Exhibit 10(a)1
SOUTHERN COMPANY
2006 OMNIBUS INCENTIVE COMPENSATION PLAN
Amended and Restated Effective January 1, 2007
Contents
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Article 1. Establishment, Objectives, and
Duration
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1
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Article 3. Administration
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4
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Article 4. Shares Subject to the Plan and Maximum
Awards
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5
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Article 5. Eligibility and Participation
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7
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Article 6. Stock Options
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7
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Article 7. Stock Appreciation Rights
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9
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Article 8. Restricted Stock and Restricted Stock
Units
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10
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Article 9. Performance Units, Performance Shares, and
Cash-Based Awards
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11
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Article 10. Performance Measures
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13
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Article 11. Beneficiary Designation
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15
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Article 13. Rights of Employees/Directors
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15
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Article 14. Amendment, Modification, and
Termination
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16
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Article 15. Withholding
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17
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Article 16. Indemnification
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17
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Article 17. Successors
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17
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Article 18. General Provisions
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17
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Southern Company
2006 Omnibus Incentive
Compensation Plan
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Article 1.
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Establishment, Objectives, and
Duration
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1.1.
Establishment of the Plan . The Southern Company
(hereinafter referred to as the “Company”), hereby
establishes this “Southern Company 2006 Omnibus Incentive
Compensation Plan” (hereinafter referred to as the
“Plan”), as set forth in this document. The
Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance
Units, and Cash-Based Awards.
Subject to approval by the
Company’s stockholders, the Plan shall become effective as of
January 1, 2006 (the “Effective Date”) and shall remain
in effect as provided in Section 1.3 hereof.
1.2.
Objectives of the Plan . The objectives of the Plan are to
optimize the profitability and growth of the Company through annual
and long-term incentives that are consistent with the
Company’s goals and that link the personal interests of
Participants to those of the Company’s stockholders; to
provide Participants with an incentive for excellence in individual
performance; and to promote teamwork among Participants.
The Plan is further intended to
provide flexibility to the Company in its ability to motivate,
attract, and retain the services of Employees and Directors who
make significant contributions to the Company’s success and
to allow those individuals to share in the success of the
Company.
1.3. Duration
of the Plan . The Plan shall commence on the Effective Date and
shall remain in effect, subject to the right of the Board of
Directors to amend or terminate the Plan at any time pursuant to
Article 14 hereof, until all Shares subject to it shall have
been purchased or acquired according to the Plan’s
provisions. However, in no event may an Award be granted under the
Plan on or after the tenth anniversary of the Effective
Date.
Whenever used in the Plan, the
following terms shall have the meanings set forth below, and when
the meaning is intended, the initial letter of the word shall be
capitalized:
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2.1.
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“Award”
means, individually or collectively,
a grant under this Plan of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance
Units, or Cash-Based Awards.
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2.2.
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“Award
Agreement” means an
agreement entered into by the Company and each Participant setting
forth the terms and provisions applicable to Awards granted under
this Plan, which agreement may be delivered and executed in
electronic form.
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2.3.
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“Board”
or “Board of
Directors” means the Board of Directors of the
Company.
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2.4.
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“ Cash-Based
Award” means an
Award granted to a Participant, as described in Article 9
herein.
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2.5.
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“ Change in Control
Benefit Plan Determination Policy” shall mean the change in control benefit plan
determination policy, as approved by the Board of Directors of
Southern Company Services, Inc., as it may be amended from time to
time in accordance with the provisions therein.
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2.6.
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“Code”
means the Internal Revenue Code of
1986, as amended from time to time.
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2.7.
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“Committee” means any committee appointed by the Board to
administer Awards to Employees, as specified in Article 3
herein. The Committee shall at all times maintain compliance with
Code Section 162(m), or any successor statute thereto, as to the
composition of the Committee.
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2.8.
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“ Common
Stock” shall mean
the common stock of the Company.
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2.9.
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“Company”
means The Southern Company, a
Delaware corporation, and any successor thereto as provided in
Article 17 herein.
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2.10.
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“Covered
Employee” means a
Participant who, as of the date of vesting and/or payout of an
Award, as applicable, is one of the group of “covered
employees,” as defined in the regulations promulgated under
Code Section 162(m), or any successor statute.
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2.11.
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“Director”
means any individual who is a member
of the Board of Directors of the Company or any Subsidiary;
provided, however, that any Director who is employed by the Company
or any Subsidiary shall be considered an Employee under the
Plan.
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2.12.
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“Disability” shall have the meaning ascribed to such term in
the Participant’s governing long-term disability plan, or if
no such plan exists, at the discretion of the Committee.
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2.13.
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“Effective
Date” means January
1, 2006.
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2.14.
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“Employee”
means any employee of the Company or
its Subsidiaries. Directors who are employed by the Company or its
Subsidiaries shall be considered Employees under this
Plan.
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2.15.
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“Exchange
Act” means the
Securities Exchange Act of 1934, as amended from time to time, or
any successor act thereto.
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2.16.
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“Fair Market
Value” shall mean
the closing price at which a share of Common Stock shall have been
traded on the respective measurement date, such as the date
of
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grant or the exercise of an Award,
or on the next preceding trading day if such date was not a trading
date, as reported by the principal securities exchange on which the
Shares are traded or, if there is no such sale on the relevant
date, then on the last previous day on which a sale was reported.
If the Shares are not listed for trading on a national securities
exchange, the fair market value of the Shares shall be determined
by the Committee in good faith and in accordance with a reasonable
valuation method as determined under Code Section 409A and the
rules and regulations promulgated thereunder.
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2.17.
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“Freestanding
SAR” means an SAR
that is granted independently of any Options, as described in
Article 7 herein.
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2.18.
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“Incentive Stock
Option” or
“ISO” means an option to purchase Shares granted
under Article 6 herein and which is designated as an
Incentive Stock Option and which is intended to meet the
requirements of Code Section 422.
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2.19.
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“Insider”
shall mean an individual who is, on
the relevant date, an officer, director or more than
ten percent (10%) beneficial owner of any class of the
Company’s equity securities that is registered pursuant to
Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
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2.20.
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“Nonqualified Stock
Option” or
“NQSO” means an option to purchase Shares
granted under Article 6 herein and which is not intended to
meet the requirements of Code Section 422.
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2.21.
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“Option”
means an Incentive Stock Option or a
Nonqualified Stock Option, as described in Article 6
herein.
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2.22.
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“Option
Price” means the
price at which a Share may be purchased by a Participant pursuant
to an Option.
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2.23.
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“Participant”
means an Employee or Director who
has been selected to receive an Award or with respect to whom an
Award is outstanding under the Plan.
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2.24.
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“ Performance-Based
Exception” means the performance-based exception from the
tax deductibility limitations of Code Section 162(m).
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2.25.
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“Performance
Period” means with
respect to Performance Units, Performance Shares and, if
applicable, Cash-Based Awards, the time period during which any
performance goals will be measured.
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2.26.
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“Performance
Share” means an
Award granted to a Participant, as described in Article 9
herein.
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2.27.
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“ Performance
Unit” means an Award granted to a Participant, as
described in Article 9 herein.
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2.28.
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“Period of
Restriction” means
the period during which the transfer of Shares of Restricted Stock
is limited in some way (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the
Shares are subject to a substantial risk of forfeiture, as provided
in Article 8 herein.
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2.29.
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“Restricted
Stock” means an
Award granted to a Participant, as described in Article 8
herein.
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2.30.
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“Restricted Stock
Unit” means an
Award granted to a Participant, as described in Article 8
herein.
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2.31.
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“Retirement” shall have the meaning ascribed to such term in
The Southern Company Pension Plan.
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2.32.
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“Shares” means the shares of Common Stock.
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2.33.
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“Stock Appreciation
Right” or
“SAR” means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to
the terms of Article 7 herein.
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2.34.
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“
Subsidiary”
means any corporation, partnership,
joint venture, limited liability company, or other entity (other
than the Company) which is part of an unbroken chain of entities
beginning with the Company if, at the time of the granting of an
Award, each of the entities in the unbroken chain (other than the
last entity) owns more than 50% of the total combined voting power
in one of the other entities in such chain.
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2.35.
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“Tandem
SAR” means an SAR
that is granted in connection with a related Option pursuant to
Article 7 herein, the exercise of which shall require forfeiture of
the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly
be canceled).
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Article 3.
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Administration
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3.1.
General . The Plan shall be administered by a Committee. The
members of the Committee shall be appointed from time to time by,
and shall serve at the discretion of, the Board of Directors. The
Committee shall be responsible for administration of the Plan;
provided, however, that the determination of the number of Awards
to be granted to Directors shall remain vested in the Board of
Directors. The Committee shall have the authority to delegate
administrative duties to one or more officers, Employees or
Directors of the Company or Subsidiaries to the extent that such
delegation would not jeopardize the Performance-Based Exception
with respect to any Award.
3.2.
Authority of the Committee . Except as limited by law or by
the Certificate of Incorporation or Bylaws of the Company, and
subject to the provisions herein, the Committee shall have full
power to select Employees and Directors who shall participate in
the Plan; determine the sizes and types of Awards; determine the
terms and conditions of Awards in a manner consistent
with the Plan; construe and
interpret the Plan and any agreement or instrument entered into
under the Plan; establish, amend, or waive rules and regulations
for the Plan’s administration; determine and certify whether
Award requirements have been met; and (subject to the provisions of
Articles 13 and 14 herein) amend the terms and conditions of
any outstanding Award as provided in the Plan. Further, the
Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As
permitted by law (and subject to Section 3.1 herein), the
Committee may delegate its authority as identified
herein.
3.3.
Underpayments/Overpayments. If any Participant or
beneficiary receives an underpayment of Shares or cash payable
under the terms of any Award, payment of any such shortfall shall
be made as soon as administratively practicable. If any Participant
or beneficiary receives an overpayment of Shares or cash payable
under the terms of any Award for any reason, the Committee or its
delegate shall have the right, in its sole discretion, to take
whatever action it deems appropriate, including but not limited to
the right to require repayment of such amount or to reduce future
payments under this Plan, to recover any such overpayment.
Notwithstanding the foregoing, if the Company is required to
prepare an accounting restatement due to the material noncompliance
of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, and if the
Participant knowingly or grossly negligently engaged in the
misconduct, or knowingly or grossly negligently failed to prevent
the misconduct, or if the Participant is one of the individuals
subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Participant shall reimburse the
Company the amount of any payment in settlement of an Award earned
or accrued during the twelve- (12-) month period following the
first public issuance or filing with the United States Securities
and Exchange Commission (whichever just occurred) of the financial
document embodying such financial reporting requirement.
3.4.
Decisions Binding . All determinations and decisions made by
the Board or the Committee pursuant to the provisions of the Plan
and all related orders and resolutions of the Board or the
Committee shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Directors, Employees,
Participants, their estates and beneficiaries and the
Subsidiaries.
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Article 4.
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Shares Subject to the Plan and Maximum Awards
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4.1. Number
of Shares Available for Grants . Subject to adjustment as
provided in Section 4.3 herein, the number of Shares hereby
reserved for issuance to Participants under the Plan shall be
28,000,000 (twenty-eight million). Additionally, any Shares
available for issuance under the Southern Company Omnibus Incentive
Compensation Plan effective May 23, 2001, as amended, (the
“2001 Plan”) on May 24, 2006 in excess of 10,000,000
(ten million) Shares shall be transferred to the Plan, added to the
reserved Shares and available for issuance to Participants under
the Plan. Any remaining Shares under the 2001 Plan shall be
cancelled and no further Shares will be granted under the 2001 Plan
after May 24, 2006. No more than one-half of the Shares available
for issuance under the Plan may be granted in the form of Awards
other than Stock Options or Stock Appreciation Rights. The
Shares available for issuance under this Plan may be authorized and
unissued Shares, treasury Shares (if provided for in the
Company’s Articles of Incorporation), or previously issued
Shares reacquired by the Company, including Shares purchased on the
open market.
Unless and until the Committee
determines that an Award to a Covered Employee shall not be
designed to comply with the Performance-Based Exception, the
following rules shall apply to grants of such Awards under the
Plan:
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(a)
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Stock Options
: The maximum aggregate number of
Shares that may be granted in the form of Stock Options, pursuant
to any Award granted in any one fiscal year to any one single
Participant shall be 5,000,000 (five million).
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(b)
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SARs : The maximum aggregate number of Shares that
may be granted in the form of Stock Appreciation Rights, pursuant
to any Award granted in any one fiscal year to any one single
Participant shall be 5,000,000 (five million).
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(c)
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Restricted Stock
: The maximum aggregate grant with
respect to Awards of Restricted Stock granted in any one fiscal
year to any one Participant shall be 1,000,000 (one
million).
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(d)
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Restricted Stock Units
: The maximum aggregate payout
(determined as of the end of the applicable restriction period)
with respect to Awards of Restricted Stock Units granted in any one
fiscal year to any one Participant shall be the greater of
$10,000,000 (ten million dollars) or 1,000,000 (one million)
shares.
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(e)
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Performance Shares.
The maximum aggregate payout
(determined as of the end of the applicable performance period)
with respect to Awards of Performance Shares granted in any one
fiscal year to any one Participant shall be $10,000,000 (ten
million dollars) or 1,000,000 (one million) shares.
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(f)
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Performance Units and Cash-Based
Awards : The maximum
aggregate payout (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 (ten million dollars).
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4.2.
Incentive Stock Option
Limit. The maximum number of Shares of the share authorization
that may be issued pursuant to ISOs under this Plan shall be
one-half of the Shares available for
issuance under the Plan
4.3.
Adjustments in Authorized Shares . In the event of any
change in corporate capitalization, such as a stock split, stock
dividend or reclassification, or a corporate transaction,
such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the
Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be
delivered under Section 4.1, in the number and class of and/or
price of Shares subject to outstanding Awards granted under the
Plan, and in the Award limits set forth in Section 4.1 as may be
determined to be appropriate and equitable by the Committee, in its
sole discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of Shares subject to any Award
shall always be a whole number. The Committee shall not make
any adjustment pursuant to this Section 4.3 that would cause an
Award that is otherwise exempt from Code Section 409A to become
subject to
Section 409A; or that would cause an Award that is subject to Code
Section 409A to fail to satisfy the requirements of Section
409A.
4.4. Share
Usage. Any Shares covered by an Award shall be counted
as used as of the date of the grant. Any Shares related to Awards
which terminate by expiration, forfeiture, cancellation, or
otherwise without the issuance of such Shares, are settled in cash
in lieu of Shares, or are exchanged with the Committee’s
permission, prior to the issuance of Shares, for Awards not
involving Shares, shall be available again for grant under this
Plan. The following Shares, however, may not again be made
available for issuance as Awards under this Plan: (i) Shares not
issued or delivered as a result of the net settlement of an
outstanding Stock Appreciation Right, (ii) Shares used to pay the
exercise price or withholding taxes related to an outstanding Award
or (iii) Shares repurchased on the open market with the proceeds of
the option exercise price.
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Article 5.
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Eligibility and
Participation
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5.1.
Eligibility . Persons eligible to participate in this Plan
include all Employees and Directors.
5.2. Actual
Participation . Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible
Employees and Directors, those to whom Awards shall be granted and
shall determine the nature and amount of each Award.
6.1. Grant of
Options . Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon
such terms, and at any time and from time to time as shall be
determined by the Committee; provided that an ISO may be granted
only to an eligible Employee.
6.2. Award
Agreement . Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the
Option, the number of Shares to which the Option pertains, and such
other provisions as the Committee shall determine. The Award
Agreement also shall specify whether the Option is intended to be
an ISO within the meaning of Code Section 422, or an NQSO
whose grant is intended not to fall under the provisions of Code
Section 422.
The Committee, in its sole
discretion, shall have the ability to require in the Award
Agreement that the Participant must certify in a manner acceptable
to the Committee that he/she is in compliance with the terms and
conditions of the Plan and the Award Agreement. In the event that a
Participant fails to comply with the provisions of this Section 6.2
prior to, or during the six (6) month period after any exercise,
payment, or delivery pursuant to an Option, such exercise, payment,
or delivery may be rescinded by the Committee within two (2) years
thereafter. In the event of such rescission, the Participant shall
pay to the Company the amount of any gain realized or payment
received as a result of the rescinded exercise, payment, or
delivery, in such manner and or such terms and conditions as may be
required, and the Company shall be entitled to set-off against the
amount of any such gain any amount owed to the Participant by the
Company.
6.3. Option
Price . The Option Price for each grant of an Option under this
Plan shall be determined by the Committee in its sole discretion
and shall be specified in the Award Agreement; provided that the
Option Price shall in no event be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant of
the Option.
6.4. Term of
Options . Each Option granted to a Participant shall expire at
such time as the Committee shall determine at the time of grant;
provided that no Option shall be exercisable later than the tenth
(10 th ) anniversary of the date of grant of the
Option.
6.5. Exercise
of Options . Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which
need not be the same for each grant or for each
Participant.
6.6.
Payment . Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the
Company and/or the Committee, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied by
full payment for the Shares. The Option Price upon exercise of any
Option shall be payable to the Company in full either: (a) in
cash or its equivalent, (b) except with regard to Executive
Officers as defined in the Exchange Act, by forgoing compensation
that the Committee agrees otherwise would be owed
