Exhibit 10(a)77
SOUTHERN COMPANY
PERFORMANCE DIVIDEND PLAN
EFFECTIVE JANUARY 1, 1997
SOUTHERN COMPANY
PERFORMANCE DIVIDEND PLAN
Purposes
The purposes of the Southern Company Performance Dividend Plan are to
provide a financial incentive which will focus the efforts of certain key
employees on areas which will have a direct and significant influence on
corporate performance and to provide the potential for levels of compensation
which will enhance the Employing Companies' abilities to attract, retain and
motivate such key employees. In order to achieve these objectives, the Plan will
be based upon corporate performance as measured by total shareholder return or
such other performance measure which the Committee may determine under the terms
of the Plan.
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 Dividend" shall mean the aggregate, annual dividend
declared by the Company on Common Stock for the Plan Year in which an Award is
made.
1.2 "Award" shall mean the awards granted pursuant to Article IV
hereof.
1.3 "Board of Directors" shall mean the Board of Directors of Southern
Company Services, Inc.
1.4 "Committee" shall mean the Compensation Committee of the Board of
Directors of the Company or the Employing Company.
1.5 "Common Stock" shall mean the common stock of the Company.
1.6 "Company" shall mean The Southern Company.
1.7 "Computation Period" shall mean a four-year period commencing the
first day of January of each year, provided, however, that the Computation
Period for the first three years beginning in the year of the effective date of
the Plan shall be one year, two years and three years, respectively, beginning
January 1, 1997.
1.8 "Employing Company" shall mean Southern Company Services, Inc., or
any affiliate or subsidiary (direct or indirect) of the 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.
1.9 "Key Employee" shall mean any person who is or was employed by an
Employing Company who has been granted Stock Options.
1.10 "Participant" shall mean an Employee who satisfies the criteria
set forth in Article III.
1.11 "Payment Date" shall mean the date the check evidencing an Award
is endorsed by an authorized person of an Employing Company.
1.12 "Peer Group Common Stock" shall mean the common stock of the Peer
Group Companies.
1.13 "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.
1.14 "Performance Based" shall mean compensation which qualifies as
"performance based" within the meaning of Code Section 162(m)(4)(c) and the
regulations thereunder.
1.15 "Permanent Disability" shall mean such permanent disability as
defined in The Southern Company Pension Plan.
1.16 "Phantom Stock" shall mean phantom shares of Common Stock as
defined by The Southern Company Deferred Compensation Plan.
1.17 "Plan" shall mean the Southern Company Performance Dividend Plan.
1.18 "Plan Year" shall mean the calendar year.
1.19 "Retirement" shall mean the termination of employment with an
Employing Company under the terms of The Southern Company Pension Plan or such
other retirement or early retirement plan or arrangement which the Committee
shall adopt and make available to a Participant.
1.20 "Stock Option" shall mean those options to acquire Common Stock
awarded to Participants pursuant to the Southern Company Performance Stock Plan.
1.21 "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 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.
1.22 "Total Shareholder Return" or "TSR" shall mean the total amount an
investor would receive by investing $100 per quarter in Common Stock or in 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 Peer Group Common
Stock by reinvesting such dividends on a quarterly basis in additional shares of
Common Stock or 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.
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
2.1 Plan Administration. The Plan shall be administered by the
Committee. The Committee is authorized to establish such rules and to appoint
such agents as it deems appropriate for the proper administration of the Plan,
and to make such determinations and to take such steps in connection with the
Plan or the benefits provided hereunder as it deems necessary or advisable.
2.2 Plan Interpretation. The Committee shall have the exclusive
authority to interpret the Plan. The decision of the Committee with respect to
any question arising as to the grant of an Award to a Participant in the Plan,
the amount, term, form, and time of payment of Awards under the Plan, or any
other matter concerning the Plan shall be final, conclusive, and binding on both
the Company and the Participants.
ARTICLE III
Participants
3.1 Participation in the Plan shall be limited to Key Employees of the
Employing Companies, or in the case of death, their estates or beneficiaries,
holding Stock Options as of the last day of any Computation Period.
3.2 Any Participant who terminates his or her employment with an
Employing Company and who is not immediately re-employed with an affiliate of an
Employing Company prior to the Payment Date of any Award due under this Plan for
reasons other than death, Permanent Disability, or Retirement shall forfeit any
Award due under this Plan. If a Participant terminates his or her employment by
reason of death, Permanent Disability or Retirement, such Participant or his or
her estate or representative shall continue to be eligible to receive Awards
with respect to any Stock Options which remain outstanding in accordance with
their terms.
3.3 Notwithstanding any other provision of this Plan, no Participant
whose employment is terminated by an Employing Company for Cause shall be
eligible to receive an Award under this Plan.
3.4 Notwithstanding any other provision of this Plan, the maximum Award
for any Plan Year payable to any Participant with respect to Stock Options
awarded during such Plan Year shall be six million dollars ($6,000,000).
3.5 In the case of an individual who becomes a Participant subsequent
to January 1, 1997, such Participant shall participate in each Computation
Period which ends not less than two (2) years after becoming a Participant. A
new four-year measuring period shall begin 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.
ARTICLE IV
Performance Dividend Award
4.1 Each Participant shall receive an Award on the last day of each
Computation Period which shall be based upon the number of vested and unvested,
outstanding Stock Options held by the Participant on the last day of such
Computation Period multiplied by the Annual Dividend multiplied by the Payout
Percentage determined in accordance with the following schedule:
Percentage of Southern TSR Payout Percentage
Versus Peer Group TSR
90th 100%
70th 75%
50th 50%
30th 25%
Below 30th 0%
The Payout Percentage for performance levels falling between the percentiles
listed above shall be extrapolated for any given Plan Year. The Committee may
increase the Payout Percentage by up to a factor of two (2) with respect to such
Participants and under such circumstances as the Committee in its discretion
shall deem appropriate.
4.2 The Payout Percentage set forth herein shall be based on the
Company's Total Shareholder Return ranking during a Computation Period as
compared to the Total Shareholder Return ranking of the Peer Group Companies for
such Computation Period. The Total Shareholder Return of the 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 the Peer Group
Companies' Total Shareholder Return may be accurately compared to that of the
Company.
4.3 Notwithstanding the above provisions, an Award shall not be granted
for any Computation Period ending with the Plan Year in which the current
earnings of The Southern Company are less than the amount necessary to fund
dividends on its Common Stock at the rate such dividends were paid for the
immediately preceding Plan Year.
4.4 Awards shall be paid in cash on or before the 15th day of the third
month following the last day of the Computation Period or, with respect to those
Participants who are otherwise eligible to participate in The Southern Company
Deferred Compensation Plan, may be deferred by exercising an option to do so no
later than 12 months before any amount would otherwise be distributed pursuant
to this Section 4.4. If an election is made to defer the receipt of the amount
of any Award, such amount shall be deemed to be invested in Phantom Stock.
Dividend equivalents earned on such Phantom Stock shall be automatically
invested in additional shares of Phantom Stock.
ARTICLE V
Miscellaneous Provisions
5.1 Neither the Participant, his or her beneficiary, nor his or her
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 under
this Plan shall be void and have no effect.
5.2 An Employing Company shall neither reserve nor otherwise set aside
funds for the payments of any Awards under this Plan.
5.3 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 accrued under the Plan prior to such amendment,
modification, or termination.
5.4 It is expressly understood and agreed that 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 or she may be eligible,
whether funded or unfunded, by reason of his or her employment with an Employing
Company.
5.5 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 an Employing Company to such governmental authority for the
account of the person entitled to such distribution.
5.6 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.
5.7 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 adopts the Southern Company Performance Dividend
Plan as approved by the Board of Directors on February 17, 1997, to be effective
January 1, 1997.
SOUTHERN COMPANY SERVICES, INC.
By:
Its: Executive Vice President
Attest:
By:
Its: Assistant Secretary
[CORPORATE SEAL]