UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT of
1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ]Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
THE SOUTHERN COMPANY
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(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 14a-6(i) (1) 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:
[LOGO]
NOTICE OF
ANNUAL MEETING
2003
& PROXY STATEMENT
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PROXY STATEMENT
CONTENTS
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Letter to Stockholders
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Notice of Annual Meeting of Stockholders -- May 28, 2003
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Proxy Statement 1
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General Information 1
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Giving Voting Instructions 1
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Revocation of Proxies 1
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Electronic Delivery of Proxy Materials and Annual Report 1
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Householding Information 1
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Stockholder Proposals for the 2003 proxy materials 2
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Cost of Proxy Solicitation 2
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Corporate Governance 3
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Company Organization 3
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Director Compensation 3
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Meetings of Non-Management Directors 3
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Director Independence 3
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Committees of the Board 4
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Audit 4
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Compensation & Management Succession 4
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Finance 4
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Governance 4
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Nuclear Oversight 5
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Committee Charters 5
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Director Attendance 5
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Stock Ownership Table 6
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Matters to be Voted On 7
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Item No. 1 -- Election of Directors 7
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Item No. 2 -- Ratification of By-Laws Amendments
Permitting Book-Entry Shares 11
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Item No. 3 -- Stockholder Proposal on Environmental
Report 12
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Audit Committee Report 14
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Compensation & Management Succession Committee Report 16
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Committee Report 16
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Committee Interlocks 18
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Five-Year Performance Graph 19
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Other Information 20
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Section 16(a) Beneficial Ownership Reporting Compliance 20
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Legal Proceedings 20
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Certain Relationships and Related Transactions 20
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Executive Compensation 21
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Employment, Change in Control and Separation Agreements 21
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Summary Compensation Table 22
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Stock Options 23
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Option Exercises 24
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Pension Plan Table 25
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Appendix A -- Text of Amended By-Laws i
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Appendix B -- Audit Committee Charter iii
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Appendix C -- Policy on Engagement of the Independent
Auditor For Audit and Non-Audit Services vi
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LETTER TO STOCKHOLDERS
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[LETTER]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS - MAY 28, 2003
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TIME AND DATE
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10:00 a.m., EDT, on Wednesday, May 28, 2003
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PLACE
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The Southern Pine at Callaway
U.S. Highway 18
Pine Mountain, Georgia 31822
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ITEMS OF BUSINESS
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(1) Elect 10 members of the Board of Directors;
(2) Ratifying amendments of the by-laws of the Company permitting book-entry
shares for stock ownership purposes;
(3) Consider and vote upon a stockholder proposal, if presented at the meeting,
as described in Item No. 3 of the Proxy Statement; and
(4) Transact other business properly coming before the meeting or any
adjournments thereof.
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RECORD DATE
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Stockholders of record at the close of business on March 31, 2003, are entitled
to attend and vote at the meeting.
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ANNUAL REPORT TO STOCKHOLDERS
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The Southern Company Annual Report to stockholders for 2002 is enclosed but is
not a part of this mailing.
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VOTING
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Even if you plan to attend the meeting in person, please provide your voting
instructions in one of the following ways as soon as possible:
(1) Internet -- use the Internet address on the proxy form
(2) Telephone -- use the toll-free number on the proxy form
(3) Mail -- mark, sign, and date the proxy form and return in the enclosed
postage-paid envelope
BY ORDER OF THE BOARD OF DIRECTORS, TOMMY CHISHOLM, SECRETARY, APRIL 16, 2003
PROXY STATEMENT
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GENERAL INFORMATION
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Q: HOW DO I GIVE VOTING INSTRUCTIONS?
A: You may attend the meeting and give instructions in person or by the
Internet, by telephone, or by mail. Instructions are on the proxy form. The
Proxies, named on the enclosed proxy form, will vote all properly executed
proxies that are delivered pursuant to this solicitation and not
subsequently revoked in accordance with the instructions given by you.
Q: CAN I CHANGE MY VOTE?
A: Yes, you may revoke your proxy by submitting a subsequent proxy or by
written request received by the Company's secretary before the meeting.
Q: WHO CAN VOTE?
A: All stockholders of record on the record date of March 31, 2003. On that
date, there were 721,108,761 shares of Southern Company common stock
outstanding and entitled to vote.
Q: HOW MUCH DOES EACH SHARE COUNT?
A: Each share counts as one vote, except votes for directors may be cumulative.
Abstentions that are marked on the proxy form are included for the purpose
of determining a quorum, but shares that a broker fails to vote are not
counted toward a quorum. Neither is counted for or against the matters being
considered.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY FORM?
A: You will receive a proxy form for each account that you have. Please vote
proxies for all accounts to ensure that all your shares are voted. If you
wish to consolidate multiple registered accounts, please contact Stockholder
Services at (800) 554-7626.
Q: CAN THE COMPANY'S PROXY STATEMENT AND ANNUAL REPORT BE ACCESSED FROM THE
INTERNET?
A: Stockholders may view the Proxy Statement and Annual Report on the Internet
instead of receiving them by U.S. mail, each year. This choice will save the
Company money by reducing printing and postage costs, and is friendlier to
our environment. If you choose to access future Proxy Statements and Annual
Reports online, you will continue to receive a proxy form in the mail.
Future proxy forms will contain the website address and other necessary
information to view the proxy materials and to submit your vote. Whether you
receive your proxy materials in the mail or view them on the Internet, you
will continue to have the option to vote on the Internet, by telephone, by
mail, or in person at the Annual Meeting. If you wish to take advantage of
this option, you may make this election when voting your proxy. If you vote
on the Internet, simply respond to the question when prompted. If you vote
by mail, please mark the appropriate box on your proxy form. You may also
consent to suppressing the mailing of future Proxy Statements and Annual
Reports by marking the appropriate box on a registered account statement or
dividend check stub and mailing it to Stockholder Services.
If you elect to view the proxy materials on the Internet and then change
your mind, please contact Stockholder Services at (800) 554-7626.
Q: WHAT IS "HOUSEHOLDING"?
A: Certain beneficial owners of the Company's common stock, sharing a single
address, may receive only one copy of the Proxy Statement and Annual Report
unless the broker, bank, or nominee has received contrary instructions from
any beneficial owner at that address. This practice -- known as
householding -- is designed
1
to reduce printing and mailing costs. If a beneficial owner does not wish to
participate in householding, this year or in the future, he or she may
contact Stockholder Services at (800) 554-7626 or at 270 Peachtree Street
NW, Atlanta, Georgia 30303 and ask to receive a Proxy Statement or Annual
Report. As noted earlier, beneficial owners may view the Proxy Statement and
Annual Report on the Internet.
Q: WHEN ARE STOCKHOLDER PROPOSALS DUE FOR THE 2004 ANNUAL MEETING OF
STOCKHOLDERS?
A: The deadline for the receipt of stockholder proposals to be considered for
inclusion in the Company's proxy materials is December 18, 2003. They must
be submitted in writing to Tommy Chisholm, Corporate Secretary, Bin 912,
Southern Company, 270 Peachtree Street NW, Atlanta, Georgia 30303.
Additionally, the proxy solicited by the Board of Directors for next year's
meeting will confer discretionary authority to vote on any stockholder
proposal presented at that meeting that is not included in the Company's
proxy materials unless the Company is provided written notice of such
proposal no later than March 2, 2004.
Q: WHO PAYS THE EXPENSE OF SOLICITING PROXIES?
A: The Company pays the cost of soliciting proxies. The officers or other
employees of the Company or its subsidiaries may solicit proxies to have a
larger representation at the meeting.
THE COMPANY'S 2002 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON
FORM 10-K WILL BE PROVIDED WITHOUT CHARGE UPON WRITTEN REQUEST TO TOMMY
CHISHOLM, CORPORATE SECRETARY, BIN 912, SOUTHERN COMPANY, 270 PEACHTREE STREET
NW, ATLANTA, GEORGIA 30303.
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CORPORATE GOVERNANCE
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COMPANY ORGANIZATION
Southern Company is a holding company managed by a core group of officers and
governed by a Board of Directors that has been set at 10 members. The nominees
for election as directors consist of nine non-employees and one executive
officer of the Company.
DIRECTOR COMPENSATION
Only non-employee directors are compensated for Board service. The pay
components are:
ANNUAL RETAINERS:
/ / $40,000 if first elected as a director before 1997, of which
$10,000 is deferred in shares of Company common stock until
Board membership ends
/ / $49,000 if first elected as a director in 1997 or later, of
which $19,000 is deferred in shares of Company common stock
until Board membership ends
/ / $5,000 if serving as chairman of a Board committee
EQUITY GRANTS:
/ / 1,000 additional shares of Company common stock in quarterly
grants of 250 shares are deferred until Board membership
ends
MEETING FEES:
/ / $1,250 for each Board meeting attended (in person or
participation by telephone)
/ / $2,000 for each committee meeting attended on a day on which
the Board does not meet
/ / $1,000 for a committee meeting attended on a day that the
Board meets
/ / $1,000 for participation in a committee meeting by telephone
Directors may elect to defer up to 100 percent of their compensation until
membership on the Board ends.
There is no pension plan for non-employee directors.
MEETINGS OF NON-MANAGEMENT DIRECTORS
Non-management Directors meet in executive session without any members of
management being present on the day of a regular Board meeting. There are five
regular Board meetings, each year. There is a presiding Director at each of
these executive sessions. Mr. Bruce S. Gordon, chair of the Governance
Committee, is the current presiding Director and will serve as presiding
Director until the day of the 2004 Annual Meeting of Stockholders or until a
successor is named by the non-management Directors. The presiding Director is
selected from the chairs of the five standing committees. Written communications
may be sent to Mr. Gordon or the non-management Directors as a group by
directing it to Southern Company, Bin 912, 270 Peachtree Street, N.W., Atlanta,
Georgia 30303.
DIRECTOR INDEPENDENCE
The Board has made the determination after reviewing any relationships as to
materiality such as business, charitable and familial that existed in 2002
between a Director and the Company that each of the nine non-management
Directors are independent.
3
COMMITTEES OF THE BOARD
AUDIT COMMITTEE:
/ / Members are Mr. Hardman, Chairman, Ms. Bern, Mr. James,
Dr. Pate and Mr. Purcell. Mr. Purcell was elected to the
Audit Committee on February 17, 2003.
/ / Met 14 times in 2002
/ / Oversees the Company's financial reporting and audit
processes, internal controls and legal, regulatory and
ethical compliance
/ / Appoints the Company's independent auditors, approves their
services and fees and reviews the scope and timing of their
audits
/ / Reviews and discusses the Company's financial statements
with management and the independent auditors, including
critical accounting policies and practices, alternative
financial treatments, proposed adjustments, control
recommendations, significant management judgments and
estimates, reporting or operational issues, changes in
accounting principles and any disagreements with management
/ / Recommends the filing of the Company's annual financial
statements with the Securities and Exchange Commission ("the
SEC")
The Board has determined that the five members of the Audit Committee are
independent as defined by the New York Stock Exchange listing standards and
rules of the SEC promulgated pursuant to the Sarbanes-Oxley Act. The Board has
determined that Mr. Purcell qualifies as an "audit committee financial expert"
as defined by the SEC. The Board has amended the Audit Committee Charter (see
Appendix B) to comply with the proposed changes to the New York Stock Exchange
listing standards and SEC rules adopted pursuant to the Sarbanes-Oxley Act.
COMPENSATION & MANAGEMENT SUCCESSION COMMITTEE:
/ / Members are Mr. St. Pe', Chairman, Mr. Amos and Mr. Chapman
/ / Met four times in 2002
/ / Evaluates performance of executive officers and establishes
their compensation
/ / Administers executive compensation plans
/ / Reviews management succession plans
FINANCE COMMITTEE:
/ / Members are Mr. James, Chairman, Mr. Amos, Mr. Gordon and
Mr. Hardman
/ / Met six times in 2002
/ / Reviews Southern's financial matters, recommends actions
such as dividend philosophy to the Board and approves
certain capital expenditures
GOVERNANCE COMMITTEE:
/ / Members are Mr. Gordon, Chairman, Ms. Bern, Mr. Chapman and
Mr. St. Pe'
/ / Met five times in 2002
/ / Reviews corporate governance issues
/ / Considers and recommends nominees for election as directors
/ / Considers and recommends membership of committees of the
Board
/ / Reviews and recommends director compensation
/ / Reviews and recommends changes to the Company's corporate
governance guidelines as needed
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The Governance Committee expects to identify from its own resources qualified
nominees but will accept from stockholders recommendations of individuals to be
considered as nominees. Stockholder recommendations, together with a description
of the proposed nominee's qualifications, relevant biographical information and
signed consent to serve should be submitted in writing to the Company's
secretary and received by that office by December 10, 2003. Stockholder
recommendations will be considered by the Governance Committee in determining
nominees to recommend to the Board. The final selection of the Board's nominees
is within the sole discretion of the Board of Directors.
NUCLEAR OVERSIGHT COMMITTEE:
/ / Membership is Dr. Pate, Chairman
/ / Reviews nuclear operations activities
COMMITTEE CHARTERS
Charters for each of the five standing committees can be found at the Company's
website --
www.southerncompany.com.
DIRECTOR ATTENDANCE
The Board of Directors met eight times in 2002. The average attendance for
directors at all Board and committee meetings was 94 percent. No nominee
attended less than 75 percent of applicable meetings with the exception of
Mr. Chapman who attended 65 percent of applicable meetings. Mr. Chapman's
absences were caused, without exception, by a family member's illness.
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STOCK OWNERSHIP TABLE
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This table shows the number of shares of the Company's common stock owned by
directors, nominees, and executive officers as of December 31, 2002. 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 the class.
SHARES BENEFICIALLY OWNED INCLUDE:
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SHARES
INDIVIDUALS
SHARES HAVE RIGHTS TO
BENEFICIALLY ACQUIRE WITHIN SHARES HELD BY
TITLE OF SECURITY OWNED(1) 60 DAYS(2) FAMILY MEMBERS(3)
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DANIEL P. AMOS Southern Common Stock 17,177
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DORRIT J. BERN Southern Common Stock 14,549
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THOMAS F. CHAPMAN Southern Common Stock 5,278
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H. ALLEN FRANKLIN Southern Common Stock 786,517 747,185
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BRUCE S. GORDON Southern Common Stock 15,687
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W. GEORGE HAIRSTON, III Southern Common Stock 91,105 87,322
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L. G. HARDMAN III Southern Common Stock 25,315 100
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DONALD M. JAMES Southern Common Stock 13,250
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GALE E. KLAPPA Southern Common Stock 159,116 134,656
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CHARLES D. MCCRARY Southern Common Stock 177,749 174,711
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ZACK T. PATE Southern Common Stock 23,243
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J. NEAL PURCELL Southern Company Stock 5,000(4)
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D. M. RATCLIFFE Southern Common Stock 253,807 241,461
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GERALD J. ST. PE' Southern Common Stock 57,589 1,750
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DIRECTORS, NOMINEES, AND Southern Common Stock 2,136,039 1,831,804 1,850
EXECUTIVE OFFICERS AS A
GROUP (18 PEOPLE)
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(1) "Beneficial ownership" means the sole or shared power to vote, or to direct
the voting of, a security, or investment power with respect to a security,
or any combination thereof.
(2) Indicates shares of the Company's common stock that certain executive
officers have the right to acquire within 60 days. Shares indicated are
included in the Shares Beneficially Owned column.
(3) Each director disclaims any interest in shares held by family members.
Shares indicated are included in the Shares Beneficially Owned column.
(4) Includes 4,000 shares purchased by Mr. Purcell on February 25, 2003.
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NOMINEES FOR ELECTION AS DIRECTORS
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ITEM NO. 1 -- ELECTION OF DIRECTORS
The Proxies named on the enclosed proxy form will vote, unless otherwise
instructed, each properly executed form of proxy for the election of the
following nominees as directors. If any named nominee becomes unavailable for
election, the Board may substitute another nominee. In that event, the proxy
would be voted for the substitute nominee unless instructed otherwise on the
proxy form. Each nominee, if elected, will serve until the Annual Meeting of
Stockholders of 2004.
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DANIEL P. AMOS
[PHOTO]
Age: 51
Director since: 2000
Board committees: Compensation and Management Succession, Finance
Principal occupation: Chairman of the board and chief executive officer of
AFLAC Incorporated, insurance
Other directorships: Synovus Financial Corporation
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DORRIT J. BERN
[PHOTO]
Age: 52
Director since: 1999
Board committees: Audit, Governance
Principal occupation: Chairman of the board, president and chief executive
officer of Charming Shoppes, Inc., retail apparel stores
Other directorships: Brunswick Corporation
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THOMAS F. CHAPMAN
[PHOTO]
Age: 59
Director since: 1999
Board committees: Compensation and Management Succession, Governance
Principal occupation: Chairman of the board and chief executive officer of
Equifax, Inc., information services and transaction
processing
Recent business experience:
Mr. Chapman served as president from August 1997 to June
1999, and chief operating officer of Equifax from August
1997 to January 1998. He was appointed chief executive
officer in January 1998 and chairman of the board of
Equifax in May 1999.
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ALLEN FRANKLIN
[PHOTO]
Age: 58
Director since: 1988
Principal occupation: Chairman of the board, president and chief executive
officer of the Company
Recent business experience: Mr. Franklin served as president and chief executive
officer of Georgia Power Company and executive vice
president of the Company from 1994 until June 1999. He
served as president and chief operating officer of the
Company from June 1999 to March 2001 and president and
chief executive officer from March 1, 2001 to April 1,
2001, when he assumed his current position.
Other directorships:
SouthTrust Corporation, Vulcan Materials Company, and
Southern system companies -- Alabama Power Company,
Georgia Power Company, Gulf Power Company and Southern
Power Company
8
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BRUCE S. GORDON
[PHOTO]
Age: 57
Director since: 1994
Board committees: Finance, Governance (CHAIR)
Principal occupation: President of retail markets group of Verizon
Communications, Inc., telecommunications
Recent business experience: Mr. Gordon served as group president retail services of
Verizon from August 1997 until December 1998, and group
president of enterprise business group of Verizon from
December 1998 to July 2000, when he was appointed to his
current position.
Other directorships:
Bartech Personnel Services, Office Depot and Tyco
International Ltd.
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L. G. HARDMAN III
[PHOTO]
Age: 63
Director since: 1986
Board committees: Audit (CHAIR), Finance
Principal occupation: Chairman of the board of nBank.Corp.; chairman of the
board of nBank, N.A; and chairman of the board,
president, and treasurer of Harmony Grove Mills, Inc.
Other directorships: Georgia Power Company
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DONALD M. JAMES
[PHOTO]
Age: 54
Director since: 1999
Board committees: Audit, Finance (CHAIR)
Principal occupation: Chairman of the board and chief executive officer of
Vulcan Materials Company, construction materials
Other directorships: Protective Life Corporation and SouthTrust Corporation
9
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ZACK T. PATE
[PHOTO]
Age: 66
Director since: 1998
Board committees: Audit, Nuclear Oversight (CHAIR)
Principal occupation: Chairman emeritus of the World Association of Nuclear
Operators and chairman emeritus of the Institute of
Nuclear Power Operations (INPO), an independent,
nonprofit organization promoting safety, reliability and
excellence in the operation of nuclear electric
generating plants
Recent business experience:
Dr. Pate retired as chairman of the World Association of
Nuclear Operators in 2002.
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J. NEAL PURCELL
[PHOTO]
Age: 61
Director since: 2003
Board committees: Audit
Principal occupation: Retired partner of KPMG, public accounting
Recent business experience: Mr. Purcell served as KPMG's Southeast Area Managing
Partner from July 1993 to October 1998 and as
vice-chairman in charge of National Audit Practice
Operations from October 1998 to his retirement on
Other directorships: January 31, 2002.
Advisory director of Synovus Financial Services
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GERALD J. ST. PE'
[PHOTO]
Age: 63
Director since: 1995
Board committees: Compensation and Management Succession (CHAIR),
Governance
Principal occupation: Chairman of the board of Signal International, marine
service and fabrication and a partner and director of
Delta Health Group, health care
Recent business experience: Mr. St. Pe served as president, Ingalls Shipbuilding
from 1985 to August 1999 and as chief operating officer
of Northrop-Grumman Ship Systems from August 1999 to
November 2001.
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Each nominee has served in his or her present position for at least the past
five years, unless otherwise noted.
The affirmative vote of a plurality of shares present and entitled to vote is
required for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN ITEM
NO. 1.
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BY-LAWS AMENDMENTS
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ITEM NO. 2 -- RATIFICATION OF BY-LAWS AMENDMENTS PERMITTING BOOK-ENTRY SHARES
To gain efficiencies in the issuance and trading of securities, the New York
Stock Exchange modified its listing criteria to permit listed companies to issue
and directly register securities in electronic book-entry form (uncertificated)
through the Direct Registration System ("DRS"), as administered by the
Depository Trust Company. DRS allows stockholders to hold their securities in
electronic book-entry form directly on the Company's books without having to
take possession of a physical stock certificate.
Currently nearly 400 companies permit their stockholders to hold securities in
electronic book-entry form. Benefits include greater flexibility in the manner
that the companies' securities are held, convenience of not having to hold and
store physical certificates and the ability to electronically transfer
securities.
On February 17, 2003, the Board amended the by-laws as indicated below and as
provided in detail in Appendix "A" to permit Southern securities to be issued
and registered in book-entry form. The by-law changes do not affect the right of
a stockholder to request or hold physical certificates and do not affect
participation in the Company's direct stock purchase plan.
The by-laws changes are as follows:
Section 14 under the "DIRECTOR." heading was amended removing the requirement
that an original or a duplicate stock ledger be maintained in the state of
Delaware;
Section 31 entitled "POWERS AND DUTIES OF THE SECRETARY." was amended removing
the requirement that the Secretary affix the seal of the Corporation to all
certificates;
Section 34 entitled "TRANSFER AGENT AND REGISTRAR." was amended allowing the
Board of Directors to require Transfer Agents, Transfer Clerks, and Registrars
to sign written notices or statements relative to uncertificated stock;
Section 35 entitled "STOCK LEDGER." requiring that a stock ledger be open for
examination at the principal office or place of business of the Corporation in
the State of Delaware was deleted;
Section 36 entitled "STOCK LEDGER AND CERTIFICATES OF STOCK." was deleted and a
new Section 35 entitled "CERTIFICATES FOR SHARES." was added providing for
representation of shares of the Corporation in uncertificated form as well as in
certificated form;
Section 37 entitled "TRANSFER OF STOCK." was renumbered as Section 36 and
amended authorizing shares presented for transfer to be transferred in
uncertificated form as well as certificated form;
Sections 38 and 39 of the by-laws were renumbered as sections 37 and 38
respectively;
Section 40 entitled "LOST, STOLEN OR DESTROYED CERTIFICATES." was renumbered as
Section 39 and amended to authorize the issuance of new certificate(s) or
uncertificated shares to replace lost, stolen, or destroyed certificates upon
the making of an affidavit and authorizing the Board of Directors, in its
discretion, to require that a bond of indemnity be given in favor of the
Corporation as a condition for replacement of lost, stolen, or destroyed
certificates; and
Sections 41 through 47 of the by-laws were renumbered as sections 40 through 46
respectively.
A complete text of the amendments is set forth in Appendix A.
These amendments are now being submitted to the Company's stockholders for their
ratification and approval, as required by the by-laws.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
11
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STOCKHOLDER PROPOSAL ON ENVIRONMENTAL REPORT
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ITEM NO. 3 -- STOCKHOLDER PROPOSAL ON ENVIRONMENTAL REPORT
The Company has been advised that The Sisters of Charity of Saint Elizabeth, P.
O. Box 476, Convent Station, New Jersey 07961, holder of 100 shares of common
stock; United Church Foundation, 475 Riverside Drive, Suite 1020, New York, New
York 10115, holder of 23,400 shares of common stock; Sinsinawa Dominicans, 1059
East Hyde Park Boulevard, Apartment 2, Chicago, Illinois 60615, holder of 90
shares of common stock; and Sisters of St. Dominic of Caldwell New Jersey, 52
Old Swartswood Station Road, Newton, New Jersey, holder of 100 shares of common
stock, propose to submit the following resolution at the 2003 Annual Meeting of
Stockholders.
"WHEREAS:
"In 2001 The Intergovernmental Panel on Climate Change concluded that "there is
new and stronger evidence that most of the warming observed over the last
50 years is attributable to human activities.'
"In 2001 the National Academy of Sciences stated that the "degree of confidence
in the IPCC assessment is higher today than it was 10, or even 5 years ago...
there is general agreement that the observed warming is real and particularly
strong within the past 20 years.'
"The United States government's "Climate Action Report -- 2002," concluded that
global climate change may harm the country. The report highlights risks to
coastal communities in the Southeast due to sea level rise, water shortages
throughout the West, and increases in the heat index and frequency of heat
waves.
"In July 2002, eleven Attorneys General wrote President Bush, outlining their
concern over the U. S. Climate Action Report's failure to recommend mandatory
reductions of greenhouse gas emissions. They declared that States are being
forced to fill the federal regulatory void through state-by-state regulation and
litigation, increasing the ultimate costs of addressing climate change. They
urged a reconsideration of his regulatory position, and adoption of a
"comprehensive policy that will protect both our citizens and our economy.'
"U.S. power plants are responsible for about two-thirds of the country's sulfur
dioxide emissions, one-quarter of its nitrogen oxides emissions, one-third of
its mercury emissions, approximately 40 percent of its carbon dioxide emissions,
and 10 percent of global carbon dioxide emissions.
"Scientific studies show that air pollution from U.S. power plants causes tens
of thousands of premature deaths and hospitalizations, hundreds of thousands of
asthma attacks, and several million lost workdays nationwide every year from
pollution-related ailments.
"Standards for carbon dioxide emissions and other air pollutants are emerging
across multiple fronts. Ninety-six countries have ratified the Kyoto Protocol,
requiring carbon dioxide reductions. Massachusetts and New Hampshire have
enacted legislation capping power plants emissions of carbon dioxide and other
air pollutants. In June 2002 the Senate Environment and Public Works Committee
passed a bill seeking to cap emissions from the generation of electric and
thermal energy.
"We believe that taking early action on reducing emissions and preparing for
standards could better position companies over their peers, including being
first to market with new high-efficiency and low-emission technologies. Changing
consumer preferences, particularly those relating to clean energy, should also
be considered.
"Inaction and opposition to emissions control efforts could expose companies to
reputation and brand damage, and regulatory and litigation risk.
"RESOLVED: That the Board of Directors report (at reasonable cost and omitting
proprietary information) by August 2003 to shareholders on (a) the economic
risks associated with the Company's past, present, and future emissions of
carbon dioxide, sulfur dioxide, nitrogen oxide and mercury emissions, and the
public stance of the
12
company regarding efforts to reduce these emissions and (b) the economic
benefits of committing to a substantial reduction of those emissions related to
its current business activities (i.e., potential improvement in competitiveness
and profitability)."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM NO. 3 FOR THE FOLLOWING
REASONS:
The Company is committed to complying fully with all environmental laws and
regulations as well as maintaining our commitment to environmental stewardship
in such a way that appropriately considers our customers and stockholders.
The proposal requests a report to our shareholders on the "economic risks
associated with the Company's past, present, and future emissions." The Company
currently provides details regarding its risk factors including historic and
anticipated environmental costs and known future contingencies. This information
is included in the Company's Annual Report on Form 10- K for the year ended
December 31, 2002 ("Form 10-K"). The Form 10-K is available on the Company's
website and the website of the Securities and Exchange Commission and may be
obtained from the Company. (See page 2 of this Proxy Statement for information
on requesting a copy of the Form 10-K from the Company.)
Details on the Company's risk factors, including historic and anticipated
environmental costs and known future contingencies, are also included in the
Annual Report to stockholders in the Management's Discussion and Analysis of
Results of Operations and Financial Condition section and in the Notes to
Financial Statements.
In addition, the Company's environmental commitment and achievements are
described in our Environmental Progress Report. This report is available for
viewing and downloading on the Company's website and will be sent to
stockholders or others upon request.
The Company opposes this proposal because the information the Company would
report is largely duplicative of information already provided. We also believe
the detailed information requested on future costs and risks would require
knowledge of future governmental or other legal action and is too speculative to
report and quantify as requested by the proposal, beyond what is discussed in
the reports noted above. We believe that it is in the best interests of our
stockholders that the Company not be required to incur the additional expense of
producing and distributing such a report.
The vote needed to pass the proposed stockholders' resolution is a majority of
the shares represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM NO. 3.
13
--------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
-------------------------------------------------------------
The Audit Committee (the "Committee") oversees the Company's financial reporting
process on behalf of the Board of Directors. 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 consolidated financial statements of the
Company and its subsidiaries in the Annual Report to stockholders 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 auditors 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 auditors 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 auditors their independence from management and the Company
including the matters in the written disclosures required by Independence
Standards Board No. 1, "Independence Discussions with Audit Committees." The
Committee has also considered whether the independent auditors' 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
and independent auditors for their respective audits. The Committee meets with
the internal and independent auditors 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 14 meetings during 2002.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board approved) that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002 and filed with the Securities and
Exchange Commission. The Committee also reappointed Deloitte & Touche LLP as the
Company's independent auditors for 2003.
Members of the Committee:
L. G. Hardman III, Chairman
Dorrit J. Bern
Donald M. James
Zack T. Pate
J. Neal Purcell
PRINCIPAL PUBLIC ACCOUNTING FIRM FEES
The following represents the fees billed to the Company for the last fiscal year
by Deloitte & Touche LLP -- the Company's principal public accountant for 2002:
Audit Fees.................................................. $5,375,000
Audit-Related Fees.......................................... 1,014,000
Tax......................................................... 888,000
All Other................................................... 252,000
Total............................................... $7,529,000
The Audit Committee has adopted a Policy on Engagement of the Independent
Auditor for Audit and Non-Audit Services (see Appendix C) that includes
requirements for the Audit Committee to pre-approve audit and non-audit services
provided by Deloitte & Touche LLP.
14
CHANGE IN PRINCIPAL PUBLIC ACCOUNTING FIRM
On March 28, 2002, the Board of Directors of the 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 public accountants for
fiscal year, 2002.
Arthur Andersen's reports on the consolidated financial statements of the
Company and its subsidiaries for the two 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.
Such reports have not been re-issued in connection with the Company's financial
statements included in the Annual Report on Form 10-K for the year ended
December 31, 2002.
During the Company's two 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 statement 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 reports;
/ / 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.
Representatives from Deloitte & Touche will be present at the Annual Meeting of
Stockholders and will be given the opportunity to make a statement, if they
desire, and to respond to questions.
15
--------------------------------------------------------------------------------
COMPENSATION & MANAGEMENT SUCCESSION
COMMITTEE REPORT
-------------------------------------------------------------
WHAT IS THE EXECUTIVE COMPENSATION PHILOSOPHY?
We have established an executive compensation program that is competitive and is
tied to the Company's short-and long-term performance. With the objective of
maximizing stockholder value over time, our program aligns the interests of our
executives and stockholders.
TOTAL EXECUTIVE COMPENSATION
HOW IS TOTAL EXECUTIVE COMPENSATION ESTABLISHED?
We retain an independent executive compensation consultant who provides
information on total executive compensation paid at other large companies in the
electric and gas utility industries. Seventeen of these companies are included
in the 27 companies that comprise the S&P Electric Utility Index -- the peer
group used in the five-year performance graph. Based on the market data, total
executive compensation targets are set at an appropriate size-adjusted level.
This means that for target level performance, our program is designed to pay
executives an amount that is at or about the median of the market. Total
executive compensation is paid through an appropriate mix of both fixed and
performance-based (incentive) compensation. Because our program focuses on
incentive compensation, actual total compensation paid can be above or below the
targets based on actual corporate performance.
WHAT ARE THE COMPONENTS OF TOTAL EXECUTIVE COMPENSATION?
/ / Base pay (salary);
/ / Short-term incentives (annual performance bonuses); and
/ / Long-term incentives.
These are the primary components of our executive compensation program. The
Company does provide certain perquisites that we review periodically to
determine if they are reasonable and appropriate. The primary perquisites
provided by the Company are financial planning services, club memberships (for
business use), and home security.
BASE PAY
A range for base pay is determined for each executive, including Mr. Franklin,
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 our emphasis on incentive compensation
in our executive compensation program.
ANNUAL PERFORMANCE BONUSES
Annual bonuses are paid through the Omnibus Incentive Compensation Plan. All
named executives participated in this plan in 2002.
PERFORMANCE GOALS
Annual performance bonuses are based on the attainment of corporate performance
goals and attainment of the respective business units' adjusting goals. All
performance goals were set in the first quarter of the year.
16
For 2002, the corporate performance goals included specific targets for:
/ / Company earnings -- earnings per share ("EPS") and
/ / Subsidiary companies' net income or return on equity ("ROE")
We believe that accomplishing the corporate goals is essential for the Company's
continued success and sustained financial 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
respective business units' adjusting goals related to such measures as capital
expenditures, cash flow, customer service, plant availability, and diversity.
A target percentage of base pay is established for each executive officer based
on his or her position level, for target-level performance. Annual performance
bonuses may range from 0 percent of the target to 240 percent based on actual
corporate performance.
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 the 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.
ANNUAL BONUS PAYMENTS
Performance met or exceeded the target levels in all areas in 2002, resulting in
bonuses that exceeded the target levels.
Mr. Franklin's annual performance bonus under the Plan for target-level
performance was 100 percent of his base pay. His bonus for 2002 performance was
based entirely on the degree of achievement of the Company's EPS goal. The bonus
amount was adjusted as described above. Based on the Company's performance his
bonus exceeded the target.
The target percentage of base pay for the other named executive officers ranged
from 60 to 75 percent and the resulting payout exceeded the executives'
respective targets.
LONG-TERM INCENTIVES
We base a significant portion of our total compensation program on long-term
incentives including Company stock options and performance dividend equivalents.
STOCK OPTIONS
Executives are granted options with ten-year terms to purchase the 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 48 percent of Mr. Franklin's total target compensation, and 24 to
27 percent for the other named executives. The size of prior grants was not
considered in determining the size of the grants made in 2002. 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 paid during the year if total
shareholder return over a four-year period, compared to a group of other utility
companies, is at the 30th percentile to 100 percent of the dividend paid if it
reaches the 90th percentile. For eligible stock options held on December 31,
2002, all executives received a payout of $1.355 per option for maximum
performance under the Omnibus Incentive Compensation Plan.
17
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 Code and
that has been approved by stockholders. The Company has obtained stockholder
approval of the Omnibus Incentive Compensation Plan. However, because our policy
is to maximize long-term stockholder value, tax deductibility is only one factor
considered in setting compensation.
SUMMARY
We believe that the policies and programs described in this report link pay and
performance and serve the best interest of stockholders. We frequently review
the various pay plans and policies and modify them as we deem necessary to
continue to attract, retain, and motivate talented executives.
Members of the Committee:
G. J. St. Pe', Chairman
D. P. Amos
T. F. Chapman
--------------------------------------------------------------------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
--------------------------------------------------------------------------------
The Company's Compensation and Management Succession Committee is made up of
non-employee directors who have never served as officers of, or been employed
by, the Company. None of the Company's executive officers serve on a board of
directors of any entity that has a director or officer serving on this
Committee.
18
--------------------------------------------------------------------------------
FIVE-YEAR PERFORMANCE GRAPH
-------------------------------------------------------------
This performance graph compares the cumulative total shareholder return on the
Company's common stock with the Standard & Poor's Electric Utility Index and the
Standard & Poor's 500 Index for the past five years. The graph assumes that $100
was invested on December 31, 1997, in the Company's common stock and each of the
above indices, and that all dividends are reinvested. The distribution of shares
of Mirant Corporation stock to Company stockholders effective April 2, 2001, is
treated as a special dividend for purposes of calculating shareholder return.
The shareholder return shown below for the five-year historical period may not
be indicative of future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SOUTHERN COMPANY S & P ELECTRIC UTILITY INDEX S & P 500 INDEX
1997 $100 $100 $100
1998 $118 $116 $129
1999 $100 $97 $156
2000 $149 $150 $141
2001 $191 $125 $125
2002 $225 $106 $97
1997 1998 1999 2000 2001 2002
---------------------------------------------------------------------------------------------------------------------
Southern Company $ 100 $ 118 $ 100 $ 149 $ 191 $ 225
---------------------------------------------------------------------------------------------------------------------
S & P Electric Utility Index 100 116 97 150 125 106
---------------------------------------------------------------------------------------------------------------------
S & P 500 Index 100 129 156 141 125 97
---------------------------------------------------------------------------------------------------------------------
19
--------------------------------------------------------------------------------
OTHER INFORMATION
-------------------------------------------------------------
--------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------
No reporting person failed to file on a timely basis the reports required by
Section 16(a), except Mr. McCrary, who was late in reporting two transactions on
one Form 4.
--------------------------------------------------------------------------------
LEGAL PROCEEDINGS
--------------------------------------------------------------------------------
In November 2002, the Company and certain current and former directors of Mirant
Corporation ("Mirant"), including Company director Allen Franklin, were added as
defendants in a class action lawsuit (In re: Mirant Corporation Securities
Litigation, United States District Court for the North District of Georgia)
originally filed by certain Mirant shareholders against Mirant and certain
Mirant officers. The claims against Mirant and the Mirant officers are based on
allegations related to alleged improper energy trading and marketing activities
in the California energy market, alleged false statements and omissions in
Mirant's prospectus for its initial public offering and in subsequent public
statements by Mirant, and accounting-related issues previously disclosed by
Mirant. The claims against the Company are based on allegations that the Company
was a control person, as defined in Section 20(a) of the Securities Exchange Act
of 1934 and Section 15 of the Securities Act of 1933, as to Mirant, based on the
Company's majority ownership of Mirant prior to the April 2, 2001 Mirant
spin-off and allegations of knowledge of and involvement in Mirant's activities
thereafter. The claims against Mr. Franklin and the other current and former
Mirant directors are based on alleged misstatements and omissions in Mirant's
initial public offering prospectus. The Company does not believe that
Mr. Franklin's interest in this litigation is adverse to the Company.
A motion seeking to dismiss all claims against the Company and Mr. Franklin has
been filed. However, the final outcome of this matter cannot now be determined.
For more information concerning this litigation, please see the Company's
financial statements, including particularly notes 3 and 11, and Management's
Discussion and Analysis of Results of Operation and Financial Condition which
are included in the Company's Annual Report.
--------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------
During 2002, the Company and its subsidiaries paid Vulcan Materials Company
$970,057 for products and services including $919,506 paid by Georgia Power
Company. These amounts are less than one-tenth of one percent of the 2002
revenues of Vulcan Materials Company and less than one-one hundredth of one
percent of the Company's 2002 revenues. Donald M. James, a director of the
Company, is chairman and chief executive officer of Vulcan Materials Company.
During 2002, Mr. Jeffrey G. Franklin, son of Allen Franklin, a director and
executive officer of the Company, and Ms. Iris Franklin, daughter-in-law of
Allen Franklin, were employed by subsidiaries of the Company. Mr. Franklin was
employed by Southern Company Services Inc. as a Project Manager and received
compensation of $133,918. Ms. Franklin was employed by Alabama Power Company as
a Market Specialist and received compensation of $63,592.
20
--------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
-------------------------------------------------------------
EMPLOYMENT, CHANGE IN CONTROL AND SEPARATION AGREEMENTS
The Company has Change in Control Agreements with each of its executive officers
shown on the Summary Compensation Table on page 22. If an executive is
involuntarily terminated, other than for cause, within two years following a
change in control of the Company, the Agreements provide for:
/ / lump sum payment of 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 the Agreement.
A change in control is defined under the Agreements as:
/ / acquisition of at least 20 percent of the Company's stock,
/ / a change in the majority of the members of the Company's
Board of Directors,
/ / a merger or other business combination that results in the
Company's stockholders 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 the Company.
If a change in control affects only a subsidiary of the Company, these payments
would only be made to executives of the affected subsidiary who are
involuntarily terminated as a result of that change in control.
The Company's Omnibus Incentive Compensation Plan provides for pro-rata payments
at not less than target-level performance if a change in control occurs and the
plan is not continued or replaced with a comparable plan or plans.
On February 23, 1998, the Company and Southern Nuclear Operating Company entered
into a Deferred Compensation Agreement with Mr. Hairston which provides that on
the fifth anniversary of the Agreement, if still employed by the Company or one
of its subsidiaries, Mr. Hairston would receive the cash value of the number of
shares of common stock that could have been purchased for $250,000 on
February 23, 1998, and on which dividends were reinvested throughout the
five-year period. If certain performance goals are met, Mr. Hairston also will
receive the estimated income tax expense on the compensation. This Agreement
expired by its terms on February 23, 2003, and the cash value of the shares on
that date ($601,058) was paid to Mr. Hairston along with the estimated income
tax expense on the compensation ($464,647) for a total payment of $1,065,705.
21
--------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------
This table shows information concerning the Company's chief executive officer
serving during 2002 and each of the other four most highly compensated executive
officers of the Company serving during 2002.
LONG-TERM COMPENSATION
-----------------------------------
NUMBER OF LONG-
ANNUAL COMPENSATION SECURITIES TERM
------------------------------------ RESTRICTED UNDERLYING INCENTIVE
OTHER ANNUAL STOCK STOCK PLAN ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS($) OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(1) (2) (#) ($)(3) ($)(4)
---------------------------------------------------------------------------------------------------------------------------------
H. A. FRANKLIN 2002 929,215 1,984,320 7,080 -- 382,242 1,672,510 61,822
Chairman, President & CEO 2001 855,969 1,867,320 2,770 648,863 497,790 1,249,890 44,786
Southern Company 2000 655,806 1,014,696 8,305 -- 85,354 409,975 34,902
---------------------------------------------------------------------------------------------------------------------------------
W. G. HAIRSTON, III 2002 440,104 507,131 11,485 -- 65,890 239,842 27,969
President & CEO 2001 414,594 370,798 1,583 -- 96,135 294,360 22,523
Southern Nuclear Operating
Company 2000 388,195 366,074 11,581 -- 42,172 70,161 21,179
---------------------------------------------------------------------------------------------------------------------------------
GALE E. KLAPPA 2002 377,163 546,971 4,546 -- 56,210 290,400 19,581
Executive Vice President,
CFO & Treasurer 2001 321,052 410,810 9,303 -- 79,319 243,773 17,663
Southern Company 2000 284,015 273,165 8,812 -- 24,602 48,155 15,543
---------------------------------------------------------------------------------------------------------------------------------
C. D. MCCRARY 2002 493,604 673,140 34,993 -- 79,751 374,984 24,101
President & CEO 2001 391,647 438,652 91,403 -- 92,338 284,529 118,975
Alabama Power Company 2000 335,995 335,247 8,515 -- 29,201 59,539 16,342
---------------------------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE 2002 573,018 865,767 4,550 -- 92,521 522,736 33,309
President & CEO 2001 483,324 865,280 3,134 -- 155,694 476,734 26,000
Georgia Power Company 2000 447,934 626,654 14,320 -- 48,662 93,507 25,675
---------------------------------------------------------------------------------------------------------------------------------
(1) Tax reimbursement on certain perquisites.
(2) The amount for Mr. Franklin reflects the value of restricted stock units on
the date granted. The restricted stock units vested on April 2, 2001 and the
value was transferred to the Company's Deferred Compensation Plan. The only
named executive officer holding restricted stock units or restricted stock
as of December 31, 2002, was Mr. Hairston. He received a grant of restricted
stock units on February 23, 1998, valued at $250,000 on that date. Dividends
are reinvested and the number of units was adjusted after the spin-off of
Mirant Corporation under the anti-dilution provisions of the agreement with
Mr. Hairston. The units vest on his continued employment and the value is
payable in cash. (See page 21 for a description of the agreement with
Mr. Hairston.) On December 31, 2002, Mr. Hairston held 21,246.29 units
valued at $603,182.
(3) Payout of performance dividend equivalents on stock options granted after
1996, that were held by the executive at the end of the performance periods
under the Omnibus Incentive Compensation Plan for the four-year performance
periods ended December 31, 2000, 2001, and 2002, respectively. Dividend
equivalents can range from 25 percent of the common stock dividend paid
during the last year of the performance period if total shareholder return
over the four-year period, compared to a group of other large utility
companies, is at the 30th percentile to 100 percent of the dividend paid if
it reaches the 90th percentile. For eligible stock options held on
December 31, 2000, 2001, and 2002 all named executives received a payout of
$.90, $1.34, and $1.355 per option, respectively. For Mr. Franklin this
amount also includes a payout of $201,760 under a former long-term incentive
compensation plan (the Executive Productivity Improvement Plan) for the
four-year performance period ended December 31, 2000.
22
(4) Company contributions in 2002 to the Employee Savings Plan and Employee
Stock Ownership Plan, non-pension related accruals under the Supplemental
Benefit Plan, and tax sharing benefits paid to participants who elected
receipt of dividends on Company common stock held in the Employee Saving
Plan are provided in the following table:
ESP TAX
SHARING
ESP ($) ESOP ($) SBP ($) BENEFIT
-----------------------------------------------------------------------------
H. A. Franklin 12,683 701 43,160 5,278
-----------------------------------------------------------------------------
W. G. Hairston, III 7,808 701 14,878 4,582
-----------------------------------------------------------------------------
G. E. Klappa 8,250 701 10,630 --
-----------------------------------------------------------------------------
C. D. McCrary 6,342 701 17,058 --
-----------------------------------------------------------------------------
D. M. Ratcliffe 8,182 701 22,282 2,144
-----------------------------------------------------------------------------
--------------------------------------------------------------------------------
STOCK OPTIONS
-------------------------------------------------------------
OPTION GRANTS IN 2002
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (1) FISCAL YEAR (2) ($/SH)(1) DATE (1) VALUE ($)(3)
-----------------------------------------------------------------------------------------------------------------
H. A. FRANKLIN 382,242 4.8 25.26 2/15/2012 1,288,156
-----------------------------------------------------------------------------------------------------------------
W. G. HAIRSTON, III 65,890 0.8 25.26 2/15/2012 222,049
-----------------------------------------------------------------------------------------------------------------
G. E. KLAPPA 56,210 0.7 25.26 4/11/2008 189,428
-----------------------------------------------------------------------------------------------------------------
C. D. MCCRARY 79,571 1.0 25.26 2/15/2012 268,154
-----------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE 92,521 1.2 25.26 2/15/2012 311,796
-----------------------------------------------------------------------------------------------------------------
(1) Stock option grants were made on February 15, 2002, 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. Exercise price is
the average of the high and low price of the Company's common stock on the
date granted. Options may be transferred to certain family members, family
trusts, and family limited partnerships.
(2) A total of 8,040,632 stock options were granted in 2002.
(3) Value was calculated using the Black-Scholes option valuation model. The
actual value, if any, ultimately realized depends on the market value of the
Company's common stock at a future date. Significant assumptions are shown
below:
RISK-FREE RATE DIVIDEND EXPECTED
VOLATILITY OF RETURN YIELD TERM
------------------------------------------------------------------------------------
26.34% 2.79% 4.63% 4.28 years
------------------------------------------------------------------------------------
23
--------------------------------------------------------------------------------
OPTION EXERCISES
-------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN 2002 AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
NUMBER OF VALUE OPTIONS AT YEAR-END (#) YEAR-END ($)(2)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------------
H. A. FRANKLIN 80,671 1,210,521 475,136 759,189 5,286,965 4,461,221
------------------------------------------------------------------------------------------------------------------------
W. G. HAIRSTON, III 108,557 1,023,601 24,750 152,255 210,138 1,016,904
------------------------------------------------------------------------------------------------------------------------
G.E. KLAPPA 34,870 470,179 91,566 122,751 1,028,026 749,682
------------------------------------------------------------------------------------------------------------------------
C. D. MCCRARY 15,165 218,479 120,187 156,554 1,377,475 912,081
------------------------------------------------------------------------------------------------------------------------
D. M. RATCLIFFE 62,510 841,892 163,761 221,733 1,782,057 1,403,049
------------------------------------------------------------------------------------------------------------------------
(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) These columns represent the excess of the fair market value of the Company's
common stock of $28.39 per share, as of December 31, 2002, above the
exercise price of the options. The amounts under the Exercisable column
report 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, 2002.
24
--------------------------------------------------------------------------------
PENSION PLAN TABLE
-------------------------------------------------------------
YEARS OF ACCREDITED SERVICE
--------------------------------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
--------------------------------------------------------------------------------------------------------
$ 100,000 $ 25,500 $ 34,000 $ 42,500 $ 51,000 $ 59,500 $ 68,000
--------------------------------------------------------------------------------------------------------
300,000 76,500 102,000 127,500 153,000 178,500 204,000
--------------------------------------------------------------------------------------------------------
500,000 127,500 170,000 212,500 255,000 297,500 340,000
--------------------------------------------------------------------------------------------------------
700,000 178,500 238,000 297,500 357,000 416,500 476,000
--------------------------------------------------------------------------------------------------------
900,000 229,500 306,000 382,500 459,000 535,500 612,000
--------------------------------------------------------------------------------------------------------
1,100,000 280,500 374,000 467,500 561,000 654,500 748,000
--------------------------------------------------------------------------------------------------------
1,300,000 331,500 442,000 552,500 663,000 773,500 884,000
--------------------------------------------------------------------------------------------------------
1,500,000 382,500 510,000 637,500 765,000 892,500 1,020,000
--------------------------------------------------------------------------------------------------------
1,800,000 459,000 612,000 765,000 918,000 1,071,000 1,224,000
--------------------------------------------------------------------------------------------------------
2,000,000 510,000 680,000 850,000 1,020,000 1,190,000 1,360,000
--------------------------------------------------------------------------------------------------------
2,200,000 561,000 748,000 935,000 1,222,000 1,309,000 1,496,000
--------------------------------------------------------------------------------------------------------
2,500,000 637,500 850,000 1,062,500 1,275,000 1,487,500 1,700,000
--------------------------------------------------------------------------------------------------------
2,800,000 714,000 952,000 1,190,000 1,428,000 1,666,000 1,904,000
--------------------------------------------------------------------------------------------------------
This table shows the estimated annual pension benefits payable at normal
retirement age under the Company's qualified Pension Plan, as well as
non-qualified supplemental benefits, based on the stated compensation and years
of service with the Company's subsidiaries. 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. These compensation components are reported under
the columns titled "Salary" and "Bonus" in the Summary Compensation Table on
page 22.
As of December 31, 2002, the applicable compensation levels and accredited
service for determination of pension benefits would have been:
ACCREDITED
COMPENSATION SERVICE
--------------------------------------------
H. A. Franklin 2,329,737 31
--------------------------------------------
W. G. Hairston, III 770,739 33
--------------------------------------------
G. E. Klappa 738,137 27
--------------------------------------------
C. D. McCrary 844,258 28
--------------------------------------------
D. M. Ratcliffe 1,204,867 30
--------------------------------------------
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 Social Security offset that would apply
in most cases.
25
APPENDIX A
TEXT OF AMENDED BY-LAWS
After amendment, Section 14 of the Company's by-laws reads in its entirety as
follows:
14. The Board of Directors may hold their meetings and have one or more
offices, and keep the books of the Corporation at such place or places as
they may from time to time determine.
After amendment, Section 31 of the Company's by-laws reads in its entirety as
follows:
POWERS AND DUTIES OF THE SECRETARY.
31. The Secretary shall be sworn to the faithful discharge of his duty. He
shall act as custodian of the minutes of all meetings of the Board of
Directors and of the stockholders; he shall attend to the giving and serving
of all notices of the Corporation; he shall attend to the giving and serving
of all notices of the Corporation; and he shall attest the seal of the
Corporation upon all contracts and instruments executed under such seal. He
shall have charge of the stock certificate book, transfer book and stock
ledger, and such other books and papers as the Board of Directors may
direct. He shall, in general, perform all the duties of Secretary, subject
to the control of the Board of Directors.
After amendment, Section 34 of the Company's by-laws reads in its entirety as
follows:
TRANSFER AGENT AND REGISTRAR.
34. The Board of Directors may appoint one or more Transfer Agents or
Transfer Clerks and Registrars, and may require all stock certificates,
certificates representing any rights or options, and any written notices or
statements relative to uncertificated stock to be signed by such Transfer
Agents or Transfer Clerks acting on behalf of the Corporation and by such
Registrars.
Sections 35 and 36 of the Company's by-laws were deleted and a new Section 35
added which, after amendment, reads in its entirety as follows:
CERTIFICATES FOR SHARES.
35. The shares of the Corporation shall be represented by a certificate or
shall be uncertificated and shall be entered in the books of the Corporation
and registered as they are issued. Certificates shall be signed by, or in
the name of the Corporation by, the President or a Vice-President or any
other officer authorized by law and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to the Delaware General Corporation Law or a statement
that the Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such preferences
and/or rights.
Any of or all the signatures on a certificate may be facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
Section 37 of the Company's by-laws was renumbered as Section 36 and after
amendment, reads in its entirety as follows:
TRANSFERS OF STOCK.
36. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it
shall be
i
the duty of the Corporation to issue a new certificate or evidence of the
issuance of uncertificated shares to the person entitled thereto, cancel the
old certificate and record the transaction upon the Corporation's books.
Upon the receipt of proper transfer instructions from the registered owner
of uncertificated shares, such uncertificated shares shall be cancelled,
issuance of new equivalent uncertificated shares or certificated shares
shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the Corporation.
Sections 38 and 39 of the Company's by-laws were renumbered as sections 37 and
38 respectively.
Section 40 of the Company's by-laws was renumbered as Section 39 and after
amendment, reads in its entirety as follows:
LOST, STOLEN OR DESTROYED CERTIFICATES.
39. The Corporation may issue a new certificate or certificates of stock or
uncertificated shares in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or
uncertificated shares, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Sections 41 through 47 of the Company's by-laws were renumbered as sections 40
through 46 respectively.
ii
APPENDIX B
AUDIT COMMITTEE CHARTER
This Charter identifies the composition, purpose, authority, meeting
requirements and responsibilities of the Southern Company (the Company) Audit
Committee (the Committee) as approved by the Southern Company Board of Directors
(the Board).
I. Composition
The Committee will be comprised of at least three independent members of the
Board, each of whom will be financially literate. A deliberate effort will
be made to include at least one Director who is a financial expert. The
selection of Committee members will be in accordance with requirements for
independence and financial literacy and expertise, as interpreted by the
Board in its best business judgment, giving full consideration to the rules
of the Securities and Exchange Commission (SEC) and the New York Stock
Exchange.
II. Purpose
To assist the Board of Directors in fulfilling its oversight
responsibilities for the following:
A. Integrity of the financial reporting process;
B. The system of internal control;
C. The independence and performance of the internal and independent audit
process; and
D. The Company's process for monitoring adherence with the spirit and intent
of its Code of Ethics and compliance with laws and regulations.
III. Authority
The Audit Committee has authority to conduct or authorize investigations
into any matters within its scope of responsibility. It is empowered to:
A. Appoint, compensate, and oversee the work of the independent auditors.
B. Resolve any disagreements between management and the independent
auditors regarding financial reporting.
C. Pre-approve all auditing and non-audit services provided by the
independent auditors.
D. Retain independent counsel, accountants, or others to advise the
Committee or assist in the conduct of an investigation.
E. Seek any information it requires from employees -- all of whom are
directed to cooperate with the Committee's requests -- or external
parties.
F. Meet with Company officers, independent auditors, internal auditors,
inside counsel or outside counsel, as necessary.
In the execution of its duties, the Committee will report to the Board of
Directors.
IV. Meeting Requirements
The Committee shall meet a minimum of four times each year, or more often if
warranted, to receive reports and to discuss the quarterly and annual
financial statements, including disclosures and other related information.
The Committee shall meet separately, at least annually, with Company
management, the Director of Internal Auditing, the Compliance Officer, and
the independent auditors 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.
V. Responsibilities
A. Financial Reporting and Independent Audit Process --
iii
The oversight responsibility of the Committee in the area of financial
reporting is to provide reasonable assurance that the Company's financial
disclosures and accounting practices 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 consolidated subsidiary that has publicly
traded securities. To accomplish this, the Committee will:
1. Provide oversight of the independent audit process, including direct
responsibility for:
a. Annual appointment of the independent auditors.
b. Compensation of the independent auditors.
c. Review and confirmation of the independence of the external auditors
by obtaining statements from the auditors on relationships between the
auditors and the Company, including non-audit services, and discussing
the relationships with the auditors. Ensure that non-audit services
provided by the independent auditors comply with and are disclosed to
investors in periodic reports required by the Securities Exchange Act
of 1934 and the Sarbanes-Oxley Act of 2002.
d. Review of the independent auditors' quarterly and annual work plans,
and results of audit engagements.
e. Review of the experience and qualifications of the senior members of
the independent audit team annually and ensure that all partner
rotation requirements are executed.
f. Evaluation of the independent auditors' performance.
g. Oversight of the coordination of the independent auditors' activities
with the Internal Auditing and Accounting functions.
2. Review and discuss with management the quarterly and annual consolidated
earnings announcements and earnings guidance provided to analysts and
rating agencies.
3. Review and discuss with management and the independent auditors the
quarterly and annual financial statements (including disclosures under
Management's Discussion and Analysis of Financial Condition and Results
of Operations) and recommend the reports for filing with the SEC. The
financial statements include the Southern Company consolidated financial
statements as well as the separate financial statements for all
consolidated subsidiaries with publicly traded securities.
a. The review and discussion will be based on timely reports from the
independent auditors, including:
i. All critical accounting policies and practices to be used.
ii. All alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management; ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditors.
iii. Other material written communications between the independent
auditors and management, such as any management letter or
schedule of unadjusted differences.
b. In addition, the following items will also be reviewed and discussed:
i. Significant judgments and estimates made by management.
ii. Significant reporting or operational issues identified during
the reporting period, including how they were resolved.
iii. Issues on which management sought second accounting opinions.
iv. Significant regulatory changes and accounting and reporting
developments proposed by Financial Accounting Standards Board,
SEC or other regulatory agency.
v. Any audit problems or difficulties and management's response.
iv
4. Review the letter of management representations given to the independent
auditors in connection with the audit of the annual financial statements.
B. Internal Control--
The responsibility of the Committee in the area of internal control, in
addition to the actions described in SECTION (V).(A.)., is to:
1. Provide oversight of the internal audit function including:
a. Review of audit plans, budgets and staffing levels.
b. Review of audit results.
c. Review of 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 Internal Auditing.
2. Assess management's response to any reported weaknesses or compliance
deficiencies.
3. Provide oversight of the Company's Legal and Regulatory Compliance and
Ethics Programs, including:
a. Creation and maintenance of procedures for:
i. Receipt, retention and treatment of complaints received by
management regarding accounting, internal accounting controls
or audit matters.
ii. Confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters.
b. Review of plans and activities of the Company's Corporate Compliance
Officer.
c. Review of results of auditing or other monitoring programs designed
to prevent or detect violations of laws or regulations.
d. Review of corporate policies relating to compliance with laws and
regulations, ethics, conflict of interest and the investigation of
misconduct or fraud.
e. Review of reported cases of employee fraud, conflict of interest,
unethical or illegal conduct.
4. Review the quality assurance practices of the internal auditing function
and the independent auditors.
5. Review and discuss significant risks facing the Company and the
guidelines and policies to govern the process by which risk assessment
and risk management is undertaken.
C. Conduct an annual self-assessment of the Committee's performance.
D. Other
1. Set clear employment policies for Southern Company's hiring of employees
or former employees of the independent auditors.
2. Report Committee activities and findings to the Board on a regular
basis.
3. Report Committee activities in the Company's annual proxy statement to
shareholders.
4. Review this charter at least annually and recommend appropriate changes.
ADOPTED ON FEBRUARY 17, 2003
BY THE SOUTHERN COMPANY
BOARD OF DIRECTORS
v
APPENDIX C
POLICY ON ENGAGEMENT OF THE INDEPENDENT AUDITOR
FOR AUDIT AND NON-AUDIT SERVICES
A. Southern Company (including its subsidiaries) will not engage the independent
auditor to perform any services that are prohibited by the Sarbanes-Oxley
Act of 2002. It shall further be the policy of the Company not to retain the
independent auditor for non-audit services unless there is a compelling
reason to do so and such retention is otherwise pre-approved consistent with
this policy. Non-audit services that are prohibited include:
1. Bookkeeping and other services related to the preparation of accounting
records or financial statements of the Company or its subsidiaries.
2. Financial information systems design and implementation.
3. Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports.
4. Actuarial services.
5. Internal audit outsourcing services.
6. Management functions or human resources.
7. Broker or dealer, investment adviser, or investment banking services.
8. Legal services or expert services unrelated to financial statement
audits.
9. Any other service that the Public Company Accounting Oversight Board
determines, by regulation, is impermissible.
B. Effective January 1, 2003, officers of the Company (including its
subsidiaries) may not engage the independent auditor to perform any personal
services, such as personal financial planning or personal income tax
services.
C. All audit services (including providing comfort letters and consents in
connection with securities issuances) and permissible non-audit services
provided by the independent auditor must be pre-approved by the Southern
Company Audit Committee.
D. Under this Policy, the Audit Committee's approval of the independent
auditor's annual arrangements letter shall constitute pre-approval for all
services covered in the letter.
E. By adopting this Policy, the Audit Committee hereby pre-approves the
engagement of the independent auditor to provide services related to the
issuance of comfort letters and consents required for securities sales by
the Company and its subsidiaries and services related to consultation on
routine accounting and tax matters. The actual amounts expended for such
services each calendar quarter shall be reported to the Committee at a
subsequent Committee meeting.
F. The Audit Committee also delegates to its Chairman the authority to grant
pre-approvals for the engagement of the independent auditor to provide any
permissible service up to a limit of $50,000 per engagement. Any engagements
pre-approved by the Chairman shall be presented to the full Committee at its
next scheduled regular meeting.
G. The Southern Company Comptroller shall establish processes and procedures to
carry out this Policy.
APPROVED BY THE SOUTHERN COMPANY AUDIT COMMITTEE
DECEMBER 9, 2002
vi
[LOGO]
[LOGO]
RECYCLED PAPER
[GRAPHIC OMITTED]
Admission Ticket
(Not Transferable)
2003 Annual Meeting of Stockholders
10 a.m. EDT, May 28, 2003
The Southern Pine at Callaway
Highway 18
Pine Mountain, GA 31822 800-543-7121
Please present this Admission Ticket in order to gain admittance to the meeting.
Ticket admits only the stockholder(s) listed on reverse side and is not
transferable.
Directions to Meeting Site: From Atlanta, take I-85 South to I-185 (Exit 21).
Turn left onto U.S. Highway 27 (Exit 42) and drive south for approximately ten
miles to Pine Mountain. In Pine Mountain, turn right onto Georgia Highway 354
West and proceed to Georgia Highway 18 and turn left into Callaway. From
Columbus, take I-185 North and exit east on Georgia Highway 18 (Exit 34) to
Callaway. From Montgomery take I-85 North and exit east on Georgia Highway 18
(Exit 2) to Callaway.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of The Southern Company will be held on
Wednesday, May 28, 2003, at 10:00 a.m., EDT, at The Southern Pine at Callaway,
Pine Mountain, Georgia. Stockholders owning shares at the close of business on
March 31, 2003, are entitled to attend and vote at the meeting. Stockholders
will elect ten members of the Board of Directors; ratify amendments to the
by-laws of the Company permitting book-entry shares for stock ownership
purposes; consider and vote upon a stockholder proposal, if presented at the
meeting, as described in Item No. 3 of the Proxy Statement; and transact other
business properly coming before the meeting or any adjournments thereof.
-------------------------------------------------------------------------------
[GRAPHIC OMITTED]
FORM OF PROXY AND FORM OF PROXY
TRUSTEE VOTING AND
INSTRUCTION FORM TRUSTEE VOTING
INSTRUCTION FORM
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS AND ESP/ESOP TRUSTEES
If a stockholder of record, the undersigned hereby appoints H. A.
Franklin and T. Chisholm, or either of them, Proxies with full power of
substitution in each, to vote all shares the undersigned is entitled to vote at
the Annual Meeting of Stockholders of The Southern Company, to be held at The
Southern Pine at Callaway, Pine Mountain, Georgia, on May 28, 2003, at 10:00
a.m., EDT, and any adjournments thereof, on all matters properly coming before
the meeting, including, without limitation, the proposals listed on the reverse
side of this form.
If a beneficial owner holding shares through the Employee Savings Plan ("ESP")
and/or the Employee Stock Ownership Plan ("ESOP"), the undersigned directs the
Trustees of these Plans to vote all shares the undersigned is entitled to vote
at the Annual Meeting of Stockholders, and any adjournments thereof, on all
matters properly coming before the meeting, including, without limitation, the
proposals listed on the reverse side of this form.
This Form of Proxy/Trustee Voting Instruction Form is solicited jointly by the
Board of Directors of The Southern Company and the Trustees of the Employee
Savings Plan and Employee Stock Ownership Plan pursuant to a separate Notice of
Annual Meeting and Proxy Statement. If not voted electronically, this form
should be mailed in the enclosed envelope to the Company's proxy tabulator at 51
Mercedes Way, Edgewood, NY 11717. The deadline for receipt of Trustee Voting
Instruction Forms for ESP and ESOP shares is 5:00 p.m. on Monday, May 26, 2003.
The deadline for receipt of shares of record voted through the Form of Proxy is
9:00 a.m. on Wednesday, May 28, 2003. The deadline for receipt of instructions
provided electronically is 11:59 p.m. on Tuesday, May 27, 2003.
The proxy tabulator will report separately to the Proxies named above and to the
Trustees as to proxies received and voting instructions provided, respectively.
THIS FORM OF PROXY/TRUSTEE VOTING INSTRUCTION FORM WILL BE VOTED AS
SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS INDICATED, THE SHARES WILL BE
VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.
Continued on reverse side.
[GRAPHIC OMITTED] Please consider furnishing your
voting instructions electronically -
Internet or phone - and save the
Company money.
C/O Proxy Services
P. O. Box 9112
Farmingdale, NY 11735
INTERNET - www.proxyvote.com
Use the Internet to transmit your
voting instructions. Have this
form in hand when you access the
web site. You will be prompted to
enter your 12-digit Control
Number that is located below to
create an electronic voting
instruction form.
TELEPHONE - 1-800-690-6903
Toll-Free Use any touch-tone
telephone to transmit your voting
instructions. Have this form in
hand when you call. You will be
prompted to enter your 12-digit
Control Number that is located
below, then follow the simple
instructions provided to record
your vote.
MAIL
Mark, sign and date this form and
return it in the postage-paid
envelope we have provided or
return it to Southern Company,
C/O ADP, 51 Mercedes Way,
Edgewood, NY 11717
If you vote by Internet or phone,
please do not mail this form.
THANK YOU
VIEW ANNUAL REPORT AND PROXY STATEMENT
ON THE INTERNET - www.southerncompany.com
NOTE: The last instruction received, either paper or electronic,
will be the last tabulated.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
STHCO1 KEEP THIS PORTION FOR YOUR RECORDS
-------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS FORM OF PROXY/TRUSTEE VOTING INSTRUCTION FORM IS VALID ONLY WHEN
SIGNED AND DATED.
THE SOUTHERN COMPANY
Vote on Items
1. ELECTION OF DIRECTORS:
For Withhold For All To withhold authority to vote, mark "For All
01) D. P. Amos 02) D. J. Bern 03) T. F. Chapman All All Except Except" and write the nominee's number on
04) H. A. Franklin 05) B. S. Gordon 06) L. G. Hardman III ( ) ( ) ( ) the line below.
07) D. M. James 08) Z. T. Pate 09) J. N. Purcell ___________________________
10) G. J. St. Pe'
For Against Abstain
2. RATIFICATION OF BY-LAWS AMENDMENTS PERMITTING BOOK-ENTRY SHARES ( ) ( ) ( )
3. STOCKHOLDER PROPOSAL ON ENVIRONMENTAL REPORT ( ) ( ) ( )
UNLESS OTHERWISE SPECIFIED ABOVE, YOUR SHARES WILL BE VOTED "FOR" ITEMS 1 AND 2
AND "AGAINST" ITEM 3.
Yes
Mark here if you plan to attend the Annual Meeting. ( ) ( )
I (we) consent to suspending future mailings of the Annual
Report and Proxy Statement on this account. I (we) have access to
copies of the documents or can access them electronically through the Internet.
I (we) can revoke this consent at any time by notifying Stockholder Services.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date