[Federal Register Volume 66, Number 70 (Wednesday, April 11, 2001)]
[Notices]
[Pages 18825-18827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8904]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27372]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

April 5, 2001.

    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated under the Act. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendment(s) is/are available for public 
inspection through the Commission's Branch of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by April 30, 2001, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts or law that 
are disputed. A person who so requests will be notified of any hearing, 
if ordered, and will receive a copy of any notice or order issued in 
the matter. After April 30, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

The Southern Company (70-9869)

Notice of Proposal To Issue Securities; Order Authorizing Solicitation 
of Proxies

    The Southern Company (``Southern''), 270 Peachtree Street, NW., 
Atlanta, Georgia 30303, a registered public utility holding company, 
has filed a declaration under sections 6(a), 7 and 12(e) and rules 54, 
62(d) and 65 of the Act.
    Southern proposes, from time to time through May 22, 2011, to grant 
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation 
Rights, Restricted Stock, Restricted Stock Units, Performance Shares, 
Performance Units and Cash Based Awards and to issue up to 30 million 
shares of its common stock, par value $5.00 per share (``Common 
Stock''), under the Southern Company Omnibus Incentive Compensation 
Plan (``Plan'').\1\
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    \1\ Thirty million shares of Common Stock are available for 
grants under the Plan. Additional shares of Common Stock will be 
transferred from the Southern Company Performance Stock Plan to this 
Plan and will also be available for grants under this Plan.
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    A committee appointed by the Board of Directors of Southern 
(``Committee'') will administer the Plan. The composition of the 
Committee must comply with section 162(m) of the Internal Revenue Code 
of 1986, as amended (``Internal Revenue Code''). Currently, the 
Committee consists of two directors of Southern who are not employees 
of Southern or its subsidiaries. The Committee will have exclusive 
authority to interpret the Plan. The Plan will terminate May 22, 2011, 
unless terminated sooner by the Board of Directors.
    Southern states the purpose of the Plan is to optimize the 
profitability and growth of Southern through annual and long-term 
incentives that are consistent with Southern's goal and that link the 
personal interest of participants to those of Southern's stockholders, 
to provide participants with an incentive for excellence in individual 
performance, to promote teamwork among participants and to provide 
flexibility to Southern in its ability to motivate, attract and retain 
key individuals with outstanding ability.
    The Plan permits the Committee to grant, in its discretion, 
Incentive Stock Options and Nonqualified Stock Options (collectively, 
``Stock Options''), Stock Appreciation Rights, Restricted Stock, 
Restricted Stock Units, Performance Shares, Performance Units and/or 
Cash Based Awards to directors of Southern or certain of its 
subsidiaries and those employees, as determined by the Committee, who 
have a significant impact on the long-term performance and success of 
Southern. The Committee has determined that the approximate number of 
participants under the Plan initially will be 24,000, but may be 
changed at the Committee's discretion. Southern states that each award 
made under the Plan will be evidenced by an award agreement.
    Nonqualified Stock Options entitle the participant to purchase up 
to the number of shares of Common Stock specified in the grant at a 
specified price (``Option Price''). The Committee will

[[Page 18826]]

set the Option Price at the time a grant is made. The Committee will 
also set the period during which the Nonqualified Stock Options may be 
exercised at the time a grant is made.
    Stock Options designated by the Committee as Incentive Stock 
Options are intended to comply with section 422 of the Internal Revenue 
Code. They will be granted only to employees and entitle the 
participant to purchase the specified number of shares of Common Stock 
at the Option Price not to more than 10 years from the date of the 
grant. The aggregate fair market value of Common Stock determined at 
the time of each grant for which any participant may vest in Incentive 
Stock Options under the Plan for any calendar year shall not exceed 
$100,000.
    Stock Options must be paid in full when exercised by the 
participant. The Committee, in its discretion, may permit the Option 
Price to be paid in whole or in part through the transfer to Southern 
of shares of Common Stock previously acquired by the participant.
    Stock Appreciation Rights are rights that, when exercised, entitle 
the participant to the appreciation in value of the number of shares of 
Common Stock specified in the grant, from the date granted to the date 
exercised. The exercised Stock Appreciation Right may be paid in cash 
and/or Common Stock, as determined by the Committee. Stock Appreciation 
Rights may be granted in the sole discretion of the Committee in 
conjunction with an Incentive Stock Option or Nonqualified Stock 
Option. Stock Appreciation Rights may not be exercised more than 10 
years after the date granted.
    Restricted Stock awards are grants of shares of Common Stock that 
are held by Southern for the benefit of the participant without payment 
of consideration by the participant. There are restrictions or 
conditions on the participant's right to transfer or sell such shares. 
The Committee will establish a restriction period for each Restricted 
Stock award made. Subject to the terms of an award agreement, the 
participant may be entitled to dividends paid on the Restricted Stock 
and may have the right to vote such shares.
    Restricted Stock Units are awards that entitle the participant to 
the value of shares of Common Stock at the end of a designated 
restriction period. Except for voting rights, Restricted Stock Units 
may have all of the characteristics of Restricted Stock, as described 
above. Restricted Stock Units may be paid out in cash or shares.
    Performance Units, Performance Shares, Performance Stock Awards and 
Cash-Based Awards (collectively, ``Performance Awards'') are awards 
that entitle the participant to a level of compensation based on the 
achievement of pre-established performance goals over a designated 
performance period. Performance Units shall have an initial value 
determined by the Committee. The value of a Performance Share will be 
the fair market value of Common Stock on the grant date. A Cash-Based 
Award will have the value determined by the Committee. At the beginning 
of the performance period the Committee will determine the number of 
Performance Units or Performance Shares awarded or the target value of 
Cash-Based Awards; the performance period; and the performance goals. 
At the end of the performance period, the Committee will determine the 
degree of achievement of the performance goals which will determine the 
level of payout. The Committee may set performance goals using any 
combination of the following criteria: (1) Earnings per share; (2) net 
income or net operating income (before or after taxes and before or 
after extraordinary items); (3) return measures (including, but not 
limited to, return on assets, equity or sales); (4) cash flow return on 
investments which equals net cash flows divided by owners equity; (5) 
earnings before or after taxes; (6) gross revenues; (7) gross margins; 
(8) share price (including, but not limited to, growth measures and 
total shareholder return); (9) economic value added, which equals net 
income or net operating income minus a charge for use of capital; (10) 
operating margins; (11) market shares; (12) revenue growth; (13) 
capacity utilization; (14) increase in customer base; (15) 
environmental health and safety; (16) diversity; and (17) quality.
    Performance Awards may be paid in cash or shares of Common Stock or 
a combination of cash and shares of Common Stock, in the Committee's 
discretion.
    The maximum aggregate number of shares of Common Stock that may be 
granted in the form of Stock Options, under any award granted in any 
one fiscal year to any one single participant, shall be 5,000,000 
shares.
    The maximum aggregate number of shares of Common Stock that may be 
granted in the form of Stock Appreciation Rights, under any award 
granted in any one fiscal year to any one participant, shall be 
5,000,000 shares.
    The maximum aggregate number of shares of Common Stock that may be 
granted with respect to awards of Restricted Stock granted in any one 
fiscal year to any one participant shall be 1,000,000 shares.
    The maximum amount payable (determined at the end of the applicable 
restriction period) in any one fiscal year to any one participant for 
Restricted Stock Units is the higher of $10,000,000 or 1,000,000 shares 
of Common Stock.
    The maximum amount payable (determined as of the end of the 
applicable performance period) with respect to an award of Performance 
Shares granted in any one fiscal year to any one participant shall be 
equal to the larger of $10,000,000 or 1,000,000 shares.
    The maximum amount payable (determined as of the end of the 
applicable performance period) with respect to Performance Units or 
Cash-Based Awards awarded in any one fiscal year to any one participant 
shall be $10,000,000.
    If a change in control occurs all Stock Options, Stock Appreciation 
Rights, Restricted Stock and Restricted Stock Units will vest 
immediately and if the Plan is not continued or replaced with a 
comparable plan, pro-rata payments of all Performance Awards at not 
less than target-level performance will be paid.\2\
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    \2\ The Board of Directors of Southern may terminate or amend 
the Plan at any time except after a change in control.
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    The Board of Directors of Southern has adopted the Plan, subject to 
stockholder approval. Approval of the Plan requires the affirmative 
vote of the holders of a majority of the shares of Common Stock 
represented in person or by proxy at the annual meeting.
    Southern further proposes to solicit proxies from its stockholders 
and to submit the Plan for consideration and action by its stockholders 
at the annual meeting of stockholders to be held on May 23, 2001. 
Southern may employ professional proxy solicitors to assist in the 
solicitation of proxies and pay their expenses and compensation for 
such assistance which, it is estimated, will not exceed $30,000.
    Southern proposes to mail the notice of meeting, statement relating 
to the Plan, proxy statement and proxy to its shareholders for the 
annual meeting, and has filed its proxy solicitation materials relating 
to the Plan. Southern requests that an order authorizing the 
solicitation of proxies be issued as soon as practicable under rule 
62(d). It appears to the Commission that Southern's declaration as it 
pertains to the proposed solicitation of proxies should be permitted to 
become effective immediately under rule 62(d).
    The proposed transactions are subject to rule 54. Southern 
currently meets all the conditions of rule 53(a) under the Act, except 
for clause (1). Southern

[[Page 18827]]

states that, at December 31, 2000, its ``aggregate investment,'' as 
defined in rule 53(a)(1), in exempt wholesale generators (``EWGs'') and 
foreign utility companies (``FUCOs'') was approximately $2,420 
billion,or approximately 53.52% of Southern's ``consolidated retained 
earnings,'' also as defined in rule 53(a)(1) under the Act for the four 
quarters ended December 31, 2000 ($4.522 billion). By order dated April 
1, 1996 (HCAR No. 26501) (``April 1 Order''), the Commission authorized 
Southern to invest up to 100% of its consolidated retained earnings in 
EWGs and FUCOs. Southern's current aggregate investment in EWGs and 
FUCOs exceeds the limit specified in rule 53(a)(1) under the Act but is 
within the parameters authorized in the April 1 Order. For purposes of 
rule 54, Southern states that all other conditions specified in rule 
53(a) are satisfied and that none of the adverse conditions specified 
in rule 53(b) exist.
    Southern states that, as of December 31, 1995, the most recent 
fiscal year preceding the April 1 Order, Southern's consolidated 
capitalization consisted of 49.3% equity (including mandatorily 
redeemable preferred securities) and 50.7% debt (including $1.68 
billion of long-term, nonrecourse debt and short-term debt related to 
EWGs and FUCOs). As of December 31, 2000, that ratio was 58.1% equity 
\3\ and 41.9% debt, including all nonrecourse debt. Southern further 
states that earnings attributable to its investments in international 
operations and competitive energy supply business made a positive 
contribution to earnings during the four calendar years since the 
Commission issued the order allowing Southern to invest up to 100% of 
its consolidated retained earnings in EWGs and FUCOs.
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    \3\ Excluding preferred stock and preferred securities from the 
equity component of Southern's consolidated capitalization, the 
equity component was 46.7% of total capitalization.
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    Fees, commissions and expenses to be incurred in connection with 
the proposed transactions are estimated to be $675,000. Southern states 
that no state or federal commission, other than this Commission, has 
jurisdiction over the proposed transactions.
    It Is Ordered, under rule 62 under the Act, that the declaration to 
the extent that it relates to the proposed solicitation of proxies is 
permitted to become effective immediately, subject to the terms and 
conditions contained in rule 24 under the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-8904 Filed 4-10-01; 8:45 am]
BILLING CODE 8010-01-M