UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant To Section 14(c) of the Securities
Exchange Act of 1934 (AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary information statement [ ] Confidential, for use of the
Commission only (as permitted
by Rule 14c-5(d)(2))
[x] Definitive information statement
MISSISSIPPI POWER COMPANY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] 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:
(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:
[ ] Fee paid previously with preliminary materials.
[ ] 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:
NOTICE OF 2001 ANNUAL MEETING & INFORMATION STATEMENT
(Mississippi POWER LOGO)
(DWIGHT H. EVANS LETTERHEAD)
April 27, 2001
Dear Shareholder:
You are cordially invited to attend our 2001 Annual Meeting of Shareholders
at 10:00 a.m., Central Time, on May 21, 2001 at the Company's General Office
Auditorium, 2992 West Beach, Gulfport, Mississippi.
At the meeting we will elect our board of directors.
Sincerely yours,
/s/ DWIGHT H. EVANS
Dwight H. Evans
President and Chief
Executive Officer
MISSISSIPPI POWER COMPANY
GULFPORT, MISSISSIPPI
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 2001
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Mississippi Power Company will be held at the Company's General Office
Auditorium, 2992 West Beach, Gulfport, Mississippi on May 21, 2001 at 10:00
a.m., Central Time, to elect nine members of the board of directors and to
transact any other business that may properly come before said meeting or any
adjournment or postponement thereof.
Only shareholders of record at the close of business on March 28, 2001 will
be entitled to notice of and to vote at said meeting or any adjournment or
postponement thereof.
The Information Statement and the Annual Report are included in this
mailing.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
Michael W. Southern
Vice President, Secretary, Treasurer
and
Chief Financial Officer
Gulfport, Mississippi
April 27, 2001
TABLE OF CONTENTS
PAGE
----
General Information......................................... 1
Nominees for Election as Directors.......................... 2
Corporate Governance........................................ 3
Audit Committee Report...................................... 5
Compensation and Management Succession Committee Report..... 6
Compensation Committee Interlocks and Insider
Participation............................................. 8
Certain Relationships and Related Transactions.............. 8
Executive Compensation Information.......................... 9
Stock Ownership Table....................................... 13
Appendix A -- Southern Company's Audit Committee Charter.... A-1
Appendix B -- Mississippi Power Company's Audit Committee of
the Board of Directors.................................... B-1
MISSISSIPPI POWER COMPANY
INFORMATION STATEMENT
GENERAL INFORMATION
This Information Statement is furnished by Mississippi Power Company (the
"Company") in connection with the 2001 Annual Meeting of Shareholders and any
adjournment or postponement thereof. The meeting will be held at 10:00 a.m.,
Central Time, on May 21, 2001, at the Company's General Office Auditorium, 2992
West Beach, Gulfport, Mississippi. This Information Statement is initially being
provided to shareholders on or about April 27, 2001.
At the meeting, we will elect nine members to the board of directors and
transact any other business that may properly come before the meeting. We are
not aware of any other matters to be presented at the meeting; however, the
holder of the Company's common stock will be entitled to vote on any other
matters properly presented.
All shareholders of record on the record date of March 28, 2001 are
entitled to notice of and to vote at the meeting. On that date, there were
1,121,000 common shares outstanding and entitled to vote, all of which are held
by The Southern Company. There were also 84,050 shares of $100 preferred stock
and 936,160 shares of depositary preferred stock, each representing one-fourth
of a share of preferred stock, outstanding on that date. With respect to the
election of directors, all of the outstanding shares of preferred stock are
entitled to vote as a single class with the Company's common stock. Each common
share counts as one vote and each share of preferred stock counts as one-half
vote. Neither the Company's charter nor by-laws provides for cumulative voting
rights.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
1
NOMINEES FOR ELECTION AS DIRECTORS
ITEM NO. 1 -- ELECTION OF DIRECTORS
A board of nine directors is to be elected at the annual meeting, each
director to hold office until the next annual meeting of shareholders and until
the election and qualification of a successor. If any named nominee becomes
unavailable for election, the board may substitute another nominee.
Below is information concerning the nominees for director stating, among
other things, their names, ages, positions and offices held, and brief
descriptions of their business experience.
MICHAEL D. GARRETT -- New Nominee
Mr. Garrett, 51, will be President and Chief Executive Officer of the
Company effective May 1, 2001. He previously served as Executive Vice
President -- Customer Service of Alabama Power Company from January 2000 to May
2001 and Executive Vice President of External Affairs of Alabama Power Company
from March 1998 to January 2000. He previously served as Senior Vice President
of External Affairs of Alabama Power Company from February 1994 to March 1998.
TOMMY E. DULANEY -- New Nominee
Mr. Dulaney, 62, is President and Chief Executive Officer of Structural
Steel Services, Inc. (production of steel fabricated members), Meridian,
Mississippi. He is a member of the Advisory Board of Trustmark National Bank,
Meridian, Mississippi.
ROBERT S. GADDIS -- Director since 1986
Mr. Gaddis, 69, is Chairman of the Advisory Board of Trustmark National
Bank, Laurel, Mississippi.
LINDA T. HOWARD -- Director since 1999
Ms. Howard, 57, is President of Howard Industries, Inc. (lighting and
computer sales), Laurel, Mississippi.
AUBREY K. LUCAS -- Director since 1984
Dr. Lucas, 66, is President Emeritus and Distinguished Professor of Higher
Education at the University of Southern Mississippi, Hattiesburg, Mississippi.
MALCOLM PORTERA -- Director since 1999
Dr. Portera, 54, is President of Mississippi State University, Starkville,
Mississippi.
GEORGE A. SCHLOEGEL -- Director since 1995
Mr. Schloegel, 60, is President and Chief Executive Officer of Hancock
Bank, Gulfport, Mississippi. He is also Vice Chairman and Chief Executive
Officer of Hancock Holding Company.
PHILIP J. TERRELL -- Director since 1995
Dr. Terrell, 47, is Superintendent of Schools, Pass Christian Public School
District, Pass Christian, Mississippi. He is also adjunct Professor of Education
at the University of Southern Mississippi, Gulf Park Campus, Long Beach,
Mississippi.
N. EUGENE WARR -- Director since 1986
Mr. Warr, 65, is a retailer in Gulfport, Mississippi. He is a director of
Coast Community Bank, formerly SouthTrust Bank of Mississippi, Biloxi,
Mississippi.
Each nominee has served in his or her present position for at least the
past five years, unless otherwise noted.
A plurality of the votes cast by the shares outstanding and entitled to
vote at a meeting at which a quorum is present is required for the election of
directors. Southern Company, as owner of all of the Company's outstanding common
stock, will vote for all of the nominees above.
2
CORPORATE GOVERNANCE
HOW IS THE COMPANY ORGANIZED?
The Company is managed by a core group of officers and governed by a board
of directors that has been set at nine members. The nominees for election as
directors consist of eight non-employees and one executive officer of the
Company.
WHAT ARE DIRECTORS PAID FOR THEIR SERVICES?
- Standard Arrangements. The following compensation was paid to the
Company's directors during 2000 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 may be payable in Southern Company common
stock, and all or a portion of the total fees may be deferred under the
Deferred Compensation Plan until membership on the board is terminated.
Cash Retainer Fee...................... $10,000
Stock Retainer Fee..................... 200 shares of Southern Company common stock
$750 for each board or committee meeting
Meeting Fee............................ attended
Effective January 1, 1997, the Outside Directors Pension Plan (the "Plan")
was terminated for future participants and benefits payable under the Plan were
frozen. Non-employee directors serving as of January 1, 1997 were given a
one-time election to receive a Plan benefit buy-out equal to the actuarial
present value of future Plan benefits or receive benefits under the terms of the
Plan at the annual retainer rate in effect on December 31, 1996. Directors who
elected to receive the benefit buy-out were required to defer receipt of that
amount under the Deferred Compensation Plan until termination from board
membership. Directors who elected to continue to participate under the terms of
the Plan are entitled to benefits upon retirement from the board on the
retirement date designated in the Company's by-laws. The annual benefit payable
is based upon length of service and varies from 75 percent of the annual
retainer in effect on December 31, 1996 if the participant has at least 60
months of service on the Company's board or the board of one or more of the
Company's affiliates, to 100 percent if the participant has at least 120 months
of such service. Payments will continue for the greater of the lifetime of the
participant or 10 years.
- Other Arrangements. No director received other compensation for services
as a director during the year ending December 31, 2000 in addition to or
in lieu of that specified by the standard arrangements specified above.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE:
- Members are Dr. Lucas, Chairman; Mr. Edwin E. Downer; Ms. Howard; and Dr.
Terrell
- Met four times in 2000
- Reviews the Company's financial reporting and accounting practices and
oversees the internal accounting, compliance and control systems
Southern Company's Audit Committee reviews the independent public
accountants' reports on the Company's financial statements and discusses
significant changes in accounting principles and practices, significant proposed
adjustments and any unresolved disagreements with management concerning
accounting or disclosure matters with management and the independent public
accountants. It also recommends appointment of the independent public
accountants and reviews their services and fees and
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the scope and timing of audits. It also is responsible for recommending the
filing of the Company's annual financial statements with the Securities and
Exchange Commission.
Upon recommendation of Southern Company's Audit Committee, Southern
Company's board of directors has selected Arthur Andersen LLP as the Company's
independent public accountants for 2001. No representative of Arthur Andersen
LLP is expected to be present at the meeting unless prior to the day of the
meeting, the Company's Secretary has received written notice from a shareholder
addressed to the Secretary at Mississippi Power Company, 2992 West Beach,
Gulfport, Mississippi 39501, that such shareholder will attend the meeting and
wishes to ask questions of a representative of Arthur Andersen LLP.
COMPENSATION COMMITTEE:
- Members are Mr. Gaddis, Chairman; Dr. Portera; and Mr. Schloegel
- Met one time in 2000
- Oversees the administration of the Company's compensation arrangements
Southern Company's Compensation and Management Succession Committee
approves the corporate performance goals used to determine incentive
compensation and establishes the mechanism for setting compensation levels for
the Company's executive officers. It also administers executive compensation
plans and reviews management succession plans.
FINANCE COMMITTEE:
- Members are Dr. Terrell, Chairman; Mr. Evans; Mr. Schloegel; and Mr. Warr
- Met six times in 2000
- Reviews the Company's financial affairs and recommends actions to the
board
- --------------------------------------------------------------------------------
The board of directors met six times in 2000. Average director attendance
at all board and committee meetings was approximately 95 percent. No director
attended less than 75 percent of applicable meetings.
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AUDIT COMMITTEE REPORT
WHAT IS THE AUDIT COMMITTEE'S PHILOSOPHY?
The Audit Committee of Southern Company (the "Committee") oversees the
Company's financial reporting process on behalf of the board of directors of
each of the Company and Southern Company. The Company's management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. In fulfilling its oversight
responsibilities, the Committee reviewed the audited financial statements of the
Company in the Annual Report with management. The Committee's review process
included discussions of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The independent public accountants are responsible for expressing an
opinion on the conformity of those audited financial statements with accounting
principles generally accepted in the United States. The Committee reviewed with
the independent public accountants their judgments as to the quality, not just
the acceptability, of the Company's accounting principles and such other matters
as are required to be discussed with the Committee under generally accepted
auditing standards. In addition, the Committee has discussed with the
independent public accountants their independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board. The Committee has also considered whether the
independent public accountants' provision of non-audit services to the Company
is compatible with maintaining their independence.
The Committee discussed the overall scopes and plans with the Company's
internal auditors and independent public accountants for their respective
audits. The Committee meets with the internal auditors and independent public
accountants, with and without management present, to discuss the results of
their audits, their evaluations of the Company's internal controls and the
overall quality of the Company's financial reporting. The Committee held seven
meetings during fiscal 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the board of directors of Southern Company (and the board
approved) that the audited financial statements be included in the Company's
Annual Report for the year ended December 31, 2000 and filed with the Securities
and Exchange Commission. The Committee also recommended to the board of
directors of Southern Company (and the board approved) the selection of the
Company's independent public accountants.
Members of the Committee:
L. G. Hardman III, Chair
Dorrit J. Bern
Bruce S. Gordon
Zack T. Pate
Gerald J. St. Pe
PRINCIPAL PUBLIC ACCOUNTING FIRM FEES
The following represents the fees billed to the Company for the last fiscal
year by Arthur Andersen LLP -- the Company's principal public accountant:
Audit Fees.................................................. $184,000
Financial Information Systems Design and Implementation
Fees...................................................... --
All Other Fees.............................................. 39,000
--------
Total............................................. $223,000
========
5
COMPENSATION AND MANAGEMENT SUCCESSION COMMITTEE REPORT
WHAT IS THE EXECUTIVE COMPENSATION PHILOSOPHY?
Southern Company's Compensation and Management Succession Committee's
intent is to provide a competitive compensation program that is linked directly
to Southern Company's and the Company's strategic business objectives and their
short- and long-term operating performance. With the objective of maximizing
Southern Company's stockholder value over time, this policy serves to align the
interests of executives and Southern Company's stockholders.
WHAT COMPRISES TOTAL EXECUTIVE COMPENSATION?
- Base pay,
- Short-term incentives (annual performance bonuses), and
- Long-term incentives.
TOTAL EXECUTIVE COMPENSATION
Total executive compensation targets are set at the size-adjusted median of
the marketplace. The marketplace is defined as a group of large companies in the
electric and gas utility industries. Twenty of these companies are included in
the 26 companies that comprise the Standard & Poor's Electric Utility Index.
BASE PAY
A range for base pay is determined for each executive by comparing the base
pay at the appropriate peer group of companies described previously. Base pay is
set at a level that is at or below the size-adjusted median paid at those
companies because of Southern Company's emphasis on incentive compensation in
its executive compensation program.
ANNUAL PERFORMANCE BONUSES
Annual bonuses are paid through the Performance Pay Plan. All named
executive officers participated in this plan in 2000.
PERFORMANCE GOALS
The annual performance bonuses are based on the attainment of corporate
goals that we set at the beginning of the year.
We believe that accomplishing the corporate goals is essential for the
Company's continued success and sustained financial performance. For 2000, the
corporate performance goals included specific targets for:
- Southern Company earnings -- earnings per share of Southern Company from
operations ("EPS") and
- The Company's income and return on equity ("ROE").
The Committee established short-term corporate goals under the Performance
Pay Plan related to cost control, cash flow, customer value, power plant
availability and diversity. The degree of achievement of the short-term goals
can affect the bonus payments positively or negatively.
A target performance level is set for each goal. Performance above or below
the targets results in proportionately higher or lower bonus payments. A
percentage of base pay is set for each executive officer based on his or her
position level for target-level performance. For all executive officers, bonuses
may range from 50 percent of the target to 200 percent based on the degree of
achievement of goals. No
6
bonuses are paid if performance is below a threshold level or if a minimum
earnings level is not reached. Also, no bonuses are paid if Southern Company's
current earnings are not sufficient to fund the common stock dividend at the
same level as the prior year.
ANNUAL BONUS PAYMENTS
Performance met or exceeded the target levels in all areas in 2000,
resulting in bonuses that exceeded the target levels.
The annual performance bonus of Mr. Dwight H. Evans under the Performance
Pay Plan for target-level performance was 60% of his base pay. His bonus paid
for 2000 performance was based 30% on the degree of achievement of the Southern
Company EPS goal and 70% on the degree of achievement of the Company's net
income and ROE goal. Performance for both goals exceeded the target, resulting
in a bonus payment to Mr. Evans that exceeded the target.
LONG-TERM INCENTIVES
We based a significant portion of our total compensation program on
long-term incentive compensation. Long-term incentive vehicles are stock options
and performance dividend equivalents. Executives are granted options with
ten-year terms to purchase Southern Company common stock at the market price on
the date of the grant. The estimated annualized value represented approximately
20 percent of the total compensation for the executives. The size of prior
grants and the number of options outstanding were not considered in determining
the size of the grants made in 2000. These options vest over a three-year
period.
Executives also are paid performance-based dividend equivalents on stock
options granted after 1996 and held at the end of the year. Dividend equivalents
can range from 25 percent of the common stock dividend rate if total shareholder
return, compared to a group of other utility companies, is at the 30th
percentile to 100 percent of the dividend rate if total shareholder return
reaches the 90th percentile. For stock options held on December 31, 2000, the
executives received $.90 per share.
POLICY ON INCOME TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deductibility of
certain executives' compensation that exceeds $1 million per year unless the
compensation is paid under a performance-based plan as defined in the Internal
Revenue Code and that has been approved by shareholders. Southern Company has
obtained shareholder approval for its incentive plans for those executives whose
compensation is subject to the Section 162(m) limitations. However, the policy
is to maximize long-term stockholder value, and tax deductibility is only one
factor considered in setting compensation.
SUMMARY
We believe that the policies and programs described in this report link pay
and performance and serve the best interest of Southern Company stockholders. We
frequently review the various pay plans and policies and modify them as we deem
necessary to continue to attract, retain and motivate talented executives.
Members of the Committee:
G. J. St. Pe, Chair
L. G. Hardman III
7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Management Succession Committee is made up of
non-employee directors who have never served as executive officers of Southern
Company or the Company. During 2000, none of Southern Company's or the Company's
executive officers served on the board of directors of any entities whose
directors or officers serve on Southern Company's Compensation and Management
Succession Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Robert S. Gaddis is Chairman of the Advisory Board of Trustmark
National Bank, Laurel, Mississippi and Mr. George A. Schloegel is President of
Hancock Bank, Gulfport, Mississippi. During 2000, these banks furnished a number
of regular banking services in the ordinary course of business to the Company.
The Company intends to maintain normal banking relations with the aforesaid
banks in the future.
8
EXECUTIVE COMPENSATION INFORMATION
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has adopted Southern Company's Change in Control Plan, which is
applicable to certain of its officers, and has entered into an individual change
in control agreement with Mr. Evans. If an executive is involuntarily
terminated, other than for cause, within two years following a change in control
of Southern Company or the Company, the agreements provide for:
- 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 and dividend
equivalents and
- payment of any excise tax liability incurred as a result of payments
made under any individual agreements.
A Southern Company change in control is defined under the agreements as:
- 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,
- 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.
A change in control of the Company is defined under the agreements as:
- 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.
Southern Company also has amended its short- and long-term incentive plans
to provide for pro-rata payments at not less than target-level performance if a
change in control occurs and the plans are not continued or replaced with
comparable plans.
9
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company serving during 2000.
LONG-TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION NUMBER OF
-------------------------------------------- SECURITIES LONG-TERM
OTHER ANNUAL UNDERLYING INCENTIVE ALL OTHER
NAME AND OTHER PRINCIPAL COMPENSATION STOCK OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) ($)(1) (SHARES) ($)(2) ($)(3)
- ------------------------ ---- ---------- --------- ------------ ------------- --------- ------------
DWIGHT H. EVANS(4)...................... 2000 300,894 292,038 12,951 26,064 -- 16,427
President, Chief Executive 1999 288,494 43,702 3,375 12,614 251,300 15,507
Officer, Director 1998 283,195 42,603 5,051 11,693 218,175 15,291
DON E. MASON............................ 2000 211,662 195,502 1,708 18,334 -- 10,261
Vice President 1999 203,584 36,891 821 7,330 111,258 10,243
1998 203,234 29,560 4,497 6,926 96,594 10,757
H. E. BLAKESLEE......................... 2000 216,012 169,775 8,929 18,711 -- 10,489
Vice President 1999 207,769 37,649 8,070 7,481 111,258 11,254
1998 207,416 36,202 47 7,068 96,594 10,979
MICHAEL W. SOUTHERN..................... 2000 188,300 144,266 8,457 14,296 -- 9,141
Vice President, 1999 179,117 34,369 8,891 6,469 103,585 9,590
Chief Financial 1998 174,334 34,130 -- 5,997 83,087 8,978
Officer, Secretary,
Treasurer
GENE L. USSERY(5)....................... 2000 171,197 126,070 616 12,780 -- 8,434
Vice President 1999 -- -- -- -- -- --
1998 -- -- -- -- -- --
- ---------------
(1) Tax reimbursement by the Company and certain personal benefits.
(2) Payouts made in 1999 and 2000 for the four-year performance periods ending
December 31, 1998 and 1999, respectively.
(3) Company contributions to the Employee Savings Plan (ESP), Employee Stock
Ownership Plan (ESOP), non-pension related accruals under the Supplemental
Benefit Plan (SBP) (an Employee Retirement Income Security Act excess plan
under which accruals are made to offset Internal Revenue Code imposed
limitations under the ESP and ESOP) are as follows:
NAME ESP ESOP SBP
- ---- ------ ---- ------
Dwight H. Evans............................ $6,853 $810 $8,764
Don E. Mason............................... 5,958 810 3,493
H. E. Blakeslee............................ 5,958 810 3,721
Michael W. Southern........................ 5,958 810 2,373
Gene L. Ussery............................. 5,981 810 1,643
(4) On May 1, 2001, Mr. Evans will be transferred to an executive position at
Southern Company and will cease to be the President and Chief Executive
Officer of the Company. On that date, Mr. Garrett will become the Company's
President and Chief Executive Officer.
(5) Mr. Ussery was named an executive officer effective September 21, 2000.
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STOCK OPTION GRANTS IN 2000
The following table sets forth all stock option grants to the named
executive officers of the Company during the year ending December 31, 2000.
% OF TOTAL
OPTIONS
# OF SECURITIES GRANTED TO EXERCISE OR GRANT DATE
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) VALUE($)(3)
- ---- ------------------ -------------- ----------- ---------- -----------
Dwight H. Evans................. 26,064 0.4 23.25 02/18/2010 150,129
Don E. Mason.................... 18,334 0.3 23.25 02/18/2010 105,604
H. E. Blakeslee................. 18,711 0.3 23.25 02/18/2010 107,775
Michael W. Southern............. 14,296 0.2 23.25 02/18/2010 82,345
G. L. Ussery, Jr................ 12,780 0.2 23.25 02/18/2010 73,613
- ---------------
(1) Performance Stock Plan grants were made on February 18, 2000 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 fair market value of Southern
Company's common stock on the date granted. Options may be transferred to
family members, family trusts and family limited partnerships.
(2) A total of 6,977,038 stock options were granted in 2000.
(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 common stock at a future date. Significant assumptions are
shown below:
DISCOUNT FOR
FORFEITURE RISK
--------------------
RISK-FREE DIVIDEND BEFORE BEFORE
VOLATILITY RATE OF RETURN OPPORTUNITY TERM VESTING EXPIRATION
---------- -------------- ----------- ---- ------- ----------
Black-Scholes Assumptions...... 22.14% 6.52% 50% 10 7.79% 12.40%
- ---------------
These assumptions reflect the effects of cash dividend equivalents paid to
participants under Southern Company's Performance Dividend Plan assuming targets
are met.
AGGREGATED STOCK OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during the year ending December 31, 2000 by the named executive officers and the
value of unexercised options held by them as of December 31, 2000.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)1
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($)2 EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------------- ------------------------- -------------------------
Dwight H. Evans............. -- -- 72,039/38,371 811,284/341,116
Don E. Mason................ -- -- 30,438/25,529 309,803/230,374
H. E. Blakeslee............. -- -- 41,340/26,054 452,722/235,112
Michael W. Southern......... -- -- 22,758/20,607 227,124/184,228
Gene L. Ussery.............. -- -- 13,383/18,183 125,365/163,190
- ---------------
(1) This column represents the excess of the fair market value of Southern
Company common stock of $33.25 per share, as of December 31, 2000, above the
exercise price of the options. The Exercisable column reports the "value" of
options that are vested and therefore could be exercised. The Unexercisable
column reports the "value" of options that are not vested and therefore
could not be exercised as of December 31, 2000.
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(2) 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.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
The following table sets forth the estimated annual pension benefits
payable at normal retirement age under Southern Company's qualified Pension
Plan, as well as supplemental benefits, based on the stated compensation and
years of service with the Southern Company system for the named executive
officers at the Company. Compensation for pension purposes is limited to the
average of the highest three of the final 10 years' compensation -- base salary
plus the excess of annual and long-term incentive compensation over 15 percent
of base salary (reported under columns titled "Salary", "Bonus" and "Long-Term
Incentive Payouts" in the Summary Compensation Table on page 10).
The amounts shown in the table were calculated according to the final
average pay formula and are based on a single life annuity without reduction for
joint and survivor annuities or computation of the Social Security offset which
would apply in most cases.
YEARS OF ACCREDITED SERVICE
---------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40 45
------------ -------- -------- ------- ------- ------- ---------- ----------
$ 100,000................ $ 25,500 $ 34,000 $42,500 $51,000 $59,500 $ 68,000 $ 76,500
300,000................ 76,500 102,000 127,500 153,000 178,500 204,000 229,500
500,000................ 127,500 170,000 212,500 255,000 297,500 340,000 382,500
700,000................ 178,500 238,000 297,500 357,000 416,500 476,000 535,500
900,000................ 229,500 306,000 382,500 459,000 535,500 612,000 688,500
1,100,000............... 280,500 374,000 467,500 561,000 654,500 748,000 841,500
1,300,000............... 331,500 442,000 552,500 663,000 773,500 884,000 994,500
1,500,000............... 382,500 510,000 637,500 765,000 892,500 1,020,000 1,147,500
Listed below are the applicable compensation levels and years of accredited
service as of December 31, 2000 for the named executive officers.
COMPENSATION ACCREDITED
NAME LEVEL YEARS OF SERVICE
- ---- ------------ ----------------
Dwight H. Evans............................................. $528,884 29
Don E. Mason................................................ 315,880 34
H. E. Blakeslee............................................. 322,956 35
Michael W. Southern......................................... 286,564 25
Gene L. Ussery.............................................. 242,876 32
12
STOCK OWNERSHIP TABLE
Southern Company is the beneficial owner of 100% of the outstanding common
stock of the Company. The following table shows the number of shares of Southern
Company common stock owned by directors, nominees and executive officers as of
December 31, 2000. It is based on information furnished by the directors,
nominees and executive officers. The shares owned by all directors, nominees and
executive officers as a group constitute less than one percent of the total
number of shares of Southern Company common stock outstanding on December 31,
2000.
NUMBER OF
SHARES
BENEFICIALLY
NAME OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OWNED(1)(2)
- -------------------------------------------------- ------------
Edwin E. Downer............................................. 6,057
Tommy E. Dulaney............................................ 0
Dwight H. Evans............................................. 105,584
Robert S. Gaddis............................................ 2,166
Michael D. Garrett.......................................... 35,549
Linda T. Howard............................................. 268
Aubrey K. Lucas............................................. 2,891
Malcolm Portera............................................. 268
George A. Schloegel......................................... 826
Philip J. Terrell........................................... 1,099
N. Eugene Warr.............................................. 1,423
H. E. Blakeslee............................................. 52,599
Don E. Mason................................................ 61,823
Michael W. Southern......................................... 32,628
Gene L. Ussery.............................................. 19,385
The directors, nominees and executive officers as a group... 322,565
- ---------------
(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 (i.e., the power to dispose of, or to direct the disposition of, a
security).
(2) Includes shares of Southern Company common stock that certain executive
officers have the right to acquire within 60 days as follows: Mr. Evans,
80,727 shares; Mr. Blakeslee, 47,577 shares; Mr. Garrett, 30,473 shares; Mr.
Mason, 36,550 shares; Mr. Southern, 27,524 shares; and Mr. Ussery, 17,643
shares.
13
APPENDIX A
SOUTHERN COMPANY
AUDIT COMMITTEE CHARTER
This Charter identifies the composition, purpose, authority, meeting
requirements and responsibilities of the Southern Company Audit Committee (the
"Committee") as approved by the Southern Company Board of Directors.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee will be comprised of at least three independent
directors, each of whom will have a basic understanding of financial statements
and at least one of whom will have prior accounting and related financial
management expertise. Such requirements, for independence and financial
literacy, are interpreted by the Board of Directors in its best business
judgment in accordance with the rules of the Securities and Exchange Commission
(SEC) and the New York Stock Exchange.
PURPOSE OF THE AUDIT COMMITTEE
The purpose of the Audit Committee is to provide, on behalf of the Southern
Company Board of Directors, oversight of:
- The Southern Company's accounting and financial reporting practices and
policies and internal audit activities and procedures, including the
assessment of the adequacy of internal accounting, compliance and
controls systems.
- The Southern Company's financial statements and the independent audit
thereof, including quarterly and annual reporting. This includes
financial information for all Southern Company first-tier, consolidated
subsidiaries.
- The independent public accountants, including their selection or
nomination for Board of Directors, their performance evaluation and,
where appropriate, their replacement.
- The independence of the external public accountants through evaluation
and discussion of their annual written "Statement as to Independence" and
consideration of non-audit services provided.
AUTHORITY OF THE AUDIT COMMITTEE
The Committee reports to the Board of Directors and has unrestricted access
and authorization to obtain assistance from Southern Company personnel to
accomplish its purpose. In addition, the Committee has the discretion to
initiate and supervise investigations within the scope of its duties, as it may
deem appropriate and to employ whatever additional advisors and consultants it
deems necessary for the fulfillment of its duties.
MEETING REQUIREMENTS
The Audit Committee shall meet a minimum of four times each year, or more
often if warranted, to receive reports from and discuss the quarterly and annual
financial statements, including disclosures and other related information. The
Audit Committee shall meet separately, at least annually, with the Director of
Internal Auditing, the Compliance Officer, and the external auditor to discuss
matters that the Audit Committee or any of these persons believe should be
discussed privately. Meetings of the Audit Committee may utilize conference
call, Internet or other similar electronic communication technology.
A-1
RESPONSIBILITIES OF THE AUDIT COMMITTEE
1. Financial Reporting and Accounting Practices
The oversight responsibility of the Audit Committee in the area of financial
reporting and accounting practices is to provide reasonable assurances that
financial disclosures made by management accurately portray the financial
condition, results of operations, cash flows, plans and long-term commitments
of the Company on a consolidated basis, as well as on a separate company
basis for each first-tier, consolidated subsidiary that has publicly traded
securities. To accomplish this, the Committee will:
- Provide oversight of the external audit coverage, including:
Annual nomination or selection of independent public accountants.
Evaluation of the independent public accountants' performance.
Evaluation of policies covering when or whether to engage the independent
public accountants to provide non-audit services.
Review of the independent public accountants' quarterly and annual work
plans, results of the audit engagements and proposed and actual fees for
services rendered. This includes audit and non-audit work plans and fees.
Coordination with the Internal Auditing and Accounting functions.
Assessment of the external auditors' annual "Statement as to Independence."
- Review and discuss the quarterly and annual consolidated earnings
announcements with management.
- Review and discuss with management and the independent public accountants
the quarterly and annual financial statements and recommend them for filing
with the SEC. The financial statements include the Southern Company
consolidated financial statements as well as the separate financial
statements for all first-tier, consolidated subsidiaries with publicly
traded securities. The review and discussion includes:
Significant accounting policies and policy decisions.
Significant judgments and estimates made by management.
Significant reporting or operational issues identified during the reporting
period, including how they were resolved.
Issues on which management sought second accounting opinions.
Adjustments to the financial statements proposed by the external auditors.
Significant regulatory changes and accounting and reporting developments
proposed by Financial Accounting Standards Board, SEC or other regulatory
agency.
- Review the letters of management representation given to the independent
public accountants in connection with the audits of the annual financial
statements.
2. Internal Control
The responsibility of the Audit Committee in the area of internal control in
addition to the actions described in section (1) is to:
- Provide oversight of the internal audit functions by:
Reviewing audit plans, budgets and staffing levels.
Reviewing audit results.
A-2
Reviewing 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 Auditing.
- Assess the extent to which the planned audit scopes of the internal
auditors and the independent public accountants can be relied on to detect
fraud or weaknesses in internal controls.
- Assess management's response to any reported weaknesses or compliance
deficiencies.
- Provide oversight of the Company's Compliance and Ethics Programs by:
Reviewing the plans and activities of the Company's Corporate Compliance
Officer.
Reviewing results of auditing or other monitoring programs designed to
prevent or detect violations of laws or regulations.
Reviewing corporate policies relating to compliance with laws and
regulations, ethics, conflict of interest and the investigation of
misconduct or fraud.
Reviewing significant cases of employee conflict of interest, unethical or
illegal conduct.
- Review the quality assurance practices of the internal auditing function
and the independent public accountants.
- Review and discuss significant risks facing the Company and the steps taken
to monitor and minimize such risks.
- Review different aspects of the Company's business on a planned basis to
ensure a general understanding of the significant operations and functional
areas and to assess the impact of these operations and functional areas on
the internal control environment.
3. Other
- Report Committee activities and findings to the Board of Directors on a
regular basis.
- Report Committee activities in the Company's annual proxy statement to
shareholders.
- Review this charter at least annually and recommend appropriate changes.
A-3
APPENDIX B
MISSISSIPPI POWER COMPANY AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
CHARTER
The charter identifies the purpose, authority, meeting requirements and
responsibilities of the Mississippi Power Company Audit Committee (the
"Committee") as approved by the Mississippi Power Company Board of Directors.
PURPOSE
The purpose of the Committee is to provide, on behalf of the Mississippi
Power Company Board of Directors:
- Oversight of the adequacy of the Company's internal accounting,
compliance, and control systems.
- Oversight of the Company's internal auditing activities and procedures.
- Review of the Company's financial reporting and accounting practices.
AUTHORITY
The Committee, which is composed of a minimum of three outside directors,
reports to the Board of Directors and has unrestricted access and authorization
to obtain assistance from Company personnel to accomplish its purpose. In
addition, the Committee has the discretion to initiate and supervise
investigations within the scope of its duties, as it may deem appropriate and to
employ whatever additional advisors and consultants it deems necessary for the
fulfillment of its duties.
MEETING REQUIREMENTS
The Committee shall meet at least quarterly or more often if warranted to
receive reports from management, internal auditing, and the independent public
accountants. The Committee shall also meet separately, at least annually with
the Director of Internal Auditing, the Compliance Officer, and the independent
public accountants to discuss matters that the Committee or any of these persons
believe should be discussed privately. Meetings of the Committee may utilize
conference call, Internet or other similar electronic communication technology.
RESPONSIBILITIES
1. Financial Reporting and Accounting Practices. Oversight of the
Company's financial reporting process and quarterly and annual reporting to the
Securities and Exchange Commission, as well as the performance of the
independent public accountants, is the responsibility of the Southern Company
Audit Committee. The responsibility of the Mississippi Power Company Committee
in the area of financial reporting and accounting practices is to review
financial disclosures made by management portraying the Company's financial
condition, results of operation, cash flows, plans, and long-term commitments.
To accomplish this, the Committee will review:
- Significant accounting policies and policy decisions.
- Reviews of quarterly and annual financial statements.
- Significant regulatory changes and accounting and reporting developments
proposed by Financial Accounting Standards Board, SEC, or other
regulatory agency.
- Significant reporting or operational issues that were discussed during
the reporting period and determine how they were resolved.
B-1
- Issues on which management sought a second accounting opinion.
- The letter of management representation given to the independent public
accountants in connection with the review of the annual financial
statements.
2. Internal Control. The responsibility of the Committee in the area of
internal control in addition to the actions described in section (1) is to:
- Provide oversight of the internal audit function by:
- Reviewing audit plans, budgets, and staffing levels.
- Reviewing audit results.
- Reviewing 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 Auditing.
- Assess the extent to which the planned audit scope of internal auditing
and the independent public accountant can be relied on to detect fraud or
weaknesses in internal controls.
- Assess management's response to reported weaknesses or compliance
deficiencies.
- Provide oversight of the Company's Compliance Program by:
- Reviewing the plans and activities of the Company's Corporate Compliance
Officer.
- Reviewing results of auditing or other monitoring programs designed to
prevent or detect violations of laws or regulations.
- Reviewing corporate policies relating to compliance with laws and
regulations, ethics, conflict of interest, and the investigation of
misconduct or fraud.
- Reviewing significant cases of employee conflict of interest, misconduct
or fraud.
- Review the quality assurance practices of the internal auditing function
and the independent public accountant.
- Review and discuss significant risks facing the Company and the steps
taken to monitor and minimize such risks.
- Review different aspects of the Company's business on a planned basis to
ensure a general understanding of operations and functional areas and
assess the impact of these operations and functional areas on the
internal control environment.
- Report Committee activities and findings to the Board of Directors and
the Southern Company Audit Committee on a regular basis.
- Review this charter at least annually and recommend appropriate changes.
Approved this 17th day of October 2000
B-2