Exhibit 10(a)65
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
Amended and Restated
Effective January 1, 1994
ARTICLE DESCRIPTION PAGE
I Definitions . . . . . . . . . . . . . . . . . . 2
II Participants . . . . . . . . . . . . . . . . . . 4
III Corporate Financial Performance Award . . . . . 5
IV Election for Deferral of Payment . . . . . . . . 7
V Deferred Compensation Accounts . . . . . . . . . 9
VI Distribution of Deferred Amounts . . . . . . . 11
VII Miscellaneous Provisions . . . . . . . . . . . 13
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of The Southern Company Productivity
Improvement Plan (the "Plan") are to provide a financial
incentive which will focus the efforts of participants on areas
that will have a direct and significant influence on corporate
performance and to provide the potential for levels of
compensation that will enhance the Employing Companies' abilities
to attract, retain and motivate key management employees. In
order to achieve these objectives, the Plan will be based upon
corporate performance.
The effective date of this amendment and restatement of the
Plan shall be January 1, 1994, and except as otherwise provided
herein, the terms of the Plan as in effect prior to January 1,
1994 shall continue to be applicable until such date.
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the
following meanings unless a different meaning is plainly required
by the context:
1.1 "Annual Corporate Financial Performance Award" shall
mean the amount awarded to a Participant in accordance with
Article III.
1.2 "Annual Salary" shall mean the wages paid to a
Participant without including overtime and before deduction of
taxes, FICA, etc.
1.3 "Award" shall mean an Annual Corporate Financial
Performance Award.
1.4 "Award Opportunity" shall mean the standard award a
Participant could receive as an Annual Corporate Financial
Performance Award.
1.5 "Board of Directors" shall mean the Board of Directors
of Southern Company Services, Inc.
1.6 "Chief Executive Officer" shall mean the individual
designated as such by the Board of Directors of an Employing
Company and of The Southern Company.
1.7 "Committee" or "Compensation Committee" shall mean the
Compensation Committee of the Board of Directors of The Southern
Company or the Employing Company.
1.8 "Common Stock" shall mean the common stock of The
Southern Company.
1.9 "Computation Period" shall mean a four-year period
commencing on the first day of the initial year of participation
and thereafter it shall mean a four-year period commencing the
first day of January each year.
1.10 "Deferral Election" shall mean the Participant's
written election to defer all or a portion of his Award pursuant
to Article IV.
1.11 "Deferred Productivity Improvement Plan Account" shall
mean the account maintained for the Participant in accordance
with Article V.
1.12 "Employee" shall mean any person who is currently
employed by an Employing Company but shall not include any
individual who is eligible to participate in The Southern Company
Executive Productivity Improvement Plan.
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1.13 "Employing Company" shall mean Southern Company
Services, Inc., or any affiliate or subsidiary (direct or
indirect) of The Southern Company, which the Board of Directors
may from time to time determine to bring under the Plan and which
shall adopt the Plan, and any successor of any of them.
The Employing Companies as of January 1, 1994 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Company Services, Inc.
Southern Nuclear Operating Company, Inc.
1.14 "Investment Election" shall mean the Participant's
written election to have his deferred Award invested pursuant to
Section 5.3 or Section 5.4.
1.15 "Market Value" shall mean the average of the high and
low sale prices of the Common Stock, as published in the Wall
Street Journal in its report of New York Stock Exchange composite
transactions, on the date such Market Value is to be determined,
as specified herein (or the average of the high and low sale
prices on the trading day immediately preceding such date if the
Common Stock is not traded on the New York Stock Exchange on such
date).
1.16 "Participant" shall mean any Employee who satisfies the
criteria referred to in Article II.
1.17 "Plan" shall mean The Southern Company Productivity
Improvement Plan, as described herein or as from time to time
amended.
1.18 "Grade Level" shall mean the evaluation assigned under
the job evaluation system.
1.19 "Grade Level Value" shall mean the assigned dollar
value within the Annual Salary range for a Grade Level in a
Computation Period, upon which awards are based.
1.20 "Supervisor" shall mean the immediate person
responsible for the supervision of the performance of the
Participant.
Where the context requires, words in the masculine gender
shall include the feminine and neuter genders, words in the
singular shall include the plural, and words in the plural shall
include the singular.
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ARTICLE II
Participants
2.1 The Participants in the Plan shall be limited to those
Employees of an Employing Company who occupy Grade Level 19 and
higher, as well as any other Employee who occupies a grade
recommended for inclusion in the Plan by the Chief Executive
Officer of an Employing Company with the concurrence of the Chief
Executive Officer of The Southern Company, on January 1 of each
calendar year; provided, however, that any additional Employees
who are recommended for inclusion in the Plan by the Chief
Executive Officer of an Employing Company with the concurrence of
the Chief Executive Officer of The Southern Company shall be
identified by Grade Level Value and/or title in an exhibit to the
Plan each January 1.
2.2 A Participant who vacates an eligible grade during a
Computation Period for one of the following reasons shall be
included in the Plan on a pro-rata basis:
(a) retirement,
(b) total disability, as determined by the Social
Security Administration,
(c) death,
(d) demotion due to health related reasons, or
(e) termination of employment, but only in the event
the Participant shall transfer to or be reemployed by
Southern Electric International, Inc. during the same
Computation Period.
The pro-rata amount of an Award shall be determined for the
Computation Period in which such termination occurs by a fraction
which is the number of months employed by an Employing Company
during the Computation Period prior to such termination, divided
by the total number of months in the Computation Period
(generally forty-eight (48)) which ends immediately after such
termination. The actual Awards will be made as soon as
practicable and in accordance with any Deferral Election in
effect. A Participant who vacates an eligible grade for reasons
other than those described above shall forfeit any Award for any
Computation Periods that have not closed as of the date the
Participant vacates such eligible grade.
2.3 The administration of Awards for Participants who are
promoted or transferred from one grade included in the Plan to
another grade included in the Plan, both within an Employing
Company and between Employing Companies, shall be on a pro-rata
basis in accordance with procedures adopted by the Employing
Company or Companies.
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ARTICLE III
Corporate Financial Performance Award
3.1 The Award Opportunity for each Participant shall be
based upon his Grade Level(s) and shall range from fifty percent
(50%) to five percent (5%) of the Grade Level Value(s) for the
Grade Level(s) held by the Participant during the Computation
Period. In the event a Participant's Grade Level shall change
during a Computation Period, a pro-rata amount of an Award
Opportunity shall be determined for each Grade Level held by the
Participant during the Computation Period. The Award Opportunity
for each Grade Level shall be in the same proportion as the ratio
of the number of months a Grade Level is held by the Participant
during the Computation Period (determined as of the last day of
the month) bears to the total number of months in such
Computation Period (generally forty-eight (48) months). The
Award Opportunity for each Grade Level held by a Participant
shall be determined in accordance with the chart set forth in
Exhibit A herein.
3.2 Each Award Opportunity shall be further adjusted by the
award percentage based on The Southern Company's average return
on common equity ranking during a Computation Period as compared
to the average return on common equity ranking of certain other
member companies of the Southeastern Electric Exchange, as set
forth in Exhibit B herein. In the case of an individual becoming
a Participant subsequent to the initial year of the Plan, said
Participant will participate on a pro-rata basis in each
Computation Period which ends not less than two (2) years after
becoming a Participant. Said pro-rata portion shall be
determined for each Computation Period by a fraction which is the
number of months remaining in the Computation Period after
qualifying as a Participant, divided by the total number of
months in the Computation Period (generally forty-eight (48)). A
new four-year measuring period begins each year in order to
recognize the need to link objectives over longer periods of
time, to recognize changes in the operating environment, and to
encourage Participants to make long-term decisions.
3.3 Notwithstanding the above, an employee of Savannah
Electric and Power Company ("SEPCO") who has been continuously
employed by SEPCO since January 1, 1986 shall participate in the
Award for the Computation Periods ending in 1989, 1990 and 1991
to the same extent he would have been eligible to participate
based on his Grade Level then in effect, if SEPCO had been
acquired by The Southern Company on January 1, 1986.
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3.4 Notwithstanding the above provisions, an Award will not
be granted for any Computation Period ending with the calendar
year in which the current earnings of The Southern Company are
less than the amount necessary to fund the dividends on its
Common Stock at the rate such dividends were paid for the
immediately preceding calendar year.
3.5 In the discretion of the Compensation Committee of the
Board of Directors, the Award for one or more Computation
Period(s) may be calculated without regard to any extraordinary
item of income or expense incurred by the Southern Company or any
Employing Company, provided such determination is made prior to
the close of the Computation Period.
3.6 The Awards to the Participants will be paid in cash as
soon as is practicable after all evaluations are completed. The
Award payment may be deferred at the option of the Participant in
accordance with Article IV. In the event a Participant shall not
elect to defer a portion of his Award and shall die prior to the
payment of such amount, payment shall be made to the beneficiary
designated by the Participant. In the event a beneficiary
designation has not been made or the designated beneficiary is
deceased or cannot be located, payment shall be made to the
estate of the Participant or former Participant.
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ARTICLE IV
Election for Deferral of Payment
4.1 A Participant may elect to defer payment of an Award
until termination of service with an Employing Company by filing
a Deferral Election with the Employing Company not later than
December 31st of the year preceding the next succeeding
Computation Period.
4.2 Participants may elect to defer payments of any whole
percentage (1% - 100%) of any Award that might be made to him.
If a Deferral Election is duly made pursuant to the provisions of
this Article with respect to an Award, an individual account will
be maintained by the Employing Company as of the date of the
Award.
4.3 The Deferral Election shall be made in writing on a
form prescribed by the Employing Company and said Deferral
Election shall state:
(a) That the Participant wishes to make an election to
defer payment of the Award;
(b) The percentage of the Award to be deferred;
(c) The method of payment, which shall be the payment
of a lump-sum or a series of annual payments not to exceed
ten (10) years; and
(d) The time for commencement of distribution of his
Deferred Productivity Improvement Plan Account, but not
later than the first day of the month coinciding with or
next following the second (2nd) anniversary of his
termination of employment with the Employing Company.
4.4 The Deferral Election shall be made by written notice
to be delivered to the Employing Company prior to the first day
of the next succeeding Computation Period and shall be effective
on the first day of such succeeding Computation Period. A
deferral Election for the Corporate Financial Performance
Component shall be an election for the four-year computation
period. A Participant's termination of participation in the Plan
shall not affect Awards previously deferred.
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4.5 The initial Deferral Election made with respect to
(a) the method of payment whether it be lump sum or installments,
including the number of installments selected, and (b) the time
for commencement of distribution of a Participant's Account may
not be revoked and shall govern the distribution of a
Participant's Deferred Productivity Improvement Account.
Notwithstanding the foregoing, and except as provided below, upon
application to the senior officer in charge of employee relations
of an Employing Company and the approval of such officer in his
sole discretion, a Participant's Deferral Election may be amended
not prior to the 395th day nor later than the 365th day prior to
a Participant's date of termination in order to change (a) the
form, and/or (b) the time for distribution of his Deferred
Productivity Improvement Plan Account in accordance with the
terms of the Plan; provided, however, that any Participant who is
required to file reports pursuant to Section 16(a) of the
Securities and Exchange Act of 1934, as amended, shall not be
permitted to amend his Deferral Election during any time period
for which such Participant is required to file any such reports.
Each Participant making a Deferral Election in accordance with
this Article IV and his successors, shall be bound as to any
action taken pursuant to the terms thereof or pursuant to the
Plan. Notwithstanding anything to the contrary above, if the
time for distribution of a Participant's Deferred Productivity
Improvement Plan Account is accelerated, such Account shall be
discounted to reasonably reflect the time value of money.
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ARTICLE V
Deferred Compensation Accounts
5.1 An account shall be established on the Employing
Company books for each Participant electing a deferral pursuant
to Article IV, which shall be designated as the Deferred
Productivity Improvement Plan Account of said Participant. The
Awards deferred in accordance with Article IV, pursuant to each
Participant's Investment Election, the amounts computed in
accordance with Section 5.2 and/or the number of shares computed
in accordance with Section 5.1 shall be credited to the Deferred
Productivity Improvement Plan Account.
5.2 The Deferred Productivity Improvement Plan Account of
each Participant electing to invest his deferred Awards for a
Computation Period pursuant to this Section 5.2 shall be credited
with an amount computed by the Employing Company by treating the
Awards deferred as a sum certain to which the Employing Company
will add in lieu of interest an amount equal to the prime rate of
interest set by Wachovia Bank of Georgia, N.A.. Interest will be
computed as if credited from the date such Award would otherwise
have been paid and will be compounded quarterly at the end of
each calendar quarter. The prime rate in effect on the first day
of each calendar quarter shall be deemed the prime rate in effect
for such calendar quarter. Interest will be treated as if
accrued and will be compounded on any balance until such amount
is fully distributed.
5.3 The Deferred Productivity Improvement Plan Account of
each Participant electing to invest his deferred Award for a
Computation Period pursuant to this Section 5.3 shall be credited
with the number of shares (including fractional shares) of Common
Stock which could have been purchased on the date such deferred
Awards otherwise would have been paid based upon the Common
Stock's Market Value. As of each date of payment of dividends on
the Common Stock there shall be credited with respect to shares
of Common Stock in the Participant's Deferred Productivity
Improvement Plan Account such additional shares (including
fractional shares) of Common Stock as follows:
(a) In the case of cash dividends, such additional
shares as could be purchased at the Market Value as of the
payment date with the dividends which would have been
payable if the credited shares had been outstanding;
(b) In the case of dividends payable in property other
than cash or Common Stock, such additional shares as could
be purchased at the Market Value as of the payment date with
the fair market value of the property which would have been
payable if the credited shares had been outstanding; or
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(c) In the case of dividends payable in Common Stock,
such additional shares as would have been payable on the
credited shares if they had been outstanding.
5.4 The Investment Election by a Participant with respect
to his Deferred Productivity Improvement Plan Account shall be
made in writing on a form prescribed by the Employing Company.
Any Investment Election shall be delivered to the Employing
Company prior to the first day of the next succeeding Computation
Period and shall be effective on the first day of such succeeding
Computation Period. The Investment Election made in accordance
with this Article V shall be irrevocable and shall continue from
Computation Period to Computation Period unless the Participant
changes the Investment Election regarding future deferred Awards
by submitting a written request to the Employing Company on a
form prescribed by the Employing Company. Any such change shall
become effective as of the first day of the Computation Period
next following the Computation Period in which such request is
given.
5.5 At the end of each year, a report shall be issued to
each Participant who has a Deferred Productivity Improvement Plan
Account and said report will set forth the amount and the Market
Value of any shares of Common Stock reflected in such Account.
5.6 The terms and provisions of Articles V and VI in effect
prior to the effective date of this amendment and restatement
shall remain in force and continue to apply to Individual
Performance Annual Awards and Annual Corporate Financial
Performance Awards deferred by Participants prior to January 1,
1994.
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ARTICLE VI
Distribution of Deferred Amounts
6.1 When a Participant terminates his employment with the
Employing Company, said Participant shall be entitled to receive
the entire amount and the Market Value of any shares of Common
Stock (and Fractions thereof) reflected in his Deferred
Productivity Improvement Plan Account maintained by the Employing
Company in accordance with his Deferral Election made pursuant to
Article IV of the Plan. No portion of a Participant's Deferred
Productivity Improvement Plan Account shall be distributed in
Common Stock.
6.2 In the event a Participant elected to receive annual
installments, the first payment shall be made on the first day of
the month selected by the Participant in accordance with the
terms of the Plan, or as soon as reasonably possible thereafter,
and shall be an amount equal to the balance in the Participant's
Deferred Productivity Improvement Plan Account divided by the
number of annual installment payments. Each subsequent annual
payment shall be an amount equal to the balance in the
Participant's Deferred Productivity Improvement Plan Account on
the payment date, divided by the number of the remaining annual
payments and shall be due on the anniversary of the preceding
payment date. The Market Value of any shares of Common Stock
credited to a Participant's Deferred Productivity Improvement
Plan Account shall be determined as of the twenty-fifth (25th)
day of the month immediately preceding the date of any lump sum
or installment distribution.
6.3 Upon the death or total disability of a Participant, or
a former Participant prior to the payment of all amounts and the
Market Value of any shares of Common Stock (and fractions
thereof) credited to said Participant's Deferred Productivity
Improvement Plan Account, the unpaid balance shall be paid in the
sole discretion of the Employing Company (a) in a lump sum to the
designated beneficiary of a Participant or former Participant
within thirty (30) days of the date of death (or as soon as
reasonably possible thereafter) or (b) in accordance with the
Deferral Election made by such Participant or former Participant.
In the event a beneficiary designation is not on file or the
designated beneficiary is deceased or cannot be located, payment
will be made to the estate of the Participant or former
Participant. The Market Value of any shares of Common Stock
credited to a Participant's Deferred productivity Improvement
Plan Account shall be determined as of the twenty-fifth (25th)
day of the month immediately preceding the date of any lump sum
or installment distribution.
6.4 The beneficiary designation may be changed by the
Participant or former Participant at any time, and without the
consent of the prior beneficiary.
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6.5 The senior officer in charge of employee relations of
an Employing Company, in his sole discretion upon application
made to him, may determine to accelerate payments or, in the
event of death or total disability (as determined by the Social
Security Administration), to extend or otherwise make payments in
a manner different from the manner in which they would be made in
the absence of such determination; provided, however, that if a
payment is accelerated in accordance with this Section 6.5, such
payment shall be discounted to reasonably reflect the time value
of money.
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ARTICLE VII
Miscellaneous Provisions
7.1 Neither the Participant, his beneficiary, nor his
personal representative shall have any rights to commute, sell,
assign, transfer or otherwise convey the right to receive any
payments hereunder, which payments and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any
attempt to assign or transfer the right to payments of this Plan
shall be void and have no effect.
7.2 The Employing Company shall not reserve or otherwise
set aside funds for the payments of Awards deferred in accordance
with Article IV.
7.3 The Plan may be amended, modified, or terminated by the
Board of Directors in its sole discretion at any time and from
time to time; provided, however, that no such amendment,
modification, or termination shall impair any rights to payments
which have been deferred under the Plan prior to such amendment,
modification, or termination.
7.4 It is expressly understood and agreed that the Awards
made in accordance with the Plan are in addition to any other
benefits or compensation to which a Participant may be entitled
or for which he may be eligible, whether funded or unfunded, by
reason of his employment with the Employing Company.
7.5 There shall be deducted from the payment of each Award
under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Employing Company
to such governmental authority for the account of the person
entitled to such distribution.
7.6 Any Awards paid to a Participant while employed by an
Employing Company shall not be considered in the calculation of
the Participant's benefits under any other employee welfare or
pension benefit plan maintained by an Employing Company, unless
otherwise specifically provided therein.
7.7 This Plan, and all its rights under it, shall be
governed by and construed in accordance with the laws of the
State of Georgia.
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IN WITNESS WHEREOF, Southern Company Services, Inc., through
its officers duly authorized, hereby amends and restates The
Southern Company Productivity Improvement Plan this ____ day of
____________________, 1994, to be effective January 1, 1994.
SOUTHERN COMPANY SERVICES, INC.
By: _______________________________
Its:
Attest:
By: ________________________
Its:
[CORPORATE SEAL]
(LLC) H:\southern\southern.pip
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EXPLANATORY NOTES
1. Under the Corporate Financial Component, the average ROCE
for a Computation Period will be determined by
a) calculating the average ROCE for each year in the
Computation Period, b) adding the average ROCE calculations
for all years in the Computation Period; and c) dividing the
total by the number of years in the Computation Period.
2. The peer group companies are as follows:
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Annual Corporate
CEO/Grade Level Financial Performance Opportunity
President/CEO 50%
President/CEO 35%
30 35%
29-28 30%
27-26 25%
25-24 20%
23-22 15%
21-20 10%
19 5%
THE SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT B
AWARD PERCENTAGE SCHEDULE
Position Ranking
12-14 15-17 18-20
Award Percentage Companies Companies Companies
Above Above Above
125% Position 1 Position 1 Position 1
120 1 1 1
115 2 2 2
110 2.5 3 3
105 3 4 4
100 4 4.5 5
95 4.5 5 6
90 5 6 7
85 6 7 8
80 6.5 8 9
75 7 8.5 10
70 8 9 11
65 8.5 10 12
60 9 11 13
55 10 12 14
50 10.5 12.5 14.5
0 Below 10.5 Below 12.5 Below 14.5