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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MISSISSIPPI 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. | |||
| (1) | Title of each class of securities to which transaction applies: |
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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.: | |||
(3) | Filing Party: |
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(4) | Date Filed: |
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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 the director’s 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. |
Annual Cash Retainer Fee | $12,000 | |
Quarterly Stock Retainer Fee | 85 shares of Southern Company common stock | |
Meeting Fees | $1,200 for each board meeting attended; and $1,000 for each committee meeting attended |
• | Pension Plan. There is no pension plan for non-employee directors. | |
• | Other Arrangements. No director received other compensation for services as a director during the year ended December 31, 2005 in addition to or in lieu of that specified by the standard arrangements specified above. |
• | Members are Mr. Schloegel, Chair; Mr. Dulaney and Dr. Khayat | |
• | Met four times in 2005 | |
• | Oversees the Company’s internal control and compliance matters |
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• | Members are Mr. Dulaney, Chair; Mr. Hood and Dr. Terrell | |
• | Met one time in 2005 | |
• | Oversees the administration of the Company’s compensation arrangements |
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2004 | 2005 | |||||||
(in thousands) | ||||||||
Audit Fees(1) | $ | 1,281 | $ | 1,007 | ||||
Audit-Related Fees | 0 | 0 | ||||||
Tax Fees | 2 | 0 | ||||||
All Other Fees | 0 | 0 | ||||||
Total | $ | 1,283 | $ | 1,007 | ||||
(1) | Includes services performed in connection with financing transactions. |
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• | Base pay (salary); |
• | Annual performance-based compensation (short-term goals); and |
• | Stock options and performance-based dividend equivalents (long-term components) |
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• | Southern Company earnings — earnings per share (“EPS”) and |
• | The Company’s net income/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) | |||||||||||||||||||||
Anthony J. Topazi(4) | 2005 | 327,637 | 426,965 | 59,261 | 37,805 | 109,592 | 93,262 | |||||||||||||||||||||
President, Chief Executive | 2004 | 310,384 | 389,232 | 16,962 | 37,479 | 145,128 | 37,067 | |||||||||||||||||||||
Officer, Director | ||||||||||||||||||||||||||||
Bobby J. Kerley(5) | 2005 | 217,425 | 212,122 | 25,934 | 16,099 | 39,226 | 61,357 | |||||||||||||||||||||
Vice President | 2004 | 207,951 | 195,464 | 8,732 | 16,113 | 54,390 | 19,714 | |||||||||||||||||||||
2003 | 185,055 | 144,128 | 3,450 | 11,828 | 53,623 | 8,756 | ||||||||||||||||||||||
Frances V. Turnage(6) | 2005 | 182,703 | 175,215 | 13,213 | 7,015 | 24,233 | 35,028 | |||||||||||||||||||||
Vice President, Treasurer, | ||||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
Kimberly D. Flowers(6) | 2005 | 186,242 | 151,305 | 13,826 | 10,531 | 36,064 | 58,314 | |||||||||||||||||||||
Vice President | ||||||||||||||||||||||||||||
John W. Atherton(7) | 2005 | 147,548 | 129,468 | 15,671 | 8,597 | 8,727 | 40,309 | |||||||||||||||||||||
Vice President | ||||||||||||||||||||||||||||
Michael W. Southern(8) | 2005 | 247,937 | 236,779 | 4,206 | 17,353 | 86,891 | 13,175 | |||||||||||||||||||||
Vice President, Treasurer, | 2004 | 225,094 | 210,695 | 20,600 | 17,369 | 117,695 | 47,109 | |||||||||||||||||||||
Chief Financial Officer | 2003 | 217,594 | 187,758 | 16,179 | 18,032 | 109,556 | 36,668 | |||||||||||||||||||||
Gene L. Ussery, Jr.(9) | 2005 | 252,160 | 243,312 | 6,553 | 18,944 | 61,442 | 18,290 | |||||||||||||||||||||
Vice President | 2004 | 230,587 | 187,621 | 10,534 | 17,886 | 87,520 | 27,759 | |||||||||||||||||||||
2003 | 218,752 | 182,806 | 8,388 | 18,129 | 110,711 | 11,488 | ||||||||||||||||||||||
(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 executive officers at the end of the performance periods under the Southern Company Omnibus Incentive Compensation Plan (“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 | |||||||||
Anthony J. Topazi | $ | 9,450 | $ | 773 | $ | 7,539 | ||||||
Bobby J. Kerley | 7,916 | 773 | 2,168 | |||||||||
Frances V. Turnage | 8,222 | 773 | 533 | |||||||||
Kimberly D. Flowers | 8,272 | 773 | 586 | |||||||||
John W. Atherton | 6,640 | 669 | 0 | |||||||||
Michael W. Southern | 9,007 | 773 | 3,395 | |||||||||
Gene L. Ussery, Jr. | 9,450 | 773 | 3,067 | |||||||||
In 2005, this amount for Ms. Flowers and Ms. Turnage includes additional compensation of $48,683 and $25,500, respectively. Also in 2005, Messrs. Topazi, Kerley, Atherton and Ussery received additional compensation of $75,500, $50,500, $33,000 and $5,000, respectively. In 2004, this amount also includes additional incentive compensation for Messrs. Topazi, Kerley, Mason, Southern and Ussery in the amounts |
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of $25,000, $10,000, $10,000, $35,000 and $15,500, respectively. In 2003, Mr. Southern’s amount includes additional incentive compensation of $25,000. |
(4) | Mr. Topazi became president and chief executive officer of the Company effective January 1, 2004. |
(5) | Mr. Kerley became an executive officer of the Company in November 2003. |
(6) | Ms. Turnage and Ms. Flowers became executive officers of the Company in March 2005. |
(7) | Mr. Atherton became an executive officer of the Company in January 2005. |
(8) | Mr. Southern resigned from the Company effective in March 2005 to become the Chief Financial Officer of Southern Power Company. |
(9) | Mr. Ussery resigned from the Company effective in March 2005 and was elected Vice President of Georgia Power Company effective in February 2005. |
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Number of | ||||||||||||||||||||
Securities | Percent of Total | |||||||||||||||||||
Underlying | Options Granted | Exercise or | Grant Date | |||||||||||||||||
Options | to Employees in | Base Price | Expiration | Present | ||||||||||||||||
Name | Granted(1) | Fiscal Year(2) | ($/Sh)(1) | Date(1) | Value($)(3) | |||||||||||||||
Anthony J. Topazi | 37,805 | 14.2 | 32.70 | 02/18/2015 | 147,440 | |||||||||||||||
Bobby J. Kerley | 16,099 | 6.1 | 32.70 | 02/18/2015 | 62,786 | |||||||||||||||
Frances V. Turnage | 7,015 | 2.6 | 32.70 | 02/18/2015 | 27,359 | |||||||||||||||
Kimberly D. Flowers | 10,531 | 4.0 | 32.70 | 02/18/2015 | 41,071 | |||||||||||||||
John W. Atherton | 8,597 | 3.2 | 32.70 | 02/18/2015 | 33,528 | |||||||||||||||
Michael W. Southern | 17,353 | 6.5 | 32.70 | 02/18/2015 | 67,677 | |||||||||||||||
Gene L. Ussery, Jr. | 18,944 | 7.1 | 32.70 | 02/18/2015 | 73,882 | |||||||||||||||
(1) | Under the terms of the Southern Company Omnibus Incentive Compensation Plan, stock option grants to the named executive officers were made on February 18, 2005 and vest annually at a rate of one-third on the anniversary date of the grant. Grants fully vest upon termination as a result of death, total disability or retirement and expire five years after retirement, three years after death or total disability, or their normal expiration date if earlier. The exercise price is the average of the high and low price of Southern Company’s common stock on the date granted. Options may be transferred to a revocable trust. |
(2) | A total of 266,051 stock options were granted in 2005 to employees of the Company. |
(3) | Value was calculated using the Black-Scholes option valuation model. The actual value, if any, ultimately realized depends on the market value of Southern Company’s common stock at a future date. Significant assumptions are shown below: |
Risk-free | Dividend | Expected | ||||||||||||
Volatility | Rate of Return | Yield | Term | |||||||||||
17.9% | 3.87 | % | 4.38 | % | 5 years | |||||||||
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Options at | In-the-Money Options | |||||||||||||||||||||||
Shares | Value | Year-End(#) | at Year-End($)(2) | |||||||||||||||||||||
Acquired on | Realized | |||||||||||||||||||||||
Name | Exercise(#) | ($)(1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Anthony J. Topazi | 24,723 | 297,908 | 60,073 | 71,966 | 454,083 | 255,005 | ||||||||||||||||||
Bobby J. Kerley | 13,421 | 126,998 | 16,476 | 30,784 | 108,552 | 109,340 | ||||||||||||||||||
Frances V. Turnage | 21,037 | 287,873 | 15,116 | 14,080 | 117,179 | 52,045 | ||||||||||||||||||
Kimberly D. Flowers | 0 | 0 | 22,368 | 21,083 | 173,782 | 77,774 | ||||||||||||||||||
John W. Atherton | 2,053 | 14,929 | 0 | 10,515 | 0 | 26,384 | ||||||||||||||||||
Michael W. Southern | 9,136 | 154,616 | 69,745 | 34,943 | 710,724 | 129,400 | ||||||||||||||||||
Gene L. Ussery, Jr. | 16,656 | 185,802 | 37,115 | 36,911 | 285,964 | 134,257 | ||||||||||||||||||
(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’s common stock of $34.53 per share, as of December 31, 2005, above the exercise price of the options. The Exercisable column |
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reports the “value” of options that are vested and therefore could be exercised. Unexercisable column reports the “value” of options that are not vested and therefore could not be exercised as of December 31, 2005. |
Years of Accredited Service | ||||||||||||||||||||||||||
Compensation | 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 |
Compensation | Accredited | ||||||||
Name | Level | Years of Service | |||||||
Anthony J. Topazi | $ | 622,982 | 36 | ||||||
Bobby J. Kerley | 361,865 | 31 | |||||||
Frances V. Turnage | 277,716 | 24 | |||||||
Kimberly D. Flowers | 297,309 | 17 | |||||||
John W. Atherton | 191,369 | 20 | |||||||
Michael W. Southern | 410,995 | 31 | |||||||
Gene L. Ussery, Jr. | 405,889 | 37 | |||||||
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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) | |||||||||
Thomas E. Dulaney | Southern Company Common Stock | 3,792 | ||||||||||
Warren A. Hood | Southern Company Common Stock | 1,545 | ||||||||||
Robert C. Khayat | Southern Company Common Stock | 1,162 | ||||||||||
Aubrey B. Patterson, Jr. | Southern Company Common Stock | 186 | ||||||||||
George A. Schloegel | Southern Company Common Stock | 2,767 | ||||||||||
Phillip J. Terrell | Southern Company Common Stock | 2,302 | ||||||||||
Anthony J. Topazi | Southern Company Common Stock | 106,793 | 94,343 | |||||||||
Bobby J. Kerley | Southern Company Common Stock | 35,334 | 31,157 | |||||||||
Frances V. Turnage | Southern Company Common Stock | 26,826 | 22,191 | |||||||||
Kimberly D. Flowers | Southern Company Common Stock | 37,204 | 32,934 | |||||||||
John W. Atherton | Southern Company Common Stock | 10,097 | 4,154 | |||||||||
Directors, Nominees and Executive Officers as a group (11 people) | Southern Company Common Stock | 228,008 | 184,779 | |||||||||
(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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I. | Composition |
II. | Purpose |
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. |
III. | Authority |
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. |
IV. | Meeting Requirements |
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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. |
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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. |
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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