Exhibit 10(a)60
AMENDMENT AND RESTATEMENT OF
SOUTHERN COMPANY
EXECUTIVE 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 22, 1998
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of the Southern Company Executive Productivity Improvement
Plan (the "Plan") are to provide a financial incentive which will focus the
efforts of certain executives 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 such executives. In order to achieve these objectives, the
Plan will be based upon corporate performance.
This 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 Executive Productivity Improvement Plan, overtime
pay, shift differential and substitution pay.
1.2 "Average ROE" shall mean the mathematical result obtained by (a)
calculating the return on equity for each year in the Computation Period, (b)
adding the return on equity calculations for all years in the Computation
Period; and (c) dividing the total by the number of years in the Computation
Period.
1.3 "Award" shall mean the Award Opportunity or Award Units multiplied
by the Performance Unit Value determined under Sections 3.2 and 3.4 of the Plan.
1.4 "Award Opportunity" shall mean the award opportunity determined
under Section 3.1 of the Plan.
1.5 "Award Unit" shall mean the unit opportunity determined under
Section 3.3 of the Plan.
1.6 "Board of Directors" shall mean the Board of Directors of Southern
Company Services, Inc.
1.7 "Chief Executive Officer" shall mean the individual designated as
such by the Board of Directors of an Employing Company and of Southern Company.
1.8 "Committee" or "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors of Southern Company or the Employing
Company.
1.9 "Common Stock" shall mean the common stock of Southern Company.
1.10 "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 made up of the
ROE Computation Period and the TSR Computation Period, if any, respectively.
1.11 "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.
1.12 "Executive Employee" shall mean any person who is currently
employed by an Employing Company who is a "covered employee" as that term is
defined in Section 162(m) of the Internal Revenue Code (the "Code") who is
designated as an Executive Employee by the Compensation Committee and such other
persons employed by an Employing Company as the Compensation Committee in its
discretion shall designate.
1.13 "Grade Level" shall mean the evaluation assigned under the job
evaluation system.
1.14 "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.
1.15 "Non-Adopting Employer" shall mean any subsidiary or affiliate of
Southern Company which is not an Employing Company.
1.16 "Participant" shall mean an Executive Employee who satisfies the
criteria referred to in Article II at the beginning of a Computation Period but
shall not include any individual who ceased to be an Executive Employee by
reason of the amendment of Section 1.11 hereof by this Amendment and
Restatement.
1.17 "Payment Date" shall mean the date the check evidencing the Award
is endorsed by an authorized person of an Employing Company.
1.18 "Percentage of Total Award" shall have the meaning ascribed in
Exhibits B and E hereof.
1.19 "Plan" shall mean the Southern Company Executive Productivity
Improvement Plan, as described herein or as from time to time amended.
1.20 "Prior Plan" shall mean the Plan as amended and restated effective
January 1, 1995.
1.21 "Southern Company" shall mean The Southern Company.
1.22 "ROE Computation Period" shall have the meaning ascribed in
Section 3.1 hereof.
1.23 "ROE 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.
1.24 "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 and 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 or impair the good name
and standing of the Company or an Employing Company or would
bring the Company or an Employing Company any into contempt,
ridicule or would reasonably shock or offend any community in
which the 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.
1.25 "Total Shareholder Return" or "TSR" shall mean the total amount an
investor would receive by investing $100 per quarter in Common Stock or in TSR
Peer Group Common Stock, as the case may be, as determined by measuring the
total dividends which would have been paid on such Common Stock or TSR Peer
Group Common Stock by reinvesting such dividends on a quarterly basis in
additional shares of Common Stock or TSR Peer Group Common Stock as the case may
be and the total gain or loss on such Common Stock or Peer Group Common Stock as
if such stock had been sold at the closing price on the last day of the
respective Computation Period.
1.26 "TSR Computation Period" shall have the meaning ascribed in
Section 3.3 hereof.
1.27 "TSR Peer Group Common Stock" shall mean the common stock of the
Peer Group Companies.
1.28 "TSR Peer Group Companies" shall mean those Companies designated
by Goldman Sachs as the 80 Utility Peer Group Companies as published quarterly
and as composed from time to time. In the event that Goldman Sachs no longer
publishes the 80 Utility Peer Group Companies, the Committee shall choose such
other and similar list of national peer group companies as published by a
similarly nationally recognized firm.
1.29 "Value of Performance Unit" shall have the meaning ascribed in
Exhibits B and E attached hereto.
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 Participation in the Plan shall be limited to Executive Employees
of the Employing Companies.
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 an
affiliate of an Employing Company 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 unless such death, disability or retirement
shall have occurred on January 1 in which case the Participant or his or her
estate shall only be entitled to an Award for the Computation Period ending
December 31 of the previous year. 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 Notwithstanding any other provision of this Plan, no employee whose
employment is Terminated for Cause shall be eligible to receive an Award under
this Plan.
2.7 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. For
the Computation Periods ending December 31, 1995, December 31, 1996, December
31, 1997 and December 31, 1998 a Participant's Grade Level Value for determining
Awards shall be the Participant's Grade Level Value on January 1, 1995.
2.8 Notwithstanding any other provision of this Plan, the maximum Award
for any Computation Period payable to any Participant shall be two million
dollars ($2,000,000).
2.9 Any individual who initially becomes 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.
2.10 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 For Computation Period years beginning before January 1, 1997 (the
"ROE Computation Period"), the Award Opportunity for each Participant shall be
based upon either his Grade Level Value (as determined based on his Grade Level
at the beginning of such period) or, in the Committee's discretion, upon his
Annual Salary at the beginning of such period and in either case shall range
from fifty percent (50%) to sixty-five percent (65%) of such Grade Level Value
or Annual Salary, as applicable. The Award Opportunity for each Grade Level or
Annual Salary shall be determined in accordance with the chart set forth in
Exhibit A hereof.
3.2 Each Award Opportunity granted in the ROE Computation Period shall
be multiplied by the Value of Performance Unit factor and the Percentage of
Total Award factor set forth in Exhibit B hereof, which is based on Southern
Company's Average ROE ranking during the ROE Computation Period as compared to
the Average ROE ranking of the ROE Peer Group Companies to determine a
Participant's Award. The return on common equity of the ROE 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 ROE Peer Group Company return on
common equity may be accurately compared to that of Southern Company.
3.3 For Computation Period years beginning on or after January 1, 1997
(the "TSR Computation Period"), the Award Units for each Participant shall be
based upon either his Grade Level Value (as determined based upon his Grade
Level at the beginning of such period) or, in the Committee's discretion, upon
his Annual Salary at the beginning of such period and, in either case shall
range from fifty percent (50%) to sixty-five percent (65%) of such Grade Level
Value or Annual Salary, as applicable. The Award Units for each Grade Level or
Annual Salary shall be determined in accordance with the charts set forth in
Exhibit D hereof.
3.4 Each Award Unit granted in the TSR Computation Period shall be
multiplied by the Value of Performance Unit factor and the Percentage of Total
Award factor set forth in Exhibit E hereof which is based on Total Shareholder
Return of Southern Company as compared to the Total Shareholder Return for the
TSR Peer Group Companies. The Total Shareholder Return of Southern Company and
the TSR 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 amortized by such accountant so that each TSR
Peer Group Company's total shareholder return may be accurately compared to that
of Southern Company.
3.5 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.
3.6 In the exercise of negative discretion, the Compensation Committee
may calculate the Award for one or more Computation Period(s) without regard to
any extraordinary income item (but not loss) otherwise recorded by Southern
Company or any Employing Company, provided such determination that an item of
income is extraordinary is made by the Committee prior to the close of the
Computation Period.
3.7 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 This Plan, and all its 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 the Southern Company Executive
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
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Award Opportunity
Grade Award Opportunity
1/1/95 6/1/95 Percentage of Grade Level Value
or Annual Salary
President/CEO 50/65%
29/30 (15) 50%
The Southern Company
Executive 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
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT C
ROE Peer Group Companies
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.
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT D
Award Units
Grade
1/1/95 6/1/95 Award Units
Percentage of Grade Level Value
or Annual Salary
President/CEO 50/65%
29/30 (15) 50%
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT E
Performance Unit Factor
Value of Unit Percentage of Southern TSR
vs.
Investor Utility
$ 2.00 90th and above
$ 1.50 70th and above
$ 1.00 50th and above
$ .50 30th and above
$ .00 Below 30th
Percentage Of Total Award Factor
Computation Period Ending Factor
December 31, 1997 25%
December 31, 1998 50%
December 31, 1999 75%
Thereafter 100%