Exhibit 10(a)59
AMENDMENT AND RESTATEMENT OF
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EFFECTIVE JANUARY 1, 1997
TROUTMAN SANDERS LLP
NationsBank Plaza
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308
(404) 885-3000
March 25, 1997
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of the Southern Company Productivity Improvement 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 amendment and restatement shall be effective as of January 1, 1997.
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 Salary" shall mean base salary or wages paid to a
Participant before deductions for taxes, social security, etc., including all
amounts contributed by an Employing Company to The Southern Electric System
Flexible Benefits Plan or The Southern Company Flexible Benefits Plan on behalf
of a Participant, amounts contributed by any Employing Company to The Southern
Company Employee Savings Plan as Elective Employer Contributions, as said term
is defined in Section 4.1 therein, pursuant to the Participant's exercise of his
deferral option made in accordance with Section 401(k) of the Internal Revenue
Code, and amounts contributed to the Deferred Compensation Plan for The Southern
Company, but excluding all awards under The Southern Company Performance Pay
Plan and the Southern Company Productivity Improvement Plan, overtime pay, shift
differential and substitution pay.
1.2 "Average Common Equity" shall mean the total average common equity
of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company, Savannah Electric and Power Company, Southern Nuclear Operating
Company and Southern Company Services, Inc.
1.3 "Average Return on Common Equity" for a Computation Period shall
mean the result obtained by (a) dividing Core Net Income by Average Common
Equity for each year in the Computation Period, (b) adding the result, and (c)
dividing the sum by the number of years in the Computation Period.
1.4 "Award" shall mean the award opportunity multiplied by the
performance unit value determined under Section 3.2 of the Plan.
1.5 "Award Opportunity" shall mean the target award opportunity
determined under Section 3.1 of the Plan.
1.6 "Award Percentage" shall mean the award percentage set forth on
Exhibit B hereto. Such Exhibit may be modified from time to time by the
Committee to reflect changes in Exhibit C hereto.
1.7 "Board of Directors" shall mean the Board of Directors of Southern
Company Services, Inc.
1.8 "Chief Executive Officer" shall mean the individual designated as
such by the Board of Directors of an Employing Company and of Southern Company.
1.9 "Committee" shall mean the individuals then serving in the
positions of Director, System Compensation and Benefits of Southern Company;
Vice President, Human Resources of Southern Company; and Comptroller of Southern
Company or any other position or positions that succeed to the duties of the
foregoing positions.
1.10 "Common Stock" shall mean the common stock of Southern Company.
1.11 "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.
1.12 "Core Business" shall mean the operations of Alabama Power
Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company,
Savannah Electric and Power Company, Southern Nuclear Operating Company and the
operations of Southern Company Services, Inc. with respect to such companies.
1.13 "Core Net Income" shall mean the combined net income (or net loss)
of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company, Savannah Electric and Power Company and The Southern Company
"corporate", provided, that the net income (or net loss) of The Southern Company
"corporate" shall be adjusted by eliminating interest expense not attributable
to Core Business and one-half of The Southern Company's "corporate"
administration and general expenses.
1.14 "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 or
any person who is eligible to participate in any incentive compensation program
maintained by an Employing Company that specifically provides that an eligible
employee under such program shall not be entitled to also receive Awards under
this Plan.
1.15 "Employing Company" shall mean Southern Company Services, Inc., or
any affiliate or subsidiary (direct or indirect) of 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.
1.16 "Grade Level" shall mean the evaluation assigned under the job
evaluation system as of January 1 of each calendar year.
1.17 "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.
1.18 "Non-Adopting Company" shall mean any subsidiary or affiliate of
Southern Company which is not an Employing Company.
1.19 "Participant" shall mean all Employees described in Section 2.1
hereof.
1.120 "Payment Date" shall mean the date the check evidencing the Award
is endorsed by an authorized person of an Employing Company.
1.21 "Peer Group Companies" shall mean the companies set forth on
Exhibit C attached hereto and as may be revised from time to time by the
Committee to reflect mergers, acquisitions, reorganizations, etc. of such
companies.
1.22 "Plan" shall mean the Southern Company Productivity Improvement
Plan, as described herein or as from time to time amended.
1.23 "Prior Plan" shall mean the Plan as amended and restated effective
January 1, 1995.
1.24 "Southern Company" shall mean The Southern Company.
1.25 "Termination for Cause" or "Cause" shall mean the termination of a
Participant's employment by an Employing Company under any of the following
circumstances:
a. The Participant willfully neglects or refuses to discharge
his or her duties to the Employing Company as an employee or refuses to
comply with any lawful or reasonable instructions given to him or her
by the Employing Company without reasonable excuse;
b. The Participant is guilty of gross misconduct. For purposes
of this Plan, the following acts shall constitute gross misconduct:
i) any act involving fraud or dishonesty or breach of
appropriate regulations of competent authorities;
ii) the carrying out of any activity or the making of
any statement which would prejudice and/or reduce the good
name and standing of Southern Company or an Employing Company
or would bring Southern Company or an Employing Company any
into contempt, ridicule or would reasonably shock or offend
any community in which Southern Company or an Employing
Company is located;
iii) attendance at work in a state of intoxication or
otherwise being found in possession at his or her workplace of
any prohibited drug or substance, possession of which would
amount to a criminal offense;
iv) assault or other act of violence against any
employee or other person during the course of the
Participant's employment; and
v) conviction of any felony or misdemeanor involving
moral turpitude.
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.
ARTICLE II
Participants
2.1 The Participants in the Plan shall be limited to those Employees of
an Employing Company who occupy Grade Level 7 and higher as of January 1 of any
Computation Period, 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 Southern Company shall be identified by Grade Level
Value and/or title in an exhibit to the Plan each January 1.
2.2 Any Participant who vacates an eligible Grade Level prior to the
close of a Computation Period and who is not immediately re-employed with a
subsidiary or an affiliate of Southern Company in an eligible Grade Level shall
forfeit any Award for any Computation Periods that have not closed as of the
date the Participant vacates such eligible Grade Level.
2.3 If a Participant's employment is terminated by reason of death,
disability or retirement, such Participant or his or her estate shall be
eligible to receive an Award for the Computation Period ending in the year of
such death, disability or retirement. For purposes of this Plan, the date of
disability or retirement shall be the last day of active service by the
Participant and shall not mean any date subsequent to such last date of active
service which is deemed to be a retirement or disability date under the terms of
any pension, severance, retirement or disability plan or arrangement. Any
Participant who terminates employment for any other reason shall receive only
any unpaid Award for a completed Computation Period and shall not be eligible to
receive an Award for the Computation Period ending in the year of such
termination of employment, provided, however, that any Participant who's
employment is Terminated for Cause shall forfeit any and all unpaid Awards as of
the date of termination.
2.4 Notwithstanding the provisions of Section 2.3 above, in the case of
an individual transferring from an Employing Company to a Non-Adopting Employer
any Award paid for any Computation Period not yet closed as of the date of a
Participant's transfer shall be paid to the Participant by the Employing Company
from which the Participant is transferring on the following basis:
(i) 100% of the Award for the Computation Period ending in the
year of transfer;
(ii) 75% of the Award for the Computation Period ending in the
first year following the year of transfer;
(iii) 50% of the Award for the Computation Period ending in
the second year following the year of transfer; and
(iv) 25% of the Award for the Computation Period ending in the
third year following the year of transfer.
Such transferring Participant shall receive no award for any Computation Period
which has not begun on the date of the Participant's transfer or if Participant
shall no longer be in an eligible Grade Level after such transfer.
Any Awards payable under this Section 2.4 shall be based on the Grade
Level at the time of transfer.
2.5 In the case of an individual transferring from a Non-Adopting
Employer to an Employing Company whose Grade Level and length of service at the
Non-Adopting Employer would have caused the Employee to have been a Participant
in the Plan if the Non-Adopting Employer were an Employing Company and whose
Grade Level after the transfer would enable the Employee to participate in the
Plan, such individual shall be deemed to have been employed by an Employing
Company while employed with the Non-Adopting Employer and shall, for any
Computation Period ending after such transfer, be deemed a Participant in the
plan as if the Non-Adopting Employer was an Employing Company.
Any Awards payable under this Section 2.5 shall be based on the Grade
Levels at the Employing Company.
2.6 The administration of Awards for Participants who are promoted or
transferred from one Grade Level included in the Plan to another Grade Level
included in the Plan shall be based on the Participant's Grade Level Value on
the first day of the Computation Period for which an Award is being granted.
2.7 Any individual who initially became a Participant in the Plan as of
January 1, 1995 shall be considered to have been participating in the Plan as of
January 1, 1993 for purposes of determining benefits payable for any Computation
Period that began or begins on or after January 1, 1993 and such Participant
will therefore be eligible for an Award equal to seventy-five percent (75%) of
the Award Opportunity for the Computation Period ending December 31, 1995.
2.8 In the case of an individual who becomes a Participant subsequent
to January 1, 1995, said Participant will participate in each Computation Period
which ends not less than two (2) years after becoming a Participant.
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 fifteen percent (15%) to sixty-five percent
(65%) of the Grade Level Value held by the Participant at the beginning of any
Computation Period. 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. Such Exhibit A shall be modified from time to time by the
Committee to reflect any changes in Exhibit C hereto.
3.2 Each Award Opportunity shall be multiplied by the Award Percentage
set forth in Exhibit B herein, which is based on Southern Company's Average
Return on Common Equity ranking during a Computation Period as compared to the
average return on common equity ranking of the Peer Group Companies to determine
a Participant's Award. The return on common equity of Southern Company Peer
Group Companies shall be determined annually by an independent certified public
accountant based on generally accepted accounting principles and shall be
properly adjusted and annualized by such accountant so that each Peer Group
Company return on common equity may be accurately compared to that of Southern
Company. The average return on common equity for each Peer Group Company for a
Computation Period under this Section 3.2 shall be determined by (a) calculating
the average return on common equity for each company for each year in the
Computation Period, (b) adding the average return on common equity calculations
for each company all years in the Computation Period; and (c) dividing the total
for each company by the number of years in the Computation Period.
3.3 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 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.
3.4 In the discretion of the Committee or 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 Southern Company or any
Employing Company, provided such determination is made prior to the close of the
Computation Period.
3.5 The Awards to the Participants will be paid in cash as soon as is
practicable after all evaluations are completed. An Award payment may not be
deferred under this Plan. In the event an Award was deferred under the Prior
Plan, such deferral shall be governed by the terms of the Prior Plan.
ARTICLE IV
Miscellaneous Provisions
4.1 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.
4.2 The Employing Company shall not reserve or otherwise set aside
funds for the payments of Awards deferred in accordance with the Prior Plan.
4.3 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 Prior Plan prior to such
amendment, modification, or termination.
4.4 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.
4.5 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.
4.6 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.
4.7 The Committee shall have the authority to interpret the provisions
of this Plan and to develop such rules and regulations as are necessary to carry
out the terms of the Plan. Any such interpretations, rules or regulations shall
be binding upon all Participants.
4.8 The Committee shall have the authority to delegate any of its
duties and obligations hereunder and shall have the authority to engage such
agents as it deems necessary to carry out its duties and obligations hereunder.
4.9 This Plan, and all rights under it, shall be governed by and
construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, Southern Company Services, Inc., through its duly
authorized officers, hereby amends and restates Southern Company Productivity
Improvement Plan as approved by the Board of Directors on February 17, 1997, to
be effective January 1, 1997.
SOUTHERN COMPANY SERVICES, INC.
By:
Its:
Attest:
By:
Its:
[CORPORATE SEAL]
.
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Grade Target Award Opportunity
- -------------- ------------------------
1/1/95 6/1/95 Percentage of Grade Level Value
President/CEO 50/65%
29/30 (15) 50%
27/28 (14) 45%
25/26 (13) 40%
23/24 (12) 35%
21/22 (11) 30%
19/20 (10) 25%
17/18 (9) 25%
15/16 (8) 20%
13/14 (7) 15%
The Southern Company
Productivity Improvement Plan
Exhibit B
Award Percentage Schedule
Position Ranking
Value of
Performance Unit 12-14 15-17 18-20
($) Companies Companies Companies
--- --------- --------- ---------
$2.00 Top Top Top
1.80 1.0 1.0 1.0
1.60 2.0 2.0 2.0
1.40 2.5 3.0 3.0
1.20 3.0 4.0 4.0
1.00 4.0 4.5 5.0
0.90 4.5 5.0 6.0
0.80 5.0 6.0 7.0
0.70 6.0 7.0 8.0
0.60 6.5 8.0 9.0
0.50 7.0 8.5 10.0
0 Below 7.0 Below 8.5 Below 10
Percentage of Total Award Factor
Computation Period Ending Factor
December 31, 1997 75%
December 31, 1998 50%
December 31, 1999 25%
Thereafter 0%
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT C
The Peer Group Companies are as follows:
Allegheny Power System
American Electric Power
Carolina Power & Light
Central & South West (4 utility subs will be combined*)
Central Louisiana Electric
Constellation Energy (previously BG&E & Potomac Electric)
Delmarva Power & Light
Duke Power
Entergy
Florida Power & Light (previously used FPL Group, Inc.)
Florida Power Corp. (previously used Florida Progress)
Kentucky Utilities Company (previously used KU Energy)
South Carolina Electric & Gas (previously used SCANA)
Southern Company (Core only)
Tampa Electric (previously used TECO Energy)
Virginia Electric & Power (previously used Dominion Resources)
*Central Power & Light Co., Public Service Co. of Oklahoma, Southwestern
Electric Power Co. and West Texas Utilities Co.