UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant To Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
o | Preliminary information statement |
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o | Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2)) | |||
x | Definitive information statement |
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ALABAMA POWER COMPANY
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. | |||
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| (2) | Aggregate number of securities to which transaction applies: |
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: |
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o | Fee paid previously with preliminary materials. |
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o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
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(2) | Form, Schedule or Registration Statement No.: | |||
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(4) | Date Filed: |
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General Information | 1 | |||
Shareholder Proposals | 1 | |||
Nominees for Election as Directors | 2 | |||
Corporate Governance | 4 | |||
Communications to the Board | 6 | |||
Board Attendance at Annual Shareholders Meeting | 6 | |||
Audit Committee Report | 7 | |||
Compensation and Management Succession Committee Report | 9 | |||
Compensation Committee Interlocks and Insider Participation | 11 | |||
Certain Relationships and Related Transactions | 11 | |||
Executive Compensation Information | 12 | |||
Stock Ownership Table | 16 | |||
Articles of Incorporation | 17 | |||
Appendix A — Southern Company Audit Committee Charter | A-1 | |||
Appendix B — Nominating Committee Charter | B-1 | |||
Appendix C — Amendment to Articles of Incorporation | C-1 |
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• | Standard Arrangements. The following compensation was paid to the Company’s directors during 2005 for service as a member of the board of directors and any board committee(s), except that employee directors received no fees or compensation for service as a member of the board of directors or any board committee. At the election of the director, all or a portion of the cash retainer and meeting fees may be payable in Southern Company common stock. Also, at the election of the director, all or a portion of directors’ compensation, including the stock retainer, may be deferred under the Company’s deferred compensation plan for its directors until membership on the board is terminated. If a director elects to defer the stock retainer, it is payable in Southern Company common stock following termination from the board. |
Annual Cash Retainer Fee | $25,000 for directors serving as chair of a board committee and $22,000 for other directors | |
Annual Stock Retainer Fee | 520 shares of Southern Company common stock | |
Meeting Fees | $1,800 for each board meeting attended and $1,200 for each committee meeting attended |
• | Other Arrangements. No director received other compensation for services as a director during the year ending December 31, 2005 in addition to or in lieu of that specified by the standard arrangements specified above. |
• | Members are Mr. Webb, Chairman; Mr. R. Kent Henslee and Mr. Lowder | |
• | Met four times in 2005 | |
• | Oversees the Company’s internal control and compliance matters |
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• | Members are Mr. Wallace D. Malone, Jr., Chairman; Mr. Armstrong and Dr. Portera | |
• | Met three times in 2005 | |
• | Oversees the administration of the Company’s compensation arrangements |
• | Members are Mr. Ritter, Chairman; Mr. Cooper; Mr. Johns; Mr. Ratcliffe and Mr. Sanford | |
• | Met one time in 2005 | |
• | Considers and recommends nominees for election as directors |
• | Members are Mr. McCrary, Chairman; Mr. Carl E. Jones, Jr.; Mr. Wallace D. Malone, Jr. and Mr. Ritter | |
• | Met three times in 2005 | |
• | Acts in place of full board on matters that require board action between scheduled meetings of the board to the extent permitted by law and within certain limits set by the board |
• | Members are Mr. Powers, Chairman; Ms. King and Mr. Wright | |
• | Met four times in 2005 | |
• | Reviews nuclear activities |
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2004 | 2005 | |||||||
(in thousands) | ||||||||
Audit Fees(1) | $ | 2,546 | $ | 2,619 | ||||
Audit-Related Fees | 0 | 0 | ||||||
Tax Fees | 16 | 0 | ||||||
All Other Fees | 0 | 0 | ||||||
Total | $ | 2,562 | $ | 2,619 | ||||
(1) | Includes services performed in connection with financing transactions. |
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• | Base pay (salary); |
• | Short-term incentives (annual performance-based compensation); and |
• | Long-term incentives (stock options and performance-based dividend equivalents). |
• | Southern Company earnings — earnings per share (“EPS”) and |
• | The Company’s return on equity (“ROE”). |
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• | lump sum payment of two or three times annual compensation, | |
• | up to five years’ coverage under group health and life insurance plans, | |
• | immediate vesting of all stock options, stock appreciation rights and restricted stock previously granted, | |
• | payment of any accrued long-term and short-term bonuses (performance-based compensation) and dividend equivalents and | |
• | payment of any excise tax liability incurred as a result of payments made under any individual agreements. |
• | acquisition of at least 20 percent of Southern Company’s stock, | |
• | a change in the majority of the members of Southern Company’s board of directors in connection with an actual or threatened change in control, | |
• | a merger or other business combination that results in Southern Company’s shareholders immediately before the merger owning less than 65 percent of the voting power after the merger or | |
• | a sale of substantially all the assets of Southern Company. |
• | acquisition of at least 50 percent of the Company’s stock, | |
• | a merger or other business combination unless Southern Company controls the surviving entity or | |
• | a sale of substantially all of the assets of the Company. |
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Long-Term Compensation | ||||||||||||||||||||||||||||
Annual Compensation | Number of | |||||||||||||||||||||||||||
Securities | Long-Term | |||||||||||||||||||||||||||
Other Annual | Underlying | Incentive | All Other | |||||||||||||||||||||||||
Name and Principal | Compensation | Stock Options | Payouts | Compensation | ||||||||||||||||||||||||
Position | Year | Salary ($) | Bonus ($) | ($)(1) | (Shares) | ($)(2) | ($)(3) | |||||||||||||||||||||
Charles D. McCrary | 2005 | 580,495 | 808,636 | 86,706 | 86,454 | 256,887 | 131,643 | |||||||||||||||||||||
President, Chief Executive | 2004 | 551,989 | 648,749 | 8,205 | 71,424 | 384,772 | 29,685 | |||||||||||||||||||||
Officer and Director | 2003 | 521,649 | 694,948 | 9,111 | 72,054 | 483,081 | 26,180 | |||||||||||||||||||||
C. Alan Martin | 2005 | 367,818 | 374,370 | 3,607 | 39,418 | 100,110 | 19,839 | |||||||||||||||||||||
Executive Vice President | 2004 | 357,144 | 306,181 | 6,008 | 39,838 | 195,234 | 18,918 | |||||||||||||||||||||
2003 | 346,112 | 337,538 | 9,987 | 41,359 | 261,977 | 21,857 | ||||||||||||||||||||||
Art P. Beattie(4) | 2005 | 231,941 | 216,584 | 12,253 | 21,558 | 56,876 | 36,159 | |||||||||||||||||||||
Executive Vice President, | ||||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
and Treasurer | ||||||||||||||||||||||||||||
Steve R. Spencer | 2005 | 338,729 | 313,128 | 38,657 | 30,687 | 50,852 | 91,797 | |||||||||||||||||||||
Executive | 2004 | 330,196 | 257,343 | 35,930 | 31,165 | 86,749 | 90,677 | |||||||||||||||||||||
Vice President | 2003 | 290,026 | 283,698 | 7,502 | 29,414 | 164,081 | 16,536 | |||||||||||||||||||||
Jerry L. Stewart | 2005 | 304,530 | 333,663 | 416 | 32,814 | 119,647 | 16,689 | |||||||||||||||||||||
Senior Vice President | 2004 | 286,863 | 311,581 | 9,925 | 32,224 | 163,090 | 35,635 | |||||||||||||||||||||
2003 | 265,028 | 297,171 | 17,963 | 30,381 | 178,471 | 49,116 | ||||||||||||||||||||||
(1) | This column reports tax reimbursements on certain perquisites and personal benefits as well as on additional incentive compensation, if applicable. Additional incentive compensation is reported in the “All Other Compensation” column. |
(2) | Payout of performance dividend equivalents on stock options granted after 1996 that were held by the named executive officer at the end of the performance periods under the Southern Company Omnibus Incentive Compensation Plan for the four-year performance periods ended December 31, 2003, 2004 and 2005, respectively. Effective January 1, 2005, dividend equivalents can range from approximately five percent of the Southern Company common stock dividend paid during the last year of the performance period if Southern Company total shareholder return over the four-year period, compared to a group of other large utility companies, is above the 10th percentile to 100 percent of the dividend paid if it reaches the 90th percentile. For eligible stock options held on December 31, 2003, 2004 and 2005, all named executive officers earned a payout of $1.385, $1.22 and $0.83 per option, respectively. |
(3) | Company contributions in 2005 to the Southern Company Employee Savings Plan (ESP), Employee Stock Ownership Plan (ESOP) and non-pension related accruals under the Southern Company Supplemental Benefit Plan (SBP) are provided in the following table: |
Name | ESP | ESOP | SBP | |||||||||
Charles D. McCrary | $ | 7,878 | $ | 773 | $ | 22,992 | ||||||
C. Alan Martin | 8,839 | 773 | 10,227 | |||||||||
Art P. Beattie | 8,368 | 773 | 2,018 | |||||||||
Steve R. Spencer | 7,972 | 773 | 8,052 | |||||||||
Jerry L. Stewart | 9,450 | 773 | 6,466 | |||||||||
In 2005, Messrs. McCrary, Beattie and Spencer received additional compensation of $100,000, $25,000 and $75,000, respectively. | |
In 2004, Messrs. Spencer and Stewart received additional incentive compensation of $75,000 and $20,000, respectively. | |
In 2003, Messrs. Martin, Spencer and Stewart received additional incentive compensation of $4,000, $4,000 and $35,000, respectively. |
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Number of | ||||||||||||||||||||
Securities | Percent of Total | |||||||||||||||||||
Underlying | Options Granted | Exercise or | Grant Date | |||||||||||||||||
Options | to Employees in | Base Price | Expiration | Present | ||||||||||||||||
Name | Granted(1) | Fiscal Year(2) | ($/Sh)(1) | Date(1) | Value($)(3) | |||||||||||||||
Charles D. McCrary | 86,454 | 7.3 | 32.70 | 2/18/2015 | 337,171 | |||||||||||||||
C. Alan Martin | 39,418 | 3.3 | 32.70 | 2/18/2015 | 153,730 | |||||||||||||||
Art P. Beattie | 21,558 | 1.8 | 32.70 | 2/18/2015 | 84,076 | |||||||||||||||
Steve R. Spencer | 30,687 | 2.6 | 32.70 | 2/18/2015 | 119,679 | |||||||||||||||
Jerry L. Stewart | 32,814 | 2.8 | 32.70 | 2/18/2015 | 127,975 | |||||||||||||||
(1) | Under the terms of the Southern Company Omnibus Incentive Compensation Plan, stock option grants to the named executive officers were made on February 18, 2005 and vest annually at a rate of one-third on the anniversary date of the grant. Grants fully vest upon termination as a result of death, total disability, or retirement and expire five years after retirement, three years after death or total disability, or their normal expiration date if earlier. The exercise price is the average of the high and low price of Southern Company common stock on the date granted. Options may be transferred to a revocable trust and for Mr. McCrary, options may also be transferred to certain family members, family trusts and family limited partnerships. |
(2) | A total of 1,179,681 stock options were granted in 2005 to employees of the Company. |
(3) | Value was calculated using the Black-Scholes option valuation model. The actual value, if any, ultimately realized depends on the market value of Southern Company’s common stock at a future date. Significant assumptions are shown below: |
Risk-free | Dividend | Expected | ||||||||||||
Volatility | Rate of Return | Yield | Term | |||||||||||
17.9% | 3.87% | 4.38% | 5 years | |||||||||||
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Options at Fiscal | In-the-Money Options | |||||||||||||||||||||||
Shares | Value | Year-End(#) | at Year-End($)(2) | |||||||||||||||||||||
Acquired on | Realized | |||||||||||||||||||||||
Name | Exercise(#) | ($)(1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Charles D. McCrary | 92,338 | 1,125,892 | 151,415 | 158,088 | 1,172,253 | 555,157 | ||||||||||||||||||
C. Alan Martin | 78,831 | 713,096 | 40,853 | 79,762 | 247,539 | 296,089 | ||||||||||||||||||
Art P. Beattie | 7,731 | �� | 111,510 | 35,735 | 32,790 | 327,325 | 101,801 | |||||||||||||||||
Steve R. Spencer | 40,525 | 288,079 | 0 | 61,268 | 0 | 224,932 | ||||||||||||||||||
Jerry L. Stewart | 22,341 | 328,025 | 79,730 | 64,423 | 702,201 | 234,487 | ||||||||||||||||||
(1) | The “Value Realized” is ordinary income, before taxes, and represents the amount equal to the excess of the fair market value of the shares at the time of exercise above the exercise price. |
(2) | This column represents the excess of the fair market value of Southern Company common stock of $34.53 per share, as of December 31, 2005, above the exercise price of the options. The Exercisable column reports the “value” of options that are vested and therefore could be exercised. The Unexercisable column reports the “value” of options that are not vested and therefore could not be exercised as of December 31, 2005. |
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Years of Accredited Service | ||||||||||||||||||||||||||
Remuneration | 15 | 20 | 25 | 30 | 35 | 40 | ||||||||||||||||||||
$ | 100,000 | $ | 25,500 | $ | 34,000 | $ | 42,500 | $ | 51,000 | $ | 59,500 | $ | 68,000 | |||||||||||||
300,000 | 76,500 | 102,000 | 127,500 | 153,000 | 178,500 | 204,000 | ||||||||||||||||||||
500,000 | 127,500 | 170,000 | 212,500 | 255,000 | 297,500 | 340,000 | ||||||||||||||||||||
700,000 | 178,500 | 238,000 | 297,500 | 357,000 | 416,500 | 476,000 | ||||||||||||||||||||
900,000 | 229,500 | 306,000 | 382,500 | 459,000 | 535,500 | 612,000 | ||||||||||||||||||||
1,100,000 | 280,500 | 374,000 | 467,500 | 561,000 | 654,500 | 748,000 | ||||||||||||||||||||
1,300,000 | 331,500 | 442,000 | 552,500 | 663,000 | 773,500 | 884,000 | ||||||||||||||||||||
1,500,000 | 382,500 | 510,000 | 637,500 | 765,000 | 892,500 | 1,020,000 |
Accredited | ||||||||
Name | Compensation | Years of Service | ||||||
Charles D. McCrary | $ | 1,190,756 | 31 | |||||
C. Alan Martin | 645,938 | 33 | ||||||
Art P. Beattie | 324,322 | 29 | ||||||
Steve R. Spencer | 566,582 | 26 | ||||||
Jerry L. Stewart | 560,632 | 32 | ||||||
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Shares Beneficially | ||||||||||||
Owned Include: | ||||||||||||
Shares Individuals | ||||||||||||
Shares | Have Rights to | |||||||||||
Name of Directors, Nominees | Beneficially | Acquire Within 60 | ||||||||||
and Executive Officers | Title of Security | Owned(1) | Days(2) | |||||||||
Whit Armstrong | Southern Company Common Stock | 16,951 | ||||||||||
David J. Cooper, Sr. | Southern Company Common Stock | 9,402 | ||||||||||
R. Kent Henslee | Southern Company Common Stock | 13,949 | ||||||||||
John D. Johns | Southern Company Common Stock | 2,818 | ||||||||||
Carl E. Jones, Jr. | Southern Company Common Stock | 17,432 | ||||||||||
Patricia M. King | Southern Company Common Stock | 3,704 | ||||||||||
James K. Lowder | Southern Company Common Stock | 13,107 | ||||||||||
Wallace D. Malone, Jr. | Southern Company Common Stock | 3,295 | ||||||||||
Charles D. McCrary | Southern Company Common Stock | 232,408 | 228,059 | |||||||||
Malcolm Portera | Southern Company Common Stock | 4,338 | ||||||||||
Robert D. Powers | Southern Company Common Stock | 4,265 | ||||||||||
David M. Ratcliffe | Southern Company Common Stock | 611,615 | 596,499 | |||||||||
C. Dowd Ritter | Southern Company Common Stock | 3,704 | ||||||||||
James H. Sanford | Southern Company Common Stock | 7,541 | ||||||||||
John C. Webb, IV | Southern Company Common Stock | 13,063 | ||||||||||
James W. Wright | Southern Company Common Stock | 5,286 | ||||||||||
Art P. Beattie | Southern Company Common Stock | 54,518 | 50,456 | |||||||||
C. Alan Martin | Southern Company Common Stock | 86,096 | 81,058 | |||||||||
Steve R. Spencer | Southern Company Common Stock | 33,016 | 30,422 | |||||||||
Jerry L. Stewart | Southern Company Common Stock | 118,839 | 111,536 | |||||||||
Directors, Nominees and Executive Officers as a group (20 people) | Southern Company Common Stock | 1,255,347 | 1,098,030 | |||||||||
(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 shares of Southern Company’s common stock that certain executive officers have the right to acquire within 60 days. Shares indicated are included in the Shares Beneficially Owned Column. |
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The Committee will be comprised of at least three independent members of the Board, each of whom will be financially literate. A deliberate effort will be made to include at least one Director who is a financial expert. The selection of Committee members will be in accordance with requirements for independence and financial literacy and expertise, as interpreted by the Board in its best business judgment, giving full consideration to the rules of the Securities and Exchange Commission (SEC) and the New York Stock Exchange. |
To assist the Board of Directors in fulfilling its oversight responsibilities for the following: |
A. Integrity of the financial reporting process; | ||
B. The system of internal control; | ||
C. | The independence and performance of the internal and independent audit process; | |
D. | The Company’s process for monitoring adherence with the spirit and intent of its Code of Ethics and compliance with laws and regulations; and | |
E. | Assistance to Executive Management and the Chief Executive Officer in setting an appropriate “Tone at the Top” that encourages the highest levels of ethical behavior and integrity in all matters. |
The Audit Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to: |
A. | Appoint, compensate, and oversee the work of the independent auditors. | |
B. | Resolve any disagreements between management and the independent auditors regarding financial reporting. | |
C. | Pre-approve all auditing and non-audit services provided by the independent auditors. | |
D. | Retain independent counsel, accountants, or others to advise the committee or assist in the conduct of an investigation. | |
E. | Seek any information it requires from employees — all of whom are directed to cooperate with the Committee’s requests — or external parties. | |
F. | Meet with Company officers, independent auditors, internal auditors, inside counsel or outside counsel, as necessary. |
The Committee shall meet a minimum of four times each year, or more often if warranted, to receive reports and to discuss the quarterly and annual financial statements, including disclosures and other related information. The Committee shall meet separately, at least annually, with Company management, the Director of Internal Auditing, the Compliance Officer, and the independent auditors to discuss matters that the Committee or any of these persons believe should be discussed privately. Meetings of the Committee may utilize conference call, Internet or other similar electronic communication technology. |
A-1
A. | Financial Reporting and Independent Audit Process — The oversight responsibility of the Committee in the area of financial reporting (including disclosure controls and procedures and internal control over financial reporting) is to provide reasonable assurance that the Company’s financial disclosures and accounting practices accurately portray the financial condition, results of operations, cash flows, plans and long-term commitments of the Company on a consolidated basis, as well as on a separate company basis for each consolidated subsidiary that has publicly traded securities. To accomplish this, the Committee will: |
1. | Provide oversight of the independent audit process, including direct responsibility for: |
a. | Annual appointment of the independent auditors. | |
b. | Compensation of the independent auditors. | |
c. | Review and confirmation of the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the Company, including non-audit services, and discussing the relationships with the auditors. Ensure that non-audit services provided by the independent auditors comply with and are disclosed to investors in periodic reports required by the Securities Exchange Act of 1934 and the Sarbanes Oxley Act of 2002. | |
d. | Review of the independent auditors’ quarterly and annual work plans, and results of audit engagements. | |
e. | Review of the experience and qualifications of the senior members of the independent audit team annually and ensure that all partner rotation requirements are executed. | |
f. | Evaluation of the independent auditors’ performance. | |
g. | Oversight of the coordination of the independent auditors’ activities with the Internal Auditing and Accounting functions. |
2. | Review and discuss with management the quarterly and annual consolidated earnings announcements and earnings guidance provided to analysts and rating agencies. | |
3. | Review and discuss with management and the independent auditors the quarterly and annual financial reports and recommend those reports for filing with the SEC. The financial reports include the Southern Company consolidated financial reports as well as the separate financial reports for all consolidated subsidiaries with publicly traded securities. |
a. | The review and discussion will be based on timely reports from the independent auditors, including: |
i. | All critical accounting policies and practices to be used. | |
ii. | All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management; ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors. | |
iii. | Other material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences. |
b. | In addition, the following items will also be reviewed and discussed: |
i. | Significant judgments and estimates made by management. | |
ii. | Significant reporting or operational issues identified during the reporting period, including how they were resolved. | |
iii. | Issues on which management sought second accounting opinions. | |
iv. | Significant regulatory changes and accounting and reporting developments proposed by Financial Accounting Standards Board, SEC, Public Company Accounting Oversight Board (PCAOB) or other regulatory agencies. | |
v. | Any audit problems or difficulties and management’s response. |
4. | Review the letter of management representations given to the independent auditors in connection with the audit of the annual financial statements. |
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B. | Internal Control — The responsibility of the Committee in the area of internal control, in addition to the actions described inSection (V).(A.).,is to: |
1. | Provide oversight of the internal audit function including: |
a. | Review of audit plans, budgets and staffing levels. | |
b. | Review of audit results. | |
c. | Review of management’s appointment, appraisal of, and/or removal of the Company’s Director of Internal Auditing. At least every two years, regardless of the performance of the incumbent, the President and Chief Executive Officer will review with the Committee the merits of reassigning the Director of Internal Auditing. |
2. | Assess management’s response to any financial reporting or compliance deficiencies. | |
3. | Provide oversight of the Company’s Legal and Regulatory Compliance and Ethics Programs, including: |
a. | Creation and maintenance of procedures for: |
i. | Receipt, retention and treatment of complaints received by management regarding accounting, internal accounting controls or audit matters. |
ii. | Confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. |
b. | Review of plans and activities of the Company’s Corporate Compliance Officer. | |
c. | Review of results of auditing or other monitoring programs designed to prevent or detect violations of laws or regulations. | |
d. | Review of corporate policies relating to compliance with laws and regulations, ethics, conflict of interest and the investigation of misconduct or fraud. | |
e. | Review of reported cases of employee fraud, conflict of interest, unethical or illegal conduct. |
4. | Review the quality assurance practices of the internal auditing function and the independent auditors. | |
5. | Review and discuss significant risks facing the Company and the guidelines and policies to govern the process by which risk assessment and risk management is undertaken. |
C. | Conduct an annual self-assessment of the Committee’s performance. |
D. Other |
1. | Set clear employment policies for Southern Company’s hiring of employees or former employees of the independent auditors. | |
2. | Report Committee activities and findings to the Board on a regular basis. | |
3. | Report Committee activities in the Company’s annual proxy statement to shareholders. | |
4. | Review this charter at least annually and recommend appropriate changes. |
ADOPTED ON OCTOBER 17, 2005 | |
BY THE SOUTHERN COMPANY | |
BOARD OF DIRECTORS |
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a. The holders of the preferred stock and Class A preferred stock of each class shall be entitled to receive dividends, payable when and as declared by the board of directors, on such dates and at such rates as shall be determined for the respective classes, from the first day of the current dividend period within which such stock shall have been originally issued or from such other date within such dividend period as the board of directors may have determined for such class, before any dividends shall be declared or paid upon or set apart for the common stock or any other kind of stock of the corporation not having preference over the preferred stock and Class A preferred stock as to the payment of dividends. Such dividends shall be cumulative so that if for any dividend period or periods dividends shall not have been paid or declared and set apart for payment upon all outstanding preferred stock and Class A preferred stock at the rates and from the dates determined for the respective classes, the deficiency shall be fully paid, or declared and set apart for payment, before any dividends shall be declared or paid upon the common stock or any other kind of stock of the corporation not having preference over the preferred stock and Class A preferred stock as to the payment of dividends. Dividends shall not be declared and set apart for payment, or paid, on the preferred stock or Class A preferred stock of any one class, for any dividend period, unless dividends have been or are contemporaneously declared and set apart for payment, or paid, on the preferred stock and Class A preferred stock of all classes for all dividend periods terminating on the same or on an earlier date. | |
b. When full cumulative dividends as aforesaid upon the preferred stock and Class A preferred stock of all classes then outstanding for all past dividend periods and for the current dividend periods shall have been paid or declared and set apart for payment, the board of directors may declare dividends on the common stock or on any other kind of stock over which the preferred stock and Class A preferred stock have preference as to the payment of dividends, and no holders of any class of the preferred stock or Class A preferred stock as such shall be entitled to share therein. No dividends (other than dividends paid in stock over which the preferred stock and Class A preferred stock have preference as to the payment of dividends and as to assets or dividends paid in cash or property, if presently thereafter there shall be paid to the corporation in cash or property an amount equal to such dividends, for shares of, or as a capital contribution with respect to, such stock over which the preferred stock and Class A preferred stock have such preference) shall be paid or any other distribution of assets made, by purchase of shares or otherwise, on common stock or on any other kind of stock over which the preferred stock and Class A preferred stock have preference as to the payment of dividends or as to assets except out of accumulated surplus available for distribution to stock over which the preferred stock and Class A preferred stock have preference as to the payment of dividends and as to assets, earned subsequent to January 31, 1942. | |
c. Upon any dissolution, liquidation or winding up of the corporation, whether voluntary or involuntary, the holders of preferred stock and Class A preferred stock of each class, without any preference of the shares of any class of preferred stock or Class A preferred stock over the shares of any other class of preferred stock or Class A preferred stock, shall be entitled to receive out of the assets of the corporation, whether capital, surplus or other, before any distribution of the assets to be distributed shall be made to the holders of common stock or of any other kind of stock not having preference as to assets over the preferred stock or Class A preferred stock, the amount specified to be payable on the shares of such class in the event of voluntary or involuntary liquidation, as the case may be. In case the assets shall not be sufficient to pay in full the amounts determined to be payable on all the shares of preferred stock and Class A preferred stock in the event of voluntary or involuntary liquidation, as the case may be, then the assets available for such payment shall be distributed to the extent available as follows: first, to the payment, pro rata, of the amount payable in the event of involuntary liquidation on each share of preferred stock and Class A preferred stock outstanding irrespective of class; second, to the payment of the accrued dividends on such shares, such payment to be made pro rata in accordance with the amount of accrued dividends on each such share; and, third, to the payment of any amounts in excess of the amount payable in the event of involuntary liquidation on each such share plus accrued dividends which may be payable on the shares of any class in the event of voluntary or involuntary liquidation, as the case may be, such payment also to be |
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made pro rata in accordance with the amounts, if any, so payable on each such share. After payment to the holders of the preferred stock and the Class A preferred stock of the full preferential amounts hereinbefore provided for, the holders of the preferred stock and the Class A preferred stock as such shall have no right or claim to any of the remaining assets of the corporation, either upon any distribution of such assets or upon dissolution, liquidation or winding up, and the remaining assets to be distributed, if any, upon a distribution of such assets or upon dissolution, liquidation or winding up, may be distributed among the holders of the common stock or of any other kind of stock over which the preferred stock and the Class A preferred stock have preference as to assets. Without limiting the right of the corporation to distribute its assets or to dissolve, liquidate or wind up in connection with any sale, merger, or consolidation, the sale of all the property of the corporation to, or the merger or consolidation of the corporation into or with, any other corporation shall not be deemed to be a distribution of assets or a dissolution, liquidation or winding up for the purpose of this paragraph. | |
d. At the option of the board of directors of the corporation, the corporation may redeem any class of preferred stock or Class A preferred stock which is redeemable, and each such class may be redeemed, as a whole or in part, at any time at the redemption price specified for such class. Not less than thirty nor more than sixty days prior to the date fixed for redemption a notice of the time and place thereof shall be given to the holders of record of the preferred stock or Class A preferred stock so to be redeemed, by mail or publication, in such manner as may be prescribed by the by-laws of the corporation or by resolution of the board of directors, but such resolution shall in no way conflict with the by-laws. In every case of redemption of less than all the outstanding shares of any one class of preferred stock or Class A preferred stock, the shares of such class to be redeemed shall be chosen by lot in such manner as may be prescribed by resolution of the board of directors. At any time after notice of redemption has been given in the manner prescribed by the by-laws of the corporation or by resolution of the board of directors to the holders of stock so to be redeemed, the corporation may deposit, or may cause its nominee to deposit, the aggregate redemption price with some bank or trust company in the Borough of Manhattan, The City of New York, or in the city of Birmingham, Alabama, named in such notice, payable on the date fixed for redemption as aforesaid and in the amounts aforesaid to the respective orders of the holders of the shares so to be redeemed, on endorsement to the corporation or its nominee, or otherwise, as may be required, and upon surrender of the certificates for such shares. Upon the deposit of such money as aforesaid, or, if no such deposit is made, upon such redemption date (unless the corporation defaults in making payment of the redemption price as set forth in such notice), such holders shall cease to be shareholders with respect to such shares, and from and after the making of such deposit, or, if no such deposit is made, after the redemption date (the corporation not having defaulted in making payment of the redemption price as set forth in such notice), such holders shall have no interest in or claim against the corporation, or its nominee, with respect to such shares, but shall be entitled only to receive such moneys on the date fixed for redemption as aforesaid from such bank or trust company, or, if no such deposit is made, from the corporation, without interest thereon, upon endorsement, if required, and surrender of the certificates as aforesaid. |
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e. Notwithstanding any of the provisions of Article XI hereof, so long as any shares of the preferred stock or Class A preferred stock are outstanding, the corporation shall not, without the affirmative vote in favor thereof of the holders of at least two-thirds of the total voting power of the shares of preferred stock and Class A preferred stock at the time outstanding, |
(1) authorize or create any kind of stock preferred as to dividends or assets over the preferred stock or Class A preferred stock or issue (such issuance to be within twelve months after such vote) any shares of any kind of stock preferred as to dividends or assets over the preferred stock or Class A preferred stock or any security convertible into such kind of stock or change any of the rights and preferences of the then outstanding preferred stock or Class A preferred stock in any manner so as to affect adversely the holders thereof; provided, however, that if any such change would adversely affect the holders of only one, but not the other, such kind of stock, only the vote of the holders of at least two-thirds of the total voting power of the outstanding shares of the kind so affected shall be required. Nothing in this paragraph contained shall authorize any such authorization, creation or change by the vote of the holders of a less number of shares of preferred stock or Class A preferred stock, or of any other class of stock, or of all classes of stock, than is required for such authorization, creation or change by the laws of the State of Alabama at the time applicable thereto; | |
(2) issue, sell or otherwise dispose of any shares of preferred stock if the total number of shares thereof thereafter issued and outstanding would exceed 300,000, or issue, sell or otherwise dispose of any shares of Class A preferred stock, or issue, sell or otherwise dispose of any kind of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, or issue, sell or otherwise dispose of any shares of preferred stock or Class A preferred stock or of any kind of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, which have been redeemed, purchased or otherwise acquired by the corporation, unless, in any such case, (a) the net income of the corporation available for the payment of dividends for a period of twelve consecutive calendar months within the fifteen calendar months immediately preceding the issuance, sale or disposition of such stock (including, in any case in which such stock is to be issued, sold or otherwise disposed of in connection with the acquisition of new property, the net income of the property to be so acquired, computed on the same basis as the net income of the corporation available for the payment of dividends) is at least equal to two times the annual dividend requirements on all outstanding shares of preferred stock and Class A preferred stock and of all kinds of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, including the shares proposed to be issued, and (b) the gross income of the corporation available for the payment of interest for a period of twelve consecutive calendar months within the fifteen calendar months immediately preceding the issuance, sale or disposition of such stock (including, in any case in which such stock is to be issued, sold or otherwise disposed of in connection with the acquisition of new property, the gross income of the property to be so acquired, computed on the same basis as the gross income of the corporation available for the payment of interest) is at least equal to one and one-half times the aggregate of the annual interest requirements (adjusted by provision for amortization of debt discount and expense or of premium on debt, as the case may be) on all outstanding indebtedness of the corporation and the annual dividend requirements (adjusted by provision for amortization of preferred stock premium and expense) on all outstanding shares of preferred stock and Class A preferred stock and of all kinds of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, including the shares proposed to be issued; or | |
(3) issue, sell or otherwise dispose of any shares of preferred stock if the total number of shares thereof thereafter issued and outstanding would exceed 300,000, or issue, sell or otherwise dispose of any shares of Class A preferred stock, or issue, sell or otherwise dispose of any kind of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, or issue, sell or otherwise dispose of any shares of preferred stock or Class A preferred stock, or of any kind of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, which have been redeemed, purchased or otherwise acquired by the corporation, unless, in any such case, the aggregate |
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of the par value of, or stated capital represented by, the outstanding shares of common stock and of the surplus of the corporation (paid in, earned and other, if any) shall be not less than the aggregate amount payable in the event of involuntary liquidation upon all outstanding shares of preferred stock and Class A preferred stock and all kinds of stock over which the preferred stock and Class A preferred stock do not have preference as to the payment of dividends and as to assets, including the shares proposed to be issued, provided that no portion of the surplus of the corporation utilized to satisfy the foregoing requirement shall be available for dividends or other distributions of assets, by purchase of shares or otherwise, on common stock or on any other kind of stock over which the preferred stock and Class A preferred stock have preference as to the payment of dividends and as to assets, until such additional shares are retired or until and to the extent that the par value of, or stated capital represented by, the outstanding shares of common stock shall have been increased. |
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a. The preference stock is subject to the prior rights and preferences of the preferred stock and Class A preferred stock. | |
b. So long as any shares of preference stock are outstanding, no dividends shall be declared or paid upon or set apart for the common stock or any other kind of stock not having preference over the preference stock as to the payment of dividends and as to assets, nor any sums applied to the purchase, redemption or retirement of any class of such stock, unless (i) full dividends on all shares of cumulative preference stock, of all series outstanding, for all past dividend periods shall have been paid or declared and a sum sufficient for the payment thereof set apart and the full dividend for the then-current dividend period shall have been or concurrently shall be declared, and (ii) full dividends for the then-current dividend period on all shares of non-cumulative preference stock, of all series outstanding, have been, or contemporaneously are, paid, or declared and a sum sufficient for the payment thereof set aside. Unpaid accrued dividends on the preference stock shall not bear interest. |
c. Upon any dissolution, liquidation or winding up of the corporation, whether voluntary or involuntary, before any distribution shall be made to the holders of the common stock or any other class of stock over which the preference stock has preference as to the payment of dividends or assets, but subject to the prior rights and preferences of the holders of preferred stock and the Class A preferred stock, the holders of preference stock of each series, without any preference of the shares of any series of preference stock over the shares of any other series of preference stock, shall be entitled to receive out of the assets of the corporation, whether capital, surplus or other, the amount specified to be payable on the shares of such series in the event of voluntary or involuntary liquidation, as the case may be. |
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d. So long as any shares of the preference stock are outstanding, the corporation shall not, without the affirmative vote in favor thereof of the holders of at least a majority of the total voting power of the shares of preference stock at the time outstanding voting together as a single class, increase the authorized shares of preferred stock or Class A preferred stock or authorize or create any other class of stock preferred as to dividends or assets over the preference stock or change any of the rights and preferences of the then outstanding preference stock in any manner so as to affect adversely the holders thereof; provided, however, that if any such change would affect adversely the holders of only one or more series of the preference stock, but not other series of the preference stock, only the vote of the holders of at least a majority of the total voting power of the outstanding shares of the series so affected voting together as a single class shall be required; and provided further that nothing in this paragraph contained shall authorize any such authorization, creation or change by the vote of the holders of a less number of shares of preference stock, or of any other class of stock, or of all classes of stock, than is required for such authorization, creation or change by the laws of the State of Alabama at the time applicable thereto. |
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a. the relative voting power of each share of preferred stock and Class A preferred stock for purposes of all votes and consents hereunder shall be in the same proportion to all the outstanding shares of |
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preferred stock and Class A preferred stock as the ratio of (i) the stated capital of such share to (ii) the aggregate stated capital of all then outstanding shares of preferred stock and Class A preferred stock. | |
b. the relative voting power of each share of preference stock for purposes of all votes and consents hereunder shall be in the same proportion to all the outstanding shares of preference stock as the ratio of (i) the stated capital of such share to (ii) the aggregate stated capital of all then outstanding shares of preference stock. | |
c. for purposes of computation | |
(1) in voting by holders of preferred stock and Class A preferred stock as a single class, each share of preferred stock or Class A preferred stock having the lowest stated capital then outstanding shall have one vote and each share of preferred stock and Class A preferred stock having a stated capital other than the lowest stated capital then outstanding shall have that number of votes which is proportionate to such one vote as determined pursuant to subparagraph (a) above, | |
(2) in voting by holders of preference stock as a single class, each share of preference stock having the lowest stated capital then outstanding shall have one vote and each share of preference stock having a stated capital other than the lowest stated capital then outstanding shall have that number of votes which is proportionate to such one vote as determined pursuant to subparagraph (b) above, and | |
(3) in voting by holders of preferred stock, Class A preferred stock and preference stock together with the holders of the common stock, each share of common stock shall have one vote, each share of preferred stock shall have one vote, each share of Class A preferred stock shall have that number of votes which is proportionate to such one vote as determined pursuant to subparagraph (a) above and each share of preference stock shall have that number of votes which is proportionate to such one vote as determined pursuant to subparagraph (b) above. |
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