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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

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The Southern Company

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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Table of Contents

2021 Notice of Annual Meeting
of Stockholders and
Proxy Statement

Wednesday, May 26, 2021 at 10:00am ET
Virtual Annual Meeting of Stockholders


Table of Contents

Our Mission

Building the future of energy

For more than a century, we’ve been providing clean, safe, reliable and affordable energy to the customers and communities we’re privileged to serve. Through industry-leading innovation and a commitment to a net-zero future, we’re delivering sustainable and resilient energy solutions that help to drive growth and prosperity.

Our Values

How we do our work is just as important as what we do. Our uncompromising values are key to our sustained success. They guide our behavior and ensure we put the needs of those we serve at the center of all we do.

At Southern Company, Our Values will guide us to make every decision, every day, in the right way.

Safety First      We believe the safety of our employees and customers is paramount. We will perform and maintain every job, every day, safely.
 
Unquestionable Trust Honesty, respect, fairness and integrity drive our behavior. We keep our promises, and ethical behavior is our standard.
 
Superior Performance We are dedicated to superior performance throughout our business. We will continue our strong focus on innovative solutions, improving how we run our business and our commitment to environmental stewardship.
 
Total Commitment We are committed to the success of our employees, our customers, our stockholders and our communities. We fully embrace, respect and value our differences and diversity.

Our Code of Ethics

Our Code of Ethics defines our culture. It guides behavior and makes Our Values come to life every day. These ethical guidelines apply to all of us and remind us that how we do our jobs is just as important as what we do.

Learn more at www.southerncompany.com/about/governance/values-and-ethics.html

 

Southern Company is a holding company that conducts its business through its subsidiaries; accordingly, unless the context otherwise requires, references in this proxy statement to Southern Company’s operations, such as generating activities, GHG emissions and employment practices, refer to those operations conducted through its subsidiaries.

See Definitions of Key Terms on page 119 for many key terms and acronyms used in this proxy statement.


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i     

Letter from our Chairman and Chief Executive Officer

Dear Fellow Stockholders:

You are invited to attend the Southern Company 2021 Annual Meeting of Stockholders at 10:00 a.m., ET, on Wednesday, May 26, 2021. We will be conducting the annual meeting online for the safety of our stockholders, employees and other attendees. See page 110 for information about how to participate in the virtual annual meeting.

By almost any measure, 2020 was a remarkable and challenging year none of us will soon forget. Our nation, our communities and our Company were tested in ways we could not have imagined. Despite the advent of a global pandemic and an exceedingly busy storm season, our business model demonstrated substantial resilience as we delivered outstanding service to customers, provided excellent operational reliability and achieved strong financial performance.

Excel at the Fundamentals
Nothing is more fundamental to our business than keeping the lights on and fueling our communities. Our state-regulated electric and gas subsidiaries constantly strive to provide a world-class customer experience. Despite the numerous challenges presented by a global pandemic, we demonstrated our agility and ability to rapidly adapt the way we do business.

The record- breaking 2020 hurricane season produced 30 named storms, including 13 hurricanes in a 6-month season. Following these storms, our teams quickly and safely restored electricity and gas service to millions in our system’s service territory and across the eastern half of the U.S. while adhering to COVID-19 safety protocols.

Strong Financial Performance Despite the Many Challenges
While revenues were meaningfully lower in 2020 due to the COVID-19 pandemic, we implemented thoughtful cost containment measures across the system to help mitigate the impact of reduced kilowatt hour sales. As a result, we were able to achieve strong adjusted earnings per share and we increased our dividend for the 19th consecutive year. We also effectively executed our capital plan and maintained solid credit ratings across the system. During 2020, Southern continued to deliver positive stockholder returns despite significant market volatility.

Continued Progress at Plant Vogtle Construction Project
Construction of the two new nuclear units at Georgia Power’s Plant Vogtle continued to see steady progress in 2020. New health and safety protocols were instituted, which allowed work to continue with enhanced safety precautions.

A number of major milestones were accomplished in 2020, including cold hydro testing for Unit 3, the certification of more than 60 plant operators and receipt of the first nuclear fuel shipment for Unit 3. When completed, the two units will feature new state-of-the-art AP1000 reactors. Once operating, these units are expected to provide carbon-free power for more than 500,000 homes and businesses.

Value and Develop Our People
In 2020, we placed great emphasis on the well-being of our workforce, including those in the field and those working from home. We further enhanced our physical, financial and emotional/social health offerings to support our employees’ needs amid the pandemic. We also maintained training, mentoring, leadership and workforce development programs, despite the remote working environment for many. Importantly, we continue to evaluate and modernize our programs to help ensure they attract, engage, include and retain the workforce necessary for today and tomorrow.

Events in 2020 also highlighted the racial inequality that persists in America. For years, striving toward equity has been a part of our focus on building a healthy culture. Southern Company is committed to an equitable and inclusive workplace that mirrors the diverse communities we serve, and we are working diligently to prevent inequities in our companies and help ensure a fair and just culture, from the boardroom to the front lines. We have refocused our efforts toward a more holistic goal of diversity, equity and inclusion, helping to ensure all groups are welcomed, well represented, engaged and fairly treated throughout the organization.

Setting a Net Zero Target
In 2020, we announced an ambitious new goal to achieve net zero greenhouse gas (GHG) emissions by 2050. Southern Company will continue to use a portfolio approach as we seek to decarbonize. We expect our path to net zero to be comprised of several elements including continued coal transition, utilization of natural gas to enable fleet transition, further growth in our portfolio of zero-carbon resources, negative carbon solutions, enhanced energy efficiency initiatives and continued investment in R&D focused on clean energy technologies.

Our Values are Key to our Long-Term Success
Safety First confirms that the safety of our employees and customers is paramount, even as we contend with the coronavirus. Unquestionable Trust speaks to our standard of honesty, respect, fairness and integrity in all we do. Superior Performance informs our resolve to sustain operational excellence. Total Commitment demands that we fully embrace, respect and value our differences and diversity as we work for social justice. These values have served us well for many years, and they will continue to guide us through these challenging times.

We believe Southern Company is well-positioned to deliver on its value proposition as our customer-and community-focused business model continues to serve us well across the enterprise. We look forward to serving customers with excellence for years to come.

Your vote is important. We urge you to vote as soon as possible by internet or by telephone or, if you received a paper copy of the proxy form by mail, by signing and returning the proxy form.

We are grateful for your continued support of Southern Company.

At Southern Company, we are bullish on the future. We acknowledge the challenges before us, but we see them as opportunities. Our answer to these challenges must always be “yes, and.” Yes, we acknowledge the challenge, and we are committed to finding a solution.


Thomas A. Fanning
Chairman, President and
Chief Executive Officer
April 12, 2021


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ii

Letter from our Independent Directors

Dear Fellow Stockholders:
   

As independent Directors, we strive to govern Southern Company in a prudent and transparent manner with a commitment to sound governance principles. We thank you for your confidence in us, as your representatives.

Oversight of Long-Term Strategy
One of our Board’s primary responsibilities is overseeing Southern Company’s strategy of maximizing long-term value to stockholders through an employee-, customer-, community- and relationship-focused business model.

At each Board meeting and during our regular strategy sessions, we contribute to management’s strategic plan by engaging senior leadership in robust discussions about overall strategy, business priorities and material long-term risks and growth opportunities.

In 2020 and continuing today, the COVID-19 pandemic has presented unique challenges, but we are proud of how the Company has responded and the resilience we have seen across the organization. We actively sought to support management as it prioritized the health and safety of our customers, neighbors and employees, while continuing to provide clean, safe, reliable and affordable energy. This past year also made clear that the struggle for racial equality continues. As a Board, we strongly supported the management team as they made clear Southern’s commitment that racism will not be accepted, ignored or dismissed.

Throughout the year we continued our focus on the construction of Plant Vogtle Units 3 and 4, which included added complexity presented by the pandemic. We also continued our robust dialogue with management on economically decarbonizing the Southern Company system’s diverse generating fleet and the risks and opportunities for Southern in a low-carbon future. These efforts resulted in the May 2020 update of our long-term GHG emissions reduction goal to net zero emissions by 2050 and the September 2020 publication of the Implementation and Action Toward Net Zero report. In addition, we maintained our focus on core operations, constructive regulatory relationships and employee safety and well-being.

By helping management address near-term priorities and obstacles while maintaining a long-term outlook, we are best able to support our common goal of creating enduring long-term value for customers, employees and stockholders alike. Our Board has been and will continue to be committed to the oversight of long-term strategy for the enterprise.

Corporate Governance and Risk Oversight
We remain focused on Board refreshment, Board diversity and meaningful Board succession planning. We have a leading search firm engaged to assist our evergreen search for Board candidates. Since March 2018, we have added four new independent Directors and three directors have retired. In 2020, we welcomed Colette D. Honorable to our team of Directors. Her extensive energy policy and regulation experience are additive to our Board. Effective at the annual meeting, Steven R. Specker and Jon A. Boscia will retire from the Board, and we thank them for their years of dedicated service. The Board aims to further refresh its membership in the coming years, including a continued focus on diverse candidates.

During 2020, we undertook a review of the collective qualifications, skills, attributes and experience that we desire on the Board with the aim of ensuring that they are aligned with oversight of long-term strategy and related risks and opportunities.

We continued to oversee risk for the enterprise through our six standing committees and as a full Board. Each committee provides ongoing oversight for the most significant risks designated to it, reports to the Board on its oversight activities and elevates review of risk issues to the Board as appropriate. For many key strategic issues, including climate risk, each Board committee considers issues within the scope of its responsibilities, and we have taken steps to promote the Board’s overall oversight as both deep and coordinated.

Stockholder Engagement
We maintained our focus on regularly communicating with our stockholders to better understand their viewpoints, gather feedback regarding matters of investor interest and help them understand how we approach our oversight role at Southern. We appreciate that stockholders have a growing list of governance and sustainability topics they wish to discuss and that direct engagement with independent Directors on behalf of the Board is a priority. We remain committed to effective engagement with our investors.

In 2020, independent Directors directly engaged (without the CEO present) with stockholders representing about 25% of our outstanding shares. The primary topics discussed included our pandemic response, how the Board oversees our strategy to reduce carbon emissions, executive compensation and human capital management.

Thank you for the trust you place in us. We are grateful for the opportunity to serve Southern Company on your behalf.


Dr. Janaki Akella Juanita Powell
Baranco
Jon A. Boscia Henry A. Clark III Anthony F.
Earley, Jr.
David J. Grain Colette D.
Honorable
Donald M. James John D. Johns Dr. Dale E. Klein Dr. Ernest J. Moniz William G.
Smith, Jr.
Dr. Steven R.
Specker
E. Jenner Wood III


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1

Notice of Annual Meeting of Stockholders of Southern Company


DATE AND TIME
Wednesday, May 26, 2021
10:00 a.m., ET

ACCESS THE ANNUAL MEETING
Stockholders may participate in the virtual annual meeting by logging in at

www.virtualshareholdermeeting.com/SO2021

RECORD DATE
Stockholders of record at the close of business on March 29, 2021 are entitled to attend and vote at the annual meeting. On that date, there were 1,059,661,292 shares of common stock of Southern Company outstanding and entitled to vote.
On April 12, 2021, these proxy materials and our annual report are being mailed or made available to stockholders.

Items of Business
Stockholders are being asked to vote on the agenda items described below and to consider any other business properly brought before the 2021 annual meeting and any adjournment or postponement of the meeting.

1

Elect 13 Directors

2

Conduct an advisory vote to approve executive compensation

3

Approve the 2021 Equity and Incentive Compensation Plan

4

Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021

5

Approve an Amendment to the Restated Certificate of Incorporation to Reduce the Supermajority Vote Requirement to a Majority Vote


Every Vote is Important to Southern Company
We have created an annual meeting website at southerncompanyannualmeeting.com to make it easy to access our 2021 annual meeting materials. At the annual meeting website you can find an overview of the items to be voted, the proxy statement and the annual report to read online or to download, as well as a link to vote your shares.

Even if you plan to participate in the virtual annual meeting, please vote as soon as possible by internet or by telephone or, if you received a paper copy of the proxy form by mail, by signing and returning the proxy form.

Vote by Mail
If you received a paper copy of the proxy form by mail, you can mark, sign, date and return the proxy form in the enclosed, postage-paid envelope.

Vote by Internet or Telephone

Voting by internet or by telephone is fast and convenient, and your vote is immediately confirmed and tabulated.

Internet www.proxyvote.com (24/7) Telephone 1-800-690-6903 (24/7)


By Order of the Board of Directors.
April 12, 2021

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of Stockholders to be held on May 26, 2021: The proxy statement and the annual report are available at investor.southerncompany.com.

In light of the ongoing COVID-19 pandemic, for the safety of our stockholders, employees and other attendees, and taking into account recent federal, state and local guidance that has been issued, we have determined that the 2021 annual meeting will be held in a virtual meeting format only via the internet. There will be no physical location for stockholders to attend.

Stockholders will be able to participate in the virtual annual meeting, vote and submit questions from any location via the internet by logging in at www.virtualshareholdermeeting.com/SO2021, and by entering the 16-digit control number on your proxy card, voting instruction form or Notice of Internet Availability you previously received. Stockholders who do not receive a 16-digit control number should consult their voting instruction form or Notice of Internet Availability and may need to obtain a legal proxy in advance of the virtual annual meeting in order to participate. A list of our stockholders of record will be made available to stockholders during the virtual annual meeting at the same link. Please see page 110 for more information.



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2

Our Company

We are one of America’s premier energy companies, with 42,000 megawatts of electric generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume serving 9 million customers through our subsidiaries, a competitive generation company serving wholesale customers across America and a nationally recognized provider of customized energy solutions, as well as fiber optics and wireless communications.

42,000 MW
of generating capacity
Capabilities in
50 States
9 Million
customers
Approximately
28,000
employees
7
electric & natural gas utilities
      Major Subsidiaries
 
1.5 million electric utility customers

 
2.6 million electric utility customers

 
188,000 electric utility customers

 
11,920 MW of wholesale solar, wind, natural gas and clean alternative technology provider in 13 states

 
A national leader in distributed infrastructure technologies doing business nationwide

 
An innovative leader among the nation’s nuclear energy industry

 
Wireless communications service

 
4.3 million natural gas distribution customers across four state-regulated, wholesale and retail energy businesses and gas storage facilities in the U.S.
Atlanta Gas Light (GA)
Chattanooga Gas (TN)
Nicor Gas (IL)
Virginia Natural Gas (VA)

See the inside back cover of this proxy statement for a map of our service territories.

 

Our Strategy

We are one of America’s premier energy companies, delivering clean, safe, reliable and affordable energy to our electric and natural gas customers through our state regulated utilities. Our strategy is to maximize long-term value to stockholders through a customer-, community- and relationship-focused business model that is designed to produce sustainable levels of return on energy infrastructure.

Our Decarbonization Efforts  
 

Southern Company is committed to providing clean, safe, reliable and affordable energy, with a focus on reducing GHG emissions. Since 2007, the percentage of energy generated from coal across our system has decreased approximately 75% and the percentage of energy generated from carbon-free sources has increased 113%.

Annual Energy Mix*       *

Annual energy mix represents all of the energy the Southern Company system uses to serve its retail and wholesale customers during the year. It is not meant to represent delivered energy mix to any particular retail customer or class of customers. Annual energy mix percentages include non-affiliate power purchase agreements.

Renewables/Other category includes wind, solar, hydro, biomass and landfill gas.

With respect to certain renewable generation and associated renewable energy credits (RECs), to the extent an affiliate of Southern has the right to the RECs associated with renewable energy it generates or purchases, it retains the right to sell the energy and RECs, either bundled or separately, to retail customers and third parties.



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3

Our 2020 Performance

Outstanding Response and Resiliency During Unprecedented Times
Despite extraordinary circumstances in 2020 due to the COVID-19 pandemic and an exceedingly busy storm season, our business model demonstrated substantial resilience, delivering outstanding service to customers, providing excellent operational reliability and achieving strong financial performance. We were well-prepared to quickly adjust and executed COVID-19 pandemic plans across all businesses, maintaining the Southern Company system’s critical operations while also emphasizing employee, customer and community safety.

A top priority was to keep our employees healthy and safe, all while continuing to provide clean, safe, reliable and affordable energy for our customers. One of our best assets is the reliability and resiliency of our workforce.

We rapidly procured and deployed necessary protective equipment and implemented effective safety protocols.

Our operations and customer service teams continued to provide essential services to customers.

We found solutions for many of our teams to work remotely, and we devised new communication strategies that allowed us to connect with our workforce and external stakeholders in a whole new way.

We did not reduce our employee workforce or reduce pay for our employees, nor did we adjust the metrics and goals in our annual and long-term incentive compensation plans in response to the COVID-19 pandemic.

Delivered Strong Financial Results and Created Value for Stockholders
Our goal is to deliver long-term value to stockholders with appropriate risk-adjusted TSR. During 2020, we made thoughtful, effective adjustments to our business that allowed us to weather the COVID-19 pandemic. By continuing to prioritize the well-being of our employees, customers and communities, we maintained our strong track record of reliability, Georgia Power made meaningful progress at Plant Vogtle Units 3 and 4 and we successfully executed our financial plan.

We reported strong EPS performance, with adjusted EPS above the top end of our guidance range for 2020. While revenues were meaningfully lower in 2020 due to the COVID-19 pandemic, we implemented thoughtful cost containment measures across the system to help mitigate the impact of reduced kilowatt hour sales.

We increased our dividend for the 19th consecutive year, with dividend yield as of year-end 2020 at 4.1%.

We effectively executed our capital plan, maintained solid credit ratings across the system and continue to foresee no need for equity issuances in the capital markets through 2025.


        Reduced GHG Emissions and Committed to Net Zero by 2050
 

Our strategy includes the continued development of a diverse portfolio of energy resources to serve customers and communities reliably and affordably with a focus on reducing GHG emissions.

In 2018, we were one of the first U.S. utilities to set bold, industry-leading goals to reduce GHG emissions. In 2020, we updated our long-term decarbonization goal to net zero by 2050 and indicated that we expect to sustainably achieve our 2030 goal of 50% GHG emissions reduction well in advance of 2030 and possibly as early as 2025.

In 2020, we reported that our GHG emissions decreased by 52% since 2007, compared to the decrease we reported in 2019 of 44% since 2007. Our generation from coal dropped to 17% in 2020, compared to 22% in 2019 and 69% in 2007. The reduction in GHG emissions from 2019 to 2020 was primarily driven by milder weather, decreased customer energy usage resulting from the COVID-19 pandemic and the continued transition to lower-emitting and zero carbon resources. 

The work of planning, transitioning and operating our system to meet our decarbonization goals will require continued active and constructive engagement with government officials, investors and a wide variety of other public and private stakeholders. Our success will require the support of policies that encourage and advance innovation while protecting the affordability, reliability and resilience of the service we provide to our customers.



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Southern Company 2021 Proxy Statement
4

Earnings per Share ($)            Dividends Paid per Share ($)

Increased
8 cents
in 2020

Paid
$2.7B
to stockholders in 2020


*

For a reconciliation of adjusted EPS to EPS under GAAP, see page 115.

Our TSR significantly outperformed the Philadelphia Utility Index and the Dow Jones Industrial Average for the three-year period ended December 31, 2020. This is primarily due to the 51.6% TSR result for 2019. During 2020, we continued to deliver positive stockholder returns despite significant market volatility. We have reliably demonstrated strong TSR performance over the long-term 25 year period.

Total Shareholder Return (Annualized)

      1-Year       3-Year       5-Year       25-Year
Southern Company 0.66 % 13.64 % 10.57 % 11.03 %
Philadelphia Utility Index 2.72 % 10.45 % 12.29 % 8.82 %
S&P 500 Index 18.39 % 14.13 % 15.19 % 9.54 %
Dow Jones Industrial Average 9.72 % 9.87 % 14.62 % 9.91 %

*

Source: Bloomberg using quarterly compounding as of December 31, 2020.


Continued Progress at Georgia Power’s Plant Vogtle Units 3 and 4 Construction Project
At Plant Vogtle Units 3 and 4, major milestones were completed despite significant impacts from the pandemic on our workforce and site construction productivity.

Strong leadership at the site allowed us to move quickly to establish effective COVID-19 protocols. We engaged independent medical advisors to guide our actions and reduce the possible spread of the virus and consulted closely with the U.S. Nuclear Regulatory Commission, the project’s co-owners and local and state authorities. The president of North America’s Building Trades Unions commended us for going above and beyond the call of duty to help keep their members on the project site safe and healthy.
Though productivity at the site slowed because of the pandemic and the total estimated cost to complete rose by $325 million, major milestones were achieved during 2020 including cold hydro testing at Unit 3 and control room ready for testing at Unit 4.

Excelled at the Fundamentals
Our operating subsidiaries continued to rank in the top quartile on the Customer Value Benchmark Survey and were recognized among the most highly rated utilities for customer satisfaction and for best practices in COVID-19 Customer Communication by J.D. Power.

Despite the pandemic, we maintained outstanding operational performance throughout the year, with rapid service restoration following major storms and tornadoes in the Southeast and exceptional reliability in natural gas delivery. Georgia Power received a StormReady Supporter certification from the National Weather Service, indicating its commitment to the community to be prepared for severe weather events.
We continued to enhance our cyber and physical security programs and operational resiliency through targeted technological deployments and all-hazards planning and testing.
In addition to our focus on health and safety during the pandemic, we continued our long-term commitment to employee safety by concentrating efforts on safety processes, safety culture and risk reduction to prevent injuries.


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Our 2020 Performance
5

Our Environmental and Social
Highlights
         

Our GHG Reduction Goals

In 2018, we set an interim goal to reduce system-wide GHG emissions by 50% by 2030 (from 2007 levels) and a long-term goal of low- to no- carbon emissions by 2050. Since 2018, the discourse around decarbonization efforts in the U.S. and beyond, including with our Board and stakeholders, has evolved to incorporate concepts related to negative carbon technologies. In 2020, as a result of this evolution and our evaluation of opportunities to incorporate net zero concepts into our long-term strategy, we updated our long-term GHG emissions reduction goal to net zero emissions by 2050.

We believe our path to net zero by 2050 will be achieved through:

Continued coal transition
Utilization of natural gas to enable fleet transition
Further growth in portfolio of zero-carbon resources
Negative carbon solutions
Enhanced energy efficiency initiatives
Continued investment in R&D focused on clean energy technologies

In 2020, we achieved a 52% reduction in GHG emissions driven by a combination of reduced demand due to the pandemic, mild weather and the continued deployment of zero-carbon resources. We expect to reach a sustainable reduction of 50% by 2025, or possibly earlier.

Protecting our Workforce Throughout 2020

In 2020, we faced a global health pandemic, an economic downturn and social and political unrest that impacted our communities and our nation. These events placed mental, physical and financial burdens on many of our employees.

Throughout the year and into 2021, we faced each issue head-on and established a robust communication pipeline that kept employees informed and updated about issues facing the Company and the community.

In response to the pandemic, we developed a pandemic playbook for Southern Company that was ultimately leveraged and deployed by several peer utilities. Key elements included extensive CDC-compliant safety programs at our operational sites, coverage of all COVID-19 testing through our benefit plans and new well-being toolkits with resources addressing stress management, exercising, healthy eating and working from home.
                 
Board Oversight of ESG
Our Board is engaged in overseeing our business strategies and related risks and opportunities, which includes ESG topics. Our Committee structure facilitates oversight of issues that impact many areas of our business. Committees report out to the full Board on key issues. Examples of ESG oversight include:
The Operations, Environment and Safety Committee has primary oversight of strategies to reduce carbon emissions, fleet transition system reliability and safety.
The Finance Committee has primary oversight over capital investment, including alignment with our climate objectives.
The Compensation and Management Succession Committee has primary oversight over human capital management, including our diversity, equity and inclusion initiatives.
The Nominating, Governance and Corporate Responsibility Committee has primary oversight over the Company’s practices and positions to advance its corporate citizenship, including environmental, sustainability and corporate social responsibility initiatives.


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Southern Company 2021 Proxy Statement
6

$1.5 billion
in diverse spend

We spend approximately $1.5 billion annually with diverse suppliers, representing approximately 25% of sourceable procurement spend.


200,000
volunteer hours

In an average year, our retirees and employees dedicate approximately 200,000 hours of volunteer service to improve the communities we serve.


$65 million
in total giving

We make direct corporate contributions and endow and fund independent, nonprofit company foundations that contribute to arts and culture, health and human services, civic and community projects, safety, education and the environment. Total giving across the system typically exceeds $65 million annually.

           
We have utilized new 401(k) and healthcare legislation to help ensure employee financial stability during the pandemic. We leveraged our existing innovative and comprehensive benefit programs and technologies for quick and easy remote access to physical, mental and financial help.
Throughout the year, we continued regular communication with employees throughout the organization, including town hall meetings led by our CEO and the CEOs of our operating subsidiaries and regular emails providing updates with reminders of key benefits and descriptions of new well-being toolkits.
Racism has no place in our Company nor in our communities. We acknowledge that we must do our part, and that starts with our employees, customers and partners. During 2020, we moved quickly to enhance our efforts to address racial equity as described below, and we recognize that this work must continue in 2021 and beyond.
In addressing the 2020 elections and events that followed, including in early 2021, we communicated with our employees and stakeholders that our belief in government, respect for the democratic process and adherence to the rule of law always have been part of our core principles. We are constantly evaluating our engagement efforts with policy makers to ensure they are informed by these ideals and adhere to the uncompromising values we follow as a business – honesty, respect, fairness, integrity and the value of diversity.

We are a Citizen Wherever We Serve

We are committed to supporting and improving our communities while conducting business with honesty, integrity and fairness. In 2020, our commitments to safety, outreach and engagement allowed us to quickly respond to needs in our communities arising from the pandemic.

Our operating companies worked closely with customers offering special payment plans for those with past-due account balances and delaying disconnects.
We implemented health protocols that helped our field employees protect themselves, our customers and communities while continuing to provide essential electric and gas services and maintain reliability.
We are working with relief organizations in several states to help lessen the health, community and economic impacts of COVID-19. Southern Company and its subsidiaries are targeting a COVID-19 relief commitment of nearly $10 million in foundation and other charitable contributions in the areas of food insecurity, homelessness and displaced workers. In addition to financial support, our employees have logged thousands of volunteer hours to assist those impacted by the pandemic.

Our Commitment to Racial Equity

In 2020, we strengthened our holistic approach to diversity, equity and inclusion and focused on building a healthy and diverse culture, as described in Our Human Capital Beliefs on page 8. We are also proud of our ongoing commitment to foster racial justice. We are committed to be a role model among companies forging change.

Following events last year highlighting racial injustice in our society, we have developed a framework, posted on our website, which confirms our collective commitment to racial equity. Key efforts include:

Talent: Committing to a diverse, equitable and inclusive workplace to better serve our customers and communities; increase and improve outreach, recruitment, hiring and retention of diverse groups at all levels of the workforce; help ensure equity in leadership development programs; and seek diverse candidate slates for all positions, including management roles
Culture: Committing to promote an actively anti-racist culture and to help ensure that all groups, and especially historically underrepresented and marginalized groups, are well-represented, included and fairly treated within all levels of the organization and that everyone feels welcomed, valued and respected


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Our 2020 Performance
7

Community: Committing $200 million over five years to advance racial equity and social justice in our communities with a focus on criminal justice reform, economic empowerment and the advancement of educational equality. This includes a planned donation of $50 million to historically black colleges and universities (HBCUs) in our service territories. As part of this commitment, the Southern Company Foundation announced a partnership with Apple with each company investing $25 million to launch the Propel Center, a new digital learning hub, business incubator, and global innovation headquarters located in Atlanta for students of HBCUs throughout the nation.
Political Engagement: Advocating for racial equity through our political engagement, policy positions and ongoing public dialogues
Suppliers: Aiming to increase our minority business enterprise spend to 20% and total diverse spend to 30% by 2025 and committing to developing and doing business with more Black-owned businesses in our industry and communities

Our Commitment to Transparency

We recognize the value our investors and stakeholders place on transparency, and we are committed to continued enhancements. In September 2020, we published an updated climate report, Implementation and Action Toward Net Zero, which included disclosure responsive to recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and we added a number of disclosures to our website over the last year in response to investor feedback. These new additions include disclosure aligned to TCFD, the standards of the Sustainability Accounting Standards Board (SASB) and the Edison Electric Institute (EEI) ESG/ Sustainability Reporting Template.

We actively review reports and ratings issued by ESG data providers and identify disclosures that can inform their analyses. As a result of these efforts, we have seen an increase in our ratings over the past few years.

Our MSCI ESG rating has improved from BBB to AA.
We earned a score of A- from the CDP Climate Change Disclosure for our environmental transparency and leadership within the North America region and thermal power generation sector. This represents a significant improvement since we restarted reporting to CDP in 2018.

We continue to engage with our investors and stakeholders to focus on providing meaningful disclosures.

Our Sustainable Financing Framework

In January 2021 we became the first large cap utility in the U.S. to publish a Sustainable Financing Framework, and in the first quarter our subsidiaries issued both Green and Sustainable bonds totaling $1.15 billion in principal amount. This framework highlights Southern’s ongoing commitment to a wide range of sustainability and social issues and should allow us to leverage our work in these areas to help optimize our balance sheet and benefit customers.

In January 2021, Southern Power issued a $400 million green bond with net proceeds to be allocated to fund development of its robust renewables energy portfolio.
In February 2021, Georgia Power issued the first sustainability bond for a domestic utility in the United States. With net proceeds of approximately $743 million to be allocated to fund sustainable projects such as our spending with diverse and small business suppliers and our investments in renewable energy projects, the bond aligns with our ongoing commitments to the community and the continued growth of Georgia Power’s solar portfolio, one of the largest voluntary renewable portfolios in the country.
           


$3.9 billion
in green bonds

The Southern Company system has issued a combined total of nearly $3.9 billion in green bonds, which ranks within the top five among all U.S. corporate green bond issuers



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Southern Company 2021 Proxy Statement
8

Our Human Capital Beliefs
Southern Company’s foundation is built on being a citizen wherever we serve. We are fully engaged with and committed to the success of employees, customers, stockholders and communities. Our Values foster a diverse, inclusive, equitable and innovative culture so that employees can execute our business strategy with agility and accountability.

We believe in and invest in the well-being of our employees through a total rewards strategy that includes competitive salary, annual incentive awards for almost all employees* and health, welfare and retirement benefits designed to encourage physical, financial and emotional/social well-being.
Development and retention of our talent is a priority. The addition of external hires augments our existing workforce as we seek to meet changing business needs, address any critical skill gaps and supplement and diversify our talent pipelines.
We are proud of our positive relationships with labor unions and support the rights to collective bargaining and freedom of association.
We support human rights and are opposed to all forms of forced labor, child labor and other human rights abuses.
Our employees, suppliers and partners are expected to act in a manner consistent with Our Values, Our Human Capital Beliefs, Our Code of Ethics and U.S. and international law.
* Certain employees are not eligible for our incentive program due to collective bargaining agreements.

Our Human Capital Pillars
Diversity, Equity & Inclusion
We are committed to a diverse, equitable and inclusive workplace to better serve our customers and communities.
Our strategy for recruiting, hiring, retaining and developing employees includes a deliberate focus on diversity, equity and inclusion.
We integrate continuous feedback from employees to refine our commitments and actions.

Diversity makes us stronger and provides a competitive advantage

Adopted new commitments to attract, engage, include and retain a diverse workforce
Management team includes 24% women and 22% people of color
Committed to enhanced transparency and will begin disclosing aggregated EEO-1 workforce diversity data in 2021
Rewards & Well-Being
We define total well-being in three categories: physical, financial and emotional well-being.
We provide meaningful and valuable benefits that support all employees.
We continue to evaluate and modernize our programs to help ensure they attract, engage, include and retain the workforce necessary for today and tomorrow.

Total Rewards strategy provides physical, financial and emotional well-being

Highly skilled and technical jobs are compensated for outstanding performance
Conducted comprehensive pay equity analysis throughout the enterprise using third-party experts
Improved employees’ 401(k) utilization and understanding (e.g. increased participation to 94%, increased average saving rate close to 10%)
82% of workforce participate in physical well-being programs
Significant investments in emotional well-being programs


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Our 2020 Performance
9

Talent Development
We focus development on Business Imperatives: Inclusivity, Emotional Intelligence, Courage and Business Execution.
Through a robust succession planning process and strategic external hiring, we help ensure a well-qualified and diverse pipeline of leaders.
Our custom internal programs, external partnerships and online resources provide career and leadership development opportunities for employees at all levels – from individual contributors to senior leaders.
Across Southern, our performance management process, Connected Conversations, provides a platform for frequent and meaningful performance and development conversations between managers and employees, driving individual performance and growth.

Talent Development is key to leadership readiness, employee engagement and retention

Leadership roles are primarily filled from succession planning slates, often providing opportunity for intercompany transfers
Highly engaged workforce as measured by Voice of the Employee Survey
Low turnover rates and high promotion rates into first-time supervisor roles
Workforce Sustainability
We focus on having the right people with the right skills who are trained to perform their jobs safely to meet current and future business requirements.
Safety First: We believe the safety of our employees and customers is paramount. We strive to perform and maintain every job, every day, safely.
Strong relationships with labor unions improves the lives of our employees and communities.
We focus on training to help ensure that each employee has a specific developmental program for personal growth and career development.

Sustainable jobs within our communities

Over 30% of employees were covered by agreements with labor unions
Over 40 hours of training per year for most employees
Community
Partnerships with businesses, academic institutions, local governments and other organizations bring new business to our service footprint.
Our charitable support is designed to focus on the issues critical to the success of the Company, customers and our stockholders; the Company’s commitment to diversity, equity and inclusion extends to the way we support our communities.
We foster collaborative partnerships with schools to invest in the next generation with STEM-focused programs.

A community-focused business model is important to our long-term success

We are engaged citizens in the local community
We are bigger than the bottom line
Committed over $200 million to advance racial equity and social justice in our communities over the next five years


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Southern Company 2021 Proxy Statement
10

Significant Recognition for our Accomplishments
From innovating our industry to making strides in sustainable energy, human capital management and corporate culture, we are recognized as a leader by customers, partners, investors and employees as well as the broader business, science and technology communities.
     
        
  Human Capital and Corporate Culture  
Among the Top 50 Companies for Diversity by DiversityInc. (5th consecutive year)

Ranked No. 2 in G.I. Jobs magazine 2020 Top 100 Military-Friendly Employers

Top-ranked utility for 14th consecutive year, and 3rd consecutive year in the Gold Top 10

2020 Best Places to Work for Disability Inclusion by The Disability Equality Index (perfect score for the 4th consecutive year)

Southern Company recognized in the Wall Street Journal Management Top 250

Listed on the 2020 Best Diversity Practices Index

A 2020 Best Place to Work for LGBTQ Equality by Human Rights Campaign’s Corporate Equality Index (4th consecutive year)

2020 Best Places to Work in IT by IDG’s Computerworld

2020 Top 50 Employer by Minority Engineer magazine

Mississippi Power won two of the Southeastern Electric Exchange’s five industry safety awards in 2020

Three executives recognized in 2020 Atlanta’s Top 100 Black Women of Influence by the Atlanta Business League

 
Customer Satisfaction
Georgia Power ranked No. 2 by J.D. Power for 2020 Business Customer Satisfaction among Large Utilities in the South

Chattanooga Gas, Nicor Gas and Virginia Natural Gas named as 2020 Most Trusted Business Partners in the utility industry by The Cogent Syndicated Utility Trusted Brand & Customer Engagement™: Business study from Escalent

 
Governance & Leadership

2020 World’s Most Admired

Companies by FORTUNE magazine for the 9th consecutive year

2020 Most Transparent Utility, No. 6 overall for corporate disclosure and No. 2 for Best Investor Relations Website in Labrador’s 2020 Transparency Awards

Alabama Power recognized as
2020 Company of the Decade by the Birmingham Business Journal

 
Sustainability & Community Partnerships

Partners for Environmental Progress (PEP) awarded the Environmental Stewardship Award in 2020 to the Alabama Power Plant Barry Environmental Stewardship Team

Plant Scherer was awarded the 2020 Waste to Energy Award by the Georgia Chapter of the Solid Waste Association of North America

The National Association of Secretaries of State recognized Alabama Power with the Medallion Award in 2020 for efforts following Hurricane Zeta to ensure polling locations had power for a smooth and successful election

Edison Electric Institute (EEI) awarded the Emergency Assistance Award and Emergency Recovery Award to Alabama Power for power restoration efforts after Hurricane Laura and Hurricane Sally in 2020

 
Innovation & Technology

Virginia Natural Gas won the 2020 Excellence in Outreach Innovation Award for its enhanced communication platform, Keep Me Informed -Department of Mines, Minerals and Energy Awards (DMME) and Virginia Oil and Gas Association (VOGA)

Alabama Power was awarded the 2020 Smart Grid Award by POWER magazine for their Smart Neighborhood at Reynolds Landing

Georgia Tech Microgrid was recognized by Public Utilities Fortnightly magazine in their 2020 Smartest Utility Projects



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11

Proxy Voting Roadmap
ITEM
1
Election of 13 Directors
     

The Board
recommends a vote

FOR each nominee
for Director
See page 17 ►
The Board, acting upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee, has nominated 13 of the Directors currently serving for re-election to the Southern Company Board of Directors.
Janaki Akella
David J. Grain
Dale E. Klein
Juanita Powell Baranco
Colette D. Honorable
Ernest J. Moniz
Henry A. Clark Ill
Donald M. James
William G. Smith, Jr.
Anthony F. Earley, Jr.
John D. Johns
E. Jenner Wood Ill
Thomas A. Fanning
Each nominee holds or has held senior executive positions, maintains the highest degree of integrity and ethical standards and complements the needs of the Company and the Board.
Through their positions, responsibilities, skills and perspectives, which span various industries and organizations, these nominees represent a Board of Directors that is diverse and possesses appropriate collective qualifications, skills, knowledge and experience.
ITEM
2
Advisory Vote to Approve Executive Compensation (Say on Pay)
     

The Board
recommends a vote

FOR this proposal
See page 93 ►
We believe our compensation program provides the appropriate mix of fixed and at-risk compensation.
The short- and long-term performance-based compensation program for our CEO ties pay to Company performance, rewards achievement of financial and operational goals, relative TSR and progress on meeting our GHG reduction goals, encourages individual performance that is in line with our long-term strategy, is aligned with stockholder interests and remains competitive with our industry peers.
ITEM
3
Approve the 2021 Equity and Incentive Compensation Plan (2021 Omnibus Plan)
     

The Board
recommends a vote

FOR this proposal
See page 94 ►
The Southern Company 2021 Equity and Incentive Compensation Plan (2021 Omnibus Plan) will be used to grant incentive compensation to employees of the Southern Company system and non-employee directors of Southern and its subsidiaries.
The Board approved the 2021 Omnibus Plan, subject to approval by stockholders at the annual meeting. If approved, the 2021 Omnibus Plan will succeed the 2011 Omnibus Plan.


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Southern Company 2021 Proxy Statement
12

ITEM
4
Ratify the Independent Registered Public Accounting Firm for 2021
     

The Board
recommends a vote

FOR this proposal
See page 105 ►
The Audit Committee appointed Deloitte & Touche as our independent registered public accounting firm for 2021.
This appointment is being submitted to stockholders for ratification.
ITEM
5
Approve an Amendment to the Restated Certificate of Incorporation to Reduce the Supermajority Vote Requirement to a Majority Vote
     

The Board
recommends a vote

FOR this proposal
See page 106 ►
A supermajority vote requirement like the one contained in Article Eleventh of the Restated Certificate of Incorporation (Certificate of Incorporation or Certificate) historically has been intended to facilitate corporate governance stability and provide protection against self-interested action by large stockholders by requiring broad stockholder consensus to make certain fundamental changes.
As corporate governance standards have evolved, many stockholders and commentators now view a supermajority requirement as limiting the Board’s accountability to stockholders and the ability of stockholders to effectively participate in corporate governance.


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13

Table of Contents

Letter from our Chairman and CEO i
Letter from our Independent Directors ii
Notice of Annual Meeting of Stockholders of Southern Company iii
Our Company 2
Our Strategy 2
Our 2020 Performance 3
Our Environmental and Social Highlights 5
Our Human Capital Beliefs 8
Proxy Voting Roadmap 11
Southern Company Board of Director Nominees 14
Board of Director Nominees Qualifications, Attributes, Skills and Experience 16
17
Biographical Information about our Nominees for Director 18
Corporate Governance at Southern Company 26
Key Governance Practices 26
Engaging with our Stakeholders 27
Committees of the Board 29
Board Composition and Structure 33
Board and Committee Responsibilities 39
Board Governance Processes 42
Director Compensation 44
Compensation Discussion and Analysis 46
CD&A At-a-Glance 47
Letter from the Compensation and Management Succession Committee 49
CEO Pay for Performance and Alignment with Stockholder Interests 52
Stockholder Outreach and Say on Pay Response 53
Executive Compensation Program 55
Compensation Governance Practices, Beliefs and Oversight 69
Executive Compensation Tables 75
93
94
Why We Believe You Should Vote for this Proposal 94
Awards Outstanding and Historical Grants 95
2021 Omnibus Plan Highlights 96
Summary of Other Material Terms of the 2021 Omnibus Plan 97
Equity Compensation Plan Information 102
Audit Committee Matters 103
Audit Committee Report 103
105
106
Stock Ownership Information 108
FAQs about Voting and the Annual Meeting 110
Reconciliation of Non-GAAP Information 115
Cautionary Note Regarding Forward-Looking Statements 117
Appendix A — The Southern Company 2021 Equity and Incentive Compensation Plan 120
See the Definitions of Key Terms on page 119 that defines many key terms and acronyms used in this proxy statement.
New or notable in this proxy statement
Environmental and social highlights that are of interest to our investors and other stakeholders       5
Board oversight of key ESG risks 5
Extensive stakeholder engagement efforts that include independent Director participation and how we have responded to feedback 27, 53
Describe “Rooney Rule” language in Corporate Governance Guidelines confirming the Board’s commitment to actively seek out diverse candidates 33
Cybersecurity governance and risk oversight 40
Operational goals for annual incentive award promote our sustainable business model and align with key ESG matters 58
GHG reduction goal is part of the CEO’s long-term equity incentive compensation program 65
Enhanced Clawback Policy that applies to senior management 70


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Southern Company 2021 Proxy Statement
14



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Southern Company Board of Director Nominees
15



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Southern Company 2021 Proxy Statement
16

Board of Director Nominees Qualifications, Attributes, Skills and Experience

We believe effective oversight comes from a Board that represents a diverse range of experience and perspectives that provides the collective qualifications, attributes, skills and experience necessary for sound governance. The Nominating, Governance and Corporate Responsibility Committee establishes and regularly reviews with the Board the qualifications, attributes, skills and experience that it believes are desirable to be represented on the Board to help ensure that they align with the Company’s long-term strategy. The most important of these are described below.

We believe our Directors possess a range and depth of expertise and experience to effectively oversee the Company’s operations, risks and long-term strategy.

PUBLIC COMPANY CEO EXPERIENCE
Experience serving as a public company CEO with strong business acumen and judgment.

5/13

AUDIT COMMITTEE FINANCIAL EXPERT
Experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor of a public company or experience actively supervising such person or persons. Experience preparing, auditing, analyzing or evaluating public company financial statements and an understanding of a company’s internal controls and procedures for financial reporting.

5/13

GEOGRAPHIC REGIONAL
Understanding and experience working in the business and political environment of the Company’s residential, commercial and industrial customer base.

7/13

NATIONAL SECURITY CLEARANCE
Holding active national security clearances such that one can provide effective oversight on key securities issues for the Company as an important component of U.S. critical infrastructure.

4/13

SOUTHERN OPERATING COMPANY BOARD EXPERIENCE
Experience serving on the board of directors of one of the Company’s operating companies.

4/13

BUSINESS INTEGRATION
Demonstrated leadership and operational experience with the integration and disposition of business divisions.

8/13

CYBERSECURITY
Experience and contemporary understanding of asymmetrical cyber threats (both to private and governmental actors), risk mitigation and policy gained through operational experience.

5/13

ENVIRONMENTAL
Exposure and understanding of oversight of environmental policy, regulation, risk and business operation matters in highly regulated industries. Experience reducing environmental risks to provide safe, reliable and responsible business operations. An in-depth understanding of the risks and opportunities for an organization in a low-carbon future.

5/13

FINANCE/BANKING
Exposure to deal-making (including in M&A), financial plans and programs and capital allocation experience, and familiarity with Wall Street and/or other major financial institutions.

8/13

GOVERNMENT AFFAIRS AND REGULATORY
Exposure to heavily regulated industries, having worked in public policy for a significant institution or leading a corporate function (e.g., government affairs) that influences the public policy and regulatory process, or a senior executive with experience directly managing one or more members of management engaged in such activities.

9/13

MAJOR PROJECTS
Experience overseeing, managing or advising on large scale capital projects in the industrial sector. Knowledge of creating long-term value through the financing of and capital allocation for the construction of large-scale capital projects.

7/13



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Item 1: Election of 13 Directors
17

NUCLEAR
Deep knowledge and experience in the construction, operations and regulation of nuclear energy.

4/13

TECHNOLOGY (DIGITAL)
Demonstrated experience leading digital technology strategy, navigating associated disruption of legacy businesses and/or expertise in social media strategy, including knowledge of data analytics and associated IT infrastructure investments to support digital transformation.

4/13

TECHNOLOGY (TECHNICAL)
Deep knowledge and experience working with power generation technology, as well as an understanding of recent innovations in utility operational technology and technology disruptions affecting the utility industry.

2/13

UTILITY OPERATIONS
Experience in the management of electric and/or natural gas utilities, including expertise in electric power generation and transmission facilities and natural gas distribution and storage facilities, and proven experience navigating the risks (including financial, resiliency, health, safety and environmental) associated with utility operations.

3/13




     
     

ITEM
1

Election of 13 Directors

     
 
The Board, acting upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee, has nominated 13 of the Directors currently serving for re-election to the Southern Company Board of Directors.
 
 
Janaki Akella
Juanita Powell Baranco
Henry A. Clark Ill
Anthony F. Earley, Jr.
Thomas A. Fanning
David J. Grain
Colette D. Honorable
Donald M. James
John D. Johns
 
Dale E. Klein
Ernest J. Moniz
William G. Smith, Jr.
E. Jenner Wood Ill
  
 
 
Each nominee, if elected, will serve until the 2022 annual meeting of stockholders.
The proxies named on the proxy form will vote each properly executed proxy form for the election of the 13 Director nominees, unless otherwise instructed. 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.
 
 
The Board recommends a vote FOR each nominee for Director
 


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Southern Company 2021 Proxy Statement
18

Biographical Information about our Nominees for Director

     
      Janaki Akella  INDEPENDENT 
Digital Transformation Leader, Google LLC, multinational technology company specializing in internet-related products
Age: 60
Director since: 2019
   Board committees: Operations, Environmental and Safety; Business Security and Resiliency
Other public company directorships: None
 
           

DIRECTOR HIGHLIGHTS

Dr. Akella’s qualifications include electrical engineering experience and knowledge, global business technology, data and analytics expertise and cybersecurity matters knowledge. Her understanding and involvement with technology market disruptions is particularly valuable to the Board as the Southern Company system continues to develop innovative business strategies.

Dr. Akella serves as the Digital Transformation Leader of Google LLC, a position she has held since 2017. At Google, Dr. Akella addresses challenges and complex technical issues arising from new technologies and new business models.
Prior to joining Google, Dr. Akella held a number of leadership positions during a 17-year career at McKinsey & Company, where she most recently served as principal. She led and contributed to over 100 consulting engagements in North America, Europe, Asia and Latin America with multiple project teams and client executives. She began her career with Hewlett-Packard as a member of the system technology technical staff, engineer scientist and technical contributor.
She previously served on the Boards of the Guindy College of Engineering North American Alumni and the Churchill Club.

     
      Juanita Powell Baranco   INDEPENDENT 
Executive Vice President and Chief Operating Officer, Baranco Automotive Group, large retailer of new and used high-end automobiles
Age: 72
Director since: 2006
   Board committee: Audit
Other public company directorships: None (formerly a Director of Cox Radio, Inc., John H. Harland Company and Georgia Power)
 
           

DIRECTOR HIGHLIGHTS

Ms. Baranco’s qualifications include senior leadership experience and governmental affairs knowledge and experience as well as risk management experience and deep operations experience as a successful business owner and operator. Her legal knowledge and background as a former Assistant Attorney General for the State of Georgia and her knowledge of our business from almost a decade of service on the Board of Directors of Georgia Power are also valuable to the Board.

Ms. Baranco had a successful legal career, which included serving as Assistant Attorney General for the State of Georgia, before she cofounded the first Baranco automobile dealership in Atlanta in 1978.
She served as a Director of Georgia Power, the largest subsidiary of the Company, from 1997 to 2006. During her tenure on the Georgia Power Board, she served as Chair of the Controls and Compliance Committee (formerly known as the Audit Committee) and as a member of the Diversity, Executive and Nuclear Operations Overview Committees.
She served on the Federal Reserve Bank of Atlanta Board for a number of years and also on the Boards of Directors of John H. Harland Company and Cox Radio, Inc.
An active leader in the Atlanta community, she serves on the Board of the Commerce Club, the Woodruff Arts Center and the Buckhead Coalition. She is past Chair of the Board of Regents for the University System of Georgia and past Board Chair for the Sickle Cell Foundation of Georgia, and she previously served on the Board of Trustees for Clark Atlanta University and on the Advisory Council for the Catholic Foundation of North Georgia. Ms. Baranco is also active in the Women Energy Directors Network, WomenCorporateDirectors Foundation (Atlanta chapter) and the International Women’s Forum.


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Item 1: Election of 13 Directors
19

     
      Henry A. “Hal” Clark III  INDEPENDENT 
Senior Advisor of Evercore Inc. (retired), global independent investment advisory firm
Age: 71
Director since: 2009
   Board committee: Audit
Other public company directorships: None
 
           

DIRECTOR HIGHLIGHTS

Mr. Clark’s qualifications include finance and capital allocation knowledge and experience, risk management experience, mergers and acquisitions experience and investment advisory experience specific to the power and utilities industries. The skills Mr. Clark developed with his extensive involvement in strategic mergers and acquisitions and capital markets transactions are particularly valuable to the Board as the Southern Company system continues to finance major capital projects.

Mr. Clark was a Senior Advisor with Evercore Inc. (formerly Evercore Partners Inc.) from August 2011 until his retirement in December 2016. As a Senior Advisor, Mr. Clark was primarily focused on expanding advisory activities in North America with a particular focus on the power and utilities sectors.
With more than 40 years of experience in the global financial and the utility industries, Mr. Clark brings a wealth of experience in finance and risk management to his role as a Director.
Prior to joining Evercore, Mr. Clark was Group Chairman of Global Power and Utilities at Citigroup, Inc. from 2001 to 2009. He joined Lexicon Partners, LLC in July 2009, which Evercore Partners subsequently acquired in August 2011.
His work experience includes numerous capital markets transactions of debt, equity, bank loans, convertible securities and securitization, as well as advice in connection with mergers and acquisitions. He also has served as policy advisor to numerous clients on capital structure, cost of capital, dividend strategies and various financing strategies.
He has served as Chair of the Wall Street Advisory Group of the Edison Electric Institute.

     
      Anthony F. “Tony” Earley, Jr.  INDEPENDENT 
Chairman, President and Chief Executive Officer, PG&E Corporation (retired), public utility holding company providing natural gas and electric services
Age: 71
Director since: 2019
   Board committee: Compensation and Management Succession; Operations, Environmental and Safety
Other public company directorships: Ford Motor Company (formerly a Director of DTE Energy and PG&E Corporation)
 
           

DIRECTOR HIGHLIGHTS

Mr. Earley’s qualifications include public company CEO experience and energy industry expertise including nuclear regulation, generation and technology, as well as cybersecurity matters, environmental matters and major capital projects. His experience as the president and chief executive officer of energy companies and his involvement in electric industry-wide research and development programs are valuable to the Board.

Mr. Earley served as Chairman, President and Chief Executive Officer of PG&E Corporation from 2011 until February 2017, when he became Executive Chairman. He served as Executive Chairman until his retirement from PG&E in December 2017. On January 29, 2019, PG&E Corporation and its subsidiary Pacific Gas and Electric Company filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code as a result of wildfire claims in California.
Before joining PG&E Corporation, he served in several executive leadership roles during 17 years at DTE Energy, including Executive Chairman, President, Chief Executive Officer and Chief Operating Officer. He served in various executive roles at Long Island Lighting Company, including President and Chief Operating Officer. He was also a partner at the Hunton & Williams LLP law firm (now Hunton Andrews Kurth LLP) as a member of the energy and environmental team, where he participated in the licensing of both nuclear and non-nuclear generating plants and represented nuclear utilities in rulemaking actions before the U.S. Nuclear Regulatory Commission.
Prior to beginning his lengthy career in the utility industry, Mr. Earley earned a degree in physics and served in the U.S. Navy as an officer on the nuclear submarine, USS Hawkbill.
Mr. Earley is a member of the Board of Directors of Ford Motor Company and serves as Lead Outside Director and on the Compensation (chairman), the Nominating and Governance and the Sustainability and Innovation Committees. He previously served on the Board of Directors of DTE Energy, PG&E Corporation, Comerica Incorporated, Masco Corporation and Long Island Lighting Company.
He previously served on the executive committees of the Edison Electric Institute and the Nuclear Energy Institute and served on the Board of the Electric Power Research Institute.


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Southern Company 2021 Proxy Statement
20

     
      Thomas A. Fanning  
Chairman of the Board, President and Chief Executive Officer of Southern Company
Age: 64
Director since: 2010
   Board committees: None
Other public company directorships: Vulcan Materials Company (formerly a Director of The St. Joe Company)
 
           

DIRECTOR HIGHLIGHTS

Mr. Fanning’s qualifications include public company CEO experience and electric and natural gas industry knowledge and experience, including nuclear and new technology matters, cybersecurity matters, environmental matters and governmental affairs and financial expertise. His deep knowledge of the Company, based on 40 years of service, as well as his civic participation on a local and national level, are valuable to the Board.

Mr. Fanning has held numerous leadership positions across the Southern Company system during his 40 years with the Company. He served as Executive Vice President and Chief Operating Officer of the Company from 2008 to 2010, leading the Company’s generation and transmission, engineering and construction services, research and environmental affairs, system planning and competitive generation business units. He served as the Company’s Executive Vice President and Chief Financial Officer from 2003 to 2008, where he was responsible for the Company’s accounting, finance, tax, investor relations, treasury and risk management functions. In those roles, he also served as the chief risk officer and had responsibility for corporate strategy.
He serves as the co-chair of the Electricity Subsector Coordinating Council, which serves as the principal liaison between the federal government and the electric power sector to protect the integrity of the national electric grid. His leadership in the cybersecurity area was recognized by the U.S. Senate in 2019 with an appointment to the Cyberspace Solarium Commission, a group developing a protection strategy for the cyberspace interests of the United States.
Mr. Fanning is a Director of Vulcan Materials Company, serving as a member of the Audit Committee and the Compensation Committee. He served on the Board of Directors of the Federal Reserve Bank of Atlanta from 2012 to 2018 and is a past chairman.
He also served on the Board of Directors for the St. Joe Company, a real estate developer and asset manager, from 2005 to 2011.

     
      David J. Grain   INDEPENDENT 
Chief Executive Officer and Managing Director, Grain Management, LLC (Grain Management), private equity firm specializing in the communications industry
Age: 58
Director since: 2012
   Board committee: Compensation and Management Succession; Finance (Chair)
Other public company directorships: New Fortress Energy LLC
 
           

DIRECTOR HIGHLIGHTS

Mr. Grain’s qualifications include capital allocation expertise, financial expertise, major capital projects knowledge and experience, technology innovations knowledge and experience and risk management experience. Mr. Grain’s knowledge and involvement managing large and small businesses and raising and managing investor capital, particularly in a regulated industry, is also valuable to the Board.

Mr. Grain is the Chief Executive Officer of Grain Management, a private equity firm focused on global investments in the media and communications sectors, which he founded in 2006. With headquarters in Washington, D.C. and offices in New York City, New York and Sarasota, Florida, the firm manages capital for a number of the country’s leading academic endowments, public pension funds and foundations.
Mr. Grain also founded and was Chief Executive Officer of Grain Communications Group, Inc.
Prior to founding Grain Management, he served as President of Global Signal, Inc., Senior Vice President of AT&T Broadband’s New England Region and Executive Director in the High Yield Finance Department at Morgan Stanley.
Mr. Grain was appointed by President Obama in 2011 to the National Infrastructure Advisory Council.
He previously served as Chairman of the Florida State Board of Administration Investment Advisory Council as an appointee of former Governor Charlie Crist, where he provided independent oversight of the state board’s funds and major investment responsibilities, including investments for the Florida Retirement System programs.
Mr. Grain is a Director of New Fortress Energy LLC, serving as a member of the Audit Committee.
He is currently a member of the Advisory Board of the Amos Tuck School of Business Administration at Dartmouth College, serves on the Investment Committee of the United States Tennis Association and is a Trustee of the Brookings Institution.


Table of Contents

Item 1: Election of 13 Directors
21

     
      Colette D. Honorable   INDEPENDENT 
Partner at Reed Smith LLP (law firm) and former commissioner of the Federal Energy Regulatory Commission (FERC), an independent U.S. federal agency that regulates the wholesale sale of electricity, natural gas and oil in interstate commerce and reviews and licenses projects in the energy market
Age: 51
Director since: 2020
   Board committee: Business Security and Resiliency; Finance
Other public company directorships: None
 
           

DIRECTOR HIGHLIGHTS

Ms. Honorable’s qualifications include extensive energy policy and regulatory experience as a highly regarded thought leader and legal practitioner in the domestic and international energy sectors. Her legal experience along with her leadership and deep industry expertise demonstrated as a former FERC Commissioner, past Chair of the Arkansas Public Service Commission and past president of the National Association of Regulatory Utility Commissioners are all valuable to our Board.

Ms. Honorable serves as a Partner at Reed Smith LLC, where she is a member of the firm’s Energy and Natural Resources Group and leads the energy regulatory practice. Based in Washington, D.C., Honorable serves as chair of the office’s Women’s Initiative Network and is a member of the firm’s Sustaining and Training African Americans business inclusion group.
Nominated by President Barack Obama in August 2014 and unanimously confirmed by the U.S. Senate, Ms. Honorable served as a FERC commissioner from January 2015 to June 2017. Prior to joining FERC, she joined the Arkansas Public Service Commission (PSC) as a commissioner in 2007, served as interim chair in 2008 and led the PSC as chair from January 2011 to January 2015.
Ms. Honorable served as president of the National Association of Regulatory Utility Commissioners from 2013 to 2014, becoming that organization’s first African American president.
Her experience includes service in several state government executive roles, including chief of staff to the Arkansas Attorney General, a member of the Governor’s cabinet and a special judge of the Pulaski County Circuit Court.
Ms. Honorable is a senior fellow with the Bipartisan Policy Center, an ambassador for the Department of Energy Clean Energy Education & Empowerment Initiative and serves on the global advisory board of Energy Futures Initiative.

     
      Donald M. James   INDEPENDENT 
Chairman of the Board and Chief Executive Officer of Vulcan Materials Company (retired), producer of aggregate and aggregate-based construction materials
Age: 72
Director since: 1999
   Board committee: Compensation and Management Succession; Finance
Other public company directorships: Wells Fargo & Company (formerly a Director of Vulcan Materials Company and Protective Life Corporation)
 
           

DIRECTOR HIGHLIGHTS

Mr. James’ qualifications include public company CEO experience, a legal background as a former public company general counsel and an understanding of corporate governance, risk management, major capital projects and environmental matters. Mr. James brings important perspectives on management, operations and strategy from his experience as the former chief executive officer of a public company.

Mr. James joined Vulcan Materials Company in 1992 as Senior Vice President and General Counsel. He next became President of the Southern Division, followed by Senior Vice President of the Construction Materials Group, and then President and Chief Operating Officer. In 1997, he was elected Chairman and Chief Executive Officer. Mr. James retired from his position as Chief Executive Officer of Vulcan Materials Company in July 2014 and Executive Chairman in January 2015. He retired in December 2015 as Chairman of the Board of Directors of Vulcan Materials Company.
Prior to joining Vulcan Materials Company, Mr. James was a partner at the law firm of Bradley, Arant, Rose & White for 10 years.
Mr. James serves on the Finance, the Governance and Nominating (Chair) and the Human Resources Committees of Wells Fargo & Company’s Board of Directors. He is a former director of SouthTrust Corporation and Wachovia Corporation.
Mr. James is a Trustee of Children’s of Alabama, where he serves on the Executive Committee and the Compensation Committee.


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Southern Company 2021 Proxy Statement
22

     
      John D. Johns   INDEPENDENT 
Chairman of DLI North America Inc., (retired), the oversight company for Protective Life Corporation (Protective Life), provider of financial services through insurance and investment products
Age: 69
Director since: 2015
   Board committee: Compensation and Management Succession (Chair); Finance
Other public company directorships: Genuine Parts Company and Regions Financial Corporation (formerly a Director of Protective Life Corporation and Alabama Power)
 
           

DIRECTOR HIGHLIGHTS

Mr. Johns’ qualifications include public company CEO experience, financial expertise, capital allocation experience and risk management experience in a highly-regulated industry. His legal background as the former general counsel of a large energy public holding company that included natural gas operations and his prior service for over a decade on the Board of Directors of Alabama Power are also of significant value to the Board.

Mr. Johns retired in 2020 as Chairman, DLI North America Inc.
He served as Chairman and Chief Executive Officer of Protective Life from 2002 to 2017 and President from 2002 to January 2016. He joined Protective Life in 1993 as Executive Vice President and Chief Financial Officer.
Before his tenure at Protective Life, Mr. Johns served as general counsel of Sonat, Inc., a diversified energy company.
Prior to joining Sonat, Inc., Mr. Johns was a founding partner of the law firm Maynard, Cooper & Gale, P.C.
He previously served on the Board of Directors of Alabama Power from 2004 to 2015. During his tenure on the Alabama Power Board, he was a member of the Nominating and Executive Committees.
He is a member of the Boards of Directors of Regions Financial Corporation, where he is Chairman of the Risk Committee and a member of the Executive Committee, and Genuine Parts Company, where he serves as Lead Independent Director and chairs the Compensation, Nominating and Governance Committee and the Executive Committee. He is a former director of Protective Life Corporation.
Mr. Johns has served on the Executive Committee of the Financial Services Roundtable in Washington, D.C. and is a past chairman of the American Council of Life Insurers.
Mr. Johns has served as the Chairman of the Business Council of Alabama, the Birmingham Business Alliance, the Greater Alabama Council, Boy Scouts of America and Innovation Depot, Alabama’s leading business and technology incubator.

     
      Dale E. Klein   INDEPENDENT 
Associate Vice Chancellor of Research of the University of Texas System and former Commissioner and Chairman, U.S. Nuclear Regulatory Commission, federal agency responsible for regulation of nuclear reactor materials and safety
Age: 73
Director since: 2010
   Board committee: Compensation and Management Succession; Operations, Environmental and Safety (Chair); Business Security and Resiliency
Other public company directorships: Pinnacle West Capital Corporation and Arizona Public Service Company
 
           

DIRECTOR HIGHLIGHTS

Dr. Klein’s qualifications include expertise in nuclear energy research, regulation, safety and technology, as well as experience in environmental matters and governmental affairs. His senior leadership skills demonstrated as the Chairman of the U.S. Nuclear Regulatory Commission are also important to the Board.

Dr. Klein was Commissioner from 2009 to 2010 and Chairman from 2006 through 2009 of the U.S. Nuclear Regulatory Commission. He also served as Assistant to the Secretary of Defense for Nuclear, Chemical and Biological Defense Programs from 2001 through 2006.
Dr. Klein has more than 40 years of experience in the nuclear energy industry.
Dr. Klein began his career at the University of Texas in 1977 as a professor of mechanical engineering, which included a focus on the university’s nuclear program. He spent 33 years in various teaching and leadership positions, including Director of the nuclear engineering teaching laboratory, Associate Dean for research and administration in the College of Engineering and Vice Chancellor for special engineering programs.
He serves on the Audit and Nuclear and Operating Committees of Pinnacle West Capital Corporation, an Arizona energy company, and is a member of the Board of Pinnacle West Capital Corporation’s principal subsidiary, Arizona Public Service Company.


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      Ernest J. Moniz   INDEPENDENT 
Cecil and Ida Green Professor of Physics and Engineering Systems Emeritus, Special Advisor to the President of Massachusetts Institute of Technology (MIT) and former U.S. Secretary of Energy
Age: 76
Director since: 2018
   Board committee: Nominating, Governance and Corporate Responsibility; Operations, Environmental and Safety; Business Security and Resiliency (Chair)
Other public company directorships: None
 
           

DIRECTOR HIGHLIGHTS

Dr. Moniz’s qualifications include senior leadership experience, energy industry experience, nuclear expertise and cybersecurity matters knowledge. Having served as U.S. Secretary of Energy, Dr. Moniz brings key insights about energy and environmental regulation and policy. His current roles in academia and as the leader of nonprofit energy industry organizations allow him to contribute up-to-date perspectives on clean energy, climate change, environmental matters and national security.

Dr. Moniz is an American nuclear physicist who served as the 13th U.S. Secretary of Energy from May 2013 until January 2017. Dr. Moniz engaged regularly with issues related to energy regulation and policy, environmental regulation and policy and greenhouse gas emissions.
He also serves as the President and Chief Executive Officer of The Energy Futures Initiative, Inc. (EFI) and Co-Chairman and Chief Executive Officer of the Nuclear Threat Initiative, positions he has held since June 2017. EFI is a non-profit organization providing analytically-based, unbiased policy options to advance a cleaner, safer, more affordable and more secure energy future. The Nuclear Threat Initiative is a non-profit, non-partisan organization working to protect lives, livelihoods and the environment from nuclear, biological, radiological, chemical and cyber dangers.
Dr. Moniz’s involvement in national energy policy began in 1995, when he served as Associate Director for Science in the Office of Science and Technology Policy in the Executive Office of the President.
He later oversaw the U.S. Department of Energy’s science, energy and security programs as Under Secretary from 1997 to 2001.
He was a member of the President’s Council of Advisors on Science and Technology from 2009 to 2013 and received the Department of Defense Distinguished Public Service Award in 2016.
Prior to his appointment as Secretary of Energy, he had a career spanning four decades at MIT, during which he was head of the MIT Department of Physics from 1991 to 1995 and in 1997, and he was the Founding Director of the MIT Energy Initiative and Director of the Laboratory for Energy and the Environment. Since January 2017, Dr. Moniz has served as the Cecil and Ida Green Professor of Physics and Engineering Systems Emeritus and Special Advisor to the President of MIT.
Dr. Moniz is also a non-resident Senior Fellow at the Harvard Belfer Center and the inaugural Distinguished Fellow of the Emerson Collective.
Dr. Moniz served on the U.S. Department of Defense Threat Reduction Advisory Committee and the Blue Ribbon Commission on America’s Nuclear Future. He also is Chair of the Advisory Board of the Clean Energy Venture Fund and the Lime Rock New Energy Fund, a member of the Council on Foreign Relations and a fellow of the American Association for the Advancement of Science, the American Academy of Arts and Sciences, the Humboldt Foundation and the American Physical Society. He has been honored by the governments of Cyprus, Portugal and Japan.


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Southern Company 2021 Proxy Statement
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      William G. Smith, Jr.    INDEPENDENT 
Chairman of the Board, President and Chief Executive Officer of Capital City Bank Group, Inc., publicly-traded financial holding company providing a full range of banking services
Age: 67
Director since: 2006
Lead Independent
Director, 2012-2014
   Board committee: Audit (Chair)
Other public company directorships: Capital City Bank Group, Inc.
 
           

DIRECTOR HIGHLIGHTS

Mr. Smith’s qualifications include public company CEO experience, finance and capital allocation expertise, risk management expertise and audit and financial reporting experience. Mr. Smith contributes valuable perspectives on management, operations and regulatory compliance from his experience as the chief executive officer of a public company in a highly-regulated industry.

Mr. Smith began his career at Capital City Bank in 1978, where he worked in a number of positions of increasing responsibility before being elected President and Chief Executive Officer of Capital City Bank Group, Inc. in January 1989. He was elected Chairman of the Board of the Capital City Bank Group, Inc. in 2003. He is also the Chairman and Chief Executive Officer of Capital City Bank.
He previously served on the Board of Directors of the Federal Reserve Bank of Atlanta.
Mr. Smith is the former Federal Advisory Council Representative for the Sixth District of the Federal Reserve System and past Chair of Tallahassee Memorial HealthCare and the Tallahassee Area Chamber of Commerce.
 

     
      E. Jenner Wood III    INDEPENDENT 
Corporate Executive Vice President – Wholesale Banking, SunTrust Banks, Inc. (retired), publicly-traded company providing a full range of financial services
Age: 69
Director since: 2012
   Board committee: Audit
Other public company directorships: Genuine Parts Company and Oxford Industries, Inc. (formerly a Director of Crawford & Company and Georgia Power)
 
           

DIRECTOR HIGHLIGHTS

Mr. Wood’s qualifications include senior leadership experience as well as finance, banking and risk management knowledge and understanding. With his familiarity and knowledge gained from 10 years of service as a former member of the Board of Directors of Georgia Power, he contributes key perspectives on our operations and strategic imperatives.

Mr. Wood served as Corporate Executive Vice President – Wholesale Banking of SunTrust Banks, Inc. from October 2015 until his retirement in December 2016. Prior to that, he served as Chairman and Chief Executive Officer of the Atlanta Division of SunTrust Bank from 2001 to 2015. He began his career with SunTrust Banks, Inc. in 1975 and advanced through various management positions including Chairman of the Board, President and Chief Executive Officer of the Georgia/North Florida Division and Chairman, President and Chief Executive Officer of SunTrust’s Central Group with responsibility over Georgia and Tennessee.
He served as a member of the Board of Georgia Power from 2002 until May 2012. During his tenure on the Georgia Power Board, he served as Chair of the Finance Committee and as a member of the Compensation and Executive Committees. He also served as a Director of Crawford & Company, a large independent claims company, from 1997 to 2013.
Mr. Wood is a Director of Oxford Industries, Inc., where he serves as Lead Director and a member of the Executive Committee, and a Director of Genuine Parts Company, where he serves on the Compensation, Nominating and Governance Committee.
He is active in numerous civic and community organizations, serving as Chairman of the Robert W. Woodruff Foundation, the Joseph B. Whitehead Foundation and the Lettie Pate Evans Foundation. Mr. Wood also serves as a Trustee of the Sartain Lanier Family Foundation and Chairman of the Jesse Parker Williams Foundation. In addition, he serves on the Board of Trustees of Emory University and is the past Chairman of the Metro Atlanta Chamber of Commerce.


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Item 1: Election of 13 Directors
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Retiring Board members

Jon A. Boscia      
Mr. Jon A. Boscia and Dr. Steven R. Specker will retire from our Board at the end of their terms on the date of the annual meeting of stockholders.

We sincerely thank Mr. Boscia for over 13 years of service on our Board, including serving as Chair of the Nominating, Governance and Corporate Responsibility Committee, as Chair of the Audit Committee and as a member of the Operating, Environmental and Safety Committee.

We sincerely thank Dr. Specker for over 10 years of service on our Board, including serving as Lead Independent Director from 2018 to 2021, as Chair of the Operating, Environmental and Safety Committee and as a member of the Compensation and Management Succession Committee and the Nominating, Governance and Corporate Responsibility Committee.
     
Steven R. Specker            


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26

Corporate Governance at Southern Company

Key Governance Practices

Corporate Governance Standards, Practices and Principles
We seek to establish corporate governance standards and practices that create long-term value for our stockholders and positive influences on the governance of the Company. Below we identify each of the Investor Stewardship Group’s corporate governance principles and note how our specific actions, practices and beliefs are aligned with these principles. The Investor Stewardship Group is an investor-led effort to establish a framework of corporate governance standards and practices that includes some of the largest U.S.-based institutional investors and global asset managers.

Principle Boards are accountable to stockholders
All Directors stand for stockholder election annually
Majority voting standard in uncontested Director elections, and Directors not receiving majority support must tender their resignation for consideration by the Board
Adopted market-standard proxy access for stockholders
10% threshold for stockholders to request a special meeting
Fully disclose our corporate governance practices

Principle Stockholders should be entitled to voting rights in proportion to their economic interest

One class of common stock, with each share carrying equal voting rights (a “one-share, one-vote” standard)

Principle Boards should be responsive to stockholders and be proactive in order to understand their perspectives

Year-round stockholder outreach that includes participation of independent Directors, with feedback provided to the Board
Key members of senior management regularly attend investor conferences to better understand emerging issues and stockholder perspectives and to facilitate engagement opportunities
Process in place for stockholders and interested parties to communicate with Lead Independent Director or other independent Directors
Responded to investor interest in our long-term GHG emission reduction efforts by updating our goal to net zero by 2050 and posting Implementation and Action toward Net Zero
Responded to investor interest in aligning executive compensation with our GHG reduction goals by including a metric that is aligned with our 2030 and 2050 goals as part of our CEO’s long-term equity incentive compensation award

Principle Boards should have a strong, independent leadership structure

14 of 15 currently serving Directors, and 12 of 13 Director nominees, are independent
Strong Lead Independent Director with robust authority and responsibility that is disclosed to stockholders
Annual Board review of leadership structure and disclosure of the Board’s reasoning underlying its leadership structure
All Board committees are comprised of independent Directors and are chaired by independent Directors
An executive session is included on the agenda of every regular Board meeting and regular committee meeting

Principle Boards should adopt structures and practices that enhance their effectiveness

Regular Board refreshment, with four new independent Directors added since March 2018
Corporate Governance Guidelines confirm the Board’s commitment to actively seeking out diverse candidates and including women and minority candidates in the pool from which the Board nominees are chosen
Of our Director nominees, three are women (23%) and four are racially or ethnically diverse (31%)
Evergreen Board refreshment with nationally-recognized search firm on retainer
Directors reflect a diverse mix of qualifications, skills and experience relevant to our businesses and strategies
Annual Board self-assessment facilitated by an independent third party and annual committee self-assessment
Board has full and free access to officers and employees
During 2020, the Directors attended on average 98% of the total of all meetings of the Board and the committees on which they served, and all 2020 Director nominees attended the 2020 virtual annual meeting

Principle Boards should develop management incentive structures that are aligned with the long-term strategy of the company

Say on Pay vote received over 95% stockholder support at 2020 annual meeting
Incentive compensation performance metrics include outcome-based measures that align with stockholder value, such as relative TSR, EPS and return on equity, as well as input measures that foster long-term sustainable business practices such as safety, customer satisfaction, reliability and culture
GHG reduction metric is part of CEO’s long-term incentive compensation program
Responsive to stockholder feedback in considering adjustments to earnings and aligning incentive compensation payouts with stockholder interests


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Engaging with our Stakeholders
We place great importance on consistent dialogue with all our stakeholders, including stockholders, employees, customers and members of the communities that we serve. We regularly engage in discussions with, and provide comprehensive information for, constituents interested in Southern Company’s strategy, performance, governance, citizenship, stewardship and environmental compliance. We are receptive to stakeholder input, and we are committed to transparency and proactive interactions.

Stockholder Engagement
Our Board places great importance on regularly communicating with our stockholders to better understand their viewpoints and gather feedback regarding matters of investor interest. The Nominating, Governance and Corporate Responsibility Committee oversees our stockholder engagement efforts on behalf of the Board.


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Southern Company 2021 Proxy Statement
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Participants in various calls and meetings with our stockholders include:

Independent Directors (Lead Independent Director, Chair of the Compensation and Management Succession Committee and Chair of the Nominating, Governance and Corporate Responsibility Committee)
Chairman and CEO (only when the engagement did not include a discussion of his compensation)
Chief Financial Officer
Chief Legal Officer
Senior Vice President of Environmental and System Planning
Senior Vice President of Human Resources
Vice President, Corporate Governance
Director, Investor Relations and Corporate Governance

Stockholder feedback is communicated to our Board and its committees throughout the year.

In addition, our CFO and investor relations group lead our management team in hundreds of investor meetings throughout the year to discuss our business, our strategy and our financial results. Increasingly, these discussions also include ESG-related topics. Meetings include in-person, telephone and webcast conferences.

Environmental Stakeholder Engagement
Since 2011, we have held regular environmental stakeholder forums, webinars, calls and meetings covering a range of topics, including our efforts to reduce GHG emissions, regulatory and policy issues, system risk and planning related to renewables, energy efficiency and just transition. Members of senior management participate in these events.

In 2020, we hosted two virtual environmental stakeholder forums following the publication of our Implementation and Action Toward Net Zero report. Tom Fanning, our CEO, led both of the virtual forums. Other senior leaders that participated included the Chief Financial Officer, Chief Legal Officer, Executive Vice President of Operations and Senior Vice President of Environmental and System Planning. Key topics discussed included our net zero by 2050 goal, decarbonization efforts, R&D efforts, just transition and advancing energy policy. More than 20 stakeholders participated in each forum. We also invited the co-lead investors of the Climate Action 100+ investor initiative to participate. Stakeholder participants include regional environmental and socially focused non-governmental organizations, shareholder advocacy groups and state pension funds.

We had several follow-up conversations with participants in the stakeholder forums to further discuss topics raised at the meetings. In addition, we held an informational webinar on coal combustion residuals.


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Corporate Governance at Southern Company
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Committees of the Board

Charters for each of the Board’s six standing committees can be found on the Corporate Governance page of our website at investor.southerncompany.com. All members of the Board’s standing committees are independent Directors.

     Audit Committee     
MEMBERS William G. Smith, Jr.,  CHAIR 
Juanita Powell Baranco
Henry A. Clark III
E. Jenner Wood III
ATTENDANCE    MEETINGS IN 2020    9    REPORT    Page 103  
 
    

The Audit Committee’s duties and responsibilities include the following:

Oversee the Company’s financial reporting, audit process, internal controls and legal, regulatory and ethical compliance.
Appoint the Company’s independent registered public accounting firm, approve its services and fees and establish and review the scope and timing of its audits.
Review and discuss the Company’s financial statements with management, the internal auditors and the independent registered public accounting firm, including critical audit matters, critical accounting policies and practices, material alternative financial treatments within GAAP, proposed adjustments, control recommendations, significant management judgments and accounting estimates, new accounting policies, changes in accounting principles, any disagreements with management and other material written communications between the internal auditors and/or the independent registered public accounting firm and management.
Recommend the filing of the Company’s and its registrant subsidiaries’ annual financial statements with the SEC.

The Board has determined that all members of the Audit Committee are independent as defined by the NYSE corporate governance rules within its listing standards and rules of the SEC promulgated pursuant to the Sarbanes-Oxley Act of 2002.

The Board has determined that all members of the Audit Committee are financially literate under NYSE corporate governance rules and that William G. Smith, Jr. qualifies as an audit committee financial expert as defined by the SEC.

    
 

     Business Security and Resiliency Committee     
MEMBERS Ernest J. Moniz,  CHAIR 
Janaki Akella
Colette D. Honorable
Dale E. Klein
ATTENDANCE    MEETINGS IN 2020    5   
 
    

The Business Security and Resiliency Committee’s duties and responsibilities include the following:

Oversee management’s efforts to establish and continuously improve enterprise-wide security policies, programs, standards and controls, including those related to cyber and physical security.
Oversee management’s efforts to monitor significant security events and operational and compliance activities.

The Board has determined that each member of the Business Security and Resiliency Committee is independent.

    
 


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     Compensation and Management Succession Committee     
MEMBERS John D. Johns,  CHAIR 
Anthony F. Earley, Jr.
David J. Grain
Donald M. James
Dale E. Klein
ATTENDANCE    MEETINGS IN 2020    7    LETTER AND REPORT    Page 49  
 
    

The Compensation and Management Succession Committee’s duties and responsibilities include the following:

Evaluate the performance of the CEO at least annually, review the evaluation with the independent Directors of the Board and approve the compensation level of the CEO for ratification by the independent Directors of the Board based on this evaluation.
Oversee the evaluation and review and approve the compensation level of the other executive officers.
Review and approve compensation plans and programs, including performance-based compensation, equity-based compensation programs and perquisites.
Review CEO and other management succession plans with the CEO and the full Board, including succession of the CEO in the event of an emergency.
Review risks and associated risk management activities related to human capital, including diversity, equity and inclusion initiatives and employee recruitment, retention and development.
Review the assessment of risk associated with employee compensation policies and practices, particularly performance-based compensation, as they relate to risk management practices and/or risk-taking incentives.
Review and discuss with management the CD&A.

The Board has determined that all members of the Compensation and Management Succession Committee are independent as defined by the NYSE corporate governance rules within its listing standards.

The Compensation and Management Succession Committee engaged Pay Governance, a third-party consultant, to provide an independent assessment of the current executive compensation program and any management-recommended changes to that program and to work with management to ensure that the executive compensation program is designed and administered consistent with the Compensation and Management Succession Committee’s requirements.

Pay Governance also advises the Compensation and Management Succession Committee on executive compensation and related corporate governance trends.

Pay Governance is engaged directly by the Compensation and Management Succession Committee and does not provide any services to management unless authorized to do so by the Compensation and Management Succession Committee. The Compensation and Management Succession Committee reviewed Pay Governance’s independence and determined that Pay Governance is independent and the engagement did not present any conflicts of interest. Pay Governance also determined that it was independent from management, which was confirmed in a written statement delivered to the Compensation and Management Succession Committee.

    
 


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     Finance Committee     
MEMBERS David J. Grain,  CHAIR 
Colette D. Honorable
Donald M. James
John D. Johns
ATTENDANCE    MEETINGS IN 2020    6   
 
    

The Finance Committee’s duties and responsibilities include the following:

Review the Company’s financial matters and recommend actions to the Board such as dividend philosophy and financial plan approval.
Provide input regarding the Company’s financial plan and associated financial goals.
Review the financial strategy of and the strategic deployment of capital by the Company.
Provide input to the Compensation and Management Succession Committee on financial goals and metrics for the Company’s annual and long-term incentive compensation programs.

The Board has determined that each member of the Finance Committee is independent.

    
 

     Nominating, Governance and Corporate Responsibility Committee     
MEMBERS Jon A. Boscia,  CHAIR 
Ernest J. Moniz
Steven R. Specker
ATTENDANCE    MEETINGS IN 2020    6   
 
    

The Nominating, Governance and Corporate Responsibility Committee’s duties and responsibilities include the following:

Recommend Board size and membership criteria and identify, evaluate and recommend Director candidates.
Oversee and make recommendations regarding the composition of the Board and its committees.
Oversee succession planning for the Board and key leadership roles on the Board and its committees.
Review and make recommendations regarding total compensation for non-employee Directors.
Periodically review and recommend updates to the Corporate Governance Guidelines and Board committee charters.
Coordinate the performance evaluations of the Board and its committees.
Oversee the Company’s practices and positions to advance its corporate citizenship, including environmental, sustainability and corporate social responsibility initiatives.
Oversee the Company’s stockholder engagement program.

The Board has determined that each member of the Nominating, Governance and Corporate Responsibility Committee is independent.

    
 


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     Operations, Environmental and Safety Committee     
MEMBERS Dale E. Klein,  CHAIR 
Janaki Akella
Jon A. Boscia
Anthony F. Earley, Jr.
Ernest J. Moniz
Steven R. Specker
ATTENDANCE    MEETINGS IN 2020    5   
 
    

The Operations, Environmental and Safety Committee’s duties and responsibilities include the following:

Oversee information, activities and events relative to significant operations of the Southern Company system including nuclear and other power generation facilities, electric transmission and distribution, natural gas distribution and storage, fuel and information technology initiatives.
Oversee business strategies designed to address the long-term reduction of carbon emissions and related risks and opportunities across the Company.
Oversee significant environmental and safety regulation, policy and operational matters, including net zero carbon strategies.
Oversee the Southern Company system’s management of significant construction projects.
Provide input to the Compensation and Management Succession Committee on the key operational goals and metrics for the annual short-term incentive compensation program.

The Board has determined that each member of the Operations, Environmental and Safety Committee is independent.

    
 


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Board Composition and Structure

Board Diversity, Board Refreshment and Board Succession Planning

Our commitment to diversity and inclusion begins with the Board. Our Board believes a diverse variety of viewpoints contribute to a more effective decision-making process and helps drive long-term value. Our Board has included a female member every year since 1984 – nearly four full decades.

While our Corporate Governance Guidelines do not prescribe diversity standards, the Guidelines provide that the Board as a whole should be diverse. The Guidelines also include “Rooney Rule” language confirming the Board’s commitment to actively seeking out women and minority candidates to include in the pool from which Board nominees are chosen. The Nominating, Governance and Corporate Responsibility Committee assesses the effectiveness of its efforts at pursuing diversity through its regular evaluations of the Board’s composition.

The Nominating, Governance and Corporate Responsibility Committee continues to focus on Board refreshment to align the Board’s long-term composition with the Company’s long-term strategy and to effect meaningful Board succession planning. It has an evergreen Board search process in place and has engaged a nationally-recognized Board search firm to assist in the identification of qualified candidates.

The Nominating, Governance and Corporate Responsibility Committee regularly evaluates the expertise and needs of the Board to determine the Board’s membership and size.
As part of this evaluation, the Nominating, Governance and Corporate Responsibility Committee considers aspects of diversity, such as diversity of race, gender and ethnicity.
The Nominating, Governance and Corporate Responsibility Committee also considers diversity of age, education, industry, business background and experience in the selection of candidates to serve on the Board.

Since March 2018, we have added four new independent Directors to the Board, with two of those Directors being women of color. Over the same period of time, four Directors have retired. Effective at the annual meeting, two additional Directors will retire.

The Board aims to strike a balance between the knowledge that comes from longer-term service on the Board and the new experience and ideas that can come from adding Directors to the Board. The Board believes the average tenure of the Director nominees of approximately 8.5 years reflects the balance the Board seeks between different perspectives brought by longer-serving Directors and new Directors.

The Board aims to continue to refresh its membership in the coming year, with a particular focus on diverse candidates.

Director Nominee Tenure       Director Nominee Gender Diversity       Director Nominee Ethnic/Racial Diversity
         
Women Minorities


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Board Nomination Process

Identifying Nominees for Election to the Board
The Nominating, Governance and Corporate Responsibility Committee, comprised entirely of independent Directors, is responsible for identifying, evaluating and recommending nominees for election to the Board. Final selection of the nominees for election to the Board is within the sole discretion of the Board.

The Board believes that, as a whole, it should have collective qualifications, attributes, skills and experience beneficial to our Company and in line with our long-term strategic plans.

Colette D. Honorable was recommended by the Nominating, Governance and Corporate Responsibility Committee for election as independent Director and was elected to the Board effective October 1, 2020. Ms. Honorable was identified by the third-party Board search firm engaged by the Nominating, Governance and Corporate Responsibility Committee and several independent Directors.

The following describes the selection process for new Directors.

           

Board
Succession
Planning

As it seeks potential candidates for Director, the Nominating, Governance and Corporate Responsibility Committee considers the qualifications, skills, attributes and experiences of the Board and identifies the skills and experiences of a candidate that would enhance the Board’s oversight of long-term strategy and related risks and opportunities.

Identification of
Candidates

The Nominating, Governance and Corporate Responsibility Committee engages in an evergreen search process with the assistance of an independent search firm to identify qualified Director candidates based on the talent framework consistent with our leadership mission and aligned with our strategic imperatives that drive long-term value. The Nominating, Governance and Corporate Responsibility Committee also considers the following personal characteristics and qualifications:

Highest degree of integrity and ethical standards
Independence from management
Ability to provide sound and informed judgment
History of achievement that reflects superior standards
Willingness to commit sufficient time
Financial literacy
Number of other board memberships
Genuine interest in the Company and a recognition that, as a member of the Board, one is accountable to the stockholders of the Company, not to any particular interest group

As part of its evaluation of Board composition, the Committee will consider aspects of diversity, such as diversity of race, gender and ethnicity.

Meeting with
Candidates

Potential Director candidates are initially interviewed by our Chairman and CEO, Lead Independent Director and members of the Nominating, Governance and Corporate Responsibility Committee. If there is a collective agreement that the Nominating, Governance and Corporate Responsibility Committee would like to move forward with the candidate, all members of the Board are provided an opportunity to interview the Director candidate and provide feedback to the Committee.

Decision and
Nomination

The Nominating, Governance and Corporate Responsibility Committee recommends, and the full Board approves, the Director candidate best qualified to serve the interests of the Company and its stockholders for nomination.

Election

Stockholders consider the nominees and elect Directors at the annual meeting to serve one-year terms. The Board may also elect Directors on the recommendation of the Nominating, Governance and Corporate Responsibility Committee throughout the year, following the same process, when determined to be in the best interests of the Company and its stockholders.

 


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Proxy Access
Proxy access generally refers to the right of stockholders who meet certain ownership thresholds to nominate one or more Directors to the Board and have the nominees included in the Company’s proxy materials and on the Company’s proxy card.

The following are the key terms of our proxy access By-Law.

Any stockholder or group of up to 20 stockholders maintaining continuous qualifying ownership of at least 3% of our outstanding shares for at least 3 years

Can nominate, and include in our proxy materials, Director nominees constituting the greater of 2 nominees or 20% (rounded down) of the number of Directors in our proxy materials for the next annual meeting

Nominating stockholder(s) and the nominee(s) must also meet the eligibility requirements described in our By-Laws.

Stockholder Recommendation of Board Candidates

The Nominating, Governance and Corporate Responsibility Committee considers potential board candidates recommended by stockholders.
Recommendations can be made by submitting the candidate’s information to our Corporate Secretary in writing at Southern Company, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308. Stockholders should provide as much relevant information about the candidate as possible, including the candidate’s biographical information and qualifications to serve.
A stockholder recommended candidate is reviewed in the same manner as a candidate identified by the Nominating, Governance and Corporate Responsibility Committee.
For information about the direct nomination of directors for election by stockholders at an annual meeting as provided in the By-Laws, see page 113.

Majority Voting for Directors and Director Resignation Policy

We have a majority vote standard for Director elections, which requires that a nominee for Director in an uncontested election receive a majority of the votes cast at a stockholder meeting in order to be elected to the Board. The Board believes that the majority vote standard in uncontested Director elections strengthens the Director nomination process and enhances Director accountability.

We also have a Director resignation policy, which requires any nominee for election as a Director to submit an irrevocable letter of resignation as a condition to being named as such nominee, which would be tendered in the event that nominee fails to receive the affirmative vote of a majority of the votes cast in an uncontested election at a meeting of stockholders. Such resignation would be considered by the Board, and the Board would be required to either accept or reject such resignation within 90 days from the certification of the election results.

Board Independence

Director Independence Standards
No Director will be deemed to be independent unless the Board affirmatively determines that the Director has no material relationship with the Company directly or as an officer, stockholder or partner of an organization that has a relationship with the Company. The Board has adopted categorical guidelines which provide that a Director will not be deemed to be independent if within the preceding three years:

The Director was employed by the Company or the Director’s immediate family member was an executive officer of the Company.
The Director has received, or the Director’s immediate family member has received, during any 12-month period, direct compensation from the Company of more than $120,000, other than Director and committee fees. (Compensation received by an immediate family member for service as a non-executive employee of the Company need not be considered.)


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The Director was affiliated with or employed by, or the Director’s immediate family member was affiliated with or employed in a professional capacity by, a present or former external auditor of the Company and personally worked on the Company’s audit.

The Director was employed, or the Director’s immediate family member was employed, as an executive officer of a company where any of the Company’s present executive officers at the same time served on that company’s compensation committee.

The Director is a current employee, or the Director’s immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any year, exceeds the greater of $1,000,000 or 2% of that company’s consolidated gross revenues.

The Director or the Director’s spouse serves as an executive officer of a charitable organization to which the Company made discretionary contributions which, in any year, exceeds the greater of $1,000,000 or 2% of the organization’s consolidated gross revenues.

These guidelines are in compliance with the NYSE corporate governance rules within its listing standards.

Director Independence Review Process
At least annually, the Board receives a report on all commercial, consulting, legal, accounting, charitable or other business relationships that a Director or the Director’s immediate family members have with the Company and its subsidiaries. This report includes all ordinary course transactions with entities with which the Directors are associated.

The Board determined that the Company and its subsidiaries followed our procurement policies and procedures, that the amounts reported were well under the thresholds contained in the Director independence requirements and that no Director had a direct or indirect material interest in the transactions included in the report.

The Board reviewed all contributions made by the Company and its subsidiaries to charitable organizations with which the Directors are associated. The Board determined that the contributions were consistent with other contributions by the Company and its subsidiaries to charitable organizations and none were approved outside the Company’s normal procedures.

In determining Director independence, the Board considers transactions, if any, identified in the report discussed above that affect Director independence, including any transactions in which the amounts reported were above the threshold contained in the Director independence requirements and in which a Director had a direct or indirect material interest. No such transactions were identified and, as a result, no such transactions were considered by the Board.

In making its determination, the Board considered the fact that one of the Company’s Directors, Ms. Honorable, is a partner at Reed Smith LLP, which provides legal services to the Company and its affiliates. The Board also considered that, in the ordinary course of the Southern Company system’s business, electricity and natural gas are provided to some Directors and entities with which the Directors are associated on the same terms and conditions as provided to other customers of the Southern Company system.

As a result of its review process, the Board affirmatively determined that 12 of its 13 nominees for Director are independent. Mr. Boscia and Dr. Specker, who are retiring from the Board at the annual meeting, and Larry D. Thompson, who retired at the 2020 annual meeting, are also independent. The only member of the Board that is not independent is Mr. Fanning, Chairman, President and CEO of the Company.

Independent Director Nominees Director Nominee Independence
Janaki Akella
Juanita Powell Baranco
Henry A. Clark III
Anthony F. Earley, Jr.
David J. Grain
Colette D. Honorable
Donald M. James
John D. Johns
Dale E. Klein
Ernest J. Moniz
William G. Smith, Jr.
E. Jenner Wood III
     

 
Independent



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Board Leadership Structure

Our Corporate Governance Guidelines and our By-Laws allow the independent Directors to determine the appropriate Board leadership structure for Southern Company, including the flexibility to split or combine the Chairman and CEO responsibilities. The independent Directors annually review our Board leadership structure to determine the structure that is in the best interests of the Company and its stockholders.

The Board believes that presently its current leadership structure, which has a combined role of Chairman and CEO counterbalanced by a strong independent Board led by an empowered Lead Independent Director, active and engaged independent Directors and fully-independent Board committees chaired by independent Directors, provides the optimal balance between independent oversight of management and unified leadership. The Board believes this leadership structure is most suitable for us at this time and is in the best interests of the Company and its stockholders.

The combined role of Chairman and CEO is held by Tom Fanning, who is the Director most familiar with our business and industry (including the regulatory structure and other industry-specific matters) and is most capable of effectively identifying strategic priorities and leading discussion and execution of strategy. During his tenure as Chairman and CEO, Mr. Fanning has been instrumental in driving forward Southern Company’s strategic priorities, including Southern Company’s climate strategy and the progression to our long-term greenhouse gas emissions reduction goal, announced in 2020, of net zero emissions by 2050.

The Board believes that the combined role of Chairman and CEO promotes the development and execution of our strategy. Independent Directors and management have different perspectives and roles in strategy development. The CEO brings Company-specific experience and expertise, while our independent Directors bring experience, oversight and expertise from outside the Company and its industry. At the same time, several of our independent Directors have deep experience within our industry, and all of our independent Directors receive comprehensive industry information from diverse sources, both internal and external, to best position them to oversee the Company’s strategy and key risks.

The Board believes that the combined role of Chairman and CEO facilitates the flow of information between management and the Board, which is essential to effective corporate governance. For example, the Board recognizes the importance of presenting the Board with robust and comprehensive meeting agendas and information. As a result, a key element of the Lead Independent Director’s role is working with the Chairman to set the agenda for Board meetings and reviewing and approving the meeting materials.

As the Board looks toward the future and evaluates the Company’s leadership, risks, opportunities and long-term strategic priorities, the Board is also evaluating other governance matters, such as the size of the Board and the Board’s skills makeup and diversity. While the Board annually reviews its leadership structure, the Board will undertake a more comprehensive review of its leadership structure in conjunction with a CEO transition. The Nominating, Governance and Corporate Responsibility Committee will help lead our Board in this important evaluation, which will include consideration of an independent board chair.

The Nominating, Governance and Corporate Responsibility Committee will perform a comprehensive review and analysis of current and emerging best practices with respect to board leadership structure. As part of the process, we will (among other things) reach out to stockholders, solicit feedback on board leadership structure and share that feedback with the Nominating, Governance and Corporate Responsibility Committee. We also anticipate that the Chair of the Nominating, Governance and Corporate Responsibility Committee will engage directly with key stockholders to solicit feedback on board leadership structure. The Nominating, Governance and Corporate Responsibility Committee also will consider the role of the Board’s leadership in helping the Company achieve its long-term strategic priorities, including the Company’s decarbonization efforts to meet its long-term GHG emission reduction goal of net zero by 2050, the Company’s fleet transition plans to meet both the interim goal and the 2050 goal and the Company’s enterprise-wide capital allocation plans.

After completing its review, the Nominating, Governance and Corporate Responsibility Committee will present its recommendations to our independent Directors, who will determine the Board leadership structure that is most suitable for us and is in the best interests of the Company and its stockholders at the time of a CEO succession.


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Role of the Lead Independent Director
The Lead Independent Director role at Southern is robust, with the following key authorities and responsibilities:

Working with the Chairman to set the agenda for Board meetings

Approving the agenda (with the ability to add agenda items) and schedule for Board meetings to provide that there is sufficient time for discussion of all agenda items

Approving information sent to the Board

Chairing executive sessions of the non-management Directors, which are included on the agenda of every regular board meeting, and having the ability to call an executive session

Chairing Board meetings in the absence of the Chairman

Meeting regularly with the Chairman

Acting as the principal liaison between the Chairman and the non-management Directors (although every Director has direct and complete access to the Chairman at any time)

Serving as the primary contact Director for stockholders and other interested parties

Communicating any sensitive issues to the Directors

Overseeing the independent Directors’ performance evaluation of the Chairman, in conjunction with the chair of the Compensation and Management Succession Committee

The Lead Independent Director is elected by the independent Directors of the Board to serve in the role for a period of generally two to three years. The Board’s succession planning process includes the regular review of the skills, qualifications, attributes and experiences of the independent Directors to identify potential future candidates for the Lead Independent Director role.

Dr. Specker was elected by the independent Directors in May 2018 to serve as Lead Independent Director. Following Dr. Specker’s retirement at the annual meeting, the independent Directors will elect a new Lead Independent Director consistent with its long-term Board succession planning process.

Role of the Independent Directors
The Board has strong, independent Directors that provide additional independent leadership to the Board and effective oversight of management. All members of our Board other than the Chairman and CEO, or 14 of our 15 currently serving Directors, are independent.

The independent Directors are free to raise subjects at a Board meeting that are not on the agenda for that meeting. An executive session, which allows the independent Directors to meet without the Chairman and CEO present, is included on the agenda of every regular board meeting.

All of the Board’s six standing committees are comprised solely of independent Directors, and independent Directors chair all of these committees. Each Board committee has a designated member of senior management, other than the Chairman and CEO, that works with the independent Director that chairs that committee to develop the committee’s agenda for each meeting. The independent Director that chairs each committee reviews and approves the agenda and materials to be covered at the upcoming meeting. The independent Directors are free to raise subjects at a committee meeting that are not on the agenda for that meeting. An executive session is included on the agenda of every regular committee meeting.

The independent Directors evaluate the performance of the Chairman and CEO at least annually. The Lead Independent Director, in conjunction with the chair of the Compensation and Management Succession Committee, is responsible for overseeing the evaluation process. Input on the Chairman and CEO’s performance is sought from all of the independent Directors. The Lead Independent Director facilitates a robust discussion of the evaluation results with the independent Directors while meeting in executive session. The Lead Independent Director and the chair of the Compensation and Management Succession Committee together discuss the evaluation with the Chairman and CEO. The evaluation is used by the Compensation and Management Succession Committee to determine the compensation to be recommended for ratification by the independent Directors.


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Meetings and Attendance

The Board met nine times in 2020. All of our Directors attended at least 75% of applicable Board and committee meetings in 2020. Our Directors are engaged, as demonstrated by the average Director attendance at all applicable Board and committee meetings in 2020 of 98%.

All Director nominees are expected to participate in the annual meeting of stockholders. All nominees for Director at the 2020 annual meeting attended the virtual annual meeting.

     
Engaged Directors

Average 2020 Board
and Committee Meeting
Attendance

Board Continuing Education

Directors are encouraged to participate in continuous learning in an effort to promote the investment in knowledge on matters relevant to the Company. On a quarterly basis, we provide our Directors with suggested educational courses on topics including emerging governance issues, compliance and ethics matters, financial and risk oversight and industry-specific subjects. To facilitate ongoing education by our Directors, we pay the costs for registration and tuition and related travel and lodging expenses.

Board and Committee Responsibilities

Board Risk Oversight

The Board and its committees have both general and specific risk oversight responsibilities. The Board has broad responsibility to provide oversight of significant risks primarily through direct engagement with management and through delegation of ongoing risk oversight responsibilities to the committees. Any risk oversight that is not allocated to a committee remains with the Board.

At least annually, the Board reviews our risk profile to ensure that oversight of each risk is properly designated to an appropriate committee or the full Board. The charters of the committees and the checklist of agenda items for each committee define the areas of risk for which each committee is responsible for providing ongoing oversight.

             
Audit Committee
Reviews risks and associated risk management activities related to financial reporting and ethics and compliance-related matters.
Reviews the adequacy of the risk oversight process and documentation that appropriate enterprise risk management and oversight are occurring. The documentation includes a report that tracks which significant risk reviews have occurred and the committee(s) reviewing such risks. In addition, an overview is provided at least annually of the risk assessment and profile process conducted by Company management.
Receives regular updates from Internal Auditing and quarterly updates as part of the disclosure controls process.
Business Security and Resiliency Committee
Reviews risks and associated risk management activities related to cybersecurity, physical security, operational resiliency and technological developments and the response to incidents with respect thereto.
Reviews the adequacy of processes and procedures to protect critical cyber and physical assets and resiliency of ongoing operations.
Compensation and Management Succession Committee
Reviews risks and associated risk management activities related to human capital.
Reviews the assessment of risks associated with the Company’s employee compensation policies and practices, particularly performance-based compensation, as they relate to risk management practices and/or risk-taking incentives. The review is conducted at least annually and whenever significant changes to any business unit’s compensation practices are under consideration.
 


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Finance Committee
Reviews risks and associated risk management activities related to financial matters of the Company such as financial integrity, major capital investments, dividend policy, financing programs and financial and capital allocation strategies.
Nominating, Governance and Corporate Responsibility Committee
Reviews risks and associated risk management activities related to the state and federal regulatory and legislative environment, stockholder activism and environmental, sustainability and corporate social responsibility.
Operations, Environmental and Safety Committee
Reviews risks and associated risk management activities related to significant operations of the Southern Company system such as safety, system reliability, nuclear, gas and other operations, environmental regulation and policy, net zero carbon strategies, fuel cost and availability.
 

Each committee provides ongoing oversight for each of our most significant risks designated to it, reports to the Board on their oversight activities and elevates review of risk issues to the Board as appropriate. Each committee has a designated member of executive management as the primary responsible officer for providing information and updates related to the significant risks for that committee. These officers ensure that all significant risks identified in the risk profile we develop are regularly reviewed with the Board and/or the appropriate committee(s).

The Board’s oversight of strategy and risks includes oversight of key ESG matters, including climate, human capital, diversity, equity and inclusion, safety, cybersecurity and other matters. These matters are key to the long-term success of the Company and, accordingly, integrated into topics reviewed and discussed at each Board meeting as well as the Board’s annual in-depth strategy session.

Southern Company has a robust enterprise risk management program that facilitates identification, communication and management of the most significant risks throughout the Company employing a formalized framework in which risk governance and oversight are largely embedded in existing organizational and control structures. As a part of the governance structure, the CFO serves as the Chief Risk Officer and is accountable to the CEO and the Board for ensuring that enterprise risk oversight and management processes are established and operating effectively.

All Directors are actively involved in the risk oversight function, and we believe that our leadership structure supports the Board’s risk oversight responsibility. Each committee is chaired by an independent Director, and the Chairman and CEO does not serve on any committee. There is regular, open communication between management and the Directors.

Cybersecurity Governance and Risk Oversight

Cybersecurity is a critical component of our risk management program. The Board devotes significant time and attention to overseeing cyber and information security risk, and our strong approach to cybersecurity governance establishes oversight and accountability at every level of the enterprise. The Board’s Business Security and Resiliency Committee, comprised solely of independent Directors, is charged with oversight of risks related to cybersecurity and operational resiliency. The Business Security and Resiliency Committee includes directors with an understanding of cyber issues and with high-level security clearances.

The Business Security and Resiliency Committee meets at every regular Board meeting and when needed in the event of a specific threat or emerging issue. The Chair of the Business Security and Resiliency Committee regularly reports out to the Board on key matters considered by the Committee.

The Business Security and Resiliency Committee routinely receives presentations on a range of topics, including the threat environment and vulnerability assessments, policies and practices, technology trends and regulatory developments.

The Chief Information Security Officer reports to the Business Security and Resiliency Committee at each committee meeting.



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We use a risk-based, “all threats” and “defense in depth” approach to identify, protect, detect, respond to and recover from cyber threats. Recognizing that no single technology, process or business control can effectively prevent or mitigate all risks, we employ multiple technologies, processes and controls, all working independently but as part of a cohesive strategy to minimize risk. This strategy is regularly tested through auditing, penetration testing and other exercises designed to assess effectiveness.

Overall network security efforts are led by the Chief Information Security Officer and the Technology Security Organization. We utilize a 24/7 Security Operations Center, which facilitates real-time situational awareness across the cyber-threat environment, and a robust Insider Threat Protection Program and Fusion Center that leverages cross-function information sharing to assess insider threat activity.
We emphasize security and resiliency through business assurance capabilities and incident response plans designed to identify, evaluate and remediate incidents when they occur. We regularly review and update our plans, policies and technologies and conduct regular training exercises and crisis management preparedness activities to test their effectiveness.
We have implemented a security awareness program designed to educate and train employees at least annually, or more often as needed, about risks inherent to human interaction with information and operational technology.
Our cybersecurity program increasingly leverages intelligence sharing capabilities about emerging threats within the energy industry, across other industries, with specialized vendors and through public-private partnerships with government intelligence agencies. Such intelligence allows us to better detect and work to prevent emerging cyber threats before they materialize.

The U.S. Department of Homeland Security has granted Certification for the Company’s cybersecurity risk management program under the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002.
Our CEO co-chairs the Electricity Subsector Coordinating Council, which coordinates industry and federal government preparation for and response to potential national disasters and cyber-attacks.
Members of senior management have high-level security clearances to facilitate access to critical information, and we participate in pilot programs with industry and government to share additional information and strengthen cybersecurity and business resiliency.

Succession Planning and Talent Development

Valuing and developing our people is a strategic priority for our Company. To support this priority, we engage in detailed discussions around succession planning and talent development at all levels within our organization. We have robust discussions and actions that occur throughout the year. The Board meets potential leaders at many levels across the organization through formal presentations and informal events on a regular basis.

The Compensation and Management Succession Committee oversees the development and implementation of succession plans for senior leadership positions.

The process starts with management undertaking a full internal review of performance and development of leaders across the organization.
Management presents and discusses with the Compensation and Management Succession Committee its evaluation and recommendations for senior leadership succession regularly throughout the year.
The Compensation and Management Succession Committee updates the Board on these discussions.

The Compensation and Management Succession Committee is also regularly updated on key talent indicators for the overall workforce, including diversity, equity and inclusion, recruiting and development programs.

The Board annually reviews succession plans for senior management and the CEO, including both a long-term succession plan and an emergency succession plan. To assist the Board, the CEO annually provides his assessment of senior leaders and their potential to succeed at key senior management positions. The evaluation is done in the context of the business strategy with a focus on risk management.


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Political Contributions and Lobbying-Related Oversight

We believe that we have a responsibility to customers and stockholders to participate in the political process and, where appropriate, to make political contributions or expenditures (as defined by applicable law). The Company and its subsidiaries comply with all laws governing the use of corporate funds in connection with elections for public office. All political contributions or independent expenditures must be approved in advance.

Engagement in legislative and regulatory proceedings at the federal, state and local levels of government is crucial to our success, and we devote substantial attention and resources to interaction with government officials as public policy is debated and laws and regulations are developed. We also work with trade associations and industry coalitions as part of our government relations activities.

Southern’s political expenditures and lobbying-related activities are reviewed at least annually by the full Board.

We provide on our website an overview of our policies and practices for political spending and annually disclose our political contributions. We also provide on our website an overview of our policies and practices for lobbying-related activities and annually disclose the trade associations and coalitions engaged in lobbying to which we make yearly contributions of $50,000 or more.

Board Governance Processes

Board and Committee Self-Evaluation Process

The Board and each of its committees have a robust annual self-evaluation process.

           
1

Board Evaluation

The Lead Independent Director, in conjunction with the Nominating, Governance and Corporate Responsibility Committee, oversees the annual self-assessment process on behalf of the Board.

2

Committee Evaluations

The charter of each committee of the Board also requires an annual performance evaluation, which traditionally is overseen by the chair of each committee.

3

Interviews and Discussion

The Board self-evaluation process involves completion of a written questionnaire by each Board member, followed by an interview of each Director conducted by an independent third party. The independent third party reviews the results of the evaluation process with the Lead Independent Director. The Lead Independent Director leads a discussion with the full Board to review the results of the self-evaluation and identify follow up items.

The committee self-evaluation process involves a review and discussion for each committee. The process is led by the chair of each committee and is conducted in executive session.

4

Outcome

The objective is to allow the Directors to share their perspectives and consider adjustments or enhancements in response to the feedback.

 

As a result of the Board’s self-evaluation processes in recently years, the Board restructured meeting schedules to allow more time at many committee meetings throughout the year, evaluated Board materials to ensure an appropriate quantity of materials to facilitate a robust discussion and reviewed and updated agenda items to be considered at each meeting to use the Directors’ time more effectively.


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Meetings of Non-Management Directors

An executive session, which allows non-management Directors (our independent Directors) to meet without any members of the Company’s management present, is included on the agenda of each regularly-scheduled Board meeting. These executive sessions promote an open discussion of matters in a manner that is independent of the Chairman and CEO. The Lead Independent Director chairs each of these executive sessions.

Certain Relationships and Related Transactions

We have a robust system for identifying potential related person transactions.

Our Audit Committee is responsible for overseeing our Code of Ethics, which includes policies relating to conflicts of interest. The Code of Ethics requires that all employees, officers and Directors avoid conflicts of interest, defined as situations where the person’s private interests conflict, or even appear to conflict, with the interests of the Company as a whole.
We conduct a review of our financial systems to identify potential conflicts of interest and related person transactions.
At least annually, each Director and executive officer completes a detailed questionnaire that asks about any business relationship that may give rise to a conflict of interest and all transactions in which the Company or one of its subsidiaries is involved and in which the executive officer, a Director or a related person has a direct or indirect material interest.
We have a Contract Manual and other formal written procurement policies and procedures that guide the purchase of goods and services, including requiring competitive bids for most transactions above $10,000 or approval based on documented business needs for sole sourcing arrangements.

The approval and ratification of any related person transaction would be subject to these written policies and procedures which include:

a determination of the need for the goods and services;
preparation and evaluation of requests for proposals by supply chain management;
the writing of contracts;
controls and guidance regarding the evaluation of the proposals; and
negotiation of contract terms and conditions.

As appropriate, these contracts are also reviewed by individuals in the legal, accounting and/or risk management services departments prior to being approved by the responsible individual. The responsible individual will vary depending on the department requiring the goods and services, the dollar amount of the contract and the appropriate individual within that department who has the authority to approve a contract of the applicable dollar amount.

We do not have a written policy pertaining solely to the approval or ratification of related person transactions.

In 2020, Ms. Alexia B. Borden, the daughter of Paul Bowers, an executive officer of the Company, was employed by Alabama Power as senior vice president and general counsel and received total compensation of approximately $878,000.

We do not have any other related person transactions that meet the requirements for disclosure in this proxy statement.

In the ordinary course of the Southern Company system’s business, electricity and natural gas are provided to some Directors and entities with which the Directors are associated on the same terms and conditions as provided to other customers of the Southern Company system.

Communicating with the Board

We encourage stockholders or interested parties to communicate directly with the Board, the independent Directors or the individual Directors, including the Lead Independent Director.

Communications may be sent to the Board as a whole, to the independent Directors or to specified Directors, including the Lead Independent Director, by regular mail or electronic mail.
Regular mail should be sent to our principal executive offices, to the attention of the Corporate Secretary, Southern Company, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308.
Electronic mail should be directed to corpgov@southerncompany.com. The electronic mail address also can be accessed from the Governance Inquiries link on the Corporate Governance page of our website at investor.southerncompany.com.

With the exception of commercial solicitations, all communications directed to the Board or to specified Directors will be relayed to them.


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Corporate Governance Website

Information relating to our corporate governance is available on the Corporate Governance page of our website at investor.southerncompany.com.

Board of Directors — Background and Experience
Composition of Board Committees
Board Committee Charters
Corporate Governance Guidelines
Link for on-line communication with Board of Directors
Management Council — Background and Experience
Executive Stock Ownership Requirements
Code of Ethics
Restated Certificate of Incorporation
Amended and Restated By-Laws (By-Laws)
Securities and Exchange Commission (SEC) Filings
Policies and Practices for Political Spending and Lobbying-Related Activities
Anti-Hedging and Anti-Pledging Provision

These documents also may be obtained by requesting a copy from the Corporate Secretary, Southern Company, BIN 803, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308.

Director Compensation

Only non-employee Directors of the Company are compensated for service on the Board. For 2020, the pay components for non-employee Directors were:

Annual cash retainers      
Cash retainer $ 110,000
Additional cash retainer if serving as the Lead Independent Director of the Board $ 30,000
Additional cash retainer if serving as a chair of a standing committee of the Board $ 20,000
Annual equity grant
In deferred common stock units until Board membership ends $ 160,000
Meeting fees
Meeting fees are not paid for participation in a meeting of the Board
Meeting fees are not paid for participation in a meeting of a committee or subcommittee of the Board

Director Compensation Table

The following table reports compensation to the non-employee Directors during 2020.

Name       Fees Earned or
Paid in Cash
($)(1)
      Stock Awards
($)(2)
      All Other
Compensation
($)(3)
      Total
($)
Janaki Akella 110,000 160,000 0 270,000
Juanita Powell Baranco 110,000 160,000 0 270,000
Jon A. Boscia 130,000 160,000 0 290,000
Henry A. Clark III 110,000 160,000 0 270,000
Anthony F. Earley, Jr. 110,000 160,000 0 270,000
David J. Grain 130,000 160,000 0 290,000
Colette D. Honorable(4) 0 0 0 0
Donald M. James 110,000 160,000 0 270,000
John D. Johns 130,000 160,000 0 290,000
Dale E. Klein 130,000 160,000 0 290,000
Ernest J. Moniz 130,000 160,000 0 290,000
William G. Smith, Jr. 130,000 160,000 0 290,000
Steven R. Specker 140,000 160,000 0 300,000
Larry D. Thompson(5) 55,000 80,000 0 135,000
E. Jenner Wood III 110,000 160,000 0 270,000

(1) Includes amounts voluntarily deferred in the Director Deferred Compensation Plan.
(2) Represents the grant date fair market value of deferred common stock units.


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(3) No non-employee Director of the Company received perquisites in an amount above the reporting threshold.
(4) Ms. Honorable was elected to the Board in October 2020 and received compensation starting in January 2021.
(5) Mr. Thompson retired from our Board in May 2020.

Director Stock Ownership Guidelines

Under our Corporate Governance Guidelines, non-employee Directors are required to beneficially own, within five years of their initial election to the Board, common stock of the Company equal to at least five times the annual cash retainer. The annual equity grant for non-employee Directors is required to be deferred until Board membership ends. All non-employee Directors either meet the stock ownership guideline or are expected to meet the guideline within the allowed timeframe.

Director Deferred Compensation Plan

The annual equity grant to the independent Directors is required to be deferred in shares of common stock. The shares are not distributed until membership on the Board ends. The deferral is made under the Director Deferred Compensation Plan and invested in common stock units which earn dividends as if invested in common stock. Earnings are reinvested in additional stock units. Upon leaving the Board, distributions are made in common stock or cash.

In addition, Directors may elect to defer up to 100% of their remaining compensation in the Director Deferred Compensation Plan until membership on the Board ends. Such deferred compensation may be invested as follows, at the Director’s election:

in common stock units which earn dividends as if invested in common stock and are distributed in shares of common stock or cash upon leaving the Board; or
at the prime interest rate which is paid in cash upon leaving the Board.

All investments and earnings in the Director Deferred Compensation Plan are fully vested and, at the election of the Director, may be distributed in a lump-sum payment, or in up to 10 annual distributions after leaving the Board. We have established a grantor trust that primarily holds common stock that funds the common stock units that are distributed in shares of common stock.


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Compensation Discussion and Analysis

What you will find in this CD&A:  
CD&A At-a-Glance          47
We highlight key items that are discussed in the CD&A
Letter from the Compensation and Management Succession Committee 49
The Compensation and Management Succession Committee (Compensation Committee or Committee) describes its key focus areas for 2020 and its key decisions with respect to pay for the year
CEO Pay for Performance and Alignment with Stockholder Interests 52
We demonstrate how CEO pay is aligned with our performance and stockholder interests
Stockholder Outreach and Say on Pay Response 53
We describe what we heard from investors on executive compensation topics from our outreach efforts and how the Committee responded to the input
Executive Compensation Program 55
We describe the details of our executive compensation program, including base salary, short- and long-term incentive awards and benefits
GHG Reduction Metric 65
We describe the metric that is aligned with our GHG emission reduction goals and part of the CEO’s long-term incentive award
Understanding the Annual Change in Pension Value 68
We describe the drivers for changes to the annual pension value reported in the Summary Compensation Table
Compensation Governance Practices, Beliefs and Oversight 69
We describe our key compensation beliefs, the active compensation governance oversight by the Committee and the Board, peer groups, clawback policy and other compensation policies and practices

New or notable in this year’s CD&A:
No Mid-Year Changes: Despite the challenges of 2020, we did not make any adjustments or changes to the incentive compensation metrics, goals and targets we set for the year
CEO Pay Decisions: As a result of the increases in the Vogtle construction project’s cost reserve and the resulting charges against earnings for 2020, the Committee reduced the CEO’s incentive payouts by approximately $2.5 million, which is equivalent to paying on GAAP for this item
GHG Goal: Continued including a GHG goal as a meaningful part of the CEO’s long-term equity award
Pay equity: Description of our pay equity review process and the enhanced analysis undertaken in 2020
Clawback and Stock Ownership Guidelines: Enhanced incentive compensation clawback for senior leaders and stock ownership requirements for the CEO in 2021
 
 
This CD&A focuses on the compensation for our CEO, CFO and our three other most highly compensated executive officers serving at the end of 2020. Collectively, these officers are referred to as the NEOs.
Tom
Fanning
Chairman of the Board, President and CEO of Southern Company
Andrew
Evans
Executive Vice President and CFO of Southern Company
Paul
Bowers
Chairman and CEO of Georgia Power and former President of Georgia Power
Mark
Crosswhite
Chairman, President and CEO of Alabama Power
Stephen
Kuczynski
Chairman, President and CEO of Southern Nuclear


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47


      CD&A At-a-Glance
 

Key 2020 Company Highlights

Outstanding response and resiliency
during unprecedented times

     

Best in class customer service
reflecting excellent operational reliability throughout the year

Adjusted EPS exceeded
guidance range

Completed major milestones
on Plant Vogtle construction project

13.64%
Total Shareholder Return over the last 3 years

Focus on our employees
to keep them healthy and safe and promote a diverse, inclusive and innovative culture

Net zero by 2050
updated long-term GHG reduction goal

$2.7 billion
in dividends to stockholders

73 consecutive years
of dividends paid

19 consecutive years
of dividend increases

Our Compensation Focus
In 2020, we faced a global health pandemic, an economic downturn and social and political unrest that impacted our communities and our nation. Throughout the year, a top priority was to keep our employees healthy and safe while maintaining the Southern Company system’s critical operations.

We closely monitored the compensation program, including incentive compensation metrics and goals set for 2020 to help ensure that they balanced the demands of the pandemic and appropriately recognized 2020 performance and long-term value creation for our stockholders and reflected feedback from our ongoing stockholder engagement program. We did not make any adjustments or changes to the incentive compensation metrics, goals and targets we set for the year.
We continue to target the total direct compensation for our executives at market median and place a very significant portion of that target compensation at risk. For our CEO, 91% of pay is at risk. This approach helps ensure management accountability to deliver on our annual and long-term commitments to stockholders.
The Committee exercises discretion when necessary to appropriately align payouts with business performance and stockholder returns. In 2020 as well as prior years, this has resulted in exercising negative discretion to reflect charges against earnings resulting from large construction projects and excluding large gains from asset dispositions that were not included in our annual financial plans.
The Committee continues to believe that the majority of executive pay should be focused on long-term incentives. In 2020, 74% of the CEO’s target pay was comprised of long-term awards based on multi-year achievement of financial goals, stock price performance and the Company’s GHG goals.
Our compensation program is designed to support our human capital strategy of investing in our employees to attract, engage, competitively compensate and retain key talent and reinforce our pay for performance philosophy. We enhanced our pay equity analysis and our diversity, equity and inclusion and talent development efforts during 2020.


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48

 
    Key Company
Performance Metrics
      Compensation Decisions for the CEO
The CEO’s outstanding leadership was integral to navigating the Company through the many challenges of 2020, including a global pandemic, economic downturn, significant social and political unrest and an exceedingly busy storm season. The CEO was also instrumental in the continued advancement of our long-term strategy, including setting our updated goal to achieve net zero GHG emissions by 2050.
The Company demonstrated substantial resilience in 2020, providing excellent operational reliability, delivering outstanding service to customers and achieving strong financial performance while working to keep our employees and customers safe. Calculated incentive compensation payouts for 2020 reflect our strong performance.
Consistent with prior years, the Committee evaluated each earnings adjustment, both positive and negative, in determining final payouts with the objective of aligning pay with stockholder interests and being responsive to stockholder feedback.
The CEO’s leadership through the pandemic was critical to continued progress at the Vogtle construction site during 2020, though increases in the project’s cost reserve resulted in charges against earnings for 2020.
Consistent with its objective of aligning pay with stockholder interests as well as past practices, the Committee applied negative discretion to reduce the calculated 2020 incentive payouts for the CEO by approximately $2.5 million, which is equivalent to paying on GAAP for this item.
The 2020 annual incentive award (PPP) payout (calculated at 170% of target) was reduced by $1.8 million or 41%, equivalent to a payout at target. A consistent approach was applied to the 2018-2020 long-term incentive award (PSP) payout.
     We delivered exceptionally strong financial, operational and stock price performance in 2020 despite the challenging year.     
Exceeded our 2020 EPS goal
Target       Result       Payout
$3.16 $3.25 166%
Exceeded our 2020 operational goals, including safety, customer satisfaction and reliability
Target Result Payout
Various Well
above
target
160%
Exceeded our peer group on the three-year
TSR goal
Target Result Payout
Median Top
quartile
183%
 

Responsiveness to Ongoing Stockholder Engagement and Feedback page 53
Monitored developments during the year to help ensure that compensation plan design and previously-approved incentive goals and metrics continued to appropriately incentivize employees.
Continued to review all adjustments to earnings, whether positive or negative, to determine their appropriateness based on management control, materiality and overall impact to investors.
Continued to include a GHG emission reduction goal in the CEO’s long-term incentive award, and enhanced disclosure of factors considered by the Committee in its qualitative assessment.
Committed to disclose aggregated EEO-1 workforce diversity data beginning in 2021.
Enhanced focus on talent development and diversity, equity and inclusion efforts, including engaging an outside expert to audit our annual pay equity review process.

Goal Rigor and Goal Setting Process page 56
The goal setting process used by the Committee aims to align goals with the Company’s financial plan and EPS guidance and include the appropriate level of stretch in the goals to encourage management to deliver and/or exceed on commitments to stockholders.


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49

Letter from the Compensation and Management Succession Committee

To our Fellow Stockholders:

Over the last year, the challenges of the COVID-19 pandemic have significantly affected our employees, our customers and the communities we serve. At the same time, 2020 marked a year of significant progress for Southern Company and demonstrated the resilience of our workforce.

Under the steadfast leadership of our Chairman and CEO Tom Fanning, the Company demonstrated strong operational performance, delivered outstanding financial results (on an adjusted basis) and maintained positive TSR performance through a volatile year. Major milestones were achieved in 2020 at Georgia Power’s Plant Vogtle Unit 3 and 4 construction project. See page 3 for the 2020 Company performance overview.

Compensation Committee Oversight and Engagement

Throughout the year, our Committee remained focused on employee health and well-being and, with the rest of the Board, in overseeing the different business impacts and risks the pandemic, the economic downturn and the social and political unrest created.

We remained actively engaged in our oversight responsibilities through a pivot to virtual meetings beginning in March 2020. We met seven times in 2020, with average Director attendance of 97%. We also discussed compensation and executive succession matters in many additional Board calls throughout the year.

The five independent Directors serving on our Committee bring a diverse range of qualifications, attributes, skills, experiences and perspectives to our decision-making. We are committed to aligning pay with performance each year, hiring, developing and retaining a diverse pool of talent and promoting alignment of our compensation program with the Company’s long-term strategy and stockholders’ expectations.

Throughout 2020 and into 2021, we continued our involvement in stockholder outreach, which includes independent Director participation in key engagements. In addition to direct participation, Directors receive regular updates from management on our robust stockholder engagement program.

An overview of the key focus areas for our Committee over the past year are described below.

Managing Through the Pandemic
A top priority remained workforce health and safety. The Company’s management acted swiftly to address safe business practices for our essential workers and facilitate a transition to remote working for more than half our employees so that critical business operations continued with the reliability our customers have come to expect.
We monitored the evolving external landscape and evaluated whether the compensation plan design and the previously-approved incentive goals and metrics continued to appropriately incentivize the employee workforce, including the executive team. Despite the challenges of 2020, we did not make any adjustments or changes to the incentive compensation metrics, goals and targets we set for the year. We also did not reduce our employee workforce or reduce pay for our broader workforce as a result of the coronavirus pandemic.

Enhancing Human Capital Management Practices
Our employees are one of our greatest assets, and our actions demonstrate the value we place on our people. We continued to invest in the well-being of our employees through a comprehensive total rewards strategy that includes competitive salary, annual incentive awards for nearly all employees and health, welfare and retirement benefits designed to encourage physical, financial and emotional/social well-being.
Our Values support our longstanding commitment to pay equity for all employees. Pay equity has always been an important component of our compensation program. Historically, the Company has conducted an annual internal compensation equity review. In 2020, we engaged an independent third party to audit our pay equity practices and annual review process.
Racism has no place in our company and our communities. We, along with the other Directors, oversaw the introduction by the CEO and his leadership team of a 4-stage approach to enhance Company efforts to promote racial equality in our workforce and the communities we serve.
We supported the Company’s commitment to provide additional transparency through disclosure of aggregated EEO-1 workforce diversity data beginning in 2021.


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50

We continued quarterly engagement with management on key talent at the local business unit or operating company level, including their specific human resources initiatives and actions on diversity, equity and inclusion; pay equity, culture and employee attraction; engagement; and retention efforts.

Developing Compensation Metrics to Support GHG Reduction Goals and Sustainable Business Practices
We continued to align a meaningful portion of the CEO’s long-term equity incentive award to the Company’s 2030 and 2050 GHG emission reduction goals with a quantitative metric that measures performance over a three-year period in terms of net megawatt change (adding zero-carbon megawatts and eliminating coal or gas steam megawatts) and a qualitative modifier that assesses the CEO’s leadership in advancing the energy portfolio of the future. In response to stockholder feedback, we have enhanced disclosure of the factors considered by our Committee in our qualitative assessment.
We continued to include operational metrics in the annual incentive award that include safety, workforce diversity, supplier diversity, customer satisfaction and other measures that support our sustainable business model.

Evaluating Compensation Plan Design and Alignment with Business Strategy and Stockholder Interests
We conducted our annual rigorous program evaluation to assess whether our incentive plan design strikes the right balance between short- and long-term results and is aligned with business strategy, key financial objectives and stockholder interests.
We continue to believe the plan design works as intended and aligns CEO performance with the long-term strategy of our business and value creation for stockholders through performance metrics that focus on both:
outcome-based measures that create stockholder value on a risk-adjusted basis, such as relative TSR, ROE and adjusted EPS growth, and
input measures intended to enhance the sustainability of our business strategy and create long-term value for our stockholders, such as GHG reduction, safety, customer satisfaction and culture.
Our Committee continued actively engaging in assessing goal rigor and reviewing all earnings adjustments, both positive and negative, in making payout decisions by considering (1) management’s control over the item, (2) whether the item was contemplated in the financial plan, (3) alignment of pay outcome with stockholder impact and (4) alignment of pay outcome with management accountability.

Conducting a CEO Performance Assessment
We reviewed and approved the CEO’s performance goals for 2020 and engaged in ongoing performance assessment dialogue throughout the year.
Utilizing an independent third-party, we facilitated a CEO performance review with the independent members of the Board. Details on CEO performance are on page 60.

Succession Planning
The challenging events of 2020 further reinforced the importance of our thorough succession planning process for senior management and the CEO and the need for a robust talent pipeline that can provide the same steadfast leadership in challenging times. In 2020, our Committee:
met and discussed senior leadership talent and the overall company-wide talent management process throughout the year,
facilitated regular exposure, through Board meetings and other opportunities, to high potential employees despite the remote nature of these interactions throughout much of 2020, and
together with the Lead Independent Director and the rest of the Board, regularly discussed and reassessed both the long-term succession plan and emergency succession plan for the CEO and senior management.


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Compensation Discussion and Analysis
51

2020 Incentive Compensation Pay Decisions for the CEO
2020 was an unprecedented year with many significant challenges. The Company was committed to overcome these challenges and achieved excellent outcomes for our employees, customers, stockholders and the communities we serve. The outstanding leadership demonstrated by the CEO and executive team was key to the Company’s success in 2020. Executive leadership during the pandemic at the Vogtle construction site was critical to continuing progress during 2020.

The Company determined it prudent to increase the cost reserve for the Vogtle 3 and 4 construction project by $149 million as of June 30, 2020 and $176 million as of December 31, 2020, resulting in charges against earnings totaling 23 cents per share for 2020, largely due to COVID-19 impacts and other costs.

Consistent with prior years, we calculate initial payouts based on adjusted earnings as reported to investors and then we actively review all EPS adjustments, both positive and negative, to determine final payouts with the objective of aligning pay with stockholder interests and responding to stockholder feedback. In making payout decisions in prior years for the CEO and key members of management, we have determined to exclude large gains from asset dispositions that were not included in our annual financial plans and include charges resulting from large construction projects.

We recognize that the CEO and senior executives’ leadership through the pandemic was critical to continued progress at the Vogtle construction site during 2020. At the same time, consistent with our focus of aligning pay with stockholder interests and responding to stockholder feedback, we felt it was appropriate to reflect the increases in the project’s cost reserve for 2020 and the resulting charges against earnings for 2020.

Accordingly, we applied negative discretion to reduce the calculated 2020 incentive payouts for the CEO by approximately $2.5 million, which is equivalent to paying on GAAP for this item. We reduced the 2020 annual incentive award (PPP) payout (calculated at 170% of target) by $1.8 million or 41%, equivalent to a payout at target. We applied a consistent approach to the 2018-2020 long-term incentive award (PSP) payout. We also applied negative discretion reflecting a 10% reduction to the 2020 annual incentive award (PPP) payout for another member of senior management.

These actions are consistent with the Committee’s approach in prior years, including the use of negative discretion in 2017 and 2018 to reduce incentive payouts due to charges from large construction projects, as noted on page 57.

Report of the Compensation Committee

We met with management to review and discuss the CD&A. Based on that review and discussion, we recommended to the Board that the CD&A be included in this proxy statement.

John D.
Johns

 CHAIR 
Anthony F.
Earley, Jr.
David J.
Grain
Donald M.
James
Dale E.
Klein


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Southern Company 2021 Proxy Statement
52

CEO Pay for Performance and Alignment with Stockholder Interests

2020 CEO Incentive Payouts Demonstrate Pay for Performance and Alignment with Stockholder Interests

We have strong alignment between CEO pay and performance based on three factors:

We place the overwhelming majority of the CEO’s total compensation at risk
We have metrics and targets in place to align pay with long-term value creation for stockholders
We actively review earnings adjustments to appropriately align pay outcome consistent with stockholder interests and stockholder feedback

CEO Pay Aligned with Long-Term Total Shareholder Return
We continue to create significant long-term stockholder returns through stock price appreciation and dividends paid to our stockholders. The chart below demonstrates the link between CEO incentive pay and the Company’s three-year stock price performance relative to the industry peer group for the years from 2018 through 2020.

For 2020, the majority of the CEO incentive compensation was tied to stockholder value created from 2018 to 2020 relative to our industry peers.
During that same period, the Company created more than $25 billion of stockholder value.

CEO incentive pay strongly aligned to 3-year stock price performance
relative to industry peer group*
(CEO pay in millions)
      More than $25B of stockholder
value created from 2018 to 2020

Target Incentive Pay
Represents the target PPP and the target PSP granted for the applicable year Though PRSUs have a performance hurdle, they are excluded from the analysis as they are less sensitive to TSR performance.
Actual Incentive Pay
Represents actual PPP and PSP payouts for the applicable year
3-Year TSR % Rank
Percentile rank for Southern’s TSR compared to the relative TSR for the industry peer group for the 3-year performance period ending in the applicable year*
      The majority of the 2020 CEO actual incentive payout is tied total shareholder returns relative to our industry peer group

* Industry peers selected by the Committee for determining TSR performance are generally consistent over the last three years, having been adjusted each year for mergers or other business combinations and refinements, based on recommendations from our independent compensation consultant, to better match the Company’s profile (see page 72), and are disclosed in the applicable proxy statement for the year the PSP grant was made.
** Market capitalization calculated based on the stock price on January 1, 2018. Market capitalization growth based on the closing stock price on December 31, 2020 as compared to the closing stock price on January 1, 2018.


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Strong adjusted EPS growth for 2018–2020 allowed us to deliver consistent dividend growth for stockholders

Over the last three years, we have delivered strong adjusted EPS results above the top end of our projected guidance ranges. These results were driven by a combination of constructive regulatory outcomes for customers and stockholders and effective, thoughtful cost discipline.
Our strong financial performance has enabled us to increase dividends per share for 19 consecutive years. Moreover, we have paid a dividend equal to or greater than the prior year for the last 73 years.

Reported EPS was $2.18 in 2018, $4.53 in 2019, and $2.95 in 2020. For a reconciliation of adjusted EPS to EPS under GAAP, see page 115.

Stockholder Outreach and Say on Pay Response

We are committed to year-round engagement with our stockholders. Feedback from our stockholders has resulted in changes to our executive compensation program and enhancements to our disclosures over time.

At our 2020 annual meeting, we received over 95% support of the votes cast on the Say on Pay vote. Though stockholder support remained very strong, we continued our stockholder outreach efforts through 2020 and early 2021, reaching out to the holders of about 50% of our stock. Since January 2020, we have had engagements with stockholders representing over 30% of our stock. Independent Directors participated directly in many of these key engagements.


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54

An overview of what we heard from the engagements with respect to executive compensation matters and how we have responded is described below.

 
    What We Heard What We Did    
Alignment between CEO pay and financial performance
Committee continued to evaluate plan design to help ensure that the programs are producing outcomes that are aligned with stockholders’ interests and overall Company performance
Committee continued to review all adjustments to earnings, whether positive or negative, to determine their appropriateness based on management control, materiality and overall impact to investors
After thoughtful consideration by the Committee and consultation with the independent compensation consultant, in light of the increases in the cost reserve and charges to earnings for the Vogtle construction project in 2020, the Committee exercised negative discretion and reduced the CEO’s calculated 2020 incentive payouts by $2.5 million, equivalent to paying on GAAP for this item

Consistent with the over 95% support for the 2020 Say on Pay vote, stockholders have expressed the following:

Satisfaction with the 2019 payout decisions
Support of the overall pay program designs
Trust that the Committee will carefully assess each adjustment to earnings and act to promote pay for performance alignment
Linking CEO pay with GHG reduction goals
Committee continued the GHG reduction compensation metric for 2020 CEO compensation
Continued using a quantitative metric of net megawatt change as a reliable measure of progress in our fleet transition along with a qualitative modifier
For the 2020 to 2022 performance period, increased the spread between the target and maximum quantitative net megawatt change necessary to earn a stretch payout by 60%
Disclosed the factors considered by the Committee in its qualitative assessment of progress toward net zero by 2050 (see page 66)
Committee continued to align 10% of the CEO’s 2020 long-term equity incentive award with our GHG reduction goals, noting that most stockholders support the relative allocation among TSR, ROE and GHG as appropriately aligned with financial, market-based and GHG performance goals; given that some stockholders suggested an increase in the weighting of the GHG metric, we plan to continue to seek shareholder feedback on this topic in 2021
Stockholders continue to support linking CEO pay and GHG reduction goals and are very supportive of including the metric as part of long-term equity incentive pay rather than the annual incentive
Stockholders continue to support the qualitative modifier and have asked for us to disclose the factors considered by the Committee in its qualitative assessment
Most stockholders continue to believe that aligning 10% of the CEO’s target long-term incentive award with our GHG reduction goals is appropriate, though some stockholders suggested an increase in the percentage
Stockholders expressed a better appreciation for why the Committee chose the quantitative metric of net change in megawatts, which reflects the transition in our fleet, as compared to percentage decrease in emissions, which is more likely to be impacted by annual changes to weather patterns and the strength of the economy that is outside of management’s control
Human capital management
Committee strongly supported management’s priority of keeping our employees healthy and safe
Committee did not change the incentive targets under our annual or long-term incentive plans as a result of the pandemic
Committee enhanced its focus on talent development and DE&I efforts, including engaging an outside expert to audit our annual pay equity review process
Committed to disclose aggregated EEO-1 workforce diversity data beginning in 2021
Continued engagement and regular review sessions for CEO and senior management succession planning with the support of an external consultant with expertise in succession planning
Interest from stockholders in understanding how we considered the health and safety of our workforce during the pandemic and any changes made to our incentive compensation targets and goals as a result of the pandemic
Interest from stockholders in our DE&I efforts, talent development and transparency on workforce diversity data
Interest from stockholders on succession planning for key executive positions
 


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Compensation Discussion and Analysis
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Executive Compensation Program

Overview of Key Compensation Components

     Element Vehicle Link to Stockholder Value
Base Salary
Cash
Fixed cash compensation rewards scope of responsibility, experience and individual performance to attract and retain top talent
Annual Performance
Pay Program (PPP)

Cash
Promotes strong short-term business results by rewarding value drivers, without creating an incentive to take excessive risk
Serves as key compensation vehicle for rewarding annual results and differentiating performance each year
Long-Term Program

Performance share units (PSUs) in the Performance Share Program (PSP) (paid in shares of common stock)

Performance restricted stock units (PRSUs) (paid in shares of common stock)

PSUs reward achievement of financial goals and stock price performance compared to utility peers over a three-year period
PRSUs reward achievement of financial goals related to our ability to pay regular dividends
Equity awards provide a significant stake in the long-term financial success of the Company that is aligned with stockholder interests and promotes employee retention
For the CEO, equity awards link a meaningful portion of long-term compensation with the Company’s GHG reduction goals
Employee Savings
Plan
401(k)
Creates shared responsibility for retirement through matching contributions
Pension Defined benefit pension plan and restoration plans
Financially efficient vehicle to provide market-competitive retirement benefits while promoting employee retention

Base Salary

The CEO recommends base salary adjustments for each of the other executive officers for the Compensation Committee’s review and approval. The recommendations consider competitive market data provided by the Committee’s independent compensation consultant, the need to retain an experienced team, internal equity, time in position, recent base salary adjustments and individual performance. Individual performance includes, among other things, the individual’s relative contributions to the achievement of financial and operational goals in prior years.
Base salary adjustments are effective as of March 1 each year.
The Compensation Committee determines the CEO’s base salary based on its comprehensive review of his individual performance, considering competitive market data provided by the independent compensation consultant.

Name       March 1, 2020
Base Salary
($)
      March 1, 2019
Base Salary
($)
Tom Fanning 1,500,000 1,400,000
Andrew Evans 859,040 832,000
Paul Bowers 953,681 908,267
Mark Crosswhite 857,161 830,180
Stephen Kuczynski 815,341 789,677


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Southern Company 2021 Proxy Statement
56

Annual Incentive Compensation (At Risk)

2020 Annual Performance Pay Program
PPP is an annual cash incentive award program that provides the opportunity to receive an annual cash award based on the achievement of predetermined financial, operational and individual goals.
The formula for computing PPP payouts is as follows:
Base Salary Target Award
Percentage
Performance Goal
Achievement
PPP Award Earned
(% of Base Salary;
varies by pay grade)
(% of target level; payout
ranges from 0% to 200%)
(ranges from
0% to 200%)

PPP Goal Rigor and Process Used to Set Goals
The Committee establishes the financial goals for EPS and net income based on the Company’s financial plan and value proposition, focusing on providing regular, predictable and sustainable EPS and dividend growth and strong returns on invested capital.
The Company’s goal setting process employs a multilayered approach and analysis that incorporates a blend of objective and subjective business considerations and other analytical methods to help ensure that the goals are sufficiently rigorous. Goals are calibrated in part based on relative performance versus peer companies.

2020 PPP Goal Weighting
CEO and CFO   Other NEOs
  

Financial Goal Setting Process
Belief: The Committee believes that paying on adjusted EPS and net income in conjunction with active Committee engagement aligns pay outcomes with stockholder interests
The Committee reviews the financial plan approved by the Finance Committee to reflect the current economic and regulatory environment and expectations for investment opportunities with the aim to deliver regular, predictable and sustainable EPS and dividend growth to investors over the long-term.
 
 

The Committee believes that setting goals in support of the achievement of our long-term EPS growth objectives is in the best interest of investors, rather than comparisons of year-over-year GAAP results. This approach is focused on the long-term EPS growth trajectory and, when setting the EPS goal, considers unique factors that may have impacted the prior year’s actual results, such as:

 
Weather-related revenue and expenses
Regulatory, legislative or policy changes from federal or state authorities
Impact of acquisitions and dispositions
 
 

The Committee calibrates the EPS goal to align with our publicly announced guidance range and considers industry comparisons and growth expectations to establish the threshold, target and maximum performance levels.

 
 
The Committee is actively engaged at every Board meeting in reviewing any EPS or net income adjustments by considering:
 
Whether the item was contemplated in the financial plan
Whether the item was outside of normal operations (one-time versus recurring item or something outside of management’s control)
Whether the pay outcome would align with stockholder interests



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Compensation Discussion and Analysis
57
EPS Goal Setting Rigor Highlights
The EPS guidance range for 2020 was $3.10 to $3.22, and the 2020 EPS target was set at $3.16 (middle of guidance). The 2020 EPS target represents an increase of 12 cents, or almost 4%, from the 2019 EPS target of $3.04, and is higher than the adjusted EPS result for 2019 of $3.11.
For 2021, the EPS guidance range is $3.25 to $3.35 and the EPS target is set at $3.30 (middle of guidance). The 2021 EPS target reflects year-over-year growth of 14 cents, or an increase of 4%, from the 2020 EPS target of $3.16, and is higher than the adjusted EPS result for 2020 of $3.25.

Active Committee Engagement in Reviewing Goal Adjustments and Aligning with Stockholder Interests
In 2017, the Committee applied a 40% (~$4.7 million) reduction to the CEO’s total compensation as a result of the charges against 2017 earnings related to the gasifier at the Kemper project.
In 2018, the Committee applied a 52% (~$6.1 million) reduction to the CEO’s total compensation as a result of the charge against 2018 earnings related to the Vogtle construction project.
In 2019, the Committee excluded the $1.3 billion gain from the sale of Gulf Power in calculating adjusted EPS results.
In 2020, the Committee applied an 11% (~$2.5 million) reduction to the CEO’s total compensation as a result of increases in the Vogtle project’s cost reserve and the resulting charges against earnings for 2020.

No payout can be made if events occur that impact the Company’s financial ability to fund the common stock dividends.

Operational Goal Setting Process
Belief: The Committee believes that operational goal targets should be set at challenging levels to achieve and drive long-term growth and success
The Committee establishes operational goals that are primarily based on industry benchmarks, with the objective of delivering top quartile results compared to industry peers.
For goals that do not have a comparable industry benchmark, the Committee sets stretch targets to motivate continuous improvement.
 
 

As part of its goal-setting process, the Committee reviews previous goals and performance along with input from the Operations, Environmental and Safety Committee on operational goals to appropriately align the threshold, target and maximum goals with expected Company performance.

2020 Financial Performance

Financial Goal Achievement for 2020 PPP
We exceeded the financial goals for the year set by the Compensation Committee for 2020 financial performance.
Financial Goals Threshold
($)
Target
($)
Maximum
($)
Result
($)
Calculated
Achievement
(%)
EPS* 3.00 3.16 3.32 3.25 166%
Alabama Power Net Income* (millions) 1,031 1,078 1,186 1,150 178%
Georgia Power Net Income* (millions) 1,550 1,643 1,812 1,812 200%
Southern Nuclear Net Income* (millions)** NA NA NA NA 189%
*
In determining EPS and net income for compensation goal achievement purposes, the Compensation Committee excluded acquisition and disposition impacts; estimated loss on plants under construction, including charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries) and tax impacts; earnings from the Wholesale Gas Services business; impairment charges related to two leveraged leases; and costs associated with the extinguishment of debt at Southern Company. For a reconciliation of EPS, as adjusted, to EPS under GAAP, see page 115.
**
Net income achievement for Southern Nuclear is determined by an average of the Alabama Power and Georgia Power Net Income payouts


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Southern Company 2021 Proxy Statement
58

Goal Why it’s important What it measures and how we set the goal
EPS
Supports commitment to provide stockholders solid, risk-adjusted returns and to support and grow the dividend
The Company’s net income from ongoing business activities divided by average shares outstanding during the year

EPS target is consistent with our business plan and aligned with the midpoint of our publicly-announced guidance range for the year
Business Unit Net Income
Supports delivery of stockholder value and contributes to the Company’s sound financial policies and stable credit ratings
Net income after dividends on preferred and preference stock, if any

Target is consistent with our 2020 business plan

2020 Operational Performance

Operational Goal Achievement for 2020 PPP
The Company’s operational goals reflect our aim to deliver clean, safe, reliable and affordable energy to our customers. These goals also promote our sustainable business model by focusing on workforce development, improving our community through providing reliable and affordable energy and reflecting the Company’s focus on ESG matters.

The following table provides a summary of the operational goals for the Company’s CEO and CFO. 
 
Category and
Relationship to ESG
Weight Goal Performance Goal
Payout
Human Capital
Safety – Reduce serious injuries (<0.10) and achieve milestones for critical risk controls and the safety & health management system
Exceeded safety goal
125%
Culture – Improve representation of minorities and women in leadership and across the organization, achieve top quartile performance on DiversityInc. ranking and spending targets with diverse suppliers
Exceeded culture goal: improved diverse representation across the Company and recognized as one of the top 50 companies for diversity by DiversityInc.
138%
Customer Satisfaction
and Reliability
Customer Satisfaction – Achieve 2nd quartile ranking on benchmarks surveys for each customer segment
Exceeded customer satisfaction goal: achieved top quartile rankings in customer satisfaction for each customer segment
200%
Power Delivery – Maintain transmission and distribution system reliability, based on historical performance of the frequency and duration of outages
Slightly below target due to severe weather events
96%
Gas Operations – Improve pipeline safety and reliability by reducing damages from excavations and leak response time; achieve pipeline replacement target
Exceeded gas operations goals
158%


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Compensation Discussion and Analysis
59

Category and
Relationship to ESG
Weight Goal Performance Goal
Payout
Generation Efficiency
Generation Availability – Achieve top quartile for Combined Reliability Metric
Exceeded goal; achieved industry-leading Combined Reliability Metric results
200%
Nuclear Operations – Achieve targets for nuclear safety, reliability and availability
Exceeded nuclear operations goal
164%
Strategic Projects
Plant Vogtle Units 3 and 4 Construction Project Execution – Comprehensive assessment of current year progress on the safety, quality and productivity of the construction schedule, operational readiness and investment recovery
Exceeded expectations by swiftly addressing workforce health and safety and continuing progress on the site, including cold hydro testing at Unit 3 and control room ready for testing at Unit 4
175%
Total 100% 160%

The operational goals for the other NEOs are aligned with their specific operating company, and the structure is consistent with the goals for the Southern Company CEO and CFO. Their operational goal weights are:

Paul Bowers: Safety at 20%, Culture at 10%, Customer Satisfaction at 30% and Plant Vogtle Units 3 and 4 Project Execution at 40%
Mark Crosswhite: Safety at 20%, Culture at 20%, Customer Satisfaction at 30%, Power Delivery Reliability at 15% and Generation Availability at 15%
Stephen Kuczynski: Safety at 20%, Culture at 10%, Nuclear Safety at 30%, Capability Factor at 20% and Plant Vogtle Units 3 and 4 Project Execution at 20%


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Southern Company 2021 Proxy Statement
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2020 Individual Performance

CEO Performance Assessment
Strong leadership and commitment from our CEO led Southern Company to deliver strong financial and operational results in the face of tremendous challenges in 2020, which included a global pandemic, economic downturn, significant social and political unrest and an exceedingly busy storm season. Our Board recognizes the exceptional leadership of Mr. Fanning within Southern Company and across the entire industry. Below are some of the performance highlights noted by the Committee for 2020.

Tom Fanning
Chairman of the Board, President and CEO
 
CONSTRUCTION OVERSIGHT AT PLANT VOGTLE UNITS 3 AND 4
Facilitated construction progress at Plant Vogtle Units 3 and 4 by promptly establishing COVID-19 protocols and a medical village to protect the workforce and mitigate impacts on site productivity; decisive and effective actions enabled construction to continue remaining productive resulting in major milestone achievements in 2020
As of the end of 2020, direct construction was 97% complete for Unit 3 and 75% for Unit 4
Continued oversight, leadership and governance of project milestones, timeline and costs
   
   
FINANCIAL AND OPERATIONAL SUCCESS
Company remained financially strong through the pandemic with a high level of liquidity and outstanding financial results
Adjusted EPS finished above the top of guidance at $3.25 compared to our guidance range of $3.10 to $3.22
Significantly reduced costs to mitigate revenue reduction due to COVID-19
Reduced interest costs through record financing activity ($8.4 billion of debt raised at attractive rates)
Operational performance continued to lead the industry
Implemented protocols to prioritize health and safety of our workforce
Maintained outstanding customer satisfaction ratings
Industry-leading generation reliability and resiliency and exceptional storm restoration efforts during a very active storm season
   
   
CULTURE AND HUMAN CAPITAL
Through our “Move to Racial Equity” commitment, the CEO facilitated the development and communication of a comprehensive plan focusing on equity in talent, culture, community investment, political engagement, supplier diversity and social justice, including a commitment of $200 million to advance racial equity and social justice in our communities over the next five years
Continued to prioritize the development of cultural bandwidth and agility through Emotional Intelligence training
Maintained focus on senior executive succession readiness and development of key talent
Supported employees through pandemic by focusing on remote work schedules, flexibility and employee well-being (physical, financial, and emotional/social) with no employee lay-offs due to the COVID-19 pandemic
Company recognized for its management quality, culture and focus on human capital, including one of the Worlds Most Admired Companies from Fortune magazine and top rated utility for Management by Wall Street Journal (top 250 list)


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ESG STRATEGY AND STAKEHOLDER ENGAGEMENT

Advanced long-term strategy of transitioning fleet to low- and no-carbon resources and updated long-term GHG goal to net zero emissions by 2050
Energy from coal down to 17% and energy from zero-carbon resources up to 32%
Reduced GHG emissions 52% since 2007 and Company expects to sustainably meet its 2030 goal of 50% reduction in GHG emissions (as compared to 2007) by 2025 or earlier

 

Continued leadership in R&D, including receiving the EEI Edison Award for energy storage R&D and renewing and expanding the scope of operations of the National Carbon Capture Center
Enhanced transparency on decarbonization progress, including improving CDP Climate Score to “A-” or leadership level
Led substantive engagement during the year with Climate Action 100+ investor group, environmental stakeholder group and other key investors

INDUSTRY LEADERSHIP

During 2020 the CEO’s leadership within the industry continued to inform business strategy and create long-term value for stockholders:
Involvement with the federal executive and legislative branches
Appointed member of the Cyberspace Solarium Commission
Principal of the American Energy Innovation Council
Co-chair of Electricity Subsector Coordinating Council

 

Member of the Tri-Sector Executive Working Group (public-private partnership that manages national risk across critical sectors in financial services, communications and electricity)
Additional leadership recognitions in 2020:
Atlanta magazine’s Atlanta 500 list of influential leaders in the community (Government and Infrastructure category)
Named one of Georgia Trend magazine’s 100 Most Influential Georgians
 

Other NEOs Performance Assessment
Our team of named executive officers successfully led the Company through a very challenging 2020. The Committee believes the overall performance of the executive officer team was pivotal to the many successes highlighted above for 2020, and as such, recognized the team exceeded expectations for the year.

         
Andrew Evans Paul Bowers Mark Crosswhite Stephen Kuczynski
Executive Vice President and CFO of the Company Chairman and CEO of Georgia Power Chairman, President and CEO of Alabama Power Chairman, President and CEO of Southern Nuclear

The executive management team collectively led and supported many of the initiatives listed above. Individual contributions and performance were assessed and pay differentiated for each executive. The following areas were considered for individually assessing each member of the executive team’s contributions for 2020:

Achieve success with Plant Vogtle Units 3 and 4 (cost, productivity and milestones)
Commitment and impact on culture (support of Our Values, including diversity, equity and inclusion)
Constructive regulatory outcomes
Strong financial and operational performance
Commitment to transitioning the fleet and meeting GHG goals
 


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Southern Company 2021 Proxy Statement
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2020 PPP Payouts

Name     Target
2020 PPP
Opportunity
(% of salary)
    Target
2020 PPP
Opportunity
($)
    EPS
Payout
(%)
(1)
    Net
Income
Payout
(%)(1)
    Operational
Payout
(%)(1)
    Individual
Payout
(%)(1)
    Total
Payout
(%)(1)
    Calculated
2020 PPP
Payout ($)
    Reduction
to Payout
(%)(1)
      2020 PPP
Payout
($)
  
Tom Fanning 175% 2,625,000 166% NA 160% 190% 170% 4,462,500 (41%) 2,625,000  
Andrew Evans 80% 687,232 166% NA 160% 175% 166% 1,140,805 - 1,140,805  
Paul Bowers 100% 953,681 166% 200% 154% 190% 176% 1,674,664 (10%) 1,507,198  
Mark Crosswhite 80% 685,729 166% 178% 183% 173% 175% 1,202,768 - 1,202,768  
Stephen Kuczynski 75% 611,506 166% 189% 148% 190% 171% 1,044,452 - 1,044,452  
(1) Shown as rounded numbers.

Long-Term Equity Incentive Compensation (At Risk)

Evolution of Long-Term Equity Incentive Program Over Time
Our long-term equity incentive program has evolved in response to stockholder feedback and our ongoing evaluation of best practices. We provide long-term incentive compensation through performance shares (PSUs) and performance restricted stock units (PRSUs):

PSUs – Performance Metrics
Performance Period       Relative TSR       Consolidated
ROE
      Cumulative EPS       GHG Reduction
(for CEO Only)
      PRSUs
2017-2019
2018-2020
2019-2021
2020-2022

2020-2022 Performance Share Program Award
The PSP award includes financial and market-based performance goals over the three-year performance period from 2020 to 2022 and is further subject to a credit quality threshold requirement.

Goal Why it’s important What it measures and how we set the goal
Relative TSR       Aligns award with shareholder returns on a relative basis over the performance period       TSR relative to a utility peer group of companies that are believed to be most similar to the Company in both business model and investors. It measures investment gains arising from stock price appreciation and dividends received from that investment. The peer group is described on page 72 and is subject to change based on merger and acquisition activity.
Consolidated ROE Aligns performance with regulatory ROE commitment and is a counterbalance to net income in the Performance Pay Program Consolidated Southern Company ROE of the traditional electric operating companies, Southern Company Gas and Southern Power
GHG Reduction Goal (for CEO only) Aligns performance with Southern Company’s 2030 and 2050 GHG emission reduction goals GHG reduction goal measures the progress on the Company’s emissions reduction commitment through quantitative and qualitative metrics

The financial goal is also subject to a credit quality threshold requirement that encourages the maintenance of adequate credit ratings to provide an attractive return to investors. If the primary credit rating falls below investment grade at the end of the three-year performance period, the payout for the ROE goal will be reduced to zero.

For each of the financial performance measures, a threshold, target and maximum goal was set at the beginning of 2020. The threshold, target and maximum for the GHG emission reduction goal are described in the next section.

      Relative
TSR Performance
      Consolidated ROE
Performance
      Payout
Maximum 90th percentile or higher 12.5% 200%
Target 50th percentile 10.5% 100%
Threshold 10th percentile 9.0% 0%


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Compensation Discussion and Analysis
63

2018-2020 Performance Share Program Payouts
The calculated payout for the 2018-2020 PSP awards was 181% of target before applying any adjustments.

Payout Results
PSUs – Relative TSR 183%
PSUs – ROE 178%
Total Weighted Average 181%

Name       Grant Date
Target Value of
PSUs Granted
($)
      Calculated Value
of PSUs Earned
($)
      Reduction to
Payout
(%)
        2020 PSP
Payout
($)
(1)
   
Tom Fanning 6,378,784 18,053,018 (4)% 17,409,528  
Andrew Evans 1,539,974 4,358,392 0% 4,358,392  
Paul Bowers 1,714,119 4,851,272 0% 4,851,272  
Mark Crosswhite 1,551,552 4,391,146 0% 4,391,146  
Stephen Kuczynski 1,083,871 3,067,564 0% 3,067,564  

(1) Based on the closing price of our stock on the date the Committee approved payouts. Includes accrued DEUs.

Recent Payout Results for the Long-Term Equity Incentive Awards
The chart below summarizes calculated payouts for the three most recent PSP award three-year performance cycles, including the recently completed 2018-2020 performance cycle. The chart does not reflect discretionary reductions, if any, determined by the Committee.

The 2017-2019 performance period was the first award cycle to include PRSUs, which comprised 30% of the total long-term equity incentive grant for that performance period. The chart below does not include PRSU payouts; they are described in more detail following the chart.

Performance
Period
    Performance Measures     Weight     2016     2017     2018     2019     2020         Total
Calculated
Payout
   
2018-2020 PSUs Relative TSR - Custom Peer Group 40% 183% 181%  
Consolidated ROE* 30% 178%  
2017-2019 PSUs Relative TSR - Custom Peer Group 30% 108% 134%  
Cumulative EPS* 20% 129%  
Consolidated ROE* 20% 177%  
2016-2018 PSUs Relative TSR - Custom Peer Group 50% 23% 95%  
Cumulative EPS* 25% 160%  
Equity-weighted ROE* 25% 173%  

* In determining EPS and ROE for compensation goal achievement purposes for the 2018-2020 performance period, the Compensation Committee excluded acquisition, disposition and integration impacts, including related impairment charges (2018-2020); earnings from the Wholesale Gas Services business (2018-2020); estimated loss on plants under construction, including charges (net of salvage proceeds), associated legal expenses (net of insurance recoveries) and tax impacts (2018-2020); the 2018 earnings impact of the Toshiba parent guarantee proceeds paid in 2017 (2018); settlement proceeds of Mississippi Power’s claim for lost revenue resulting from the 2010 Deepwater Horizon oil spill in the Gulf of Mexico (2018); additional net tax benefits as a result of implementing federal tax reform legislation (2018); impairment charges associated with a natural gas storage facility and leveraged leases (2019-2020); and costs associated with the extinguishment of debt at Southern Company (2020).

The PRSUs granted to the NEOs in 2020 were subject to a one-year financial goal, 2020 cash from operations must exceed the amount paid in dividends in 2019. If the goal is not met, then all of the PRSUs would be forfeited. The Committee determined that the goal was met. The PRSUs vest 1/3 each year over a three-year period. The first third vested upon certification of the achievement of the goal by the Committee, and the remaining 2/3 will vest ratably on the second and third anniversaries of the grant date.


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2020 Long-Term Equity Incentive Grants

Long-term performance-based awards are intended to promote long-term success and increase stockholder value by directly tying a substantial portion of the NEOs’ total compensation to the interests of stockholders.
65% of the CEO’s and 70% of the other NEOs’ long-term equity incentive award is in PSUs that are earned solely based on the achievement of pre-established performance goals over a three-year performance period from 2020 to 2022. Performance goals include relative TSR measured against an industry peer group and consolidated ROE. Payouts can range from 0% to 200% of target, based on the actual level of goal achievement.
25% of the CEO’s and 30% of the other NEOs’ long-term equity incentive award is in PRSUs that are earned only if a pre-established performance goal of cash from operations is met. If the goal is not met, all PRSUs are forfeited. If the goal is met, the PRSUs vest one-third per year over a three-year period.
10% of the CEO’s long-term equity incentive award is in PSUs that are earned based on the achievement of pre-established performance goals aligned with the Company’s 2050 GHG reduction goal, including both quantitative and qualitative measures.

If earned, awards are paid in common stock. Accrued dividend equivalent units (DEUs) are received only if the underlying award is earned.
The number of shares granted was determined by using the target value divided by the closing price of Common Stock on February 11, 2020, the date the Compensation Committee approved the grant. Performance share awards with performance tied to relative TSR are valued in the Summary Compensation Table and Grants of Plan-Based Awards Table using a Monte Carlo analysis, resulting in amounts that differ from what is shown in this CD&A. For more information on the valuation of those performance shares and the Monte Carlo value, see the footnotes following the Summary Compensation Table and the Grants of Plan-Based Awards Table.

2020 Long-Term Equity Incentive Grant Amounts

Name       Target as
Percent of
Base Salary
            PSP –
Relative
TSR
(1)
      PSP –
Consolidated
ROE(1)
      PSP –
GHG(1)
      PRSU –
Cash From
Operations(1)
        Total
Long-Term
Grant
(100%)
   
Tom Fanning 775% $ 4,649,990 2,906,227 1,162,532 2,906,227 11,624,976  
# of units 67,794 42,371 16,949 42,371 169,485  
Andrew Evans 275% $ 944,964 708,740 708,740 2,362,444  
# of units 13,777 10,333 10,333 34,443  
Paul Bowers 350% $ 1,335,173 1,001,345 1,001,345 3,337,863  
# of units 19,466 14,599 14,599 48,664  
Mark Crosswhite 275% $ 942,907 707,163 707,163 2,357,233  
# of units 13,747 10,310 10,310 34,367  
Stephen Kuczynski 250% $ 815,329 611,480 611,480 2,038,289  
# of units 11,887 8,915 8,915 29,717  

(1) Certain metrics for the 2020-2022 long-term equity incentive grant for the CEO are weighted slightly different than for the other NEOs. For the CEO, 25% of the long-term grant is tied to the PSP ROE goal, 10% is tied to the PSP GHG goal and 25% is allocated to PRSUs. For the other NEOs, 30% of the long-term grant is tied to the PSP ROE goal and 30% is allocated to PRSUs.

2020 Performance Restricted Stock Units Award

The PRSU award includes a financial performance goal of cash from operations that must be met after the first year for any PRSUs to vest during the three-year period.
PRSUs are earned only if Southern Company’s cash from operations in 2020 exceeds $2.570 billion, the amount of dividends paid in 2019. If earned, the PRSUs vest one-third each year over a three-year period.
The Compensation Committee believes that allocating a portion of the long-term equity incentive program to PRSUs with a one-year performance goal related to our ability to pay regular dividends and a payout period of three years continues to provide alignment with stockholders and enhance retention.


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Compensation Discussion and Analysis
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2020-2022 Long-Term Incentive Award - GHG Reduction Goal for CEO
To demonstrate our commitment to GHG reduction, including the updated net zero by 2050 goal, the Compensation Committee continued to include a GHG metric in the CEO’s 2020 long-term equity incentive award. A meaningful portion of the CEO’s 2020 PSP award (10% or up to $2 million) is aligned with our GHG reduction goals. This goal has both quantitative and qualitative components.

Quantitative Metric: The Committee chose to express the quantitative metric in terms of net change in megawatts (MW) as it reflects the transition in our overall generation fleet, as opposed to expressing the metric in percentage of decrease in emissions which can be impacted by factors outside the Company’s control such as annual changes to weather patterns and the strength or weakness of the economy.

Performance over the 2020-2022 period is aligned with the trajectory necessary to meet our 50% GHG emission reduction, as compared to 2007. The metric is defined in terms of net MW change, which is limited to:

Adding zero-carbon megawatts
Placing coal or gas steam generation units in retirement status or inactive reserve (which means no longer available for routine economic commitment and dispatch but available for resiliency and reliability)

Setting the GHG Goal associated with the Long-Term Incentive Award:

To achieve the Company’s goal of reducing GHG emissions 50% by 2030, a significant change in the Company’s generation fleet is required over a number of years. The magnitude of change to the generation fleet necessary to meet the Company’s 50% GHG reduction goal requires a long-term effort, begun years ago, due to lead times associated with adding new generation resources, adding new transmission facilities and retiring existing generation resources while maintaining reliability and affordability for customers. These generation changes are “lumpy”, meaning that the transition does not follow a straight line. Rather, in some years the MW change will be larger than in other years due to the discrete size of individual generation units and the lead times to implement the changes.

2019 - 2022 Planned and Actual Trajectory Toward 50% GHG Reduction Goal

The GHG goal is based on the cumulative, realized actual change in net MW over a forward-looking three-year performance period. As the Committee thoughtfully sets each three-year performance goal, it bases the target goal on the plan trajectory upon which the 50% GHG reduction by 2030 goal was set. This helps ensure the goal’s three-year net MW change will maintain the trajectory necessary to achieve the Company’s larger commitment of attaining a 50% GHG reduction by 2030. The stretch goal is set to a level that would drive acceleration of the goal achievement.

It should be noted that announcements or decisions do not count toward goal performance. Goal performance achievement is based on the actual date when new zero carbon generation begins commercial operation or when coal or gas steam generation is permanently removed from routine economic commitment and dispatch.

100% payout target goal: Set based on the trajectory needed to meet the Company’s 2030 goal of 50% GHG reduction by 2030.
150% payout stretch goal: Set about 60% higher than the target three-year net MW change goal, meaning that it is more challenging to reach the maximum payout for the 2020-2022 performance period. Threshold for 2020-2022 has been set to the target level of the 2019-2021 goal, preventing any payout if the target of the 2019-2021 performance period is not reached.


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Below are the net MW change goals for the 2020-2022 performance period.

2020-2022
Net MW Change
(1)
      Payout %
of Target
          Estimated % Complete by 2022 of GHG Emission Reduction Goal for 2030
< 1,284 MW 0% 44% of 50% GHG emission reduction goal, equivalent to 84% achievement of 2030 goal
1,284 MW 50% 44% of 50% GHG emission reduction goal, equivalent to 86% achievement of 2030 goal
1,723 MW 100% 46% of 50% GHG emission reduction goal, equivalent to 88% achievement of 2030 goal
2,752 MW 150% 49% of 50% GHG emission reduction goal, equivalent to 90% achievement of 2030 goal
(1) Goal is expressed in net MW change. Not all megawatts have the same GHG emission impacts.

Qualitative Modifier: The qualitative modifier creates incentives to achieve our 2050 goal through a qualitative assessment by the Compensation Committee, that is discussed with the Board, of the CEO’s leadership in advancing the energy portfolio of the future. The payout modifier, which is applied to the payout determined under the quantitative metric, is up to 30%.

Leadership and energy policy (nationally and within the industry)

R&D investments (such as EPRI and Southern proprietary R&D)

Investments (such as corporate venture capital spend and Energy Impact Partners)

New business development (through Southern Power, PowerSecure, Sequent and liquefied natural gas (e.g., renewables, distributed generation, distributed infrastructure, Bloom Energy, Greener State)

    Achievement         Modifier    
Fails to meet 0%
Meets +15%
Exceeds +30%


Performance Update: 2019-2021 and 2020-2022 GHG Reduction Goals

QUANTITATIVE METRIC:

The target goal for the 2019-2021 award is a 3,080 net MW change. Through the end of 2020, the Company is trending favorably, with much of the target already accomplished through new solar generation placed into service in 2019 and 2020 and the 2019 retirements of Plant Hammond, Plant Gorgas and Plant McIntosh Unit 1. The retirement of Plant Gorgas was not forecasted or included in the original IRP plan on which the goal was based.

The target goal for the 2020-2022 award is a 1,723 net MW change. Through the end of 2020, the Company is also trending favorably, with much of the target already accomplished through the addition of solar generation and placing a gas steam generation resource on inactive reserve.

QUALITATIVE MODIFIER:

The Committee noted the following accomplishments during 2020 that facilitate our ability to achieve net zero:

Leadership and energy policy

Meetings with federal policy makers regarding climate policy
Announced goal to convert 50% of Southern Companys light duty vehicles to electric by 2030

R&D investments

Anchor sponsor in the multi-sector, international Low-Carbon Resources Initiative begun by the Electric Power Research Institute and the Gas Technology Institute
Extended agreement with the U.S. Department of Energy (DOE) to operate the National Carbon Capture Center and to expand the scope to include both carbon capture for natural gas-fired generation as well as direct air capture of existing GHG from the atmosphere. Participating in study to assess feasibility of a commercial-scale, regional GHG geological storage hub.
Participating in research to develop cost-effective zero carbon hydrogen-based energy solutions
Secured DOE award to further develop the TerraPower advanced nuclear reactor concept

Investments

Committed additional $50 million for deployment over five years (2020-2024) in a second Energy Impact Partners fund

New business development

Southern Power completed, or is in the process of adding, four wind facilities and five battery storage projects
Acquired/partnered with companies for 100+ MW of energy storage and Bloom Energy Servers


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Looking Ahead: 2021-2023 GHG Reduction Goal
The Committee has continued including the GHG goal as part of the CEO’s long-term equity incentive award for the 2021-2023 performance period. Performance over the period from 2021 to 2023 remains aligned with a trajectory to our 2030 goal of 50% GHG emission reduction as compared to 2007. The 150% payout stretch net MW change goal for 2021-2023 has been set at a level to achieve our 50% GHG reduction goal more than five years early, with a net MW change about 21% higher than the target net MW change goal for the 2021-2023 performance period.

Benefits

Retirement Benefits

Employee Savings Plan: Substantially all employees are eligible to participate in the Employee Savings Plan (ESP), our 401(k) plan. The NEOs are also eligible to participate in the Supplemental Benefit Plan (SBP), which is a nonqualified deferred compensation plan where we can make contributions that are prohibited to be made under the ESP due to limits prescribed for 401(k) plans under the tax code.

Pension Benefits: Substantially all employees participate in a funded Pension Plan. Normal retirement benefits become payable when participants attain age 65. These benefits vest after the employee completes five years of vesting service. The Company also provides unfunded benefits to certain employees, including the NEOs, under two nonqualified plans: the Supplemental Benefit Plan (Pension-Related) (SBP-P) and the Supplemental Executive Retirement Plan (SERP). The SBP-P and the SERP provide additional benefits the Pension Plan cannot pay due to limits applicable to the Pension Plan.

Deferred Compensation Benefits: We offer a Deferred Compensation Plan (DCP), which is an unfunded plan that permits participants to defer income as well as certain federal, state and local taxes until a specified date or their retirement, disability, death or other separation from service.


Change-in-Control Protections

We believe that change-in-control protections allow management to focus on potential transactions that are in the best interest of our stockholders.

Change-in-control protections include severance pay and, in some situations, vesting or payment of incentive awards.

We provide certain severance payments if there is a change in control of the Company and a termination of the executive’s employment (either involuntary termination not for cause or voluntary termination for good reason), often called a “double trigger”.

Severance payment for the CEO is three times salary plus target PPP opportunity. For the other NEOs, severance is two times salary plus target PPP opportunity. No excise tax gross-up would be provided.


Perquisites

We provide limited perquisites to our executive officers, consistent with the Company’s goal of providing market-based compensation and benefits.

The Compensation Committee recognizes that permitting limited personal use of system aircraft for certain executives allows them to continue to perform their duties in a safe, secure environment and promotes safe and effective use of their time. For 2020, the Compensation Committee approved personal use of system aircraft for Mr. Fanning and Mr. Kuczynski. Amounts are included in the Summary Compensation Table.
The personal safety and security of employees at home, at work and while traveling is of utmost importance to the Company. Given Mr. Fanning’s profile and high visibility, the Committee believes that the costs of his security program are appropriate and a necessary business expense and that we can benefit from the added security measures for him. Costs reported in the Summary Compensation Table reflect the ongoing security services provided during 2020.
No tax assistance is provided on perquisites to executive officers of the Company, except on certain relocation-related benefits that are generally available to all employees.


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Understanding the Annual Change in Pension Value

               
  No additional pension benefits  
2020 annual change in pension value is not due to any modifications to the existing pension program or formulas
Pension formula considers years of service, which has an impact on the year over year change in pension value
 
  Annual changes primarily driven by macroeconomic and non-performance factor changes  
Traditional pension plans are extremely sensitive to interest rate changes, which are macroeconomic factors out of the Company’s control
Unlike the short-term and long-term incentive programs which are purely performance based, pension values are driven mostly by non-performance factors
 
  High prevalence of traditional pension plans in utility industry  

In industries such as the utility industry, traditional pension plans are highly prevalent as they:

Are the most economically efficient way to provide financial well-being at retirement to our employees
Help us retain and protect the significant investment we make in our highly skilled workforce and attract the right talent for the future
Align with our business model
 
  Compensation Committee is committed to the ongoing sustainability of the pension plan  
Over the years, the Committee has taken actions to promote the sustainability of pension benefits for the future, shift to a more shared responsibility between employer and employee and meet evolving workforce needs in order to attract and retain employees
The pension plan formula changed in 2018 for new participants from a final average earning formula to a cash balance formula
Eligibility was closed to additional participants in the SERP nonqualified pension plan program beginning in 2016
The Committee will continue to assess the pension program so that it attracts, engages, includes and retains the workforce necessary for today and tomorrow
 
       
 


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Compensation Governance Practices, Beliefs and Oversight

Executive Compensation Best Practices

       
 

What We Do

Compensation Committee focuses on aligning actual payouts with performance and stockholder interests
100% of short- and long-term incentive awards are performance-based
Independent compensation consultant retained by the Compensation Committee
Policy against hedging and pledging of stock by Directors and executive officers
Executive officers receive limited ongoing perquisites that make up a small portion of total compensation
Strong stock ownership requirements for Directors and executive officers
Change-in-control severance payouts require double-trigger of change in control and termination of employment
Clawback provision applies to all incentive compensation awards with enhanced Clawback Policy provisions for key executives
Annual pay risk assessment undertaken with input from the independent consultant.
91% of CEO target pay is at risk based on achievement of performance goals
Engagement in year-round stockholder outreach efforts
Dividends on stock awards received only if underlying award is earned
Annual compensation audit conducted to help ensure pay equity

What We Don’t Do

No tax gross ups for executive officers (except on certain relocation-related expenses)
No employment agreements with our executive officers
No stock option repricing
No excise tax gross-ups on change-in control severance arrangements
 
   

Our Compensation Program is Designed to Further Our Long-Term Strategy

Operating premier state-regulated utilities and investing in energy infrastructure under long-term contracts are the focus of our customer-centric business model, which is designed to support regular, predictable and sustainable long-term earnings and dividend growth. We believe in several overarching principles in designing the compensation program to tie to our long-term strategy.

           
 

Alignment with Strategy

Metrics and targets support long-term business strategy of superior risk-adjusted returns
Annual financial goals are aligned with investor guidance
 

Pay for Performance

Promote a strong pay-for-performance relationship between business results, stockholder returns and payouts
Where appropriate, use individual performance metrics to enhance pay-for-performance relationship
Pay mix (i.e., the percent of total pay derived from annual and long-term incentives) should accurately reflect the scope of responsibility of the role
Compensation Committee exercises discretion when necessary to align actual payouts with business performance and stockholder returns
 
         
 

Balance and Sustainability

Designs balance achievement of short-term goals and long-term value creation
Designs balance operational goals and financial objectives to help ensure sustainable results for our stakeholders
Designs help ensure programs reward behaviors that drive long-term sustainability for customers, stockholders, employees and the communities we serve
   
           


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Our Commitment to Provide Equitable Compensation for all Employees

Our compensation system is designed to promote pay equity throughout the entirety of each employee’s tenure. To help ensure compensation is fair, competitive and equitable, we have adhered to several key strategies:

We pay market-competitive rates. We use highly reliable data sources and rigorous compensation analysis to help ensure alignment to the market.
We adhere to the pay for performance philosophy which allows managers to reward employees based on performance within established controls.
We utilize several additional measures to promote fairness, including strong market data and job pricing, well-defined salary structures, comprehensive merit and incentive processes -- along with clear procedures for employees to voice concerns.
When appropriate, pay adjustments may occur in accordance with an employee’s performance or changes in responsibilities. Adjustments may also occur with ad hoc market-based changes or as the result of an equity audit.

We internally conduct a pay equity audit each year. These audits are performed to evaluate potential inequities or inconsistencies in our pay practices. In 2020, we engaged an independent third party to perform the annual pay equity audit plus wage gap and glass ceiling analysis. Detailed results are reported to the Compensation Committee and to senior leadership. High-level results were communicated to all employees in 2020.

This annual audit helps us evaluate our compensation program and consistently confirms strong pay equity across all operating companies.

The Compensation Committee and senior management remain vigilant in our efforts to help ensure all employees are treated fairly and consistently.

We have a longstanding commitment to equitable pay at all levels across the Southern Company system. As we navigated through a challenging time of social and political unrest in 2020, we redoubled our efforts to communicate to our employees our longstanding commitment to provide equitable compensation. To further the transparent communication strategy, we have been developing and releasing a series of articles and short videos that provide education about the Southern Company compensation program, including our dedication to equitable compensation.
Our commitment aligns closely with the concept of Unquestionable Trust that we find in Our Values. It speaks to our commitment to act with honesty, respect, fairness and integrity in all we do. Simply put, discrimination in any form has no place in our business practices, including those that have to do with employee compensation.

Clawback of Compensation

Clawback Provisions in the Omnibus Plans
The 2011 Omnibus Plan and the proposed 2021 Omnibus Plan include clawback provisions that apply to annual and long-term incentive awards granted under the plans. These clawback provisions are triggered if (1) we are required to prepare an accounting restatement due to material noncompliance as a result of misconduct with any financial reporting requirement under the securities laws (a Restatement Trigger), and (2) a 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 the Sarbanes-Oxley Act of 2002.

Clawback Enhancements in 2021
In 2021, to further promote a culture of accountability within our organization and alignment between the interests of our senior management and our stockholders, we sought to develop even more robust clawback practices. After considering our compensation programs and reviewing current best practices, the Board adopted a new Clawback Policy that provides us with an additional basis to recoup incentive-based compensation from certain members of our senior management, including our executive officers. The new Clawback Policy applies in the following circumstances:

Restatement: The Committee may provide for the recovery or adjustment of excessive incentive-based compensation from a covered employee if (1) there is a Restatement Trigger, and (2) the Committee determines that the covered employee committed misconduct that contributed to the noncompliance that resulted in the Restatement Trigger


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Detrimental Activity: The Committee may provide for the reduction, termination or recovery of incentive-based compensation with respect to a covered employee if the Committee determines that the covered employee has engaged in certain detrimental activity (such as certain misconduct or a material violation of our Code of Ethics or applicable Company policies) that results in significant financial or operational loss or serious reputational harm to the Company or its subsidiaries (a Detrimental Activity Trigger)

The new Clawback Policy as expanded to include a Detrimental Activity Trigger generally covers incentive-based compensation granted after May 26, 2021, including annual and long-term incentive awards. It also generally allows for recovery for at least three years prior to the year in which the Committee determines that a triggering event has occurred. This three-year recovery period represents an enhancement over the clawback period under our omnibus plans, which allow for the recovery of award payments that are earned or accrued during the 12-month period following the first public issuance or filing that was restated.

Compensation Governance Oversight by the Board and its Committees

The Board and its committees are actively engaged in compensation governance oversight.

Principle Description Application
Collaboration
Receive input into financial and operational goals from applicable Board committees
The Finance Committee reviews the Company’s financial plan and the proposed compensation program financial goals to align the goals with the financial plan and are rigorous and provides its input to the Compensation Committee.
The Operations, Environmental and Safety Committee reviews the proposed operational goals compared to industry benchmarks and prior year results and provides its input to the Compensation Committee.
Alignment
The Compensation Committee helps ensure alignment of financial targets for compensation programs with financial plan and EPS guidance
The Compensation Committee approves an EPS goal that is aligned with the EPS guidance range established at the beginning of the year.
Analysis and Discretion
Active involvement by the Compensation Committee in helping to ensure alignment between calculated performance results and payouts under incentive compensation programs
The Compensation Committee receives updates on financial and operational progress against goals at each regular meeting and engages in regular dialogue regarding progress towards goals and impacts to at-risk compensation.
The CEO, assisted by Human Resources staff, reviews the individual performance results for the other executive officers with the Compensation Committee.
The Compensation Committee carefully considers all adjustments to financial goals in light of overall Company performance and retains discretion to adjust payouts up or down to appropriately align performance and stockholder interests.
No decisions are made by the Compensation Committee with respect to payouts for the Company’s executive officers until after the end of the performance period.
Engagement
Promote Board engagement in key compensation decisions
At every Board meeting, the Chair of the Compensation Committee reports to the full Board the key items discussed and any actions taken at each Compensation Committee meeting.
All independent Directors are engaged in setting the CEO’s annual individual performance goals and reviewing the performance of the CEO each year.
The Compensation Committee reviews all decisions about CEO compensation with the independent Directors for ratification by the independent Directors.

 


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Southern Company 2021 Proxy Statement
72

Peer Groups and Establishing Market-Based Compensation Levels

             
 
Peer Group for 2020
Compensation Decisions
Used to determine the total direct compensation for our executives
Approximates the competitive market in which we compete for talent in executive and managerial roles
Consists of 19 publicly traded utility companies (subject to changes resulting from mergers and acquisitions)
In 2020, Pay Governance, in conjunction with the Compensation Committee, conducted a detailed review of internal considerations and external practices for the determination of the compensation peer group.
Adjustments to the peer group and the benchmarking approach were made to focus on large companies (at least $6 billion in revenues) with more similar businesses, including other large diversified utilities that have combined electric and gas operations.
We target the total direct compensation for our executives at market median of the peer group.
Peer Group for Relative TSR Metric for 2020-
2022 Performance Period
Used to measure our relative TSR performance (used in the PSP award)
The peer group against which we measure our relative TSR for the 2020-2022 performance period for the performance shares consists of 22 publicly traded utility companies that we believe are most similar to Southern Company in both their business model and investors.
The Compensation Committee considers companies that have at least 70% regulated assets and $7 billion in market capitalization.
Several companies in the relative TSR peer group do not meet the revenue size requirement to be included in the compensation peer group, and some companies might not participate in the survey from which the data for the compensation peer group is derived.
 
       

     Peers used for BOTH:
2020 Compensation Decisions Peer Group
and 2020-2022 Relative TSR Peer Group
    
Ameren Corporation DTE Energy Company FirstEnergy Corp.
American Electric Power Duke Energy Corporation PPL Corporation
Company, Inc. Edison International Sempra Energy
CenterPoint Energy, Inc. Entergy Corporation WEC Energy Group, Inc.
CMS Energy Corporation Eversource Energy Xcel Energy Inc.
Dominion Energy, Inc.
   
 
 

             
2020 Compensation Decisions Peer Group 2020-2022 Relative TSR Peer Group
Exelon Corporation Alliant Energy Corporation
NextEra Energy, Inc. Consolidated Edison, Inc.
PG&E Corporation Evergy, Inc.
Public Service Enterprise Group Incorporated Fortis Energy Services
NiSource Inc.
OGE Energy Corp.
Pinnacle West Capital Corporation
   


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Compensation Discussion and Analysis
73

Other Compensation and Governance Inputs, Policies and Practices

Role of the Compensation Committee
The Compensation Committee is responsible for overseeing the development and administration of our compensation and benefits policies and programs as well as the review and approval of all aspects of our executive compensation programs.
The Compensation Committee is supported in its work by the HR Department, the Finance Committee (financial goals), the Operations, Environmental and Safety Committee (operational goals) and the Compensation Committee’s independent compensation consultant.

Role of the CEO
The CEO makes recommendations to the Compensation Committee regarding other executive officers with respect to (1) base salary adjustments, (2) PPP targets and individual performance achievement payouts and (3) LTIP targets. These recommendations are based upon market data provided by the independent compensation consultant, the CEO’s assessment of each executive officer’s performance, the performance of the individual’s respective business or function and employee retention considerations.
The Compensation Committee considers the CEO’s recommendations in approving the compensation for the other executive officers. However, the Compensation Committee makes the final decisions with respect to compensation decisions for the executive officers.
The CEO does not play any role with respect to decisions impacting his own compensation.

Role of the Independent Compensation Consultant
The Compensation Committee has retained Pay Governance as its independent executive compensation consultant. Pay Governance reports directly to the Compensation Committee. A representative of Pay Governance attends meetings of the Compensation Committee, as requested, and communicates with the Compensation Committee Chair between meetings.
Pay Governance provides various executive compensation services to the Compensation Committee pursuant to a written consulting agreement with the Compensation Committee. Generally, these services include advising the Compensation Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relation to the executives’ performance.
In 2020, Pay Governance provided an annual competitive evaluation of target total compensation for the NEOs. Additionally, the Compensation Committee relies on Pay Governance to provide information and advice on executive compensation and related corporate governance trends throughout the year. Pay Governance provided no services to Company management during 2020.
The Compensation Committee retains authority to hire Pay Governance directly, approve its compensation, determine the nature and scope of its services, evaluate its performance and terminate its engagement. The Compensation Committee has assessed the independence of Pay Governance pursuant to the listing standards of the NYSE and SEC rules and concluded that Pay Governance is independent and that no conflict of interest exists that would prevent Pay Governance from serving as an independent consultant to the Compensation Committee.

Prohibition on Hedging and Pledging of Common Stock

Our insider trading policy includes an “anti-hedging” provision that prohibits Directors and employees (including officers) and certain of their related persons (such as certain of their family members and entities they control) from purchasing or selling, or making any offer to purchase or sell, derivative securities relating to securities of the Company or its subsidiaries. The policy specifies examples of covered derivative securities, including exchange-traded options to purchase or sell securities of the Company or its subsidiaries (so-called “puts” and “calls”) or financial instruments, that are designed to hedge or offset any decrease in the market value of securities of the Company or its subsidiaries (including but not limited to prepaid variable forward contracts, equity swaps, collars and exchange funds).

Our insider trading policy also includes a “no pledging” provision that prohibits pledging of our stock for all Southern Company executive officers and Directors.


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Stock Ownership Requirements

We believe ownership requirements align the interests of officers and stockholders by promoting a long-term focus and long-term share ownership.

All of our executive officers are subject to stock ownership requirements.
All of our executive officers are meeting their applicable ownership requirements.
Mr. Fanning exceeds his stock ownership requirements by almost six times, based on the stock ownership guidelines as of December 31, 2020.
Ownership arrangements counted toward the requirements include shares owned outright, those held in Company-sponsored plans and phantom stock investments in the DCP and the SBP.

CEO Stock Ownership as of December 31, 2020   

Effective January 1, 2021, the Compensation Committee enhanced the stock ownership requirements.

Increased ownership requirement for CEO from five times base salary to six times base salary.
Reduced timeframe to meet applicable ownership requirement from six years to five years for newly-elected and newly-promoted officers.
Eliminated reduced requirement at age 60 for our Management Council; these executives must maintain their full ownership requirement.

          2020 Guidelines      NEW 2021 Guidelines     
CEO Multiple of Base Salary 5X Base Salary 6X Base Salary
NEO Multiple of Base Salary 3X Base Salary 3X Base Salary
Timeframe to Meet Guidelines 6 years 5 years
One-half Reduction at Age 60 Yes No
 

Tax Deductibility of Compensation

U.S. tax law limits a public company’s deductions to $1 million per year for compensation paid to its CEO, CFO and each of its three other most highly compensated executive officers, as well as to any individual who was subject to the $1 million deduction limitation in 2017 or any later year. There is no exception for qualifying performance-based compensation unless it is pursuant to a written binding contract in effect as of the transition date of November 2, 2017. Certain annual cash incentive awards and equity-based incentive awards made on or before the transition date may satisfy the requirements for deductible compensation and any compensation in excess of $1 million paid to a covered person after 2017 will not be deductible unless it qualifies for transition relief. The Committee continues to retain the discretion to make awards and pay amounts that do not qualify as deductible.

Despite the changes to the tax code, the Compensation Committee continues to believe that a significant portion of our executive officers’ compensation should be performance based and tied to pre-approved performance measures.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is made up of independent Directors of the Company who have never served as executive officers of the Company. During 2020, none of the Company’s executive officers served on the Board of Directors of any entities whose executive officers serve on the Compensation Committee.


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Executive Compensation Tables

Summary Compensation Table

Name
(a)
Year
(b)
Salary
($)
(c)
Stock
Awards
($)
(d)
Non-Equity
Incentive Plan
Compensation
($)
(e)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
All Other
Compensation
($)
(g)
Total
($)
(h)
Total
without
Change in
Pension
Value
($)*
Thomas A. Fanning
Chairman,
President and CEO,
Southern Company
2020 1,536,539 12,260,206 2,625,000 5,721,710 223,395 22,366,850 16,645,140
2019 1,389,616 10,836,513 3,496,675 11,927,890 214,491 27,865,185 15,937,295
2018 1,350,000 9,112,550 1,522,699 880,693 231,749 13,097,691 12,216,998
Andrew W. Evans
Executive Vice
President and CFO,
Southern Company

2020 886,360 2,491,535 1,140,805 916,499 63,394 5,498,593 4,582,094
2019 825,354 2,530,039 1,104,896 973,986 49,489 5,483,764 4,509,778
2018 800,000 2,199,958 1,177,078 105,985 104,703 4,387,724 4,281,739
W. Paul Bowers
Chairman,
President and CEO,
Georgia Power

2020 980,754 3,520,259 1,507,198 4,690,478 60,206 10,758,895 6,068,417
2019 904,568 2,761,923 1,319,531 3,816,375 59,846 8,862,243 5,045,868
2018 885,171 2,448,751 837,743 1,153,981 51,642 5,377,288 4,223,307
Mark A. Crosswhite
Chairman,
President and CEO,
Alabama Power

2020 884,421 2,486,042 1,202,768 2,672,719 56,822 7,302,772 4,630,053
2019 825,158 2,524,432 1,129,045 3,703,350 52,679 8,234,664 4,531,313
2018 799,681 2,216,483 1,222,541 672,043 50,538 4,961.286 4,289,243
Stephen E.
Kuczynski
Chairman, President
and CEO, Southern
Nuclear
2020 841,271 2,149,671 1,044,452 848,625 197,455 5,081,474 4,232,849
2019 786,431 1,746,370 960,642 809,403 174,109 4,476,955 3,667,552
2018 769,564 4,548,410 631,625 280,287 227,196 6,457,083 6,176,796
 

* In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation without the change in pension value. The amounts reported in this additional column differ substantially from the amounts reported in the Total column required by SEC rules and are not a substitute for that amount. The change in pension value is subject to many external variables, such as interest rates, that are not related to Company performance and does not represent compensation granted or received by the NEOs in the applicable year.

Column (d)
This column does not reflect the value of stock awards that were actually earned or received in 2020. Rather, as required by applicable rules of the SEC, this column reports the aggregate grant date fair value of performance shares and PRSUs granted in 2020.

The value reported for the performance shares related to relative TSR and consolidated ROE is based on the probable outcome of the performance conditions as of the grant date, using a Monte Carlo simulation model and the closing price of common stock on the grant date. No amounts will be earned until the end of the three-year performance period on December 31, 2022. The value then can be earned based on performance ranging from 0% to 200%, as established by the Compensation Committee.

The aggregate grant date fair value of the performance shares granted in 2020 assuming that the highest level of performance is achieved is as follows: Fanning — $16,382,894; Evans - $ 3,565,591; Bowers — $ 5,037,830; Crosswhite $ 3,557,758 and Kuczynski — $ 3,076,381.

The value reported for the performance shares granted to Mr. Fanning related to the GHG reduction goals in 2020 is based on the closing price of common stock on the date of the grant. No amounts will be earned until the end of the three-year performance period on December 31, 2022. The value then can be earned based on performance ranging from 0% to 195%, as established by the Compensation Committee. The aggregate grant date fair value of the performance share granted to Mr. Fanning in 2020 related to the GHG reduction goals assuming the highest level of performance is achieved is $ 2,266,937.

The amounts in column (d) also reflect the grant date fair value of PRSUs granted to all of the NEOs in 2020 as described in the CD&A. The aggregate grant date fair value of the PRSUs granted in 2020 and reported in column (d) is as follows: Fanning — $2,906,227; Evans — $708,740; Bowers — $1,001,345; Crosswhite — $707,163; and Kuczynski — $611,480.

See Note 12 to the financial statements included in the 2020 annual report for a discussion of the assumptions used in calculating these amounts.

Column (e)
The amounts in this column reflect actual payouts under the annual PPP. The amount reported for 2020 is for the one-year performance period that ended on December 31, 2020.


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Column (f)
This column reports the aggregate change in the actuarial present value of each NEO’s accumulated benefit under the applicable Pension Plan and supplemental pension plans (collectively, Pension Benefits) as of December 31 of the applicable year.

The Pension Benefits as of each measurement date are based on the NEO’s age, pay and service accruals and the plan provisions applicable as of the measurement date. The actuarial present values as of each measurement date reflect the assumptions the Company selected for cost purposes as of that measurement date; however, the NEOs were assumed to remain employed at any Company subsidiary until their benefits commence at the pension plans’ stated normal retirement date, generally age 65.

Pension values may fluctuate significantly from year to year depending on a number of factors, including age, years of service, annual earnings and the assumptions used to determine the present value, such as the discount rate. For 2020, the discount rate assumption used to determine the actuarial present value of accumulated pension benefits, as required by SEC rules, was lower than in 2019. For Mr. Fanning, this lower discount rate assumption significantly increased the present value of the accumulated benefit. See page 68 of the CD&A for more information regarding the amounts included in this column.

This column also reports any above-market earnings on deferred compensation under the DCP. However, there were no above-market earnings on deferred compensation in the years reported.

The values reported in this column are calculated pursuant to SEC requirements and are based on assumptions used in preparing the Company’s audited financial statements for the applicable fiscal years. The plans utilize a different method of calculating actuarial present value for the purpose of determining a lump sum payment, if any. The change in pension value from year to year as reported in the table is subject to market volatility and may not represent the value that an NEO will actually accrue or receive under the plans during any given year.

Column (g)
The amounts reported in this column for 2020 are itemized below.

Name       Perquisites
($)
      Tax
Reimbursements
($)
      Company
Contribution
to 401(k) Plan
($)
      Company
Contribution to
Supplemental
Retirement
Plan
($)
      Total
($)
Tom Fanning 145,811 0 14,535 63,829 224,175
Andrew Evans 18,245 0 14,535 30,669 63,449
Paul Bowers 10,248 0 14,475 35,483 60,206
Mark Crosswhite 11,816 0 14,436 30,570 56,822
Stephen Kuczynski 158,539 0 10,546 28,370 197,455

Perquisites includes financial planning, personal use of corporate aircraft and other miscellaneous perquisites.

Financial planning is provided for most officers of the Company, including all of the NEOs. The Company provides an annual subsidy of up to $20,000 per year for Mr. Fanning and up to $15,000 per year for all other NEOs to be used for financial planning, tax preparation fees and estate planning.
The Southern Company system has aircraft that are used to facilitate business travel. All flights on these aircraft must have a business purpose, except limited personal use that is associated with business travel is permitted. The amount reported for such personal use is the incremental cost of providing the benefit, primarily fuel costs and airport costs as well as any incidental costs for the crew. Also, if seating is available, the Company permits a spouse or other family member to accompany an employee on a flight. However, because in such cases the aircraft is being used for a business purpose, there is no incremental cost associated with the family travel, and no amounts are included for such travel. Any additional expenses incurred that are related to family travel are included.
The Compensation Committee recognizes that permitting limited personal use of system aircraft for certain executives allows the them to continue to perform their duties in a safe, secure environment and promotes safe and effective use of their time. For 2020, the Compensation Committee approved personal use of system air for Mr. Fanning and Mr. Kuczynski. The amount for Mr. Fanning is $112,601 and for Mr. Kuczynski is $52,078.
The personal safety and security of employees at home, at work and while traveling is of utmost importance to us. The amount reported for Mr. Fanning includes $7,100 related to personal security expenses. Given Mr. Fanning’s profile and high visibility, we believe that the costs of his security program are appropriate and a necessary business expense and that we can benefit from the added security measures for him. Costs reported reflect the ongoing security services provided during 2020.
To facilitate the ability of Mr. Kuczynski to be near the Vogtle construction site, the Company assists in covering living expenses (apartment and furniture rental) and a vehicle lease for Mr. Kuczynski. The amount for 2020 includes $76,153 for living expenses and $16,640 for the vehicle lease.
Other miscellaneous perquisites include the full cost to the Company of providing the following items: personal use of Company-provided tickets for sporting and other entertainment events, spousal expenses related to business travel and gifts distributed to and activities provided to attendees at Company-sponsored events.


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Grants of Plan-Based Awards in 2020

This table provides information on short-term and long-term incentive compensation awards made in 2020.

Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
Estimated Future Payouts
Under Equity Incentive
Plan Awards
      Grant Date
Fair Value
of Stock
and Option
Awards
($)
(i)
Name
(a)
Grant
Date
(b)
Threshold
($)
(c)
Target
($)
(d)
Maximum
($)
(e)
      Threshold
(#)
(f)
Target
(#)
(g)
Maximum
(#)
(h)
Thomas A. Fanning