcliffe’s favor and Mr. Ratcliffe is reimbursed legal fees under Section 2.6 hereof.
3.6 Interim and Injunctive Relief . Nothing in this Article III is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article III.
ARTICLE IV – TRANSFER OF EMPLOYMENT
4.1 Transfer of Employment . In the event that Mr. Ratcliffe’s employment by the Company is terminated during the two year period following a Change in Control and Mr. Ratcliffe accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the “Company” for all purposes hereunder.
ARTICLE V - MISCELLANEOUS
5.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Ratcliffe under the this Agreement shall not be funded in any manner and shall be paid by the Company out of its general assets, which assets are subject to the claims of the Company’s creditors.
5.2 Withholding . There shall be deducted from the payment of any amount due under this Agreement the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of Mr. Ratcliffe.
5.3 Assignment . Neither Mr. Ratcliffe nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
5.4 Interpretation . This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
5.5 Amendment and Termination . The Agreement may be amended or terminated only by a writing executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 19th day of December, 2008.
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THE SOUTHERN COMPANY
By: /s/Patricia L. Roberts Assistant Secretary
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SOUTHERN COMPANY SERVICES, INC.
By: /s/David M. Ratcliffe
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MR. RATCLIFFE
/s/David M. Ratcliffe David M. Ratcliffe
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Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Ratcliffe upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, David M. Ratcliffe, understand that I am entitled to receive the severance benefits described in Article II of the Change in Control Agreement (the “Agreement”) if I execute this Waiver and Release (“Waiver”) within thirty (30) days of my Separation Date. I understand that the benefits I will receive under the Agreement are in excess of those I would have received from The Southern Company and Southern Company Services, Inc. (collectively, the “Company”) if I had not elected to sign this Waiver.
I recognize that I may have a claim against the Company under the Civil Rights Act of 1964 and 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Energy Reorganization Act of 1974, as amended, the Americans with Disabilities Act or other federal, state and local laws.
In exchange for receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the “Releasees”), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act;
(b) claims for violations of any other federal or state statute or regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or
(e) any other claims under state law arising in tort or contract.
In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement.
I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers’ compensation laws. However, I understand and acknowledge that nothing herein is intended to or shall be construed to require the Company to institute or continue in effect any particular plan or benefit sponsored by the Company and the Company hereby reserves the right to amend or terminate any of its benefit programs at any time in accordance with the procedures set forth in such plans.
Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law.
I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees’ business that is not generally known by or readily available to Releasees’ competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law.
I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof).
I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement.
I have carefully read this agreement and I fully understand all of the provisions of this Waiver.
I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice.
I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it.
I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. Revocation of this Waiver will not alter or change the termination of my employment by the Company.
In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise.
I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will.
I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____.
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___________________________ |
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David M. Ratcliffe |
Sworn to and subscribed to me this
___day of _________, ____
__________________________
Notary Public
My Commission Expires:
___________________________
(Notary Seal)
Acknowledged and Accepted by the Company.
By: |
Date: |
Exhibit 10(a)16
FIRST AMENDMENT TO THE SOUTHERN COMPANY
DEFERRED COMPENSATION TRUST AGREEMENT
WHEREAS, the Grantors adopted the Southern Company Deferred Compensation Trust Agreement (“Trust”) amended and restated effective January 1, 2001; and
WHEREAS , the Grantors desire to amend the Trust in order to ascertain compliance with Section 409A of the Internal Revenue Code; and
WHEREAS, under Section 4 of the Trust, the Grantors have the authority to amend the Trust.
NOW, THEREFORE, effective as of January 1, 2009, the Grantors hereby amend the Trust as follows:
1.
Section 7 is amended by adding the following Section 7(i) to the end thereof.
Notwithstanding the provisions in this Section 7 or any other provision of the Trust, the dispute resolution provisions shall at all times be administered to be in compliance with Section 409A of the Code and any provision determined by the Trustee to be non-compliant should be disregarded and the Trustee shall take a similar action which the Trustee reasonably believes is compliant with Section 409A of the Code. With respect to the obligation in the Trust to reimburse a Beneficiary for legal fees or any other expenses or assessments (“Expenses”), the following requirements shall apply: All reimbursements of Expenses under the Trust will be for Expenses incurred during Beneficiary’s lifetime. Reimbursement will be made within ten (10) days following the date Beneficiary submits an invoice for Expenses. In no event shall the payments by the Company under the Trust be made later than the end of the calendar year next following the calendar year in which such Expenses were incurred, provided, that the Participant shall have submitted an invoice for such Expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such Expenses were incurred. In no event will the amount of Expenses reimbursed in one year affect the amount of Expenses eligible for reimbursement, or in-kind benefit to be provided, to Beneficiary in any other taxable year and the Beneficiary’s right to have the Trust pay such Expenses may not be liquidated or exchanged for any other benefits.
2.
Except as amended herein by this First Amendment, the Trust shall remain in full force and effect as adopted by the Grantors prior to the adoption of this First Amendment.
IN WITNESS WHEREOF , the parties hereto have executed this amended and restated Trust Agreement as of this 19th day of December, 2008.
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ALABAMA POWER COMPANY
By:
/s/Wayne Boston
GEORGIA POWER COMPANY
By:
/s/Wayne Boston
GULF POWER COMPANY
By:
/s/Wayne Boston
MISSISSIPPI POWER COMPANY
By:
/s/Wayne Boston
SOUTHERN COMMUNICATIONS SERVICES, INC.
By:
/s/Samual H. Dabbs, Jr.
SOUTHERN COMPANY ENERGY SOLUTIONS, LLC
By:
/s/Samual H. Dabbs, Jr.
SOUTHERN COMPANY SERVICES, INC.
By:
/s/Patricia L. Roberts
SOUTHERN NUCLEAR OPERATING COMPANY, INC.
By:
/s/Wayne Boston
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Exhibit 10(a)18
FIRST AMENDMENT TO THE SOUTHERN COMPANY
DEFERRED STOCK TRUST AGREEMENT FOR DIRECTORS
OF SOUTHERN COMPANY AND ITS SUBSIDIARIES
WHEREAS, the Grantors adopted the Southern Company Deferred Stock Trust Agreement for Directors of Southern Company and its Subsidiaries (“Trust”) amended and restated effective January 1, 2000; and
WHEREAS , the Grantors desire to amend the Trust in order to ascertain compliance with Section 409A of the Internal Revenue Code; and
WHEREAS, under Section 4 of the Trust, the Grantors have the authority to amend the Trust.
NOW, THEREFORE, effective as of January 1, 2009, the Grantors hereby amend the Trust as follows:
1.
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Section 7 is amended by adding the following Section 7(j) to the end thereof. |
Notwithstanding the provisions in this Section 7 or any other provision of the Trust, the dispute resolution provisions shall at all times be administered to be in compliance with Section 409A of the Code and any provision determined by the Trustee to be non-compliant should be disregarded and the Trustee shall take a similar action which the Trustee reasonably believes is compliant with Section 409A of the Code. With respect to the obligation in the Trust to reimburse a Beneficiary for legal fees or any other expenses or assessments (“Expenses”), the following requirements shall apply: All reimbursements of Expenses under the Trust will be for Expenses incurred during Beneficiary’s lifetime. Reimbursement will be made within ten (10) days following the date Beneficiary submits an invoice for Expenses. In no event shall the payments by the Company under the Trust be made later than the end of the calendar year next following the calendar year in which such Expenses were incurred, provided, that the Participant shall have submitted an invoice for such Expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such Expenses were incurred. In no event will the amount of Expenses reimbursed in one year affect the amount of Expenses eligible for reimbursement, or in-kind benefit to be provided, to Beneficiary in any other taxable year and the Beneficiary’s right to have the Trust pay such Expenses may not be liquidated or exchanged for any other benefits.
2.
Except as amended herein by this First Amendment, the Trust shall remain in full force and effect as adopted by the Grantors prior to the adoption of this First Amendment.
IN WITNESS WHEREOF , the parties hereto have executed this amended and restated Trust Agreement as of this 19th day of December, 2008.
ALABAMA POWER COMPANY
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By: /s/Wayne Boston
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GEORGIA POWER COMPANY
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By: /s/Wayne Boston
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GULF POWER COMPANY
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By: /s/Wayne Boston
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MISSISSIPPI POWER COMPANY
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By: /s/Wayne Boston
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THE SOUTHERN COMPANY
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By: /s/Patricia L. Roberts
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Exhibit 10(a)20
FIRST AMENDMENT TO THE SOUTHERN COMPANY
DEFERRED CASH COMPENSATION TRUST AGREEMENT FOR DIRECTORS
OF SOUTHERN COMPANY AND ITS SUBSIDIARIES
WHEREAS, the Grantors adopted the Southern Company Deferred Cash Compensation Trust Agreement for Directors of Southern Company and its Subsidiaries (“Trust”) amended and restated effective September 1, 2001; and
WHEREAS , the Grantors desire to amend the Trust in order to ascertain compliance with Section 409A of the Internal Revenue Code; and
WHEREAS, under Section 4 of the Trust, the Grantors have the authority to amend the Trust.
NOW, THEREFORE, effective as of January 1, 2009, the Grantors hereby amend the Trust as follows:
1.
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Section 7 is amended by adding the following Section 7(i) to the end thereof. |
Notwithstanding the provisions in this Section 7 or any other provision of the Trust, the dispute resolution provisions shall at all times be administered to be in compliance with Section 409A of the Code and any provision determined by the Trustee to be non-compliant should be disregarded and the Trustee shall take a similar action which the Trustee reasonably believes is compliant with Section 409A of the Code. With respect to the obligation in the Trust to reimburse a Beneficiary for legal fees or any other expenses or assessments (“Expenses”), the following requirements shall apply: All reimbursements of Expenses under the Trust will be for Expenses incurred during Beneficiary’s lifetime. Reimbursement will be made within ten (10) days following the date Beneficiary submits an invoice for Expenses. In no event shall the payments by the Company under the Trust be made later than the end of the calendar year next following the calendar year in which such Expenses were incurred, provided, that the Participant shall have submitted an invoice for such Expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such Expenses were incurred. In no event will the amount of Expenses reimbursed in one year affect the amount of Expenses eligible for reimbursement, or in-kind benefit to be provided, to Beneficiary in any other taxable year and the Beneficiary’s right to have the Trust pay such Expenses may not be liquidated or exchanged for any other benefits.
2.
Except as amended herein by this First Amendment, the Trust shall remain in full force and effect as adopted by the Grantors prior to the adoption of this First Amendment.
IN WITNESS WHEREOF , the parties hereto have executed this amended and restated Trust Agreement as of this 19th day of December, 2008.
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ALABAMA POWER COMPANY
By:
/s/Wayne Boston
GEORGIA POWER COMPANY
By:
/s/Wayne Boston
GULF POWER COMPANY
By:
/s/Wayne Boston
MISSISSIPPI POWER COMPANY
By:
/s/Wayne Boston
THE SOUTHERN COMPANY
By:
/s/Patricia L. Roberts
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Exhibit 10(a)21
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") made and entered into by and between The Southern Company ("Southern"), Southern Company Services, Inc. (the "Company") and Mr. Thomas A. Fanning ("Mr. Fanning") (hereinafter collectively referred to as the "Parties") is effective December 31, 2008. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Fanning, Southern and the Company, effective January 1, 2007.
WITNESSETH :
WHEREAS, Mr. Fanning is the Executive Vice President and Chief Financial Officer of the Company;
WHEREAS, the Company wishes to provide to Mr. Fanning certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of the Parties set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I – DEFINITIONS.
For purposes of this Agreement, the following terms shall have the following meanings:
1.1 “ Annual Compensation ” shall mean Mr. Fanning’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.
1.2 “ Base Salary ” shall mean Mr. Fanning’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
1.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
1.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
1.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
1.6 “ Board of Directors ” shall mean the board of directors of the Company.
1.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.
1.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);
(ii) 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
(iii) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to the Company, the occurrence of any of the following:
(i) 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 the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. Fanning, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
1.9 “ COBRA Coverage ” shall mean any continuation coverage to which Mr. Fanning or his dependents may be entitled pursuant to Code Section 4980B.
1.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
1.11 “ Common Stock ” shall mean the common stock of Southern.
1.12 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
1.14 “ 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 governmental agencies.
1.15 “ 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.
1.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.
1.17 “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
1.18 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.19 “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.
1.20 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
1.21 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
1.22 “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.
1.23 “ Good Reason ” shall mean, without Mr. Fanning’s express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the
Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. Fanning claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Fanning provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. Fanning of its decision within thirty (30) days of receipt of Mr. Fanning’s written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties.
(i) Change in Control . A meaningful and detrimental alteration in Mr. Fanning’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. Fanning’s
job title, duties and status in effect at the Company as of the date the offer of employment is received.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees eligible for such compensation:
(A) Mr. Fanning’s Base Salary;
(B) the sum of Mr. Fanning’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of Mr. Fanning’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(b)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the
acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Fanning’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;
(c) Relocation .
(i) Company . A change in Mr. Fanning’s work location to a location more than fifty (50) miles from the facility where Mr. Fanning was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. Fanning’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Fanning of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. Fanning’s right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Fanning’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Fanning’s work location
at the Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. Fanning is entitled under the Company’s Retirement and Welfare Benefit plans in which Mr. Fanning was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Company to provide Mr. Fanning with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. Fanning is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).
(iii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.
(e) Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.
(f) Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. Fanning is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. Fanning would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the
Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Company shall provide to the Benefit Consultant actual data for its Employees.
(iv) The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. Fanning by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
1.24 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
1.25 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
1.26 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
1.27 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who 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 February 23, 2006 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.
1.28 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
1.29 “ Month of Service ” shall mean any calendar month during which Mr. Fanning has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.
1.30 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. Fanning by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with
the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
1.31 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
1.32 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
1.33 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.34 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.35 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
1.36 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
1.37 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
1.38 “ Separation Date ” shall mean the date on which Mr. Fanning’s employment with the Company is terminated; provided, however, that solely for purposes of Section2.2(c) hereof, if, upon termination of employment with the Company, Mr. Fanning is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Fanning’s Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.
1.39 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
1.40 “ Southern ” shall mean The Southern Company, its successors and assigns.
1.41 “ Southern Board ” shall mean the board of directors of Southern.
1.42 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
1.43 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
1.44 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 1.8(b)(iii) hereof.
1.45 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
1.46 “ Termination for Cause ” or “ Cause ” shall mean Mr. Fanning’s termination of employment with the Company upon the occurrence of any of the following:
(a) The willful and continued failure by Mr. Fanning to substantially perform his duties with the Company (other than any such failure resulting from Mr. Fanning’s Total Disability or from Mr. Fanning’s retirement or any such actual or anticipated failure resulting from termination by Mr. Fanning for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes Mr. Fanning has
not substantially performed his duties; or
(b) The willful engaging by Mr. Fanning in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of Mr. Fanning’s employment by the Company;
(ii) the willful carrying out of any activity or the making of any statement by Mr. Fanning which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by Mr. Fanning at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of the Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Company’s safety officer;
(v) assault or other act of violence by Mr. Fanning against any person during the course of employment; or
(vi) Mr. Fanning’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by Mr. Fanning shall be deemed “willful” unless done, or omitted to be done, by Mr. Fanning not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Mr. Fanning shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Fanning and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, Mr. Fanning was guilty of conduct set forth in Section 1.46 (a) or (b) hereof and specifying the particulars thereof in detail.
1.47 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
1.48 “ 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.
1.49 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
1.50 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE II - SEVERANCE BENEFITS
2.1 Eligibility .
(a) Except as otherwise provided herein, if Mr. Fanning’s employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Fanning voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II.
(b) Limits on Eligibility . Notwithstanding anything to the contrary herein, Mr. Fanning shall not be eligible to receive benefits under this Plan if Mr. Fanning :
(i) is not actively at work on his Separation Date, unless Mr. Fanning is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with the Company for other than Good Reason;
(iii) has his employment terminated by the Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Fanning would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Fanning shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23 (a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 1.23 (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by
the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement.
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his Separation Date.
2.2 Severance Benefits . Upon the Company’s receipt of an effective Waiver and Release, Mr. Fanning shall be entitled to receive the following severance benefits:
(a) Employee Outplacement Services . Mr. Fanning shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Fanning’s Separation Date.
(b) Severance Amount . Mr. Fanning shall be paid in cash an amount equal to three times his Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Company shall pay to Mr. Fanning an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal determined by adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the
Severance Amount plus all other “parachute payments” to Mr. Fanning under Code Section 280G exceeds three (3) times Mr. Fanning’s “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times Mr. Fanning’s Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by Mr. Fanning, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 2.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Fanning, Southern and the Company.
(c) Welfare Benefit .
(i) Except as provided in Section 2.3 hereof, Mr. Fanning shall be eligible to participate in the Company’s Group Health Plan for a period of six (6) months for each of Mr. Fanning’s Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. Fanning’s Separation Date unless otherwise specifically provided under such plan, upon Mr. Fanning’s payment of both the Company’s and Mr. Fanning’s premium under such plan. Mr. Fanning shall also be entitled to elect coverage under the Group Health
Plan for his dependents who are participating in the Group Health Plan on Mr. Fanning’s Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of Mr. Fanning’s extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to Mr. Fanning pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Fanning in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by Mr. Fanning in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Fanning fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Fanning or his dependent may elect. In the event that Mr. Fanning or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Company’s Group Health Plan available to Mr. Fanning or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by
law, and shall not be renewed. It shall be the duty of Mr. Fanning to inform the Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Fanning elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Fanning a cash amount equal to the Company’s and Mr. Fanning’s cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 2.1(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference.
(i) Any of Mr. Fanning’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Fanning is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to Mr. Fanning under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of Mr. Fanning’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Fanning is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Fanning’s Separation Date and to the extent Mr. Fanning is entitled to participate therein, Mr. Fanning shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Fanning is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Fanning’s Separation Date and to the extent Mr. Fanning is entitled to participate therein, Mr. Fanning shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to
the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which Mr. Fanning’s Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Fanning and no payment to Mr. Fanning shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Fanning is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Fanning shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 2.2(h) shall apply to Mr. Fanning to the extent that he, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 2.2. Provided Mr. Fanning is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through Mr. Fanning’s Separation Date and to the extent Mr. Fanning is entitled to participate therein, Mr. Fanning shall be entitled to receive cash in an amount equal to his award under the Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred,
at Mr. Fanning’s target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by the Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Fanning has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes Mr. Fanning’s Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP.
2.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, if Mr. Fanning is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans
sponsored by the Company of which Mr. Fanning is a participant. If Mr. Fanning is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Fanning becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
2.4 Payment of Benefits .
(a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Fanning in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Fanning’s Separation Date, or (b) the tender to the Company by Mr. Fanning of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such waiver. In the case of a Separation Date occurring in December, payment under this Article II will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Agreement are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-3(a)). In the event of a dispute with respect to liability or amount of any benefit due hereunder, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Company.
(b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this
Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee.
2.5 Benefits in the Event of Death . In the event of Mr. Fanning’s death prior to the payment of all benefits due under this Article II, Mr. Fanning’s estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
2.6 Legal Fees . In the event of a bona fide legal dispute between Mr. Fanning and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Fanning’s favor, the Company shall reimburse Mr. Fanning’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
2.7 No Mitigation . Mr. Fanning shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Fanning hereunder shall not be reduced or suspended if he accepts such subsequent employment.
2.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by Mr. Fanning for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Fanning’s favor, the Company shall reimburse Mr. Fanning’s legal fees in the manner provided in Section 2.6 hereof.
ARTICLE III - ARBITRATION
3.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Agreement, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Fanning’s employment by the Company or the termination thereof.
3.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Fanning, in the case of the Company, or to the Compensation Committee, in the case of Mr. Fanning.
3.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
3.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by Mr. Fanning, one arbitrator shall be appointed by the Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
3.5 Costs . The arbitration filing fee shall be paid by Mr. Fanning. All other costs of arbitration shall be borne equally by Mr. Fanning and the Company, provided, however, that the Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. Fanning’s favor and Mr. Fanning is reimbursed legal fees under Section 2.6 hereof.
3.6 Interim and Injunctive Relief . Nothing in this Article III is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article III.
ARTICLE IV – TRANSFER OF EMPLOYMENT
4.1 Transfer of Employment . In the event that Mr. Fanning’s employment by the Company is terminated during the two year period following a Change in Control and Mr. Fanning accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the “Company” for all purposes hereunder.
ARTICLE V - MISCELLANEOUS
5.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Fanning under the this Agreement shall not be funded in any manner and shall be paid by the Company out of its general assets, which assets are subject to the claims of the Company’s creditors.
5.2 Withholding . There shall be deducted from the payment of any amount due under this Agreement the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of Mr. Fanning.
5.3 Assignment . Neither Mr. Fanning nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
5.4 Interpretation . This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
5.5 Amendment and Termination . The Agreement may be amended or terminated only by a writing executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 19th day of December, 2008.
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THE SOUTHERN COMPANY
By: /s/Patricia L. Roberts Assistant Secretary
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SOUTHERN COMPANY SERVICES, INC.
By: /s/Patricia L. Roberts Vice President & Associate General Counsel
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MR. FANNING
/s/Thomas A. Fanning Thomas A. Fanning
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Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Fanning upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, Thomas A. Fanning, understand that I am entitled to receive the severance benefits described in Article II of the Change in Control Agreement (the “Agreement”) if I execute this Waiver and Release (“Waiver”) within thirty (30) days of my Separation Date. I understand that the benefits I will receive under the Agreement are in excess of those I would have received from The Southern Company and Southern Company Services, Inc. (collectively, the “Company”) if I had not elected to sign this Waiver.
I recognize that I may have a claim against the Company under the Civil Rights Act of 1964 and 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Energy Reorganization Act of 1974, as amended, the Americans with Disabilities Act or other federal, state and local laws.
In exchange for receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the “Releasees”), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act;
(b) claims for violations of any other federal or state statute or regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or
(e) any other claims under state law arising in tort or contract.
In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement.
I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers’ compensation laws. However, I understand and acknowledge that nothing herein is intended to or shall be construed to require the Company to institute or continue in effect any particular plan or benefit sponsored by the Company and the Company hereby reserves the right to amend or terminate any of its benefit programs at any time in accordance with the procedures set forth in such plans.
Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law.
I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees’ business that is not generally known by or readily available to Releasees’ competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law.
I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof).
I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement.
I have carefully read this agreement and I fully understand all of the provisions of this Waiver.
I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice.
I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it.
I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. Revocation of this Waiver will not alter or change the termination of my employment by the Company.
In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise.
I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will.
I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____.
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___________________________ |
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Thomas A. Fanning |
Sworn to and subscribed to me this
___day of _________, ____
__________________________
Notary Public
My Commission Expires:
___________________________
(Notary Seal)
Acknowledged and Accepted by the Company.
By: |
Date: |
Exhibit 10(a)23
SOUTHERN COMPANY
SENIOR EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
AMENDED AND RESTATED
SOUTHERN COMPANY
SENIOR EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
AMENDED AND RESTATED
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption of Plan . Southern Company Services, Inc. hereby adopts this Amended and Restated Southern Company Senior Executive Change in Control Severance Plan effective as of the date of execution. The Plan was originally effective May 1, 2003 and amended effective January 1, 2007. The Plan is an unfunded “top hat” plan designed to provide certain severance benefits to a select group of management or highly compensated employees, to be paid solely from the general assets of the respective Employing Companies.
1.2 Purpose . The Plan is primarily designed to provide benefits to certain key executive employees of the Employing Companies, whose employment is terminated subsequent to a change in control of Southern or their respective Employing Company.
ARTICLE II - DEFINITIONS
2.1 “ Annual Compensation ” shall mean a Participant’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan.
2.2 “ Base Salary ” shall mean a Participant’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
2.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
2.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 2.4 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
2.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
2.6 “ Board of Directors ” shall mean the board of directors of the Company.
2.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States income tax purposes.
2.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership (during the 12 month period ending on the date of the most recent acquisition by such Person) of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 2.8(a)(i), the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) and (C) of Section 2.8(a)(iii);
(ii) 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
(iii) Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to an Employing Company, the occurrence of any of the following:
(i) 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 2.8(b)(i), any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of an Employing Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (an “Employing Company Business Combination”), in each case, unless, following such Employing Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Employing Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of an Employing Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
2.9 “ COBRA Coverage ” shall mean any continuation coverage to which a Participant or his dependents may be entitled pursuant to Code Section 4980B.
2.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
2.11 “ Common Stock ” shall mean the common stock of Southern.
2.12 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
2.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
2.14 “ 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 governmental agencies.
2.15 “ 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.
2.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 2.24(f) hereof.
2.17 “ Effective Date ” shall mean the date of execution hereof.
2.18 “ Employee ” shall mean those employees of Southern, the Company or any other Southern Subsidiary identified in either Subsection (a) or (b) of this Section 2.18, except as otherwise provided in Subsection (c) hereof.
(a) The following officers shall participate in the Plan:
(i) Chief Executive Officer of Southern;
(ii) Chief Financial Officer of Southern;
(iii) General Counsel of Southern;
(iv) External Affairs Executive Vice President of Southern;
(v) Chief Production Officer of Southern;
(vi) Chief Executive Officer of Alabama Power Company;
(vii) Chief Executive Officer of Georgia Power Company;
(viii) Chief Executive Officer of Gulf Power Company;
(ix) Chief Executive Officer of Mississippi Power Company;
(x) Chief Executive Officer of Southern Communications Services, Inc.;
(xi) Chief Executive Officer of Southern Nuclear Operating Company, Inc.
(xii) Executive Vice President of Southern Company Services, Inc. responsible for the Southern Company Generation and Energy Marketing business unit;
(xiii) Executive Vice President of Southern Nuclear Operating Company, Inc..
(b) Any employee of Southern, the Company or any other Southern Subsidiary that the Compensation Committee has designated as eligible to participate in the Plan based upon the recommendation of the Chief Executive Officer of Southern.
(c) Notwithstanding Subsections (a) and (b) above, no employee shall participate in the Plan if either of the following circumstances apply: (1) the Compensation Committee has designated the employee as ineligible to participate in the Plan based upon the recommendation of the Chief Executive Officer of Southern; or (2) if, prior to a Change in Control, the employee has entered into a change in control agreement with his Employing Company.
(d) The Compensation Committee may deem one or more Employees of a particular Southern Subsidiary to be employed by another Employing Company for purposes of this Plan. Such action shall be in writing and shall cause such an Employee to be entitled to benefits under this Plan in the event of a Change in Control of his deemed Employing Company, not his Employing Company. Notwithstanding the above, no Employee shall participate in the Plan if, prior to a Change in Control, the Employee is entitled to, and elects to receive benefits under any other change in control severance plan, agreement or arrangement.
(e) An Employee shall immediately cease to be an Employee who is eligible to participate in the Plan if he no longer holds one of the named positions set forth in Subsection (a) of this Section 2.18 unless the Compensation Committee has designated
(upon the recommendation of the Chief Executive Officer of Southern) the Employee as eligible to participate in the Plan under Subsection (b) hereof.
2.19 “ Employee Outplacement Program ” shall mean the program established by an Employing Company from time to time for the purpose of assisting Participants covered by the Plan in finding employment outside of the Employing Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
2.20 “ Employing Company ” or “ Employer ” shall mean the Company, or any other Southern Subsidiary, which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them. The term “Employing Company” or “Employer” shall also mean any other corporation or entity Controlled by Southern which the Compensation Committee has determined to bring under the Plan and which shall adopt the Plan, and any successor of any of them.
2.21 “ Employing Company Business Combination ” shall have the meaning set forth in Section 2.7(b)(ii) hereof.
2.22 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
2.23 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
2.24 “ Executive Employee ” shall mean those employees of an Employing Company of Grade Level 10 or above regardless of whether or not they participate in the Plan.
2.25 “ Good Reason ” shall mean, without an Employee’s express written consent, after written notice to his Employing Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the Employee’s Employing Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 2.24. In the case of an Employee or Support Employee claiming benefits under this Plan upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if the Employee or Support Employee provides to the Compensation Committee a copy of his or her written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 2.24. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 2.24(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify the Participant of its decision within thirty (30) days of receipt of the Participant’s written offer of employment. Any dispute regarding the Compensation Committee ’s decision shall be resolved in accordance with Article V hereof. This definition of “Good Reason” is intended to
constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties .
(i) Change in Control . A meaningful and detrimental alteration in the Employee’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if an Employee is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than the Employee’s job title, duties and status in effect at his Employing Company on the date the offer of employment is received from the acquiring company.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Employing Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees of the Employing Company eligible for such compensation:
(A) the Employee’s Base Salary;
(B) the sum of the Employee’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of the Employee’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under his Employing Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 2.25(a)(i) hereon, in the event of a Subsidiary Change in Control, Good Reason shall exist if an Employee or Support Employee is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of the Employee’s or Support Employee’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under his Employing Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received from the acquiring company;
(c) Relocation .
(i) Employing Company . A change in an Employee’s work location to a location more than fifty (50) miles from the facility where the Employee was located
on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of the Employee’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by an Employee of employment by an Employing Company at a work location which is outside the fifty mile radius set forth in this Section 2.24(c) shall not be a waiver of the Employee’s right to refuse subsequent transfer by an Employing Company to a location which is more than fifty (50) miles from the Employee’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 2.25(b)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if the Employee’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from the Employee’s work location at his or her Employing Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action or the failure to take any action by the Employing Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which an Employee is entitled under the Employing Company’s Retirement and Welfare Benefit plans in which the Employee was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Employing Company to provide an Employee with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which the Employee is entitled on the basis of years of service with the Employing Company in accordance with the Employing Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Employing Company).
(iii) Subsidiary Change in Control . Notwithstanding Section 2.25(c)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if an Employee or Support Employee is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 2.24(f) and (g) hereof.
(e) Adoption of Severance Plan . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to adopt a severance plan substantially in the form of Exhibit C attached hereto.
(f) Economic Equivalence . For purposes of Section 2.24(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what an Employee or Support Employee of an
Employing Company undergoing a Subsidiary Change in Control is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value the Employee or Support Employee would have derived from his Employing Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 2.24(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Employing Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Compensation Committee shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Employing Company shall provide to the Benefits Consultant actual data for its Employees. The Company shall provide such data for Support Employees whose Employing Company is the subject of the Subsidiary Change in Control.
(iv) The determination of whether or not the acquiring employer's Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to the Employee or Support Employee by his or her Employing Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
2.26 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
2.27 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
2.28 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
2.29 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of January 1, 2009, plus any individual who 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 January 1, 2009 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.
2.30 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
2.31 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to an Employee by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Employing Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Employing Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
2.32 “ Month of Service ” shall mean any calendar month during which a Participant has worked at least one (1) hour or was on approved leave of absence while in the employ of an Employing Company or any other Southern Subsidiary.
2.33 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
2.34 “ Participant ” shall mean an Employee or Support Employee who meets the eligibility requirements of Section 3.1 of this Plan.
2.35 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
2.36 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
2.37 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
2.38 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
2.39 “ Plan ” shall mean the Southern Company Senior Executive Change in Control Severance Plan.
2.40 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or an Employing Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, an Employing Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
2.41 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits and plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
2.42 “ Separation Date ” shall mean the date on which a Participant’s employment with his Employing Company is terminated; provided, however, that solely for purposes of Section 3.2(c) hereof, the Separation Date of Participants who are deemed to be retired pursuant to the provisions of Section 3.3 hereof, shall be the effective date of their retirement pursuant to the terms of the Pension Plan.
2.43 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
2.44 “ Southern ” shall mean The Southern Company, its successors and assigns.
2.45 “ Southern Board ” shall mean the board of directors of Southern.
2.46 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern,
2.47 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
2.48 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 2.8(b)(iii) hereof.
2.49 “ Support Employee ” shall mean an Employee of the Company (which shall continue to be such Employee’s Employing Company for all other purposes of this Plan) whose employment with the Company:
(a) Is involuntarily terminated without Cause within two years after the Change in Control of an Employing Company (other than the Company) and either (i) spent at least 40% of his working time performing services for such Employing Company as of the day immediately preceding the day the Change in Control is Consummated and for one-hundred eighty (180) days prior thereto, or since commencement of employment by the Company, if shorter, or (ii) is determined by the Compensation Committee to be involuntarily terminated without Cause as a result of such Change in Control; or
(b) Is voluntarily terminated by Employee for Good Reason within two years after the Change in Control of an Employing Company (other than the Company) and spent at least 40% of his working time performing services for such Employing Company as of the day immediately preceding the day the Change in Control is Consummated and for one-hundred eighty (180) days prior thereto, or since commencement of employment by the Company, if shorter. For purposes of this Section 2.49(b) only, Good Reason shall
not include the provisions of Section 2.24(a), entitled “Inconsistent Duties.”
2.50 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Employing Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
2.51 “ Termination for Cause ” or “ Cause ” shall mean an Employee’s termination of employment with his Employing Company upon the occurrence of any of the following:
(a) The willful and continued failure by the Employee to substantially perform his duties with his Employing Company (other than any such failure resulting from the Employee’s Total Disability or from the Employee’s retirement or any such actual or anticipated failure resulting from termination of employment by the Employee for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes the Employee has not substantially performed his duties; or
(b) The willful engaging by the Employee in conduct that is demonstrably and materially injurious to his Employing Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of an Employee’s employment by his Employing Company;
(ii) the willful carrying out of any activity or the making of any statement by an Employee which would materially prejudice or impair the good name and standing of his Employing Company, Southern or any other Southern Subsidiary or would bring his Employing Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which his Employing Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by an Employee at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of his Employing Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Employing Company’s safety officer;
(v) assault or other act of violence by Employee against any person during the course of employment; or
(vi) Employee’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by an Employee shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of his Employing Company.
Notwithstanding the foregoing, an Employee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to the Employee and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, the Employee was guilty of conduct set forth in Section 2.50(a) or (b) hereof and specifying the particulars thereof in detail.
2.52 Total Disability ” shall mean total disability under the terms of the Pension Plan.
2.53 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.
2.54 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
2.55 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE III - SEVERANCE BENEFITS
3.1 “ Eligibility .
(a) Employees . Except as otherwise provided herein, any Employee whose employment is involuntarily terminated by his Employing Company at any time during the two year period following a Change in Control of Southern or his Employing Company for reasons other than Cause or who shall voluntarily terminate his employment with his Employing Company for Good Reason at any time during the two year period following a Change in Control of Southern or his Employing Company shall be entitled to participate in this Plan and receive the benefits described in Section 3.2 hereof, subject to the terms and conditions described in this Article 3.
(b) Deemed Employees . An Employee who is deemed to be employed by an Employing Company other than his actual Employing Company under Section 2.18 hereof shall be entitled to participate in this Plan and receive the benefits described in Section 3.2 hereof in the same manner as other Employees of the deemed Employing Company undergoing a Change in Control under Section 3.1(a) hereof; provided, however, that such deemed Employee will be considered to be an Employee of the deemed Employing Company solely for purposes of determining whether he or she is entitled to benefits under this Plan as a result of a Change in Control of such deemed Employing Company. For all other purposes under this Plan, such deemed Employee’s actual Employing Company shall be considered.
(c) Support Employees . A Support Employee shall be entitled to participate in this Plan and receive the benefits described in Section 3.2 hereof, subject to the terms and conditions described in this Article 3.
(d) Limits on Eligibility . Notwithstanding anything to the contrary herein, an Employee or Support Employee shall not be eligible to receive benefits under this Plan if the Employee or Support Employee:
(i) is not actively at work on his Separation Date, unless such Employee or Support Employee is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with his Employing Company for other than Good Reason;
(iii) has his employment terminated by his Employing Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or his Employing Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if an Employee or Support Employee would otherwise have been a Participant in the Plan but for this Section 3.1(d)(iv), such Employee or Support Employee will be a Participant and eligible for benefits under this Plan except for those outplacement, severance and welfare benefits described in Sections 3.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with his Employing Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from his or her Employing Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 2.24(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he or she is entitled at his or her Employing Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 2.24(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof;
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by his Employing Company in lieu of benefits under this Plan; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Plan; and
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his or her Separation Date.
3.2 Benefits . Upon the Employing Company’s receipt of an effective Waiver and Release, Participants shall be entitled to receive the following benefits:
(a) Employee Outplacement Services . Each Participant shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from the Participant’s Separation Date.
(b) Severance Benefit . Participants shall be paid in cash an amount equal to three times the Participant’s Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Employing Company shall pay to the Participant an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal determined by adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the Severance Amount plus all other “parachute payments” to the Participant under Code Section 280G exceeds three (3) times the Participant’s “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times the Participant’s Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by the Participant, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 3.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon the Participants, Southern and the Employing Company.
(c) Welfare Benefit .
(i) Except as provided in Section 3.3 hereof, each Participant shall be eligible to participate in the Employing Company’s Group Health Plan for a period of six (6) months for each of the Participant’s Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following the Participant’s Separation Date unless otherwise specifically provided under such plan, upon the Participant’s payment of both the Employing Company’s and the Participant’s premium under such plan. A Participant who receives this extended medical coverage shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on the Participant’s Separation Date (and for such other dependents as may be entitled to
coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of the Participant’s extended medical coverage under this Section 3.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to a Participant pursuant to this Section 3.2(c) as well as the premiums to be paid by the Participant in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by the Participant in connection with this extended coverage shall be due on the first day of each month; provided, however, that if a Participant fails to pay his premium within thirty (30) days of its due date, such Participant’s extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 3.2(c) shall be a part of and not in addition to any COBRA Coverage which a Participant or his dependent may elect. In the event that a Participant or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Employing Company’s Group Health Plan available to the Participant or his dependent by virtue of the provisions of this Article 3 shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of a Participant to inform the Employing Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 3.3 hereof, regardless of whether a Participant elects the extended coverage described in Section 3.2(c) hereof, the Employing Company shall pay to each Participant a cash amount equal to the Employing Company’s and the Participant’s cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 3.2(d) shall apply to any Participant who, as of the date of the Change in Control, was a participant in the Omnibus Plan, the defined terms of which are incorporated in this Section 3.2(d) by reference.
(i) Any of the Participant’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Participant holding a Stock Appreciation Right who is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to the Participant under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of the Participant’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free
of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 3.2(e) shall apply to any Participant who, as of the date of the Change in Control, was a participant in the Performance Pay Program, the defined terms of which are incorporated in this Section 3.2(e) by reference. Provided the Participant is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of the Participant’s Separation Date and to the extent the Participant is entitled to participate therein, the Participant shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 3.2(e) shall apply to any Participant who, as of the date of the Change in Control, was a participant in the Performance Dividend Program, the defined terms of which are incorporated in this Section 3.2(e) by reference. Provided the Participant is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through the Participant’s Separation Date and to the extent the Participant is entitled to participate therein, the Participant shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 3.2(e), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which the Participant’s Separation Date occurs, all other remaining PDP performance measurement periods shall terminate with respect to such Participant and no payment to such Participant shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 3.2(g) shall apply to any Participant who, as of the date of the Change in Control is entitled to a Performance Unit or Performance Share award under the Omnibus Plan. Provided the Participant is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, the Participant shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 3.2(h) shall apply to any Participant who, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 3.2. Provided the Participant is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through the Participant’s Separation Date and to the extent the Participant is entitled to participate therein, the Participant shall be entitled to receive cash in an amount equal to his award under his respective Employing Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred, at the Participant’s target performance level and prorated by the number of months which have passed since the beginning of the annual performance
period until the Separation Date. For purposes of this Section 3.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by an Employing Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Board of Directors and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 3.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 3.2 to the contrary, in the event that a Participant has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes a Participant’s Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar for dollar by any such amount received or to be received under the BPP.
3.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, any Participant who is otherwise eligible to retire pursuant to the terms of the Pension Plan shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Employing Company of which the Participant is a participant. A Participant who is deemed to have retired in accordance with the preceding sentence shall not be eligible to receive the benefits described in Section 3.2(c) hereof if, upon his Separation Date, such Participant becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
3.4 Payment of Benefits .
(a) Except as otherwise provided in Section 3.4(b) hereof, the total amount payable under this Article III shall be paid to a Participant in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) the Participant’s Separation Date, or (b) the tender to the Employing Company by the Participant of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such Waiver and Release. In the case of a Separation Date occurring in December, payment under this Article 3 will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Plan are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-1(a)(4) promulgated under Code section 409A and to ensure that a Participant cannot directly or indirectly designate the taxable year of the receipt of benefits under the Plan as described in Treasury Regulation 1.409A-3(a)). In the event payment under this Article III is delayed as a result of a bona fide legal dispute with respect to liability or amount of any benefit due under the Plan, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Employing Company.
(b) Notwithstanding anything to the contrary in Section 3.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment, or portion
thereof, under this Article III in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment, or portion thereof, shall be delayed for the period set forth in Code Section 409A(a)(2)(B)(i) and such delayed payment, or portion thereof, shall bear a reasonable rate of interest as determined by the Compensation Committee.
3.5 Benefits in the Event of Death . In the event of the Participant’s death prior to the payment of all benefits due under this Article 3, the Participant’s estate shall be entitled to receive as due any amounts not yet paid under this Article 3 upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
3.6 Legal Fees . In the event of a bona fide legal dispute between a Participant and his Employing Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in the Participant’s favor, his Employing Company shall reimburse the Participant’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
3.7 No Mitigation . A Participant who receives benefits under Section 3.2 of this Plan shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 3.1(d) hereof, the amounts due a Participant hereunder shall not be reduced or suspended if such Participant accepts such subsequent employment.
3.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by a Participant for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article 5 hereof and if any material issue in such dispute is finally resolved in the Participant’s favor, the Company shall reimburse the Participant’s legal fees in the manner provided in Section 3.6 hereof.
ARTICLE IV - ADMINISTRATION
4.1 Administrative Duties . Except as otherwise provided herein, the Compensation Committee shall be responsible for the general administration of the Plan and may appoint other persons or entities to perform or assist in the performance of any of its duties, subject to its review and approval. The Compensation Committee shall have the right to remove any such appointee from his position without cause upon notice.
ARTICLE V- ARBITRATION
5.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Plan, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article 5 are not intended to apply to any other disputes, claims or controversies arising out of or relating to a Participant’s employment by an Employing Company or the termination thereof.
5.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to the Participant, in the case of an Employing Company, or to the Compensation Committee, in the case of a Participant.
5.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except
to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
5.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by the Participant, one arbitrator shall be appointed by the Employing Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
5.5 Costs . The arbitration filing fee shall be paid by the Participant. All other costs of arbitration shall be borne equally by the Participant and his Employing Company, provided, however, that such Employing Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in the Participant’s favor and the Participant is reimbursed legal fees under Section 3.6 hereof.
5.6 Interim and Injunctive Relief . Nothing in this Article 5 is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article 5 and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article V.
ARTICLE VI - MISCELLANEOUS
6.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the benefits payable to a Participant under the Plan shall not be funded in any manner and shall be paid by the Employing Companies out of their general assets, which assets are subject to the claims of the Employing Companies’ creditors.
6.2 Withholding . There shall be deducted from the payment of any benefit due under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Employing Companies to such governmental authority for the account of the Participant entitled to such payment.
6.3 Assignment . No Participant or beneficiary shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any benefit due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
6.4 Interpretation . This Plan is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Code Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Plan for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
6.5 Amendment and Termination . The Plan may be amended or terminated at any time by the Board of Directors, provided, however, that no such amendment or termination of the Plan shall be effective if such amendment or termination is made or is effective within a period that is (a) six (6) months before or at any time after, a Preliminary Change in Control of Southern Company
and (b) prior to the earlier of (x) such time as the Board of Directors shall have determined that the event that gave rise to such Preliminary Change in Control will not be Consummated or (y) two years following the respective Southern Company Change in Control unless such amendment or termination during such period (i) has the effect of increasing benefits to Participants under the Plan, (ii) is determined by the Board of Directors to be immaterial, (iii) applies solely to individuals who were not Employees of an Employing Company on the date of the respective Change in Control or (iv) is more than six (6) months prior to any other Preliminary Change in Control of Southern Company and any such amendment or termination applies solely to such other Southern Company Preliminary Change in Control and the Southern Company Change in Control to which it relates.
IN WITNESS WHEREOF, this Amended and Restated Southern Company Senior Executive Change in Control Severance Plan has been executed by the Company through its duly authorized officers, this 31 day of December, 2008, to be effective as provided herein.
|
SOUTHERN COMPANY SERVICES, INC.
By: /s/Patricia L. Roberts
Its: Vice President & Associate General Counsel |
Exhibit 10(a)24
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
AMENDED AND RESTATED
Troutman Sanders LLP
Bank of America Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
AMENDED AND RESTATED
ARTICLE 1 - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption of Plan . Southern Company Services, Inc. hereby adopts this Amended and Restated Southern Company Executive Change in Control Severance Plan effective as of the date of execution. The Plan was originally effective December 7, 1998. It was amended by a First Amendment also effective December 7, 1998, and subsequently amended and restated effective July 10, 2000, May 9, 2002, May 1, 2003 and January 1, 2007. The Plan is an unfunded “top hat” plan designed to provide certain severance benefits to a select group of management or highly compensated employees, to be paid solely from the general assets of the respective Employing Companies.
1.2 Purpose . The Plan is primarily designed to provide benefits to certain key employees of the Employing Companies, whose employment is terminated subsequent to a change in control of Southern or their respective Employing Company.
ARTICLE 2 - DEFINITIONS
2.1 “ Administrative Committee ” shall mean the Southern Company Benefits Administration Committee as such committee shall stand from time to time. In the event the Southern Company Plan Administration Committee is disestablished, the Administrative Committee shall be the committee appointed by the Board of Directors to conduct the overall administration of the Plan.
2.2 “ Annual Compensation ” shall mean a Participant’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan.
2.3 “ Base Salary ” shall mean a Participant’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
2.4 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
2.5 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 2.6 hereof another Benefits Consultant has been chosen by the Administrative Committee, such other comparable index utilized by the Benefits Consultant.
2.6 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Administrative Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
2.7 “ Board of Directors ” shall mean the board of directors of the Company.
2.8 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States income tax purposes.
2.9 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership (during the 12 month period ending on the date of the most recent acquisition by such Person) of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 2.9(a)(i), the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) and (C) of Section 2.9(a)(iii);
(ii) 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
(iii) Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to an Employing Company, the occurrence of any of the following:
(i) 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 2.9(b)(i), any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of an Employing Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (an “Employing Company Business Combination”), in each case, unless, following such Employing Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Employing Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of an Employing Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
2.10 “ COBRA Coverage ” shall mean any continuation coverage to which a Participant or his dependents may be entitled pursuant to Code Section 4980B.
2.11 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
2.12 “ Common Stock ” shall mean the common stock of Southern.
2.13 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
2.14 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
2.15 “ 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 governmental agencies.
2.16 “ 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.
2.17 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 2.25(f) hereof.
2.18 “ Effective Date ” shall mean the date of execution hereof.
2.19 “ Employee ” shall mean each regular full-time or regular part-time employee of an Employing Company of Grades 10 to 13 (or, if the Grade system is not used, $130,000 or more of annual base salary rate for the twelve month period immediately preceding the date the Change in Control is Consummated) not covered by a collective bargaining agreement between the Employing Company and a union or other employee representative who is an employee of an Employing Company on the date the Change in Control is Consummated. The Administrative Committee may deem one or more Employees of a particular Southern Subsidiary to be employed by another Employing Company for purposes of this Plan. Such action shall be in writing and shall cause such an Employee to be entitled to benefits under this Plan in the event of a Change in Control of his deemed Employing Company, not his Employing Company. Notwithstanding the above, no Employee shall participate in the Plan if, prior to a Change in Control, the Employee is entitled to, and elects to receive, benefits under any other change in control severance plan, agreement or arrangement.
2.20 “ Employee Outplacement Program ” shall mean the program established by an Employing Company from time to time for the purpose of assisting Participants covered by the Plan in finding employment outside of the Employing Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
2.21 “ Employing Company ” or “ Employer ” shall mean the Company, or any other Southern Subsidiary, which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them. The term “Employing Company” or “Employer” shall also mean any other corporation or entity Controlled by a Southern Subsidiary which the Compensation Committee has determined to bring under the Plan and which shall adopt the Plan, and any successor of any of them.
2.22 “ Employing Company Business Combination ” shall have the meaning set forth in Section 2.9(b)(ii) hereof.
2.23 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
2.24 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
2.25 “ Good Reason ” shall mean, without an Employee’s express written consent, after written notice to his Employing Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the Employee’s Employing Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 2.25. In the case of an Employee or Support Employee claiming benefits under this Plan upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if the Employee or Support Employee provides to the Administrative Committee a copy of his or her written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 2.25. The Administrative Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 2.24(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify the Participant of its decision within thirty (30) days of receipt of the Participant’s written offer of employment. Any dispute regarding the Administrative Committee ’s decision shall be resolved in accordance with Article 5 hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties .
(i) Change in Control . A meaningful and detrimental alteration in the Employee’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if an Employee is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than the Employee’s job title, duties and status in effect at his Employing Company on the date the offer of employment is received from the acquiring company.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Employing Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-
five percent (95%) or more of the Employees of the Employing Company eligible for such compensation:
(A) the Employee’s Base Salary;
(B) the sum of the Employee’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of the Employee’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under his Employing Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 2.25(a)(i) hereon, in the event of a Subsidiary Change in Control, Good Reason shall exist if an Employee or Support Employee is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of the Employee’s or Support Employee’s Base Salary plus Target Bonus under his Employing Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under his Employing Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received from the acquiring company;
(c) Relocation .
(i) Employing Company . A change in an Employee’s work location to a location more than fifty (50) miles from the facility where the Employee was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of the Employee’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by an Employee of employment by an Employing Company at a work location which is outside the fifty mile radius set forth in this Section 2.25(c) shall not be a waiver of the Employee’s right to refuse subsequent transfer by an Employing Company to a location which is more than fifty (50) miles from the Employee’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 2.25(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if the Employee’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from the Employee’s work location at his or her Employing Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action, or the failure to take any action, by the Employing Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which an Employee is entitled under the Employing Company’s Retirement and Welfare Benefit plans in which the Employee was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Employing Company to provide an Employee with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which the Employee is entitled on the basis of years of service with the Employing Company in accordance with the Employing Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Employees of the Employing Company).
(iii) Subsidiary Change in Control . Notwithstanding Section 2.25(c)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if an Employee or Support Employee is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 2.25(f) and (g) hereof.
(e) Adoption of Severance Plan . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to adopt a severance plan substantially in the form of Exhibit C attached hereto.
(f) Economic Equivalence . For purposes of Section 2.25(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what an Employee or Support Employee of an Employing Company undergoing a Subsidiary Change in Control is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value the Employee or Support Employee would have derived from his Employing Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 2.25(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Employing Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Administrative Committee shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Employing Company shall provide to the Benefits Consultant actual data for its Employees. The Company shall provide such data for Support Employees whose Employing Company is the subject of the Subsidiary Change in Control.
(iv) The determination of whether or not the acquiring employer's Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to the Employee or Support Employee by his or her Employing Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
2.26 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
2.27 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
2.28 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
2.29 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of January 1, 2009, plus any individual who 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 January 1, 2009 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.
2.30 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
2.31 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to an Employee by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Employing Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Employing Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
2.32 “ Month of Service ” shall mean any calendar month during which a Participant has worked at least one (1) hour or was on approved leave of absence while in the employ of an Employing Company or any other Southern Subsidiary.
2.33 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
2.34 “ Participant ” shall mean an Employee or Support Employee who meets the eligibility requirements of Section 3.1 of this Plan.
2.35 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
2.36 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
2.37 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
2.38 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
2.39 “ Plan ” shall mean the Southern Company Executive Change in Control Severance Plan.
2.40 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or an Employing Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, an Employing Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
2.41 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits and plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
2.42 “ Separation Date ” shall mean the date on which a Participant’s employment with his Employing Company is terminated; provided, however, that solely for purposes of Section 3.2(c) hereof, the Separation Date of Participants who are deemed to be retired pursuant to the provisions of Section 3.3 hereof, shall be the effective date of their retirement pursuant to the terms of the Pension Plan.
2.43 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
2.44 “ Southern ” shall mean The Southern Company, its successors and assigns.
2.45 “ Southern Board ” shall mean the board of directors of Southern.
2.46 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
2.47 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
2.48 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 2.8(b)(iii) hereof.
2.49 “ Support Employee ” shall mean an Employee of the Company (which shall continue to be such Employee’s Employing Company for all other purposes of this Plan) whose employment with the Company:
(a) Is involuntarily terminated without Cause within two years after the Change in Control of an Employing Company (other than the Company) and either (i) spent at least 40% of his working time performing services for such Employing Company as of the day immediately preceding the day the Change in Control is Consummated and for one-hundred eighty (180) days prior thereto, or since commencement of employment by the Company, if shorter, or (ii) is determined by the Administrative Committee to be involuntarily terminated without Cause as a result of such Change in Control; or
(b) Is voluntarily terminated by Employee for Good Reason within two years after the Change in Control of an Employing Company (other than the Company) and who spent at least 40% of his working time performing services for such Employing Company as of the day immediately preceding the day the Change in Control is Consummated and for one-hundred eighty (180) days prior thereto, or since commencement of employment by the Company, if shorter. For purposes of this Section 2.49(b) only, Good Reason shall not include the provisions of Section 2.25(a), entitled “Inconsistent Duties.”
2.50 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Employing Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
2.51 “ Termination for Cause ” or “ Cause ” shall mean an Employee’s termination of employment with his Employing Company upon the occurrence of any of the following:
(a) The willful and continued failure by the Employee to substantially perform his duties with his Employing Company (other than any such failure resulting from the Employee’s Total Disability or from the Employee’s retirement or any such actual or anticipated failure resulting from termination of employment by the Employee for Good Reason) after a written demand for substantial performance is delivered to him by the Administrative Committee, which demand specifically identifies the manner in which the Administrative Committee believes the Employee has not substantially performed his duties; or
(b) The willful engaging by the Employee in conduct that is demonstrably and materially injurious to his Employing Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of an Employee’s employment by his Employing Company;
(ii) the willful carrying out of any activity or the making of any
statement by an Employee which would materially prejudice or impair the good name and standing of his Employing Company, Southern or any other Southern Subsidiary or would bring his Employing Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which his Employing Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by an Employee at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of his Employing Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Employing Company’s safety officer;
(v) assault or other act of violence by Employee against any person during the course of employment; or
(vi) Employee’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by an Employee shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of his Employing Company.
Notwithstanding the foregoing, an Employee shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Administrative Committee at a meeting called and held for such purpose (after reasonable notice to the Employee and an opportunity for him, together with counsel, to be heard before the Administrative Committee), finding that, in the good faith opinion of the Administrative Committee, the Employee was guilty of conduct set forth in Section 2.51(a) or (b) hereof and specifying the particulars thereof in detail.
2.52 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
2.53 “ 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.
2.54 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
2.55 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE 3 - SEVERANCE BENEFITS
3.1 “ Eligibility .
(a) Employees . Except as otherwise provided herein, any Employee whose employment is involuntarily terminated by his Employing Company at any time during the two year period following a Change in Control of Southern or his Employing Company for reasons other than Cause or who shall voluntarily terminate his employment with his Employing Company for Good Reason at any time during the two year period following a Change in Control of Southern or his Employing Company shall be entitled to participate in this Plan and receive the benefits described in Section 3.2 hereof, subject to the terms and conditions described in this Article 3.
(b) Deemed Employees . An Employee who is deemed to be employed by an Employing Company other than his actual Employing Company under Section 2.19 hereof shall be entitled to participate in this Plan and receive the benefits described in Section 3.2 hereof in the same manner as other Employees of the deemed Employing Company undergoing a Change in Control under Section 3.1(a) hereof; provided, however, that such deemed Employee will be considered to be an Employee of the deemed Employing Company solely for purposes of determining whether he or she is entitled to benefits under this Plan as a result of a Change in Control of such deemed Employing Company. For all other purposes under this Plan, such deemed Employee’s actual Employing Company shall be considered.
(c) Support Employees . A Support Employee shall be entitled to participate in this Plan and receive the benefits described in Section 3.2 hereof, subject to the terms and conditions described in this Article 3.
(d) Limits on Eligibility . Notwithstanding anything to the contrary herein, an Employee or Support Employee shall not be eligible to receive benefits under this Plan if the Employee or Support Employee:
(i) is not actively at work on his Separation Date, unless such Employee or Support Employee is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with his Employing Company for other than Good Reason;
(iii) has his employment terminated by his Employing Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or his Employing Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if an Employee or Support Employee would otherwise have been a Participant in the Plan but for this Section 3.1(d)(v), such Employee or Support Employee will be a Participant and eligible for benefits under this Plan except for those outplacement, severance and welfare benefits described in Sections 3.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with his Employing Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from his or her Employing Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 2.24(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he or she is entitled at his or her Employing Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 2.24(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by his Employing Company in lieu of benefits under this Plan; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Plan.
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his or her Separation Date.
3.2 Benefits . Upon the Employing Company’s receipt of an effective Waiver and Release, Participants shall be entitled to receive the following benefits:
(a) Employee Outplacement Services . Each Participant shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from the Participant’s Separation Date.
(b) Severance Benefit . Participants shall be paid in cash an amount equal to two times the Participant’s Annual Compensation, but not in excess of the Capped Amount. For purposes of this Section 3.2(b), the Capped Amount shall be the amount otherwise payable under this Section 3.2(b), reduced in such amount and to such extent that no amount of the payment under this Section 3.2(b), plus all other “parachute payments” under Code Section 280G, would constitute an “excess parachute payment” under Code Section 280G, but only to the extent that if the payment under this Section 3.2(b) were increased by one additional dollar ($1.00), a portion of the payment under this Section 3.2(b) would be an “excess parachute payment” under Code Section 280G. The calculation of the Capped Amount and any other determinations relating to the applicability of Code Section 280G (and the rules and regulations promulgated thereunder) to the payments contemplated by this Plan shall be made by a nationally recognized firm specializing in federal income taxes as selected by the Administrative Committee, and such calculations or determinations shall be binding upon the Participants, Southern and the Employing Company.
(c) Welfare Benefit .
(i) Except as provided in Section 3.3 hereof, each Participant shall be eligible to participate in the Employing Company’s Group Health Plan for a period of six (6) months for each of the Participant’s Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following the Participant’s Separation Date unless otherwise specifically provided under such plan, upon the Participant’s payment of both the Employing Company’s and the Participant’s premium under such plan. A Participant who receives this extended medical coverage shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on the Participant’s Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of the Participant’s extended medical coverage under this Section 3.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to a Participant pursuant to this Section 3.2(c) as well as the premiums to be paid by the Participant in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by the Participant in connection with this extended coverage shall be due on the first day of each month; provided, however, that if a Participant fails to pay his premium within thirty (30) days of its due date, such Participant’s extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 3.2(c) shall be a part of and not in addition to any COBRA Coverage which a Participant or his dependent may elect. In the event that a Participant or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Employing Company’s Group Health Plan available to the Participant or his dependent by virtue of the provisions of this Article 3 shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of a Participant to inform the Employing Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 3.3 hereof, regardless of whether a Participant elects the extended coverage described in Section 3.2(c) hereof, the Employing Company shall pay to each Participant a cash amount equal to the Employing Company’s and the Participant’s cost of premiums for two (2) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 3.2(d) shall apply to any Participant who, as of the date of the Change in Control, was a participant in the Omnibus Plan, the defined terms of which are incorporated in this Section 3.2(d) by reference.
(i) Any of the Participant’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Participant holding a Stock Appreciation Right who is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to the Participant under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of the Participant’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 3.2(e) shall apply to any Participant who, as of the date of the Change in Control, was a participant in the Performance Pay Program, the defined terms of which are incorporated in this Section 3.2(e) by reference. Provided the Participant is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of the Participant’s Separation Date and to the extent the Participant is entitled to participate therein, the Participant shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 3.2(f) shall apply to any Participant who, as of the date of the Change in Control, was a participant in the Performance Dividend Program, the defined terms of which are incorporated in this Section 3.2(f) by reference. Provided the Participant is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through the Participant’s Separation Date and to the extent the Participant is entitled to participate therein, the Participant shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 3.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which the Participant’s Separation Date occurs, all other remaining PDP performance measurement periods shall terminate with respect to such Participant and no payment to such Participant shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 3.2(g) shall apply to any Participant who, as of the date of the Change in Control is entitled to a Performance Unit or Performance Share award under the Omnibus Plan. Provided the Participant is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, the Participant shall be entitled to receive cash in an
amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 3.2(h) shall apply to any Participant who, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 3.2. Provided the Participant is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through the Participant’s Separation Date and to the extent the Participant is entitled to participate therein, the Participant shall be entitled to receive cash in an amount equal to his award under his respective Employing Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred, at the Participant’s target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 3.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by an Employing Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Board of Directors and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 3.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 3.2 to the contrary, in the event that a Participant has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes a Participant’s Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar for dollar by any such amount received or to be received under the BPP.
3.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, any Participant who is otherwise eligible to retire pursuant to the terms of the Pension Plan shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Employing Company of which the Participant is a participant. A Participant who is deemed to have retired in accordance with the preceding sentence shall not be eligible to receive the benefits described in Section 3.2(c) hereof if, upon his Separation Date, such Participant becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
3.4 Payment of Benefits .
(a) Except as otherwise provided in Section 3.4(b) hereof, the total amount
payable under this Article 3 shall be paid to a Participant in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) the Participant’s Separation Date, or (b) the tender to the Employing Company by the Participant of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such Waiver and Release. In the case of a Separation Date occurring in December, payment under this Article 3 will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Plan are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-1(a)(4) promulgated under Code section 409A and to ensure that a Participant cannot directly or indirectly designate the taxable year of the receipt of benefits under the Plan as described in Treasury Regulation 1.409A-3(a)). In the event payment under this Article 3 is delayed as a result of a bona fide legal dispute with respect to liability or amount of any benefit due under the Plan, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Employing Company.
(b) Notwithstanding anything to the contrary in Section 3.4(a) above, if the Administrative Committee determines that it is necessary to delay any payment, or portion thereof, under this Article III in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment, or portion thereof, shall be delayed for the period set forth in Code Section 409A(a)(2)(B)(i) and such delayed payment, or portion thereof, shall bear a reasonable rate of interest as determined by the Administrative Committee.
3.5 Benefits in the Event of Death . In the event of the Participant’s death prior to the payment of all benefits due under this Article 3, the Participant’s estate shall be entitled to receive as due any amounts not yet paid under this Article 3 upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
3.6 Legal Fees . In the event of a bona fide legal dispute between a Participant and his Employing Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in the Participant’s favor, his Employing Company shall reimburse the Participant’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed thirty thousand dollars ($30,000).
3.7 No Mitigation . A Participant who receives benefits under Section 3.2 of this Plan shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 3.1(d) hereof, the amounts due a Participant hereunder shall not be reduced or suspended if such Participant accepts such subsequent employment.
3.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by a Participant for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article 5 hereof and if any material issue in such dispute is finally resolved in the Participant’s favor, the Company shall reimburse the Participant’s legal fees in the manner provided in Section 3.6 hereof.
ARTICLE 4 - ADMINISTRATION
4.1 Administrative Committee .
(a) The Administrative Committee shall be responsible for the general administration of the Plan and may appoint other persons or entities to perform or assist in the performance of any of its duties, subject to its review and approval. The Administrative Committee shall have the right to remove any such appointee from his position without cause upon notice.
(b) The Administrative Committee shall maintain permanent records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers, and other transactions concerning the Plan. Such accounts, books, and records relating thereto shall be open at all reasonable times to inspection and audit by the Company and any persons designated thereby.
(c) The Administrative Committee shall take all steps necessary to ensure that the Plan complies with the law at all times, including the preparation and filing of all documents and forms required by any governmental agency; maintenance of adequate Participant records; recording and transmission of all notices required to be given to Participants and their beneficiaries; receipt and dissemination, if required, of all reports and information received from the Employing Companies; securing of such fidelity bonds as may be required by law; and doing such other acts necessary for the proper administration of the Plan. The Administrative Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of accounts, records, and other data as may be necessary for proper administration of the Plan. The Administrative Committee shall notify the Employing Companies upon their request of any action taken by it, and when required, shall notify any other interested person or persons.
4.2 Powers . The Administrative Committee 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 Administrative Committee shall have the discretionary authority to interpret the Plan (including any ambiguities herein) and to determine all questions arising in the administration, interpretation, and application of the Plan. The Administrative Committee shall adopt such procedures and regulations necessary or desirable for the discharge of its duties hereunder and may appoint such accountants, counsel, actuaries, specialists, and other agents as it deems necessary or desirable in connection with the administration of this Plan. The Administrative Committee shall be the legal appointed agent for the service of process.
4.3 Compensation of the Administrative Committee . The Administrative Committee shall not receive any compensation from the Plan for its services.
4.4 Payment of Expenses . The Administrative Committee shall be reimbursed by the Employing Companies for its reasonable expenses incurred in the discharge of its duties. Such expenses shall include any expenses incident to its duties, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan.
4.5 Indemnification . Each Employing Company shall indemnify the Administrative Committee against any and all claims, losses, damages, expenses, and liability arising from its actions or omissions, except when the same is finally adjudicated to be the result of gross negligence or willful misconduct. The Employing Companies may purchase at their own expense sufficient liability insurance for the Administrative Committee 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 Administrative Committee.
ARTICLE 5 - ARBITRATION
5.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Plan, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article 5 are not intended to apply to any other disputes, claims or controversies arising out of or relating to a Participant’s employment by an Employing Company or the termination thereof.
5.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to the Participant, in the case of an Employing Company, or to the Administrative Committee, in the case of a Participant.
5.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
5.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by the Participant, one arbitrator shall be appointed by the Employing Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
5.5 Costs . The arbitration filing fee shall be paid by the Participant. All other costs of arbitration shall be borne equally by the Participant and his Employing Company, provided, however, that such Employing Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in the Participant’s favor and the Participant is reimbursed legal fees under Section 3.6 hereof.
5.6 Interim and Injunctive Relief . Nothing in this Article 5 is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article 5 and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article 5.
ARTICLE 6 - MISCELLANEOUS
6.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the benefits payable to a Participant under the Plan shall not be funded in any manner and shall be paid by the Employing Companies out of their general assets, which assets are subject to the claims of the Employing Companies’ creditors.
6.2 Withholding . There shall be deducted from the payment of any benefit due under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Employing Companies to such governmental authority for the account of the Participant entitled to such payment.
6.3 Assignment . No Participant or beneficiary shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any benefit due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
6.4 Interpretation . This Plan is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Code Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Plan for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
6.5 Amendment and Termination . The Plan may be amended or terminated at any time by the Board of Directors, provided, however, that no such amendment or termination of the Plan shall be effective if such amendment or termination is made or is effective within a period that is (a) six (6) months before or at any time after, a Preliminary Change in Control of Southern Company and (b) prior to the earlier of (x) such time as the Board of Directors shall have determined that the event that gave rise to such Preliminary Change in Control will not be Consummated or (y) two years following the respective Southern Company Change in Control unless such amendment or termination during such period (i) has the effect of increasing benefits to Participants under the Plan, (ii) is determined by the Board of Directors to be immaterial, (iii) applies solely to individuals who were not Employees of an Employing Company on the date of the respective Change in Control or (iv) is more than six (6) months prior to any other Preliminary Change in Control of Southern Company and any such amendment or termination applies solely to such other Southern Company Preliminary Change in Control and the Southern Company Change in Control to which it relates.
IN WITNESS WHEREOF, this Amended and Restated Southern Company Executive Change in Control Severance Plan has been executed by the Company through its duly authorized officers, this 31 day of December, 2008, to be effective as provided herein.
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SOUTHERN COMPANY SERVICES, INC. |
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By: |
/s/Patricia L. Roberts |
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Its: |
Vice President & Associate General Counsel |
Exhibit 10(a)25
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") made and entered into by and between The Southern Company ("Southern"), Georgia Power Company (the "Company") and Mr. Michael D. Garrett ("Mr. Garrett ") (hereinafter collectively referred to as the "Parties") is effective December 31 , 2008. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Garrett, Southern and the Company, effective January 1, 2007.
WITNESSETH :
WHEREAS, Mr. Garrett is the President and Chief Executive Officer of the Company;
WHEREAS, the Company wishes to provide to Mr. Garrett certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of the Parties set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I – DEFINITIONS.
For purposes of this Agreement, the following terms shall have the following meanings:
1.1 “ Annual Compensation ” shall mean Mr. Garrett’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.
1.2 “ Base Salary ” shall mean Mr. Garrett’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
1.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
1.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
1.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
1.6 “ Board of Directors ” shall mean the board of directors of the Company.
1.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.
1.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);
(ii) 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
(iii) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to the Company, the occurrence of any of the following:
(i) 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 the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. Garrett, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
1.9 “ COBRA Coverage ” shall mean any continuation coverage to which Mr. Garrett or his dependents may be entitled pursuant to Code Section 4980B.
1.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
1.11 “ Common Stock ” shall mean the common stock of Southern.
1.12 “ Company ” shall mean Georgia Power Company, its successors and assigns.
1.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
1.14 “ 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 governmental agencies.
1.15 “ 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.
1.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.
1.17 “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
1.18 “ Company ” shall mean Georgia Power Company, its successors and assigns.
1.19 “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.
1.20 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
1.21 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
1.22 “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.
1.23 “ Good Reason ” shall mean, without Mr. Garrett’s express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. Garrett claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Garrett provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. Garrett of its decision within thirty (30) days of receipt of Mr. Garrett’s written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties.
(i) Change in Control . A meaningful and detrimental alteration in Mr. Garrett’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if
Mr. Garrett is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. Garrett’s job title, duties and status in effect at the Company as of the date the offer of employment is received.
(b) Reduced Compensation .
(i) Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees eligible for such compensation:
(A) Mr. Garrett’s Base Salary;
(B) the sum of Mr. Garrett’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of Mr. Garrett’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(b)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if
Mr. Garrett is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Garrett’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;
(c) Relocation .
(i) Company . A change in Mr. Garrett’s work location to a location more than fifty (50) miles from the facility where Mr. Garrett was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. Garrett’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Garrett of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. Garrett’s right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Garrett’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if
Mr. Garrett’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Garrett’s work location at the Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. Garrett is entitled under the Company’s Retirement and Welfare Benefit plans in which Mr. Garrett was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Company to provide Mr. Garrett with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. Garrett is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).
(iii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Garrett is offered a package of Retirement
and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.
(e) Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.
(f) Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. Garrett is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. Garrett would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would
materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Company shall provide to the Benefit Consultant actual data for its Employees.
(iv) The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. Garrett by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
1.24 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
1.25 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
1.26 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
1.27 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who 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 February 23, 2006 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.
1.28 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
1.29 “ Month of Service ” shall mean any calendar month during which Mr. Garrett has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.
1.30 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. Garrett by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more
reduction in employer matching funds as a percentage of employee contributions in accordance with the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
1.31 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
1.32 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
1.33 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.34 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.35 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
1.36 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
1.37 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
1.38 “ Separation Date ” shall mean the date on which Mr. Garrett’s employment with the Company is terminated; provided, however, that solely for purposes of Section 2.2(c) hereof, if, upon termination of employment with the Company, Mr. Garrett is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Garrett’s Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.
1.39 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
1.40 “ Southern ” shall mean The Southern Company, its successors and assigns.
1.41 “ Southern Board ” shall mean the board of directors of Southern.
1.42 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
1.43 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
1.44 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 1.8(b)(iii) hereof.
1.45 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
1.46 “ Termination for Cause ” or “ Cause ” shall mean Mr. Garrett’s termination of employment with the Company upon the occurrence of any of the following:
(a) The willful and continued failure by Mr. Garrett to substantially perform his duties with the Company (other than any such failure resulting from Mr. Garrett’s Total Disability or from Mr. Garrett’s retirement or any such actual or anticipated failure resulting from termination by Mr. Garrett for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes Mr. Garrett has not
substantially performed his duties; or
(b) The willful engaging by Mr. Garrett in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of Mr. Garrett’s employment by the Company;
(ii) the willful carrying out of any activity or the making of any statement by Mr. Garrett which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by Mr. Garrett at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of the Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Company’s safety officer;
(v) assault or other act of violence by Mr. Garrett against any person during the course of employment; or
(vi) Mr. Garrett’s indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by Mr. Garrett shall be deemed “willful” unless done, or omitted to be done, by Mr. Garrett not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Mr. Garrett shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Garrett and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, Mr. Garrett was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail.
1.47 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
1.48 “ 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.
1.49 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
1.50 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE II - SEVERANCE BENEFITS
2.1 Eligibility .
(a) Except as otherwise provided herein, if Mr. Garrett’s employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Garrett voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II.
(b) Limits on Eligibility . Notwithstanding anything to the contrary herein, Mr. Garrett shall not be eligible to receive benefits under this Plan if Mr. Garrett :
(i) is not actively at work on his Separation Date, unless Mr. Garrett is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with the Company for other than Good Reason;
(iii) has his employment terminated by the Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Garrett would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Garrett shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by
the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement; or
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his Separation Date.
2.2 Severance Benefits . Upon the Company’s receipt of an effective Waiver and Release, Mr. Garrett shall be entitled to receive the following severance benefits:
(a) Employee Outplacement Services . Mr. Garrett shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Garrett’s Separation Date.
(b) Severance Amount . Mr. Garrett shall be paid in cash an amount equal to three times his Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Company shall pay to Mr. Garrett an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal determined by adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the
Severance Amount plus all other “parachute payments” to Mr. Garrett under Code Section 280G exceeds three (3) times Mr. Garrett’s “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times Mr. Garrett’s Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by Mr. Garrett, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 2.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Garrett, Southern and the Company.
(c) Welfare Benefit .
(i) Except as provided in Section 2.3 hereof, Mr. Garrett shall be eligible to participate in the Company’s Group Health Plan for a period of six (6) months for each of Mr. Garrett’s Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. Garrett’s Separation Date unless otherwise specifically provided under such plan, upon Mr. Garrett’s payment of both the Company’s and Mr. Garrett’s premium under such plan. Mr. Garrett shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr.
Garrett’s Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of Mr. Garrett’s extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to Mr. Garrett pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Garrett in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by Mr. Garrett in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Garrett fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Garrett or his dependent may elect. In the event that Mr. Garrett or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Company’s Group Health Plan available to Mr. Garrett or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by
law, and shall not be renewed. It shall be the duty of Mr. Garrett to inform the Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Garrett elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Garrett a cash amount equal to the Company’s and Mr. Garrett’s cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference.
(i) Any of Mr. Garrett’s Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Garrett is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to Mr. Garrett under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of Mr. Garrett’s Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Garrett is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Garrett’s Separation Date and to the extent Mr. Garrett is entitled to participate therein, Mr. Garrett shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Garrett is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Garrett’s Separation Date and to the extent Mr. Garrett is entitled to participate therein, Mr. Garrett shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to
the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which Mr. Garrett’s Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Garrett and no payment to Mr. Garrett shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Garrett is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Garrett shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 2.2(h) shall apply to Mr. Garrett to the extent that he, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 2.2. Provided Mr. Garrett is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through Mr. Garrett’s Separation Date and to the extent Mr. Garrett is entitled to participate therein, Mr. Garrett shall be entitled to receive cash in an amount equal to his award under the Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred, at Mr. Garrett’s target performance level and prorated by the number of months which have
passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by the Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Garrett has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes Mr. Garrett’s Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP.
2.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, if Mr. Garrett is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Garrett is a participant. If Mr. Garrett is deemed to have
retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Garrett becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
2.4 Payment of Benefits .
(a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Garrett in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Garrett’s Separation Date, or (b) the tender to the Company by Mr. Garrett of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such waiver. In the case of a Separation Date occurring in December, payment under this Article II will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Agreement are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short term rule” as described in Treasury Regulation section 1.409A-3(a)). In the event of a dispute with respect to liability or amount of any benefit due hereunder, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Company.
(b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such
payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee.
2.5 Benefits in the Event of Death . In the event of Mr. Garrett’s death prior to the payment of all benefits due under this Article II, Mr. Garrett’s estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
2.6 Legal Fees . In the event of a bona fide legal dispute between Mr. Garrett and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Garrett’s favor, the Company shall reimburse Mr. Garrett’s legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
2.7 No Mitigation . Mr. Garrett shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Garrett hereunder shall not be reduced or suspended if he accepts such subsequent employment.
2.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by Mr. Garrett for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Garrett’s favor, the Company shall reimburse Mr. Garrett’s legal fees in the manner provided in Section 2.6 hereof.
ARTICLE III - ARBITRATION
3.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Agreement, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Garrett’s employment by the Company or the termination thereof.
3.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Garrett, in the case of the Company, or to the Compensation Committee, in the case of Mr. Garrett.
3.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
3.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by Mr. Garrett, one arbitrator shall be appointed by the Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
3.5 Costs . The arbitration filing fee shall be paid by Mr. Garrett. All other costs of arbitration shall be borne equally by Mr. Garrett and the Company, provided, however, that the
Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. Garrett’s favor and Mr. Garrett is reimbursed legal fees under Section 2.6 hereof.
3.6 Interim and Injunctive Relief . Nothing in this Article III is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article III.
ARTICLE IV – TRANSFER OF EMPLOYMENT
4.1 Transfer of Employment . In the event that Mr. Garrett’s employment by the Company is terminated during the two year period following a Change in Control and Mr. Garrett accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the “Company” for all purposes hereunder.
ARTICLE V - MISCELLANEOUS
5.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Garrett under the this Agreement shall not be funded in any
manner and shall be paid by the Company out of its general assets, which assets are subject to the claims of the Company’s creditors.
5.2 Withholding . There shall be deducted from the payment of any amount due under this Agreement the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of Mr. Garrett.
5.3 Assignment . Neither Mr. Garrett nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
5.4 Interpretation . This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
5.5 Amendment and Termination . The Agreement may be amended or terminated only by a writing executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 19th day of December, 2008.
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THE SOUTHERN COMPANY
By: /s/Patricia L. Roberts Assistant Secretary
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GEORGIA POWER COMPANY
By: /s/Wayne Boston Assistant Secretary |
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MR. GARRETT
/s/Michael D. Garrett Michael D. Garrett
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Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Garrett upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, Michael D. Garrett, understand that I am entitled to receive the severance benefits described in Article II of the Change in Control Agreement (the “Agreement”) if I execute this Waiver and Release (“Waiver”) within thirty (30) days of my Separation Date. I understand that the benefits I will receive under the Agreement are in excess of those I would have received from The Southern Company and Georgia Power Company (collectively, the “Company”) if I had not elected to sign this Waiver.
I recognize that I may have a claim against the Company under the Civil Rights Act of 1964 and 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Energy Reorganization Act of 1974, as amended, the Americans with Disabilities Act or other federal, state and local laws.
In exchange for receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the “Releasees”), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act;
(b) claims for violations of any other federal or state statute or regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or
(e) any other claims under state law arising in tort or contract.
In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement.
I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers’ compensation laws. However, I understand and acknowledge that nothing herein is intended to or shall be construed to require the Company to institute or continue in effect any particular plan or benefit sponsored by the Company and the Company hereby reserves the right to amend or terminate any of its benefit programs at any time in accordance with the procedures set forth in such plans.
Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law.
I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees’ business that is not generally known by or readily available to Releasees’ competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law.
I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof).
I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement.
I have carefully read this agreement and I fully understand all of the provisions of this Waiver.
I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice.
I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it.
I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. Revocation of this Waiver will not alter or change the termination of my employment by the Company.
In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise.
I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will.
I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____.
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___________________________ |
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Michael D. Garrett |
Sworn to and subscribed to me this
___day of _________, ____
__________________________
Notary Public
My Commission Expires:
___________________________
(Notary Seal)
Acknowledged and Accepted by the Company.
By: |
Date: |
Exhibit 10(a)26
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") made and entered into by and between The Southern Company ("Southern"), Southern Company Services, Inc. (the "Company") and Mr. William Paul Bowers ("Mr. Bowers") (hereinafter collectively referred to as the "Parties") is effective December 31, 2008. This Agreement amends and restates the Change in Control Agreement entered into by Mr. Bowers, Southern and Southern Company Services, effective January 1, 2007.
WITNESSETH :
WHEREAS, Mr. Bowers is Executive Vice President of the Company;
WHEREAS, the Company wishes to provide to Mr. Bowers certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of the Parties set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I – DEFINITIONS.
For purposes of this Agreement, the following terms shall have the following meanings:
1.1 “ Annual Compensation ” shall mean Mr. Bowers’ Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.
1.2 “ Base Salary ” shall mean Mr. Bowers’ highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.
1.3 “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.
1.4 “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.
1.5 “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.
1.6 “ Board of Directors ” shall mean the board of directors of the Company.
1.7 “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.
1.8 “ Change in Control ” shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;
(D) any acquisition by a qualified pension plan or publicly held mutual fund;
(E) any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or
(F) any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);
(ii) 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
(iii) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:
(A) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’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’s Voting Securities;
(B) no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary 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
(C) at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.
(b) with respect to the Company, the occurrence of any of the following:
(i) 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 the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. Bowers, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;
(ii) The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or
(iii) The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).
1.9 “ COBRA Coverage ” shall mean any continuation coverage to which Mr. Bowers or his dependents may be entitled pursuant to Code Section 4980B.
1.10 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.
1.11 “ Common Stock ” shall mean the common stock of Southern.
1.12 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.13 “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.
1.14 “ 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 governmental agencies.
1.15 “ 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.
1.16 “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.
1.17 “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
1.18 “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.
1.19 “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.
1.20 “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.
1.21 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
1.22 “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.
1.23 “ Good Reason ” shall mean, without Mr. Bowers’ express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the
condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. Bowers claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Bowers provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. Bowers of its decision within thirty (30) days of receipt of Mr. Bowers’ written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).
(a) Inconsistent Duties.
(i) Change in Control . A meaningful and detrimental alteration in Mr. Bowers’ position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Bowers is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. Bowers’ job title, duties and status in effect at the Company as of the date the offer of employment is received.
(b) Reduced Compensation.
(i) Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees eligible for such compensation:
(A) Mr. Bowers’ Base Salary;
(B) the sum of Mr. Bowers’ Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or
(C) the sum of Mr. Bowers’ Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(b((i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Bowers is offered Base Salary, Target Bonus under the acquiring company’s
Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Bowers’ Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;
(c) Relocation.
(i) Company . A change in Mr. Bowers’ work location to a location more than fifty (50) miles from the facility where Mr. Bowers was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. Bowers’ principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Bowers of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. Bowers’ right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Bowers’ principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;
(ii) Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Bowers’ work location under the terms of the offer of employment from the
acquiring employer is more than fifty (50) miles from Mr. Bowers’ work location at the Company as of the date the offer of employment by the acquiring employer is received.
(d) Benefits and Perquisites .
(i) Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. Bowers is entitled under the Company’s Retirement and Welfare Benefit plans in which Mr. Bowers was participating on the day immediately preceding the day the Change in Control is Consummated.
(ii) Vacation and Paid Time Off . The failure by the Company to provide Mr. Bowers with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. Bowers is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).
(iii) Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Bowers is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.
(e) Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.
(f) Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. Bowers is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. Bowers would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.
(g) Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:
(i) Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would
materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.
(ii) The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.
(iii) The Company shall provide to the Benefit Consultant actual data for its Employees.
(iv) The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. Bowers by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.
1.24 “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.
1.25 “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.
1.26 “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.
1.27 “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who 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 February 23, 2006 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.
1.28 “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.
1.29 “ Month of Service ” shall mean any calendar month during which Mr. Bowers has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.
1.30 “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. Bowers by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in
accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.
1.31 “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.
1.32 “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.
1.33 “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.34 “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.
1.35 “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
1.36 “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.
(a) Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;
(b) Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or
(c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.
1.37 “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).
1.38 “ Separation Date ” shall mean the date on which Mr. Bowers’ employment with the Company is terminated; provided, however, that solely for purposes of Section 2.2(c) hereof, if, upon termination of employment with the Company, Mr. Bowers is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Bowers’ Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.
1.39 “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.
1.40 “ Southern ” shall mean The Southern Company, its successors and assigns.
1.41 “ Southern Board ” shall mean the board of directors of Southern.
1.42 “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.
1.43 “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.
1.44 “ Subsidiary Change in Control ” shall have the meaning set forth in Section 1.8(b)(iii) hereof.
1.45 “ Target Bonus ” shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs.
1.46 “ Termination for Cause ” or “ Cause ” shall mean Mr. Bowers’ termination of employment with the Company upon the occurrence of any of the following:
(a) The willful and continued failure by Mr. Bowers to substantially perform his duties with the Company (other than any such failure resulting from Mr. Bowers’ Total
Disability or from Mr. Bowers’ retirement or any such actual or anticipated failure resulting from termination by Mr. Bowers for Good Reason) after a written demand for substantial performance is delivered to him by the Southern Board, which demand specifically identifies the manner in which the Southern Board believes Mr. Bowers has not substantially performed his duties; or
(b) The willful engaging by Mr. Bowers in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following:
(i) any willful act involving fraud or dishonesty in the course of Mr. Bowers’ employment by the Company;
(ii) the willful carrying out of any activity or the making of any statement by Mr. Bowers which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located;
(iii) attendance by Mr. Bowers at work in a state of intoxication or otherwise being found in possession at his workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
(iv) violation of the Company’s policies on drug and alcohol usage, fitness for duty requirements or similar policies as may exist from time to time as adopted by the Company’s safety officer;
(v) assault or other act of violence by Mr. Bowers against any person during the course of employment; or
(vi) Mr. Bowers’ indictment for any felony or any misdemeanor involving moral turpitude.
No act or failure to act by Mr. Bowers shall be deemed “willful” unless done, or omitted to be done, by Mr. Bowers not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Mr. Bowers shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Bowers and an opportunity for him, together with counsel, to be heard before the Southern Board), finding that, in the good faith opinion of the Southern Board, Mr. Bowers was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail.
1.47 “ Total Disability ” shall mean total disability under the terms of the Pension Plan.
1.48 “ 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.
1.49 “ Waiver and Release ” shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto.
1.50 “ Year of Service ” shall mean an Employee’s Months of Service divided by twelve (12) rounded to the nearest whole year, rounding up if the remaining number of months is seven (7) or greater and rounding down if the remaining number of months is less than seven (7). If an
Employee has a break in his service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service.
ARTICLE II - SEVERANCE BENEFITS
2.1 Eligibility.
(a) Except as otherwise provided herein, if Mr. Bowers’ employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Bowers voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II.
(b) Limits on Eligibility . Notwithstanding anything to the contrary herein, Mr. Bowers shall not be eligible to receive benefits under this Plan if Mr. Bowers :
(i) is not actively at work on his Separation Date, unless Mr. Bowers is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work;
(ii) voluntarily terminates his employment with the Company for other than Good Reason;
(iii) has his employment terminated by the Company for Cause;
(iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern;
(v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Bowers would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Bowers shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof);
(vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment;
(vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not
provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof.
(viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement; or
(ix) fails to execute and submit a Waiver and Release substantially in the form of Exhibit A attached hereto within thirty (30) days of his Separation Date.
2.2 Severance Benefits . Upon the Company’s receipt of an effective Waiver and Release, Mr. Bowers shall be entitled to receive the following severance benefits:
(a) Employee Outplacement Services . Mr. Bowers shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Bowers’ Separation Date.
(b) Severance Amount . Mr. Bowers shall be paid in cash an amount equal to three times his Annual Compensation (the “Severance Amount”). If any portion of the Severance Amount constitutes an “excess parachute payment” (as such term is defined under Code Section 280G (“Excess Parachute Payment”)), the Company shall pay to Mr. Bowers an additional amount calculated by determining the amount of tax under Code Section 4999 that he otherwise would have paid on any Excess Parachute Payment with respect to the Change in Control and dividing such amount by a decimal determined by
adding the tax rate under Code Section 4999 (“Excise Tax”), the hospital insurance tax under Code Section 3101(b) (“HI Tax”) and federal and state income tax measured at the highest marginal rates (“Income Tax”) and subtracting such result from the number one (1) (the “280G Gross-up”); provided, however, that no 280G Gross-up shall be paid unless the Severance Amount plus all other “parachute payments” to Mr. Bowers under Code Section 280G exceeds three (3) times Mr. Bowers’ “base amount” (as such term is defined under Code Section 280G (“Base Amount”)) by ten percent (10%) or more; provided further, that if no 280G Gross-up is paid, the Severance Amount shall be capped at three (3) times Mr. Bowers’ Base Amount, less all other “parachute payments” (as such term is defined under Code Section 280G) received by Mr. Bowers, less one dollar (the “Capped Amount”), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax.
For purposes of this Section 2.2(b), whether any amount would constitute an Excess Parachute Payment and any other calculations of tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts, e.g., Base Amount, Capped Amount, etc., shall be determined by a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Bowers, Southern and the Company.
(c) Welfare Benefit .
(i) Except as provided in Section 2.3 hereof, Mr. Bowers shall be eligible to participate in the Company’s Group Health Plan for a period of six (6) months for each of Mr. Bowers’ Years of Service, not to exceed a period of five (5)
years, beginning on the first day of the first month following Mr. Bowers’ Separation Date unless otherwise specifically provided under such plan, upon Mr. Bowers’ payment of both the Company’s and Mr. Bowers’ premium under such plan. Mr. Bowers shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. Bowers’ Separation Date (and for such other dependents as may be entitled to coverage under the provisions of the Health Insurance Portability and Accountability Act of 1996) for the duration of Mr. Bowers’ extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan.
(ii) The extended medical coverage afforded to Mr. Bowers pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Bowers in connection with such coverage shall be determined in accordance with the terms of the Group Health Plan and shall be subject to any changes in the terms and conditions of the Group Health Plan as well as any future increases in premiums under the Group Health Plan. The premiums to be paid by Mr. Bowers in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Bowers fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Bowers or his dependent may elect. In the event that Mr. Bowers or his dependent becomes
eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health plan or is eligible for coverage under any government-sponsored health plan during the above period, coverage under the Company’s Group Health Plan available to Mr. Bowers or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. Bowers to inform the Company of his eligibility to participate in any such health plan.
(iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Bowers elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Bowers a cash amount equal to the Company’s and Mr. Bowers’ cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control.
(d) Stock Option Vesting . The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference.
(i) Any of Mr. Bowers’ Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Bowers is subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable at such time if such actions would result in liability to Mr. Bowers under Section 16(b) of
the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations applicable to any of Mr. Bowers’ Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable.
(e) Performance Pay Program . The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Bowers is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Bowers’ Separation Date and to the extent Mr. Bowers is entitled to participate therein, Mr. Bowers shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(f) Performance Dividend Program . The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Bowers is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Bowers’ Separation Date and to
the extent Mr. Bowers is entitled to participate therein, Mr. Bowers shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31 st of the year in which Mr. Bowers’ Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Bowers and no payment to Mr. Bowers shall be made with respect thereto.
(g) Other Short Term Incentives Under the Omnibus Plan . The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Bowers is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Bowers shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date.
(h) Other Short-Term Incentive Plans . The provisions of this Section 2.2(h) shall apply to Mr. Bowers to the extent that he, as of the date of the Change in Control, is a participant in any other “short term incentive compensation plan” not otherwise previously referred to in this Section 2.2. Provided Mr. Bowers is not otherwise entitled to a plan
payout under any change in control provisions of such plans, if the “short term incentive compensation plan” is in place through Mr. Bowers’ Separation Date and to the extent Mr. Bowers is entitled to participate therein, Mr. Bowers shall be entitled to receive cash in an amount equal to his award under the Company’s “short term incentive compensation plan” for the annual performance period in which the Separation Date shall have occurred, at Mr. Bowers’ target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), the term “short term incentive compensation plan” shall mean any incentive compensation plan or arrangement adopted in writing by the Company which provides for annual, recurring compensatory bonuses to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments.
(i) Pro rata Calculation . For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, 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.
(j) No Duplicate Benefits . Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Bowers has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the “BPP”) for the Performance Period which includes Mr. Bowers’ Separation Date, then the amount of any such Cash-
Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP.
2.3 Coordination with Retiree Medical and Life Insurance Coverage . Notwithstanding anything to the contrary above, if Mr. Bowers is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Bowers is a participant. If Mr. Bowers is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Bowers becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan.
2.4 Payment of Benefits .
(a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Bowers in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Bowers’ Separation Date, or (b) the tender to the Company by Mr. Bowers of an effective Waiver and Release in the form of Exhibit A attached hereto and the expiration of any applicable revocation period for such waiver. In the case of a Separation Date occurring in December, payment under this Article II will be made no earlier than January 1 and no later than March 15 of the following year, provided all other requirements of the Agreement are met, including the receipt of an effective Waiver and Release. (The foregoing time of payment requirement is intended to satisfy the requirements of the so-called “short-term rule” as described in Treasury Regulation section 1.409A-3(a)). In the
event of a dispute with respect to liability or amount of any benefit due hereunder, an effective Waiver and Release shall be tendered at the time of final resolution of any such dispute on the date payment, if any, is tendered by the Company.
(b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee.
2.5 Benefits in the Event of Death . In the event of Mr. Bowers’ death prior to the payment of all benefits due under this Article II, Mr. Bowers’ estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release.
2.6 Legal Fees . In the event of a bona fide legal dispute between Mr. Bowers and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Bowers’ favor, the Company shall reimburse Mr. Bowers’ legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000).
2.7 No Mitigation . Mr. Bowers shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Bowers hereunder shall not be reduced or suspended if he accepts such subsequent employment.
2.8 Non-qualified Retirement and Deferred Compensation Plans . Subsequent to a Change in Control, any claims by Mr. Bowers for benefits under any of the Company’s non-qualified retirement or deferred compensation plans shall be resolved through binding arbitration in accordance with the procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Bowers’ favor, the Company shall reimburse Mr. Bowers’ legal fees in the manner provided in Section 2.6 hereof.
ARTICLE III - ARBITRATION
3.1 General . Any dispute, controversy or claim arising out of or relating to the Company’s obligations to pay severance benefits under this Agreement, or the breach thereof, shall be settled and resolved solely by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) except as otherwise provided herein. The arbitration shall be the sole and exclusive forum for resolution of any such claim for severance benefits and the arbitrators’ award shall be final and binding. The provisions of this Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Bowers’ employment by the Company or the termination thereof.
3.2 Demand for Arbitration . Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Bowers, in the case of the Company, or to the Compensation Committee, in the case of Mr. Bowers.
3.3 Law and Venue . The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia.
3.4 Appointment of Arbitrators . Arbitrators shall be appointed within fifteen (15) business days following service of the demand for arbitration. The number of arbitrators shall be three. One arbitrator shall be appointed by Mr. Bowers, one arbitrator shall be appointed by the Company, and the two arbitrators shall appoint a third. If the arbitrators cannot agree on a third arbitrator within thirty (30) business days after the service of demand for arbitration, the third arbitrator shall be selected by the AAA.
3.5 Costs . The arbitration filing fee shall be paid by Mr. Bowers. All other costs of arbitration shall be borne equally by Mr. Bowers and the Company, provided, however, that the Company shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. Bowers’ favor and Mr. Bowers is reimbursed legal fees under Section 2.6 hereof.
3.6 Interim and Injunctive Relief . Nothing in this Article III is intended to preclude, upon application of either party, any court having jurisdiction from issuing and enforcing in any lawful manner such temporary restraining orders, preliminary injunctions, and other interim measures of relief as may be necessary to prevent harm to either party’s interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to prevent any court from entering and enforcing in any lawful manner such judgments for permanent equitable relief as may be necessary to prevent harm to a party’s interests or as otherwise may be appropriate following the issuance of arbitral awards pursuant to this Article III.
ARTICLE IV – TRANSFER OF EMPLOYMENT
4.1 Transfer of Employment . In the event that Mr. Bowers’ employment by the Company is terminated during the two year period following a Change in Control and Mr. Bowers accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the “Company” for all purposes hereunder.
ARTICLE V - MISCELLANEOUS
5.1 Funding of Benefits . Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Bowers under the this Agreement shall not be funded in any manner and shall be paid by the Company out of its general assets, which assets are subject to the claims of the Company’s creditors.
5.2 Withholding . There shall be deducted from the payment of any amount due under this Agreement the amount of any tax required by any governmental authority to be withheld and paid over by the Company to such governmental authority for the account of Mr. Bowers.
5.3 Assignment . Neither Mr. Bowers nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount due hereunder, which payment and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
5.4 Interpretation . This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional
tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent.
5.5 Amendment and Termination . The Agreement may be amended or terminated only by a writing executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 19th day of December, 2008.
|
THE SOUTHERN COMPANY |
|
By: |
/s/Patricia L. Roberts
|
|
SOUTHERN COMPANY SERVICES, INC. |
|
By: |
/s/Patricia L. Roberts
|
|
MR. BOWERS |
|
/s/William Paul Bowers |
|
William Paul Bowers |
Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Bowers upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, William Paul Bowers, understand that I am entitled to receive the severance benefits described in Article II of the Change in Control Agreement (the “Agreement”) if I execute this Waiver and Release (“Waiver”) within thirty (30) days of my Separation Date. I understand that the benefits I will receive under the Agreement are in excess of those I would have received from The Southern Company and Southern Company Services, Inc. (collectively, the “Company”) if I had not elected to sign this Waiver.
I recognize that I may have a claim against the Company under the Civil Rights Act of 1964 and 1991, the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, the Energy Reorganization Act of 1974, as amended, the Americans with Disabilities Act or other federal, state and local laws.
In exchange for receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the “Releasees”), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to:
(a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act;
(b) claims for violations of any other federal or state statute or regulation or local ordinance;
(c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty;
(d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or
(e) any other claims under state law arising in tort or contract.
In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement.
I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers’ compensation laws. However, I understand and acknowledge that nothing herein is intended to or shall be construed to require the Company to institute or continue in effect any particular plan or benefit sponsored by the Company and the Company hereby reserves the right to amend or terminate any of its benefit programs at any time in accordance with the procedures set forth in such plans.
Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law.
I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees’ business that is not generally known by or readily available to Releasees’ competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees.
I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law.
I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof).
I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement.
I have carefully read this agreement and I fully understand all of the provisions of this Waiver.
I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice.
I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it.
I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. Revocation of this Waiver will not alter or change the termination of my employment by the Company.
In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise.
I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will.
I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____.
|
___________________________ |
|
William Paul Bowers |
Sworn to and subscribed to me this
___day of _________, ____
__________________________
Notary Public
My Commission Expires:
___________________________
(Notary Seal)
Acknowledged and Accepted by the Company.
By: |
Date: |
EXHIBIT 10(a)29
BASE SALARIES OF NAMED EXECUTIVE OFFICERS
THE SOUTHERN COMPANY
Effective as of March 1, 2009, the following are the annual base salaries of the current Chief Executive Officer and Chief Financial Officer of The Southern Company (the “Company”) and certain other current or former executive officers of the Company who served as such during 2008.
David M. Ratcliffe President and Chief Executive Officer |
$1,129,467 |
W. Paul Bowers Executive Vice President and Chief Financial Officer |
$599,004 |
Thomas A. Fanning Executive Vice President and Chief Operating Officer |
$664,685 |
Charles D. McCrary Executive Vice President of the Company, President and Chief Executive Officer of Alabama Power Company |
$662,242 |
Michael D. Garrett Executive Vice President of the Company, President and Chief Executive Officer of Georgia Power Company |
$695,402 |
G. Edison Holland, Jr. Executive Vice President, General Counsel and Secretary |
$574,037 |
EXHIBIT 10(b)20
BASE SALARIES OF NAMED EXECUTIVE OFFICERS
ALABAMA POWER COMPANY
Effective as of March 1, 2009, the following are the annual base salaries of the current Chief Executive Officer and Chief Financial Officer of Alabama Power Company and certain other current or former executive officers of Alabama Power Company who served during 2008.
Charles D. McCrary President and Chief Executive Officer |
$662,242 |
Art P. Beattie Executive Vice President, Chief Financial Officer and Treasurer |
$289,068 |
C. Alan Martin Executive Vice President of The Southern Company, President of Southern Company Services, Inc. |
$441,348 |
Steven R. Spencer Executive Vice President |
$379,187 |
Jerry L. Stewart Senior Vice President |
$354,792 |
EXHIBIT 10(c)25
BASE SALARIES OF NAMED EXECUTIVE OFFICERS
GEORGIA POWER COMPANY
Effective as of March 1, 2009, the following are the annual base salaries of the current Chief Executive Officer and Chief Financial Officer of Georgia Power Company and certain other current or former executive officers of Georgia Power Company who served as such during 2008.
Michael D. Garrett President and Chief Executive Officer |
$695,402 |
Cliff S. Thrasher Executive Vice President, Chief Financial Officer and Treasurer |
$296,484 |
Christopher C. Womack Executive Vice President of The Southern Company and Southern Company Services, Inc. |
$363,651 |
James H. Miller, III President and Chief Executive Officer of Southern Nuclear Operating Company, Inc. |
$455,803 |
Mickey A. Brown Executive Vice President |
$363,253 |
EXHIBIT 10(d)21
BASE SALARIES OF NAMED EXECUTIVE OFFICERS
GULF POWER COMPANY
Effective as of March 1, 2009, the following are the annual base salaries of the current Chief Executive Officer and Chief Financial Officer of Gulf Power Company and certain other current or former executive officers of Gulf Power Company who served as such during 2008.
Susan N. Story President and Chief Executive Officer |
$396,084 |
Philip Raymond Vice President and Chief Financial Officer |
$228,433 |
P. Bernard Jacob Vice President |
$230,346 |
Theodore J. McCullough Vice President |
$182,973
|
Bentina C. Terry Vice President |
$228,433
|
Ronnie R. Labrato Vice President of Southern Company Services, Inc. |
$262,500 |
EXHIBIT 10(e)19
BASE SALARIES OF NAMED EXECUTIVE OFFICERS
MISSISSIPPI POWER COMPANY
Effective as of March 1, 2009, the following are the annual base salaries of the current Chief Executive Officer and Chief Financial Officer of Mississippi Power Company and certain other current or former executive officers of Mississippi Power Company who served as such during 2008.
Anthony J. Topazi President and Chief Executive Officer |
$392,343 |
Frances V. Turnage Vice President, Treasurer and Chief Financial Officer |
$227,640 |
Donald R. Horsley Vice President |
$254,818 |
Kimberly D. Flowers Vice President |
$216,775 |
John W. Atherton Vice President |
$190,021 |
Exhibit 10(e)22
Mississippi Power Company has requested confidential treatment for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Mississippi Power Company has omitted portions from this filing and filed them separately with the Securities and Exchange Commission. Such omissions are designated as “[**]”.
|
DOE F 4600.1# |
U.S. DEPARTMENT OF ENERGY |
(07/08)
|
NOTICE OF FINANCIAL ASSISTANCE AWARD |
Under the authority of Public Law |
95-91 DOE Organization Act and PL 102-486 Energy Policy Act 1992 |
13. |
RECIPIENT TYPE |
|
[ |
] |
STATE GOV'T |
[ |
] |
INDIAN TRIBAL GOV'T |
[ |
] |
HOSPITAL |
[X |
] |
FOR PROFIT
|
[ |
] |
INDIVIDUAL |
|
[ |
] |
LOCAL GOV'T |
[ |
] |
INSTITUTION OF
|
[ |
] |
OTHER NONPROFIT
|
[X |
] |
CORPORATION |
[ |
] |
PARTNERSHIP |
[ |
] |
SOLE
|
[ |
] |
OTHER (Specify)
|
14. ACCOUNTING AND APPROPRIATIONS DATA: |
15. EMPLOYER I.D. NUMBER
a. TIN: 63-0274273 b. DUNS: 137519547 |
|
TABLE OF CONTENTS
SECTION II - SPECIAL TERMS AND CONDITIONS |
5 |
|
2.1 PREVAILING REGULATIONS (SEPT 2004) |
5 |
|
2.2 ORDER OF PRECEDENCE (AUG 2001) |
5 |
|
2.3 DEFINITIONS (MAR 2002) |
5 |
|
2.4 SUBSTANTIAL INVOLVEMENT BETWEEN DOE AND THE RECIPIENT (MAR 2002) |
5 |
|
2.5 BUDGET PERIODS AND ESTIMATED PROJECT COSTS |
6 |
|
2.6 RESERVED |
7 |
|
2.7 COST OVERRUNS |
7 |
|
2.8 ALLOWABLE PRE-AWARD COSTS (MAR 1999) |
7 |
|
2.9 COST SHARING (MAR 2002) |
7 |
|
2.10
PAYMENT PROCEDURES *REIMBURSEMENT THROUGH THE AUTOMATED STANDARD
|
8 |
|
2.11 CONTINUATION APPLICATION AND FUNDING |
9 |
|
2.12 PROPERTY MANAGEMENT AND DISPOSITION |
10 |
|
2.13 REAL PROPERTY - NONE (JAN 1999) |
10 |
|
2.14 FEDERALLY OWNED PROPERTY (GOVERNMENT-FURNISHED) - NONE (JAN 1999) |
10 |
|
2.15 KEY PERSONNEL |
10 |
|
2.16 PROJECT SITE AND ACCESS |
11 |
|
2.17 PAPERWORK REDUCTION - COOPERATIVE AGREEMENTS (SEPT 2002) |
11 |
|
2.18 PUBLIC ACCESS TO INFORMATION (APR 2000) |
11 |
|
2.19 COMPLIANCE WITH BUY AMERICAN ACT (OCT 2004) |
11 |
|
2.20
NOTICE REGARDING THE PURCHASE OF AMERICAN-MADE EQUIPMENT
|
11 |
|
2.21 LOBBYING RESTRICTIONS (OCT 2004) |
11 |
|
2.22 NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITIES (NOV 1998) |
11 |
|
2.23 REPORTING (NOV 1998) |
12 |
|
2.24 RECIPIENT PRESS RELEASES (APR 1998) |
12 |
|
2.25 PUBLICATION OF RESULTS/ACKNOWLEDGMENT STATEMENT (MAR 2004) |
12 |
|
2.26 NATIONAL ENVIRONMENTAL POLICY ACT (NEPA) REQUIREMENTS |
12 |
|
2.27 ENVIRONMENTAL, SAFETY & HEALTH (OCT 2003) |
13 |
|
2.28 HAZARDOUS WASTES MANIFESTS AND LABELS (MAR 2003) |
13 |
|
2.29 PERMITS AND LICENSES |
13 |
|
2.30 INSURANCE |
13 |
|
2.31 LIMITATION OF DOE LIABILITY (MAR 2002) |
13 |
|
2.32 TERMINATION (MAR 2002) |
14 |
|
2.33 RECORDS RETENTION, ACCESS, AND DISCLOSURE (MAR 2002) |
14 |
|
2.34 SEVERABILITY (MAR 2002) |
14 |
|
2.35 PERFORMANCE OF WORK IN THE UNITED STATES (AUG 2003) |
14 |
|
2.36 RESERVED |
15 |
|
2.37 ANNUAL INDIRECT COST PROPOSAL AND RECONCILIATION (OCT 2004) |
15 |
|
2.38 CONDITIONS ON AWARD |
15 |
|
2.39 WITHHOLDING OF FUNDS |
15 |
SECTION III -INTELLECTUAL PROPERTY PROVISIONS |
17 |
|
3.1 INTELLECTUAL PROPERTY PROVISIONS (FOR-PROFIT R&D) (JAN 2004) |
17 |
|
3.2 CONFIDENTIAL BUSINESS INFORMATION (JAN 2004) |
17 |
|
3.3 52.227-1 AUTHORIZATION AND CONSENT (JUL 1995) - ALTERNATE I (APR 1984) |
17 |
|
3.4 52.227-2 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) |
17 |
|
3.5 52.227-3 PATENT INDEMNITY (APR 1984) |
18 |
|
3.6 952.227-9 REFUND OF ROYALTIES (FEB 1995) |
18 |
|
3.7 PATENT RIGHTS (LARGE BUSINESS FIRMS) - NO WAIVER (OCT 2003) |
19 |
|
3.8 RIGHTS IN DATA - PROGRAMS COVERED UNDER SPECIAL DATA STATUTES (OCT 2003) |
23 |
|
3.9 LIMITED RIGHTS DATA (JAN 2004) |
30 |
|
3.10 RESTRICTED COMPUTER SOFTWARE (JAN 2004) |
30 |
|
3.11 PROTECTED DATA (JAN 2004) |
30 |
|
3.12 AVAILABILITY OF CONTRACT AND OTHER DATA (DEC 2003) |
31 |
|
3.13 COMMERICIALIZATION OF DEMONSTRATION TECHNOLOGY. (DEC 2003) |
31 |
|
3.14 52.227-23 RIGHTS TO PROPOSAL DATA (TECHNICAL). (JUN 1987) |
31 |
SECTION IV - LIST OF ATTACHMENTS |
33 |
ATTACHMENT A - STATMENT OF PROJECT OBJECTIVES |
34 |
ATTACHMENT B - FEDERAL ASSISTANCE REPORTING CHECKLIST |
35 |
ATTACHMENT C - BUDGET PAGE(S) |
48 |
ATTACHMENT D - AMENDED AND RESTATED REPAYMENT AGREEMENT |
53 |
The purpose of this amendment is to acknowledge a relocation of the Project site from Orlando, Florida to Kemper County, Mississippi and to make certain changes associated with that relocation, including the addition of CO 2 capture and compression. On and after the date of Amendment A004, the Cooperative Agreement is as follows:
SECTION II - SPECIAL TERMS AND CONDITIONS
2.1 |
Prevailing Regulations (SEPT 2004) |
As indicated on the face page, Block 18c, this award is subject to the DOE Assistance Regulations of Title 10, Code of Federal Regulations, Part 600. This set of regulations may be found in most major libraries or on the World Wide Web at: http://ecfr.gpoaccess.gov .
2.2 |
Order of Precedence (AUG 2001) |
In the event of any inconsistency among the provisions of this agreement, the inconsistency shall be resolved by giving precedence as follows: (a) applicable public laws; (b) 10 CFR Part 600; (c) the special terms and conditions; and (d) other documents, exhibits and attachments.
2.3 |
Definitions (MAR 2002) |
“Cooperative Agreement” means this agreement between the United States Department of Energy (DOE) and the Recipient, DOE Instrument number DE-FC26-06NT42391, and any subsequent amendments.
“Recipient” or “Participant” means Southern Company Services, Inc. and its successors and assigns.
“Repayment Agreement” means the agreement made by Southern Company Services, Inc.; Kellogg Brown & Root, Inc; and DOE in DOE Cooperative Agreement Number DE-FC26-06NT42391 on January 30, 2006, as amended and restated on May 2, 2007 and again on December 5, 2008, to repay the DOE share of costs paid under this Cooperative Agreement. The Repayment Agreement is agreement number DE-FR26-06NT42392.
“United States” means the United States of America and its 50 States, the District of Columbia, the Commonwealth of Puerto Rico, and any possession or trust territory of the United States.
2.4 |
Substantial Involvement Between DOE and the Recipient (MAR 2002) |
(a) |
Recipient Role |
The Recipient shall be responsible for all aspects of Project performance as set forth in the Statement of Project Objectives. All services, personnel, facilities, equipment, materials, and supplies shall be furnished by the Recipient, unless otherwise specified under this Cooperative Agreement. The Recipient Project Director shall serve as its authorized representative for the technical elements of all work to be performed under this Cooperative Agreement. The Recipient Business Officer shall serve as its authorized representative for administrative elements dealing with the Cooperative Agreement.
(b) |
DOE Role |
DOE shall monitor the Recipient’s progress in performing the Project and shall have a substantial role in Project decision making.
The DOE Contracting Officer is the only Government Representative authorized to accept the reports and other deliverables the Recipient is required to provide under this Cooperative Agreement. The DOE Project Officer (same as Contracting Officer’s Representative) shall have the authority to comment on those technical reports, plans, and other technical information the Recipient is required to submit to DOE for review and comment.
The DOE Project Officer shall have the authority to issue written technical advice which suggests redirecting the Project work (e.g., by changing the emphasis among different tasks), or pursuing specific lines of inquiry likely to assist in accomplishing the Statement of Project Objectives. The DOE Project Officer is not authorized to issue, and the Recipient must not follow, any technical advice which constitutes work which is not within the scope of the Statement of Project Objectives; which in any manner causes an increase or decrease in the total estimated cost or in the time required for performance of the Project; which has the effect of changing any of the terms or conditions of the Cooperative Agreement; or which interferes with the Recipient’s right to perform the Project in accordance with the terms and conditions of this Cooperative Agreement.
(c) |
No Government Obligation to Third Parties |
In connection with the performance of the Project, the Government shall have no obligation or responsibility to any contractor, subcontractor or other person who is not a party to this Cooperative Agreement. The foregoing limitation shall apply notwithstanding the Contracting Officer's prior approval of or consent to any contract awarded by the Recipient. The Recipient shall be responsible, without recourse to DOE, except for amounts DOE is otherwise obligated to pay pursuant to the provisions of this Cooperative Agreement for the resolution and satisfaction of all pre-award protests, contract administration issues, and contract disputes arising out of contracts awarded by the Recipient for acquisitions related to the Project.
2.5 |
Budget Periods and Estimated Project Costs |
(a) |
Budget Periods |
The project period of this Cooperative Agreement is divided into Project budget periods for funding purposes.
Phases
The Project is divided into major categories of work (e.g., project definition, design, construction, demonstration, etc.) called phases for project management planning and control. Additionally, sub-phases have been established to distinguish between work completed at the Orlando site and work proposed for the Kemper County site. The phases and sub-phases are aligned to specific budget periods and correspond to specific tasks in the Statement of Project Objectives. The delineation of phases is identified in the next section under Total Estimated Project Costs.
(b) |
Total Estimated Project Costs |
DOE and the Recipient shall share in allowable direct and indirect project costs, on an invoice by invoice basis, in the percentages up to the amounts shown below:
|
TOTAL ESTIMATED PROJECT COST: |
$ [**] |
|
Budget Period 1 - - Phase I – Project Definition |
|
DOE Share |
$ 9,285,033 |
[**] % |
|
Recipient Share |
$ [**] |
[**] % |
|
$ [**] |
Budget Period 2a - - Phase II.a – Detailed Design (Orlando, FL) and Phase III.a Construction (Orlando, FL)
|
DOE Share |
$14,248,983 |
[**] % |
|
Recipient Share |
$ [**] |
[**] % |
|
$ [**] |
Budget Period 2b - - Phase II.b – Detailed Design (Kemper County, MS); Phase III.b – Construction (Kemper County, MS) (subject to Article 2.38, Conditions on Award); and Phase IV – Demonstration – (subject to Article 2.38, Conditions on Award and Article 2.39, Withholding of Funds)
|
DOE Share |
$ |
270,215,984 |
[**] % |
|
Recipient Share |
$ [**] |
[**] % |
|
$ [**] |
Total Project
|
DOE Share |
$ |
293,750,000 |
[**] % |
|
Recipient Share |
$ [**] |
[**] % |
|
$ [**] |
(c) |
Budget Revisions |
The Recipient may re-budget funds within a total approved budget, subject to the prior approval requirements of 10 CFR § 600.315.
(d) |
Additional Funds |
The Recipient shall immediately notify the Contracting Officer in writing whenever it becomes apparent that the costs of completing that portion of the Project to be performed during a Budget Period exceeds the Total Approved Budget. Such written notice shall, at a minimum, set forth (1) a detailed explanation of the magnitude and factors causing the cost overrun and (2) the Recipient’s proposed plan to fund the increased cost.
2.6 |
RESERVED |
2.7 |
Cost Overruns |
The estimated DOE cost-share set forth in Section 2.5 (b) is the maximum amount permitted by law. The Government shall not share in any additional cost overruns. Therefore, Southern Company Services, Inc. shall be responsible for all further cost overruns that may occur in order to complete the Project in accordance with the Statement of Project Objectives contained in the Cooperative Agreement.
2.8 |
Allowable Pre-award Costs (MAR 1999) |
The Recipient is entitled to reimbursement by DOE of its share of pre-award costs in the amount not to exceed $7,200,670, per the pre-award cost authorization letter to Recipient from DOE dated December 20, 2004. These costs are limited to work associated with performance of work detailed in Recipient’s letter of December 16, 2004, incurred during the period starting on January 3, 2005 through the effective start date of this award (Block 7, DOE F 4600.1).
2.9 |
Cost Sharing (MAR 2002) |
In order to be recognized as allowable cost sharing, a cost must be otherwise allowable in accordance with the applicable Federal cost principles and DOE Regulations (10 CFR § 600.313) governing cost sharing. Cost sharing may be in various forms or combinations, including, but not limited to, cash outlays and in-kind contributions. All allowable Project costs, whether in-cash or in-kind, shall be shared by DOE when such costs are incurred by applying the share ratios set forth in the Cooperative Agreement.
Provided below is a non-exclusive list of costs that are unallowable as Project costs and cost sharing:
|
• |
Costs incurred in negotiating a Cooperative Agreement with DOE are not allowable as direct charges to the Project. |
|
• |
Allowable costs under past, present, or future Federal Government contracts, grants or Cooperative Agreements may not be charged against this Cooperative Agreement. Likewise, the Recipient may not charge costs allowable under this Project, including any portion of its cost share to the Federal Government under any other contracts, grants, or Cooperative Agreements. |
|
• |
Only the operating costs directly associated with the proposed work effort (i.e., incremental costs distinct from the daily operational costs) may be recognized as allowable costs for cost-sharing purposes if adequately supported and properly documented. |
|
• |
DOE will not share in the acquisition costs of any fuel other than coal, under this Clean Coal Power Initiative, unless prior written approval is obtained from the DOE Contracting Officer. The cost of natural gas for flare operation and gasifier start-up and commissioning is, however, an allowable cost and includes natural gas for initial and subsequent startups. The DOE share of natural gas cost for Budget Period 2b shall not exceed $ [**]. |
|
• |
Previously expended research or development costs are unallowable. |
|
• |
DOE shall not accept valuation for property sold, transferred, exchanged, or manipulated in any way to acquire a new basis for depreciation purposes or to establish a fair use value in circumstances that would amount to a transaction for the purpose of the Cooperative Agreement. |
|
• |
Interest on borrowings (however represented) and other financial costs such as bond discounts, cost of financing and refinancing capital (net worth plus long-term liabilities), are unallowable Project costs. This includes interest on funds borrowed for construction. |
|
• |
DOE will not share in both the direct cost and depreciation on the same item. Depreciation is not allowable for cost sharing on any item charged to the Project as a direct cost. For example, DOE will cost share the direct cost on equipment or facilities purchased or constructed for the Project; but, will not also cost share the depreciation. |
|
• |
The value of patents and data contributed to the Project is unallowable. |
|
• |
Facilities capital cost of money shall be an unallowable cost on all real property or equipment acquired by or on behalf of the Recipient in connection with the performance of the Project. |
|
• |
Forgone fees, forgone profits, or forgone revenues as well as replacement power costs are not allowable costs. |
|
• |
Fee or profit paid to any member of the proposing team having a substantial and direct interest in the commercialization of the demonstration technology is unallowable. Competitive subcontracts, where a proposing team member is selected for award of a subcontract, placed with the prior written consent of the Contracting Officer and subcontracts for routine supplies and services are not covered by this prohibition. |
|
• |
Business losses are unallowable. |
NOTE: See Federal Acquisition Regulations (FAR) 31.2 for the complete Cost Principles and Procedures applicable to Commercial Organizations.
2.10 |
Payment Procedures *Reimbursement Through the Automated Standard Application for Payments (ASAP) System (OCT 2004) |
(a) |
Method of Payment. Payment will be made by reimbursement through the Department of Treasury's ASAP system. |
(b) |
Requesting Reimbursement. Requests for reimbursements must be made through the ASAP system. Your requests for reimbursement should coincide with your normal billing pattern, but not more frequently than every two weeks. Each request must be limited to the amount of disbursements made for the federal share of direct project costs and the proportionate share of allowable indirect costs incurred during that billing period. |
(c) |
Adjusting payment requests for available cash. You must disburse any funds that are available from repayments to and interest earned on a revolving fund, program income, rebates, refunds, contract settlements, audit recoveries, credits, discounts, and interest earned on any of those funds before requesting additional cash payments from DOE. |
(d) |
Payments. All payments are made by electronic funds transfer to the bank account identified on the ASAP Bank Information Form that you filed with the U.S. Department of Treasury. |
(e) |
Invoice documentation shall include the following information: |
|
(1) |
Name and address of recipient/vendor. |
|
(2) |
Invoice date. |
|
(3) |
Award number. |
|
(4) |
Project Billing Cost Report: Detailed breakdown on the monthly expenses showing Travel and Living Expenses, Direct Materials, Outside Services, Direct Labor, Overheads/Fringe Benefits less cost shares. This is shown for the current period and cumulative. |
|
(5) |
DOE Allowable Overhead Calculations: Showing the labor, allowable and unallowable overheads. |
|
(6) |
Name (where practicable), title, phone number and complete mailing address of responsible official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment). |
|
(7) |
Name (where practicable), title, phone number and complete mailing address of the person to be notified in the event of a defective invoice. |
|
(8) |
Total charges for the month by Work Order Sub: Total charges, labor dollars, labor hours, overheads, employee expenses, outside services, resource usage, and other expenses. |
|
(9) |
Current month SCS billing that summarizes expenses on the Project. |
2.11 |
Continuation Application and Funding |
|
(a) |
Continuation Application. A continuation application is a non-competitive application for an additional budget period within a previously approved Project period. At least 90 days before the end of each budget period, you must submit to the DOE Project Officer identified in Block 11 and the DOE Award Administrator identified in Block 12 of the Notice of Financial Assistance Award your continuation application, which includes the following information: |
1. A report on your progress towards meeting the objectives of the Project, including any significant findings, conclusions, or developments, and an estimate of any unobligated balances remaining at the end of the budget period. If the remaining unobligated balance is estimated to exceed 20 percent of the funds available for the budget period, explain why the excess funds have not been obligated and how they will be used in the next budget period.
2. A detailed budget and supporting justification for the upcoming budget period if additional funds are requested, a reduction of funds is anticipated, or a budget for the upcoming budget period was not approved at the time of award.
3. A description of your plans for the conduct of the Project during the upcoming budget period, if there are changes from the DOE approved application.
|
(b) |
Continuation Funding. Continuation funding is contingent on (1) availability of funds; (2) satisfactory progress towards meeting the Statement of Project Objectives; (3) submittal of required reports; and (4) compliance with the terms and conditions of the award. |
|
(c) |
The continuation application shall be submitted on the DOE Form 424A. Technical and budgetary information supporting the continuation application shall be provided in accordance with 10 CFR 600.26. Forms for submission of continuation applications can be found at http://www.netl.doe.gov/business/index.html .” |
2.12 |
Property Management and Disposition |
Equipment procured under this award to the Recipient will be installed at the premises of Mississippi Power Company (Teaming Member, subcontractor and host site to the Project) (hereinafter referred to as the “hosting entity”). Such hosting entity is the owner of the facility at which the Project is to be performed and will take title to the procured equipment. Such title vesting in the hosting entity will not void DOE’s ability to share financial benefit from any property disposition.
Title to all real property, equipment and supplies (excluding Government-furnished property) acquired by or on behalf of the hosting entity in connection with performance of the Project shall vest upon acquisition and completion of the Project in the above referenced hosting entity. The hosting entity shall make such property available for use in the Project. During the period of the Cooperative Agreement, the hosting entity may, with the DOE Contracting Officer's prior approval, encumber its title to or dispose of such property. Should said property be sold during the Project period, DOE shall share in the sale proceeds at DOE’s overall project cost-share ratio. After completion of the demonstration period the hosting entity retains unconditional title and has no further obligation to DOE with respect to the property. The Contracting Officer grants consent for the purchase of equipment, fuels, materials, and services consistent with Recipient’s application.
The cost of disposal of the Demonstration Facility is an allowable cost only if proposed and included in the cost estimate for Demonstration/Operations.
The use, management, and disposition of all government-furnished property shall be governed by 10 CFR §§ 600.320 thru 600.324.
2.13 |
Real Property - None (JAN 1999) |
No land is anticipated to be procured under this award.
2.14 |
Federally Owned Property (Government-Furnished) - None (JAN 1999) |
It is not anticipated that any Government-furnished property will be provided under this award.
2.15 |
Key Personnel |
Personnel considered to be essential and key to the work being performed hereunder are specified below:
|
NAME |
TITLE |
TELEPHONE |
COMPANY |
|
[**] |
Project Manager |
[**] |
KBR |
|
[**] |
Program Manager |
[**] |
SCS |
|
[**] |
Project Manager |
[**] |
SCS |
|
[**] |
Business Manager |
[**] |
SCS |
|
[**] |
Project Director |
[**] |
MPC |
The personnel specified in this clause are considered to be essential to the Project. Before removing or replacing any key personnel, the Recipient shall notify the Contracting Officer reasonably in advance and shall
submit justification (including proposed substitutions) in sufficient detail to permit evaluation of the impact on the project. No key personnel may be substituted without the Contracting Officer's approval. Such approval shall be obtained in advance of the substitution, except that the Contracting Officer may ratify a substitution which, because of exigent circumstances, was made before the Recipient could request and/or obtain the Contracting Officer's approval.
2.16 |
Project Site and Access |
The Project shall be performed principally at the Mississippi Power Company site in Kemper County, MS. At the request of the DOE Contracting Officer or the COR, the Recipient shall provide Government officials and interested members of the public as determined by DOE with access to the Project site(s) to observe project operations at reasonable times, with reasonable limitations on the number of people during each visit, and subject to compliance with applicable site safety and security requirements.
2.17 |
Paperwork Reduction – Cooperative Agreements (SEPT 2002) |
The award is subject to the requirements of the Paperwork Reduction Act of 1980 as implemented by the Office of Management and Budget rules, "Controlling Paperwork Burdens on the Public,” published at 5 CFR 1320.
The Recipient shall submit any proposed sponsored information collection to the person identified on the DOE F 4600.1 (Award Face Page, Block 12). The proposal shall be submitted at least 120 days prior to the intended date of information collection. DOE will seek the requisite approval from the Office of Management and Budget (OMB) and will promptly notify the Recipient of the disposition of the request.
2.18 |
Public Access to Information (APR 2000) |
The Freedom of Information Act, as amended, and the DOE implementing regulations (10 CFR 1004) require DOE to release certain documents and records regarding awards to any person who provides a written request. The intended use of the information will not be a criterion for release.
2.19 |
Compliance with Buy American Act (OCT 2004) |
In accepting this award, the Recipient agrees to comply with sections 2 through 4 of the Act of March 3, 1933 (41 U.S.C. 10a-10c, popularly known as the “Buy American Act”). The Recipient should review the provisions of the Act to ensure that expenditures made under this award are in accordance with it.
2.20 |
Notice Regarding the Purchase of American-Made Equipment and Products – Sense of Congress (OCT 2004) |
It is the sense of the Congress that, to the greatest extent practicable, all equipment and products purchased with funds made available under this award should be American-made.
2.21 |
Lobbying Restrictions (OCT 2004) |
By accepting funds under this award, Recipient agrees that none of the funds obligated on the award shall be made available for any activity or the publication or distribution of literature that in any way tends to promote public support or opposition to any legislative proposal on which Congressional action is not complete. This restriction is in addition to those prescribed elsewhere in statute and regulation.
2.22 |
Notice Regarding Unallowable Costs and Lobbying Activities (NOV 1998) |
Recipients of financial assistance are cautioned to carefully review the allowable cost and other provisions applicable to expenditures under their particular award instruments. If financial assistance funds are spent for purposes or in amounts inconsistent with the allowable cost or any other provisions governing expenditures in an award instrument, the government may pursue a number of remedies against the Recipient, including in appropriate circumstances, recovery of such funds, termination of the award, suspension or debarment of the
Recipient from future awards, and criminal prosecution for false statements.
Particular care should be taken by the Recipient to comply with the provisions prohibiting the expenditure of funds for lobbying and related activities. Financial assistance awards may be used to describe and promote the understanding of scientific and technical aspects of specific energy technologies, but not to encourage or support political activities such as the collection and dissemination of information related to potential, planned or pending legislation.
2.23 |
Reporting (NOV 1998) |
Failure to comply with the reporting requirements contained in this award will be considered a material noncompliance with the terms of the award. Noncompliance may result in a withholding of future payments, suspension or termination of the current award, and withholding of future awards. A willful failure to perform, a history of failure to perform, or of unsatisfactory performance of this and/or other financial assistance awards, may also result in a debarment action to preclude future awards by Federal agencies.
2.24 |
Recipient Press Releases (APR 1998) |
The DOE policy and procedure on planned press releases requires that all Recipient press releases be reviewed and approved by DOE prior to issuance. Therefore, the Recipient shall, at least ten (10) days prior to the planned issue date, submit a draft copy to the Contracting Officer of any planned press releases related to work performed under this award. The Contracting Officer will then obtain necessary reviews and clearances and provide the Recipient with the results of such reviews prior to the planned issue date.
2.25 |
Publication of Results/Acknowledgment Statement (MAR 2004) |
Publications, as well as reports prepared under this award shall contain the following acknowledgment statement:
"This (_________________) was prepared with the support of the U.S. Department of Energy, under Award Number DE-FC26-06NT42391. However, any opinions, findings, conclusions, or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the DOE".
2.26 |
National Environmental Policy Act (NEPA) Requirements |
You are restricted from taking any action using Federal funds that would have an adverse effect on the environment or limit the choice of reasonable alternatives prior to DOE providing either a NEPA clearance or a final NEPA decision regarding this Project. DOE shall not share in any Project cost for the Kemper County, MS Project unless and until DOE issues a Record of Decision approving the Project. This restriction does not preclude the Recipient from completing activities associated with Phase IIb of Budget Period 2b at the Recipient’s expense – reference the Statement of Project Objectives. Parties agree that all Phase IIb costs shall be absorbed by the Recipient. Allowable Phase IIIb costs of Budget Period 2b incurred by the Recipient for the Kemper County, MS Project prior to the issuance of a Record of Decision (ROD) are not subject to reimbursement by DOE until after the issuance of an ROD approving the Project.
Prior to the completion and issuance of the ROD, DOE agrees to discuss with the Recipient any proposed conditions and requirements that may be included in the ROD if DOE approves the proposed action. While DOE intends to avoid surprise or undue hardship for the Recipient, DOE retains sole discretion on whether to include in the ROD any conditions and requirements. If DOE approves in the ROD the proposed action subject to specific conditions, limitations, mitigation requirements, and/or monitoring requirements, the Recipient agrees to:
a) abide by the conditions, limitations, mitigation requirements, and/or monitoring requirements specified in the ROD;
b) negotiate changes to the project schedule, costs, and/or scope as necessary to effect the requirements or conditions in the ROD;
c) allow DOE’s authorized representatives the right to visit the site and facilities at reasonable times and upon reasonable notice to verify compliance with any conditions and requirements in the ROD; and
d) submit data or otherwise meet specified reporting requirements that may be in the ROD.
If the Recipient finds the conditions and requirements to be unacceptable, the Recipient reserves the right withdraw from the Project upon written notice to DOE, as prescribed under 10 CFR § 600.351(a)(3).
2.27 |
Environmental, Safety & Health (OCT 2003) |
The recipient must comply with applicable Federal, State, and local environmental, safety and health laws and regulations for work performed under this award.
2.28 |
Hazardous Wastes Manifests and Labels (MAR 2003) |
The Recipient shall not identify, on wastes manifests or container labels or otherwise, DOE or NETL as the owner or generator of hazardous wastes without written permission, signed by either the NETL Director or both the NETL Contracting Officer and the NETL ES&H Division Director, unless expressly and specifically permitted by the award.
2.29 |
Permits and Licenses |
Within sixty (60) days of the award date (identified in Block 21 on the face page) of amendment A004 to this Cooperative Agreement, the Recipient shall submit to the DOE Project Officer a list of ES&H approvals that, in the Recipient’s opinion, shall be required to complete the work under this award. The list shall include the topic of the approval being sought, the approving authority, and the expected submittal/approval schedule. The DOE Project Officer shall be notified as specific items are added or removed from the list and processed through their approval cycles.
The Recipient agrees to include this clause in first-tier subcontracts and agrees to enforce the terms of this clause.
2.30 |
Insurance |
(a) |
Within 120 days of the award date (identified in Block 21 on the face page) of amendment A004 to this Cooperative Agreement, the Recipient must submit to DOE an updated risk management plan for this Project. The insurance requirements on the part of the Recipient for this Project shall be as set forth in its submitted plan. Such plan must be approved by a letter from the DOE Contracting Officer. The Recipient shall provide evidence that DOE has been named as an additional insured on the appropriate policies. |
(b) |
Indemnity |
The Recipient shall indemnify the Government and its officers, agents, or employees for any and all liability, including litigation expenses and attorneys’ fees, arising from suits, actions, or claims of any character for death, bodily injury, or loss of or damage to property or to the environment, resulting from the fault or negligence of the Recipient in performing the Project under this Cooperative Agreement.
2.31 |
Limitation of DOE Liability (MAR 2002) |
Awards under this part are subject to the requirement that the maximum DOE obligation to the recipient is the amount shown in the Notice of Financial Assistance Award as the amount of DOE funds obligated. DOE shall not be obligated to make any additional, supplemental, continuation, renewal or other awards for the same or
any other purpose.
2.32 |
Termination (MAR 2002) |
The Cooperative Agreement may be terminated in accordance with 10 CFR 600.351.
2.33 |
Records Retention, Access, and Disclosure (MAR 2002) |
(a) |
Period of Retention |
The Recipient shall retain all financial and performance records, supporting documents, statistical records, and other records of the Recipient which are required to be retained by the terms of this Cooperative Agreement, and any other records the Recipient reasonably considers to be pertinent to this Cooperative Agreement. The period of required retention shall be from the date each such record is created or received by the Recipient until three years after one of the following dates, whichever is latest: the expiration date of this Cooperative Agreement; the date the Recipient's final expenditure report is submitted to DOE; or if this Cooperative Agreement is terminated in its entirety, the effective date of the termination. If any claim, litigation, negotiation, investigation, audit, or other action involving the records starts before the expiration of the three-year retention period, the Recipient shall retain the records until such action is completed and all related issues are resolved, or until the end of the three-year retention period, whichever is later.
(b) |
Authorized Copies |
Copies made by microfilm, photocopying, or similar methods may be substituted for original records. Records originally created by computer may be retained on an electronic medium, provided such medium is "read only" or is protected in such a manner that the electronic record can be authenticated as an original record.
(c) |
Access to Records |
Subject to any legitimate claims of Attorney/Client Privilege as determined by a court of competent jurisdiction, DOE and the Comptroller General of the United States, or any of their authorized representatives, shall have the right of access to any books, documents, papers, or other records (including those on electronic media) which are pertinent to this Cooperative Agreement. The purpose of such access is limited to the making of audits, examinations, excerpts, and transcripts. The right of access described in this paragraph shall last as long as the Recipient retains records which are pertinent to this Cooperative Agreement.
(d) |
Restrictions on Public Disclosure |
The Federal Freedom of Information Act 5 USC Section 552 does not apply to records the Recipient is required to retain by the terms of this Cooperative Agreement to the extent that the records are not also in the possession of the Government. Unless otherwise required by law or a court of competent jurisdiction, the Recipient shall not be required to disclose such records to the public.
2.34 |
Severability (MAR 2002) |
If a court of competent jurisdiction or the DOE Financial Assistance Appeals Board determines that any part of this Cooperative Agreement is invalid, void, unenforceable, or inconsistent with any applicable Federal statute or regulation, such part shall be deemed to have been amended or deleted to conform to such determination.
2.35 |
Performance of Work in the United States (AUG 2003) |
The Recipient agrees that at least 75% of the direct labor cost for the project (including subcontractor labor) will be incurred in the United States unless the Recipient can demonstrate to the satisfaction of the DOE that the
United States economic interest will be better served through a greater percentage of work performed outside the United States.
2.36 |
RESERVED |
2.37 |
Annual Indirect Cost Proposal and Reconciliation (OCT 2004) |
(a) |
In accordance with the applicable cost principles, Recipient must submit an annual indirect cost proposal, reconciled to Recipient’s financial statements, within six months after the close of each fiscal year, unless Recipient has negotiated a predetermined or fixed indirect rate(s), or fixed amount for indirect or facilities and administration (F&A) costs. |
(b) |
Recipient should submit its annual indirect cost proposal directly to the cognizant agency for negotiating and approving indirect costs. If DOE is the cognizant agency, send your proposal to the Cognizant Department of Energy Office (CDO). If Recipient does not have a cognizant agency or if Recipient does not know the DOE CDO, contact the DOE Award Administrator identified in Block 12 of the Notice of Financial Assistance Award. |
2.38 |
Conditions on Award |
The Recipient is not authorized to proceed into Phase IV of Budget Period 2b without prior DOE approval.
(a) |
Estimated Cost of Award |
The estimated cost of the award is based on the Recipient’s revised budget application dated February 2008 and reflects estimated costs available at that time. The Recipient agrees that all costs expended in Phase IIb of Budget Period 2b will be absorbed by Recipient. DOE agrees to share costs in Phase IIIb of Budget Period 2b upon Recipient’s submission and DOE’s approval of an updated detailed cost breakdown for Phase IIIb. DOE’s agreement to share costs in Phase IV of Budget Period 2b is subject to the conditions of this Article and to DOE receiving a detailed breakdown of the expected project costs for Phase IV at least 90 days before the scheduled end of Phase IIIb. DOE will review each detailed cost breakdown and will provide SCS with any comments on such detailed cost breakdown within ninety (90) days of receipt thereof. In the event that DOE disputes the allowability of particular cost items in the detailed cost breakdown, SCS and DOE will conduct discussions to resolve any such issues. If issues on particular cost items cannot be resolved, SCS will have the option of proceeding with the Project without seeking DOE funding for any such particular cost items.
2.39 |
Withholding of Funds |
(A) The parties agree that $ [**] ( [**] dollars) of the DOE-obligated funds will be deferred for payment during Phase IV of Budget Period 2b (the Demonstration Phase) in the manner set forth in items (A)(1), (A)(2) and (A)(3) below.
(1) During Phase IV of the Project, Recipient will submit invoices to DOE in the normal course of business as provided under the cooperative agreement, and DOE will reimburse Recipient for allowable costs in the manner provided under the cooperative agreement.
(2) Each year during Phase IV of the Project, DOE will have the right to withhold up to $1,500,000 (one million five hundred thousand dollars) if Recipient fails to submit to DOE all of the required reports for that year as defined by the cooperative agreement.
(3) Once DOE has paid to Recipient $ [**] ( [**] dollars) in DOE funds, DOE will disburse the remaining funds for allowable costs earned and invoiced by Recipient as follows:
(a) $5,000,000 upon Recipient’s submission of complete final deliverables, including the Patent Certification and the Final Scientific/Technical Report.
(b) $5,000,000 upon DOE's acceptance of Recipient’s Final Scientific/Technical Report. DOE shall have 60 days after receipt of the Final Scientific/Technical Report (or any revised versions) to provide Recipient with comments and/or concurrence. Upon receipt of DOE’s comments, the Recipient shall have 60 days to revise the Final Scientific/Technical Report and resubmit it to DOE (if necessary). Should DOE not provide comments within the 60 days period, the Final Scientific/Technical Report shall be deemed to be accepted and the remaining funds will be disbursed.
SECTION III -INTELLECTUAL PROPERTY PROVISIONS
3.1 |
Intellectual Property Provisions (JAN 2004) |
The patent and technical data clauses included in this section apply to this award. As used in these applicable clauses, the term "Patent Counsel" refers to the following point of contact:
|
Intellectual Property Law Division |
|
U.S. Department of Energy |
|
Chicago Operations Office |
|
9800 South Cass Avenue |
|
Argonne, IL 60439 |
In reading these provisions, any reference to “contractor” shall mean “recipient”, and any reference to “contract” or “subcontract” shall mean “award” or “sub-award”.
The Recipient shall include intellectual property clauses in any sub-award in accordance with requirements of the clauses in this section and of 10 CFR Parts 600.136 or 600.325 as appropriate.
3.2 |
Confidential Business Information (JAN 2004) |
Information represented to the Department as being confidential business information, and which does not include “Technical Data” as that term is defined in the “Rights in Data” clause in this agreement, shall be submitted as an attachment to the required reports and will be withheld from disclosure outside the U.S. Government to the extent permitted by law. Such attachment and each page therein shall be stamped with the following legend and no other:
|
CONFIDENTIAL BUSINESS INFORMATION |
The Recipient considers the material furnished herein to contain confidential business information which is to be withheld from disclosure outside the U.S. Government to the extent permitted by law.
3.3 |
52.227-1 Authorization and Consent (JUL 1995) - Alternate I (APR 1984) |
(a) |
The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. |
(b) |
The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. |
3.4 |
52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (AUG 1996) |
(a) |
The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. |
(b) |
In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. |
(c) |
The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. |
3.5 |
52.227-3 Patent Indemnity (APR 1984) |
(a) |
The Contractor shall indemnify the Government and its officers, agents, and employees against liability, including costs, for infringement of any United States patent (except a patent issued upon an application that is now or may hereafter be withheld from issue pursuant to a Secrecy Order under 35 U.S.C. 181) arising out of the manufacture or delivery of supplies, the performance of services, or the construction, alteration, modification, or repair of real property (hereinafter referred to as “construction work”) under this contract, or out of the use or disposal by or for the account of the Government of such supplies or construction work. |
(b) |
This indemnity shall not apply unless the Contractor shall have been informed as soon as practicable by the Government of the suit or action alleging such infringement and shall have been given such opportunity as is afforded by applicable laws, rules, or regulations to participate in its defense. Further, this indemnity shall not apply to - |
|
(1) |
An infringement resulting from compliance with specific written instructions of the Contracting Officer directing a change in the supplies to be delivered or in the materials or equipment to be used, or directing a manner of performance of the contract not normally used by the Contractor; |
|
(2) |
An infringement resulting from addition to or change in supplies or components furnished or construction work performed that was made subsequent to delivery or performance; or |
|
(3) |
A claimed infringement that is unreasonably settled without the consent of the Contractor, unless required by final decree of a court of competent jurisdiction. |
3.6 |
952.227-9 Refund of Royalties (FEB 1995) |
(a) |
The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. |
(b) |
The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract here-under. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that is represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. |
(c) |
The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. |
(d) |
The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. |
(e) |
If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved |
in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount.
(f) |
The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. |
3.7 |
Patent Rights (Large Business Firms) - No Waiver (OCT 2003) |
(a) |
Definitions |
DOE patent waiver regulations, as used in this clause, means the Department of Energy patent waiver regulations in effect on the date of award. See 10 CFR Part 784.
Invention, as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.).
Patent Counsel, as used in this clause, means the Department of Energy Patent Counsel assisting the awarding activity.
Subject invention, as used in this clause, means any invention of the Recipient conceived or first actually reduced to practice in the course of or under this agreement.
(b) |
Allocations of Principal Rights |
|
(1) |
Assignment to the Government. The Recipient agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Recipient under subparagraph (b)(2) and paragraph (d) of this clause. |
|
(2) |
Greater rights determinations. The Recipient, or an employee-inventor after consultation with the Recipient, may request greater rights than the nonexclusive license in the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulation. Each determination of greater rights under this agreement shall be subject to paragraph (c) of this clause, unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. |
(c) |
Minimum Rights Acquired by the Government |
With respect to each subject invention to which the Department of Energy grants the Recipient principal or exclusive rights, the Recipient agrees to grant to the Government: A nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency); "march-in rights" as set forth in 37 CFR 401.14(a)(J)); preference for U.S. industry as set forth in 37 CFR 401.14(a)(I); periodic reports upon request, no more frequently than annually, on the utilization or intent of utilization of a subject invention in a manner consistent with 35 U.S.C. 202(c)(5); and such Government rights in any instrument transferring rights in a subject invention.
(d) |
Minimum Rights to the Recipient |
|
(1) |
The Recipient is hereby granted a revocable, nonexclusive, royalty-free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Recipient fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Recipient's license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Recipient is a part and includes the right to grant sublicenses of the same scope to the extent the Recipient was legally |
obligated to do so at the time the agreement was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Recipient's business to which the invention pertains.
|
(2) |
The Recipient may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the minimum rights acquired by the Government similar to paragraph (c) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. |
(e) |
Invention Identification, Disclosures, and Reports |
|
(1) |
The Recipient shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Recipient personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this agreement. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Recipient shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. |
|
(2) |
The Recipient shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Recipient personnel responsible for patent matters or, if earlier, within 6 months after the Recipient becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such invention known to the Recipient. The disclosure to DOE shall be in the form of a written report and shall identify the agreement under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Recipient shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Recipient. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Recipient contends in writing at the time the invention is disclosed that it was not so made. |
|
(3) |
The Recipient shall furnish the Contracting Officer a final report, within 3 months after completion of the work listing all subject inventions or containing a statement that there were no such inventions, and listing all sub-awards/contracts at any tier containing a patent rights clause or containing a statement that there were no such sub-awards/contracts. |
|
(4) |
The Recipient agrees to require, by written agreement, its employees, other than clerical and non-technical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Recipient each subject invention made under sub-award/contract in order that the Recipient can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. |
|
(5) |
The Recipient agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. |
(f) |
Examination of Records Relating to Inventions |
|
(1) |
The Contracting Officer or any authorized representative shall, until 3 years after final payment under this agreement, have the right to examine any books (including laboratory notebooks), records, and documents of the Recipient relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this agreement to determine whether – |
|
(i) |
Any such inventions are subject inventions; |
|
(ii) |
The Recipient has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; |
|
(iii) |
The Recipient and its inventors have complied with the procedures. |
|
(2) |
If the Contracting Officer learns of an unreported Recipient invention which the Contracting Officer believes may be a subject invention, the Recipient may be required to disclose the invention to DOE for a determination of ownership rights. |
|
(3) |
Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. |
(g) |
Sub-Award/Contract |
|
(1) |
The recipient shall include the clause PATENT RIGHTS (SMALL BUSINESS FIRMS AND NONPROFIT ORGANIZATIONS) (suitably modified to identify the parties) in all sub-awards/contracts, regardless of tier, for experimental, developmental, demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the sub-award/contract is subject to an Exceptional Circumstances Determination by DOE. In all other sub-awards/contracts, regardless of tier, for experimental, developmental, demonstration, or research work, the Recipient shall include this clause (suitably modified to identify the parties), or an alternate clause as directed by the contracting officer. The Recipient shall not, as part of the consideration for awarding the sub-award/contract, obtain rights in the sub-recipient's/contractor's subject inventions. |
|
(2) |
In the event of a refusal by a prospective sub-recipient/contractor to accept such a clause the Recipient: |
|
(i) |
Shall promptly submit a written notice to the Contracting Officer setting forth the sub-recipient/contractor's reasons for such refusal and other pertinent information that may expedite disposition of the matter; and |
|
(ii) |
Shall not proceed with such sub-award/contract without the written authorization of the Contracting Officer. |
|
(3) |
In the case of sub-awards/contracts at any tier, DOE, the sub-recipient/contractor, and Recipient agree that the mutual obligations of the parties created by this clause constitute a contract between the sub-recipient/contractor and DOE with respect to those matters covered by this clause. |
|
(4) |
The Recipient shall promptly notify the Contracting Officer in writing upon the award of any sub-award/contract at any tier containing a patent rights clause by identifying the sub-recipient/contractor, the applicable patent rights clause, the work to be performed under the sub-award/contract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Recipient shall furnish a copy of such sub-award/contract, and, no more frequently than |
annually, a listing of the sub-awards/contracts that have been awarded.
|
(5) |
The Recipient shall identify all subject inventions of a sub-recipient/contractor of which it acquires knowledge in the performance of this agreement and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. |
(h) |
Atomic Energy |
(1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this agreement.
(2) Except as otherwise authorized in writing by the Contracting Officer, the Recipient will obtain patent agreements to effectuate the provisions of subparagraph (h)(1) of this clause from all persons who perform any part of the work under this agreement, except non-technical personnel, such as clerical employees and manual laborers.
(i) Publication
It is recognized that during the course of the work under this agreement, the Recipient or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this agreement. In order that public disclosure of such information will not adversely affect the patent interests of DOE or the Recipient, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication.
(j) |
Forfeiture of Rights in Unreported Subject Invention |
(1) The Recipient shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Recipient fails to report to Patent Counsel within six months after the time the Recipient:
(i) Files or causes to be filed a United States or foreign patent application thereon; or
(ii) Submits the final report required by subparagraph (e)(3) of this clause, whichever is later.
(2) However, the Recipient shall not forfeit rights in a subject invention if, within the time specified in\sub-paragraph (e)(2) of this clause, the Recipient:
(i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the agreement and delivers the decision to Patent Counsel, with a copy to the Contracting Officer, or
(ii) Contending that the invention is not a subject invention, the Recipient nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy of the Contracting Officer; or
(iii) Establishes that the failure to disclose did not result from the Recipient's fault or negligence.
(3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this agreement), the Recipient shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (j) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions.
3.8 |
Rights in Data – Programs Covered Under Special Data Statutes (OCT 2003) |
(a) |
Definitions |
Computer Data Bases, as used in this clause, means a collection of data in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. The term does not include computer software.
Computer software, as used in this clause, means (i) computer programs which are data comprising a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations and (ii) data comprising source code listings, design details, algorithms, processes, flow charts, formulae and related material that would enable the computer program to be produced, created or compiled. The term does not include computer data bases.
Data, as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. The term does not include information incidental to administration, such as financial, administrative, cost or pricing or management information.
Form, fit, and function data, as used in this clause, means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability as well as data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements except that for computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithm, process, formulae, and flow charts of the software.
Limited rights data, as used in this clause, means data (other than computer software) developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged.
Restricted computer software, as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and confidential or privileged; or is published copyrighted computer software; including modifications of such computer software.
Protected data, as used in this clause, means technical data or commercial or financial data first produced in the performance of the award which, if it had been obtained from and first produced by a non-federal party, would be a trade secret or commercial or financial information that is privileged or confidential under the meaning of 5 U.S.C. 552(b)(4) and which data is marked as being protected data by a party to the award.
Protected rights, as used in this clause, mean the rights in protected data set forth in the Protected Rights Notice of paragraph (g) of this clause.
Technical data, as used in this clause, means that data which are of a scientific or technical nature. Technical data does not include computer software, but does include manuals and instructional materials and technical data formatted as a computer data base.
Unlimited rights, as used in this clause, means the right of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose whatsoever, and to have or permit others to do so.
(b) |
Allocation of Rights |
|
(1) |
Except as provided in paragraph (c) of this clause regarding copyright, the Government shall have unlimited rights in – |
|
(i) |
Data specifically identified in this agreement as data to be delivered without restriction; |
|
(ii) |
Form, fit, and function data delivered under this agreement; |
|
(iii) |
Data delivered under this agreement (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair of items, components, or processes delivered or furnished for use under this agreement; and |
|
(iv) |
All other data delivered under this agreement unless provided otherwise for protected data in accordance with paragraph (g) of this clause or for limited rights data or restricted computer software in accordance with paragraph (h) of this clause. |
|
(2) |
The Recipient shall have the right to – |
|
(i) |
Protect rights in protected data delivered under this agreement in the manner and to the extent provided in paragraph (g) of this clause; |
|
(ii) |
Withhold from delivery those data which are limited rights data or restricted computer software to the extent provided in paragraph (h) of this clause; |
|
(iii) |
Substantiate use of, add, or correct protected rights or copyrights notices and to take other appropriate action, in accordance with paragraph (e) of this clause; and |
|
(iv) |
Establish claim to copyright subsisting in data first produced in the performance of this agreement to the extent provided in subparagraph (c)(1) of this clause. |
(c) |
Copyright |
|
(1) |
Data first produced in the performance of this agreement. Except as otherwise specifically provided in this agreement, the Recipient may establish, without the prior approval of the Contracting Officer, claim to copyright subsisting in any data first produced in the performance of this agreement. If claim to copyright is made, the Recipient shall affix the applicable copyright notice of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including agreement number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U.S. Copyright Office. For such copyrighted data, including computer software, the Recipient grants to the Government, and others acting on its behalf, a paid-up nonexclusive, irrevocable, worldwide license to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government, for all such data. |
|
(2) |
Data not first produced in the performance of this agreement. The Recipient shall not, without prior written permission of the Contracting Officer, incorporate in data delivered under this agreement any data that are not first produced in the performance of this agreement and that contain the copyright notice of 17 U.S.C. 401 or 402, unless the Recipient identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (c)(1) of this clause; provided, however, that if such data are computer software, the Government shall acquire a copyright license as set forth in subparagraph (h)(3) of this clause if included in this agreement or as otherwise may be provided in a collateral agreement incorporated or made a part of this agreement. |
|
(3) |
Removal of copyright notices. The Government agrees not to remove any copyright notices placed on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. |
(d) |
Release, Publication and Use of Data |
|
(1) |
The Recipient shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Recipient in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided in this paragraph of this clause or expressly set forth in this contract. |
|
(2) |
The Recipient agrees that to the extent it receives or is given access to data necessary for the performance of this agreement which contain restrictive markings, the Recipient shall treat the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. |
(e) |
Unauthorized Marking of Data |
|
(1) |
Notwithstanding any other provisions of this agreement concerning inspection or acceptance, if any data delivered under this agreement are marked with the notices specified in subparagraph (h)(2) or (h)(3) of this clause and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this agreement, the Contracting Officer may at any time either return the data to the Recipient or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. |
|
(i) |
The Contracting Officer shall make written inquiry to the Recipient affording the Recipient 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; |
|
(ii) |
If the Recipient fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will no longer be made subject to any disclosure prohibitions. |
|
(iii) |
If the Recipient provides written justification to substantiate the propriety of the markings within the period set in subdivision (e)(1)(i) of this clause, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be cancelled or ignored. If the Contracting Officer determines that the markings are authorized, the Recipient shall be so notified in writing. If the Contracting Officer determines, with concurrence of the head of the contracting activity, that the markings are not authorized, the Contracting Officer shall furnish the Recipient a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Recipient files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officer's decision. The Government shall continue to abide by the markings under this subdivision (e)(1)(iii) until final resolution of the matter either by the Contracting Officer's determination become final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. |
|
(2) |
The time limits in the procedures set forth in subparagraph (e)(1) of this clause may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. |
(f) |
Omitted or Incorrect Markings |
|
(1) |
Data delivered to the Government without either the limited rights or restricted rights notice as |
authorized by paragraph (g) of this clause, or the copyright notice required by paragraph (c) of this clause, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for the disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Recipient may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Recipient's expense, and the Contracting Officer may agree to do so if the Recipient –
|
(i) |
Identifies the data to which the omitted notice is to be applied; |
|
(ii) |
Demonstrates that the omission of the notice was inadvertent; |
|
(iii) |
Establishes that the use of the proposed notice is authorized; and |
|
(iv) |
Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. |
|
(2) |
The Contracting Officer may also: |
|
(i) |
Permit correction at the Recipient's expense of incorrect notices if the Recipient identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized; or |
|
(ii) |
Correct any incorrect notices. |
(g) |
Rights to Protected Data |
|
(1) |
The Recipient may, with the concurrence of DOE, claim and mark as protected data, any data first produced in the performance of this award that would have been treated as a trade secret if developed at private expense. Any such claimed "protected data" will be clearly marked with the following Protected Rights Notice, and will be treated in accordance with such Notice, subject to the provisions of paragraphs (e) and (f) of this clause. |
PROTECTED RIGHTS NOTICE
These protected data were produced under Agreement Number DE-FC26-06NT42391 with the U.S. Department of Energy and may not be published, disseminated, or disclosed to others outside the Government until five years after the completion of the Demonstration Phase, unless express written authorization is obtained from the recipient. Upon expiration of the period of protection set forth in this Notice, the Government shall have unlimited rights in this data. This Notice shall be marked on any reproduction of this data, in whole or in part.
(End of notice).
|
(2) |
Any such marked Protected Data may be disclosed under obligations of confidentiality for the following purposes: |
|
(i) |
For evaluation purposes under the restriction that the "Protected Data" be retained in confidence and not be further disclosed; |
|
(ii) |
To subcontractors or other team members performing work under the Government's Clean Coal Power Initiative program of which this award is a part, for information or use in connection with the work performed under their activity, and under the restriction that the Protected Data be retained in confidence and not be further disclosed.; or |
(iii) As otherwise allowed in this agreement, use by the Government or others on its behalf to the extent necessary to enable the Government to complete the Statement of Project Objectives (Attachment A) of this agreement.
|
(3) |
The obligations of confidentiality and restrictions on publication and dissemination shall end for any Protected Data: |
|
(i) |
At the end of the protected period; |
|
(ii) |
If the data becomes publicly known or available from other sources without a breach of the obligation of confidentiality with respect to the Protected Data; |
|
(iii) |
If the same data is independently developed by someone who did not have access to the Protected Data and such data is made available without obligations of confidentiality; or |
|
(iv) |
If the Recipient disseminates or authorizes another to disseminate such data without obligations of confidentiality. |
|
(4) |
However, the Recipient agrees that the following types of data are not considered to be protected and shall be provided to the Government when required by this award without any claim that the data are Protected Data. The parties agree that notwithstanding the following lists of types of data, nothing precludes the Government from seeking delivery of additional data in accordance with this award, or from making publicly available additional non-protected data, nor does the following list constitute any admission by the Government that technical data not on the list is Protected Data. |
UNLIMITED RIGHTS DATA
General
[**]
Design
[**]
(5) The Government's sole obligation with respect to any protected data shall be as set forth in this paragraph.
(h) |
Protection of Limited Rights Data |
(1) When data other than that listed in subparagraphs (b)(1)(i), (ii), and (iii) of this clause are specified to be delivered under this agreement and such data qualify as either limited rights data or restricted computer software, the Recipient, if the Recipient desires to continue protection of such data, shall withhold such data and not furnish them to the Government under this agreement. As a condition to this withholding the Recipient shall identify the data being withheld and furnish form, fit, and function data in lieu thereof.
(2) Notwithstanding subparagraph (h)(1) of this clause, the agreement may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Recipient may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, in accordance with such Notice:
LIMITED RIGHTS NOTICE
|
(a) |
These data are submitted with limited rights under Government Agreement Number DE-FC26-06NT42391. These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Recipient, be used for purposes of |
manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure:
|
(1) |
Use (except for manufacture) by Federal support services contractors within the scope of their contracts; |
|
(2) |
This "limited rights data" may be disclosed for evaluation purposes under the restriction that the "limited rights data" be retained in confidence and not be further disclosed; |
|
(3) |
This "limited rights data" may be disclosed to other contractors participating in the Government's program of which this Recipient is a part for information or use (except for manufacture) in connection with the work performed under their awards and under the restriction that the "limited rights data" be retained in confidence and not be further disclosed; |
|
(4) |
This "limited rights data" may be used by the Government or others on its behalf for emergency repair or overhaul work under the restriction that the "limited rights data" be retained in confidence and not be further disclosed; |
|
(5) |
Release to a foreign government, or instrumentality thereof, as the interests of the United States Government may require, for information or evaluation, or for emergency repair or overhaul work by such government. This Notice shall be marked on any reproduction of this data in whole or in part; and |
|
(6) |
As otherwise allowed in this agreement, use by the Government or others on its behalf to the extent necessary to enable the Government to complete the Statement of Project Objectives (Attachment A) of this agreement. |
|
(b) |
This Notice shall be marked on any reproduction of these data, in whole or in part. |
(End of notice)
(h)(3) Notwithstanding subparagraph (h)(1) of this clause, the agreement may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Recipient may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the Notice.
RESTRICTED RIGHTS NOTICE
|
(a) |
This computer software is submitted with restricted rights under Government Agreement Number DE-FC26-06NT42391. It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the agreement. |
|
(b) |
This computer software may be – |
|
(1) |
Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; |
|
(2) |
Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; |
|
(3) |
Reproduced for safekeeping (archives) or backup purposes; |
|
(4) |
Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software are made subject to the same restricted rights; |
|
(5) |
Disclosed to and reproduced for use by support service Contractors in accordance with subparagraph (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; |
|
(6) |
Used or copied for use in or transferred to a replacement computer; and |
|
(7) |
As otherwise allowed in this agreement, use by the Government or others on its behalf to the extent necessary to enable the Government to complete the Statement of Project Objectives (Attachment A) of this agreement. |
|
(c) |
Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. |
|
(d) |
Any other rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated, in, or incorporated in, the agreement. |
|
(e) |
This Notice shall be marked on any reproduction of this computer software, in whole or in part. |
(End of notice)
(ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof:
RESTRICTED RIGHTS NOTICE
Use, reproduction, or disclosure is subject to restrictions set forth in Agreement Number DE-FC26-06NT42391 with Southern Company Services, Inc.
(End of notice)
(iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Recipient includes the following statement with such copyright notice: "Unpublished -- rights reserved under the Copyright Laws of the United States."
(i) |
Sub-award/Contract |
The Recipient has the responsibility to obtain from its sub-recipients/contractors all data and rights therein necessary to fulfill the Recipient's obligations to the Government under this agreement. If a sub-recipient/contractor refuses to accept terms affording the Government such rights, the Recipient shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with sub-award/contract award without further authorization.
(j) |
Additional Data Requirements |
In addition to the data specified elsewhere in this agreement to be delivered, the Contracting Officer may, at anytime during agreement performance or within a period of 3 years after acceptance of all items to be delivered under this agreement, order any data first produced or specifically used in the performance of this agreement. This clause is applicable to all data ordered under this subparagraph. Nothing contained in this subparagraph shall require the Recipient to deliver any data the withholding of which is authorized by this
clause or data which are specifically identified in this agreement as not subject to this clause. When data are to be delivered under this subparagraph, the Recipient will be compensated for converting the data into the prescribed form, for reproduction, and for delivery.
(k) |
The Recipient agrees, except as may be otherwise specified in this agreement for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Recipient's facility any data withheld pursuant to paragraph (h) of this clause, for purposes of verifying the Recipient's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Recipient whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection were made by a particular representative, the Contracting Officer shall designate an alternate inspector. |
3.9 |
Limited Rights Data (JAN 2004) |
The limited rights data subject to the “Rights in Data” clause in this award are listed below. This listing of data, which are asserted by the Recipient to be limited rights data, does not constitute an admission by the Government that the data is in fact limited rights data .
LIMITED RIGHTS DATA
Design
[**]
Operations
|
[**] |
If a patent is issued by the United States Patent and Trademark Office or the patent office of any foreign country based on any information asserted to be limited rights data, the Government will no longer treat any data contained in such issued patent as limited rights data. In addition, if any information asserted to be limited rights data results in or becomes a Subject Invention, as that term is defined in the patent rights clause of this agreement, the Government will only treat such data as limited rights data until the Recipient has filed its initial patent application.
The Recipient shall not introduce or utilize any limited rights data not identified in paragraph (1) above in the performance of the award without the expressed written permission of the Contracting Officer.
3.10 |
Restricted Computer Software (JAN 2004) |
The restricted computer software subject to the provisions of the “Rights in Data” clause in this agreement are listed below. This list of software programs, which are asserted by the Recipient to be restricted computer software, does not constitute an admission by the Government that the software is in fact restricted computer software.
RESTRICTED COMPUTER SOFTWARE
[**]
The Recipient shall not introduce or utilize any restricted computer software not identified above without advance written notification of the Contracting Officer.
3.11 |
Protected Data (JAN 2004) |
The following is a listing of data anticipated to be generated under this award that the Recipient expects will qualify as “Protected Data,” as that term is defined in the “Rights in Data” clause in this award. Incorporating this listing of data into this agreement does not constitute a guarantee by the Government that the data will in fact qualify for this designation.
PROTECTED DATA
[**]
If a patent is issued by the United States Patent and Trademark Office or the patent office of any foreign country based on any information asserted to be Protected Data, the Government will no longer treat any data contained in such issued patent as Protected Data. In addition, if any information asserted to be Protected Data results in or becomes a Subject Invention, as that term is defined in the patent rights clause of this agreement, the Government will only treat such data as Protected Data until the Recipient has filed its initial patent application.
3.12 |
Availability of contract and other data (DEC 2003) |
The Participant will, for the entire period of Participant's participation in the project at the Facility (including operation of the Facility) and for three years thereafter, whether or not under a Government Cooperative Agreement, keep and maintain all technical data, including limited rights data and data obtained from subcontractors and licensors, necessary to construct and/or operate the Facility, and all data including business and financial data necessary to evaluate the technical and economic operation of the Facility. During the entire period of construction and/or operation of the Facility, regardless of whether the Government participates past Design, the Participant shall permit the Government and its representative the right to inspect at the Facility any data kept and maintained pursuant to this paragraph.
3.13 |
Commercialization of Demonstration Technology. (DEC 2003) |
[**]
3.14 |
52.227-23 Rights to Proposal Data (Technical) (JUN 1987) |
Proposal dated June 10, 2004
Except for data contained on pages 1, 2, 5, 6, 8, 10, 11, 12, 14, 16, 17, 18, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 51, 52, 53, 54, 55, 56, 57, 58, 59, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75; Appendix A, - 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13; Appendix B – 1, 2, 3, 4, 5, 6, 7, 8; Appendix C – 1; Appendix D – 2, 3, 18, 19, 20, 21, 23, 24, 27 of the Project Narrative, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the “Rights in Data - General” or the “Rights in Data – Programs Covered Under Special Data Statutes” clause contained in this contract) in and to the technical data contained in the Project Narrative portion of the proposal dated June 10, 2004. All other parts of the proposal are considered to be Limited Rights Data containing sensitive business information and corporate trade secrets of the Recipient and/or of certain subcontractors.
Request to change site from Orlando, Florida to Kemper County, Mississippi (February 2008):
Except for data contained on the 4 cover letters (dated February 12, 2008, February 11, 2008, February 11, 2008 and February 8, 2008, respectively) and pages 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 of the Site Change Request dated February, 2008, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the “Rights in Data - General” or the “Rights in Data – Programs Covered Under Special Data Statutes” clause contained in this contract) in and to the technical data contained in the Site Change Request portion of the proposal dated February, 2008. All other submittals associated with the Site Change Request under this award are considered to be Limited Rights Data containing sensitive business information and corporate trade secrets of the Recipient and/or of certain subcontractors and thus are subject to the restrictions
established by the agreement.
SECTION IV - LIST OF ATTACHMENTS
Attachment A -- Statement of Project Objectives
Attachment B – Reporting Requirements
Attachment C – Budget Page(s)
Attachment D – Amended and Restated Repayment Agreement
ATTACHMENT A
STATEMENT OF PROJECT OBJECTIVES
As of Amendment A004
DEMONSTRATION OF A COAL-BASED TRANSPORT GASIFIER
[**]
DOE F 4600.2 |
ATTACHMENT B |
(10/2001)
All Other Editions are Obsolete |
U.S. Department of Energy |
|
FEDERAL ASSISTANCE REPORTING CHECKLIST |
|
AND INSTRUCTIONS |
1. Identification Number: DE-FC26-06NT42391 |
2. Program/Project Title: Demonstration of a Coal-based Transport Gasifier |
||
3. Recipient: Southern Company Services, Inc. |
|||
4. Reporting Requirements: |
Frequency |
No. of Copies |
Addresses |
[X] Progress Report [X] Special Status Report
II. SCIENTIFIC/TECHNICAL REPORTING
[X] Final Scientific/Technical ReportDOE F 241.3 [X] Topical Report DOE F 241.3 [X] Journal Articles/Conference Papers/Proceedings DOE F 241.3 [ ] DOE 421.4, Software/Manual DOE F 241.3 [ ] Conference Record DOE F 241.3
III. FINANCIAL REPORTING
[X] SF-269 or SF-269A, Financial Status Report [ ] SF-272, Federal Cash Transactions Report
IV. CLOSEOUT REPORTING
[X] DOE F 2050.11, Patent Certification [ ] NETL F 580.1-9, Property Certificate [ ] SF-120, Report of Excess Personal Property
V. OTHER REPORTING
[ ] NETL F 580.1-8, Annual Report of Property in the Custody of Contractors [ ] NETL F 580.1-25, High Risk Property Report [X] Environmental Compliance Plan [X] Environmental Monitoring Plan [X] Environmental Status Report
[X]
Other SEE STATEMENT OF PROJECT
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Q A
FG A A
Q, FG
FC
A A Q
|
Electronic version to NETL>
Electronic version to E-link>
Electronic Version to NETL>
Electronic Version to NETL>
|
FITS@NETL.DOE.GOV
http://www.osti.gov/elink-2413
(Note-software/manual must be sent to award administrator-see instructions under section B-software)
FITS@NETL.DOE.GOV
FITS@NETL.DOE.GOV
|
FREQUENCY CODES AND DUE DATES:
A - As required; see attached text for applicability. FG - Final; within ninety (90) calendar days after the project period ends. FC - Final - End of Effort. Q - Quarterly; within thirty (30) calendar days after end of the calendar quarter or portion thereof. S - Semiannually; within thirty (30) calendar days after end of project year and project half-year. YF - Yearly; 90 calendar days after the end of project year. YP - Yearly Property - due 15 days after period ending 9/30.
|
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5. SPECIAL INSTRUCTIONS: * Reports/Products must be submitted with appropriate DOE F 241. The 241 forms are available at www.osti.gov/elink The forms identified in the checklist are available at http://grants.pr.doe.gov. Alternate formats are acceptable provided the contents remain consistent with the form. |
GENERAL INSTRUCTIONS FOR THE PREPARATION AND SUBMISSION OF ELECTRONIC REPORTS (JAN 2005)
The Recipient must prepare and submit all scientific/technical reports (including conference papers/proceedings, journal articles, software, and topical reports, if applicable) via E-link at http://www.osti.gov/elink-2413 [see specific instructions below regarding form submittal and format]. If you have any technical problems with using E-Link or DOE Form 241.3, calls should be directed to OSTI at 865-576-1223. However, if your question is related to other submission issues, you should contact the award administrator identified under block 12 of the DOE F 4600.1 Notice of Financial Assistance Award face page.
For all other reports indicated on the “Federal Assistance Reporting Checklist” (including management, financial, closeout and other reporting), the Recipient must prepare and submit these via the internet at FITS@NETL.DOE.GOV .
Successful completion of this award is contingent upon submittal of the reports or items specified on the “Federal Assistance Reporting Checklist” in accordance with the following instructions:
Failure to follow these instructions can delay data entry of the report(s) into the NETL FEDERAL INFORMATION TRACKING SYSTEM (FITS) and result in the report being lost or considered delinquent.
The level of detail the Recipient provides in the reports must be commensurate with the scope and complexity of the effort and must be as delineated in the guidelines and instructions contained herein. The prime Recipient must be responsible for acquiring data from any contractors or sub recipients and ensuring that any information submitted is compatible with the requirements of the DOE.
GUIDELINES FOR ELECTRONIC SUBMISSION AND FILE FORMAT OF NON-SCIENTIFIC/TECHNICAL REPORTS (includes management, financial, closeout and other reporting).
Production of high-quality, electronic documents are dependent on the quality of the input that is provided. Thus, the Recipient must submit an electronic version of each report.
ELECTRONIC REPORTS MUST BE SUBMITTED IN THE ADOBE ACROBAT PORTABLE DOCUMENT FORMAT (PDF). ELECTRONIC REPORTS SUBMITTED IN A FORMAT OTHER THAN ADOBE WILL BE RETURNED AND THE REPORT CONSIDERED DELINQUENT. IN ADDITION, THERE CAN BE NO RESTRICTIONS ON THE PDF FILE SUBMITTED THAT WOULD AFFECT OUR ABILITY TO OPEN OR EDIT THE REPORT DOCUMENT. THEREFORE, THE ONLY SECURITY METHOD THAT WILL BE ACCEPTED IS THE ADOBE ACROBAT “NO SECURITY’ OPTION . THIS WILL ENABLE US TO PROPERLY INDEX AND PROCESS REPORT FILES.
Each report must be one integrated file that contains all text, tables, diagrams, photographs, schematics, graphs, and charts. Files must not be write-protected or encrypted in any manner.
The electronic file(s) must be submitted via the Internet at: FITS@NETL.DOE.GOV. An e-mail message sent in conjunction with the file must contain the following information:
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DOE Award Number |
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Type of Report(s) |
Frequency of Report(s)
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Reporting Period (if applicable) |
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Name of submitting organization |
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Name, phone number and fax number of preparer |
MANAGEMENT REPORTING
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PROGRESS REPORT |
The Progress Report must provide a concise narrative describing the current status of work. The report allows Recipients to communicate developments, achievements, changes and problems. The report must include the following information:
|
1. |
The DOE award number and name of the recipient. |
|
2. |
The project title and name of the project director/principal investigator. |
|
3. |
Date of report and period covered by the report. |
|
4. |
Executive Summary- A well organized summary that highlights the important accomplishments and new knowledge realized from the project during the reporting period . This summary must be more comprehensive than the traditional “abstract” and identify noteworthy advancements in research, design, manufacture or commercialization of technology developments. Also, summarize important breakthroughs that resolve critical science and technology risks or development barriers. |
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5. |
The Recipient enters a brief narrative discussion of the following topics: approach changes; performance variances, accomplishments, or problems; open times; and status assessment and forecast. Each of these topics is addressed, as appropriate, for a given reporting period and the report is submitted periodically, as required, during the life of the project |
|
6. |
Baseline and Status Reports. The Baseline Plan is a report which is used to present projected cost and activity data. The Baseline Plan presents discrete, measurable units of the proposed work. The plan will provide a specific outline of what the Recipient intends to do through a Work Breakdown Structure and the time and cost involved. The cost data to be entered must depict projected total costs for the life of the project on a monthly basis broken down by each element of the Work Breakdown Structure. The activity data required are identification of tasks required to complete the project according to the Work Breakdown Structure and a delineation of the project's major milestones. This plan will be developed and submitted to serve as the standard against which status and progress can be measured during the performance period. |
The Status Report shall provide the performance information required to determine program effectiveness and the information which DOE requires to maintain accountability for public funds. The report must show approved budget by budget period and actual costs incurred. If cost sharing is required costs must be broken out by DOE share, awardee share, and total costs. The report must show actual costs, schedule progress, and work completed to date. This data must be provided for each reporting period, broken down by month for each element of the Work Breakdown Structure.
Milestones, anticipated completion dates, and actual completion dates must be listed to show schedule status. The schedule status must identify any milestones that were not met during the reporting period and reasons why the established milestones were not met. Explanations should also provide an approximate date when the milestone will be met. Awardees may use project management software, such as Microsoft Project, to measure and report cost and schedule status.
When the status report is compared with the Baseline Plan, accomplishments can be noted, problems become apparent, and corrective action can be taken. The Status Report is a report on which the Recipient provides cost and activity data for each reporting period relative to the Baseline Plan. The information should be displayed so that the baseline for the project is clear and the status of the project relative to the baseline is clear. The report may consist of more than one page as necessary.
|
7. |
Results and Discussion - A detailed discussion of the progress performance. It is extremely important that this section includes enough relevant data, especially statistical data, to allow the project manager to justify the conclusions. With the relevant data, explain how the data was interpreted and how it relates to the original purpose of the research. Be concise in the discussion on how this research effort solved or contributed to solving the original problem. When investigation methods and/or procedures are being utilized for the first time, they shall be described in detail. This description shall contain detailed information on equipment and procedures utilized, as well as providing a rationale for their use and the accuracy of the method. |
|
8. |
Conclusion - The conclusion should not simply reiterate what was already included in the “Results and Discussion” section. It should, however, summarize what has already been presented, and include any logical implications of how the successes are relevant to technology development in the future. This is extremely important, since “relevancy” continues to be a criterion of the program. |
This section should not contain any trade secrets, business sensitive or classified data, or other information not subject to public release. If such information is important to reporting project progress, it should be presented in a separate appendix, following the instructions in the clause entitled “Supplemental Guidelines” regarding submission of a separate appendix for this type of restricted data.).
|
9. |
A summary of all of the significant accomplishments during this reporting period. An “accomplishment” is a significant development or finding that advances the state-of-the-art with respect to the technology of interest or significantly contributes to the understanding of a concept or technology. |
|
10. |
Actual or anticipated problems or delays and actions taken or planned to resolve them. Identify any event causing a significant schedule slippage or cost growth; an environmental, safety, or health violation; or the achievement of or problems encountered for an important performance objective. |
|
11. |
A description of any technology transfer activities accomplished during this reporting period. Identify and describe any activities to transfer research results or developed technology to other research stakeholders or users of the technology. |
SPECIAL STATUS REPORT
The recipient must report the following events to the DOE Project Officer by e-mail as soon as possible after they occur. The e-mail correspondence should include:
|
1. |
Recipient's name and address; |
|
2. |
Award title and number; |
|
3. |
Date; |
|
4. |
Brief statement of problem or event; |
|
5. |
Anticipated impacts; and |
|
6. |
Corrective action taken or recommended. |
The Special Status Report should document the incidents listed below:
|
1. |
Developments that have a significant favorable impact on the project. |
|
2. |
Problems, delays, or adverse conditions which materially impair the recipient’s ability to meet the objectives of the award or which may require DOE to respond to questions relating to such events from the public The recipient must report any of the following incidents and include the anticipated impact and remedial action to be taken to correct or resolve the problem/condition: |
|
a. |
Any single fatality or injuries requiring hospitalization of five or more individuals. |
|
b. |
Any significant environmental permit violation. |
|
c. |
Any verbal or written Notice of Violation of any Environmental, Safety, and Health statutes. |
|
d. |
Any incident which causes a significant process or hazard control system failure. |
|
e. |
Any event which is anticipated to cause a significant schedule slippage or cost increase. |
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f. |
Any damage to Government-owned equipment in excess of $50,000. |
|
g. |
Any other incident that has the potential for high visibility in the media. |
|
h. |
Any incident which causes a significant process or hazard control system failure, or is indicative of one which may lead to any of the above defined incidents, is to be reported as soon as possible, but within 5 days of discovery. |
When an event results in the need to issue a written or verbal statement to the local media, the statement is to be cleared first; if possible, and coordinated with NETL Communications and Public Affairs Division, the DOE Project Officer and the Contracting Officer.
III. |
SCIENTIFIC/TECHNICAL REPORTING |
Scientific/Technical Reporting includes: Final Scientific/Technical Report, Topical Reports, Journal Articles, Conference Proceedings and Papers, Software, and Conference Records.
FINAL SCIENTIFIC/TECHNICAL REPORT
The Final Scientific/Technical Report shall document and summarize all work performed during the award period in a comprehensive manner. It shall also present findings and/or conclusions produced as a consequence of this work. This report shall not merely be a compilation of information contained in other reports, but shall present that information in an integrated fashion, and shall be augmented with findings and conclusions drawn from the research as a whole.
TOPICAL REPORTS
Topical reports are intended to provide a comprehensive statement of the technical results of the work performed for a specific task or subtask of the Statement of Project Objectives, or detail significant new scientific or technical advances. If required, DOE shall review and approve the report outline prior to submission of the report.
Two Topical Reports (as a minimum) are required. The two required reports are the Preliminary Public Design Report and the Final Public Design Report. The purpose of the Public Design Reports is to consolidate for public use all available nonproprietary design information on the project. The Preliminary Public Design Report is based on the preliminary design information and is due at the end of preliminary design. The Final Public Design Report is based on detailed design information and is due after completion of the Design Phase of the project, 60 days prior to completion of the Construction Phase of the project. The Final Public Design Report should contain sufficient background information to provide an overview of the project and pertinent cost data. Since the scope of the reports is limited to nonproprietary information, their content will not be sufficient to provide a complete tool in designing a replicate plant. However, these reports will serve as a reference for the design considerations involved in a commercial-scale facility.
The reports should include an overview description of the technology and a summary of the mass and energy balances for the process. They should also define the overall process performance requirements and describe the evaluations and operating philosophies upon which those performance requirements are based. A summary cost estimate of capital and operating costs and, if possible, an analysis of how costs could be improved for future commercial projects should also be included.
The following deliverables are also to be included as components of the Preliminary Public Design Report addressing the preliminary design:
Process Flow Diagrams
The Participant shall provide a complete set of nonproprietary Process Flow Diagrams with all updates and modifications.
Stream Data
The Participant shall provide a complete set of all nonproprietary stream data. This would include both the expected values and ranges of flows, stream properties, and constituents at various operating conditions.
Equipment List
The Equipment List consists of a summary of the major equipment for the plant. Equipment is to be sorted by Flow Diagram, equipment type, and equipment number. General description data are to be provided for each equipment item, including, but not limited to, the number required for operation, size or capacity, major nonproprietary operating and design parameters, and manufacturer and/or vendor.
The Final Public Design Report shall include the final versions of the Preliminary Public Design Report plus the following:
Drawings
The Participant shall include a complete set of Equipment Plot and Elevation Drawings, and Process and Instrumentation Diagrams, which describe the plant configuration at the end of the demonstration period.
Plant Capital Cost Data
The Participant shall include the data and documentation for all projected costs associated with the construction of the plant, with a breakdown which would permit this information to be used for projecting future plant construction costs.
Plant Operating Cost Data
The participant shall include the data and documentation for all projected costs associated with the operation of the plant under conditions that represent reliable plant performance.
GUIDELINES FOR ELECTRONIC SUBMISSION AND ORGANIZATION OF FINAL SCIENTIFIC/TECHNICAL AND TOPICAL REPORTS
Electronic Submission . The final scientific/technical report and topical reports must be submitted electronically via the DOE Energy Link System (E-Link) at http://www.osti.gov/elink-2413.
Electronic Format . REPORTS MUST BE SUBMITTED IN THE ADOBE PORTABLE DOCUMENT FORMAT (PDF) AND BE ONE INTEGRATED PDF FILE THAT CONTAINS ALL TEXT, TABLES, DIAGRAMS, PHOTOGRAPHS, SCHEMATIC, GRAPHS, AND CHARTS. ELECTRONIC REPORTS SUBMITTED IN A FORMAT OTHER THAN ADOBE WILL BE RETURNED AND THE REPORT CONSIDERED DELINQUENT. IN ADDITION, THERE CAN BE NO RESTRICTIONS ON THE PDF FILE SUBMITTED THAT WOULD AFFECT OUR ABILITY TO OPEN OR EDIT THE REPORT DOCUMENT. THEREFORE, THE ONLY SECURITY METHOD THAT WILL BE ACCEPTED IS THE ADOBE ACROBAT “NO SECURITY’ OPTION . THIS WILL ENABLE US TO PROPERLY INDEX AND PROCESS REPORT FILES.
Materials, such as prints, videos, and books, that are essential to the report but cannot be submitted electronically, should be sent to the DOE Award Administrator at the address listed in Block 12 of the Notice of Financial Assistance Award.
Submittal Form . The report must be accompanied by a completed electronic version of DOE Form 241.3, “U.S. Department of Energy (DOE), Announcement of Scientific and Technical Information (STI).” You can complete, upload, and submit the DOE F.241.3 online via E-Link. You are encouraged not to submit Protected EPAct Information in these electronic technical reports. These technical reports must also not contain any Limited Rights Data (such as trade secret, proprietary or business sensitive information), classified information, information subject to export control classification, or other information not subject to release. Such information must be submitted in a separate hard-copy appendix to the electronic technical and topical reports as explained under Supplemental Guidelines below.
Organization. The following sections should be included (as appropriate) in the final scientific/technical report and topical reports in the sequence shown. Any section denoted by an asterisk is required in all final technical and topical reports.
TITLE PAGE* - The Title Page of the report itself must contain the following information in the following sequence:
Report Title
Type of Report (Final Scientific/Technical or Topical)
Reporting Period Start Date
Reporting Period End Date
Principal Author(s)
Date Report was Issued (Month [spelled out] and Year [4 digits])
DOE Award Number (e.g., DE-FG26-05NT12345) and if appropriate, task number
Name and Address of Submitting Organization (This section should also contain the name and address of significant subcontractors/sub-recipients participating in the production of the report.)
DISCLAIMER* -- The Disclaimer must follow the title page, and must contain the following paragraph:
“This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof.”
ABSTRACT* - should be a brief, concise summary of the report.
TABLE OF CONTENTS*
EXECUTIVE SUMMARY* - this should be a well organized summary that highlights the important accomplishments of the research during the reporting period. It should be no less than one page and no more than two pages in length, and should be single spaced. This summary must be more comprehensive than the traditional “abstract.”
REPORT DETAILS - The body of the final scientific/technical or topical report should address topics such as the following:
Experimental methods: Describe, or reference all experimental methods being utilized. Also provide detail(s) about materials and equipment used. Standard methods should reference the appropriate literature, where details can be obtained. Equipment should be described only if it is not standard, or if information is not available thru the literature or other reference publications.
Results and discussions: This section should include enough relevant data, especially statistical data, to allow the project manager to justify the conclusions. Explain how the data was interpreted and how it relates to the original purpose of the research. Be concise in the discussion on how this research effort solved or contributed to solving the original problem.
Conclusion : The conclusion should not simply reiterate what was already included in “Results and Discussion” but should summarize what has already been presented, and include any logical implications of how the successes are relevant to technology development in the future. This is extremely important, since “relevancy” continues to be a criterion of the program.
GRAPHICAL MATERIALS LIST(S)
REFERENCES
BIBLIOGRAPHY
LIST OF ACRONYMS AND ABBREVIATIONS
APPENDICES (IF NECESSARY)
SUPPLEMENTAL GUIDELINES
Technical reporting SHALL NOT include Limited Rights Data (such as restricted, proprietary or business sensitive information). Limited Rights Data, if required to meet the reporting requirements, shall be submitted in a separate appendix to the technical report. This appendix SHALL NOT be submitted in an electronic format but rather submitted in ONE ORIGINAL AND THREE (3) PAPER COPIES along with the paper version of the sanitized technical report deliverable. The appendix shall not be referenced in or incorporated into the sanitized technical report deliverable under the contract. The appendix must be appropriately marked and identified. Further, if this award authorizes the awardee under the provisions of The Energy Policy Act of 1992 to request protection from public disclosure for a limited period of time of certain information developed under this award, technical reports SHALL NOT contain such Protected EPAct Information. Such information shall be submitted in a separate appendix to the technical report that is suitable for release after the agreed upon period of protection from public disclosure has expired. The appendix shall not be referenced in or incorporated into the sanitized technical report deliverable under the contract. In accordance with the clause titled “Rights in data—programs covered under special data statutes,” the appendix must be appropriately marked and identified
Company Names and Logos -- Except as indicated above, company names, logos, or similar material should not be incorporated into reports.
Copyrighted Material -- Copyrighted material should not be submitted as part of a report unless written authorization to use such material is received from the copyright owner and is submitted to DOE with the report.
Measurement Units -- All reports to be delivered under this instrument shall use the SI Metric System of Units as the primary units of measure. When reporting units in all reports, primary SI units shall be followed by their U.S. Customary Equivalents in parentheses ( ). The Recipient shall insert the text of this clause, including this paragraph, in all subcontracts under this award. Note: SI is an abbreviation for "Le Systeme International d'Unites."
ELECTRONIC MEDIA STANDARD FOR PREPARATION OF TECHNICAL REPORTS
PRESENTATION : The Recipient shall submit one quality permanent paper copy for storage (permanent or alkaline paper) and an electronic version of each technical report in PDF format. ELECTRONIC REPORTS MUST BE SUBMITTED IN THE ADOBE ACROBAT PORTABLE DOCUMENT FORMAT (PDF). REPORTS SUBMITTED IN A FORMAT OTHER THAN ADOBE WILL BE REJECTED, RETURNED AND CONSIDERED DELINQUENT. The report must be one complete integrated file containing all text, tables, diagrams, photographs, schematics, graphs, and charts. Multiple files for various
report segments are unacceptable and will be rejected. The electronic file(s) may be submitted on an ISO9660-format CD-ROM.
FORMAT: The electronic file(s) must be submitted on CD-ROM and labeled as follows:
DOE Award Number
Type/Frequency of Report(s)
Reporting Period (if applicable)
Name of submitting organization
Name, phone number and fax number of preparer
JOURNAL ARTICLES, CONFERENCE PAPERS AND PROCEEDINGS GENERATED BY LARGE BUSINESSES FOR DOE REVIEW
The Recipient shall submit to DOE for review and approval all documents generated by the Recipient, or any subcontractor, which communicate the results of scientific or technical work supported by DOE under this award, whether or not specifically identified in the award, prior to submission for publication, announcement, or presentation. Such documents include journal articles, conference papers and proceedings, etc. The Recipient shall simultaneously submit a draft version of the document to the DOE Project Officer and the DOE Patent Counsel Office prior to the publication, presentation, or announcement. The DOE Project Officer and DOE Patent Counsel shall review the draft version of the document and notify the Recipient of approval or recommended changes. The approved final version shall be submitted to the NETL AAD Document Control Coordinator.
The following information shall be provided for conference papers and proceedings, etc.
-- Name of conference
-- Location of conference (city, state, and country)
-- Date of conference (month/day/year)
-- Conference sponsor
CONFERENCE RECORD
The "Conference Record" documents for the DOE Project Officer, DOE Contracting Officer, and the Recipient an understanding of significant decisions, direction or redirection, or required actions resulting from meetings with DOE representatives. It is required for any meeting, conference, or phone conversation in which a decision is made that may change the schedule, labor, cost, or technical aspects of the award or the approved baseline plans. The report shall contain the following information as applicable:
|
1. |
Report title ("Conference Record"), number, and the date prepared. |
|
2. |
Award title and number, and the Recipient's name and address. |
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3. |
Date of meeting or telephone conversation, with a list of those involved and their titles. |
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4. |
Subject(s) discussed, decisions reached, and directions given. |
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5. |
Variances from previous directions and conclusions. |
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6. |
Required actions. |
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7. |
Distribution. |
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8. |
Signature of preparer. |
III. |
FINANCIAL REPORTING |
FINANCIAL STATUS REPORT (STANDARD FORM 269 OR 269A)
This report is used for the Recipient to provide regular periodic accounting of project funds expended. The accounting may be on either a cash or accrual basis. Actual total expenditures and obligations incurred, but not paid, are reported for each reporting period for each major activity. Provision is made to identify the Federal and non-Federal share of project outlays for each identified activity.
IV. |
CLOSEOUT REPORTING |
PATENT CERTIFICATION (DOE F 2050.11)
This certificate submitted on DOE F 2050.11 is due within 90 days after completion or termination of the award.
V. |
OTHER REPORTING |
ENVIRONMENTAL REPORTS
In response, in part, to the requirements of the National Environmental Policy Act of 1969 (NEPA) and other related environmental statutes, the National Energy Technology Laboratory (NETL) requires the submission of various documents that assess the environmental aspects and projected impacts of all of its proposed actions. These documents may include the following: (1) Environmental Compliance Plan, (2) Environmental Monitoring Plan, and (3) Environmental Status Reports.
The environmental information provided in these documents will enable NETL to fulfill its responsibilities under NEPA (additional information about the requirements of the National Environmental Policy Act can be found in the DOE NEPA Compliance Guide and 10 CFR 1021) and to monitor the Recipient's compliance with other environmental regulations. The implementation of any task associated with a proposed action will be dependent upon DOE completing necessary NEPA documentation. Therefore, to minimize the risk of project delays, it is imperative that these reports be submitted in a timely manner.
The information contained herein specifies the basic environmental requirements for this award, but it is not to be interpreted as containing all necessary information for any given project. Likewise, certain aspects of the requirements may not be applicable. Accordingly, the level of information provided should be sufficient for DOE to assess the environmental implications of the proposed action.
|
A. |
ENVIRONMENTAL COMPLIANCE PLAN |
The Environmental Compliance Plan (ECP) should outline an approach to implementing an environmental monitoring and reporting strategy. This strategy should include plans for submitting a Quality Assurance/Quality Control Plan and Pollution Prevention Plan (if an ECP is required, the format of the QA/QC Plan and Pollution Prevention Plan will be determined in conjunction with the NETL environmental staff), conducting environmental monitoring of the proposed action and submitting Environmental Status Reports. The ECP should also address any concerns and/or deviations associated with the reporting and monitoring documents. The due date for the submission of the Draft ECP will be determined based on a detailed plan that
will be developed by the DOE, SCS and MPC personnel working on NEPA.
SUGGESTED FORMAT FOR ENVIRONMENTAL COMPLIANCE PLAN (ECP):
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I. |
SUMMARY OF PROPOSED PROJECT |
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II. |
FEDERAL REGULATORY COMPLIANCE (Discuss how each of the following will be complied with, if applicable.) |
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A. |
National Historic Preservation Act |
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B. |
Endangered Species Act |
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C. |
Fish and Wildlife Coordination Act |
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D. |
Floodplain/Wetlands Regulations |
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E. |
Coastal Zone Management Act |
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F. |
Farmland Protection Policy Act |
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G. |
American Indian Religious Freedom Act |
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H. |
Wild and Scenic Rivers Act |
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I. |
Resource Conservation & Recovery Act |
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J. |
Comprehensive Environmental Response, Compensation and Liability |
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Act |
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K. |
Clean Air Act |
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L. |
Clean Water Act |
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M. |
Pollution Prevention Act |
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III. |
STATE AND LOCAL REGULATORY COMPLIANCE (Discuss how any state |
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and local regulations will be complied with.) |
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B. |
ENVIRONMENTAL MONITORING PLAN |
If DOE’s analysis of the potential environmental impacts of the proposed action identifies a need for environmental monitoring, the Recipient will submit a draft Environmental Monitoring Plan (EMP). After consultation with DOE, the draft EMP will be revised, as necessary and a final EMP will be prepared. The EMP may be revised as the project dictates.
The EMP should evaluate air, land, and water resources, and waste production, using three specific types of monitoring:
|
A. |
Compliance Monitoring, |
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B. |
Unregulated Pollutant Monitoring, and, if necessary, |
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C. |
NEPA-related Monitoring. |
Compliance monitoring, i.e., environmental and health monitoring required by Federal, State, and local regulatory agencies, should detail the location, frequency, duration, and substances being monitored. All necessary applications, permits, and licenses should be identified.
Unregulated pollutants, both the amount and type of each, should be monitored. This includes those pollutants (a) not currently regulated by State or Federal laws but for which new regulations are expected in the near future; (b) which may cause environmental or health concerns based on hazardous/toxic compound lists; and (c) which are expected in discharge streams based on test data or process chemistry.
Finally, NEPA-related monitoring should be implemented as necessary. It should identify and/or confirm the impacts of the substances produced and performance of the specific technologies as predicted in the NEPA document. It should also include reporting on any mitigation action identified in the Finding of No Significant Impact or Record of Decision as a condition of approval of the proposed action (reported annually).
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C. |
ENVIRONMENTAL STATUS REPORT |
After approval of the comprehensive EMP, and as deemed necessary by the DOE Project Manager, information from environmental monitoring should be submitted in the form of Environmental Status Reports (ESRs). The necessity of these reports will depend on the size and nature of the project; they will be required quarterly
The data reported in the ESRs will ensure that project impacts (a) do not violate applicable environmental regulations and (b) are not detrimental to human health or the environment. The information will also provide a database that can be utilized to mitigate environmental problems associated with commercializing any proposed technologies.
SUGGESTED FORMAT FOR ENVIRONMENTAL STATUS REPORTS
|
I. |
SUMMARY OF MONITORING PERFORMED (Compliance and Supplemental Monitoring) |
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A. |
MONITORING PARAMETERS |
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1. |
Location |
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2. |
Stage of Project (e.g., preconstruction, operational, etc.) |
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3. |
Source to be Monitored (e.g., stack emissions) |
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4. |
Method of Monitoring |
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B. |
DATA ANALYSIS |
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1. |
Identification/characterization of emissions, effluents, etc. and their |
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concentration |
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2. |
Identification of problem areas/non-compliance |
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3. |
Suggestions for modifications/changes to the system |
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4. |
Recommendations to revise Monitoring Plan |
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II. |
PERMIT COMPLIANCE STATUS |
A. Attach copies of compliance reports, analyses, correspondence between the recipient and the appropriate regulatory agencies.
B. Attach copies of all manifests, shipping documents, etc. pertaining to the disposal of wastes generated from the project.
COMMUNICATION PLANS (MAR 2002)
Knowledge dissemination is an integral part of the Federally funded RD&D process. Effective dissemination requires planned, active, and coordinated participation of governmental entities and funded research organizations.
To ensure the effective dissemination of knowledge gained during this RD&D project, the recipient will consult with NETL's Public Affairs staff to identify communication goals, objectives, and strategies. The recipient will make an initial contact for consultation within 30 days of the award date. The recipient will make subsequent contacts whenever progress on the project warrants external communication, but no less than once a quarter.
Actions and products designed to disseminate nonproprietary project-related knowledge will be coordinated with NETL's Public Affairs staff. Examples of such actions and products include, but are not limited to:
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-- Press releases |
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-- Articles in newspapers, newsletters, and magazines |
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-- Papers in peer-reviewed journals |
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-- Radio, television, and newspaper interviews |
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-- Presentation of research results at conferences, workshops, and seminars |
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-- Publication of results on web pages |
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-- Information for government officials |
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POST-COMPLETION REVIEW (MAR 2002) |
Within two (2) years after completion of the demonstration project, the Recipient agrees to participate with DOE in a post-completion project review meeting. The time and location of the meeting will be established by agreement of the Parties. The purpose of the meeting is to review the success of the project as well as any problems that may have arisen since project completion.
ATTACHMENT C – BUDGET PAGES
ATTACHMENT C - BUDGET PAGES Budget Information - Non Construction Programs - Budget Period 1 OMB Approval No. 0348-0044 |
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ATTACHMENT C - BUDGET PAGES Budget Information - Non Construction Programs - Budget Period 2a OMB Approval No. 0348-0044 |
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Section A - Budget Summary |
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1. |
Fossil Energy R&D |
81.089 - BP 1 |
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$9,285,033 |
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Fossil Energy R&D |
81.089 - BP 2a |
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$14,248,983 |
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Fossil Energy R&D |
81.089 - BP 2b |
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$270,215,984 |
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Object Class Categories |
Grant Program, Function or Activity |
Total (5) |
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(1) Total - BP 2a Phase IIa |
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ATTACHMENT C - BUDGET PAGES Budget Information - Non Construction Programs - Budget Period 2b OMB Approval No. 0348-0044 |
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Section A - Budget Summary |
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Grant Program Function or Activity
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New or Revised Budget |
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Total |
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(b) |
(c) |
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(f) |
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1. |
Fossil Energy R&D |
81.089 - BP 1 |
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$9,285,033 |
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Fossil Energy R&D |
81.089 - BP 2a |
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$14,248,983 |
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Fossil Energy R&D |
81.089 - BP 2b |
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Object Class Categories |
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ATTACHMENT D
AMENDED AND RESTATED REPAYMENT AGREEMENT
DE-FR26-06NT42392
AMENDMENT 2
By this Amendment to the Amended and Restated Repayment Agreement by and among the United States Department of Energy (DOE), Southern Company Services, Inc. (SCS), and Kellogg Brown & Root LLC (successor to the rights and obligations of Kellogg Brown & Root, Inc.) dated May 2, 2007, the Parties acknowledge certain changes that have been made to Cooperative Agreement Number DE-FC26-06NT42391 regarding the Demonstration Project and they agree to modify the terms of the Repayment Agreement to incorporate DOE’s waiver of the repayment obligation. This Amendment to the Amended and Restated Repayment Agreement will become effective on December 5, 2008.
Specifically, the Parties hereby acknowledge as follows:
(a) The host site for the Demonstration Project has been changed from Orlando, Florida to a site owned by Mississippi Power Company in Kemper County, Mississippi.
(b) The scope and schedule for the Demonstration Project have been modified to account for the site relocation and changes in size and configuration of the Demonstration Project.
Now, therefore, in consideration of the promises and agreements of the Parties herein expressed and other good and valuable consideration, the Parties agree that the Repayment Agreement is amended to incorporate DOE’s waiver of the Obligors’ repayment obligation in accordance with the terms set forth below:
WAIVER OF REPAYMENT
Whereas, DOE and SCS have been informed by the Internal Revenue Service that DOE funds provided under the Cooperative Agreement are taxable to the Recipient;
Whereas, such treatment of DOE funds is a departure from historical practice and therefore not anticipated by either DOE or SCS;
Whereas, taxation of the funds substantially reduces the effective amount of federal contribution to the Demonstration Project and jeopardizes the success of the Demonstration Project;
Whereas, SCS has requested that the Secretary of Energy waive the repayment obligation under this Repayment Agreement in order to make the DOE funds eligible for treatment as a non-taxable contribution to capital pursuant to Internal Revenue Code Section 118;
Whereas, DOE is willing to waive the repayment obligation subject to certain conditions, including commitments from SCS (and/or its affiliated companies) to sequester a portion of the carbon dioxide (CO 2 ) produced by the Demonstration Project; and,
Whereas, SCS and its affiliate owner of the plant, Mississippi Power Company (MPC), are willing to capture a portion of the CO 2 produced by the Demonstration Project and sequester the CO 2 in geologic formations, which may include sequestration through enhanced oil recovery operation.
Therefore, pursuant to the determination by the Secretary of Energy, dated May 22, 2008, DOE agrees that the Obligors’ obligation to repay (as well as the associated reporting and retention obligations set forth in Article VI of the Repayment Agreement), pursuant to this Repayment Agreement, is waived.
Notwithstanding the foregoing, pursuant to that certain Approval Determination executed by the Secretary of Energy dated May 22, 2008 (“Approval Determination”), DOE established certain conditions regarding the waiver, which conditions are adopted herein as set forth below. The Approval Determination provided (and
by adoption this Agreement provides) that the waiver will become void if any one of the following events occurs:
(1) On or before the earlier of DOE's issuance of a National Environmental Policy Act, Record of Decision for the Demonstration Project or January 1, 2010, the Internal Revenue Service (IRS) agrees that Clean Coal Power Initiative (CCPI) Round II funds are not taxable to the Recipient, even if the funds are accompanied by a requirement of repayment to DOE. SCS agrees to seek a private letter ruling from the IRS if DOE advises SCS that the IRS has indicated a willingness to entertain tax-free treatment of DOE CCPI Round II funds.
(2) On or before the earlier of DOE's issuance of a Record of Decision for the Demonstration Project or January 1, 2010, the law is amended to make CCPI funds not taxable to the Recipient.
(3) SCS (and/or its affiliated companies) does not, with respect to the planned coal-fired power plant in Mississippi receiving CCPI Round II funds: (a) design, build, and operate the facility with the intent to capture and geologically sequester by enhanced oil recovery or otherwise one million tons per year of CO 2 (approximately 25% capture rate); and (b) establish, and actively work toward, the goal of capturing and sequestering 50% of CO 2 emissions from the plant by 2020 and thereafter.
IN WITNESS WHEREOF, the parties have caused this Amendment to the Amended and Restated Repayment Agreement to be executed as of the respective dates entered below.
UNITED STATES DEPARTMENT OF ENERGY |
OBLIGOR (Kellogg Brown & Root LLC (as successor to the rights and obligations of Kellogg Brown & Root, Inc.)) |
Signature: ______________________________ |
Signature: ________________________________ |
Name: |
Date: |
Name: |
Date: |
Title: Contracting Officer |
Title: |
OBLIGOR (Southern Company Services, Inc.)
Signature: _________________________________
Name: |
Date: |
Title:
AMENDED AND RESTATED REPAYMENT AGREEMENT
DE-FR26-06NT42392
[**]
Exhibit 14(a)
Southern Company Code of Ethics
Introduction
April 21, 2006
Southern Style is our model for corporate and professional behavior. It is the foundation of our culture of trust and it tells us that ethical behavior is an important part of how we do business at Southern Company. Southern Style is defined by three principles: Unquestionable Trust – Superior Performance – Total Commitment . Southern Style and ethical behavior apply to every part of our business -- whether it's dealing with customers, leading by example, working together or improving our communities. The Southern Company Code of Ethics is a set of expectations to guide our behaviors and a decision-making compass that should be consulted -- either literally or intuitively -- anytime we make a decision or begin a task. We should never stop asking ourselves: "Am I behaving ethically -- today and every day?" The Code applies to Southern Company, its subsidiaries, and their directors, officers and employees. Before any director, officer or employee considers acting in a manner which could constitute a violation of the Code of Ethics, the individual should recognize that he or she is placing their position with the Company in jeopardy.
Our Employees
We treat each other with fairness, respect, and dignity, offering equal opportunities for employment to all individuals. We value different backgrounds and encourage different perspectives and ideas – understanding that Diversity is a strength that unlocks our full potential and helps us achieve our goals. Intimidation, harassment, or discrimination based on race, sex, age, color, religion, national origin, veteran’s status, sexual orientation, or disability is not tolerated. We take personal responsibility for individual and organizational success, while recognizing the value that each of us contributes.
Safety & Health
We do not compromise safety and health. Because we care, we value the health and safety of each other, our contractors, and the public by conducting business in a manner designed to preserve the well-being of all. We work safely, watch out for each other and report and correct unsafe situations. We keep our workplace free from violence, illegal drugs and the inappropriate use of alcohol.
The Environment
We are committed to improving our environmental performance and the communities we serve by being good environmental stewards and working to conserve valuable natural resources. The health of our Employees, Customers, and the Public, and the protection of our natural environment are among our highest priorities.
Compliance with Laws and Regulations
We respect the Law. We comply with all laws and regulations. We have a responsibility to understand the laws and how they apply to our jobs. The Company supports each employee in this responsibility and provides the necessary resources for compliance. If it is found that any laws or regulations have been violated, corrective and responsible action will be taken.
Confidential Information
We use confidential information only for the business purpose for which it was developed or given. We respect the confidentiality of information about the Company, its customers, employees, vendors and partners. Confidential information will not be used for personal benefit. We comply with the laws and regulations which prohibit insider trading of securities. We protect the intellectual property rights, including copyrights, patents, licenses and trademarks, and other proprietary information of the Company and others.
Conflict of Interest
We avoid conflicts, or the appearance of conflicts, between personal interests and official responsibilities on behalf of the Company. We use corporate resources - time, personnel, equipment and supplies - for Company business or Company approved activities.
We do not take personal advantage of business opportunities that are discovered through the use of Company property, information or position. The Company’s directors, officers and employees do not engage in business activities in competition with the Company.
Gifts and Gratuities
We do not accept, offer or authorize gifts, entertainment, or other favors that are not a reasonable part of a business relationship. We exercise hospitality with discretion, so as not to jeopardize the integrity of those with whom we do business.
Political Activities
We value and encourage citizenship. Employees have the opportunity, as individuals, to support political candidates and engage in political activities of their own free choice. Company resources will not be used to support political candidates, parties, or committees unless permitted by law and any such activity shall be approved by executive management.
Because rules regarding gifts and gratuities to public officials can vary from state to state and even from agency to agency, we do not offer a gift of any type, including meals, to any public official unless we have determined that such a gift is appropriate and legal.
Competitive Practices
We compete vigorously, but fairly, on the basis of price, superior services, dependability and products. We do not enter into understandings or agreements between competitors regarding prices, terms of sales, division of markets or customers, or any other activity that restricts competition.
We conduct competitive marketing activities, including the advertising of products and services and gathering of competitive intelligence, fairly and honestly.
Financial Integrity
We are prudent in our expenditures on behalf of the Company and we record all business transactions in accordance with accepted accounting principles. We maintain appropriate internal controls designed to prevent or detect fraud and ensure every accounting or financial record, and supporting data, describes the transaction accurately without omission, concealment or falsification. Our financial integrity commitment also extends to business transactions between subsidiary companies to ensure all activity is properly reflected. We maintain and retain all business records accurately and in compliance with applicable laws and Company policy.
We believe in making full, fair, accurate, timely and understandable disclosure in the reports we file under securities laws and in other public communications.
External Relationships
Customers... Vendors... Contractors... Regulators... Stockholders...
We are known by our customers for the quality and value of the products and services we provide. We value the relationships we have established and realize they are built on trust and cooperation.
We are committed to building a culture of Trust , not only with our Employees, but also our Customers, Vendors, Contractors, Regulators and Stockholders. Southern Company seeks to always maintain the highest standards of integrity and objectivity in our working relationships and will not conduct business with anyone who does not operate with integrity or who compromises the Company’s values and ethical standards.
Duty To Act
Our people are our Company. We will be recognized by the actions of our people. Each of us has a clear legal mandate to act ethically on the Company’s behalf and is obligated to report promptly to management any activities that may be in violation of this Code of Ethics, other company policies, or any applicable laws or regulations. The Company has in place appropriate processes to provide for the timely and effective review of such reports and will not tolerate any retaliation against those fulfilling this obligation.
Each of us is encouraged to discuss concerns or questions with our supervision, responsible Compliance Officer or the Southern Company Concerns Program (1-800-754-9452). The Southern Company Concerns Program (800) line may also be used to report issues regarding accounting practices, internal accounting controls or auditing matters directly to the Southern Company Audit Committee.
Conclusion
In Southern Company, ethics mean more than merely obeying laws and following policies. Ethics also encompass "doing the right thing for the right reasons" no matter what our job or responsibilities within the Company may be. Much more is expected today than ever before with regard to our ethical standards and behaviors. All of us are expected to maintain the highest ethical practices in our work and dealings both inside and outside our Company.
No waivers of the provisions of this Code of Ethics may be granted to employees without the review and approval of the Southern Company Compliance Officer or the compliance officer of the subsidiary involved. In addition, no waivers may be granted for Southern Company directors or executive officers without the review and approval of the Southern Company Board of Directors. Waivers of this Code of Ethics shall be disclosed as required by law, the New York Stock Exchange rules, or other applicable regulation.
This policy does not create any contractual right to employment, employee benefits, or other terms and conditions of employment
Exhibit 21(a)
Subsidiaries of the Registrant*
Name of Company |
|
Jurisdiction of Organization |
|
|
|
The Southern Company |
|
Delaware |
Southern Company Capital Trust I |
|
Delaware |
Southern Company Capital Trust II |
|
Delaware |
Southern Company Capital Trust VI |
|
Delaware |
Southern Company Capital Trust VII |
|
Delaware |
Southern Company Capital Trust VIII |
|
Delaware |
Southern Company Capital Trust IX |
|
Delaware |
Southern Company Holdings, Inc. |
|
Delaware |
Alabama Power Company |
|
Alabama |
Alabama Power Capital Trust V |
|
Delaware |
Alabama Power Capital Trust VI |
|
Delaware |
Alabama Power Capital Trust VII |
|
Delaware |
Alabama Power Capital Trust VIII |
|
Delaware |
Alabama Property Company |
|
Alabama |
Southern Electric Generating Company |
|
Alabama |
Georgia Power Company |
|
Georgia |
Georgia Power Capital Trust V |
|
Delaware |
Georgia Power Capital Trust VI |
|
Delaware |
Georgia Power Capital Trust VII |
|
Delaware |
Georgia Power Capital Trust VIII |
|
Delaware |
Georgia Power Capital Trust IX |
|
Delaware |
Georgia Power Capital Trust X |
|
Delaware |
Georgia Power Capital Trust XI |
|
Delaware |
Piedmont-Forrest Corporation |
|
Georgia |
Southern Electric Generating Company |
|
Alabama |
Gulf Power Company |
|
Florida |
Gulf Power Capital Trust III |
|
Delaware |
Gulf Power Capital Trust IV |
|
Delaware |
Gulf Power Capital Trust V |
|
Delaware |
Gulf Power Capital Trust VI |
|
Delaware |
Mississippi Power Company |
|
Mississippi |
Mississippi Power Capital Trust II |
|
Delaware |
Mississippi Power Capital Trust III |
|
Delaware |
Mississippi Power Capital Trust IV |
|
Delaware |
Southern Power Company** |
|
Delaware |
*This information is as of December 31, 2008. In addition, this list omits certain subsidiaries pursuant to paragraph (b)(21)(ii) of Regulation S-K, Item 601.
**Southern Power Company has omitted its list of subsidiaries in accordance with General Instruction I(2)(b) of Form 10-K.
Exhibit 23(a)1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 2-78617, 33-54415, 33-58371, 33-60427, 333-44127, 333-110557, 333-124780, 333-127187, 333-134434, 333-118061, and 333-149407 on Form S-8 and Registration Statement Nos. 33-3546, 333-09077, 333-64871 (as amended), 333-65178, 333-138503 (as amended), and 333-138504 on Form S-3 of our reports dated February 25, 2009, relating to the consolidated financial statements and consolidated financial statement schedule of Southern Company, and the effectiveness of Southern Company's internal control over financial reporting, appearing in this Annual Report on Form 10-K of Southern Company for the year ended December 31, 2008.
/s/Deloitte & Touche LLP
Atlanta, Georgia
February 25, 2009
Exhibit 23(b)1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-148513 on Form S-3 of our reports dated February 25, 2009, relating to the financial statements and financial statement schedule of Alabama Power Company, appearing in this Annual Report on Form 10-K of Alabama Power Company for the year ended December 31, 2008.
/s/Deloitte & Touche LLP
Birmingham, Alabama
February 25, 2009
Exhibit 23(c)1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-140954 on Form S-3 of our reports dated February 25, 2009, relating to the financial statements and financial statement schedule of Georgia Power Company, appearing in this Annual Report on Form 10-K of Georgia Power Company for the year ended December 31, 2008.
/s/Deloitte & Touche LLP
Atlanta, Georgia
February 25, 2009
Exhibit 23(d)1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-138480 and 333-149664 on Form S-3 of our reports dated February 25, 2009, relating to the financial statements and financial statement schedule of Gulf Power Company, appearing in this Annual Report on Form 10-K of Gulf Power Company for the year ended December 31, 2008.
/s/Deloitte & Touche LLP
Atlanta, Georgia
February 25, 2009
Exhibit 23(e)1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-108156 and 333-152895 on Form S-3 of our reports dated February 25, 2009, relating to the financial statements and financial statement schedule of Mississippi Power Company, appearing in this Annual Report on Form 10-K of Mississippi Power Company for the year ended December 31, 2008.
/s/Deloitte & Touche LLP
Atlanta, Georgia
February 25, 2009
Exhibit 23(f)1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-134219 on Form S-3 of our report dated February 25, 2009, relating to the consolidated financial statements of Southern Power Company, appearing in this Annual Report on Form 10-K of Southern Power Company for the year ended December 31, 2008.
/s/Deloitte & Touche LLP
Atlanta, Georgia
February 25, 2009
Exhibit 24(a)
February 16, 2009
Melissa K. Caen and Wayne Boston
Ms. Caen and Mr. Boston:
The Southern Company (the “Company”) proposes to file or join in the filing of reports under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission with respect to the following: (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and (2) the Company’s Quarterly Reports on Form 10-Q during 2009.
The Company and the undersigned directors and officers of the Company, individually as a director and/or as an officer of the Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, said Quarterly Reports on Form 10-Q and any necessary or appropriate amendment or amendments to any such reports, to be accompanied in each case by any necessary or appropriate exhibits or schedules thereto.
|
Yours very truly,
THE SOUTHERN COMPANY |
|
|
|
By /s/David M. Ratcliffe David M. Ratcliffe Chairman of the Board, President and Chief Executive Officer |
- 2 -
/s/Juanita Powell Baranco Juanita Powell Baranco
|
/s/J. Neal Purcell J. Neal Purcell
|
/s/Francis S. Blake Francis S. Blake
|
/s/David M. Ratcliffe David M. Ratcliffe
|
/s/Jon A. Boscia Jon A. Boscia
|
/s/William G. Smith, Jr. William G. Smith, Jr.
|
/s/Thomas F. Chapman Thomas F. Chapman
|
/s/Gerald J. St. Pé Gerald J. St. Pé
|
/s/H. William Habermeyer, Jr. H. William Habermeyer, Jr.
|
/s/G. Edison Holland, Jr. G. Edison Holland, Jr.
|
/s/Veronica M. Hagen Veronica M. Hagen
|
/s/W. Paul Bowers W. Paul Bowers
|
/s/Warren A. Hood, Jr. Warren A. Hood, Jr.
|
/s/W. Ron Hinson W. Ron Hinson
|
/s/Donald M. James Donald M. James
|
|
Extract from minutes of meeting of the board of directors of The Southern Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing the reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of this Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and its 2009 Quarterly Reports on Form 10-Q, and any necessary or appropriate amendment or amendments to any such reports, this Company, the members of its board of directors and its officers are authorized to give their several powers of attorney to Melissa K. Caen and Wayne Boston.
- - - - - - - - - -
The undersigned officer of The Southern Company does hereby certify that the foregoing is a true and correct copy of a resolution duly and regularly adopted at a meeting of the board of directors of The Southern Company, duly held on February 16, 2009, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated: February 25, 2009 |
THE SOUTHERN COMPANY
|
|
By /s/Wayne Boston Wayne Boston Assistant Secretary |
Exhibit 24(b)
Charles D. McCrary President and Chief Executive Officer
|
600 North 18 th Street Post Office Box 2641 Birmingham, Alabama 35291-0001 |
|
|
|
Tel 205.257.1000 Fax 205.257.5100 |
|
|
|
ALABAMA POWER A SOUTHERN COMPANY |
||
January 23, 2009
W. Paul Bowers |
Wayne Boston |
30 Ivan Allen Jr. Blvd, N.W. |
30 Ivan Allen Jr. Blvd, N.W. |
Atlanta, Georgia 30308 |
Atlanta, Georgia 30308 |
Dear Sirs:
Alabama Power Company (the “Company”) proposes to file or join in the filing of reports under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission with respect to the following: (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and (2) the Company’s Quarterly Reports on Form 10-Q during 2009.
The Company and the undersigned directors and officers of the Company, individually as a director and/or as an officer of said Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, said Quarterly Reports on Form 10-Q and any necessary or appropriate amendment or amendments to any such reports, to be accompanied in each case by any necessary or appropriate exhibits or schedules thereto.
|
Yours very truly,
|
|
ALABAMA POWER COMPANY
|
|
By /s/Charles D. McCrary Charles D. McCrary President and Chief Executive Officer
|
- 2 -
/s/Whit Armstrong Whit Armstrong
|
/s/Robert D. Powers Robert D. Powers
|
/s/Ralph D. Cook Ralph D. Cook
|
/s/David M. Ratcliffe David M. Ratcliffe
|
/s/David J. Cooper, Sr. David J. Cooper, Sr.
|
/s/C. Dowd Ritter C. Dowd Ritter
|
/s/John D. Johns John D. Johns
|
/s/James H. Sanford James H. Sanford
|
/s/Patricia M. King Patricia M. King
|
/s/John Cox Webb, IV John Cox Webb, IV
|
/s/James K. Lowder James K. Lowder
|
______________________________ James W. Wright
|
/s/Charles D. McCrary Charles D. McCrary
|
/s/Art P. Beattie Art P. Beattie
|
/s/Malcolm Portera Malcolm Portera |
/s/Moses H. Feagin Moses H. Feagin
|
- 3 -
Extract from minutes of meeting of the board of directors of Alabama Power Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing the reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to filing the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and its 2009 Quarterly Reports on Form 10-Q, and any necessary or appropriate amendment or amendments to any such reports, this Company, the members of its board of directors and its officers are authorized to give their several powers of attorney to W. Paul Bowers and Wayne Boston.
- - - - - - - - - -
The undersigned officer of Alabama Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Alabama Power Company, duly held on January 23, 2009, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated: February 25, 2009 |
ALABAMA POWER COMPANY
By /s/Wayne Boston Wayne Boston Assistant Secretary |
Exhibit 24(c)
February 18, 2009
Cliff S. Thrasher, W. Paul Bowers and Wayne Boston
Dear Sirs:
Georgia Power Company (the “Company”) proposes to file or join in the filing of reports under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission with respect to the following: (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and (2) the Company’s Quarterly Reports on Form 10-Q during 2009.
The Company and the undersigned directors and officers of the Company, individually as a director and/or as an officer of said Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, said Quarterly Reports on Form 10-Q and any necessary or appropriate amendment or amendments to any such reports, to be accompanied in each case by any necessary or appropriate exhibits or schedules thereto.
|
Yours very truly, GEORGIA POWER COMPANY
By /s/Michael D. Garrett Michael D. Garrett President and Chief Executive Officer
|
- 2 -
/s/Robert L. Brown, Jr. Robert L. Brown, Jr.
|
/s/D. Gary Thompson D. Gary Thompson
|
/s/Anna R. Cablik Anna R. Cablik
|
/s/Richard W. Ussery Richard W. Ussery
|
/s/Michael D. Garrett Michael D. Garrett
|
/s/W. Jerry Vereen W. Jerry Vereen
|
/s/Stephen S. Green Stephen S. Green
|
/s/E. Jenner Wood III E. Jenner Wood III
|
______________________________ David M. Ratcliffe
|
/s/Cliff S. Thrasher Cliff S. Thrasher
|
/s/Jimmy C. Tallent Jimmy C. Tallent
|
/s/Ann P. Daiss Ann P. Daiss
|
/s/Beverly Daniel Tatum Beverly Daniel Tatum |
/s/Daniel M. Lowery Daniel M. Lowery |
- 3 -
Extract from minutes of meeting of the board of directors of Georgia Power Company.
- - - - - - - - -
RESOLVED: That for the purpose of signing reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of this Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and its 2009 Quarterly Reports on Form 10-Q, and any necessary or appropriate amendment or amendments to any such reports, this Company, the members of its board of directors and its officers are authorized to give their several powers of attorney to Cliff S. Thrasher, W. Paul Bowers and Wayne Boston.
- - - - - - - - -
The undersigned officer of Georgia Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Georgia Power Company, duly held on February 18, 2009, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated: February 25, 2009 |
GEORGIA POWER COMPANY
By /s/Wayne Boston Wayne Boston Assistant Secretary |
Exhibit 24(d)
Gulf Power Company
One Energy Place
Pensacola, Florida 32520
950 444 6111
October 23, 2008
Mr. W. Paul Bowers The Southern Company 30 Ivan Allen, Jr. Blvd NW Atlanta, GA 30308 |
Mr. Wayne Boston Southern Company Services, Inc. 30 Ivan Allen, Jr. Blvd NW Atlanta, GA 30308 |
Dear Sirs:
Gulf Power Company (the “Company”) proposes to file or join in the filing of reports under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission with respect to the following: (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and (2) the Company’s Quarterly Reports on Form 10-Q during 2009.
The Company and the undersigned directors and officers of the Company, individually as a director and/or as an officer of said Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, said Quarterly Reports on Form 10-Q and any necessary or appropriate amendment or amendments to any such reports, to be accompanied in each case by any necessary exhibits or schedules thereto.
Yours very truly,
By |
/s/Susan N. Story |
|
Susan N. Story |
|
President and Chief Executive Officer |
- 2 -
/s/C. LeDon Anchors C. LeDon Anchors
|
/s/Susan N. Story Susan N. Story
|
/s/William C. Cramer, Jr. William C. Cramer, Jr.
|
/s/Philip C. Raymond Philip C. Raymond
|
/s/Fred C. Donovan, Sr. Fred C. Donovan, Sr.
|
/s/Constance J. Erickson
|
/s/William A. Pullum William A. Pullum
|
/s/Susan D. Ritenour Susan D. Ritenour
|
/s/Winston E. Scott Winston E. Scott |
|
- 3 -
Extract from minutes of meeting of the board of directors of Gulf Power Company.
- - - - - - - - - -
RESOLVED, That for the purpose of signing the reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of this Company's Annual Report on Form 10-K for the year ended December 31, 2008, and its 2009 Quarterly Reports on Form 10-Q, and any necessary or appropriate amendment or amendments to any such reports, this Company, the members of its board of directors and its officers are authorized to give their several powers of attorney to W. Paul Bowers and Wayne Boston.
- - - - - - - - - -
The undersigned officer of Gulf Power Company does hereby certify that the foregoing is a true and correct copy of a resolution duly and regularly adopted at a meeting of the board of directors of Gulf Power Company, duly held on October 23, 2008, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated: February 25, 2009 |
GULF POWER COMPANY |
|
By /s/Wayne Boston Wayne Boston Assistant Secretary |
Exhibit 24(e)
October 8, 2008
Mr. W. Paul Bowers The Southern Company 30 Ivan Allen Jr. Blvd, NW Atlanta, GA 30308 |
Mr. Wayne Boston Southern Company Services, Inc. 30 Ivan Allen Jr. Blvd, NW Atlanta, GA 30308 |
Dear Sirs:
Mississippi Power Company (the “Company”) proposes to file or join in the filing of reports under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission with respect to the following: (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and (2) the Company’s Quarterly Reports on Form 10-Q during 2009.
The Company and the undersigned directors and officers of the Company, individually as a director and/or as an officer of said Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, said Quarterly Reports on Form 10-Q and any necessary or appropriate amendment or amendments to any such reports, to be accompanied in each case by any necessary exhibits or schedules thereto.
|
Yours very truly,
MISSISSIPPI POWER COMPANY
By /s/Anthony J. Topazi Anthony J. Topazi President and Chief Executive Officer |
- 2 -
/s/Roy Anderson, III Roy Anderson, III
|
/s/Philip J. Terrell Philip J. Terrell
|
/s/Tommy E. Dulaney Tommy E. Dulaney
|
/s/Anthony J. Topazi Anthony J. Topazi
|
/s/Aubrey B. Patterson, Jr. Aubrey B. Patterson, Jr.
|
/s/Frances V. Turnage Frances V. Turnage
|
/s/Christine L. Pickering Christine L. Pickering
|
/s/Cindy F. Shaw Cindy F. Shaw
|
/s/Martha D. Saunders Martha D. Saunders
|
/s/Vicki L. Pierce Vicki L. Pierce
|
/s/George A. Schloegel George A. Schloegel |
|
- 3 -
Extract from minutes of meeting of the board of directors of Mississippi Power Company.
- - - - - - - - - -
RESOLVED, That for the purpose of signing the reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of this Company's Annual Report on Form 10-K for the year ended December 31, 2008, and its 2009 Quarterly Reports on Form 10-Q, and any necessary or appropriate amendment or amendments to any such reports, this Company, the members of its board of directors and its officers are authorized to give their several powers of attorney to W. Paul Bowers and Wayne Boston.
- - - - - - - - - -
The undersigned officer of Mississippi Power Company does hereby certify that the foregoing is a true and correct copy of a resolution duly and regularly adopted at a meeting of the board of directors of Mississippi Power Company, duly held on October 8, 2008, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated: February 25, 2009 |
MISSISSIPPI POWER COMPANY |
|
By /s/Wayne Boston Wayne Boston Assistant Secretary |
Exhibit 24(f)
November 18, 2008
Ms. Laura I. Patterson Southern Power Company 30 Ivan Allen Jr. Blvd, NW Atlanta, GA 30308 |
Mr. Wayne Boston Southern Company Services, Inc. 30 Ivan Allen Jr. Blvd, NW Atlanta, GA 30308 |
Ms. Patterson and Mr. Boston:
Southern Power Company (the “Company”) proposes to file or join in the filing of reports under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission with respect to the following: (1) the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and (2) the Company’s Quarterly Reports on Form 10-Q during 2009.
The Company and the undersigned directors and officers of the Company, individually as a director and/or as an officer of said Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K said Quarterly Reports on Form 10-Q and any necessary or appropriate amendment or amendments to any such reports, to be accompanied in each case by any necessary or appropriate exhibits or schedules thereto.
Yours very truly,
SOUTHERN POWER COMPANY
By |
/s/Ronnie L. Bates |
|
Ronnie L. Bates |
|
President and |
|
Chief Executive Officer |
- 2 -
/s/William Paul Bowers William Paul Bowers |
/s/Ronnie L. Bates Ronnie L. Bates |
/s/Thomas A. Fanning Thomas A. Fanning |
/s/Michael W. Southern Michael W. Southern |
/s/G. Edison Holland, Jr. G. Edison Holland, Jr. |
/s/Laura I. Patterson Laura I. Patterson |
/s/David M. Ratcliffe David M. Ratcliffe |
|
- 3 -
Extract from minutes of meeting of the board of directors of Southern Power Company.
- - - - - - - - - -
RESOLVED, That for the purpose of signing the reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of this Company's Annual Report on Form 10-K for the year ended December 31, 2008, and its 2009 Quarterly Reports on Form 10-Q, and any necessary or appropriate amendment or amendments to any such reports, this Company, the members of its board of directors and its officers are authorized to give their several powers of attorney to Laura I. Patterson and Wayne Boston.
- - - - - - - - - -
The undersigned officer of Southern Power Company does hereby certify that the foregoing is a true and correct copy of a resolution duly and regularly adopted at a meeting of the board of directors of Southern Power Company, duly held on November 18, 2008, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated: February 25, 2009 |
SOUTHERN POWER COMPANY
By /s/Wayne Boston Wayne Boston Assistant Secretary
|
Exhibit 31(a)1
THE SOUTHERN COMPANY
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, David M. Ratcliffe, certify that:
1. |
I have reviewed this annual report on Form 10-K of The Southern Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/David M. Ratcliffe
David M. Ratcliffe
Chairman, President and Chief Executive Officer
Exhibit 31(a)2
THE SOUTHERN COMPANY
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, W. Paul Bowers, certify that:
1. |
I have reviewed this annual report on Form 10-K of The Southern Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/W. Paul Bowers
W. Paul Bowers
Executive Vice President and Chief Financial Officer
Exhibit 31(b)1
ALABAMA POWER COMPANY
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Charles D. McCrary, certify that:
1. |
I have reviewed this annual report on Form 10-K of Alabama Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Charles D. McCrary
Charles D. McCrary
President and Chief Executive Officer
Exhibit 31(b)2
ALABAMA POWER COMPANY
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Art P. Beattie, certify that:
1. |
I have reviewed this annual report on Form 10-K of Alabama Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Art P. Beattie
Art P. Beattie
Executive Vice President, Chief Financial Officer and Treasurer
Exhibit 31(c)1
GEORGIA POWER COMPANY
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Michael D. Garrett, certify that:
1. |
I have reviewed this annual report on Form 10-K of Georgia Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Michael D. Garrett
Michael D. Garrett
President and Chief Executive Officer
Exhibit 31(c)2
GEORGIA POWER COMPANY
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Cliff S. Thrasher, certify that:
1. |
I have reviewed this annual report on Form 10-K of Georgia Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Cliff S. Thrasher
Cliff S. Thrasher
Executive Vice President, Chief Financial Officer and Treasurer
Exhibit 31(d)1
GULF POWER COMPANY
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Susan N. Story, certify that:
1. |
I have reviewed this annual report on Form 10-K of Gulf Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Susan N. Story
Susan N. Story
President and Chief Executive Officer
Exhibit 31(d)2
GULF POWER COMPANY
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Philip C. Raymond, certify that:
1. |
I have reviewed this annual report on Form 10-K of Gulf Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Philip C. Raymond
Philip C. Raymond
Vice President and Chief Financial Officer
Exhibit 31(e)1
MISSISSIPPI POWER COMPANY
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Anthony J. Topazi, certify that:
1. |
I have reviewed this annual report on Form 10-K of Mississippi Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Anthony J. Topazi
Anthony J. Topazi
President and Chief Executive Officer
Exhibit 31(e)2
MISSISSIPPI POWER COMPANY
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Frances Turnage, certify that:
1. |
I have reviewed this annual report on Form 10-K of Mississippi Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Frances Turnage
Frances Turnage
Vice President, Treasurer and Chief Financial Officer
Exhibit 31(f)1
SOUTHERN POWER COMPANY
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Ronnie L. Bates, certify that:
1. |
I have reviewed this annual report on Form 10-K of Southern Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Ronnie L. Bates
Ronnie L. Bates
President and Chief Executive Officer
Exhibit 31(f)2
SOUTHERN POWER COMPANY
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Michael W. Southern, certify that:
1. |
I have reviewed this annual report on Form 10-K of Southern Power Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 25, 2009
/s/Michael W. Southern
Michael W. Southern
Senior Vice President, Treasurer and Chief Financial Officer
Exhibit 32(a)
CERTIFICATION
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of The Southern Company for the year ended December 31, 2008, we, the undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and belief, that:
(1) |
such Annual Report on Form 10-K of The Southern Company for the year ended December 31, 2008, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
(2) |
the information contained in such Annual Report on Form 10-K of The Southern Company for the year ended December 31, 2008, fairly presents, in all material respects, the financial condition and results of operations of The Southern Company. |
|
/s/David M. Ratcliffe David M. Ratcliffe Chairman, President and Chief Executive Officer
|
|
/s/W. Paul Bowers W. Paul Bowers Executive Vice President and Chief Financial Officer
|
Date: February 25, 2009
Exhibit 32(b)
CERTIFICATION
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Alabama Power Company for the year ended December 31, 2008, we, the undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and belief, that:
(1) |
such Annual Report on Form 10-K of Alabama Power Company for the year ended December 31, 2008, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
the information contained in such Annual Report on Form 10-K of Alabama Power Company for the year ended December 31, 2008, fairly presents, in all material respects, the financial condition and results of operations of Alabama Power Company. |
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/s/Charles D. McCrary Charles D. McCrary President and Chief Executive Officer
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/s/Art P. Beattie Art P. Beattie Executive Vice President, Chief Financial Officer and Treasurer |
Date: February 25, 2009
Exhibit 32(c)
CERTIFICATION
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Georgia Power Company for the year ended December 31, 2008, we, the undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and belief, that:
(1) |
such Annual Report on Form 10-K of Georgia Power Company for the year ended December 31, 2008, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
the information contained in such Annual Report on Form 10-K of Georgia Power Company for the year ended December 31, 2008, fairly presents, in all material respects, the financial condition and results of operations of Georgia Power Company. |
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/s/Michael D. Garrett Michael D. Garrett President and Chief Executive Officer
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/s/Cliff S. Thrasher Cliff S. Thrasher Executive Vice President, Chief Financial Officer and Treasurer
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Date: February 25, 2009
Exhibit 32(d)
CERTIFICATION
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Gulf Power Company for the year ended December 31, 2008, we, the undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and belief, that:
(1) |
such Annual Report on Form 10-K of Gulf Power Company for the year ended December 31, 2008, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
the information contained in such Annual Report on Form 10-K of Gulf Power Company for the year ended December 31, 2008, fairly presents, in all material respects, the financial condition and results of operations of Gulf Power Company. |
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/s/Susan N. Story Susan N. Story President and Chief Executive Officer
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/s/Philip C. Raymond Philip C. Raymond Vice President and Chief Financial Officer
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Date: February 25, 2009
Exhibit 32(e)
CERTIFICATION
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Mississippi Power Company for the year ended December 31, 2008, we, the undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and belief, that:
(1) |
such Annual Report on Form 10-K of Mississippi Power Company for the year ended December 31, 2008, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
the information contained in such Annual Report on Form 10-K of Mississippi Power Company for the year ended December 31, 2008, fairly presents, in all material respects, the financial condition and results of operations of Mississippi Power Company. |
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/s/Anthony J. Topazi Anthony J. Topazi President and Chief Executive Officer
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/s/Frances Turnage Frances Turnage Vice President, Treasurer and Chief Financial Officer
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Date: February 25, 2009
Exhibit 32(f)
CERTIFICATION
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Southern Power Company for the year ended December 31, 2008, we, the undersigned, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of our individual knowledge and belief, that:
(1) |
such Annual Report on Form 10-K of Southern Power Company for the year ended December 31, 2008, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(2) |
the information contained in such Annual Report on Form 10-K of Southern Power Company for the year ended December 31, 2008, fairly presents, in all material respects, the financial condition and results of operations of Southern Power Company. |
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/s/Ronnie L. Bates Ronnie L. Bates President and Chief Executive Officer
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/s/Michael W. Southern Michael W. Southern Senior Vice President, Treasurer and Chief Financial Officer
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Date: February 25, 2009