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:
(MISSISSIPPI POWER LOGO)
NOTICE OF 2002
ANNUAL MEETING
& INFORMATION STATEMENT
WWW.MISSISSIPPIPOWER.COM
(MICHAEL D. GARRETT LETTERHEAD)
April 23, 2002
Dear Shareholder:
You are cordially invited to attend our 2002 Annual Meeting of Shareholders
at 8:00 a.m., Eastern Time, on May 15, 2002 at the offices of our affiliate,
Georgia Power Company, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia.
At the meeting, we will elect our board of directors.
Sincerely yours,
/s/ MICHAEL D. GARRETT
Michael D. Garrett
President and Chief
Executive Officer
MISSISSIPPI POWER COMPANY
GULFPORT, MISSISSIPPI
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 2002
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders of
Mississippi Power Company will be held at the offices of its affiliate, Georgia
Power Company, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia on May 15,
2002 at 8:00 a.m., Eastern Time, to elect seven members to 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 April 8, 2002 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
/s/Vicki L. Pierce
Vicki L. Pierce
Corporate Secretary
Gulfport, Mississippi
April 23, 2002
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
General Information......................................... 1
Shareholder Proposals....................................... 1
Nominees for Election as Directors.......................... 2
Corporate Governance........................................ 3
Audit Committee Report...................................... 5
Compensation and Management Succession Committee Report..... 7
Compensation Committee Interlocks and Insider
Participation............................................. 9
Certain Relationships and Related Transactions.............. 9
Executive Compensation Information.......................... 10
Stock Ownership Table....................................... 15
Appendix A -- Southern Company's Audit Committee Charter.... A-1
Appendix B -- Mississippi Power Company's Audit Committee
Charter................................................... B-1
</Table>
MISSISSIPPI POWER COMPANY
INFORMATION STATEMENT
GENERAL INFORMATION
This Information Statement is furnished by Mississippi Power Company (the
"Company") in connection with the 2002 Annual Meeting of Shareholders and any
adjournment or postponement thereof. The meeting will be held at 8:00 a.m.,
Eastern Time, on May 15, 2002, at the office of its affiliate, Georgia Power
Company, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia. This Information
Statement is initially being provided to shareholders on or about April 23,
2002.
At the meeting, we will elect seven 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 April 8, 2002 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 share of
outstanding common stock counts as one vote and each share of outstanding
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.
SHAREHOLDER PROPOSALS
Shareholders may present proper proposals for inclusion in the Company's
information statement and for consideration at the next annual meeting of its
shareholders by submitting their proposals to the Company in a timely manner. In
order to be considered for inclusion for the 2003 Annual Meeting of
Shareholders, shareholder proposals must be received by the Company no later
than February 22, 2003.
1
NOMINEES FOR ELECTION AS DIRECTORS
ELECTION OF DIRECTORS
A board of seven 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. The information is current as of the
date of this Information Statement.
MICHAEL D. GARRETT -- Director since 2001
Mr. Garrett, 52, is president and chief executive officer of the Company.
He served as executive vice president of 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 served as
senior vice president of external affairs of Alabama Power Company from February
1994 to March 1998.
TOMMY E. DULANEY -- Director since 2001
Mr. Dulaney, 63, 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.
LINDA T. HOWARD -- Director since 1999
Ms. Howard, 58, is president of Howard Industries, Inc. (lighting and
computer sales), Laurel, Mississippi.
AUBREY K. LUCAS -- Director since 1984
Dr. Lucas, 67, is president and distinguished professor of higher education
at the University of Southern Mississippi, Hattiesburg, Mississippi.
GEORGE A. SCHLOEGEL -- Director since 1995
Mr. Schloegel, 61, is president and chief executive officer of Hancock
Bank, Gulfport, Mississippi. He is vice chairman and chief executive officer of
Hancock Holding Company.
PHILIP J. TERRELL -- Director since 1995
Dr. Terrell, 48, is superintendent of schools, Pass Christian Public School
District, Pass Christian, Mississippi. He is adjunct professor of education at
the University of Southern Mississippi, Gulf Park Campus, Long Beach,
Mississippi.
N. EUGENE WARR -- Director since 1986
Mr. Warr, 66, 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 shares
of 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 seven members. The nominees for election as
directors consist of six 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 2001 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 shares of 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.
<Table>
Cash Retainer Fee...................... $10,000
Stock Retainer Fee..................... 50 shares of Southern Company common stock in
the first quarter of 2001 and 85 shares per
quarter thereafter
Meeting Fee............................ $750 for each board or committee meeting
attended
</Table>
- Pension Plan. There is no pension plan for non-employee directors.
- Other Arrangements. No director received other compensation for services
as a director during the year ending December 31, 2001 in addition to or
in lieu of that specified by the standard arrangements specified above.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE:
- Members are Mr. Schloegel, Chairman; Ms. Howard; Dr. Lucas; and Mr. Warr
- Met four times in 2001
- 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 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.
3
COMPENSATION COMMITTEE:
- Members are Mr. Warr, Chairman; Mr. Dulaney; and Dr. Terrell
- Met one time in 2001
- 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. Lucas, Chairman; Mr. Dulaney; Mr. Garrett; and Dr.
Terrell
- Met four times in 2001
- Reviews the Company's financial affairs and recommends actions to the
board
- --------------------------------------------------------------------------------
The board of directors met five times in 2001. Average director attendance
at all board and committee meetings was approximately 97 percent. No director
attended less than 75 percent of applicable meetings.
4
AUDIT COMMITTEE REPORT
The Audit Committee of Southern Company (the "Committee") oversees the
Company's financial reporting process on behalf of the board of directors of the
Company and the board of directors of Southern Company. The Committee members
are not professionally engaged in the practice of accounting or auditing and are
not experts in these fields. 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 nine
meetings during 2001.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the board of directors of Southern Company (and such board
approved) that the audited financial statements be included in the Company's
Annual Report for the year ended December 31, 2001 and filed with the Securities
and Exchange Commission. The Committee also recommended to the board of
directors of Southern Company (and such board approved) the selection of the
Company's independent public accountants.
Members of the Committee:
L. G. Hardman III, Chairman
Dorrit J. Bern
Zack T. Pate
Gerald J. St. Pe
5
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 for
2001:
<Table>
Audit Fees.................................................. $189,500
Financial Information Systems Design and Implementation
Fees...................................................... --
All Other Fees --
Audit-Related Fees........................................ --
Other Fees................................................ --
--------
Total............................................. $189,500
========
</Table>
CHANGE IN PRINCIPAL PUBLIC ACCOUNTING FIRM
On March 28, 2002, the board of directors of Southern Company, upon
recommendation of the Committee, decided not to engage Arthur Andersen LLP
("Arthur Andersen") as the Company's principal public accountants and engaged
Deloitte & Touche LLP ("Deloitte & Touche") to serve as the Company's principal
accountants for fiscal year 2002.
Arthur Andersen's reports on the consolidated financial statements of the
Company and its subsidiaries for the two most recent fiscal years ended December
31, 2001 did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope, or accounting
principles.
During the Company's two most recent fiscal years ended December 31, 2001
and the subsequent interim period through March 28, 2002:
- there were no disagreements between the Company and Arthur Andersen on
any matter of accounting principles or practices, financial statements
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to Arthur Andersen's satisfaction, would have caused them to
make reference to the subject matter of the disagreement in connection
with their report;
- there were no reportable events as described in Item 304(a)(1)(v) of
Regulation S-K; and
- the Company did not consult Deloitte & Touche with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be
rendered on the Company's consolidated financial statements, or any other
matters or reportable events as set forth in Items 304(a)(2)(i) and (ii)
of Regulation S-K.
No representative of Deloitte & Touche is expected to be present at the
meeting unless prior to the day of the meeting the Company's Corporate Secretary
has received written notice from a shareholder addressed to the Corporate
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 Deloitte & Touche. Representatives from Arthur Andersen
will not be present.
6
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. Fourteen of these companies are included in
the 28 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 Omnibus Incentive Compensation Plan.
All named executive officers participated in this plan in 2001.
PERFORMANCE GOALS
Annual performance bonus levels are based on a percentage of Southern
Company's net income from operations. In addition, the annual performance
bonuses are reviewed in comparison to the attainment of corporate performance
and short-term business unit goals, individual goals and new products and
services goals. All performance goals were set at the beginning of the year.
For 2001, the corporate performance goals included specific targets for:
- Southern Company earnings -- earnings per share of Southern Company from
operations ("EPS") and
- The Company's net income and return on equity ("ROE").
We believe that accomplishing the corporate performance goals is essential
for the Company's continued success and sustained performance. A target
performance level is set for each corporate performance goal. Performance above
or below the targets results in proportionately higher or lower bonus payments.
The bonus amount is then adjusted, up or down, based on the degree of
achievement of the short-term business unit goals related to capital
expenditures, cash flow, customer service, plant availability, diversity and
individual goals.
7
A target percentage of base pay is established for each executive officer
based on position level for target-level performance. Annual performance bonuses
based on the achievement of the corporate performance goals, as adjusted for the
short-term business unit goals and individual performance, may range from 0
percent of the target to 240 percent. An additional amount of up to 10 percent
of the executive's annual performance bonus may be paid for achievement of the
new products and services goal at his or her business unit.
No 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. We also capped the maximum amount for the
annual performance bonus for each named executive officer at 0.6 percent of net
income from operations.
ANNUAL BONUS PAYMENTS
Performance met or exceeded the target levels in all areas in 2000,
resulting in bonuses that exceeded the target levels.
Mr. Garrett's annual performance bonus under the Omnibus Incentive
Compensation Plan for target-level performance was 65% of his base pay. His
bonus paid for 2001 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. Garrett that exceeded the target.
Mr. Garrett also received an award based on achievement of the new products and
services goal.
LONG-TERM INCENTIVES
We based a significant portion of our total compensation program on
long-term incentives including Southern Company stock options and performance
dividend equivalents.
Stock Options -- Executives are granted options with ten-year terms to
purchase Southern Company's common stock at the market price on the date of the
grant under the terms of the Omnibus Incentive Compensation Plan. The estimated
annualized value represented approximately 30 percent of Mr. Garrett's total
compensation and approximately 30 to 35 percent for the other executives. The
size of prior grants was not considered in determining the size of the grants
made in 2001. These options vest over a three-year period.
Performance Dividends -- Executives also are paid performance-based
dividend equivalents on most stock options 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 it reaches the 90th
percentile.
For eligible stock options held on December 31, 2001, all executives
received 100 percent of the dividend rate, or $1.34 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 Omnibus Incentive Compensation Plan.
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
to performance and serve the best interest of Southern Company stockholders. We
frequently review the various pay plans and
8
policies and modify them as we deem necessary to continue to attract, retain and
motivate talented executives.
Members of the Committee:
Gerald J. St. Pe, Chairman
D. P. Amos
T. F. Chapman
L. G. Hardman III
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Southern Company's 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 2001, none of Southern Company's or the
Company's executive officers served on the board of directors of any entities
whose directors or officers served on Southern Company's Compensation and
Management Succession Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. George A. Schloegel is president and chief executive officer of Hancock
Bank, Gulfport, Mississippi. During 2001, Hancock Bank 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 bank in
the future.
9
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. Dwight H. 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 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 provides in its incentive plans 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.
10
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning any chief executive
officer and the other four most highly compensated executive officers of the
Company serving during 2001.
<Table>
<Caption>
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)
- ------------------------ ---- ---------- --------- ------------ ------------- --------- ------------
MICHAEL D. GARRETT(4)................... 2001 309,194 370,090 11,876 60,556 -- 44,133
President, Chief Executive 2000 -- -- -- -- -- --
Officer and Director 1999 -- -- -- -- -- --
DWIGHT H. EVANS(4)...................... 2001 326,876 296,139 51,963 91,299 -- 69,647
President, Chief Executive 2000 300,894 292,038 12,951 26,064 -- 16,427
Officer and Director 1999 288,494 43,702 3,375 12,614 251,300 15,507
H. E. BLAKESLEE......................... 2001 224,617 195,312 6,756 59,281 -- 10,857
Vice President 2000 216,012 169,775 8,929 18,711 -- 10,489
1999 207,769 37,649 8,070 7,481 111,258 11,254
DON E. MASON............................ 2001 220,091 182,261 2,702 52,771 -- 10,648
Vice President 2000 211,662 195,502 1,708 18,334 -- 10,261
1999 203,584 36,891 821 7,330 111,258 10,243
MICHAEL W. SOUTHERN..................... 2001 197,478 171,970 10,217 41,156 -- 19,554
Vice President, 2000 188,300 144,266 8,457 14,296 -- 9,141
Treasurer and 1999 179,117 34,369 8,891 6,469 103,585 9,590
Chief Financial Officer
GENE L. USSERY, JR.(5).................. 2001 189,361 132,964 17,095 34,151 -- 23,988
Vice President 2000 171,197 126,070 616 12,780 -- 8,434
1999 -- -- -- -- -- --
</Table>
- ---------------
(1) Tax reimbursement by the Company and certain personal benefits.
(2) Payouts made in 2000 for the four-year performance period ending December
31, 1999.
(3) Company contributions in 2001 to the Employee Savings Plan (ESP), Employee
Stock Ownership Plan (ESOP) and non-pension related accruals under the
Supplemental Benefit Plan (SBP) are provided in the following table:
<Table>
<Caption>
NAME ESP ESOP SBP
---- ------ ---- -------
Michael D. Garrett.......................................... $5,958 $764 $ 8,184
Dwight H. Evans............................................. 6,853 764 12,030
H. E. Blakeslee............................................. 5,958 764 4,135
Don E. Mason................................................ 5,958 764 3,926
Michael W. Southern......................................... 5,958 764 2,832
Gene L. Ussery, Jr. ........................................ 5,958 764 2,266
</Table>
In 2001, this amount included for Messrs. Garrett, Evans, Southern and
Ussery additional incentive compensation of $29,227, $50,000, $10,000 and
$15,000, respectively.
(4) On May 1, 2001, Mr. Garrett became president and chief executive officer of
the Company and, effective on that date, Mr. Evans was transferred to an
executive position at Southern Company.
(5) Mr. Ussery was named an executive officer of the Company effective September
21, 2000.
11
STOCK OPTION GRANTS IN 2001
The following table sets forth all stock option grants to the named
executive officers of the Company during the year ending December 31, 2001.
<Table>
<Caption>
% OF TOTAL
OPTIONS
# OF SECURITIES GRANTED TO EXERCISE OR GRANT DATE
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) VALUE($)(3)
- ---- ------------------ -------------- ----------- ---------- -----------
Michael D. Garrett............... 30,643 5.4 19.0762 2/16/2011 162,429
29,913 5.2 22.4250 2/16/2001 158,539
Dwight H. Evans.................. 33,037 5.8 19.0762 2/16/2011 175,119
58,262 10.2 22.4250 4/16/2011 308,789
H. E. Blakeslee.................. 23,718 4.2 19.0762 2/16/2011 125,722
35,563 6.2 22.4250 4/16/2011 188,484
Don E. Mason..................... 23,239 4.1 19.0762 2/16/2011 123,183
29,532 5.2 22.4250 4/16/2001 156,520
Michael W. Southern.............. 18,273 3.2 19.0762 2/16/2001 96,859
22,883 4.0 22.4250 4/16/2001 121,280
Gene L. Ussery, Jr. ............. 17,495 3.1 19.0762 2/16/2011 92,735
16,656 2.9 22.4250 4/16/2011 88,277
</Table>
- ---------------
(1) Under the terms of the Omnibus Incentive Compensation Plan, stock options
grants were made on February 16, 2001 and April 16, 2001 and vest annually
at a rate of one-third on the anniversary date of the grant. Grants fully
vest upon termination as a result of death, total disability or retirement
and expire five years after retirement, three years after death or total
disability, or their normal expiration date if earlier. The exercise price
is the average of the high and low price of shares of Southern Company's
common stock on the date granted. Options may be transferred to certain
family members, family trusts and family limited partnerships. The number of
options granted on February 16, 2001 and the exercise price thereof were
adjusted after the spin-off of Mirant Corporation from Southern Company
under the antidilution provisions of the plan such that the options had the
same aggregate intrinsic value on the day of the spin-off as the day before.
(2) A total of 570,549 stock options were granted in 2001.
(3) Value was calculated using the Black-Scholes option valuation model. The
actual value, if any, ultimately realized depends on the market value of
Southern Company's common stock at a future date. Significant assumptions
are shown below:
<Table>
<Caption>
DISCOUNT FOR
FORFEITURE RISK:
--------------------
RISK-FREE DIVIDEND BEFORE AFTER
GRANT DATE VOLATILITY RATE OF RETURN OPPORTUNITY TERM VESTING EXPIRATION
- ---------- ---------- -------------- ----------- ---- ------- ----------
2/16/01........................ 27.34% 5.10% 50% 10 7.79% 12.45%
4/16/01........................ 26.11% 5.14 50% 10 7.79% 11.77%
</Table>
- ---------------
These assumptions reflect the effects of cash dividend equivalents paid to
participants under the Omnibus Incentive Compensation Plan assuming targets are
met.
12
AGGREGATED STOCK OPTION EXERCISES IN 2001 AND YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during the year ending December 31, 2001 by the named executive officers and the
value of unexercised options held by them as of December 31, 2001.
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------- ----------- ------------- ----------- -------------
Michael D. Garrett........ 5,387 48,653 52,964 92,036 528,822 543,656
Dwight H. Evans........... 45,736 441,615 95,028 125,497 1,010,284 728,940
H. E. Blakeslee........... 40,324 396,236 42,753 83,000 430,667 497,846
Don E. Mason.............. 14,865 142,270 50,582 76,011 519,937 472,253
Michael W. Southern....... 10,322 105,012 39,877 59,675 404,838 372,187
Gene L. Ussery, Jr. ...... 6,129 59,402 27,364 50,678 270,462 328,637
</Table>
- ---------------
(1) The "Value Realized" is ordinary income, before taxes, and represents the
amount equal to the excess of the fair market value of the shares at the
time of exercise above the exercise price.
(2) This column represents the excess of the fair market value of Southern
Company common stock of $25.35 per share, as of December 31, 2001, 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, 2001.
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 non-qualified 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.
Compensation is base salary plus the excess of annual incentive compensation
over 15 percent of base salary. The compensation components are reported under
columns titled "Salary" and "Bonus" in the Summary Compensation Table detailed
earlier in this Information Statement.
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.
<Table>
<Caption>
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
</Table>
13
As of December 31, 2001, the applicable compensation levels and accredited
service for determination of pension benefits would have been:
<Table>
<Caption>
COMPENSATION ACCREDITED
NAME LEVEL YEARS OF SERVICE
- ---- ------------ ----------------
Michael D. Garrett.......................................... $491,092 33
Dwight H. Evans............................................. 566,884 30
H. E. Blakeslee............................................. 347,808 36
Don E. Mason................................................ 341,552 35
Michael W. Southern......................................... 310,172 26
Gene L. Ussery, Jr. ........................................ 271,088 33
</Table>
14
STOCK OWNERSHIP TABLE
Southern Company is the beneficial owner of 100% of the outstanding shares
of 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 of the Company as of December 31, 2001. 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, 2001.
<Table>
<Caption>
NUMBER OF
SHARES
BENEFICIALLY
NAME OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OWNED(1)(2)
- -------------------------------------------------- ------------
Tommy E. Dulaney............................................ 560
Michael D. Garrett.......................................... 81,563
Linda T. Howard............................................. 574
Aubrey K. Lucas............................................. 3,768
George A. Schloegel......................................... 1,187
Philip J. Terrell........................................... 1,249
N. Eugene Warr.............................................. 1,900
H. E. Blakeslee............................................. 65,989
Don E. Mason................................................ 94,658
Michael W. Southern......................................... 59,163
Gene L. Ussery, Jr. ........................................ 41,813
The directors, nominees and executive officers as a group... 352,424
</Table>
- ---------------
(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. Blakeslee,
60,542 shares; Mr. Garrett, 75,948 shares; Mr. Mason, 68,013 shares; Mr.
Southern, 53,519 shares; and Mr. Ussery, 39,946 shares.
15
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.
B-1
- Significant reporting or operational issues that were discussed during the
reporting period and determine how they were resolved.
- 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
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