UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT of 1934
Filed by the Registrant | x |
Filed by a Party other than the Registrant o
Check the appropriate box:
o | Preliminary Proxy Statement |
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o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e) (2)) | |||||
x | Definitive Proxy Statement |
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o | Definitive Additional Materials |
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o | Soliciting Materials Pursuant to Rule 14a-12 |
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THE SOUTHERN COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14a-6(i) (1) 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: |
(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: |
o | Fee paid previously with preliminary materials. |
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: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
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David M. Ratcliffe | |
Chairman, President and | |
Chief Executive Officer |
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Dear Fellow Stockholder: | ||
You are invited to attend the 2007 Annual Meeting of Stockholders at 10:00 a.m., ET, on Wednesday, May 23, 2007 at The Lodge Conference Center at Callaway Gardens, Pine Mountain, Georgia. | ||
At the meeting, I will report on our business and our plans for the future. Also, we will elect our Board of Directors and vote on the other matters set forth in the accompanying Notice. | ||
Your vote is important. Please review the proxy material and return your proxy form as soon as possible. | ||
We look forward to seeing you on May 23rd. | ||
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David M. Ratcliffe |
![(PHOTO OF DAVID RATCLIFFE)](https://capedge.com/proxy/DEF 14A/0000092122-07-000038/g05132g0513230.gif)
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(1) | Elect 10 members of the Board of Directors; |
(2) | Ratify appointment of independent registered public accounting firm; |
(3) | Consider and vote on a stockholder proposal if presented at the meeting as described in Item No. 3 of the Proxy Statement; and |
(4) | Transact other business properly coming before the meeting or any adjournments thereof. |
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Q: | How do I give voting instructions? | |
A: | You may attend the meeting and give instructions in person or give instructions by the Internet, by telephone or by mail. Information for giving instructions is on the proxy form. The Proxies, named on the enclosed proxy form, will vote all properly executed proxies that are delivered pursuant to this solicitation and not subsequently revoked in accordance with the instructions given by you. |
Q: | Can I change my vote? | |
A: | Yes, you may revoke your proxy by submitting a subsequent proxy or by written request received by the Company’s corporate secretary before the meeting. | |
Q: | Who can vote? | |
A: | All stockholders of record on the record date of March 26, 2007. On that date, there were 751,605,276 shares of Southern Company common stock outstanding and entitled to vote. | |
Q: | How much does each share count? | |
A: | Each share counts as one vote, except votes for Directors may be cumulative. Abstentions that are marked on the proxy form are included for the purpose of determining a quorum, but shares that a broker fails to vote are not counted toward a quorum. Neither is counted for or against the matters being considered. | |
Q: | What does it mean if I get more than one proxy form? | |
A: | You will receive a proxy form for each account that you have. Please vote proxies for all accounts to ensure that all your shares are voted. If you wish to consolidate multiple registered accounts, please contact Stockholder Services at (800) 554-7626. | |
Q: | Can the Company’s Proxy Statement and Annual Report be accessed from the Internet? | |
A: | Yes. You can access the Company’s website at www.southerncompany.com to view these documents. |
Q: | Does the Company offer electronic delivery of proxy materials? | |
A: | Yes. Most stockholders can elect to receive ane-mail that will provide electronic links to the Annual Report and Proxy Statement. Opting to receive your proxy materials on-line will save us the cost of producing and mailing documents and also will give you an electronic link to the proxy voting site. | |
You may sign up for electronic delivery when you vote your proxy via the Internet or: | ||
n Go to our investor web site at http://investor.southerncompany.com/; | ||
n Click on the word “Enroll” for Electronic Delivery of Proxy Materials; and | ||
n Follow the directions provided to complete your enrollment. | ||
Once you enroll for electronic delivery, you will receive proxy materials electronically as long as your account remains active or until you cancel your enrollment. If you consent to electronic access, you will be responsible for your usual Internet-related charges (e.g., on-line fees and telephone charges) in connection with electronic viewing and printing of proxy materials and annual reports. The Company will continue to distribute printed materials to stockholders who do not consent to access these materials electronically. |
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Q: | What is “householding”? | |
A: | Certain beneficial owners of the Company’s common stock, sharing a single address, may receive only one copy of the Proxy Statement and Annual Report unless the broker, bank or nominee has received contrary instructions from any beneficial owner at that address. This practice — known as householding — is designed to reduce printing and mailing costs. If a beneficial owner does not wish to participate in householding, he or she may contact Stockholder Services at (800) 554-7626 or at 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308 and ask to receive a Proxy Statement or Annual Report. As noted earlier, beneficial owners may view the Proxy Statement and Annual Report on the Internet. |
Q: | When are stockholder proposals due for the 2008 Annual Meeting of Stockholders? | |
A: | The deadline for the receipt of stockholder proposals to be considered for inclusion in the Company’s proxy materials for the 2008 Annual Meeting of Stockholders is December 15, 2007. Proposals must be submitted in writing to Patricia L. Roberts, Assistant Corporate Secretary, Southern Company, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308. Additionally, the proxy solicited by the Board of Directors for next year’s meeting will confer discretionary authority to vote on any stockholder proposal presented at that meeting that is not included in the Company’s proxy materials unless the Company is provided written notice of such proposal no later than February 28, 2008. |
Q: | Who pays the expense of soliciting proxies? | |
A: | The Company pays the cost of soliciting proxies. The officers or other employees of the Company or its subsidiaries may solicit proxies to have a larger representation at the meeting. The Company has retained Georgeson Shareholder to assist with the solicitation of proxies for a fee not to exceed $10,000, plus reimbursement ofout-of-pocket expenses. |
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n | Code of Ethics | |
n | Political Contributions Policy and Report | |
n | By-Laws of the Company | |
n | Executive Stock Ownership Guidelines | |
n | Board Committee Charters | |
n | Board of Directors — Background and Experience | |
n | Management Council — Background and Experience | |
n | Securities and Exchange Commission filings | |
n | Composition of Board Committees | |
n | Link for online communication with Board of Directors |
n | The Director was employed by the Company or whose immediate family member was an executive officer of the Company. | |
n | The Director received, or whose immediate family member received, direct compensation from the Company, other than director and committee fees. (Compensation received by an immediate family member for services as a non- executive employee of the Company need not be considered.) | |
n | The Director was affiliated with or employed by, or whose immediate family member was affiliated or employed in a professional capacity by, a present or former external auditor of the Company. | |
n | The Director was employed, or whose immediate family member was employed, as an executive officer of a company where any member of the Company’s present executives serve on that company’s compensation committee. |
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n | A company for which the Director currently serves as an executive officer or an employee or whose immediate family member currently serves as an executive officer that makes payments to or receives payments from the Company for property or services in an amount which in any single fiscal year exceeds the greater of $1,000,000 or two percent of that company’s consolidated gross revenues. |
Annual retainers: | ||
n | $70,000 of which $30,000 is deferred in shares of Company common stock until Board membership ends (1) | |
n | $10,000 if serving as chair of a standing Board committee with the exception that the chair of the Audit Committee receives $25,000 |
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Equity grants: | ||
n | 1,000 additional shares of Company common stock in quarterly grants of 250 shares are deferred until Board membership ends | |
Meeting fees: | ||
n | $2,500 for participation in a meeting of the Board | |
n | $2,000 for participation in a meeting of a committee of the Board other than a meeting of the Audit Committee | |
n | $4,000 for attendance in person at a meeting of the Audit Committee | |
n | $2,000 for participation by telephone in a meeting of the Audit Committee | |
n | $2,000 for each day of a visit to a plant or office of the Company and for any other business meeting at which the Director participates as a representative of the Company |
• | in Company common stock units which earn dividends as if invested in Company common stock and are distributed in shares of Company common stock upon leaving the Board | |
• | in Company common stock units which earn dividends as if invested in Company common stock and are distributed in cash upon leaving the Board | |
• | in prime interest which is paid in cash upon leaving the Board |
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Change in | ||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||
Fees | and | |||||||||||||||||||||||||||
Earned | Non-Equity | Nonqualified | ||||||||||||||||||||||||||
or Paid | Stock | Option | Incentive Plan | Deferred | All Other | |||||||||||||||||||||||
in Cash | Awards | Awards | Compensation | Compensation | Compensation | |||||||||||||||||||||||
Name | ($)(1) | ($)(2)(3) | ($) | ($) | Earnings ($) | ($)(4) | Total ($) | |||||||||||||||||||||
Daniel P. Amos(5) | 13,500 | 7,919 | — | — | — | — | 21,419 | |||||||||||||||||||||
Juanita Powell Baranco(6)(7) | 84,366 | 51,533 | — | — | — | 52 | 135,951 | |||||||||||||||||||||
Dorrit J. Bern | 100,666 | 54,869 | — | — | — | — | 155,535 | |||||||||||||||||||||
Francis S. Blake | 100,166 | 54,869 | — | — | — | — | 155,035 | |||||||||||||||||||||
Thomas F. Chapman | 100,999 | 54,869 | — | — | — | — | 155,868 | |||||||||||||||||||||
Bruce S. Gordon(5) | 20,834 | 6,419 | — | — | — | — | 27,253 | |||||||||||||||||||||
Donald M. James | 98,166 | 54,869 | — | — | — | 220 | 153,255 | |||||||||||||||||||||
Zack T. Pate | 124,666 | 54,869 | — | — | — | — | 179,535 | |||||||||||||||||||||
J. Neal Purcell | 135,666 | 54,869 | — | — | — | — | 190,535 | |||||||||||||||||||||
William G. Smith, Jr.(6) | 82,666 | 48,982 | — | — | — | 282 | 131,930 | |||||||||||||||||||||
Gerald J. St. Pé | 105,666 | 47,369 | — | — | — | 865 | 153,900 | |||||||||||||||||||||
(1) | Includes amounts voluntarily deferred in the Director Deferred Compensation Plan. |
(2) | Includes fair market value of equity grants on grant dates and retainer compensation required to be deferred in the Director Deferred Compensation Plan. All such stock awards are vested immediately upon grant. |
(3) | The aggregate number of Company common stock units held at year-end in the Director Deferred Compensation Plan for each person except Messrs. Amos and Gordon is provided in the Stock Ownership Table under the column Deferred Stock Units. At year-end, Mr. Gordon held 2,797 common stock units and Mr. Amos held no common stock units in the Director Deferred Compensation Plan. |
(4) | Consists of “gross-ups” for the reimbursement for taxes on spousal air travel and gifts. |
(5) | Messrs. Amos and Gordon resigned as Directors effective February 21, 2006. |
(6) | Ms. Baranco and Mr. Smith were first elected Directors of the Company effective February 23, 2006. |
(7) | Ms. Baranco’s compensation includes compensation earned in 2006 as a Director of Georgia Power Company, a wholly-owned subsidiary of the Company, as well as compensation earned as a Director of the Company. Ms. Baranco resigned as a Director of Georgia Power Company effective February 21, 2006. |
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Committee Charters |
Audit Committee: | ||
n | Members are Mr. Purcell, Chair, Ms. Baranco, Mr. Blake and Dr. Pate(1) | |
n | Met 10 times in 2006 | |
n | Oversees the Company’s financial reporting, audit processes, internal controls and legal, regulatory and ethical compliance; appoints the Company’s independent registered public accounting firm, approves its services and fees and establishes and reviews the scope and timing of its audits; reviews and discusses the Company’s financial statements with management and the independent registered public accounting firm, including critical accounting policies and practices, material alternative financial treatments within generally accepted accounting principles, proposed adjustments, control recommendations, significant management judgments and accounting estimates, new accounting policies, changes in accounting principles, any disagreements with management and other material written communications between the internal auditors and/or the independent registered public accounting firm and management; and recommends the filing of the Company’s annual financial statements with the SEC. |
(1) | Dr. Pate will retire from the Board on his normal retirement date, May 23, 2007. |
Compensation and Management Succession Committee: | ||
n | Members are Mr. St. Pé, Chair, Mr. Chapman, Mr. James and Mr. Smith | |
n | Met nine times in 2006 | |
n | Evaluates performance of executive officers and establishes their compensation, administers executive compensation plans and reviews management succession plans. Annually reviews a tally sheet of all components of the Chief Executive Officer’s compensation and takes actions required of it under the Pension Plan for Employees of the Company. |
Governance |
• | Considering compensation for the named executive officers in the context of all of the components of total compensation. |
• | Considering annual adjustments to pay over the course of two meetings and requiring more than one meeting to make other important decisions. |
• | Receiving meeting materials several days in advance of meetings. |
• | Having regular executive sessions of Committee members only. |
• | Having direct access to an outside compensation consultant. |
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• | Conducting a performance/payout analysis versus peer companies for the short-term incentive plan to provide a check on the Company’s goal-setting process. |
Finance Committee: | ||
n | Members are Ms. Bern, Chair, Mr. James and Mr. Smith | |
n | Met eight times in 2006 | |
n | Reviews the Company’s financial matters, recommends actions such as dividend philosophy to the Board and approves certain capital expenditures |
Governance Committee: | ||
n | Members are Mr. Chapman, Chair, Ms. Bern and Mr. St. Pé | |
n | Met four times in 2006 | |
n | Oversees the composition of the Board and its committees, determines non-employee Directors’ compensation, maintains the Company’s Corporate Governance Guidelines and coordinates the performance evaluations of the Board and its committees. |
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Nuclear Committee: | ||
n | Members are Dr. Pate(1), Chair and Mr. Habermeyer | |
n | Reviews and oversees the nuclear generating policies and facilities of the Company’s subsidiaries. The Chair serves as Chair of the Nuclear Operating Committee for Southern Nuclear Operating Company, Inc., a wholly-owned subsidiary of the Company. | |
n | Attended 14 meetings in 2006 |
(1) | Dr. Pate will retire from the Board on his normal retirement date, May 23, 2007. |
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Shares Beneficially Owned Include: | ||||||||||||||||
Shares | ||||||||||||||||
Individuals | ||||||||||||||||
Shares | Have Rights to | |||||||||||||||
Beneficially | Deferred Stock | Acquire within | Shares Held by | |||||||||||||
Directors, Nominees and Executive Officers | Owned(1) | Units(2) | 60 days(3) | Family Members(4) | ||||||||||||
Juanita Powell Baranco | 6,265 | 5,806 | ||||||||||||||
Dorrit J. Bern | 35,399 | 33,899 | ||||||||||||||
Francis S. Blake | 12,070 | 11,870 | ||||||||||||||
W. Paul Bowers | 220,417 | 211,169 | ||||||||||||||
Thomas F. Chapman | 21,126 | 21,126 | ||||||||||||||
Thomas A. Fanning | 226,782 | 223,148 | ||||||||||||||
Michael D. Garrett | 175,427 | 173,584 | ||||||||||||||
H. William Habermeyer, Jr. | 70 | 70 | ||||||||||||||
Donald M. James | 34,959 | 32,959 | ||||||||||||||
Charles D. McCrary | 318,554 | 313,745 | ||||||||||||||
Zack T. Pate | 39,206 | 34,833 | ||||||||||||||
J. Neal Purcell | 22,214 | 15,990 | 224 | |||||||||||||
David M. Ratcliffe | 996,256 | 980,167 | ||||||||||||||
William G. Smith, Jr. | 7,427 | 3,946 | ||||||||||||||
Gerald J. St. Pé | 90,047 | 36,148 | 7,480 | |||||||||||||
Directors, Nominees and Executive Officers as a Group (20 people) | 3,015,584 | 196,647 | 2,657,287 | 7,704 | ||||||||||||
(1) | “Beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, 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 Company common stock that certain executive officers have the right to acquire within 60 days. Shares indicated are included in the Shares Beneficially Owned column. |
(4) | Each Director disclaims any interest in shares held by family members. Shares indicated are included in the Shares Beneficially Owned column. |
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![]() | Juanita Powell Baranco Age: Director since: Board committees: Principal occupation: Other directorships: | 58 2006 Audit Executive vice president and chief operating officer of Baranco Automotive Group, automobile sales Cox Radio Incorporated | ||
![]() | Dorrit J. Bern Age: Director since: Board committees: Principal occupation: Other directorships: | 56 1999 Finance (chair), Governance Chairman of the board, president and chief executive officer of Charming Shoppes, Inc., multi-channel apparel, home, food and retail Charming Shoppes, Inc., OfficeMax, Inc. | ||
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![]() | Francis S. Blake Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 57 2004 Audit Chairman and chief executive officer of The Home Depot, home improvement Served as U.S. Deputy Secretary of Energy from May 2001 to April 2002 and as executive vice president of The Home Depot until January 2007 when he assumed his current position. The Home Depot, Inc. | ||
![]() | Thomas F. Chapman Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 63 2000 Governance (chair), Compensation and Management Succession Retired chairman of the board and chief executive officer of Equifax, Inc., information services, data analytics, transaction processing and consumer financial products Served as chairman of the board and chief executive officer of Equifax, Inc. until his retirement on December 12, 2005. None | ||
![]() | H. William Habermeyer, Jr. Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 64 2007 Nuclear Retired president and chief executive officer of Progress Energy Florida, Inc., electric utility Served as president and chief executive officer of Progress Energy Florida, Inc. from December 2000 until his retirement on June 1, 2006. Raymond James Financial Services, Inc. | ||
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![]() | Donald M. James Age: Director since: Board committees: Principal occupation: Other directorships: | 58 1999 Compensation and Management Succession, Finance Chairman of the board and chief executive officer of Vulcan Materials Company, construction materials Vulcan Materials Company, Protective Life Corporation, Wachovia Corporation | ||
![]() | J. Neal Purcell Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 65 2003 Audit (chair) Retired vice-chairman, audit operations, of KPMG, public accounting Served as KPMG’s vice-chairman in charge of National Audit Practice Operations from October 1998 until his retirement on January 31, 2002. Dollar General Corporation, Kaiser Permanente Healthcare and Hospitals, Synovus | ||
![]() | David M. Ratcliffe Age: Director since: Principal occupation: Recent business experience: Other directorships: | 58 2003 Chairman of the board, president and chief executive officer of the Company Served as president and chief executive officer of Georgia Power Company from May 1999 until January 2004 and as chairman and chief executive officer of Georgia Power Company from January 2004 until April 2004. He served as executive vice president of the Company from May 1999 until April 2004, and as president of the Company from April 2004 until July 2004, when he assumed his current position. CSX Corporation, Southern system companies — Alabama Power Company, Georgia Power Company and Southern Power Company | ||
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![]() | William G. Smith, Jr. Age: Director since: Board committees: Principal occupation: Other directorships: | 53 2006 Compensation and Management Succession, Finance Chairman of the board, president and chief executive officer of Capital City Bank Group, Inc. Capital City Bank Group, Inc. | ||
![]() | Gerald J. St. Pé Age: Director since: Board committees: Principal occupation: Recent business experience: Other directorships: | 67 1995 Compensation and Management Succession(chair), Governance Former president of Ingalls Shipbuilding and retired executive vice president of Litton Industries Served as chief operating officer of Northrop-Grumman Ship Systems from August 1999 to November 2001. Merchants and Marine Bank | ||
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J. Neal Purcell, Chair | |
Juanita Powell Baranco | |
Francis S. Blake | |
Zack T. Pate |
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2006 | 2005 | ||||||||
(In thousands) | |||||||||
Audit Fees(a) | $ | 12,994 | $ | 12,270 | |||||
Audit-Related Fees(b) | 673 | 410 | |||||||
Tax Fees(c) | 90 | 117 | |||||||
All Other Fees | 0 | 0 | |||||||
Total | $ | 13,757 | $ | 12,797 | |||||
(a) | Includes services performed in connection with financing transactions |
(b) | Includes benefit plan and other non-statutory audit services and accounting consultations in both 2006 and 2005 |
(c) | Includes review services in connection with the consolidated federal tax return and tax compliance licensing and training costs |
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• | Our actual earnings per share (“EPS”) and business unit performance, which includes return on equity (“ROE”) or net income, compared to target performance levels established early in the year, determine the ultimate short-term (annual) incentive payouts. | |
• | Company common stock price changes result in higher or lower ultimate values of stock options. | |
• | Our dividend payout and total shareholder return (“TSR”) compared to those of our industry peers lead to higher or lower payouts under the Performance Dividend Program (the “PDP”). |
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Intended Role and What the Element | ||||
Rewards | Why We Use the Element | |||
Pay 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. | ||
Short-Term Incentive | The Company’s Performance Pay Program (the “PPP”) rewards achievement of operational, EPS and business unit financial goals. | • Market practice. • Focuses attention on achievement of short-term goals that ultimately works 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 the Company’s common stock over the market price on date of grant, over a 10-year term. | • Represents performance-based compensation. • Aligns executives’ interests with those of stockholders. | ||
Long-Term Incentive: PDP | The PDP provides cash compensation dependent on the number of stock options held at year-end, the Company’s declared dividends during the year and four-year TSR versus industry peers. | • Performance-based compensation. • Enhances the value of stock options and focuses executives on maintaining a significant dividend yield for stockholders. • Aligns executives’ interests with stockholder interests since payouts are dependent on performance, defined as our stock performance versus industry peers. • Competitive market practice. | ||
Retirement Benefits | • The Southern Company Deferred Compensation Plan (the “DCP”) provides the opportunity to defer to future years all or part of base salary and bonus in either a prime interest rate or Company common stock account. • Executives participate in employee benefit plans available to all employees of the Company, including a 401(k) savings plan and the Southern Company Pension Plan (the “Pension Plan”). • The Supplemental Benefit Plan (the “SBP”) counts pay ineligible to be counted under the Pension Plan and the 401(k) plan due to Internal Revenue Service rules, including deferred salary. • The Supplemental Executive Retirement Plan (the “SERP”) counts short-term incentive pay above 15% of base salary for pension purposes. | • The DCP is a cost-effective method of providing additional cash flow to the Company while enhancing the retirement savings of executives. • The purpose of the SBP and the SERP is to eliminate the effect of tax limitations on the payment of retirement benefits. • Represents market practice for companies in our peer group and generally. | ||
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Intended Role and What the Element | ||||
Pay Element | Rewards | Why We Use the Element | ||
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 Company operations. • Home security systems lower our risk of harm to executives. • Club memberships are provided primarily for business use. • Limited personal use of Company aircraft allows the CEO to meet both his business and personal commitments. | Perquisites benefit both the Company and executives, at low cost to us. | ||
Post-Termination Pay | CIC agreements provide severance pay, accelerated vesting and payment of short- and long-term incentive awards upon a CIC of the Company coupled with involuntary termination not for “Cause” or a voluntary termination for “Good Reason.” | • Providing protections to senior executives upon a CIC minimizes disruption during a pending or anticipated CIC. • Payment and vesting occur only upon the occurrence of both an actual CIC and loss of the executive’s position. | ||
Allegheny Energy, Inc. Alliant Energy Corporation Ameren Corporation American Electric Power Company, Inc. CenterPoint Energy, Inc. Cinergy Corp. CMS Energy Corporation Consolidated Edison, Inc. Constellation Energy Group, Inc. Dominion Resources Inc. | DTE Energy Company Duke Energy Corporation Edison International Energy East Corporation Entergy Corporation Exelon Corporation FirstEnergy Corp. FPL Group, Inc. Great Plains Energy Incorporated Hawaiian Electric Industries, Inc. | KeySpan Corporation NiSource Inc. Northeast Utilities NSTAR OGE Energy Corp. Pepco Holdings, Inc. PG&E Corporation Pinnacle West Capital Corporation PNM Resources, Inc. PPL Corporation | Progress Energy, Inc. Public Service Enterprise Group Incorporation Puget Energy, Inc. SCANA Corporation Sempra Energy Sierra Pacific Resources TECO Energy, Inc. TXU Corp. Wisconsin Energy Corporation WPS Resources Corporation Xcel Energy Inc. | |||
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• | Base salaries for senior executives were targeted at market, though individual salaries may be above or below that level for reasons of time in position, criticality to the business or individual performance. | |
• | Target PPP opportunities were somewhat higher than market because in 2000, a long-term incentive plan (the Productivity Improvement Plan) was terminated and its award opportunities folded in with PPP. Target opportunities are set at a percentage of base salary. | |
• | To counterbalance the above-market PPP opportunities, stock option award sizes were set to be somewhat below market after taking into account the related PDP opportunity. |
• | As discussed above, the Compensation Committee targets total compensation opportunities for senior executives as a group at market. Therefore, some senior executives may be paid somewhat above and others somewhat below market. This practice allows for minor differentiation based on time in the position, individual performance and internal equity. The average total target compensation opportunities for the named executive officers for 2006 were two percent above the market data described above. | |
• | In 2004, the Compensation Committee received a detailed comparison of our executive benefits program to the benefits of a group of other large utilities and general industry companies. The results indicated that the Company’s executive benefits program was slightly below market. |
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• | Continued industry-leading reliability and customer satisfaction, while maintaining our low retail prices relative to the national average; and |
• | Meeting increased energy demand with the best economic and environmental choices. |
• | EPS Growth — A continuation of growing EPS an average of five percent per year from a base, excluding synfuel earnings, established in 2002. The target goal shown below is five percent greater than the goal established for 2005. |
• | ROE in the top quartile of comparable electric utilities. |
• | Dividend Growth. |
• | Long-term, risk-adjusted TSR. |
• | Financial Integrity — An attractive risk-adjusted return, sound financial policy and a stable ‘A’ credit rating. |
![(CHART)](https://capedge.com/proxy/DEF 14A/0000092122-07-000038/g05132g0513240.gif)
• | Operational goals for 2006 were safety, customer service, plant availability, transmission and distribution system reliability, inclusion and capital expenditures. 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 0 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. Each of our business units has operational goals. For Messrs. Garrett and McCrary, the PPP payout is adjusted up or down based on the operational goal results for Georgia Power Company and Alabama Power Company, respectively. For Messrs. Ratcliffe and Fanning, it is calculated using the corporate-wide weighted average of the operational goal results. For Mr. Bowers, it is calculated using the operational goal results for our generation business unit. |
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• | 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, excluding synthetic fuel earnings (“synfuel earnings”). The EPS performance measure is applicable to all participants in the PPP, including the named executive officers. | |
• | Business Unit Financial Performance is weighted at 50% of the financial goals. For our traditional utility operating companies (Alabama Power Company, Georgia Power Company, Gulf Power Company and Mississippi Power Company), the business unit financial performance goal is ROE, which is defined as the operating company’s net income divided by average equity for the year. For our other business units, we establish financial performance measures that are tailored to each business unit. | |
For Messrs. Garrett and McCrary, their PPP payout is calculated using the ROE for Georgia Power Company and Alabama Power Company, respectively. For Messrs. Ratcliffe and Fanning, it is calculated using a corporate-wide weighted average of all the business unit financial performance goals, including primarily the operating companies’ ROE. And, for Mr. Bowers, his business unit financial performance measure is weighed one-half the corporate-wide weighted average and one-half the financial performance measure for our generation business unit. | ||
• | In addition, superior individual performance can increase an individual’s payout by up to 10% of base salary, at the discretion of the Compensation Committee. |
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Customer | ||||||||||||||||
Level of Performance | Service | Reliability | Availability | Safety | Inclusion | Capital | ||||||||||
Maximum (1.10) | Top Quartile | Improve historical performance | 2.00% | 1.25 | Significant improvement | Below budget | ||||||||||
Target (1.00) | 2nd quartile | Maintain historical performance | 2.75% | 1.75 | Improve | Slightly above budget | ||||||||||
Threshold (0.90) | 3rd quartile | Below historical performance | 3.75% | 2.50 | Below expectations | Above budget | ||||||||||
0 Trigger | 4th quartile | Significant issues | 6.00% | >2.50 | Significant issues | See gate goal | ||||||||||
Business Unit Performance | Payout Below | |||||||||||||||||||||||
Payout Factor at | Threshold for | |||||||||||||||||||||||
Net Income | Highest Level of | Operational | ||||||||||||||||||||||
EPS Excluding | (Southern | Payout | Operational Goal | Goal | ||||||||||||||||||||
Level of Performance | Synfuel Earnings | ROE | Generation Only) | Factor | Achievement | Achievement | ||||||||||||||||||
Maximum | $2.11 | 14.25% | $310 million | 2.00 | 2.20 | 0 | ||||||||||||||||||
Target | $2.055 | 13.25% | $285 million | 1.00 | 1.10 | 0 | ||||||||||||||||||
Threshold | $1.97 | 10.50% | $226 million | 0.25 | 0.275 | 0 | ||||||||||||||||||
Below threshold | <$1.97 | <10.50% | < $226 million | 0 | 0 | 0 | ||||||||||||||||||
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Business Unit | Total Weighted | |||||||||||||||||||||||||||
Operational | EPS, | EPS Goal | Financial | Business Unit | ||||||||||||||||||||||||
Goal | Excluding | Performance | Performance | Financial | Total PPP | |||||||||||||||||||||||
Multiplier | Synfuel | Factor | Business Unit | Factor | Performance | Factor | ||||||||||||||||||||||
Name | (A) | Earnings | (50% Weight) | Financial Performance | (50% Weight) | Factor (B) | (A x B) | |||||||||||||||||||||
D. M. Ratcliffe | 1.08 | $ | 2.10 | 1.84 | Corporate average | 1.53 | 1.68 | 1.82 | ||||||||||||||||||||
T. A. Fanning | 1.08 | $ | 2.10 | 1.84 | Corporate average | 1.53 | 1.68 | 1.82 | ||||||||||||||||||||
M. D. Garrett | 1.08 | $ | 2.10 | 1.84 | 14.02% ROE | 1.77 | 1.80 | 1.95 | ||||||||||||||||||||
C.D. McCrary | 1.09 | $ | 2.10 | 1.84 | 13.31% ROE | 1.06 | 1.45 | 1.58 | ||||||||||||||||||||
W. P. Bowers | 1.09 | $ | 2.10 | 1.84 | $305 million net income and corporate average | 1.68 | 1.76 | 1.92 | ||||||||||||||||||||
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Allegheny Energy, Inc. | Exelon Corporation | Progress Energy, Inc. | ||
Alliant Energy Corporation | FirstEnergy Corporation | Public Service Enterprise Group | ||
Ameren Corporation | FPL Group, Inc. | Incorporated | ||
American Electric Power Company, Inc. | NiSource Inc. | Puget Energy, Inc. | ||
Avista Corporation | Northeast Utilities | SCANA Corporation | ||
Cinergy Corp. | NorthWestern Corporation | Sempra Energy | ||
Consolidated Edison, Inc. | NSTAR | Sierra Pacific Resources | ||
DTE Energy Company | OGE Energy Corp. | Westar Energy, Inc. | ||
Energy East Corporation | Pepco Holdings, Inc. | Wisconsin Energy Corporation | ||
Entergy Corporation | Pinnacle West Capital Corporation | Xcel Energy Inc. | ||
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Payout (% of A Full | ||||
Performance vs. Peer Group | Year’s Dividend Paid) | |||
90th percentile or higher | 100% | |||
50th percentile | 50% | |||
10th percentile or lower | 0% | |||
Allegheny Energy, Inc. | Edison International | PG&E Corporation | ||
Alliant Energy Corporation | Energy East Corporation | Pinnacle West Capital Corporation | ||
Ameren Corporation | Entergy Corporation | Progress Energy, Inc. | ||
American Electric Power Company, Inc. | Exelon Corporation | Puget Energy, Inc. | ||
Aquila, Inc. | FPL Group, Inc. | SCANA Corporation | ||
Centerpoint Energy, Inc. | KeySpan Corporation | Sempra Energy | ||
Cinergy Corp. | NiSource Inc. | Sierra Pacific Resources | ||
CMS Energy Corporation | Northeast Utilities | Westar Energy, Inc. | ||
Consolidated Edison, Inc. | NSTAR | Wisconsin Energy Corporation | ||
DPL Inc. | Pepco Holdings, Inc. | Xcel Energy Inc. | ||
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Payout (% of a Full | ||||
Performance vs. Peer Group | Year’s Dividend Paid) | |||
90th percentile or higher | 100% | |||
50th percentile | 50% | |||
10th percentile or lower | 0% | |||
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Multiple of Salary without | Multiple of Salary Counting | |||||||
Name | Counting Stock Options | 1/3 of Vested Options | ||||||
D. M. Ratcliffe | 5 Times | 10 Times | ||||||
T. A Fanning | 3 Times | 6 Times | ||||||
C. D. McCrary | 3 Times | 6 Times | ||||||
M. D. Garrett | 3 Times | 6 Times | ||||||
W. P. Bowers | 3 Times | 6 Times | ||||||
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Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||||||
Incentive | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Name and Principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
David M. Ratcliffe | 2006 | 1,028,471 | — | — | 2,152,767 | 2,563,680 | 2,036,219 | 73,127 | 7,854,264 | |||||||||||||||||||||||||||
Chairman, President & CEO | ||||||||||||||||||||||||||||||||||||
Thomas A. Fanning | 2006 | 583,011 | — | — | 551,320 | 939,527 | 357,950 | 43,041 | 2,474,849 | |||||||||||||||||||||||||||
Executive Vice President, CFO & Treasurer | ||||||||||||||||||||||||||||||||||||
Michael D. Garrett | 2006 | 575,100 | 29,288 | — | 391,843 | 967,002 | 880,636 | 47,183 | 2,891,052 | |||||||||||||||||||||||||||
President, Georgia Power Company | ||||||||||||||||||||||||||||||||||||
Charles D. McCrary | 2006 | 609,407 | — | — | 411,589 | 900,736 | 203,672 | 55,606 | 2,181,010 | |||||||||||||||||||||||||||
President, Alabama Power Company | ||||||||||||||||||||||||||||||||||||
W. Paul Bowers | 2006 | 480,371 | 24,249 | — | 465,036 | 674,784 | 140,705 | 38,201 | 1,823,346 | |||||||||||||||||||||||||||
President, Southern Company Generation | ||||||||||||||||||||||||||||||||||||
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Amount Expensed | Amount Expensed | |||||||
in 2006 | in 2006 | |||||||
(T. A. Fanning) | (W. P. Bowers) | |||||||
Grant Date | ($) | ($) | ||||||
2003 | 6,232 | 6,801 | ||||||
2004 | 69,199 | 56,304 | ||||||
2005 | 152,829 | 121,735 | ||||||
2006 | 323,060 | 280,196 | ||||||
Total | 551,320 | 465,036 | ||||||
PPP | PDP | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 1,891,539 | 672,141 | 2,563,680 | |||||||||
T. A. Fanning | 807,777 | 131,750 | 939,527 | |||||||||
M. D. Garrett | 856,660 | 110,342 | 967,002 | |||||||||
C. D. McCrary | 729,090 | 171,646 | 900,736 | |||||||||
W. P. Bowers | 558,708 | 116,076 | 674,784 | |||||||||
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Above-Market | ||||||||||||
Change in | Earnings on Deferred | |||||||||||
Pension Value | Compensation | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 2,002,835 | 33,384 | 2,036,219 | |||||||||
T. A. Fanning | 353,902 | 4,048 | 357,950 | |||||||||
M. D. Garrett | 872,674 | 7,962 | 880,636 | |||||||||
C. D. McCrary | 198,676 | 4,996 | 203,672 | |||||||||
W. P. Bowers | 136,681 | 4,024 | 140,705 | |||||||||
Tax | ||||||||||||||||||||
Perquisites | Reimbursements | ESP | SBP-N | Total | ||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
D. M. Ratcliffe | 18,419 | 7,467 | 9,213 | 38,028 | 73,127 | |||||||||||||||
T. A. Fanning | 11,050 | 5,335 | 9,381 | 17,275 | 43,041 | |||||||||||||||
M. D. Garrett | 10,437 | 10,326 | 9,900 | 16,520 | 47,183 | |||||||||||||||
C. D. McCrary | 14,673 | 12,942 | 8,498 | 19,493 | 55,606 | |||||||||||||||
W. P. Bowers | 7,728 | 8,528 | 9,746 | 12,199 | 38,201 | |||||||||||||||
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Estimated Possible Payouts | ||||||||||||||||||||||||||||||||
Under Non-Equity Incentive | All Other Option | Closing Price on | Grant Date | |||||||||||||||||||||||||||||
Plan Awards | Awards: Number of | Exercise or | Last Trading | Fair Value of | ||||||||||||||||||||||||||||
Securities | Base Price of | Date Prior to | Stock and | |||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Underlying Options | Option Awards | Grant Date | Option Awards | |||||||||||||||||||||||||
Name | Date | $ | ($) | ($) | (#) | ($/Sh) | ($/Sh) | ($) | ||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||
D. M. Ratcliffe | 2/20/2006 | PPP 233,844 | 1,039,307 | 2,286,475 | ||||||||||||||||||||||||||||
PDP 122,826 | 1,228,259 | 2,456,516 | 518,739 | 33.81 | 33.86 | 2,152,767 | ||||||||||||||||||||||||||
T. A. Fanning | 2/20/2006 | PPP 99,863 | 443,834 | 976,435 | ||||||||||||||||||||||||||||
PDP 24,076 | 240,757 | 481,514 | 95,392 | 33.81 | 33.86 | 395,877 | ||||||||||||||||||||||||||
M. D. Garrett | 2/20/2006 | PPP 98,845 | 439,313 | 966,489 | ||||||||||||||||||||||||||||
PDP 20,164 | 201,636 | 403,272 | 94,420 | 33.81 | 33.86 | 391,843 | ||||||||||||||||||||||||||
C. D. McCrary | 2/20/2006 | PPP 103,826 | 461,450 | 1,015,190 | ||||||||||||||||||||||||||||
PDP 31,366 | 313,663 | 627,325 | 99,178 | 33.81 | 33.86 | 411,589 | ||||||||||||||||||||||||||
W. P. Bowers | 2/20/2006 | PPP 65,474 | 290,994 | 640,187 | ||||||||||||||||||||||||||||
PDP 21,212 | 212,116 | 424,231 | 67,517 | 33.81 | 33.86 | 280,196 | ||||||||||||||||||||||||||
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Stock Options | Performance Dividend | Performance Dividend | Performance Dividend | |||||||||||||
Held as of | Equivalent Per Option | Equivalent Per Option | Per Option Paid at | |||||||||||||
December 31, | Paid at Threshold | Paid at Target | Maximum | |||||||||||||
2006 | Performance | Performance | Performance | |||||||||||||
Name | (#) | ($) | ($) | ($) | ||||||||||||
D. M. Ratcliffe | 1,600,336 | 0.07675 | 0.7675 | 1.535 | ||||||||||||
T. A. Fanning | 313,690 | 0.07675 | 0.7675 | 1.535 | ||||||||||||
M. D. Garrett | 262,718 | 0.07675 | 0.7675 | 1.535 | ||||||||||||
C. D. McCrary | 408,681 | 0.07675 | 0.7675 | 1.535 | ||||||||||||
W. P. Bowers | 276,372 | 0.07675 | 0.7675 | 1.535 | ||||||||||||
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||||
Plan | ||||||||||||||||||||||||||||||||||||
Equity | Awards: | |||||||||||||||||||||||||||||||||||
Equity | Incentive | Market or | ||||||||||||||||||||||||||||||||||
Incentive | Plan | Payout Value | ||||||||||||||||||||||||||||||||||
Plan | Market | Awards: | of Unearned | |||||||||||||||||||||||||||||||||
Awards: | Number of | Value | Number of | Shares, | ||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Shares or | of Shares | Unearned | Units | ||||||||||||||||||||||||||||||
Securities | Securities | Securities | Units of | or Units | Shares, | or Other | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Stock | of Stock | Units or | Rights | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | That | That Have | Other Rights | That Have | |||||||||||||||||||||||||||||
Options | Options | Unearned | Exercise | Option | Have Not | Not | That Have | Not | ||||||||||||||||||||||||||||
(#) | (#) | Options | Price | Expiration | Vested | Vested | Not Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
D. M. Ratcliffe | 92,521 | 0 | — | 25.26 | 02/15/2012 | — | — | — | — | |||||||||||||||||||||||||||
83,780 | 0 | 27.975 | 02/14/2013 | |||||||||||||||||||||||||||||||||
54,843 | 27,422 | 29.50 | 02/13/2014 | |||||||||||||||||||||||||||||||||
182,021 | 91,010 | 29.315 | 08/02/2014 | |||||||||||||||||||||||||||||||||
183,334 | 366,666 | 32.70 | 02/18/2015 | |||||||||||||||||||||||||||||||||
0 | 518,739 | 33.81 | 02/02/2016 | |||||||||||||||||||||||||||||||||
T. A. Fanning | 31,126 | 0 | — | 25.26 | 02/15/2012 | — | — | — | — | |||||||||||||||||||||||||||
42,314 | 0 | 27.975 | 02/14/2013 | |||||||||||||||||||||||||||||||||
42,143 | 21,072 | 29.50 | 02/13/2014 | |||||||||||||||||||||||||||||||||
26,948 | 53,895 | 32.70 | 02/18/2015 | |||||||||||||||||||||||||||||||||
0 | 95,392 | 33.81 | 02/02/2016 | |||||||||||||||||||||||||||||||||
M. D. Garrett | 36,314 | 0 | — | 27.975 | 02/14/2013 | — | — | — | — | |||||||||||||||||||||||||||
35,613 | 17,806 | 29.50 | 02/13/2014 | |||||||||||||||||||||||||||||||||
26,189 | 52,376 | 32.70 | 02/18/2015 | |||||||||||||||||||||||||||||||||
0 | 94,420 | 33.81 | 02/02/2016 | |||||||||||||||||||||||||||||||||
C. D. McCrary | 79,571 | 0 | — | 25.26 | 02/15/2012 | — | — | — | — | |||||||||||||||||||||||||||
72,054 | 0 | 27.975 | 02/14/2013 | |||||||||||||||||||||||||||||||||
47,616 | 23,808 | 29.50 | 02/13/2014 | |||||||||||||||||||||||||||||||||
28,818 | 57,636 | 32.70 | 02/18/2015 | |||||||||||||||||||||||||||||||||
0 | 99,178 | 33.81 | 02/02/2016 | |||||||||||||||||||||||||||||||||
W. P. Bowers | 50,046 | 0 | — | 25.26 | 02/15/2012 | — | — | — | — | |||||||||||||||||||||||||||
46,181 | 0 | 27.975 | 02/14/2013 | |||||||||||||||||||||||||||||||||
34,701 | 17,351 | 29.50 | 02/13/2014 | |||||||||||||||||||||||||||||||||
20,192 | 40,384 | 32.70 | 02/18/2015 | |||||||||||||||||||||||||||||||||
0 | 67,517 | 33.81 | 02/02/2016 | |||||||||||||||||||||||||||||||||
Expiration Date | Date Fully Vested | |
February 13, 2014 | February 13, 2007 | |
August 2, 2014 | August 2, 2007 | |
February 18, 2015 | February 18, 2008 | |
February 20, 2016 | February 20, 2009 | |
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Number of | Present Value of | Payments | ||||||||||||
Years Credited | Accumulated | During | ||||||||||||
Service | Benefit | Last Fiscal Year | ||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||
D. M. Ratcliffe | Pension Plan | 34.75 | 802,103 | — | ||||||||||
SBP-P | 34.75 | 6,683,107 | — | |||||||||||
SERP | 34.75 | 2,161,904 | — | |||||||||||
T. A. Fanning | Pension Plan | 24.92 | 355,044 | — | ||||||||||
SBP-P | 24.92 | 1,281,720 | — | |||||||||||
SERP | 24.92 | 422,160 | — | |||||||||||
M. D. Garrett | Pension Plan | 37.67 | 828,741 | — | ||||||||||
SBP-P | 37.67 | 2,875,057 | — | |||||||||||
SERP | 37.67 | 976,029 | — | |||||||||||
C. D. McCrary | Pension Plan | 31.92 | 616,547 | — | ||||||||||
SBP-P | 31.92 | 2,355,184 | — | |||||||||||
SERP | 31.92 | 757,614 | — | |||||||||||
W. P. Bowers | Pension Plan | 26.58 | 384,344 | — | ||||||||||
SBP-P | 26.58 | 976,621 | — | |||||||||||
SERP | 26.58 | 335,195 | — | |||||||||||
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• | Discount rate — six percent as of September 30, 2006 |
• | Retirement date — Normal retirement age (65 for all named executive officers) |
• | Mortality after normal retirement — RP2000 Combined Healthy mortality rate table |
• | Mortality, withdrawal, disability and retirement rates prior to normal retirement — None |
• | Form of payment |
• | Unmarried retirees: 100% elect a single life annuity | |
• | Married retirees: 20% elect a single life annuity; 40% elect a joint and 50% survivor annuity; and 40% elect a joint and 100% survivor annuity |
• | Percent married at retirement — 80% of males and 70% of females |
• | Spouse ages — Wives two years younger than their husbands |
• | Incentives earned but unpaid as of the measurement date — 130% of target percentages times base rate of pay for year incentive is earned |
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Executive | Registrant | Aggregate | ||||||||||||||||||
Contributions | Contributions | Aggregate Earnings | Withdrawals/ | Aggregate Balance | ||||||||||||||||
in Last FY | in Last FY | in Last FY | Distributions | at Last FYE | ||||||||||||||||
($) | ($) | ($) | ($) | ($) | ||||||||||||||||
Name (a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
D. M. Ratcliffe | 0 | 38,028 | 770,461 | 0 | 8,413,507 | |||||||||||||||
T. A. Fanning | 208,234 | 17,725 | 59,042 | 0 | 713,555 | |||||||||||||||
M. D. Garrett | 0 | 16,520 | 90,606 | 0 | 1,114,170 | |||||||||||||||
C. D. McCrary | 0 | 19,493 | 85,330 | 0 | 972,672 | |||||||||||||||
W. P. Bowers | 86,675 | 12,199 | 62,794 | 0 | 703,349 | |||||||||||||||
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Amounts Deferred under | Amounts Contributed by the | |||||||||||
the DCP Prior to 2006 | Company under the SBP-N | |||||||||||
and Reported in Prior | Prior to 2006 and Reported in | |||||||||||
Years’ Proxy Statements | Prior Years’ Proxy Statements | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 5,381,881 | 165,113 | 5,546,994 | |||||||||
T. A. Fanning | 423,735 | 44,771 | 468,506 | |||||||||
M. D. Garrett | 0 | 33,651 | 33,651 | |||||||||
C. D. McCrary | 489,924 | 110,968 | 600,892 | |||||||||
• | 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 the Company’s Drug and Alcohol Policy. |
• | Death or Disability — Termination of a named executive officer due to death or disability. |
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• | Southern CIC I — Acquisition by another entity of 20% or more of the Company’s common stock, or following a merger with another entity the Company’s stockholders own 65% or less of the company surviving the merger. |
• | Southern CIC II — Acquisition by another entity of 35% or more of the Company’s common stock, or following a merger with another entity the Company’s stockholders own less than 50% of the company surviving the merger. |
• | Southern Termination — A merger or other event and the Company is not the surviving company or the Company’s common stock is no longer publicly traded. |
• | Subsidiary CIC — Acquisition by another entity, other than another subsidiary of the Company, of 50% or more of the stock of a subsidiary of the Company, a merger with another entity and the subsidiary is not the surviving company or the sale of substantially all the assets of the subsidiary. |
• | Involuntary CIC Termination or Voluntary CIC Termination for Good Reason — Employment is terminated within two years of a CIC, other than for cause, or the employee voluntarily terminates for Good Reason. Good Reason for voluntarily termination within two years of a CIC is generally satisfied when there is a reduction in salary, incentive compensation opportunity or benefits, relocation of over 50 miles or a diminution in duties and responsibilities. |
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Lay Off | ||||||||||
(Involuntary | Involuntary | |||||||||
Retirement/ | Termination | Termination | ||||||||
Program | Retirement Eligible | Not For Cause) | Resignation | Death or Disability | (For Cause) | |||||
Pension Benefits: • Pension Plan • SBP-P • SERP | Lifetime of monthly benefits paid. Reductions apply if payments start prior to age 65. | SERP-related benefits forfeited. Other vested benefits paid monthly for lifetime after executive reaches retirement eligibility. Reductions apply if payments start prior to age 65. | Same as Lay Off. | At death, surviving spouse receives a lifetime of monthly payments equal to 45% (or 80% if participant has made that election) of benefits earned. If vested under the Pension Plan, all pension benefits continue to accumulate while disabled. Lifetime of monthly payments after executive becomes retirement eligible and elects commencement. | Same as for retirement and resignation, as the case may be. | |||||
PPP | Pro-rated if terminate before 12/31. | Pro-rated if terminate before 12/31. | Forfeit. | Pro-rated if terminate before 12/31. | Forfeit. | |||||
PDP | 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. | Vested options expire in 90 days; unvested are forfeited. | Vest; expire earlier of original expiration or three years. | Forfeit. | |||||
Financial Planning Perquisite | Continues for one year. | Terminates. | Terminates. | Continues for one year. | Terminates. | |||||
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Lay Off | ||||||||||
(Involuntary | Involuntary | |||||||||
Retirement/ | Termination | Termination | ||||||||
Program | Retirement Eligible | Not For Cause) | Resignation | Death or Disability | (For Cause) | |||||
DCP | 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 at DCP administrative committee’s discretion. | Same as Retirement. | |||||
SBP-N | Payable per prior elections (lump sum or up to 20 annual installments). | Same as Retirement. | Same as Retirement. | Same as the DCP, above. | Same as Retirement. | |||||
Involuntary CIC-Related | ||||||||
Termination or Voluntary | ||||||||
Southern Termination or | CIC-Related Termination | |||||||
Program | Southern CIC I | Southern CIC II | Subsidiary CIC | for Good Reason | ||||
Nonqualified Pension Benefits: • SBP-P • SERP | All SERP-related benefits vest if participant vested in Pension Plan benefits; otherwise, no impact. | Vesting as upon a Southern CIC I, and benefits paid as a lump sum following termination or retirement. | Same as Southern CIC II. | Based on type of CIC event. | ||||
PPP | No plan termination is paid at greater of target or actual performance. If plan terminated within two years of CIC, pro-rated at target performance level. | Same as Southern CIC I. | Pro-rated at target performance level. | If not otherwise eligible for payment, if PPP still in effect, pro-rated at target performance level. | ||||
PDP | No plan termination is paid at greater of target or actual performance. If plan terminated within two years of CIC, pro-rated at greater of target or actual performance level. | Same as Southern CIC I. | Pro-rated at greater of actual or target performance level. | If not otherwise eligible for payment, if PDP still in effect, greater of actual or target performance level for year of severance only. | ||||
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Involuntary CIC-Related | ||||||||
Termination or Voluntary | ||||||||
Southern Termination or | CIC-Related Termination | |||||||
Program | Southern CIC I | Southern CIC II | Subsidiary CIC | for Good Reason | ||||
Stock Options | Not affected by CIC events. | Not affected by CIC events. | Vest and convert to surviving company’s securities if there is a Southern Termination; if can not convert, pay spread in cash; not affected by a Subsidiary CIC. | Vest. | ||||
DCP | Not affected by CIC events. | Payable in lump sum following termination. | Same as Southern CIC II. | Based on type of CIC event. | ||||
SBP-N | Not affected by CIC events. | Participant provided opportunity to elect lump sum payment. | Participant provided opportunity to elect lump sum payment. | Based on type of CIC event. | ||||
Severance Benefits | Not applicable. | Not applicable. | Not applicable. | Three times base salary plus target PPP plus tax gross up if severance amounts exceed 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 three years’ premium amounts. | ||||
Outplacement Services | Not applicable. | Not applicable. | Not applicable. | Six months. | ||||
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Resignation or | Death | |||||||||||||||
Retirement | Involuntary Retirement | (monthly payments | ||||||||||||||
(monthly payments) | (monthly payments) | to a spouse) | ||||||||||||||
Name | ($) | ($) | ($) | |||||||||||||
D. M. Ratcliffe | Pension Plan SBP-P SERP | 7,389 61,565 24,105 | All plans treated as retiring | 4,410 36,743 14,386 | ||||||||||||
T. A. Fanning | Pension Plan SBP-P SERP | N/A N/A N/A | 1,943 7,013 0 | 3,191 11,518 3,794 | ||||||||||||
M. D. Garrett | Pension Plan SBP-P SERP | 7,699 26,711 10,903 | All plans treated as retiring | 4,806 16,671 6,805 | ||||||||||||
C. D. McCrary | Pension Plan SBP-P SERP | 5,798 22,148 7,125 | All plans treated as retiring | 4,058 15,501 4,986 | ||||||||||||
W. P. Bowers | Pension Plan SBP-P SERP | 3,479 8,840 3,034 | All plans treated as retiring | 3,403 8,648 2,968 | ||||||||||||
SBP-P | SERP | Total | ||||||||||
Name | ($) | ($) | ($) | |||||||||
D. M. Ratcliffe | 9,446,128 | 3,698,512 | 13,144,640 | |||||||||
T. A. Fanning | 1,197,178 | Not Applicable | 1,197,178 | |||||||||
M. D. Garrett | 4,165,085 | 1,700,121 | 5,865,206 | |||||||||
C. D. McCrary | 3,578,526 | 1,151,210 | 4,729,736 | |||||||||
W. P. Bowers | 1,530,481 | 525,281 | 2,055,762 | |||||||||
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Additional PDP | ||||
Name | ($) | |||
D. M. Ratcliffe | 594,977 | |||
T. A. Fanning | 109,007 | |||
M. D. Garrett | 91,294 | |||
C. D. McCrary | 142,017 | |||
W. P. Bowers | 96,040 | |||
Total Number of | Total Payable in Cash | |||||||||||
Number of | Options Following | under a Southern | ||||||||||
Options with | Accelerated Vesting | Termination without | ||||||||||
Accelerated | under a Southern | Conversion of Stock | ||||||||||
Name | Vesting (#) | Termination (#) | Options ($) | |||||||||
D. M. Ratcliffe | 1,003,837 | 1,600,336 | 8,353,272 | |||||||||
T. A. Fanning | 170,359 | 313,690 | 1,838,816 | |||||||||
M. D. Garrett | 164,602 | 262,718 | 1,330,625 | |||||||||
C. D. McCrary | 180,622 | 408,681 | 2,751,046 | |||||||||
W. P. Bowers | 125,252 | 276,372 | 1,831,878 | |||||||||
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Severance Amount | ||||
Name | ($) | |||
D. M. Ratcliffe | 6,235,836 | |||
T. A. Fanning | 3,108,000 | |||
M. D. Garrett | 3,076,500 | |||
C. D. McCrary | 3,228,750 | |||
W. P. Bowers | 2,328,000 | |||
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A. | Southern Company (including its subsidiaries) will not engage the independent auditor to perform any services that are prohibited by the Sarbanes-Oxley Act of 2002. It shall further be the policy of the Company not to retain the independent auditor for non-audit services unless there is a compelling reason to do so and such retention is otherwise pre-approved consistent with this policy. Non-audit services that are prohibited include: |
1. | Bookkeeping and other services related to the preparation of accounting records or financial statements of the Company or its subsidiaries. | |
2. | Financial information systems design and implementation. | |
3. | Appraisal or valuation services, fairness opinions, orcontribution-in-kind reports. | |
4. | Actuarial services. | |
5. | Internal audit outsourcing services. | |
6. | Management functions or human resources. | |
7. | Broker or dealer, investment adviser, or investment banking services. | |
8. | Legal services or expert services unrelated to financial statement audits. | |
9. | Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible. |
B. | Effective January 1, 2003, officers of the Company (including its subsidiaries) may not engage the independent auditor to perform any personal services, such as personal financial planning or personal income tax services. |
C. | All audit services (including providing comfort letters and consents in connection with securities issuances) and permissible non-audit services provided by the independent auditor must be pre-approved by the Southern Company Audit Committee. |
D. | Under this Policy, the Audit Committee’s approval of the independent auditor’s annual arrangements letter shall constitute pre-approval for all services covered in the letter. |
E. | By adopting this Policy, the Audit Committee hereby pre-approves the engagement of the independent auditor to provide services related to the issuance of comfort letters and consents required for securities sales by the Company and its subsidiaries and services related to consultation on routine accounting and tax matters. The actual amounts expended for such services each calendar quarter shall be reported to the Committee at a subsequent Committee meeting. |
F. | The Audit Committee also delegates to its Chairman the authority to grant pre-approvals for the engagement of the independent auditor to provide any permissible service up to a limit of $50,000 per engagement. Any engagements pre-approved by the Chairman shall be presented to the full Committee at its next scheduled regular meeting. |
G. | The Southern Company Comptroller shall establish processes and procedures to carry out this Policy. |
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Admission Ticket (Not Transferable)
2007 Annual Meeting of Stockholders 10 a.m. ET, May 23, 2007
The Lodge Conference Center at Callaway Gardens Highway 18 Pine Mountain, GA 31822 | |
Please present this Admission Ticket in order to gain admittance to the meeting. |
Ticket admits only the stockholder(s) listed on reverse side and is not transferable. |
Directions to Meeting Site:
From Atlanta, GA - Take I-85 south to I-185 (exit 21), then Exit 34, Georgia Highway 18. Take Georgia Highway 18 east to Callaway.
From Birmingham, AL - Take U.S. Highway 280 east to Opelika, AL, then I-85 north to Georgia Highway 18 (Exit 2). Take Georgia Highway 18 east to Callaway.
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FORM OF PROXY AND TRUSTEE VOTING INSTRUCTION FORM
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FORM OF PROXY AND TRUSTEE VOTING INSTRUCTION FORM | |
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS AND ESP TRUSTEES |
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If a stockholder of record, the undersigned hereby appoints D. M. Ratcliffe, T. A. Fanning and G. E. Holland, Jr. or any of them, Proxies with full power of substitution in each, to vote all shares the undersigned is entitled to vote at the Annual Meeting of Stockholders of The Southern Company, to be held at the Lodge Conference Center at Callaway Gardens in Pine Mountain, Georgia, on May 23, 2007, at 10:00 a.m., ET, and any adjournments thereof, on all matters properly coming before the meeting, including, without limitation, the items listed on the reverse side of this form.
If a beneficial owner holding shares through the Employee Savings Plan (“ESP”), the undersigned directs the Trustee of the Plan to vote all shares the undersigned is entitled to vote at the Annual Meeting of Stockholders, and any adjournments thereof, on all matters properly coming before the meeting, including, without limitation, the items listed on the reverse side of this form.
This Form of Proxy/Trustee Voting Instruction Form is solicited jointly by the Board of Directors of The Southern Company and the Trustee of the Employee Savings Plan pursuant to a separate Notice of Annual Meeting and Proxy Statement. If not voted electronically, this form should be mailed in the enclosed envelope to the Company’s proxy tabulator at 51 Mercedes Way, Edgewood, NY 11717. The deadline for receipt of Trustee Voting Instruction Forms for ESP is 5:00 p.m. on Monday, May 21, 2007. The deadline for receipt of shares of record voted through the Form of Proxy is 9:00 a.m. on Wednesday, May 23, 2007. The deadline for receipt of instructions provided electronically is 11:59 p.m. on Tuesday, May 22, 2007.
The proxy tabulator will report separately to the Proxies named above and to the Trustee as to proxies received and voting instructions provided, respectively.
THIS FORM OF PROXY/TRUSTEE VOTING INSTRUCTION FORM WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS INDICATED, THE SHARES WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.
Continued and to be voted and signed on reverse side. | |||||||
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C/O PROXY SERVICES P. O. BOX 9112 FARMINGDALE, NY 11735
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| Please consider furnishing your voting instructions electronically by Internet or phone. Processing paper forms is more than twice as expensive as electronic instructions.
If you vote by Internet or phone, please do not mail this form.
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions until 11:59 p.m. ET the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by Southern Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. ET the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date this form and return it in the postage-paid envelope we have provided or return it to Southern Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY, 11717.
THANK YOU
VIEW ANNUAL REPORT AND PROXY STATEMENT ON THE INTERNET www.southerncompany.com
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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| SOUTH1 KEEP THIS PORTION FOR YOUR RECORDS |
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THIS FORM OF PROXY/TRUSTEE VOTING INSTRUCTION FORM IS VALID ONLY WHEN SIGNED AND DATED.
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SOUTHERN COMPANY
The Board of Directors recommends a vote FOR Items 1 and 2 and AGAINST Item 3.
1. ELECTION OF DIRECTORS:
01) J. P. Baranco 04) T. F. Chapman 07) J. N. Purcell 10) G. J. St. Pé |
02) D. J. Bern 05) H. W. Habermeyer, Jr. 08) D. M. Ratcliffe |
03) F. S. Blake 06) D. M. James 09) W. G. Smith, Jr. | For All ( ) | Withhold All ( ) | For All Except ( ) | To withhold authority to vote, mark “For All Except” and write the nominee’s number on the line below.
_____________________________ |
| For | Against | Abstain |
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2. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2007
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3. STOCKHOLDER PROPOSAL ON ENVIRONMENTAL REPORT | ( ) | ( ) | ( ) |
UNLESS OTHERWISE SPECIFIED ABOVE, THE SHARES WILL BE VOTED “FOR” ITEMS 1 and 2 and “AGAINST” ITEM 3.
NOTE: | The last instruction received either paper or electronic, prior to the deadline will be the instruction included in the final tabulation. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |