SOUTHERN CO — Proxy Solicitation & Information Statement 2017

Apr 7, 2017

DEF 14A 1 southern3153221-def14a.htm DEFINITIVE PROXY STATEMENT

Table of Contents

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. )

☑ Filed by the Registrant ☐ Filed by a Party other than the Registrant

CHECK THE APPROPRIATE BOX:
☐	Preliminary Proxy Statement
☐	Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
☑	Definitive Proxy Statement
☐	Definitive Additional Materials
☐	Soliciting Material Under Rule
14a-12

The Southern Company

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

| PAYMENT OF FILING FEE (CHECK THE APPROPRIATE
BOX): | |
| --- | --- |
| ☑ | No fee
required. |
| ☐ | Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11. |
| | 1)
Title of each class of securities to which transaction
applies: |
| | 2)
Aggregate number of securities to which transaction applies: |
| | 3)
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
| | 4)
Proposed maximum aggregate value of transaction: |
| | 5) Total fee paid: |
| ☐ | Fee paid previously with
preliminary materials: |
| ☐ | Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the
date of its filing. |
| | 1)
Amount previously paid: |
| | 2)
Form, Schedule or Registration Statement No.: |
| | 3)
Filing Party: |
| | 4) Date
Filed: |

Table of Contents

Notice of 2017 Annual Meeting of Stockholders and Proxy Statement

Table of Contents

Investor Fact Sheet

One of America’s Premier Energy Companies

| — | 46,000 megawatts of electric
generating capacity and 1,500 billion cubic feet of combined natural gas
consumption and throughput volume serving approximately 9.0 million
electric and gas customers through 11 premier state-regulated utilities, a
competitive generation company serving wholesale customers across America
and a nationally-recognized provider of customized energy
solutions. |
| --- | --- |
| — | Consistently listed among the top
U.S. electric service providers by American Customer Satisfaction
Index. |
| — | Ranked among best employers for
minorities and veterans. |
| — | Goal to maximize long-term value to
stockholders through a customer, community and relationship-focused
business model that produces sustainable levels of return on energy
infrastructure. |

Financial Integrity

| — | Goal of achieving an attractive
risk-adjusted return, supported by a simple, transparent business model
and sound financial policy. |
| --- | --- |
| — | Experienced management focused on
creating and delivering value. |
| — | Goal of supporting a strong credit
profile and preserving the ability to invest in additional value-accretive
projects. |

Dividend Objective: Regular, Predictable and Sustainable Growth

| — | 68 consecutive years of dividends
equal to or greater than the previous year. |
| --- | --- |
| — | 15 years of consecutive dividend
increases. |

Dividends Per Share Paid

2016 Energy Mix for Southern Company

What Distinguishes Southern Company

Electric Operating Companies

— Only electric utility system in the U.S. committed to developing the full portfolio of generation resources – natural gas, 21st century coal, nuclear and renewables such as wind and solar – together with an emphasis on energy efficiency.

Southern Company Gas

— Largest natural gas distribution operator in the U.S. with seven state-regulated local distribution companies (LDCs), serving over 4.5 million customers. Midstream operations include investments in six pipelines, including Southern Natural Gas. Gas marketing services complement LDCs and midstream investments.

Southern Power

— America’s premier wholesale energy partner investing in clean energy solutions serving municipalities, electric cooperatives, investor-owned utilities and other energy customers.

PowerSecure

— Provides energy technologies and services to electric utilities and large industrial, commercial, institutional and municipal customers. Customer solutions include distributed generation systems, utility infrastructure solutions and energy efficiency products and services.

Growth in Renewables

— Approximately 4,000 megawatts of renewable capacity announced or added since 2012, including the largest voluntary utility solar portfolio in the U.S. at Georgia Power.

Research and Development

| — | Industry leader in conducting robust
research, development and deployment of new, innovative energy
technologies. |
| --- | --- |
| — | Major focus on greenhouse gas
emissions reduction and a record of technology advancement dating back to
the 1960s. |

Table of Contents

Letter to Stockholders

Thomas A. Fanning Chairman, President and Chief Executive Officer

T here is no doubt the world is rapidly changing on many fronts. At Southern Company we are not merely adapting to this changing environment – we have the energy to lead the change.”

Dear Fellow Stockholders:

You are invited to attend the 2017 Annual Meeting of Stockholders at 10:00 a.m., ET on Wednesday, May 24, 2017, at The Lodge Conference Center at Callaway Gardens, Pine Mountain, Georgia.

2016 was a year of great growth and change as we continued to fill in the energy value chain to sustain growth.

| — | We proudly welcomed more than 6,000
new colleagues and over 4.5 million customers with the addition of
Southern Company Gas (formerly AGL Resources Inc.). |
| --- | --- |
| — | Our wholesale electric subsidiary,
Southern Power Company (Southern Power), continued to acquire solar, wind
and natural gas generation facilities, investing over $4.5
billion. |
| — | We acquired a 50% equity interest in
the Southern Natural Gas pipeline system. |
| — | With the acquisition of PowerSecure
International, Inc. (PowerSecure) and its strategic alliance with Bloom
Energy for the deployment of fuel cell and battery storage technologies,
we’re developing behind-the-meter infrastructure for customers across the
country. |

These decisions were all designed to help meet customers’ current and future energy needs with a focus on the continued execution of our customer-focused business model supporting constructive regulatory environments with healthy capital spending and returns on our investment. We now own and operate 11 premier state-regulated electric and gas utilities that are complemented by energy assets under long-term contract, including natural gas and renewable generation, interstate natural gas pipelines and behind-the-meter infrastructure. We aim to continue to deliver a superior, risk-adjusted total shareholder return (TSR) supported by regular, predictable and sustainable earnings and dividends.

I am also proud to report that we were recognized by DiversityInc as one of the “Top 50 Companies for Diversity” in 2016. DiversityInc also ranked Southern Company number one on its list of “Top 10 Companies for Opportunity.” This is especially meaningful because it testifies that we were recognized not only for cultivating a diverse workplace, but that we are also considered the number one company in America in which the individuals who comprise that diverse workforce are afforded the opportunity to advance their careers. In addition, we earned a perfect score from the Human Rights Campaign on their Corporate Equality Index for 2017.

We are taking advantage of the notice and access rules of the Securities and Exchange Commission (SEC) that allow us to furnish our proxy materials to you over the internet instead of mailing paper copies to each stockholder. We are mailing a Notice of Internet Availability of Proxy Materials beginning on or about April 7, 2017 to certain of our stockholders. The Notice contains instructions on how to access the proxy materials and vote your proxy. We believe this approach allows us to provide stockholders with a timely and convenient way to receive proxy materials and vote, while lowering the costs of delivery and reducing the environmental impact of the annual meeting.

Your vote is important. We urge you to vote promptly, even if you plan to attend the annual meeting.

Thank you for your continued support of Southern Company.

Thomas A. Fanning

Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Stockholders to be held on May 24, 2017: The proxy statement and the annual report are available at investor.southerncompany.com.

investor.southerncompany.com 3

Table of Contents

Notice of Annual Meeting of Stockholders of Southern Company

Date and Time

Wednesday, May 24, 2017 at 10:00 a.m., ET

Place

The Lodge Conference Center at Callaway Gardens, Highway 18, Pine Mountain, Georgia 31822

Items of Business

Stockholders are being asked to vote on six agenda items at the 2017 annual meeting.

1	Elect 15 Directors
2	Approve an amendment to the
Certificate of Incorporation to reduce the supermajority vote requirement
to a majority vote
3	Conduct an advisory vote to approve
executive compensation, often referred to as a Say on Pay
4	Conduct an advisory vote to approve
the frequency of future advisory votes on executive compensation, often
referred to as a Say on Frequency
5	Ratify the appointment of Deloitte
& Touche LLP as our independent registered public accounting firm for
2017
6	Consider a stockholder
proposal, if properly presented at the
meeting

Record Date

Stockholders of record at the close of business on March 27, 2017 are entitled to attend and vote at the annual meeting. On that date, there were 995,225,310 shares of common stock of The Southern Company (Southern Company, the Company, we, us or our) outstanding and entitled to vote.

By Order of the Board of Directors.

April 7, 2017

| EVERY VOTE IS IMPORTANT TO SOUTHERN COMPANY We have created
an annual meeting website to make it easy to access our 2017 annual
meeting materials . | |
| --- | --- |
| ● | |
| www.southerncompanyannualmeeting.com | ● |
| 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 attend the
annual meeting in person, 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 Internet or Telephone Voting by internet or by telephone is fast and convenient,
and your vote is immediately confirmed and tabulated. — ● | www.proxyvote.com 24/7 |
| --- | --- |
| ● | 1-800-690-6903 24/7 |
| 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. |

4 Southern Company 2017 Proxy Statement

PART 02

Table of Contents

Proxy Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Annual Meeting Agenda

| Item 1 | 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. |
| --- | --- |
| — | Through their positions,
responsibilities, skills and perspectives, which span various industries
and organizations, these nominees represent a Board of Directors (Board)
that is diverse and possesses appropriate collective knowledge and
experience in accounting, finance, leadership, business operations, risk
management, corporate governance and our industry and key subsidiaries’
service territories. |
| ● | The Board recommends a vote FOR each Director nominee. |
| ● | See page 15 for further
information. |

Director Nominees

●	●	●
Age: 68 Director since: 2006 Independent Director: Yes Current Committees: Audit	Age: 64 Director since: 2007 Independent Director: Yes Current Committees: Audit	Age: 67 Director since: 2009 Independent Director: Yes Current Committees: Compensation and Management Succession
(Chair), Finance

●	●	●
Age: 60 Director since: 2010 Independent Director: No Current Committees: None	Age: 54 Director since: 2012 Independent Director: Yes Current Committees: Compensation and Management Succession,
Finance (Chair)	Age: 71 Director since: 2008 Independent Director: Yes Current Committees: Governance (Chair),
Nuclear/Operations

●	●	●
Age: 65 Director since: 2007 Independent Director: Yes Current Committees: Audit	Age: 66 Director since: 2014 Independent Director: Yes Current Committees: Governance, Nuclear/Operations, Business
Security Subcommittee (Chair)	Age: 68 Director since: 1999 Independent Director: Yes Current Committees: Compensation and Management Succession,
Finance

investor.southerncompany.com 5

Table of Contents

Proxy Summary

●	●	●
Age: 65 Director since: 2015 Independent Director: Yes Current Committees: Audit (Chair)	Age: 69 Director since: 2010 Independent Director: Yes Current Committees: Compensation and Management Succession,
Nuclear/Operations, Business Security
Subcommittee	Age: 63 Director since: 2006 Independent Director: Yes Current Committees: Finance,
Governance

●	●	●
Age: 71 Director since: 2010 Independent Director: Yes Current Committees: Compensation and Management Succession,
Nuclear/Operations (Chair)	Age: 71 Director since: 2014 Independent Director: Yes, Lead Independent Director Current Committees: Finance, Governance	Age: 65 Director since: 2012 Independent Director: Yes Current Committees: Governance,
Nuclear/Operations

| Qualifications, Attributes, Skills and Experience of the
Board as a Whole | |
| --- | --- |
| ● | CEO or senior executive
leadership experience |
| ● | Diversity of race,
ethnicity, gender, age, cultural background or professional
experience |
| ● | Electric or gas utility
experience or nuclear operations experience |
| ● | Engineering, innovation
or technology experience |
| ● | Federal, state or local
government or regulatory experience |
| ● | Financial, banking or
investment experience |
| ● | Knowledge of the
traditional electric operating companies or Southern Company
Gas |
| ● | Risk oversight or risk
management experience |

| Board Independence All Director
nominees are independent except the
CEO |
| --- |
| Board Diversity |

6 Southern Company 2017 Proxy Statement

Table of Contents

Proxy Summary

Key Corporate Governance Practices

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. Our key corporate governance practices include:

| — | Annual election of
Directors |
| --- | --- |
| — | Majority voting for Directors, with
a director resignation policy |
| — | 10% threshold for stockholders to
request a special meeting |

| — | Adoption of proxy access bylaw that
provides stockholders (up to
group of 20) that have maintained ownership of 3% of shares for three years the ability to
nominate the greater of two
nominees or 20% of Directors |
| --- | --- |
| — | 14 of 15 Directors are independent
with an average tenure of independent Directors of seven years |
| — | Strong Lead Independent
Director |

| — | All Board committees are comprised
of independent
Directors |
| --- | --- |
| — | Annual Board and committee
self-evaluations |
| — | Proactive stockholder
engagement |

| — | Clawback policy under our Omnibus
Plan |
| --- | --- |
| — | Strong stock ownership
guidelines |
| — | Annual management succession
planning review |

— Anti-hedging and anti-pledging provisions

Board Tenure Tenure of Independent Directors (Years of consecutive service) Average Tenure of Independent Directors: 7 years

Recent and Proposed Governance and Disclosure Enhancements

| — | Adopted a proxy access right for
stockholders |
| --- | --- |
| — | Continued our stockholder
engagement efforts |
| — | Added five new Directors to the
Board in the past five years |

| — | Included disclosure about Board
refreshment, Board and committee self-evaluations and management succession planning |
| --- | --- |
| — | Included a message from the Lead
Independent Director |
| — | Eliminated the “fair price”
anti-takeover provision in the Certificate of Incorporation |
| — | Proposed an amendment to the
Certificate of Incorporation to
eliminate the supermajority vote
requirement |

| Item 2 | A
supermajority vote requirement like the one contained in Article Eleventh
of the Certificate of Incorporation, as amended (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. |
| ● | The Board recommends a vote FOR approval of an amendment to the
Certificate to reduce the supermajority vote requirement to a majority
vote. |
| ● | See page 39 for further information. |

investor.southerncompany.com 7

Table of Contents

Proxy Summary

Item 3
●	The Board recommends a vote FOR approval of executive
compensation.
●	See page 78 for further
information.

Compensation Highlights

We target the total direct compensation for our executives at market median and place a significant portion of that target compensation “at risk” – subject to achieving both short-term and long-term performance goals. In fact, only the base salary portion of executive compensation is fixed.

| CEO
Target Pay | | |
| --- | --- | --- |
| | 89% At Risk-Subject to Performance Goals | |
| Salary 11% | Annual
Cash Incentive Award 16% | Long-Term Equity
Incentive Award 73% |

We have continued with the same compensation program structure for 2016, tying a significant majority of executive compensation to performance. The key performance based elements are the annual cash incentive award and the long-term equity incentive award.

Annual Cash Incentive Award
—	Awards under our Performance Pay
Program (PPP) are earned based
on the achievement of performance goals over a one-year performance
period.
—	Performance goals for 2016 include
financial goals (earnings per
share (EPS) and business unit net income), operational goals and individual performance
goals intended to drive
performance that we believe will lead to long-term success for the
Company.
—	Payout is made in cash after the
end of the performance period.

Long-Term Equity Incentive Award
—	Awards under our Performance Share
Program (PSP) are granted in
the form of performance share units that are earned based on the achievement of
performance goals over a
three-year performance period.
—	Performance goals for the 2016 to
2018 performance period include
a cumulative three-year EPS goal (25% weighting), an equity-weighted return on equity (ROE) goal (25% weighting) and a relative TSR
performance goal (50%
weighting).
—	Payout is made in shares of common
stock after the end of the
three-year performance period.

2016 Financial and Operational Performance

2016 was a successful year for us with our adjusted EPS exceeding our guidance range for the year. We expanded our reach while continuing the strong financial performance of our traditional electric operating companies and our electric wholesale subsidiary, Southern Power. We also demonstrated strong operational performance for the year.

Financial Goals and Achievement for 2016 Performance Pay Program

We exceeded the financial goals for the year set by the Compensation and Management Succession Committee under our 2016 Performance Pay Program. Financial measures tied to compensation performance goals included EPS for Southern Company and net income for our various business units.

Operational Goal Achievement for 2016 Performance Pay Program

Operating performance was strong across the Southern Company system for 2016. Operational measures for the 2016 Performance Pay Program included customer satisfaction, reliability, availability, nuclear plant operations, major projects, safety and culture. Measures and weightings vary among the operating companies.

8 Southern Company 2017 Proxy Statement

PART 03

Table of Contents

Proxy Summary

Incentive Compensation Earned for Performance Periods Ended in 2016

The compensation earned by our named executive officers (NEOs) demonstrates our commitment to pay for performance.

Annual Cash Incentive Plan – 2016 Performance Pay Program

Our Performance Pay Program rewards annual financial and operational performance as well as individual NEO performance. We had strong financial and operational performance for 2016, exceeding our overall targets for the year. The Compensation and Management Succession Committee also believed the 2016 individual performance contributions by our NEOs were strong. Accordingly, payouts for all participants in the program, including the NEOs, were above target. For the NEOs, payouts ranged from 167% to 174% of target.

Long-Term Equity Incentive Program – 2014-2016 Performance Share Program

In 2014, 60% of the target value of our long-term equity incentive program was granted in the form of performance shares under our Performance Share Program. For the three-year performance period of 2014 through 2016, performance shares could be earned based on a relative TSR performance goal. Our three-year TSR performance relative to the utility peer group was below the threshold performance level, resulting in a payout at 0% for the Performance Share Program awards for all participants, including the NEOs.

Compensation Governance Overview

What We Do

| ✓ | 89%
of CEO target pay is “at risk” based on achievement of performance
goals |
| --- | --- |
| ✓ | Performance shares subject to achievement of three
performance measures over a three-year period: cumulative EPS, ROE and
relative TSR |
| ✓ | Clawback provision for performance-based
pay |
| ✓ | Independent compensation consultant |
| ✓ | Policy against hedging and pledging |
| ✓ | Dividends on stock awards received only if underlying award
is earned |
| ✓ | Annual charter review and self-evaluation by the Compensation
and Management Succession Committee |
| ✓ | Strong stock ownership requirements |
| ✓ | Annual pay risk assessment |
| ✓ | Change-in-control severance payouts require double-trigger of
change in control and termination of employment |
| ✓ | Annual review of tally sheets |
| ✓ | Ongoing stockholder engagement |
| ✓ | Regular updates on best practices to the Compensation and
Management Succession Committee from the independent compensation
consultant |

| What We Don’t
Do | |
| --- | --- |
| ✕ | No tax gross ups for NEOs (except on certain relocation-related
expenses) |
| ✕ | NEOs receive limited ongoing perquisites that make up a small
portion of total compensation |
| ✕ | No employment agreements with our executives |
| ✕ | No stock option repricing without stockholder
approval |
| ✕ | No excise tax gross-ups on change-in-control severance
arrangements |
| ✕ | Granting of equity awards are not timed to coincide with the
release of material, non-public information |

| ● | — | 60% performance
shares with a relative TSR performance measure over a three-year
performance period and 40% stock options |
| --- | --- | --- |
| ● | — | 100% performance
shares with three performance measures over a three-year performance
period: cumulative EPS, equity-weighted ROE and relative TSR |

investor.southerncompany.com 9

Table of Contents

Proxy Summary

Item 4
●	The Board recommends a vote for the frequency of the advisory vote
on executive compensation every ONE
YEAR (on an annual basis).
●	See page 78 for further information.

| Item 5 | The Audit
Committee has appointed Deloitte & Touche LLP (Deloitte & Touche)
as our independent registered public accounting firm for
2017. |
| --- | --- |
| — | This appointment is
being submitted to stockholders for ratification. |
| ● | The Board recommends a vote FOR ratification of the appointment of
Deloitte & Touche as our independent registered public accounting firm
for 2017. |
| ● | See page 79 for further information. |

Stockholder Proposal

Item 6
●	The Board recommends a vote AGAINST the
stockholder proposal.
●	See page 84 for further information.

10 Southern Company 2017 Proxy Statement

Table of Contents

Table of Contents

| Letter to
Stockholders | | 3 |
| --- | --- | --- |
| Notice of Annual Meeting of Stockholders of Southern
Company | | 4 |
| Proxy Summary | | 5 |
| FAQs about Voting and the Annual
Meeting | | 12 |
| Corporate Governance at Southern
Company | | 15 |
| Item
1 | Election of 15 Directors | 15 |
| Southern Company Board | | 23 |
| Majority Voting for Directors and Director Resignation
Policy | | 23 |
| Director Independence
Standards | | 24 |
| Director Independence
Review Process | | 24 |
| Identifying Nominees for
Election to the Board | | 25 |
| Diversity of our Board | | 25 |
| Board Refreshment | | 26 |
| Stockholder Recommendation of Board Candidates | | 26 |
| Board Structure and
Processes | | 26 |
| Board Leadership Structure | | 26 |
| Meetings of Non-Management Directors | | 26 |
| Meetings and Attendance | | 27 |
| Board and Committee Self-Evaluation Process | | 27 |
| Message from our Lead Independent
Director | | 28 |
| Role of the Lead Independent Director | | 28 |
| Board Risk
Oversight | | 29 |
| Succession Planning and
Talent Development | | 30 |
| Communicating with the
Board | | 30 |
| Other Governance
Policies and Practices | | 31 |
| Certain Relationships and Related Transactions | | 31 |
| Proxy Access | | 32 |
| Stockholder Engagement | | 32 |
| Political Contributions Policy | | 33 |
| Our Responsibility | | 33 |
| Corporate Governance Website | | 33 |
| Committees of the Board | | 34 |
| Director Compensation | | 37 |
| Governance Related Company
Proposal | | 39 |
| Item
2 | Approve an Amendment to the Certificate of Incorporation to
Reduce the Supermajority Vote Requirement to a Majority
Vote | 39 |
| Compensation Discussion and
Analysis | | 40 |
| Letter from the Compensation and
Management Succession Committee (Compensation
Committee) | | 40 |
| Compensation Governance
Overview | | 42 |
| Business
Overview | | 43 |
| Analysis of CEO
Pay | | 44 |
| 2016 Pay for Performance
Analysis | | 46 |
| Our Executive Compensation
Philosophy | | 49 |
| Our Executive Compensation
Program | | 51 |
| Other Compensation and Governance
Inputs, Policies and Practices | | 58 |
| Executive Compensation Tables | | 62 |
| Compensation Related Company
Proposals | | 78 |
| Item
3 | Advisory Vote to Approve Executive Compensation (Say on
Pay) | 78 |
| Item
4 | Advisory Vote to Approve the Frequency of Future
Advisory Votes on Executive Compensation (Say on
Frequency) | 78 |
| Audit Committee Matters | | 79 |
| Item
5 | Ratify the Independent Registered Public Accounting Firm
for 2017 | 79 |
| Principal Independent Registered
Public Accounting Firm Fees | | 79 |
| Audit Committee
Report | | 80 |
| Stock Ownership Information | | 82 |
| Stockholder Proposal | | 84 |
| Item
6 | Report on Strategy For International Energy Agency 2°C
Scenario | 84 |
| Appendix A (Text of Proposed Amendment to Article
Eleventh of the Certificate) | | 87 |
| Reconciliation of Non-GAAP
Information | | 88 |
| Cautionary Note Regarding Forward-Looking
Statements | | 89 |

investor.southerncompany.com 11

Table of Contents

FAQs about Voting and the Annual Meeting

The following table summarizes the Board’s voting recommendations for each proposal, the vote required for each proposal to pass and the effect of abstentions and uninstructed shares on each proposal.

| Item | Board Recommendation | Voting
Standard | Abstentions | Uninstructed Shares |
| --- | --- | --- | --- | --- |
| Item 1 – Election of Directors | ✓ FOR | Majority of votes cast for each
Director | No effect | No effect |
| Item 2 – Approval of an amendment to the
Certificate to reduce the supermajority vote requirement to a majority
vote | ✓ FOR | At least two-thirds of issued and
outstanding shares | Count as a vote against | Count as a vote
against |
| Item 3 – Advisory vote to approve
executive compensation (Say on Pay) | ✓ FOR | Majority of votes cast | No effect | No effect |
| Item 4 – Advisory vote to approve the
frequency of future advisory votes on executive compensation (Say on
Frequency) | ✓ FOR | Plurality of the votes
cast | No effect | No effect |
| Item 5 – Ratification of the appointment
of Deloitte & Touche as the independent registered public accounting
firm for 2017 | ✓ FOR | Majority of votes cast | No effect | Discretionary voting by broker
permitted |
| Item 6 – Stockholder
Proposal | ✕ AGAINST | Majority of votes cast | No effect | No
effect |

Q:	Who is entitled to vote?
A:	All
stockholders of record at the close of business on the record date of
March 27, 2017 may vote.
Q:	Can I attend the annual
meeting?
A:	All stockholders are invited to the
annual meeting. Attendees need to bring photo identification, such as a
driver’s license, and proof of ownership to gain admission to the annual
meeting. If you are a holder of record, the top half of your proxy card is
your proof of ownership. If you hold your shares in street name, you will
need proof of ownership to be admitted to the annual meeting. Examples of
proof of ownership are a recent brokerage statement or a letter from your
bank or broker. Please note that cameras, sound or
video recording equipment, cellular telephones, smartphones or other
similar equipment and electronic devices are not permitted to be used
during the annual meeting. Large bags or backpacks may not be brought into
the annual meeting. If you hold your shares in street
name and you want to give voting instructions at the annual meeting, you
must get a legal proxy in your name from the broker, bank or other nominee
that holds your shares.
Q:	What is notice and
access?
A:	The SEC’s “notice and access” rule allows companies to deliver a Notice of Internet Availability of Proxy Materials (Notice) to stockholders in lieu of a paper copy of the proxy statement and annual report. The Notice provides instructions as to how stockholders can access the proxy statement and the annual report online, contains a listing of matters to be considered at the annual meeting and sets forth instructions as to how shares can be voted. Instructions for requesting a paper copy of the proxy statement and the annual report are set forth on the Notice. Shares must be voted by internet, by phone or by completing and returning a proxy form. Shares cannot be voted by marking, writing on and/or returning the Notice. Any Notices that are returned will not be counted as votes.
Q:	How do I give voting instructions?
A:	You may attend the annual meeting
and give instructions in person or give instructions by internet, by phone
or, if you received a printed proxy form, by mail. Information for giving
voting instructions is on the Notice or form of proxy and trustee voting
instruction form (proxy form). For those investors whose shares are held by a broker,
bank or other nominee, you must complete and return the voting instruction
form provided by your broker, bank or nominee in order to instruct your
broker, bank or nominee on how to vote.
Q:	What shares are included on the proxy form?
A:	If you are a stockholder of record,
you will receive only one Notice or proxy form for all the shares of
common stock you hold in certificate form, in book-entry form and in any
Company benefit plan. Please vote proxies for all
accounts to ensure that all of your shares are voted. If you wish to
consolidate multiple registered accounts, contact Wells Fargo Shareowner
Services at 1-800-554- 7626 or at www.shareowneronline.com .

12 Southern Company 2017 Proxy Statement

PART 04

Table of Contents

FAQs about Voting and the Annual Meeting

| Q: | Will my
shares be voted if I do not vote by internet, by telephone or by signing
and returning my proxy form? |
| --- | --- |
| A: | If you are a holder of record and
you do not vote, then your shares will not count in deciding the matters
presented for stockholder consideration at the annual meeting. With
respect to certain matters, your failure to vote will have the same effect
as a vote against the matter. |
| | If you are a current or former
Southern Company system employee or other individual who holds shares of
common stock in the Southern Company Employee Savings Plan (ESP), AGL
Resources Inc. Retirement Savings Plus Plan (RSP) or Nicor Gas Thrift Plan
(Nicor Plan) and you do not provide the trustee of the relevant plan
(Trustee) with timely voting instructions, the following will occur in
accordance with the applicable plan provision and/or policy for unvoted
shares: |

| — | ESP: The Pension Fund Investment
Review Committee may direct the Trustee how to vote these
shares. |
| --- | --- |
| — | RSP: The plan’s Investment Committee
will direct the Trustee how to vote these
shares. |
| — | Nicor Plan: The Trustee may vote
these shares in the same proportion as it votes shares owned by Nicor Plan
participants who voted their shares. |

Procedures are in place to safeguard the confidentiality of your voting instructions. If you are a beneficial owner, you will receive voting instruction information from the bank, broker or other nominee through which you own your shares of common stock. If your shares are held through a bank, broker or other nominee, your broker may vote your shares under certain limited circumstances if you do not provide voting instructions before the annual meeting. These circumstances include voting your shares on “routine matters” under New York Stock Exchange (NYSE) rules, such as the ratification of the appointment of our independent registered public accounting firm described in Item 5 of this proxy statement. With respect to Item 5, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted. The remaining proposals are not considered “routine matters” under NYSE rules. When a proposal is not a routine matter and the brokerage firm has not received voting instructions, the brokerage firm cannot vote the shares on that proposal. We encourage you to provide instructions to your broker or bank by voting your proxy so that your shares will be voted at the annual meeting in accordance with your wishes.

| Q: | What if I am a stockholder of record and do not specify
a choice for a matter when returning a proxy form? |
| --- | --- |
| A: | Stockholders should
specify their choice for each matter on the proxy form. If no specific
instructions are given, proxies which are signed and returned will be
voted in accordance with the Board’s recommendations. |
| Q: | Can I change my vote? |
| A: | Yes. If you are a
holder of record, you may change your vote by submitting a subsequent
proxy, by written request received by the Corporate Secretary prior to the
meeting or by attending the annual meeting and voting your
shares. |
| | If your shares are
held through a broker, bank or other nominee, you must follow the
instructions of your broker, bank or other nominee to revoke your voting
instructions. |
| Q: | How are votes counted? |
| A: | Each share counts as
one vote. |
| Q: | How many votes do you need to hold the annual
meeting? |
| A: | A quorum is required
to transact business at the annual meeting. Stockholders of record holding
shares of stock constituting a majority of the shares entitled to be cast
shall constitute a quorum. |
| | Abstentions that are
marked on the proxy form and broker non-votes are included for the
purpose of determining a quorum, but shares that otherwise are not voted
are not counted toward a quorum. |
| Q: | What are broker non-votes? |
| A: | Broker non-votes occur
on a matter up for vote when a broker, bank or other holder of shares you
own in “street name” is not permitted to vote on that particular matter
without instructions from you, you do not give such instructions and the
broker, bank or other nominee indicates on its proxy form, or otherwise
notifies us, that it does not have authority to vote its shares on that
matter. Whether a broker has authority to vote its shares on uninstructed
matters is determined by NYSE rules. |
| Q: | Can the proxy statement be accessed from the
internet? |
| A: | Yes. You can access
the proxy statement on our website at investor.southerncompany.com . |
| Q: | Can I request a copy of the Company’s 2016 Annual Report on Form
10-K? |
| A: | Yes. A copy of our
2016 Annual Report on Form 10-K including financial statements, as filed
with the SEC, may be obtained without charge upon written request to the
Corporate Secretary, Southern Company, 30 Ivan Allen Jr. Boulevard NW,
Atlanta, Georgia 30308. You can also access the document on our website
at investor.southerncompany.com . |

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FAQs about Voting and the Annual Meeting

| Q: | Does the Company offer electronic delivery of proxy
materials? |
| --- | --- |
| A: | Yes. Most stockholders
can elect to receive an email that will provide an electronic link to the
proxy statement, annual report and proxy voting site. Opting to receive
your proxy materials on- line saves us the cost of producing and mailing
documents. |
| | You may sign up for
electronic delivery when you vote your proxy via the internet or by
visiting www.icsdelivery.com/so . Once you enroll for electronic delivery, you will receive proxy
materials electronically as long as your account remains active or until
you cancel your enrollment. If you consent to electronic access, you will
be responsible for your usual internet-related charges (e.g., on-line fees
and telephone charges) in connection with electronic viewing and printing
of the proxy statement and annual report. We will continue to distribute
printed materials to stockholders who do not consent to access these
materials electronically. |
| Q: | What is “householding?” |
| A: | Stockholders sharing a
single address may receive only one copy of the proxy statement and annual
report or the Notice, unless the transfer agent, broker, bank or other
nominee has received contrary instructions from any owner at that address.
This practice — known as householding — is designed to reduce printing and
mailing costs. If a stockholder of record would like to either participate
or cancel participation in householding, he or she may contact Wells Fargo
Shareowner Services at 1-800-554-7626. If you own indirectly through a
broker, bank or other nominee, please contact your financial
institution. |
| Q: | Could any additional proposals be raised at the annual
meeting? |
| A: | We do not know of any
items, other than those referred to in the Notice of Annual Meeting of
Stockholders, which may properly come before the annual meeting. As to any
other item or proposal that may properly come before the annual meeting,
including voting on a proposal omitted from this proxy statement pursuant
to the rules of the SEC, it is intended that proxies will be voted in
accordance with the discretion of the proxy holders. |
| Q: | When are stockholder proposals due for the 2018 annual
meeting of stockholders? |
| A: | The deadline for the
receipt of stockholder proposals to be considered for inclusion in our
proxy materials for the 2018 annual meeting is December 8, 2017. Proposals
must be submitted in writing to Corporate Secretary, Southern Company, 30
Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308. The proxy solicited
by the Board of Directors for the 2018 annual meeting will confer
discretionary authority to vote on any stockholder proposal presented at
that meeting that is not included in our proxy materials unless we are
provided written notice of such proposal no later than February 21,
2018. |
| Q: | Who is soliciting my proxy and who pays the expense of
such solicitations? |
| A: | Your proxy is being
solicited on behalf of the Board. |
| | We pay the cost of
soliciting proxies. We have retained Georgeson Inc. to assist with the
solicitation of proxies for a fee of $12,500, plus additional fees for
telephone and other solicitation of proxies or other services, if needed,
and reimbursement of out-of-pocket expenses. Our officers or other
employees may solicit proxies to have a larger representation at the
meeting. None of these officers or other employees will receive any
additional compensation for these services. Upon request, we will
reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding solicitation
material to the beneficial owners of the common
stock. |

14 Southern Company 2017 Proxy Statement

Table of Contents

Corporate Governance at Southern Company

Company Organization

Southern Company is a holding company managed by a core group of officers and governed by a Board that is currently comprised of 15 members. Directors are elected annually.

The Board has adopted and operates under a set of Corporate Governance Guidelines which are available on our website at investor.southerncompany.com under Corporate Governance.

| Board of
Directors Overview |
| --- |
| The Board oversees, counsels and
directs management in the long-term interests of Southern Company and its
stockholders. The Board’s major responsibilities include: — Overseeing the conduct of our business and assessing our business
and other enterprise risks; — Reviewing and approving our key financial objectives, strategic
and operating plans and other significant
actions; — Overseeing our processes for maintaining the integrity of our
financial statements and other public disclosures and our compliance with
law and ethics; — Evaluating CEO and senior management performance and
determining executive compensation; — Planning for CEO succession and monitoring management’s
succession planning for other key executive officers;
and — Establishing an effective governance structure,
including appropriate Board composition and planning for Board
succession. |

Item 1
●	The Board recommends a vote FOR each Director
nominee.

Nominees for Election as Directors

| — | 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. |
| --- | --- |
| — | Through their positions,
responsibilities, skills and perspectives, which span various industries
and organizations, these nominees represent a Board that is diverse and
possesses appropriate collective knowledge and experience in accounting,
finance, leadership, business operations, risk management, corporate
governance and our industry and subsidiaries’ service
territories. |
| — | Each nominee, if elected, will serve
until the 2018 annual meeting of stockholders. |
| — | The proxies
named on the proxy form will vote each properly executed proxy form for
the election of the 15 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. |

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Corporate Governance at Southern Company

Juanita Powell Baranco (Independent)
Age: 68 Director since: 2006 Board
committee: Audit
Executive Vice President and
Chief Operating Officer of Baranco Automotive Group, automobile
sales	Director highlights: Ms. Baranco’s particular expertise in
business operations, her significant familiarity with Georgia Power
Company (Georgia Power or GPC) and her civic involvement are 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 and her husband founded 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 was a member of the Controls and Compliance,
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 Trustees for Clark Atlanta University and on the Advisory
Council for the Catholic Foundation of North Georgia. Ms. Baranco is also
on the Board of the Commerce Club, the Woodruff Arts Center and the
Buckhead Coalition. She is also past Chair of the Board of Regents for the
University System of Georgia and past Board Chair for the Sickle Cell
Foundation of Georgia. Other public company
directorships: None (formerly a Director of
Cox Radio, Inc., John H. Harland Company and Georgia
Power)

Jon A. Boscia (Independent)
Age: 64 Director since: 2007 Board
committee: Audit
Founder and President, Boardroom
Advisors LLC, board governance consulting
firm	Director
highlights: Mr. Boscia’s extensive
background in finance, investment management, information technology and
corporate governance is valuable to the Board.
— From September 2008 until March 2011, Mr. Boscia served
as President of Sun Life Financial Inc. In this capacity, Mr. Boscia
managed a portfolio of the company’s operations with ultimate
responsibility for the United States, United Kingdom and Asia business
groups and directed the global marketing and investment management
functions. — Previously, Mr. Boscia served as Chairman of the Board
and Chief Executive Officer of Lincoln Financial Group, a diversified
financial services organization, until his retirement in 2007. Mr. Boscia
became the Chief Executive Officer of Lincoln Financial Group in 1998.
During his time at Lincoln Financial Group, the company earned a
reputation for its stellar performance in making major
acquisitions. — Mr. Boscia is a past member of the Board of PHH
Corporation, where he was Chair of the Audit Committee and a member of the
Regulatory Oversight Committee, past member of the Board of Sun Life
Financial Inc., where he was a member of the Investment Oversight
Committee and the Risk Review Committee, and past member of the Board of
The Hershey Company, where he chaired the Corporate Governance Committee
and served on the Executive Committee. — In addition, Mr. Boscia has served in leadership
positions on other public company Boards as well as not-for-profit and
industry Boards. Other public company
directorships: None (formerly a Director of
PHH Corporation, Sun Life Financial Inc., Armstrong World Industries,
Lincoln Financial Group, Georgia Pacific Corporation and The Hershey
Company)

16 Southern Company 2017 Proxy Statement

PART 05

Table of Contents

Corporate Governance at Southern Company

Henry A. “Hal” Clark III (Independent)
Age: 67 Director since: 2009 Board
committees: Compensation and Management
Succession (Chair), Finance
Senior Advisor of Evercore
(retired), corporate finance advisory firm	Director highlights: Mr. Clark’s utility global financial and utility industry
expertise as well as his expertise in capital market transactions are
valuable to the Board.
— Mr. Clark was a Senior Advisor with Evercore (formerly
Evercore Partners Inc.) from July 2009 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 30 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 Partners Inc., Mr. Clark was
Group Chairman of Global Power and Utilities at Citigroup, Inc. from 2001
to 2009. — 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. Other public company
directorships: None

Thomas A. Fanning (Chairman, President and Chief Executive Officer)
Age: 60 Director since: 2010 Board
committee: None
Chairman of the Board, President
and Chief Executive Officer of the Company	Director highlights: Mr. Fanning’s knowledge of our business and the
utility industry, understanding of the complex regulatory structure of the
industry and experience in strategy development and execution uniquely
qualify him to be the Chairman of the Board.
— Mr. Fanning has held numerous leadership positions
across the Southern Company system during his more than 30 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. — Mr. Fanning is on the Board of Southern Power, a
subsidiary of Southern Company. — Mr. Fanning is a Director of Vulcan Materials Company,
serving as a member of the Audit Committee and the Compensation Committee,
and the Federal Reserve Bank of Atlanta, serving as Chairman of the
Board. Other public company
directorships: Vulcan Materials Company
(formerly a Director of The St. Joe
Company)

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Corporate Governance at Southern Company

David J. Grain (Independent)
Age: 54 Director since: 2012 Board committees: Compensation
and Management Succession, Finance (Chair)
Founder and Managing Partner, Grain Management, LLC, private
equity firm	Director
highlights: Mr. Grain’s background in finance, investment
management and wireless communications infrastructure, leadership and
civic involvement are valuable to the Board.
— Mr. Grain is the founding member and managing partner of
Grain Management, LLC (Grain Management), a private equity firm focused on
investments in the media and communications sectors, which he founded in
2006. With offices in Sarasota, Florida and Washington, D.C., the firm
manages funds for a number of the country’s leading academic institutions,
endowments and public pension funds. Grain Management also builds, owns
and operates wireless infrastructure assets across North
America. — 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 the
former Governor Charlie Crist. — He is currently a Director at Gateway Bank of Southwest
Florida and a Trustee of the College of the Holy Cross and serves on the
Investment Committee of the United States Tennis Association. Other public company
directorships: None

Veronica M. Hagen (Independent)
Age: 71 Director since: 2008 Board
committees: Governance (Chair),
Nuclear/Operations
Chief Executive Officer, Polymer
Group, Inc. (retired), engineered materials	Director highlights: Ms. Hagen’s global operational management
experience and commercial business leadership are valuable to the
Board.
— From 2007 until her retirement in 2013, Ms. Hagen served
as Chief Executive Officer of Polymer Group, Inc. and served from 2007 to
2015 as a Director. Ms. Hagen also served as President of Polymer Group,
Inc. from January 2011 until her retirement in 2013. Polymer Group, Inc.
is a leading producer and marketer of engineered materials. — Prior to joining Polymer Group, Inc., Ms. Hagen was the
President and Chief Executive Officer of Sappi Fine Paper, a division of
Sappi Limited, the South African-based global leader in the pulp and paper
industry, from November 2004 until 2007. — She also served as Vice President and Chief Customer
Officer at Alcoa Inc. and owned and operated Metal Sales Associates, a
privately-held metal business. — She serves on the Compensation Committee and the
Nominating/Corporate Governance Committee of the Board of Directors of
American Water Works Company, Inc. Ms. Hagen also serves as the Chair of
the Compensation Committee and a member of the Nominating and Governance
Committee of the Board of Directors of Newmont Mining
Corporation. Other public company
directorships: American Water Works
Company, Inc., Newmont Mining
Corporation

18 Southern Company 2017 Proxy Statement

Table of Contents

Corporate Governance at Southern Company

Warren A. Hood, Jr. (Independent)
Age: 65 Director since: 2007 Board
committee: Audit
Chairman of the Board and Chief
Executive Officer of Hood Companies, Inc., packaging and construction
products	Director highlights: Mr. Hood’s business operations,
risk management and financial experience, civic involvement and
significant familiarity with Mississippi Power Company (Mississippi Power
or MPC) are valuable to the Board.
— Mr. Hood is the Chairman and Chief Executive Officer of
Hood Companies, Inc. which he established in 1978. Hood Companies, Inc.
consists of four separate corporations with 74 manufacturing and
distribution sites throughout the United States, Canada and Mexico. Hood
Companies, Inc.’s products are currently marketed in North America, the
Caribbean and Western Europe. — Mr. Hood previously served on the Board of the Company’s
subsidiary, Mississippi Power, where he was also a member of the
Compensation Committee. — Mr. Hood has long been recognized for his leadership
role in the State of Mississippi. He serves or has served on numerous
corporate, community and philanthropic boards, including Boy Scouts of
America Pine Burr Area Council, Governor Phil Bryant’s Mississippi Works
Committee and The Governor’s Commission on Rebuilding, Recovery and
Renewal, which was formed following Hurricane Katrina in
2005. — He serves on the Board of BancorpSouth, Inc., where he
is a member of the Audit Committee. Other public company
directorships: BancorpSouth, Inc. (formerly
a Director of Mississippi Power)

Linda P. Hudson (Independent)
Age: 66 Director since: 2014 Board
committees: Governance, Nuclear/
Operations, Business Security Subcommittee (Chair)
Founder, Chairman and Chief
Executive Officer, The Cardea Group, business management consulting firm,
and former Chief Executive Officer of BAE Systems, Inc. (BAE Systems),
defense, aerospace and security	Director highlights: Ms. Hudson’s experience leading
a large, highly-regulated, complex business and expertise in engineering,
technology, operations and risk management are valuable to the
Board.
— Ms. Hudson is the Founder, Chairman and Chief Executive
Officer of The Cardea Group, a business management consulting firm she
founded in 2014. — From October 2009 through February 2014, Ms. Hudson
served as the President and Chief Executive Officer of BAE Systems, a
U.S.-based global defense, aerospace and security company. BAE Systems is
a wholly-owned subsidiary of London-based BAE Systems plc. Previously, Ms.
Hudson served as President of BAE Systems’ Land & Armaments operating
group, the world’s largest military vehicle and equipment
business. — Before joining BAE Systems in 2006, she served as Vice
President of General Dynamics Corporation and President of General
Dynamics Armament and Technical Products. — Ms. Hudson is a member of Bank of America Corporation’s
Board of Directors, where she serves on the Compensation and Enterprise
Risk Committee and the Credit Committee. She is also a member of the Board
of Directors of Ingersoll Rand, Inc., where she serves on the Audit and
Finance Committees. — She is a Director of the University of Florida
Foundation. Other public company
directorships: Bank of America Corporation,
Ingersoll Rand, Inc.

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Corporate Governance at Southern Company

Donald M. James (Independent)
Age: 68 Director since: 1999 Board committees: Compensation and
Management Succession, Finance
Chairman of the Board and Chief
Executive Officer of Vulcan Materials Company (retired), construction
materials	Director highlights: Mr. James’ leadership of a large
public company, his legal expertise and his civic involvement are valuable
to the Board.
— 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. Mr. James joined Vulcan Materials
Company in 1992 as Senior Vice President and General Counsel and then
became President of the Southern Division and then Senior Vice President
of the Construction Materials Group and then President and Chief Executive
Officer. — 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 and the Human Resources
Committees of Wells Fargo & Company’s Board of Directors. — Mr. James is a Trustee of the UAB Health System and
Children’s of Alabama, where he serves on the Executive
Committee. Other public company
directorships: Wells Fargo & Company
(formerly a Director of Vulcan Materials Company and Protective Life
Corporation)

John D. Johns (Independent)
Age: 65 Director
since: 2015 Board committee: Audit (Chair)
Chairman and Chief Executive
Officer of Protective Life Corporation (Protective Life),
insurance	Director highlights: Mr. Johns’ management and
leadership experience, his significant familiarity with Alabama Power
Company (Alabama Power or APC) and his civic involvement are valuable to
the Board.
— Mr. Johns has served as Chairman and Chief Executive
Officer of Protective Life since 2002 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 Executive Committee. — He is a member of the Board of Directors of Regions
Financial Corporation, where he serves on the Risk Committee, and Genuine
Parts Company, where he serves on the Compensation, Nominating and
Governance Committee and the Executive Committee. — Mr. Johns has served on the Executive Committee of the
Financial Services Roundtable in Washington, D.C. and is the immediate
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. Other public company
directorships: Genuine Parts Company,
Protective Life and Regions Financial Corporation (formerly a Director of
Alabama Power)

20 Southern Company 2017 Proxy Statement

PART 06

Table of Contents

Corporate Governance at Southern Company

Dale E. Klein (Independent)
Age: 69 Director since: 2010 Board committees: Compensation and Management Succession, Nuclear/Operations, Business Security Subcommittee
Associate Vice Chancellor of
Research of the University of Texas System and Associate Director of the
Energy Institute at The University of Texas at Austin and former
Commissioner and Chairman, U.S. Nuclear Regulatory Commission,
energy	Director highlights: Dr. Klein’s expertise in nuclear
energy regulation and operations, technology and safety is valuable 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 35 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 nearly 25 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. Other public company
directorships: Pinnacle West Capital
Corporation, Arizona Public Service
Company

William G. Smith, Jr. (Independent)
Age: 63 Director since: 2006 Board committees: Finance, Governance
Chairman of the Board, President
and Chief Executive Officer of Capital City Bank Group, Inc.,
banking	Director highlights: Mr. Smith’s experience in
finance, business operations and risk management is valuable to the
Board.
— 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. Other public company
directorships: Capital City Bank Group,
Inc.

investor.southerncompany.com 21

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Corporate Governance at Southern Company

Steven R. Specker (Independent)
Age: 71 Director since: 2010 Board committees: Compensation and Management Succession,
Nuclear/ Operations (Chair)
Chief Executive Officer, Tri Alpha
Energy Inc., energy	Director highlights: Dr. Specker’s
keen understanding of the electric industry and insights in innovation and
technology development are valuable to the Board.
— Dr. Specker currently serves as Chief Executive Officer
of Tri Alpha Energy Inc., a position he has held since October 2016. Tri
Alpha Energy is an international private fusion company focusing on clean
fusion energy technology. — Dr. Specker served as President and Chief Executive
Officer of the Electric Power Research Institute (EPRI) from 2004 until
2010. — Prior to joining EPRI, Dr. Specker founded Specker
Consulting, LLC, a private consulting firm, which provided operational and
strategic planning services to technology companies serving the global
electric power industry. — Dr. Specker also served in a number of leadership
positions during his 30-year career at General Electric Company (GE),
including serving as President of GE’s nuclear energy business, President
of GE digital energy and Vice President of global marketing. — He is also a member of the Board of Trilliant
Incorporated, a leading provider of Smart Grid communication solutions,
and serves as a member of the Board of Tri Alpha Energy Inc. Other public company
directorships: None

Larry D. Thompson (Lead Independent Director since May 2016)
Age: 71 Director since: 2014 (previously served from 2010
to 2012) Board committees: Finance, Governance
John A. Sibley Professor of
Corporate and Business Law, The University of Georgia School of Law, and
former Executive Vice President, Government Affairs, General Counsel and
Corporate Secretary, PepsiCo Inc., food and beverage	Director highlights: Mr. Thompson’s
government experience and corporate governance and legal expertise are
valuable to the Board.
— Mr. Thompson has served on the faculty of The University
of Georgia School of Law as the John A. Sibley Chair of Corporate and
Business Law since 2014. — From 2012 until his retirement in 2014, Mr. Thompson
served as Executive Vice President, Government Affairs, General Counsel
and Corporate Secretary for PepsiCo Inc., one of the world’s largest
packaged food and beverage companies. From 2004 to 2011, he served as
Senior Vice President of Government Affairs, General Counsel and Corporate
Secretary of PepsiCo Inc. At PepsiCo Inc., Mr. Thompson was responsible
for its worldwide legal function, its government affairs organization and
its charitable foundation, where he served on the Board. — His government career includes serving as Deputy
Attorney General in the U.S. Department of Justice and leading the
National Security Coordination Council. In 2002, President George W. Bush
named Mr. Thompson to head the Department of Justice’s Corporate Fraud
Task Force. — Mr. Thompson is an Independent Trustee of various
investment companies in the Franklin Templeton group of mutual funds and a
Director and a member of the Compensation Committee of Graham Holdings
Company (formerly The Washington Post Company). — He also serves as an Advisory Director of the Georgia
Justice Project. — Mr. Thompson served as a Director of Southern Company
from 2010 to 2012 and was a member of the Audit Committee. Other public company
directorships: Franklin, Templeton Series
Mutual Funds, Graham Holdings Company (formerly a Director of Cbeyond,
Inc.)

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| E.
Jenner Wood III (Independent) | |
| --- | --- |
| Age: 65 Director since: 2012 Board committees: Governance, Nuclear/Operations | |
| Corporate Executive Vice President
– Wholesale Banking, SunTrust Banks, Inc. (retired), banking | Director highlights: Mr. Wood’s
leadership experience and extensive background in finance, his involvement
in the community and his significant familiarity with Georgia Power are
valuable to the Board. |
| — 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 has
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 a member of the Compensation, Executive and Finance Committees. — Mr. Wood is a Director of Oxford Industries, Inc., where
he serves as Presiding Director and as a member of the Executive
Committee, and a Director of Genuine Parts Company, where he serves on the
Audit Committee and the Compensation, Nominating and Governance Committee. — He is active in numerous civic and community
organizations, serving as the Chairman of the Metro Atlanta Chamber of
Commerce and as a Vice 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,
Camp-Younts Foundation and the Jesse Parker Williams
Foundation. Other public company
directorships: Genuine Parts Company,
Oxford Industries, Inc. (formerly a Director of Crawford & Company and
Georgia Power) | |

Southern Company Board

Majority Voting for Directors and Director Resignation Policy

Since 2010, we have had 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.

The Board believes this standard for uncontested elections is a more equitable standard than a plurality vote standard. A plurality vote standard guarantees the election of a Director in an uncontested election; however, a majority vote standard means that nominees in uncontested elections are only elected if a majority of the votes cast are voted in their favor.

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.

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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.) |
| — | 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 member 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. |

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. 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. 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 14 of our 15 Directors are independent

Juanita Powell Baranco	Donald M. James
Jon A.
Boscia	John D. Johns
Henry
A. Clark III	Dale E. Klein
David
J. Grain	William G. Smith,
Jr.
Veronica M. Hagen	Steven R. Specker
Warren
A. Hood, Jr.	Larry D. Thompson
Linda
P. Hudson	E. Jenner Wood
III

Thomas A. Fanning, Chairman of the Board, President and Chief Executive Officer of the Company, is an employee and is not independent.

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Identifying Nominees for Election to the Board

The Governance 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 knowledge and experience in accounting, finance, leadership, business operations, risk management, corporate governance and our industry and service territories.

The Governance Committee only considers candidates with the highest degree of integrity and ethical standards. The Governance Committee evaluates a candidate’s independence from management, ability to provide sound and informed judgment, history of achievement reflecting 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.

The Governance Committee also seeks to identify candidates with the capacity to bring relevant experience, relationships and perspectives regarding the service territories of our traditional electric operating companies and natural gas distribution utilities, which have operations in 19 states. We benefit from the experience of Directors who have previously served on the Boards of our traditional electric operating companies. We anticipate the same potential from non-management Directors who serve or will serve on the Southern Company Gas Board. These operating company Boards provide an opportunity for Director candidates to cultivate significant relevant experience with our business.

The Governance Committee solicits recommendations for candidates for consideration from its current Directors and is authorized to engage third-party advisers to assist in the identification and evaluation of candidates for consideration.

| Qualifications,
Attributes, Skills and Experience of the Board as a
Whole | |
| --- | --- |
| ● | CEO or
senior executive leadership
experience |
| ● | Diversity of race, ethnicity, gender, age, cultural background or
professional experience |
| ● | Electric or gas utility or nuclear operations
experience |
| ● | Engineering, innovation or technology
experience |
| ● | Federal, state or local government or regulatory
experience |
| ● | Financial, banking or investment experience |
| ● | Knowledge of the traditional electric operating companies or
Southern Company Gas |
| ● | Risk oversight or risk management
experience |

Diversity of our Board

While our Corporate Governance Guidelines do not prescribe diversity standards, the Guidelines mandate that the Board as a whole should be diverse. Our Board also believes that diversity is important, as a variety of points of view contributes to a more effective decision-making process.

The Governance Committee annually evaluates the expertise and needs of the Board to determine the proper membership and size. As part of this evaluation, the Governance Committee considers aspects of diversity, such as diversity of race, gender and ethnicity. Currently, the Board includes three women and three ethnic minorities, representing 33% of our Board. The Governance Committee also considers diversity of age, education, industry, business background and experience in the selection of candidates to serve on the Board.

The Governance Committee assesses the effectiveness of its efforts at pursuing diversity through its periodic evaluation of the Board’s composition.

Board Diversit y

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Board Refreshment

The Governance Committee regularly considers the long-term make up of our Board and how the members of our Board will change over time, including frequent consideration of potential Board candidates. The Board aims to strike a balance between the knowledge that comes from longer-term service on the Board with the new experience, ideas and energy that can come from adding Directors to the Board. In the last five years, we have added five independent Directors to our Board and have had two Directors retire.

We believe the average tenure for our independent Directors of approximately seven years reflects the balance the Board seeks between different perspectives brought by long-serving Directors and new Directors.

Board Tenure Tenure of Independent Directors (Years of consecutive service) Average Tenure of Independent Directors: 7 years

Stockholder Recommendation of Board Candidates

Any stockholder may make recommendations for candidates for consideration by the Governance Committee by sending a written statement describing the candidate’s qualifications, relevant biographical information and signed consent to serve. These materials should be submitted in writing to our Corporate Secretary and received by December 8, 2017 for consideration by the Governance Committee as a nominee for election at the 2018 annual meeting. A stockholder recommendation is reviewed in the same manner as candidates identified by the Governance Committee or recommended to the Governance Committee.

Board Structure and Processes

Board Leadership Structure

The Board believes that its current leadership structure, which has a combined role of Chairman and Chief Executive Officer counterbalanced by a strong independent Board led by a Lead Independent Director and independent Directors chairing each of the Board committees, is most suitable for us at this time and is in the best interest of stockholders because it provides the optimal balance between independent oversight of management and unified leadership.

| — | The combined role of Chairman
and Chief Executive Officer 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, as well as being most
capable of effectively identifying strategic priorities and leading
discussion and execution of strategy. |
| --- | --- |
| — | Independent Directors and
management have different perspectives and roles in strategy development.
The Chief Executive Officer brings Company-specific experience and
expertise, while our independent Directors bring experience, oversight and
expertise from outside the Company and its
industry. |
| — | The Board believes that the
combined role of Chairman and Chief Executive Officer promotes the
development and execution of our strategy and facilitates the flow of
information between management and the Board, which is essential to
effective corporate governance. |

Meetings of Non-Management Directors

Non-management Directors meet in executive session without any members of the Company’s management present on each regularly-scheduled Board meeting date. These executive sessions promote an open discussion of matters in a manner that is independent of the Chairman and Chief Executive Officer. The Lead Independent Director chairs each of these executive sessions.

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Meetings and Attendance

The Board met seven times in 2016. Our Directors are engaged, as demonstrated by the average Director attendance at all applicable Board and committee meetings in 2016 of 96%. No nominee attended less than 75% of applicable meetings.

All Director nominees are expected to attend the annual meeting of stockholders. All members of the Board serving on May 26, 2016 attended the annual meeting in 2016.

Director Engagement 2016 Board and Committee Meeting Attendance

Board and Committee Self-Evaluation Process

Our Board has a robust annual self-evaluation process. The Governance Committee oversees the annual self-assessment process on behalf of the Board. The charter of each committee of the Board also requires an annual performance evaluation, which is overseen by the chair of each committee.

| Establish the
Process In December, the Governance Committee determines the
discussion topics for the annual Board self-evaluation. Topics
change from year to year and include, among others: tone, conduct
and composition of the Board and the committees; Board duties
and member responsiveness to duties; and management’s
responsiveness to the needs of the Board. The Chair of the
Governance Committee distributes the discussion topics to each
Board member and schedules individual calls with each Board
member. | ● | Individual Evaluation
Conversations In December and January, the Chair of the
Governance Committee conducts the
individual Board member evaluation calls. The
Chair of the Governance Committee addresses
the discussion topics as well as any other
topics the Board member wishes to discuss. |
| --- | --- | --- |
| ● | | ● |
| Review and Plan for
the Future Throughout the rest of the year, any matters requiring follow-up
are addressed by the Chair of the Governance Committee or the
applicable committee Chair. The Board also provides feedback to
management as appropriate. | ● | Meet and Discuss
Evaluation Results In February, the Chair of the Governance
Committee presents the results of the
individual Board member evaluations to the
Governance Committee. The Chair of the
Governance Committee also presents the
results to the full Board. The results are
discussed among the Governance Committee
members and the Board. |

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Message from our Lead Independent Director

Larry D. Thompson We strive to maintain an appropriate balance of tenure, diversity, skills and experience on the Board to address the needs of the Company we are today — and the Company we will be tomorrow.” I am honored to serve as Lead Independent Director of Southern Company and proud to be a part of a company that is building the future of energy. I was elected by the independent Directors to serve in this role for a two-year term to provide independent Board leadership. I join with my fellow Board members in overseeing the long-term interests of our stockholders. Among our most important responsibilities are reviewing the Company’s strategy, risks, financial plan and leadership to ensure the Company is well-positioned to continue growing value for stockholders. My fellow independent Directors and I are committed to, and value, our dialogue with management regarding the Company’s long-term plans for growth. We are committed to good corporate governance practices, as we believe that effective governance is a cornerstone of a successful long-term strategy. We have a strong and independent Board, with 14 of our 15 Directors independent of management and all of our Board committees chaired by and comprised of independent Directors. We routinely refresh our Board committees to strengthen our Directors’ awareness of issues, broaden their perspectives and diversify each committee’s expertise. We regularly and thoughtfully evaluate our governance structures and practices and keep abreast of emerging governance issues. In 2016, we adopted proxy access. This year, we again have recommended that stockholders approve an amendment to the Certificate of Incorporation to reduce the supermajority vote requirement to a majority vote. Board composition and refreshment are also a key focus for our Board, especially in light of the Company’s 2016 acquisitions of Southern Company Gas and PowerSecure. For 2017, we are focused on ensuring that we have the expertise we need on the Board given our recent acquisitions and alliances. As a group, my fellow Directors and I provide a significant breadth of experience and insight. We strive to maintain an appropriate balance of tenure, diversity, skills and experience on the Board to address the needs of the Company we are today and the Company we will be tomorrow. Our Board is committed to helping Southern Company remain among the leaders in our industry, a reliable energy provider for customers and a solid investment for our stockholders.

Role of the Lead Independent Director

The Lead Independent Director is elected every two years by the independent Directors of the Board. At the 2016 annual meeting, Larry Thompson was elected by the independent Directors to serve as Lead Independent Director from May 25, 2016 until the 2018 annual meeting.

The Lead Independent Director has the following powers and responsibilities:

| — | Approving the agenda (with the ability to add
agenda items) and schedule for Board meetings and
information sent to the Board; |
| --- | --- |
| — | Calling and chairing executive sessions of the non-management
Directors; |
| — | 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; and |
| — | Communicating any sensitive issues to the
Directors. |

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Corporate Governance at Southern Company

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 we face primarily through direct engagement with our 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 risk management activities related to
financial reporting, ethics and compliance related risks.
—	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.

| Compensation and Management
Succession Committee | |
| --- | --- |
| — | Reviews risks and associated risk management activities
related to workforce issues. |
| — | Reviews the assessment of risk 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. |

Finance Committee
—	Reviews risks and risk management activities related to
financial matters of the Company such as financial integrity, major
capital investments, dividend policy and financing
programs.

| Governance
Committee | |
| --- | --- |
| — | Reviews risks and associated risk management activities
related to state and federal regulatory and legislative
environment. |

| Nuclear/Operations
Committee | |
| --- | --- |
| — | Reviews risks and associated risk management activities
related to significant operations of the Southern Company system such as
safety, system reliability, nuclear operations, environmental regulations,
fuel cost and availability. |
| — | Business Security subcommittee of the Nuclear/Operations
Committee focuses on business strategies designed to prevent or address
catastrophic business interruption due to physical or cyberattacks or
natural disasters. |

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. For each committee, the Chief Executive Officer of the Company has designated a member of executive management as the primary responsible officer for providing information and updates related to the significant risks. These officers ensure that all significant risks identified in the risk profile we develop are reviewed with the Board and/or the appropriate committee(s) at least annually.

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

We believe that our leadership structure supports the risk oversight function of the Board. While we have a combined role of Chairman and Chief Executive Officer, an independent Director chairs each committee. There is regular, open communication between management and the Directors. All Directors are actively involved in the risk oversight function.

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Succession Planning and Talent Development

Valuing and developing our people is a strategic priority for our Company, and succession planning and talent development are important at all levels within our organization to achieve business results. Succession planning and talent development are systematic and ongoing at all levels throughout the year.

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 regularly 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, recruiting and development programs.

The Board annually reviews and evaluates 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. The Board meets potential leaders at many levels across the organization through formal presentations and informal events throughout the year.

Southern Company Accolades
—	DiversityInc recognized our Company as one of the “Top 50 Companies for Diversity.”
—	DiversityInc also ranked us No. 1 in its list of the “Top 10 Companies for Opportunity.”
—	Southern Company was recognized as a top
employer for veterans and military personnel by a variety of
publications, including DiversityInc, GI Jobs magazine,
CivilianJobs.com and Military Times EDGE magazine.
—	Black Enterprise magazine named Southern
Company one of the “Top 50 Best Companies for
Diversity” in its annual survey of the top publicly traded
companies with U.S. operations.
—	We earned a perfect score from
the Human Rights Campaign on their Workplace Equality Index for
2017.

Communicating with the Board

We encourage stockholders or interested parties to communicate directly with the Company’s 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 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 Corporate Governance webpage
located under Corporate Governance on our website at investor.southerncompany.com under the link
entitled Governance Inquiries. |

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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Other Governance Policies and Practices

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 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 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 2016, Ms. Alexia B. Borden, the daughter of Paul Bowers, an executive officer of the Company, was employed by Alabama Power as vice president with responsibility for Governmental Affairs and received total compensation of $312,109, as calculated in accordance with SEC rules and regulations. Prior to joining Alabama Power in March 2016, Ms. Borden was a partner in the Montgomery office of the law firm Balch & Bingham LLP (Balch). The Company, its subsidiaries and its predecessors have had a long-standing relationship with Balch for almost 100 years. While a partner at Balch, Ms. Borden performed work on matters for Alabama Power, which represented less than 0.5% of the amounts paid by the Southern Company system to Balch for 2016. The amount of compensation paid to Ms. Borden by Balch for 2016 was under the reporting threshold.

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

Jenner Wood, a Director since 2012, served as Corporate Executive Vice President – Wholesale Banking of SunTrust Banks, Inc. until December 31, 2016. During 2016, we continued our long-standing relationship with SunTrust and used the bank’s services in the ordinary course of business. Our relationship with SunTrust has existed for more than 20 years. The payments made and received by the Company and SunTrust represented an immaterial amount and percentage of the Company’s and SunTrust’s revenues in 2016. We believe that the relationship during 2016 was non-preferential and that Mr. Wood did not personally participate in or benefit from this relationship.

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.

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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.

In 2015, a stockholder submitted a proposal to adopt proxy access. The proposal was not approved by stockholders at the 2015 annual meeting. Given the level of stockholder support for the proposal and the Board’s ongoing review of best corporate governance practices, the Board continued to discuss the possibility of adopting proxy access after the 2015 annual meeting.

At the 2016 annual meeting, the Board proposed for stockholder vote a proxy access amendment to our By-Laws. The Board’s decision was the result of feedback from stockholder outreach, including the proponent of the proxy access proposal, consideration of evolving corporate governance trends and continuous review of our corporate governance practices. The Board believed that the By-Law amendment provided meaningful rights to stockholders while promoting responsible use of these rights by stockholders.

The proposed amendment received overwhelming support (over 95%) from our stockholders at the 2016 annual meeting and was adopted in May 2016. The following are the key terms of the proxy access By-Law amendment:

| — | Any stockholder or group of up 20
stockholders |
| --- | --- |
| — | Have maintained continuous qualifying ownership
of at least 3% of our outstanding shares for at least three years |
| — | Can nominate and include in our proxy materials
Director nominees constituting the greater of two 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 in Section 47 of our By-Laws.

Stockholder Engagement

We place great importance on consistent dialogue with all of our stakeholders, including customers, employees and stockholders. We regularly engage in discussions with, and provide comprehensive information for, constituents interested in the Southern Company system’s citizenship, stewardship and environmental compliance.

As part of these efforts, we began a more systematic approach to investor outreach in 2014 and involved members of our senior management. We are receptive to stakeholder concerns, and we are committed to transparency and proactive interactions with our investors.

Our management team participates in numerous investor meetings each year to discuss our business, our strategy and our financial results. These meetings include in-person, telephone and webcast conferences.

Members of our management team also participate in investor meetings that focus on key governance, compensation, and environmental topics. Since 2011, we have held environmental stakeholder forums, webinars, calls and meetings covering a range of topics – including regulatory and policy issues, system risk and planning related to renewables, energy efficiency and greenhouse gas matters.

Over the last year, our management team contacted institutions holding over 30% of our common stock, including every institutional investor that held at least 0.3% of our common stock, and offered to engage with these investors to discuss topics including corporate governance, executive compensation and environmental practices.

| ● | — | Enhancing the alignment of pay for
performance by shifting away from stock
options and granting the long-term equity
incentive award in the form of 100%
performance shares tied to meeting three
performance measures (cumulative EPS,
ROE and relative TSR) over a three-year
performance period |
| --- | --- | --- |
| ● | — | Adopting a no pledging policy applicable
to our Directors and executive officers |
| ● | — | Adding disclosure in the proxy statement
about Board refreshment, Board and
committee self-evaluation and management
succession planning and talent development |
| ● | — | Updating the presentation of our proxy
statement to enhance readability and
understanding by our stockholders |
| ● | — | Adopting a proxy access right for our
stockholders in the By-Laws |
| ● | — | Eliminating the “fair price” anti-takeover
provision in the Certificate of Incorporation |
| ● | — | Proposing the elimination of the supermajority
provision in the Certificate of Incorporation
(also proposed in 2013 and 2016) |
| ● | — | Adding a message from our Lead
Independent Director |

32 Southern Company 2017 Proxy Statement

Table of Contents

Corporate Governance at Southern Company

Political Contributions Policy

We believe that we have a responsibility to customers and stockholders to participate in the political process and, where appropriate, to make expenditures in connection with elections for public office and in connection with non-candidate state and local ballot initiatives such as referendums and constitutional amendments.

The Company and its subsidiaries comply with all laws governing the making of political contributions or expenditures, including independent expenditures and using corporate funds in connection with elections for public office. All political contributions or independent expenditures must be approved in advance by the Chief Executive Officer, the senior External Affairs Officer and the General Counsel (if applicable) of the Southern Company entity making the disbursement.

The Board reviews the Company’s political contributions and its policies and procedures regarding political contributions. Any corporate political contributions or independent expenditures made by the Company and its subsidiaries in connection with elections for public office, as well as any payments made by the Company and its subsidiaries to other organizations that are designated for their use in making political contributions or independent expenditures, are reviewed at least annually with the Board. Any corporate contributions to ballot initiative campaign committees also are reviewed annually with the Board.

Our Responsibility

The Southern Company system is committed to developing the full portfolio of generation resources – natural gas, 21 st century coal, nuclear and renewables such as wind and solar – together with an emphasis on energy efficiency, while designing and deploying advanced technologies to provide clean, safe, reliable and affordable energy to customers and communities. An industry leader in robust, proprietary research and development, we have managed approximately $2 billion in research and development investments since the 1960s, leading to the creation of new, innovative technologies that are improving the way America produces and uses energy.

Our greatest asset in this effort is our employees. Our workforce is engaged in cultivating and leveraging this inventive mindset. We are collaborating with forward-looking companies and seeking partnerships with the brightest minds, leading universities and cutting-edge research organizations.

We continually strive to reduce the environmental impact of our operations, help customers use energy more wisely and conserve natural resources. The Southern Company system has reduced sulfur dioxide and nitrogen oxides emissions nearly 80% since 1990 and mercury emissions by more than 70% since 2005, while electricity generation has increased. Through 2016, the Southern Company system has also invested approximately $11.4 billion to put environmental control technologies to work for customers.

We are active members of the communities we serve. As evidence of this commitment, employees consistently give more than 200,000 hours of volunteer community service annually and help lead economic development efforts.

To learn more about the Company’s corporate responsibility efforts, please view our Corporate Responsibility Report by visiting http://www.southerncompany.com/what-doing/corporate-responsibility/home.cshtml , and our environmental reports by visiting www.southerncompany.com/what-doing/environmental-reports.cshtml .

Corporate Governance Website

In addition to our Corporate Governance Guidelines (which include Board independence criteria), other information relating to our corporate governance is available on our website at investor.southerncompany.com under Corporate Governance.

| — | Board of Directors — Background and
Experience |
| --- | --- |
| — | Composition of Board Committees |
| — | Board Committee Charters |
| — | Link for on-line communication with Board of
Directors |
| — | Management Council — Background and
Experience |
| — | Executive Stock Ownership Requirements |
| — | Code of Ethics |
| — | By-Laws |
| — | 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, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308.

investor.southerncompany.com 33

PART 09

Table of Contents

Corporate Governance at Southern Company

Committees of the Board

Charters for each of the five standing committees can be found at our website at investor.southerncompany.com under Corporate Governance.

Audit Committee

●	●	●	●
John D.
Johns	Juanita
Powell Baranco	Jon A.
Boscia	Warren
A. Hood, Jr.
Chair

Meetings in 2016: 10

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 accounting policies and practices, material
alternative financial treatments within generally accepted accounting
principles, 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 each of Jon A. Boscia and John D. Johns qualify as an audit committee financial expert as defined by the SEC.

Finance Committee

●	●	●	●	●
David J.
Grain	Henry
A. Clark III	Donald
M. James	William
G. Smith, Jr.	Larry D. Thompson
Chair

Meetings in 2016: 9

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

| — | Review the Company’s financial matters and
recommend actions such as dividend philosophy and financial plan approval
to the Board. |
| --- | --- |
| — | Provide input regarding the Company’s financial
plan and associated financial goals. |

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

34 Southern Company 2017 Proxy Statement

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Corporate Governance at Southern Company

Compensation and Management Succession Committee

●	●	●	●	●
Henry A.
Clark III	David
J. Grain	Donald
M. James	Dale E.
Klein	Steven R. Specker
Chair

Meetings in 2016: 10

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 of the other executive
officers 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 workforce issues. |
| — | 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
Compensation Discussion and Analysis (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 LLC (Pay Governance) 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 solely by the Compensation and Management Succession Committee and does not provide any services directly 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.

investor.southerncompany.com 35

Table of Contents

Corporate Governance at Southern Company

Governance Committee

●	●	●	●	●
Veronica M.
Hagen	Linda
P. Hudson	William
G. Smith, Jr.	Larry
D. Thompson	E. Jenner Wood III
Chair

Meetings in 2016: 6

The Governance 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. |
| — | 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. |

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

Nuclear/Operations Committee

●	●	●	●	●
Steven R.
Specker	Veronica M. Hagen	Linda
P. Hudson	Dale E.
Klein	E. Jenner Wood III
Chair

Meetings in 2016: 5

The Nuclear/Operations 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, transmission and
distribution, fuel and information technology initiatives. |
| --- | --- |
| — | Oversee the Southern Company system’s
management of significant construction projects. |
| — | Provide input to the Compensation 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 Nuclear/Operations Committee is independent.

Business Security Subcommittee

In 2014, the Board established a Business Security Subcommittee of the Nuclear/Operations Committee, currently comprised of Linda P. Hudson (Chair) and Dale E. Klein. The subcommittee held four meetings in 2016.

The Business Security Subcommittee’s responsibilities include the following:

| — | Oversee management’s efforts to
establish and continuously improve enterprise-wide security policies,
programs, standards and controls. |
| --- | --- |
| — | Oversee management’s efforts to
monitor significant security events and operational and compliance
activities. |

36 Southern Company 2017 Proxy Statement

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Corporate Governance at Southern Company

Director Compensation

Only non-employee Directors of the Company are compensated for service on the Board. For 2016, 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 committee
of the Board	$20,000
Additional cash retainer if serving on the Business Security
Subcommittee of the Nuclear/Operations Committee	$12,500
Annual equity grant
In
deferred common stock units until Board membership ends	$140,000
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 2016.

| Name | Fees Earned or Paid in
Cash ($) (1) | Stock Awards ($) (2) | All
Other Compen­- sation ($) (3) | Total ($) |
| --- | --- | --- | --- | --- |
| Juanita Powell
Baranco | 110,000 | 140,000 | 0 | 250,000 |
| Jon A.
Boscia | 118,334 | 140,000 | 0 | 258,334 |
| Henry A. Clark
III | 130,000 | 140,000 | 0 | 270,000 |
| David J.
Grain | 121,666 | 140,000 | 0 | 261,666 |
| Veronica M.
Hagen | 132,500 | 140,000 | 0 | 272,500 |
| Warren A. Hood,
Jr. | 110,000 | 140,000 | 0 | 250,000 |
| Linda P.
Hudson | 122,500 | 140,000 | 0 | 262,500 |
| Donald M.
James | 118,334 | 140,000 | 0 | 258,334 |
| John D.
Johns | 121,666 | 140,000 | 0 | 261,666 |
| Dale E.
Klein | 122,500 | 140,000 | 0 | 262,500 |
| William G. Smith,
Jr. | 118,334 | 140,000 | 0 | 258,334 |
| Steven R.
Specker | 130,000 | 140,000 | 0 | 270,000 |
| Larry D.
Thompson | 127,500 | 140,000 | 0 | 267,500 |
| E. Jenner Wood
III | 110,000 | 140,000 | 0 | 250,000 |

| (1) | Includes amounts voluntarily
deferred in the Director Deferred Compensation Plan. |
| --- | --- |
| (2) | Represents the grant date fair
market value of deferred common stock units. |
| (3) | No non-employee Director of the
Company received perquisites in an amount above the reporting
threshold. |

investor.southerncompany.com 37

Table of Contents

Corporate Governance at Southern Company

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 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 is required to be deferred in shares of common stock under the Deferred Compensation Plan for Outside Directors of The Southern Company, as amended and restated effective January 1, 2008 (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. Directors have voting rights in the shares held in the trust attributable to these units.

38 Southern Company 2017 Proxy Statement

PART 10

Table of Contents

Governance Related Company Proposal

Item 2
The Board has determined that it is
in the best interest of the Company and its stockholders to reduce the
current two-thirds supermajority vote requirement in Article Eleventh of
the Certificate to a majority vote.
●	The Board recommends a vote FOR approval of an amendment to the
Certificate to reduce the supermajority vote requirement to a majority
vote.

Background

Article Eleventh of our Certificate currently requires the affirmative vote of the holders of at least two-thirds of our issued and outstanding common stock in order to:

| — | Authorize or create any class of
stock preferred as to dividends or assets over the common stock or
reclassify the common stock or change the issued shares of common stock
into the same or a greater or less number of shares of common stock either
with or without par value or reduce the par value of the common stock
(collectively, Stock Changes); and |
| --- | --- |
| — | Amend, alter, change or repeal
subdivision (2) of Article Ninth (with respect to working capital
determinations), Article Twelfth (with respect to preemptive rights),
Article Eleventh (with respect to Stock Changes and amendments to the
Certificate) or any provision contained in the Certificate or in any
amendment thereto which provides for the vote of the holders of at least
two-thirds of the issued and outstanding common
stock. |

The proposed amendment is the result of the Board’s ongoing review of the Company’s corporate governance principles, including consideration of a stockholder proposal on this topic.

A supermajority vote requirement like the one contained in this article of the Certificate is 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. However, while such protection can be beneficial to stockholders, as corporate governance standards have evolved, many stockholders and commentators now view this provision as limiting the Board’s accountability to stockholders and the ability of stockholders to effectively participate in corporate governance.

After considering the arguments in favor of and against the existing supermajority vote requirement, the Board voted to propose and declare advisable, and to recommend to stockholders that they approve, an amendment to Article Eleventh of the Certificate to reduce the two-thirds supermajority vote requirement to a majority vote requirement to (1) effect any Stock Changes and (2) amend, alter, change or repeal certain provisions of the Certificate.

Our Board proposed similar amendments to the Certificate in 2013 and 2016 and recommended that stockholders vote for the proposal. In 2016, the proposal received 97% support of the votes that were cast, representing 57% of the issued and outstanding shares. Despite the strong support, the proposal did not achieve the stockholder vote necessary to pass (affirmative vote of at least two-thirds of the issued and outstanding shares).

Amendment

The proposed amendment to Article Eleventh of the Certificate includes the following:

| — | Replace the two-thirds supermajority
vote requirement with a requirement that the affirmative vote of a
majority of the issued and outstanding shares of common stock is required
to approve any Stock Change; and |
| --- | --- |
| — | Remove the two-thirds supermajority
vote requirement necessary to amend, alter, change or repeal certain
provisions of the Certificate, as more fully described above, so that all
amendments, alterations, changes or repeals of the Certificate require the
affirmative vote of a majority of the issued and outstanding shares of the
capital stock of the Company, which is the default voting standard for
such actions under Delaware law. |

The text of the proposed amendment to Article Eleventh of the Certificate, marked to show changes from the current Article Eleventh, is included as Appendix A to this proxy statement.

If the proposal is approved, it will become effective upon filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which we would make promptly after the annual meeting.

The Board recommends a vote FOR approval of an amendment to the Certificate to reduce the supermajority vote requirement to a majority vote.

investor.southerncompany.com 39

Table of Contents

Compensation Discussion and Analysis

Letter from the Compensation and Management Succession Committee (Compensation Committee)

Dear Southern Company Stockholder,

2016 was a successful year for Southern Company with strong financial and operational performance.

| — | Our adjusted EPS for 2016 was above
the top of the guidance range we established at the beginning of the
year. |
| --- | --- |
| — | We increased our dividend by seven
cents per share, effective as of the second quarter of
2016. |
| — | We completed acquisitions of
Southern Company Gas and PowerSecure, acquired a 50% equity interest in
Southern Natural Gas and announced a strategic alliance with Bloom
Energy. |
| — | Alabama Power, Georgia Power, Gulf
Power Company (Gulf Power), Mississippi Power and Southern Company
continued to achieve the top five rankings on the Customer Value Benchmark
Survey. |
| — | Southern Power announced the
acquisition of 11 renewable facilities, expanding its total renewable
energy portfolio to over 3,500 megawatts, including capacity announced,
acquired or under construction at the end of 2016. |
| — | We made significant progress with
construction at Georgia Power’s Plant Vogtle Units 3 and 4 and
construction and startup of Mississippi Power’s Kemper County energy
facility. |

In 2016, Southern Company delivered a 9.9% annualized return to stockholders, and over the period from 2014 to 2016 Southern Company delivered an 11.2% annualized return to stockholders. However, in recent years Southern Company’s TSR underperformed as compared to other utility company peers and as compared to the S&P 500. We believe this level of performance is largely attributable to investor sentiment regarding our major construction projects, the implications of actual and potential federal tax law changes and the high correlation of our stock to interest rates. The underperformance of our TSR as compared to utility peers has significantly impacted the pay realized by our executive officers over the past few years.

We continue to provide clean, safe, reliable and affordable energy to millions of customers. We believe that focusing on the customer, operating premier state-regulated utilities and investing in energy infrastructure projects under long-term contracts will continue to support regular, predictable and sustainable long-term earnings and dividend growth. We believe that achieving these objectives will deliver superior risk-adjusted TSR for our investors.

What You will Find in this CD&A

This CD&A describes what we pay, why we pay it and how we made our pay decisions for 2016. It also demonstrates how our executive pay program reflects our compensation philosophy, including the importance of linking performance and compensation.

We target the total direct compensation for our executives at market median and place a significant portion of that target compensation “at risk” – subject to achieving both short-term and long-term performance goals. In fact, only the base salary portion of executive compensation is fixed.

| CEO
Target Pay | | |
| --- | --- | --- |
| | 89% At Risk-Subject to Performance Goals | |
| Salary 11% | Annual
Cash Incentive Award 16% | Long-Term Equity
Incentive Award 73% |

We have received strong support for our executive compensation program

At the 2016 annual meeting, the advisory vote on 2015 executive compensation was overwhelmingly supported by our stockholders, receiving support of 93% of the votes cast.

40 Southern Company 2017 Proxy Statement

Table of Contents

Compensation Discussion and Analysis

We have continued with the same compensation program structure for 2016, tying a significant majority of executive compensation to performance. The key performance based elements are the annual cash incentive award and the long-term equity incentive award.

Annual Cash Incentive Award

| — | Awards under our Performance Pay
Program are earned based on the achievement of performance goals over a
one-year performance period. |
| --- | --- |
| — | Performance goals for 2016 include
financial goals (EPS and business unit net income), operational goals and
individual performance goals intended to drive performance that we believe
will lead to long-term success for the Company. |
| — | Payout is made in cash after the end
of the performance period. |

Long-Term Equity Incentive Award

| — | Awards under our Performance Share
Program are granted in the form of performance share units that are earned
based on the achievement of performance goals over a three-year
performance period. |
| --- | --- |
| — | Performance goals for the 2016 to
2018 performance period include a cumulative three-year EPS goal (25%
weighting), an equity-weighted ROE goal (25% weighting) and a relative TSR
performance goal (50% weighting). |
| — | Payout is made in shares of common
stock after the end of the three-year performance
period. |

Our compensation program is designed to be consistent with our business strategy

The customer is at the center of everything we do at Southern Company, and this business model serves as our guiding principle. Our goal is to sustain long-term financial and operational success and to create long-term value for our stockholders by keeping customers first and providing them with outstanding customer service and clean, safe, reliable and affordable energy.

Our compensation program is designed to be consistent with our business strategy. By linking pay and performance, we align our executive officers with both stockholder and customer interests. We design our program to attract, engage, competitively compensate and retain our employees.

Valuing and developing our people is a strategic priority

We focus on talent development at all levels within our organization to drive performance and engagement and foster professional growth. We believe this leads to a deep bench of talent that is important to management succession planning.

Our Committee members are engaged and focused on our top priorities

We held ten Compensation Committee meetings during 2016, and the average Director attendance at our meetings in 2016 was 94%. We are engaged and take our responsibilities very seriously in establishing and overseeing the Southern Company executive compensation program and overseeing management succession planning.

We thank you for your continued support.

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.

Henry A. Clark III Chair David J. Grain Donald M. James Dale E. Klein Steven R. Specker

investor.southerncompany.com 41

Table of Contents

Compensation Discussion and Analysis

Named Executive Officers for 2016

This CD&A focuses on the compensation for our Chief Executive Officer and Chief Financial Officer as well as our three other most highly compensated executive officers serving at the end of the year. Collectively, these officers are referred to as the NEOs.

Name	Title
Tom
Fanning	Chairman of the Board, President and Chief Executive Officer
of the Company
Art
Beattie	Executive Vice President and Chief Financial Officer of the
Company (CFO)
Paul
Bowers	Executive Vice President of the Company and Chairman,
President and Chief Executive Officer of Georgia Power (Georgia Power
CEO)
Mark
Crosswhite	Executive Vice President of the Company and Chairman,
President and Chief Executive Officer of Alabama Power (Alabama Power
CEO)
Drew
Evans	Executive Vice President of the Company and Chairman,
President and Chief Executive Officer of Southern Company Gas (Gas
CEO)

Drew Evans became an employee of the Southern Company system as of July 1, 2016 in connection with our acquisition of Southern Company Gas. Mr. Evans did not participate in the same compensation programs as the NEOs that were employed by us throughout 2016. A description of Mr. Evans’ compensation begins on page 56.

Compensation Governance Overview

What We Do

| ● | 89% of CEO target pay is “at-risk”
based on achievement of performance goals |
| --- | --- |
| ● | Performance shares subject to
achievement of three performance measures over a three-year period:
cumulative EPS, ROE and relative TSR |
| ● | Clawback provision for
performance-based pay |
| ● | Independent compensation
consultant |
| ● | Policy against hedging and
pledging |
| ● | Dividends on stock awards received
only if underlying award is earned |
| ● | Annual charter review and
self-evaluation by the Compensation Committee |
| ● | Strong stock ownership
requirements |
| ● | Annual pay risk
assessment |
| ● | Change-in-control severance payouts
require double-trigger of change in control and termination of
employment |
| ● | Annual review of tally
sheets |
| ● | Ongoing stockholder
engagement |
| ● | Regular updates on best
practices to the Compensation Committee from the independent compensation
consultant |

What We Don’t Do

| ● | No tax gross ups for NEOs (except on
certain relocation-related expenses) |
| --- | --- |
| ● | NEOs receive limited ongoing
perquisites that make up a small portion of total
compensation |
| ● | No employment agreements with our
executives |
| ● | No stock option repricing without
stockholder approval |
| ● | No excise tax gross-ups on
change-in-control severance arrangements |
| ● | Granting of equity
awards are not timed to coincide with the release of material, non-public
information |

| ● | — | 60% performance shares with a relative
TSR performance measure over a
three-year performance period and 40%
stock options |
| --- | --- | --- |
| ● | — | 100% performance shares with three
performance measures over a three-year
performance period: cumulative EPS,
equity-weighted ROE and relative TSR |

42 Southern Company 2017 Proxy Statement

Table of Contents

Compensation Discussion and Analysis

Business Overview

We are one of America’s premier energy companies, serving over nine million electric and natural gas customers through our state regulated utilities. We are developing a platform of solutions to meet customers’ needs, including a portfolio of generation resources – natural gas, 21st century coal, nuclear and renewables such as wind and solar generation – infrastructure for energy transportation and delivery, as well as customized solutions for distributed infrastructure and energy efficiency.

Our strategy is to maximize long-term value to stockholders through a customer, community and relationship-focused business model that provides clean, safe, reliable and affordable energy to millions of customers.

Key 2016 Acquisitions and Alliances 2016 was an important year for Southern Company as we continue to enhance energy offerings for customers — Acquired PowerSecure on May 9, 2016 — Acquired Southern Company Gas on July 1, 2016 — Acquired a 50% equity interest in Southern Natural Gas on September 1, 2016 — Entered into a strategic alliance with Bloom Energy for the deployment of fuel cell and battery storage technologies

Key 2016 Financial Results — Reported strong adjusted EPS*, significantly exceeding the target EPS goal of $2.82 set under our annual incentive compensation program — Each of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Southern Power exceeded its net income goal set under our annual incentive compensation program — Increased our dividend for the 15th consecutive year with dividend yield as of year-end 2016 at 4.5% — Since 1948, quarterly dividends paid to stockholders have equaled or exceeded the previous quarter

Earnings Per Share

Dividends Paid
●	Over $2.1 Billion paid to stockholders in
2016

Key 2016 Operational Results — Achieved top five positions in customer satisfaction survey results — Industry-leading generation availability performance — Nuclear operations continued to perform among industry leaders — Continued to deliver excellent transmission and distribution reliability — Continued Southern Company Gas’ history of safely and reliably delivering natural gas

• Adjusted EPS results approved by the Compensation Committee exclude the impact of charges related to the Kemper County integrated coal gasification combined cycle facility (Kemper IGCC); equity return related to the Kemper IGCC schedule extension; and earnings, acquisition costs, integration costs and financing costs related to Southern Company Gas and Southern Natural Gas. These adjustments are consistent with the earnings results publicly communicated to investors. For a reconciliation of adjusted EPS, see page 88.

investor.southerncompany.com 43

PART 11

Table of Contents

Compensation Discussion and Analysis

| Major Projects
Update | |
| --- | --- |
| — | We
made significant progress with construction at Plant Vogtle Units 3 and
4 |
| — | Georgia Public Service Commission (PSC) approved the
Vogtle 3 and 4 prudence settlement agreement that deemed or presumed
prudent costs aggregating $5.68 billion while providing contingencies for
both cost and schedule |
| — | Kemper IGCC facility achieved integrated operations for
both gasifier trains and combustion turbines in 2017 |
| — | Though we recorded estimated losses of $428 million in
2016 associated with the Kemper IGCC, we made significant progress with
construction and startup |

| Total Shareholder
Return |
| --- |
| We have created long-term value for our stockholders, reflected in our outperformance against the S&P 500 and the
Philadelphia Utilities Index over the long term. In 2016 we delivered a 9.9% annualized return to stockholders, and over a
three-year period we delivered an 11.2% annualized return to stockholders. However, our TSR has underperformed the
Philadelphia Utility Index over the past one-, three- and five-years periods and has underperformed the S&P 500 for the one-
and five-year periods. We believe this is largely attributable to investor sentiment regarding our major construction projects,
the implications of actual and potential federal tax law changes and the high correlation of our stock to interest rates. |
| ● |

Analysis of CEO Pay

Reported, Realizable and Realized Compensation

The Summary Compensation Table shows reported pay. However, because a significant majority of reported pay represents the target value of long-term equity incentive compensation that is “at risk” and subject to the achievement of performance goals, much of the reported pay may or may not ultimately be received by the CEO.

To illustrate the link between pay and performance for our CEO, the following chart compares reported, realizable and realized compensation for 2014, 2015 and 2016 by type of compensation.

Reported: The Summary Compensation Table reported pay (excluding the change in pension value) for 2014, 2015 and 2016.

Realizable: The potential value of the reported pay for 2014, 2015 and 2016 as of December 31, 2016, based upon our closing stock price ($49.19) and the estimated payout value for each outstanding Performance Share Program award.

Realized: The actual pay received by the CEO in 2014, 2015 and 2016.

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Compensation Discussion and Analysis

We believe the chart demonstrates that the CEO’s realizable and realized compensation is aligned with stockholder value creation, including stock price appreciation and relative TSR performance.

| — | The realizable value of the CEO’s compensation
decreased from 2014 to 2015 and from 2015 to 2016, primarily due to our
relative TSR underperformance over that time period. |
| --- | --- |
| — | The realized value of the CEO’s compensation
decreased significantly from 2014 to 2015 and
again decreased from 2015 to 2016. The 2014
realized value was positively impacted by
the CEO’s exercise of stock options that had been granted from 2009 to 2012, reflecting the value earned as a
result of our stock price appreciation over time. However, the Performance
Share Program results were at 28%, 14% and 0% of target for 2014, 2015 and
2016, respectively. The Performance Share Program results reflect our
relative TSR performance for each performance
period. |

The realizable and realized values that the CEO may ultimately earn for the Performance Share Program awards granted in 2015 and 2016 will change in line with our relative TSR performance and our EPS and ROE performance over each performance period.

Reported, Realizable and Realized CEO Compensation ($ millions)

Reported (Summary Compensation Table) pay is calculated as (1) base salary and all other compensation, (2) actual PPP earned and (3) the target value of the 2014 stock option grant and the 2014, 2015 and 2016 PSP award grants, each as reported in the Summary Compensation Table on page 62.

Realizable (potential) pay is calculated as (1) base salary and all other compensation, (2) actual PPP award earned and (3) the estimated payout value of the 2014 stock option grant and the 2014, 2015 and 2016 PSP award grants as of December 31, 2016.

| — | 2014: For the 2014 PSP award, no amount is
realizable by the CEO because our relative TSR
performance was below threshold performance
and payout was at 0%. The 2014 stock option
grant had an exercise price of $41.28 per
share. We calculate the realizable value by
subtracting the exercise price of the stock option from our closing stock price on December 31, 2016 and multiplying by the number of options granted.
The CEO has not yet realized this value,
and the realizable value will fluctuate
with our stock price. |
| --- | --- |
| — | 2015 and 2016: The 2015 and 2016 PSP award
grants are partially through their three-year
performance cycle. The PSP value represents
the estimated payout value for the 2015 and 2016 PSP award grants calculated as of December 31, 2016, multiplied by the target number of performance
share units and the closing stock price on
December 31, 2016. |

Realized (actual) pay is calculated as (1) base salary and all other compensation, (2) actual PPP earned and (3) the value of stock options exercised or PSP awards earned in 2014, 2015 or 2016.

| — | 2014: The PSP award for the 2012 to 2014
performance period, which had a relative TSR
performance goal, was earned at 14% of
target. The CEO exercised stock options granted in 2009 to 2012 for which the CEO received a value on exercise of $10.3 million (before
taxes). |
| --- | --- |
| — | 2015: The PSP award for the 2013 to 2015
performance period, which had a relative TSR
performance goal, was earned at 28% of
target. |
| — | 2016: The PSP award for the 2014 to 2016
performance period, which had a relative TSR
performance goal, was earned at 0% of
target. |

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Compensation Discussion and Analysis

2016 Pay for Performance Analysis

2016 Financial Performance

2016 was a successful year for us, with our adjusted EPS exceeding our guidance range for the year. We expanded our reach while continuing the strong financial performance of our traditional electric operating companies and our electric wholesale subsidiary, Southern Power.

Financial Goals and Achievement for 2016 Performance Pay Program

We exceeded the financial goals for the year set by the Compensation Committee under our 2016 Performance Pay Program. Financial measures tied to compensation performance goals included EPS for Southern Company and net income for our various business units.

Financial Goals and Achievement

| * | In determining EPS for
compensation goal achievement purposes, the Compensation Committee
excluded the impact of charges related to the Kemper IGCC; equity return
related to the Kemper IGCC schedule extension; and earnings, acquisition
costs, integration costs and financing costs related to Southern Company
Gas and Southern Natural Gas. |
| --- | --- |
| ** | In determining net income for
compensation goal achievement purposes, the Compensation Committee
excluded certain integration costs. In addition, in determining
Mississippi Power’s net income for compensation goal achievement purposes,
the Compensation Committee excluded the impact of charges related to the
Kemper IGCC and the equity return related to the Kemper IGCC schedule
extension. |

46 Southern Company 2017 Proxy Statement

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Compensation Discussion and Analysis

2016 Operational Performance

We demonstrated strong operational performance for the year.

Operational Goal Achievement for 2016 Performance Pay Program

Operating performance was strong across the Southern Company system for 2016. Operational measures for the 2016 Performance Pay Program included customer satisfaction, reliability, availability, nuclear plant operations, major projects, safety and culture. Measures and weightings vary among the operating companies.

Operational Goal Achievement

Customer Service

In 2016, our companies continued to outrank the average utility score for residential customer satisfaction on the American Customer Service Satisfaction Index, and most of our electric subsidiaries were ranked among the best in the nation by the J.D. Power and Associates Customer Satisfaction Study. For the 18th consecutive year, Southern Company and its four traditional electric operating companies ranked in the top quartile overall on the Customer Value Benchmark Survey, our annual peer comparison of U.S. electric utilities based on residential, general business and large business customer value scores.

Reliability, Availability and Nuclear Plant Operations

Our continuous investment in new technology, maintenance and upgrades enables us to provide a high level of reliability to the customers and communities we are privileged to serve. We are able to achieve our customer satisfaction success by continuing to focus on the fundamentals and delivering clean, safe, reliable and affordable energy to customers.

The generation fleet and nuclear operations provided industry leading performance, which helps to ensure that affordable energy is available to meet demand when it is needed the most. Peak season equivalent forced outage rate (Peak Season EFOR) is an indicator of fossil/ hydro plant reliability during the months when generation needs are greatest. Our fossil/hydro Peak Season EFOR performance and our performance on nuclear operations goals for 2016 were above target.

Transmission and distribution system reliability performance is measured by the frequency and duration of outages, with performance targets set based on historical performances. For 2016, our performance was above target for both transmission reliability and distribution reliability.

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Major Projects

At Plant Vogtle, Georgia Power and the other project co-owners have contracted to build the first new nuclear reactors in the U.S. in more than three decades. Georgia Power achieved significant milestones for construction and operational readiness during the year. The Georgia PSC voted to approve a prudence settlement agreement that either deemed or presumed prudent costs aggregating $5.68 billion while providing contingencies for both cost and schedule.

The Kemper IGCC energy facility achieved integrated operations producing electricity from syngas using both combustion turbines, as well as production of saleable chemical byproducts. The project is approaching the final milestones to place the remainder of the facility into service. However, the expected in-service date was extended and the project cost estimate further increased during 2016 as improvements and modifications were identified during startup and testing.

Safety and Culture

Safety performance for 2016 was just below target, due to an increase in the recordable incidents compared to the prior year. We performed well on our culture goals, which are focused on developing a diverse workforce, engaging our employees in health and wellness initiatives and developing diverse suppliers for each of our business units.

Incentive Compensation Earned for Performance Periods Ended in 2016

The compensation earned by our NEOs demonstrates our commitment to pay for performance.

Annual Cash Incentive Plan – 2016 Performance Pay Program

Our Performance Pay Program rewards annual financial and operational performance as well as individual NEO performance. As noted above, we had strong financial and operational performance for 2016, exceeding our overall targets for the year. The Compensation Committee also believed the 2016 individual performance contributions by our NEOs were strong. Accordingly, payouts for all participants in the program, including the NEOs, were above target. For the NEOs, payouts ranged from 167% to 174% of target.

Long-Term Equity Incentive Program – 2014-2016 Performance Share Program

In 2014, 60% of the target value of our long-term equity incentive program was granted in the form of performance shares under our Performance Share Program. For the three year performance period of 2014 through 2016, performance shares could be earned based on a relative TSR performance goal. As noted above, our TSR underperformed as compared to the Philadelphia Utility Index. Our three-year TSR performance relative to the utility peer group was below the threshold performance level, resulting in a payout at 0% for the Performance Share Program awards for all participants, including the NEOs. The utility peer group used to measure relative TSR performance for the 2014 to 2016 performance period was selected by the Compensation Committee and is described on page 55.

48 Southern Company 2017 Proxy Statement

PART 12

Table of Contents

Compensation Discussion and Analysis

Our Executive Compensation Philosophy

Key Compensation Beliefs and How They are Applied

Linking pay to performance efficiently and economically aligns employee, customer and stockholder interests

Our executive compensation program consists of three key elements.

Fixed At Risk-Subject to Achievement of Performance Goals

Base Salary Annual Cash Incentive Award (Performance Pay Program) Long-Term Equity Incentive Award (Performance Share Program)

| — | We target the total direct compensation for
our executives at market median of a peer group of publicly-traded utility
companies that we describe later in this CD&A. |
| --- | --- |
| — | In determining the mix of the three key
elements, we emphasize at risk pay that ties to performance and is
designed to align the interests of employees with both our stockholders
and customers. The only element that is fixed is base salary. Both the annual cash incentive award and the
long-term equity incentive award are earned solely on the basis of
achievement of performance goals. |
| — | For our CEO, fixed compensation represented
only 11% of his 2016 total direct compensation, while 89% was variable and
at risk based on achievement of Company and individual performance goals.
For our other NEOs, fixed compensation represented on average 29% of their
2016 total direct compensation, while 71% was variable and at risk. |
| — | The Compensation Committee, working with its
independent consultant, annually reviews the mix of key compensation
components to assess the effectiveness of our executive compensation
program, with the goal of providing appropriate levels of fixed and at risk performance-based pay in
alignment with our short-term and long-term business strategies. Based on
this assessment, the Compensation Committee established the total target
compensation opportunity in early 2016 for each of the NEOs, with a strong
emphasis on at risk compensation. At risk compensation directly affects
the ultimate payout each NEO receives with Company and individual
performance and links the pay of each NEO to both short-term and long-term
stockholder and customer interests. |
| — | The Compensation Committee believes that
placing a significant portion of executive compensation at risk – earned
only upon achievement of performance goals – drives our executives to
achieve higher levels of performance, customer satisfaction and
productivity. Performance directly impacts the at risk portion of the
NEOs’ compensation – above target achievement of performance goals
translates to above target pay, while below target achievement of
performance goals translates to below target
pay. |

Long-term value is created through retaining employees

| — | We gain superior organizational performance
through attracting talent for the long term and placing value on the
knowledge, skills and experience gained through longevity. Many of our members of senior management
have spent their entire career with our Company. Tom Fanning, Art Beattie
and Paul Bowers each have over 35 years of service to Southern
Company. |
| --- | --- |
| — | The continued evolution of our culture is a
priority for us. This includes recruitment, engagement, diversity and
inclusion and innovation. Our diversity representation has improved over
the past several years, and we were named to the DiversityInc Corporate
Top 50 list in 2016. Our employee engagement index rose in 2016 and is
stronger than utility benchmark, signaling a strong commitment to
performance and culture by employees at all levels. |
| — | We have a low turnover rate, with average
employee tenure of approximately 16 years. Achieving low levels of
turnover lessens the impact of decreased productivity, lost knowledge and skills and overall costs
associated with recruiting and training new employees. |
| — | We focus on talent
development at all levels within our organization to drive performance and
engagement and foster professional growth. As part of our talent
development, we initiate movement of key talent across business units and
through |

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Compensation Discussion and Analysis

| | different positions. We
believe this leads to a deep bench of talent that is important to
management succession planning. |
| --- | --- |
| — | We have focused on
hiring for the future, in particular, military veterans, guardsmen and
reservists constituted over 16% of our hires in 2016. We were recognized
by G.I. Jobs, Military Times and
CivilianJobs.com and as a DiversityInc Top 10 Company for
Veterans. |

Compensation and benefits program competitiveness is critical

| — | We continuously evaluate
our compensation and benefits programs to ensure they are market
competitive to attract, engage and retain employees. The Compensation
Committee works closely with Pay Governance, its independent consultant,
the Company’s Human Resources staff and the CEO to establish our
compensation programs. |
| --- | --- |
| — | Total target compensation levels for senior
management as a whole, including the NEOs, are designed to be at the
median of the market for companies of similar size in the electric utility
industry. We also provide benefits that are necessary to compete in our
industry. |

Prioritizing the overall well-being of our workforce enhances productivity

| — | Investing in the total well-being of our
workforce and their families positively impacts our ability to attract,
engage and retain the critical talent needed to serve
customers. |
| --- | --- |
| — | We define overall well-being in three
distinct categories: physical wellness, financial wellness and emotional
wellness. Our objective is to
provide employees with comprehensive benefit programs, decision making tools and resources and
educational materials to make informed decisions regarding their families’
overall well-being. |
| — | Our comprehensive and
market competitive programs include retirement vehicles (401(k) and
pension), health and welfare benefits, insurance offerings and well-being
incentives. |

Peer Group and Establishing Market-Based Compensation Levels

| — | The Compensation
Committee reviews market data for the CEO and other positions. Based on
that data, as well as the other inputs described above, a total target
compensation opportunity is established for each NEO. Total target
compensation opportunity is the sum of base salary, the annual cash
incentive award at target performance level and the long-term equity
incentive award at target performance level. |
| --- | --- |
| — | Pay Governance develops
and presents to the Compensation Committee competitive market-based
compensation levels for each of the NEOs. The market-based compensation
levels are developed from the Towers Watson Energy Services Survey
focusing on regulated utilities with revenues above $6
billion. |
| — | We are one of the largest utility holding
companies in the United States based on revenues and market
capitalization, and our largest business units are some of the largest in
the industry as well. For that reason, Pay Governance uses
size-appropriate survey market data in order to fit it to the scope of our
business. |
| — | The compensation peer group stayed
relatively the same from 2015 to 2016. Three new companies participated in
the survey, met the revenue guidelines and were added to the group (Ameren
Corporation, Berkshire Hathaway Energy and NiSource
Inc.). |

Peer Group for 2016 Compensation Decisions

| Ameren
Corporation | Duke Energy Corporation | NRG Energy, Inc. |
| --- | --- | --- |
| American
Electric Power Company, Inc. | Edison International | PG&E Corporation |
| Berkshire
Hathaway Energy Company | Energy Transfer Partners,
L.P. | PPL Corporation |
| Calpine
Corporation | Entergy Corporation | Public Service Enterprise Group
Inc. |
| CenterPoint
Energy, Inc. | Exelon Corporation | Sempra Energy |
| CMS Energy
Corporation | First Energy Corp. | Tennessee Valley Authority |
| Consolidated
Edison, Inc. | Kinder Morgan, Inc. | The AES Corporation |
| Direct
Energy | Monroe Energy LLC | The Williams Companies, Inc. |
| Dominion
Resources, Inc. | NextEra Energy, Inc. | UGI Corporation |
| DTE Energy Company | NiSource
Inc. | Xcel Energy
Inc. |

50 Southern Company 2017 Proxy Statement

Table of Contents

Compensation Discussion and Analysis

Our Executive Compensation Program

Overview of Key Compensation Components

	Element	Vehicle	Purpose	Objectives
Fixed	Base Salary	Cash	— Provide a fixed amount of compensation for service to
attract, engage and retain the right talent	— Reward scope of responsibility, experience and
individual performance
At Risk	Performance Pay Program
(Annual)	Cash	— Short-term incentive performance pay, dependent on
Company and business unit financial and operational performance and, for
the executive officers, individual performance	— Promote strong short-term business results by rewarding
value drivers, without creating an incentive to take excessive
risk — Serve as key compensation vehicle for rewarding annual
results and differentiating performance each year
	Performance Share
Program (Long-Term)	Performance share
units	— Award values are granted based on market
competitiveness — Performance shares are earned after a three-year
performance cycle — If earned, performance share units are paid in shares of
common stock upon vesting	— Reward executives for outperforming utility peers and
achieving financial goals over a long-term period — Reward long-term value creation by providing a
significant stake in the long-term financial success of the Company that
is aligned with stockholders — Promote long-term retention
Benefits	Employee
Savings Plan	401(k) match	— Provide a retirement benefit in which the employee can
actively participate	— Allow all employees to contribute a percentage of their
annual salary and receive a matching contribution to build towards
retirement
	Pension	Annuity	— Provide a retirement benefit that encourages retention
for the totality of the employee’s career	— Encourage career employment as the pension value grows
with additional years of service

Base Salary

| Name | March 1, 2015 Base
Salary ($) | March 1, 2016 Base
Salary ($) |
| --- | --- | --- |
| Tom Fanning | 1,250,000 | 1,300,000 |
| Art Beattie | 700,438 | 721,451 |
| Paul Bowers | 814,895 | 839,342 |
| Mark Crosswhite | 641,609 | 692,938 |

| — | Tom Fanning recommends
base salary adjustments for each of the other executive officers for the
Compensation Committee’s review and approval. The recommendations take
into account competitive market data provided by Pay Governance, 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 individuals’ relative contributions to
the achievement of financial and operational goals in prior
years. |
| --- | --- |
| — | The Compensation
Committee determines Tom Fanning’s base salary based on its comprehensive
review of his individual performance and taking into account competitive
market data provided by Pay Governance. |
| — | Base salary adjustments
are effective as of March 1 each year. |

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Compensation Discussion and Analysis

Annual Incentive Compensation Program (At Risk)

2016 Performance Pay Program

| — | PPP is a broad-based
annual cash incentive award program designed to reward annual financial
and operational performance. |
| --- | --- |
| — | For the executive
officers, the program also rewards individual performance designed to
drive long-term strategy by encouraging short-term (annual) behaviors that
the Compensation Committee believes will create long-term stockholder
value. |
| — | The target award amount
is determined as a percentage of base salary, with the percentage varying
by pay grade. |
| — | Payouts can range from
0% to 200% of target, based on actual level of goal
achievement. |

Establishing the Performance Goals and Weighting

| — | The Compensation
Committee sets goals for all participants at the beginning of each
year. |
| --- | --- |
| — | As part of its
goal-setting process, the Compensation Committee reviews previous goals and performance along with input
from the Finance Committee on EPS and net income goals and the
Nuclear/Operations Committee on operational goals to appropriately align
the target and maximum goals with expected Company
performance. |

| 2016
PPP Goal Weighting for CEO and CFO — EPS 40% | Operational 30% | Individual 30% |
| --- | --- | --- |

| 2016
PPP Goal Weighting for the other NEOs — EPS 30% | Net
Income 30% | Operational 30% | Individual 10% |
| --- | --- | --- | --- |

Financial Performance Results

| — | Southern Company’s
adjusted EPS result was $2.89, exceeding the $2.82 EPS target. Adjusted
EPS results approved by the Compensation Committee exclude the impact of
charges related to the Kemper IGCC; equity return related to the Kemper
IGCC schedule extension; and earnings, acquisition costs, integration
costs and financing costs related to Southern Company Gas and Southern
Natural Gas. These adjustments are consistent with the earnings results
publicly communicated to investors. For a reconciliation of adjusted EPS,
see page 88. |
| --- | --- |
| — | Alabama Power’s adjusted
net income result was $821 million, exceeding the $774 million target. The
adjustment approved by the Compensation Committee excludes the impact of
integration costs. |
| — | Georgia Power’s adjusted
net income result was $1,333 million, exceeding the $1,235 million target.
The adjustment approved by the Compensation Committee excludes the impact
of integration costs. |

Operational Performance Results

| — | The operational goal payouts were at or near
the maximum performance level
for customer satisfaction, generation availability and transmission
reliability. |
| --- | --- |
| — | The operational goal
payouts were at or above target for nuclear plant operations, distribution
reliability, major projects and culture. |
| — | The operational goal
payout for safety was slightly below
target. |

52 Southern Company 2017 Proxy Statement

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Compensation Discussion and Analysis

Individual Performance Results

2016 saw strong overall performance and many strategic advances in the Company, led by our team of executive officers. Overall, the Compensation Committee believed that individual performance well exceeded target for the year, given the financial and operational achievements across the Company and the key acquisitions completed in 2016. The Compensation Committee considered the factors described below and other individual performance factors in determining payouts for the individual performance element of the award for the NEOs.

| — | Provided leadership to
drive the strong and continued improvements in our financial success,
including adjusted EPS results and increased stockholder
dividends |
| --- | --- |
| — | Broadened opportunities
to leverage our customer-focused business model, which has long supported
constructive regulatory relationships, world-class customer satisfaction
and regular, predictable and sustainable returns on investment with the
acquisition and integration of Southern Company Gas |
| — | Added to our portfolio
of contracted energy infrastructure assets with the acquisitions of wind
and solar assets, a 50% equity interest in Southern Natural Gas and
PowerSecure, as well as the execution of a strategic partnership with
Bloom Energy |
| — | Demonstrated significant
progress in the major construction projects, Kemper IGCC and Vogtle Units
3 and 4 |
| — | Maintained national
leadership in energy, economic and security advisory
roles |
| — | Evolved our culture
through the integration of Southern Company Gas and built upon our
exceptional performance in customer service, safety and operating
efficiencies, and expanded our excellence in innovation, diversity and
inclusion and communications |
| — | Completed over $20
billion of financing activities at attractive rates in support of executing the
Company’s strategy |
| — | Further strengthened
external relationships with investors and analysts, including a five-year
strategy and value proposition plan |

2016 Actual PPP Payout

| Name | Target 2016
PPP Opportunity (Percent of
salary) | Target 2016
PPP Opportunity ($) | Total
Performance Factor | Actual 2016
PPP Payout ($) |
| --- | --- | --- | --- | --- |
| Tom Fanning | 125% | 1,625,000 | 168% | 2,725,125 |
| Art Beattie | 85% | 613,233 | 174% | 1,065,186 |
| Paul Bowers | 80% | 671,474 | 169% | 1,133,448 |
| Mark Crosswhite | 80% | 554,350 | 169% | 934,635 |

Other Details about the Program

| — | Under the terms of the program, no payout
can be made if events occur that impact the Company’s financial ability to
fund the common stock dividend. |
| --- | --- |
| — | The Compensation
Committee may make adjustments, both positive and negative, to goal
achievement for purposes of determining payouts. |
| — | For additional
information about the goals and a further breakdown of the overall award
payout calculation by NEO, see page 60. |

Long-Term Equity Incentive Compensation (At Risk)

2016-2018 Performance Share Program

| — | 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. |
| --- | --- |
| — | 100% of award is in performance share units
that are earned solely based on achievement of pre-established performance
goals over a three-year performance period from 2016 to
2018. |
| — | Payouts can range from 0% to 200% of target,
based on actual level of goal achievement. |
| — | Paid in common stock at the end of the
performance period; accrued dividends are received only if underlying
award is earned. |

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PART 13

Table of Contents

Compensation Discussion and Analysis

Establishing the Performance Goals

The PSP award includes three performance goals for the 2016 to 2018 performance period, as well as a credit quality threshold requirement.

| Goal | What it
Measures | Why it’s
Important |
| --- | --- | --- |
| Relative TSR (50% weighting) | TSR relative to peer companies | Aligns employee pay with investor returns relative to
peers |
| Cumulative EPS (25% weighting) | Cumulative EPS over the three-year performance
period | Aligns employee pay with Southern Company’s earnings
growth |
| Equity-Weighted ROE (25%
weighting) | Equity-weighted ROE of the traditional electric operating
companies | Aligns employee pay with Southern Company’s ability to
maximize return on capital invested |

The EPS and ROE goals are also both 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 EPS and ROE goals will be reduced to zero.

For each of the performance measures, a threshold, target and maximum goal was set at the beginning of 2016.

| | Relative TSR
Performance (50% weighting) | Cumulative EPS
Performance (25% weighting) | Equity Weighted ROE
Performance (25% weighting) | Payout (Target
Performance Share Units Paid) |
| --- | --- | --- | --- | --- |
| Maximum | 90th percentile or higher | $9.37 | 6.1% | 200% |
| Target | 50th percentile | $8.85 | 4.9% | 100% |
| Threshold | 10th percentile | $8.34 | 4.5% | 0 |

| — | The Compensation
Committee retains the discretion to approve adjustments in determining
actual performance goal achievement. |
| --- | --- |
| — | Our TSR is measured
relative to a utility peer group of companies that are believed to be most
similar to the Company in both business model and investors. There is
significant overlap between the peer group used to determine relative TSR
performance for the 2016 PSP and the peer group used for compensation
benchmarking purposes. However, several of
the companies in the 2016 PSP peer group do not meet the size requirement
to be included in the compensation peer group (+$6 billion in revenues),
and one company did not participate in the Towers Watson survey from which
the data for the compensation peer group is derived. |
| — | The 2016 PSP peer group
is subject to change based on merger and acquisition
activity. |

TSR Performance Share Program Peer Group for 2016 – 2018 Performance Period

| Alliant Energy Corp. | Duke
Energy Corporation | Pinnacle West Capital Corporation |
| --- | --- | --- |
| Ameren Corporation | Edison
International | PPL
Corporation |
| American Electric Power Company,
Inc. | Entergy Corporation | SCANA
Corporation |
| CMS Energy
Corporation | Eversource Energy | Westar
Energy Inc. |
| Consolidated Edison,
Inc. | OGE
Energy Corp. | Wisconsin Energy Corporation |
| DTE
Energy Company | PG&E Corporation | Xcel Energy
Inc. |

54 Southern Company 2017 Proxy Statement

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Compensation Discussion and Analysis

Determining the Number of Performance Shares Granted

| — | The Compensation Committee approved an increase
in the total target value of the long-term incentive award for the CEO
from 575% of base salary in 2015 to 600% of base salary in 2016. The
increase reflected the CEO’s strong individual performance as well as the
Compensation Committee’s desire to position the CEO’s total direct
compensation close to market median and to position that increase in the
long-term equity incentive portion of his compensation. |
| --- | --- |
| — | A target number of performance share
units are granted to a participant, based on the total target value
determined as a percentage of a participant’s base salary. Target
percentages vary by grade level. |
| — | No actual shares are issued on the
grant date. Each performance share unit represents one share of common
stock. |
| — | The total target value for
performance share units is divided by the value per unit on the grant date
to determine the number of performance share units granted to each
participant. |

| | Target as Percent of Base Salary | Grant Date Value and Number of Performance Shares Granted in
2016 — Relative
TSR (50%) | Cumulative
EPS (25%) | Equity-Weighted
ROE (25%) | Total (100%) |
| --- | --- | --- | --- | --- | --- |
| Tom Fanning | 600% | $3,899,987 | $1,950,017 | $1,950,017 | $7,800,022 |
| | | 86,302 | 39,943 | 39,943 | 166,188 |
| Art Beattie | 275% | $992,011 | $496,011 | $496,011 | $1,984,033 |
| | | 21,952 | 10,160 | 10,160 | 42,272 |
| Paul Bowers | 275% | $1,154,107 | $577,052 | $577,052 | $2,308,212 |
| | | 25,539 | 11,820 | 11,820 | 49,179 |
| Mark Crosswhite | 275% | $952,786 | $476,386 | $476,386 | $1,905,557 |
| | | 21,084 | 9,758 | 9,758 | 40,600 |

Other Details about the Program

| — | A participant can earn from 0% to
200% of the target number of performance shares granted at the beginning
of the performance period based solely on achievement of the performance
goals over the three-year performance period. Payout for performance between points will be interpolated on a
straight-line basis. |
| --- | --- |
| — | Performance shares are not earned
until the end of the three-year performance period and after certification
of the results by the Compensation Committee. |
| — | Dividend equivalents are credited
during the three-year performance period but are only paid out if and when
the award is earned. If no performance shares are earned, then no
dividends are paid out. |
| — | Participants who retire during the
performance period will receive the full amount of performance shares
actually earned at the end of the three-year period. Participants who
become disabled or die during the performance period will receive a
prorated number of performance shares based on the performance shares
actually earned at the end of the three-year period. A participant who
terminates employment other than due to retirement, death or disability
forfeits all unearned performance
shares. |

Timing of Performance-Based Compensation

— The establishment of performance-based compensation goals and the granting of equity awards are not timed to coincide with the release of material, non-public information.

Results of 2014-2016 Performance Share Program

2014-2016 PSP Payouts

Performance share grants made in 2014 were subject to a three-year performance period that ended on December 31, 2016. Our relative TSR performance compared to the peer group was below the threshold performance level. As a result, no performance shares were earned by any participant.

Peer Group and Payouts for 2014 – 2016 PSP

| Alliant Energy Corp. | DTE Energy
Company | Pinnacle West Capital
Corporation |
| --- | --- | --- |
| Ameren Corporation | Duke Energy
Corporation | PPL
Corporation |
| American Electric Power Company, Inc. | Edison
International | SCANA
Corporation |
| CMS Energy Corporation | Eversource
Energy | Wisconsin Energy
Corporation |
| Consolidated Edison,
Inc. | PG&E Corporation | Xcel Energy Inc. |

investor.southerncompany.com 55

Table of Contents

Compensation Discussion and Analysis

| | Target Performance Shares Granted (#) | Grant Date
Target Value of Performance Shares Granted ($) | Performance Shares Earned
(#) | Value of
Performance Shares Earned ($) |
| --- | --- | --- | --- | --- |
| Tom Fanning | 90,143 | 3,383,968 | - | 0 |
| Art Beattie | 24,758 | 929,415 | - | 0 |
| Paul Bowers | 28,943 | 1,086,520 | - | 0 |
| Mark Crosswhite | 22,056 | 827,982 | - | 0 |

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 Internal Revenue Code of 1986, as amended (tax
code). |
| --- | --- |
| — | Pension Benefits: Substantially all employees participate in a funded Pension Plan. Normal
retirement benefits become payable when participants attain age 65.
Employees vest after completing five years of vesting service. The Company
also provides unfunded benefits to certain
employees, including the named executive officers, 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. |
| --- | --- |
| — | 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. |

2016 Compensation for Drew Evans

Drew Evans has served as Chairman and CEO of AGL Resources Inc., now Southern Company Gas, since January 1, 2016, and he has continued to serve in that role following the completion of the merger on July 1, 2016.

| — | Prior to the completion of the
acquisition, Mr. Evans’ compensation was recommended by the Southern
Company Gas Compensation Committee and approved by the independent members
of the Board of Directors of Southern Company Gas. |
| --- | --- |
| — | The merger agreement governed the
treatment of certain equity compensation held by all Southern Company
Gas employees, including Mr. Evans, at the
time of the merger and established certain limits on changes to
compensation of all Southern Company Gas employees, including Mr. Evans,
for one year after the merger. |
| — | Mr.
Evans and other senior executives of Southern Company Gas were parties to
change-in-control severance agreements (each, a Continuity Agreement) that
provided for certain payments and benefits in connection with a change in
control of Southern Company Gas and a termination without cause of the
employment of the executive or the termination by the executive for good
reason within a period of time following the change in
control. |

56 Southern Company 2017 Proxy Statement

Table of Contents

Compensation Discussion and Analysis

Base Salary

On December 9, 2015, the independent members of the Board of Directors of Southern Company Gas set Mr. Evans’ base salary for 2016 at $800,000, which remained in effect throughout 2016.

Annual Incentive Program

In early 2016, the Southern Company Gas Compensation Committee established performance goals for participants in its annual cash incentive program, the AGL Resources Inc. Annual Incentive Plan (Gas AIP).

| — | Mr. Evans’ target award opportunity
was set at 100% of base salary by the independent members of the Board of
Directors of Southern Company Gas. |
| --- | --- |
| — | The Southern Company Gas
Compensation Committee established a corporate performance measure (60%
weighting) related to the net income of Southern Company Gas and various
performance measures, including but not limited to earnings before
interest and taxes, of certain Southern Company Gas business units (40%
weighting) for the year. |
| — | The Southern Company Gas
Compensation Committee determined performance under the Gas AIP from
January 1, 2016 through June 30, 2016, and Southern Company Gas paid to
all participants the portion of their GAS AIP award in July 2016 that had
been earned for the first half of the year. |

Subsequent to the completion of the acquisition, the Compensation Committee of Southern Company continued the GAS AIP for all Southern Company Gas participants, approving updated corporate performance measures for the year.

| — | The Compensation Committee approved
2016 net income goals for Southern Company Gas as follows: $400.1 million
maximum), $375.9 million (target) and $363.8 million
(threshold). |
| --- | --- |
| — | The total payout under the GAS AIP
was determined by measuring actual 2016 calendar year performance against
the annual goals, with final payout reflecting the total payout amount
determined based on annual goal achievement less the payout received for
the first half of 2016. |
| — | The corporate performance measure
was achieved at a level of 183% of target and the business unit
performance measures were achieved at an aggregate level of 143% of
target, resulting in an overall payout at 167% of target. There were no
individual performance measures applicable to Mr. Evans as part of the Gas
AIP for 2016. |
| — | The Gas AIP payout to Mr. Evans for
the period from July 1, 2016 through December 31, 2016 was
$569,207. |

Long-Term Equity Incentive Awards

In accordance with the terms of the merger agreement:

| — | The outstanding vested and unvested
Southern Company Gas equity awards (other than the Southern Company Gas
performance stock units (Gas PSUs)) were settled in cash at the merger
price. |
| --- | --- |
| — | The outstanding Gas PSUs were
assumed by Southern Company and converted, pursuant to a ratio set forth
in the merger agreement, into Southern Company time-vesting RSUs with the
same vesting schedule as set forth in the original Gas PSUs. As a result,
Mr. Evans holds certain time-vesting RSUs that were granted in connection
with the assumption and conversion of the Gas
PSUs. |

Subsequent to the merger, Mr. Evans entered into a letter agreement with Southern Company pursuant to which he agreed to waive his right to receive the change-in-control benefits set forth in the Continuity Agreement and we agreed to grant Mr. Evans a performance share unit award based on 1.5 times the dollar value of Mr. Evans’ change-in-control severance payment provided for under the Continuity Agreement.

| — | A portion of the performance share
units vests on each of July 1, 2017, July 1, 2018 and July 1, 2019, the
first, second and third anniversaries of the completion of the
merger. |
| --- | --- |
| — | The remaining performance share
units may be earned based solely on Southern Company Gas’ achievement of a
cumulative net income performance goal over a three-year performance
period from 2017 through 2019 as follows: $1.336 billion (threshold) and
$1.402 billion (target). The number of units earned between each level of
achievement will be calculated on a linear basis. The maximum payout is
100% of target. |
| — | Dividend equivalents are credited
during the vesting and performance period, but are only paid when the
applicable portion of the award vests and the stock is
issued. |

Benefits

Mr. Evans participates in a number of Southern Company Gas retirement plans that continue to operate subsequent to the completion of the merger on the same basis as other Southern Company Gas employees, including the:

| — | AGL Resources Inc. Retirement
Savings Plus Plan (RSP), a 401(k) plan; |
| --- | --- |
| — | AGL Resources Inc. Nonqualified
Savings Plan (AGL NSP), a nonqualified defined contribution retirement
plan; |
| — | AGL Resources Inc. Retirement Plan (AGL Pension Plan),
a tax-qualified defined benefit pension plan; and |
| — | AGL Resources Inc. Excess Benefit
Plan (AGL Excess Benefit Plan), a nonqualified defined benefit retirement
plan. |

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Table of Contents

Compensation Discussion and Analysis

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 all 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 Chief Human Resources Officer, her staff, the
Finance Committee (financial goals), the Nuclear/Operations Committee
(operational goals) and the Compensation Committee’s independent
compensation consultant. |

| Role of the
CEO | |
| --- | --- |
| ● | |
| — | Our CEO makes recommendations to the
Compensation Committee for other executive officers with respect to (1)
base salary adjustments, (2) Performance Pay Program targets and
individual performance achievement payouts and (3) Performance Share
Program 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 executive
officers. However, the Compensation Committee makes the final decisions
with respect to all compensation for Southern Company executive
officers. |
| — | Our CEO does not play any role with
respect to any matter affecting 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
relationship to the executive’s performance. |
| — | In 2016, Pay Governance provided an
annual competitive evaluation of total compensation for the NEOs, as well
as overall compensation program share usage, dilution and fair value
expense. 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 2016. |
| — | The Compensation Committee retains
sole authority to hire Pay Governance, 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 provides that employees, officers and Directors will not trade Company options on the options market and will not engage in short sales. It also includes a “no pledging” provision that prohibits pledging of our stock for all Southern Company executive officers and Directors.

58 Southern Company 2017 Proxy Statement

PART 14

Table of Contents

Compensation Discussion and Analysis

Stock Ownership Requirements

We believe ownership requirements align the interest of officers and stockholders by promoting a long-term focus and long-term share ownership. All of our NEOs are subject to stock ownership requirements, expressed as a multiple of base salary. Under our stock ownership guidelines, the ownership requirement is reduced by one-half at age 60. All of the NEOs are meeting their applicable ownership requirements.

| | Multiple of Salary without Counting Stock
Options | Multiple of Salary Counting Portion of
Vested Stock Options |
| --- | --- | --- |
| Chief Executive
Officer | 5
Times | 10
Times |
| Other
NEOs | 3
Times | 6
Times |

Ownership arrangements counted toward the requirements include shares owned outright, those held in Company-sponsored plans and common stock accounts in the DCP and the SBP. A portion of vested stock options may be counted, but then the ownership requirement is doubled.

Newly-elected and newly-promoted officers have approximately six years from the date of their election or promotion to meet the applicable ownership requirement. We measure compliance with the stock ownership requirements as of September 30 each year.

Consideration of 2016 Advisory Vote on Executive Compensation

At the 2016 annual meeting, an advisory vote on the Company’s executive compensation program received a favorable vote of 93% of the votes cast. In light of this significant support and the payout levels under our performance-based program, the Compensation Committee continues to believe that the compensation program is competitive, aligned with our financial and operational performance and in the best interests of the Company, stockholders and customers.

Clawback of Awards

Our Omnibus Incentive Compensation Plan provides that if we are required to prepare an accounting restatement due to material noncompliance as a result of misconduct, and an executive officer of the Company knowingly or grossly negligently engaged in or failed to prevent the misconduct or is subject to automatic forfeiture under the Sarbanes-Oxley Act of 2002, the executive officer must repay us the amount of any payment in settlement of awards earned or accrued during the 12-month period following the first public issuance or filing that was restated.

Impact of Section 162(m) of the Tax Code on Compensation

Section 162(m) of the tax code limits the tax deductibility of the compensation of certain NEOs that exceeds $1 million per year unless the compensation is paid under a performance-based plan that has been approved by stockholders. At the 2016 annual meeting, stockholders re-approved the material terms for qualified performance-based compensation under the Omnibus Incentive Compensation Plan to ensure continued availability of the performance-based compensation deduction in accordance with the requirements of Section 162(m) of the tax code.

Because our policy is to maximize long-term stockholder value, tax deductibility is not the only factor considered in setting compensation. The Compensation Committee has the discretion to award compensation that may not be tax deductible.

The Compensation Committee approved a formula in 2016 to calculate the annual performance-based compensation amount payable to the affected NEOs. For 2016 performance, the Compensation Committee used negative discretion from the approved formula amount to determine the actual payouts for the NEOs under the annual performance-based compensation program.

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 2016, none of the Company’s executive officers served on the Board of Directors of any entities whose executive officers serve on the Compensation Committee.

investor.southerncompany.com 59

Table of Contents

Compensation Discussion and Analysis

Supplemental Information on 2016 PPP Goal Achievement and Payout

2016 PPP Goal Results and Payouts by NEO

| Tom
Fanning — Goal | Weight | Performance | | Achievement % |
| --- | --- | --- | --- | --- |
| EPS | 40% | — | Exceeded target | 171% |
| Operational | 30% | — | Exceeded or met targets on customer satisfaction,
transmission and distribution reliability, major projects, culture,
generation availability and nuclear plant operations | 151% |
| | | — | Results were slightly below target for safety | |
| Individual | 30% | — | Exceeded target | 180% |
| Total Performance Factor | | | | 168% |
| Art
Beattie | | | | |
| Goal | Weight | Performance | | Achievement % |
| EPS | 40% | — | Exceeded target | 171% |
| Operational | 30% | — | Exceeded or met targets on customer satisfaction,
transmission and distribution reliability, major projects, culture,
generation availability and nuclear plant operations | 151% |
| | | — | Results were slightly below target for safety | |
| Individual | 30% | — | Maximum | 200% |
| Total Performance Factor | | | | 174% |
| Paul
Bowers | | | | |
| Goal | Weight | Performance | | Achievement % |
| EPS | 30% | — | Exceeded target | 171% |
| Net Income | 30% | — | Exceeded target (GPC) | 173% |
| Operational | 30% | — | Exceeded targets on customer satisfaction, transmission
and distribution reliability, Plant Vogtle Units 3 and 4 annual
objectives, culture, generation availability and nuclear plant
operations | 152% |
| | | — | Results were slightly below target for safety | |
| Individual | 10% | — | Maximum | 200% |
| Total Performance Factor | | | | 169% |
| Mark
Crosswhite | | | | |
| Goal | Weight | Performance | | Achievement % |
| EPS | 30% | — | Exceeded target | 171% |
| Net Income | 30% | — | Exceeded target (APC) | 177% |
| Operational | 30% | — | Exceeded targets on customer satisfaction, transmission
and distribution reliability, culture and generation
availability | 164% |
| | | — | Results were slightly below
target for safety | |
| Individual | 10% | — | Exceeded target | 150% |
| Total Performance Factor | | | | 169% |

60 Southern Company 2017 Proxy Statement

Table of Contents

Compensation Discussion and Analysis

2016 PPP Goal Details

Category	Performance Measures	Description	Purpose/Objective	Applicability
Financial	EPS	The Company’s net
income from ongoing business activities divided by average shares
outstanding during the year For 2016, threshold was set at $2.68, target at
$2.82, and maximum at $2.96	Supports commitment to provide
stockholders solid, risk-adjusted returns and to support and grow the
dividend	All employees
	Business Unit Net Income	For the traditional
electric operating companies and Southern Power: net income after
dividends on preferred and preference stock Overall corporate performance determined by the
equity-weighted average of the business unit net income goal
payouts	Supports delivery of stockholder value and contributes
to the Company’s sound financial policies and stable credit
ratings	All employees, based on business unit, except CEO and
CFO
Operational	Customer Satisfaction	Surveys evaluate performance for each
traditional electric operating company and provide a ranking for each
customer segment (residential, commercial and industrial)	Performance of all goals affects
customer satisfaction	All employees, based on business
unit
	Safety	Focuses the entire Company on continuous improvement in
striving for a safe work environment	A safe work environment across all work locations is
essential for the protection of employees, customers and
communities	All employees, based on business unit
	Major Projects (Plant Vogtle Units 3 and 4; Kemper
IGCC)	A combination of
objective and subjective measures is considered in assessing the degree of
achievement by separate executive review committees for each
project For major projects,
annual goals are established that are designed to achieve long-term
project completion and with a focus on validating technology and providing
clean, reliable operation	Strategic projects
enable the Southern Company system to expand its capacity to provide
clean, safe, reliable and affordable energy to customers across the region Long-term projects are accomplished through
achievement of annual goals over the life cycle of the
project	Certain employees, based on business unit, including
CEO, CFO and Georgia Power CEO
	Culture	Seeks to improve the inclusive workplace, including
measures for diversity and employee satisfaction	Company culture supports workforce development efforts
and helps assure diversity of suppliers	All employees, based on business unit
	Reliability	Measures transmission and distribution system
reliability by frequency and duration of outages	Reliability delivering power is essential to
operations	All employees, based on business unit
	Availability	Measures peak season equivalent forced outage rate and
indicates efficient operation of generation fleet during high-demand
periods	Availability of sufficient power during peak season
fulfills the obligation to serve and provide customers with power while
effectively managing generation resources	All employees, based on business unit
	Nuclear Plant Operations	Measures nuclear safety, reliability and availability of
the nuclear fleet	Safe and efficient operation of the nuclear fleet is
important for delivering clean energy at a reasonable price	Certain employees, based on business unit
Individual	Individual Factors	Focus on overall business performance as
well as factors including leadership development,
succession planning and fostering the
culture and diversity of the organization	Individual goals provide the
Compensation Committee the ability to balance quantitative results with
qualitative inputs by focusing on both business performance and behavioral
aspects of leadership that are designed to lead to sustainable long-term
growth	All executive officers of Southern
Company

investor.southerncompany.com 61

Table of Contents

Executive Compensation Tables

Summary Compensation Table

| Name (a) | Year (b) | Salary ($)(c) | Bonus ($)(d) | Stock Awards ($)(e) | Option Awards ($)(f) | Non-Equity Incentive
Plan Compensation ($)(g) | Change in Pension Value
and Nonqualified Deferred Compensation Earnings ($)(h) | All Other Compensation ($)(i) | Total ($)(j) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Thomas A.
Fanning | 2016 | 1,290,192 | - | 7,800,022 | - | 2,725,125 | 3,894,646 | 119,667 | 15,829,652 |
| Chairman, President | 2015 | 1,240,385 | - | 7,187,441 | - | 2,499,125 | 840,198 | 78,002 | 11,845,151 |
| and
Chief Executive | 2014 | 1,192,067 | - | 3,383,968 | 2,255,999 | 1,713,600 | 2,899,537 | 70,822 | 11,515,993 |
| Officer | | | | | | | | | |
| Art P.
Beattie | 2016 | 717,329 | - | 1,984,033 | - | 1,065,186 | 1,624,332 | 42,028 | 5,432,908 |
| Executive Vice President | 2015 | 695,257 | - | 1,611,062 | - | 741,398 | 881,172 | 41,640 | 3,970,529 |
| and Chief Financial | 2014 | 668,516 | - | 929,415 | 619,617 | 772,839 | 1,396,842 | 37,293 | 4,424,522 |
| Officer | | | | | | | | | |
| W. Paul
Bowers | 2016 | 834,547 | - | 2,308,212 | - | 1,133,448 | 1,527,952 | 51,057 | 5,855,216 |
| Chairman, President and | 2015 | 809,595 | - | 1,874,305 | - | 910,865 | 642,042 | 50,827 | 4,287,634 |
| Chief Executive | 2014 | 782,928 | 45 | 1,086,520 | 724,350 | 892,841 | 1,504,316 | 46,986 | 5,037,986 |
| Officer, Georgia Power | | | | | | | | | |
| Mark A.
Crosswhite | 2016 | 682,870 | - | 1,905,557 | - | 934,635 | 1,279,197 | 46,058 | 4,848,317 |
| Chairman, President | 2015 | 633,537 | - | 1,475,743 | - | 698,899 | 698,803 | 45,102 | 3,552,084 |
| and
Chief Executive | 2014 | 581,327 | - | 827,982 | 552,000 | 701,001 | 996,216 | 36,963 | 3,695,489 |
| Officer, Alabama Power | | | | | | | | | |
| Andrew W.
Evans | 2016 | 399,231 | - | 4,390,418 | - | 569,207 | 404,923 | 135,450 | 5,899,228 |
| Chairman, President and | | | | | | | | | |
| Chief Executive Officer, | | | | | | | | | |
| Southern Company Gas | | | | | | | | | |

Column (a)

For Mr. Evans, reflects compensation paid on or after July 1, 2016 (subsequent to the completion of the merger) except as otherwise noted.

Column (e)

This column does not reflect the value of stock awards that were actually earned or received in 2016. Rather, as required by applicable rules of the SEC, this column reports the aggregate grant date fair value of performance shares granted in 2016.

The value reported for the stock awards to Mr. Fanning, Mr. Beattie, Mr. Bowers and Mr. Crosswhite is based on the probable outcome of the performance conditions as of the grant date, using a Monte Carlo simulation model (50% of grant value) and the closing price of common stock on the grant date (50% of grant value). No amounts will be earned until the end of the three-year performance period on December 31, 2018. The value then can be earned based on performance ranging from 0% to 200%, as established by the Compensation Committee.

The value reported for the stock award to Mr. Evans is based on the probable outcome of the performance conditions as of the grant date using the closing price of common stock on the grant date. A portion vests on each of the first three anniversaries of July 1, 2016, the completion of the merger. The remainder may be earned solely based on achievement of a three-year cumulative net income goal for Southern Company Gas.

The aggregate grant date fair value of the performance shares granted in 2016 assuming that the highest level of performance is achieved is as follows: Fanning — $15,600,044; Beattie — $3,968,067; Bowers — $4,616,424; Crosswhite — $3,811,114; and Evans — $4,390,418. See Note 8 to the financial statements included in the 2016 annual report for a discussion of the assumptions used in calculating these amounts.

62 Southern Company 2017 Proxy Statement

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Executive Compensation Tables

Column (f)

The Compensation Committee moved away from granting stock options as part of the long-term incentive program in 2015. No stock options were granted in 2015 or 2016. This column reports the aggregate grant date fair value of stock options granted in 2014.

Column (g)

The amounts in this column reflect actual payouts under the annual Performance Pay Program for Mr. Fanning, Mr. Beattie, Mr. Bowers and Mr. Crosswhite. The amount reported for 2016 is for the one- year performance period that ended on December 31, 2016. For Mr. Evans, reflects actual payout under the Annual Incentive Plan for the performance period from July 1, 2016 to December 31, 2016.

Column (h)

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 2016, the discount rate assumption used to determine the actuarial present value of accumulated pension benefits, as required by SEC rules, was lower than in 2015. For Mr. Fanning, this lower discount rate assumption was one of the primary reasons for the increase in pension value. The other key reasons were an additional year of service and the increase in annual pensionable earnings from 2015 to 2016.

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 (i)

The amounts reported in this column for 2016 are itemized below.

| | Perquisites ($) | Company Contribution to 401(k) Plan
($) | Company Contribution
to Supplemental Retirement Plan ($) | Total ($) |
| --- | --- | --- | --- | --- |
| Tom
Fanning | 56,161 | 13,515 | 49,991 | 119,667 |
| Art
Beattie | 7,406 | 11,542 | 23,079 | 42,028 |
| Paul
Bowers | 9,923 | 13,146 | 27,989 | 51,057 |
| Mark
Crosswhite | 11,627 | 13,120 | 21,311 | 46,058 |
| Drew Evans | 7,629 | 13,780 | 114,041 | 135,450 |

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 $8,200 to be used for financial planning, tax preparation fees and estate planning. In the initial year, the allowed amount is $13,200. Mr. Evans was covered by a separate policy for Southern Company Gas with an annual subsidy of up to $18,000.

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| — | 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. 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
amount for Mr. Bowers includes $491 for approved personal use of corporate
aircraft. |
| --- | --- |
| — | 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 $48,590 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 necessary business expenses and that
we benefit from the added security measures for him. Costs reported
reflect the initial procurement, installation and maintenance of security
measures during 2016. |
| — | Other miscellaneous perquisites
reflects the full cost to the Company of providing the following items:
personal use of Company-provided tickets for sporting and other
entertainment events and gifts distributed to and activities provided to
attendees at Company-sponsored events. |

Grants of Plan-Based Awards in 2016

This table provides information on short-term and long-term incentive compensation awards made in 2016.

| Name (a) | Potential Payouts Under Non-Equity Incentive Plan
Awards — Threshold
($) (c) | Target
($) (d) | Maximum
($) (e) | Estimated Future Payouts
Under Equity Incentive Plan Awards — Threshold
(#) (f) | Target
(#) (g) | Maximum
(#) (h) | Grant Date Fair Value
of Stock and Option Awards ($) (i) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Tom
Fanning | 16,250 | 1,625,000 | 3,250,000 | | | | |
| 2/8/2016 | | | | 1,662 | 166,188 | 332,376 | 7,800,022 |
| Art
Beattie | 6,132 | 613,233 | 1,226,466 | | | | |
| 2/8/2016 | | | | 423 | 42,272 | 84,544 | 1,984,033 |
| Paul
Bowers | 6,715 | 671,474 | 1,342,948 | | | | |
| 2/8/2016 | | | | 492 | 49,179 | 98,358 | 2,308,212 |
| Mark
Crosswhite | 5,544 | 554,350 | 1,108,700 | | | | |
| 2/8/2016 | | | | 406 | 40,600 | 81,200 | 1,905,557 |
| Drew Evans | 4,000 | 400,000 | 800,000 | | | | |
| 9/29/2016 | | | | - | 84,350 | 84,350 | 4,390,418 |

Columns (c), (d), and (e)

These columns reflect the annual Performance Pay Program opportunity for Mr. Fanning,Mr. Beattie, Mr. Bowers and Mr. Crosswhite for 2016 and the Annual Incentive Plan opportunity for Mr. Evans for July 1, 2016 through December 31, 2016. The information shown as “Threshold,” “Target” and “Maximum” reflects the range of potential payouts established by the Compensation Committee. The actual amounts earned for 2016 are included in column (g) of the Summary Compensation Table.

Columns (f), (g) and (h)

These columns reflect the long-term Performance Share Program performance shares granted to the NEOs in 2016. The information shown as “Threshold,” “Target” and “Maximum” reflects the range of potential shares that can be earned as established by the Compensation Committee. Earned performance shares and accrued dividends will be paid out in common stock following the end of the 2016–2018 performance period, based on the extent to which the performance goals are achieved. Any shares not earned are forfeited.

For Mr. Evans, represents a performance share unit award granted in September 2016. A portion vests on each of the first three anniversaries of the completion of the merger. The remainder may be earned solely based on the achievement of a cumulative net income target for Southern Company Gas for the 2017-2019 performance period. The maximum payout is 100% of target. Earned performance share units and accrued dividends will be paid out in common stock.

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Column (i)

This column reflects the aggregate grant date fair value of the Performance Share Program performance shares granted in 2016. 50% of the value is based on the probable outcome of the performance conditions as of the grant date using a Monte Carlo simulation model ($45.19), while the other 50% is based on the closing price of common stock on the grant date ($48.82). The assumptions used in calculating these amounts are discussed in Note 8 to the financial statements included in the 2016 annual report.

Outstanding Equity Awards at 2016 Fiscal Year-End

This table provides information about stock options and stock awards (performance shares and restricted stock units) as of December 31, 2016.

| Name (a) | Option Awards — Number
of Securities Underlying Unexercised Options Exercisable
(#) (b) | Number
of Securities Underlying Unexercised Options Unexercisable
(#) (c) | Option Exercise Price
($) (d) | Option Expiration Date (e) | Stock Awards — Number of Shares
or Units of Stock That Have Not Vested
(#) (f) | Market Value of
Shares or Units of Stock That Have Not Vested ($) (g) | Equity Incentive Plan Awards: Number
of Unearned Shares, Units, or Other Rights That Have Not
Vested (#) (h) | Equity Incentive Plan Awards: Market
or Payout Value of Unearned Shares, Units, or
Other Rights That Have Not Vested
($) (i) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Tom
Fanning | 597,345 | - | 44.42 | 2/13/2022 | | | | |
| | 714,297 | - | 44.06 | 2/11/2023 | | | | |
| | 683,636 | 341,818 | 41.28 | 2/10/2024 | | | | |
| | | | | | | | 167,663 | 8,247,343 |
| | | | | | | | 173,799 | 8,549,173 |
| Art
Beattie | 152,082 | - | 44.42 | 2/13/2022 | | | | |
| | 121,239 | - | 44.06 | 2/11/2023 | | | | |
| | - | 93,881 | 41.28 | 2/10/2024 | | | | |
| | | | | | | | 37,582 | 1,848,659 |
| | | | | | | | 44,208 | 2,174,592 |
| Paul
Bowers | 70,680 | - | 36.42 | 2/19/2017 | | | | |
| | 85,151 | - | 35.78 | 2/18/2018 | | | | |
| | 90,942 | - | 31.39 | 2/16/2019 | | | | |
| | 233,477 | - | 31.17 | 2/15/2020 | | | | |
| | 164,377 | - | 37.97 | 2/14/2021 | | | | |
| | 197,412 | - | 44.42 | 2/13/2022 | | | | |
| | 235,604 | - | 44.06 | 2/11/2023 | | | | |
| | 219,500 | 109,750 | 41.28 | 2/10/2024 | | | | |
| | | | | | | | 43,722 | 2,150,685 |
| | | | | | | | 51,431 | 2,529,891 |
| Mark
Crosswhite | 63,125 | - | 44.42 | 2/13/2022 | | | | |
| | 120,681 | - | 44.06 | 2/11/2023 | | | | |
| | - | 83,636 | 41.28 | 2/10/2024 | | | | |
| | | | | | | | 34,425 | 1,693,366 |
| | | | | | | | 42,459 | 2,088,558 |
| Drew
Evans | - | - | - | - | | | | |
| | - | - | - | - | | | | |
| | | | | | 84,035 | 4,133,682 | | |
| | | | | | | | 85,357 | 4,198,711 |

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Columns (b), (c), (d) and (e)

Stock options were not granted in 2015 or 2016. Stock options vest one-third per year on the anniversary of the grant date. Options granted from 2007 through 2013 with expiration dates from 2017 through 2023 were fully vested as of December 31, 2016. The options granted in 2014 become fully vested on February 10, 2017 and will expire on February 10, 2024.

Options also fully vest upon death, total disability or retirement and expire three years following death or total disability or five years following retirement, or on the original expiration date if earlier.

Columns (f) and (g)

These columns reflect the number of RSUs held by Mr. Evans as of December 31, 2016. His Gas PSUs were assumed and converted into RSUs. Dividends do not accrue on the RSUs. The value in column (g) is based on the common stock closing price on December 30, 2016 ($49.19).

Columns (h) and (i)

In accordance with SEC rules, column (h) reflects the target number of performance shares granted under the Performance Share Program that can be earned at the end of the three-year performance period (January 1, 2015 through December 31, 2017 and January 1, 2016 through December 31, 2018). The number of shares reflected in column (h) also reflects the deemed reinvestment of dividends on the target number of performance shares. Dividends are credited over the performance period but are only received at the end of the performance period if the underlying performance shares are earned.

The performance shares granted for the January 1, 2014 through December 31, 2016 performance period vested on December 31, 2016 at 0% of target.

For Mr. Evans, reflects a grant of performance share units in September 2016. A portion vests on each of the first three anniversaries of July 1, 2016, the completion of the merger. The remainder may be earned solely based on achievement of a cumulative net income goal for Southern Company Gas over a three-year performance period. The number of shares reflected in column (h) also reflects the deemed reinvestment of dividends based on the target number of performance share units.

The value in column (i) is derived by multiplying the number of shares in column (h) by the common stock closing price on December 30, 2016 ($49.19). The ultimate number of shares earned, if any, will be based on the actual performance results at the end of each respective performance period.

Option Exercises and Stock Vested in 2016

| Name (a) | Option Awards — Number
of Shares Acquired on Exercise
(#) (b) | Value Realized on
Exercise ($) (c) | Stock Awards — Number
of Shares Acquired on Vesting
(#) (d) | Value Realized on
Vesting ($) (e) |
| --- | --- | --- | --- | --- |
| Tom
Fanning | - | - | - | - |
| Art
Beattie | 388,766 | 4,366,725 | - | - |
| Paul
Bowers | - | - | - | - |
| Mark
Crosswhite | 231,199 | 2,645,737 | - | - |
| Drew Evans | - | - | 28,704 | 1,411,950 |

Columns (b) and (c)

Column (b) reflects the number of shares acquired upon the exercise of stock options during 2016, and column (c) reflects the value realized. The value realized is the difference in the market price over the exercise price on the exercise date.

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Columns (d) and (e)

Performance share grants made in 2014 were subject to a three-year performance period that ended on December 31, 2016. Our relative TSR performance compared to the peer group was below the threshold performance level. As a result, no performance shares were earned by any participant.

For Mr. Evans, represents the Gas PSUs that were assumed and converted into time-vesting RSUs. A portion of the RSUs vested on December 31, 2016. The value realized is the number of RSUs that vested multiplied by the closing price on the vesting date ($49.19).

Pension Benefits at 2016 Fiscal Year-End

| Name (a) | Plan
Name (b) | Number
of Years Credited Service (#) (c) | Present Value
of Accumulated Benefit ($) (d) | Payments During
Last Fiscal Year ($) (e) |
| --- | --- | --- | --- | --- |
| Tom
Fanning | Pension Plan | 35.00 | 1,514,010 | - |
| | Supplemental Benefit Plan (Pension-Related) | 35.00 | 14,667,738 | - |
| | Supplemental Executive Retirement Plan | 35.00 | 5,328,659 | - |
| Art
Beattie | Pension Plan | 39.92 | 1,936,054 | - |
| | Supplemental Benefit Plan (Pension-Related) | 39.92 | 6,903,309 | - |
| | Supplemental Executive Retirement Plan | 39.92 | 2,621,203 | - |
| Paul
Bowers | Pension Plan | 36.67 | 1,606,550 | - |
| | Supplemental Benefit Plan (Pension-Related) | 36.67 | 7,156,352 | - |
| | Supplemental Executive Retirement Plan | 36.67 | 2,384,572 | - |
| Mark
Crosswhite | Pension Plan | 11.92 | 410,073 | - |
| | Supplemental Benefit Plan (Pension-Related) | 11.92 | 1,210,590 | - |
| | Supplemental Executive Retirement Plan | 11.92 | 641,220 | - |
| | Supplemental Retirement Agreement | 15.00 | 2,938,621 | - |
| Drew Evans | AGL
Pension Plan | 15.00 | 405,688 | - |
| | AGL
Excess Benefit Plan | 15.00 | 1,044,505 | - |

Below is a description of pension benefits for persons employed by the Southern Company system other than Southern Company Gas and PowerSecure.

Pension Plan

The Pension Plan is a tax-qualified, funded plan. It is the Company’s primary retirement plan. Substantially all Southern Company system employees participate in this plan after one year of service. Normal retirement benefits become payable when participants attain age 65 and complete five years of participation. The plan benefit equals the greater of amounts computed using a “1.7% offset formula” and a “1.25% formula,” as described below. Benefits are limited to a statutory maximum.

The 1.7% offset formula amount equals 1.7% of final average pay times years of participation less an offset related to Social Security benefits. The offset equals a service ratio times 50% of the anticipated Social Security benefits in excess of $4,200. The service ratio adjusts the offset for the portion of a full career that a participant has worked. The highest three rates of payout of a participant’s last 10 calendar years of service are averaged to derive final average pay. The rates of pay considered for this formula are the base salary rates with no adjustments for voluntary deferrals after 2008. A statutory limit restricts the amount considered each year; the limit for 2016 was $265,000.

The 1.25% formula amount equals 1.25% of final average pay times years of participation. For this formula, the final average pay computation is the same as above, but annual performance-based compensation earned each year is added to the base salary rates.

Early retirement benefits become payable once plan participants have, during employment, attained age 50 and completed 10 years of participation. Participants who retire early from active service receive benefits equal to the amounts computed using the same formulas employed at normal retirement. However, a 0.3% reduction applies for each month (3.6% for each year) prior to normal retirement

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that participants elect to have their benefit payments commence. For example, 64% of the formula benefits are payable starting at age 55. As of December 31, 2016, all of the NEOs (other than Mr. Evans) are retirement-eligible.

The Pension Plan’s benefit formulas produce amounts payable monthly over a participant’s post-retirement lifetime. At retirement, plan participants can choose to receive their benefits in one of seven alternative forms of payment. All forms pay benefits monthly over the lifetime of the retiree or the joint lifetimes of the retiree and a beneficiary. A reduction applies if a retiring participant chooses a payment form other than a single life annuity. The reduction makes the value of the benefits paid in the form chosen comparable to what it would have been if benefits were paid as a single life annuity over the retiree’s life.

Participants vest in the Pension Plan after completing five years of service. As of December 31, 2016, all of the NEOs are vested in their Pension Plan benefits. Participants who terminate employment after vesting can elect to have their pension benefits commence at age 50 if they participated in the Pension Plan for 10 years. If such an election is made, the early retirement reductions that apply are actuarially determined factors and are larger than 0.3% per month.

Prior to January 1, 2017, if a participant died while actively employed and was either age 50 or vested in the Pension Plan as of date of death, benefits would have been paid to a beneficiary. For deaths occurring on or after January 1, 2017, a participant must be vested in the Pension Plan as of the date of death. After commencing, survivor benefits are payable monthly for the remainder of a survivor’s life.

If participants become totally disabled, periods that Social Security or employer-provided disability income benefits are paid will count as service for benefit calculation purposes. The crediting of this additional service ceases at the point a disabled participant elects to commence retirement payments. Outside of this extra service crediting, the normal Pension Plan provisions apply to disabled participants.

SBP-P

The SBP-P is an unfunded retirement plan that is not tax qualified. This plan provides high-paid employees any benefits that the Pension Plan cannot pay due to statutory pay/benefit limits. The SBP-P’s vesting and early retirement provisions mirror those of the Pension Plan. Its disability provisions mirror those of the Pension Plan but cease upon a participant’s separation from service.

The amounts paid by the SBP-P are based on the additional monthly benefit that the Pension Plan would pay if the statutory limits and pay deferrals were ignored. When a SBP-P participant separates from service, vested monthly benefits provided by the benefit formulas are converted into a single sum value. It equals the present value of what would have been paid monthly for an actuarially determined average post-retirement lifetime. The discount rate used in the calculation is based on the 30-year U.S. Treasury yields for the September preceding the calendar year of separation, but not more than six percent.

Vested participants terminating prior to becoming eligible to retire will be paid their single sum value as of September 1 following the calendar year of separation. If the terminating participant is retirement-eligible, the single sum value will be paid in 10 annual installments starting shortly after separation. The unpaid balance of a retiree’s single sum will be credited with interest at the prime rate published in The Wall Street Journal. If the separating participant is a “key man” under Section 409A of the tax code, the first installment will be delayed for six months after the date of separation.

If a SBP-P participant dies after becoming vested in the Pension Plan, the beneficiary of the deceased participant will receive the installments the participant would have been paid upon retirement.

SERP

The SERP is also an unfunded retirement plan that is not tax qualified. This plan provides high-paid employees additional benefits that the Pension Plan and the SBP-P would pay if the 1.7% offset formula calculations reflected a portion of annual performance-based compensation. To derive the SERP benefits, a final average pay is determined reflecting participants’ base rates of pay and their annual performance-based compensation amounts, whether or not deferred, to the extent they exceed 15% of those base rates (ignoring statutory limits). This final average pay is used in the 1.7% offset formula to derive a gross benefit. The Pension Plan and the SBP-P benefits are subtracted from the gross benefit to calculate the SERP benefit. The SERP’s early retirement, survivor benefit, disability, and form of payment provisions mirror the SBP-P’s provisions. However, except upon a change in control, SERP benefits do not vest until participants retire, so no benefits are paid if a participant terminates prior to becoming retirement-eligible. More information about vesting and payment of SERP benefits following a change in control is included under Potential Payments upon Termination or Change in Control. Effective January 1, 2016, participation on the SERP was closed to new hires and future promotions.

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Supplemental Retirement Agreements (SRA)

The Company also provides supplemental retirement benefits to certain employees that were first employed by an affiliate of the Company in the middle of their careers. These SRAs provide for additional retirement benefits by giving credit for years of employment prior to employment with the Company or one of its affiliates. These agreements provide a benefit which recognizes the expertise both brought to the Southern Company system, and they provide a strong retention incentive to remain with the Company, or one of its affiliates, for the vesting period and beyond. These supplemental retirement benefits are also unfunded and not tax-qualified.

The Company has an SRA with Mr. Crosswhite. Prior to his employment with the Southern Company system, Mr. Crosswhite provided legal services to Southern Company’s subsidiaries. His agreement provides an additional fifteen years of benefits. Mr. Crosswhite was vested in his benefits as of December 31, 2015.

Pension Benefit Assumptions

The following assumptions were used in the present value calculations for all pension benefits:

| — | Discount rate — 4.46% Pension Plan and 3.89%
supplemental plans as of December 31, 2016 |
| --- | --- |
| — | Retirement date — Normal retirement age (65 for
all NEOs) |
| — | Mortality after normal retirement — RP-2014
mortality tables with generational projections |
| — | Mortality, withdrawal, disability and
retirement rates prior to normal retirement — None |
| — | Form of payment for pension
benefits |

| — | Male retirees: 25% single life annuity; 25%
level income annuity; 25% joint and 50% survivor annuity; and 25% joint
and 100% survivor annuity |
| --- | --- |
| — | Female retirees: 50% single life annuity; 30%
level income annuity; 15% joint and 50% survivor annuity; and 5% joint and
100% survivor annuity |
| — | Spouse ages — Wives two years younger than
their husbands |
| — | Annual performance-based compensation earned
but unpaid as of the measurement date — 130% of target opportunity
percentages times base rate of pay for year amount is earned |
| — | Installment determination — 3.75 % discount
rate for single sum calculation and 4.25% prime rate during installment
payment period. |

For all of the NEOs, the number of years of credited service is one year less than the number of years of employment.

Below is a description of pension benefits for persons employed by Southern Company Gas, including Mr. Evans.

AGL Pension Plan

The AGL Pension Plan is the pension plan for Southern Company Gas employees. The AGL Pension Plan is a tax-qualified, funded plan. Generally all non-union employees who have a hire date on or before December 31, 2011 and all union employees who have a hire date on or before December 31, 2012 are eligible to participate in the AGL Pension Plan, upon completion of one year of service and attainment of age 21. Normal retirement benefits become payable when participants attain age 65. AGL Pension Plan benefits are determined by a career average pay formula. The benefit equals 1% of career average pay plus 0.5% of career average pay in excess of 50% of the Social Security Taxable Wage Base. Eligible compensation includes base pay, overtime and short-term incentives. Benefits are limited to a statutory maximum. A statutory limit restricts the amount considered each year; the limit for 2016 was $265,000.

Early retirement benefits become payable once plan participants have, during employment, attained age 55 and completed five years of service. Participants who retire early from active service receive reduced benefits. However, the reduced amount is subsidized so that the reduction from the normal retirement benefit is less severe than a full actuarial reduction. Employees who retire after age 62 with at least 25 years of service are eligible for an unreduced early retirement benefit. As of December 31, 2016, Mr. Evans was not retirement-eligible.

At retirement, plan participants can choose to receive their benefits from various forms of payment. Most forms pay benefits monthly over the lifetime of the retiree or the joint lifetimes of the retiree and a spouse. A reduction applies if a retiring participant chooses a payment form other than a single life annuity. The reduction makes the value of the benefits paid in the form chosen comparable to what it would have been if benefits were paid as a single life annuity over the retiree’s life. The AGL Pension Plan offers a single lump sum payment if the participant’s single lump sum amount is less than $10,000.

Participants vest in the AGL Pension Plan after completing five years of service. As of December 31, 2016, Mr. Evans is vested in his AGL Pension Plan benefit. If a participant dies while actively employed and vested in the AGL Pension Plan as of date of death, benefits will be paid to a spouse. After commencing, survivor benefits are payable monthly for the remainder of a survivor’s life depending on the form of payment selected.

If participants become totally disabled with ten years of service, periods that Social Security or employer-provided disability income benefits are paid will count as service for benefit calculation purposes. The crediting of this additional service ceases at the time the participant qualifies for unreduced benefits. Outside of this extra service crediting, the normal AGL Pension Plan provisions apply to disabled participants.

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AGL Excess Benefit Plan

The AGL Excess Benefit Plan is an unfunded retirement plan that is not tax qualified. This plan provides highly-paid employees any benefits that the AGL Pension Plan cannot pay due to statutory pay/benefit limits. The AGL Excess Benefit Plan’s provisions mirror those of the AGL Pension Plan. Benefits under the AGL Excess Benefit Plan are paid in the same forms available under the AGL Pension Plan, and are distributed at the later of separation from service or age 62.

Pension Benefit Assumptions

The following assumptions were used in the present value calculations for pension benefits related to pension benefits for Southern Company Gas employees:

| — | Discount rate — 4.39% as of December 31,
2016 |
| --- | --- |
| — | Retirement age — earliest unreduced for AGL
Pension Plan and age 62 for AGL Excess Benefit Plan |
| — | Mortality after normal retirement — RP-2014
mortality tables backed up to 2006 by Scale MP2014 and projected forward
with MP-2015 (Amount weighted total employee and total annuitant) |
| — | Salary scale — none |
| — | Mortality, withdrawal, disability, and
retirement rates prior to normal retirement — none |
| — | Form of payment for pension benefits – life
annuity |

Nonqualified Deferred Compensation as of 2016 Fiscal Year-End

| Name (a) | Executive Contributions in Last
FY ($) (b) | Employer Contributions in Last
FY ($) (c) | Aggregate Earnings in Last
FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last
FYE ($) (f) |
| --- | --- | --- | --- | --- | --- |
| Tom
Fanning | 503,909 | 49,991 | 240,932 | 0 | 4,575,978 |
| Art
Beattie | 71,745 | 23,079 | 38,015 | 0 | 721,677 |
| Paul
Bowers | 455,433 | 27,989 | 387,986 | 0 | 5,700,298 |
| Mark
Crosswhite | 69,890 | 21,311 | 32,245 | 0 | 430,896 |
| Drew
Evans (1) | 180,679 | 114,041 | 90,180 | 0 | 1,507,348 |

(1) The amounts shown for Mr. Evans include contributions made and earnings for the full year under the AGL NSP.

The Company provides the DCP (excluding Southern Company Gas and PowerSecure employees), which is designed to permit participants to defer income as well as certain federal, state and local taxes until a specified date or their retirement or other separation from service. Up to 50% of base salary and up to 100% of performance-based non-equity compensation may be deferred at the election of eligible employees. All of the NEOs, except Mr. Evans, are eligible to participate in the DCP. Mr. Evans is a participant in the AGL NSP, described below.

DCP participants have two options for the deemed investments of the amounts deferred — the stock equivalent account and the prime equivalent account. Under the terms of the DCP, participants are permitted to transfer between investments at any time.

The amounts deferred in the stock equivalent account are treated as if invested at an equivalent rate of return to that of an actual investment in common stock, including the crediting of dividend equivalents as such are paid by Southern Company from time to time. It provides participants with an equivalent opportunity for the capital appreciation (or loss) and income of that of a Company stockholder. During 2016, the rate of return in the stock equivalent account was 9.99%.

Alternatively, participants may elect to have their deferred compensation deemed invested in the prime equivalent account, which is treated as if invested at a prime interest rate compounded monthly, as published in The Wall Street Journal as the base rate on corporate loans posted as of the last business day of each month by at least 75% of the United States’ largest banks. The interest rate earned on amounts deferred during 2016 in the prime equivalent account was 3.59%.

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Under the AGL NSP, eligible employees, including Mr. Evans, are allowed to defer up to 75% of base salary and 100% of annual incentive pay as before-tax contributions. The timing restrictions for contribution deferral elections are intended to comply with Section 409A of the tax code, as well as other applicable tax code provisions. Under the AGL NSP, the amount of matching contributions is offset by the maximum matching contributions the participant could receive under the tax-qualified RSP. Southern Company Gas matches 65% of participant contributions, up to the first 8% of the participant’s covered compensation. Each participant in the AGL NSP has an account, which represents a bookkeeping entry reflecting contributions and earnings/losses on the actual performance of the participant’s notional investments. The notional investment options under the AGL NSP mirror the investment options offered under the RSP. Participants are 100% vested in their own contributions and vest in employer-matching contributions over a three-year period according to a vesting schedule. Mr. Evans has met the vesting requirements under the AGL NSP.

Distributions under the AGL NSP occur in the year following the year of termination of employment. Participants have the option of taking distributions, following termination of employment, in the following forms: a single lump sum cash payment; a lump sum cash payment of a portion of the participant’s account with the remainder distributed in up to ten equal annual installments; or between one to ten equal annual installments.

Column (b)

This column reports the actual amounts of compensation deferred under the DCP or AGL NSP, as applicable, by each NEO in 2016. The amount of salary deferred by the NEOs, if any, is included in the Salary column in the Summary Compensation Table. The amounts of performance-based compensation deferred in 2016 were the amounts that were earned as of December 31, 2015 but were not payable until the first quarter of 2016. These amounts are not reflected in the Summary Compensation Table because that table reports performance-based compensation that was earned in 2016 but not payable until early 2017. Amounts under the DCP may be distributed in a lump sum or in up to 10 annual installments at termination of employment or in a lump sum at a specified date, at the election of the participant.

Column (c)

This column reflects contributions under the SBP and, for Mr. Evans, the AGL NSP. Under the tax code, employer-matching contributions are prohibited under the ESP and the RSP on employee contributions above stated limits, and, if applicable, above legal limits set forth in the tax code.

Each of the SBP and the AGL NSP is a nonqualified deferred compensation plan under which contributions are made that are prohibited from being made in the ESP or RSP. The contributions are treated as if invested in common stock and are payable in cash upon termination of employment in a lump sum or in up to 20 annual installments, at the election of the participant. The amounts reported in this column also were reported in the All Other Compensation column in the Summary Compensation Table.

Column (d)

This column reports earnings or losses on compensation the NEOs elected to defer and on employer contributions under the SBP.

Column (f)

This column includes amounts that were deferred under the DCP or AGL NSP and contributions under the SBP or AGL NSP in prior years. The following chart shows the amounts previously reported.

| | Amounts
Deferred prior to 2016 and previously
reported ($) | Employer
Contributions prior to 2016 and previously
reported ($) | Total ($) |
| --- | --- | --- | --- |
| Tom
Fanning | 2,477,037 | 466,190 | 2,943,227 |
| Art
Beattie | 34,781 | 104,091 | 138,872 |
| Paul
Bowers | 2,354,095 | 197,735 | 2,551,830 |
| Mark
Crosswhite | 0 | 18,795 | 18,795 |
| Drew
Evans | 0 | 0 | 0 |

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Table of Contents

Executive Compensation Tables

Potential Payments Upon Termination or Change in Control

This section describes and estimates payments that could be made to the NEOs serving as of December 31, 2016 under different termination and change-in-control events. The estimated payments would be made under the terms of Southern Company’s compensation and benefit program, the Southern Company Gas program or the change-in-control severance program.

All of the NEOs are participants in Southern Company’s change-in-control severance program for officers. The amount of potential payments is calculated as if the triggering events occurred as of December 31, 2016 and assumes that the price of common stock is the closing market price on December 31, 2016.

Description of Termination and Change-in-Control Events

The following charts list different types of termination and change-in-control events that can affect the treatment of payments under the compensation and benefit programs. No payments are made under the change-in-control severance program unless, within two years of the change in control, the NEO is involuntarily terminated or voluntarily terminates for good reason.

Traditional Termination Events

| — | Retirement or Retirement-Eligible — Termination
of NEO who is at least 50 years old and has at least 10 years of credited
service. |
| --- | --- |
| — | Resignation — Voluntary termination of NEO who
is not retirement-eligible. |
| — | Lay Off — Involuntary termination of NEO who is
not retirement-eligible not for cause. |
| — | Involuntary Termination — Involuntary
termination of NEO for cause. Cause includes individual performance below
minimum performance standards and misconduct, such as violation of the
Company’s Drug and Alcohol Policy. |
| — | Death or Disability — Termination of NEO due to
death or disability. |

Change-in-Control-Related Events

At the Company or the subsidiary company level:

| — | Company Change in Control I — Consummation of
an acquisition by another entity of 20% or more of common stock or,
following consummation of a merger with another entity, the Company’s
stockholders own 65% or less of the entity surviving the merger. |
| --- | --- |
| — | Company Change in Control II — Consummation of
an acquisition by another entity of 35% or more of common stock or,
following consummation of a merger with another entity, the Company’s
stockholders own less than 50% of the Company surviving the merger. |
| — | Company Does not Survive Merger — Consummation
of a merger or other event and the Company is not the surviving company or
the common stock is no longer publicly traded. |
| — | Subsidiary Company Change in Control —
Consummation of an acquisition by another entity, other than another
subsidiary of the Company, of 50% or more of the stock of any of the
Company’s subsidiaries, consummation of a merger with another entity and
the Company’s subsidiary is not the surviving company, or the sale of
substantially all the assets of any of the Company’s
subsidiaries. |

At the employee level:

— Involuntary Change-in-Control Termination or Voluntary Change-in-Control Termination for Good Reason — Employment is terminated within two years of a change in control, other than for cause, or the employee voluntarily terminates for good reason. Good reason for voluntary termination within two years of a change in control generally is satisfied when there is a material reduction in salary, performance-based compensation opportunity or benefits, relocation of over 50 miles, or a diminution in duties and responsibilities.

72 Southern Company 2017 Proxy Statement

Table of Contents

Executive Compensation Tables

The following chart describes the treatment of different pay and benefit elements in connection with the Traditional Termination Events as described above.

| Program | Retirement/ Retirement- Eligible | Lay
Off (Involuntary Termination Not For
Cause) | Resignation | Death
or Disability | Involuntary Termination (For
Cause) |
| --- | --- | --- | --- | --- | --- |
| Pension Benefits
Plans | Benefits payable as
described in the notes following the Pension Benefits table | Benefits payable as
described in the notes following the Pension Benefits table | Benefits payable as
described in the notes following the Pension Benefits table | Benefits payable as
described in the notes following the Pension Benefits table | Benefits payable as
described in the notes following the Pension Benefits
table |
| Short-Term Incentive
Award | Prorated if before
12/31 | Prorated if before
12/31 | Forfeit | Prorated if before
12/31 | Forfeit |
| Stock
Options | Vest; expire earlier of
original expiration date or five years | Vested options expire in
90 days; unvested are forfeited | Vested options expire in
90 days; unvested are forfeited | Vest; expire earlier of
original expiration date or three years | Forfeit |
| Performance
Shares | No proration if
retirement prior to end of performance period; will receive full amount
actually earned. | Forfeit | Forfeit | Death – prorated based
on number of months employed during performance period Disability – not
affected; will receive full amount actually earned | Forfeit |
| Restricted Stock
Units | Forfeit | Prorated
vesting | Forfeit | Prorated
vesting | Forfeit |
| Financial Planning
Perquisite | Continues for one
year | Terminates | Terminates | Continues for one
year | Terminates |
| DCP | Payable per prior
elections (lump sum or up to 10 annual installments) | Payable per prior
elections (lump sum or up to 10 annual installments) | Payable per prior
elections (lump sum or up to 10 annual installments) | Payable to beneficiary
or participant per prior elections; amounts deferred prior to 2005 can be
paid as a lump sum per the benefit administration committee’s
discretion | Payable per prior
elections (lump sum or up to 10 annual installments) |
| SBP–non- pension
related | Payable per prior
elections (lump sum or up to 20 annual installments) | Payable per prior
elections (lump sum or up to 20 annual installments) | Payable per prior
elections (lump sum or up to 20 annual installments) | Payable to beneficiary
or participant per prior elections; amounts deferred prior to 2005 can be
paid as a lump sum per the benefit administration committee’s
discretion | Payable per prior
elections (lump sum or up to 20 annual installments) |
| AGL
NSP | Payable in the year
following the year of termination | Payable in the year
following the year of termination | Payable in the year
following the year of termination | Payable to beneficiary
on participant in the year following the year of termination | Payable in the year
following the year of termination |

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PART 17

Table of Contents

Executive Compensation Tables

The following chart describes the treatment of payments under compensation and benefit programs under different change-in-control events, except the pension plans. The pension plans are not affected by change-in-control events.

| Program | Company Change in Control
I | Company Change in Control
II | Company Does Not Survive Merger or
Subsidiary Company Change in Control | Involuntary Change-in- Control-Related Termination
or Voluntary Change- in-Control-Related Termination for Good
Reason |
| --- | --- | --- | --- | --- |
| Nonqualified Pension Benefits (except
SRA) | All SERP-related
benefits vest if participants vested in tax-qualified pension benefits; otherwise, no impact SBP-P benefits vest for all participants
and single sum value of benefits earned to change-in-control date paid following termination or retirement | Benefits vest for all participants and single sum value of benefits earned to the
change- in-control date paid following termination or retirement | Benefits vest for all participants and single sum value of benefits earned
to the
change-in-control date paid following termination or retirement | Based on type of change-in-control event |
| SRA | Not affected | Not affected | Not affected | Vest |
| Short-Term Incentive Award | If no program termination, paid at greater of target or actual performance;
if program terminated within two years of change in control, prorated at target
performance level | If no program termination, paid at greater of target or actual
performance; if program terminated within two years of change in control, prorated at
target performance level | Prorated at target performance level | If not otherwise eligible for payment, if the program is
still in effect, prorated at target performance level |
| Stock Options | Not affected | Not affected | Vest and convert to
surviving company’s securities; if cannot convert, pay spread in
cash | Vest |
| Performance Shares | Not affected | Not affected | Vest and convert to
surviving company’s securities; if cannot convert, pay spread in
cash | Vest |
| Restricted Stock Units | Not affected | Not affected | Vest and convert to surviving company’s securities; if
cannot convert, pay spread in cash | Vest |
| DCP | Not affected | Not affected | Not affected | Not affected |
| SBP | Not affected | Not affected | Not affected | Not affected |
| Severance Benefits | Not applicable | Not applicable | Not applicable | Two or three times base salary plus target annual
performance-based pay |
| Healthcare Benefits | Not applicable | Not applicable | Not applicable | Up to five years participation in group healthcare plan
plus payment of two or three years’ premium amounts |
| Outplacement Services | Not applicable | Not applicable | Not applicable | Six months |

74 Southern Company 2017 Proxy Statement

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Executive Compensation Tables

Potential Payments

This section describes and estimates payments that would become payable to the NEOs upon a termination or change in control as of December 31, 2016.

Pension Benefits

The amounts that would have become payable to the NEOs if the Traditional Termination Events occurred as of December 31, 2016 under the Pension Plan, the SBP-P, the SERP, the AGL Pension Plan and the AGL Excess Pension Plan are itemized in the following chart. The amounts shown under the Retirement and Resignation or Involuntary Termination columns are amounts that would have become payable to the NEOs that were retirement-eligible on December 31, 2016 and are the monthly Pension Plan benefits and the first of 10 annual installments from the SBP-P and the SERP.

Mr. Evans was not retirement-eligible on December 31, 2016. For Mr. Evans, the amounts shown under the Resignation or Involuntary Termination column are the amounts that would have become payable as a monthly annuity.

The amounts shown that are payable to a beneficiary in the event of the death of the NEO are the monthly amounts payable to a beneficiary under the Pension Plan and the first of 10 annual installments from the SBP-P and the SERP. The amounts shown for Mr. Evans are the amounts that would have become payable to his spouse on a monthly basis under the AGL Pension Plan and the AGL Excess Benefit Plan.

The amounts in this chart are very different from the pension values shown in the Summary Compensation Table and the Pension Benefits table. Those tables show the present values of all the benefit amounts anticipated to be paid over the lifetimes of the NEOs and their beneficiaries. Those plans are described in the notes following the Pension Benefits table.

| | Plan | Retirement ($) | Resignation
or Involuntary Termination ($) | Death
Benefits ($) |
| --- | --- | --- | --- | --- |
| Tom Fanning | Pension Plan | 9,829 | 9,829 | 5,466 |
| | SBP-P | 1,786,053 | 1,786,053 | 1,786,053 |
| | SERP | 648,857 | 648,857 | 648,857 |
| Art Beattie | Pension Plan | 12,587 | 12,587 | 6,238 |
| | SBP-P | 788,997 | 788,997 | 788,997 |
| | SERP | 299,584 | 299,584 | 299,584 |
| Paul Bowers | Pension Plan | 10,431 | 10,431 | 5,737 |
| | SBP-P | 866,279 | 866,279 | 866,279 |
| | SERP | 288,653 | 288,653 | 288,653 |
| Mark Crosswhite | Pension Plan | 2,516 | 2,516 | 1,879 |
| | SBP-P | 156,092 | 156,092 | 156,092 |
| | SERP | 82,678 | 82,678 | 82,678 |
| | SRA | 378,901 | 378,901 | 378,901 |
| Drew Evans | AGL Pension Plan | - | 1,417 | 422 |
| | AGL Excess Benefit Plan | - | 7,323 | 1,087 |

As described in the change-in-control chart, the only change in the form of payment, acceleration or enhancement of the pension benefits is that the single sum value of benefits earned up to the change-in-control date under the SBP-P, the SERP, the SRA and the AGL Excess Benefit Plan could be paid as a single payment rather than in 10 annual installments. Also, the SERP benefits vest for participants who are not retirement-eligible upon a change in control. Estimates of the single sum payment that would have been made to the NEOs, assuming termination as of December 31, 2016 following a change-in-control-related event, other than a Company Change in Control I (which does not impact how pension benefits are paid), are itemized below. These amounts would be paid instead of the benefits shown in the Traditional Termination Events chart above; they are not paid in addition to those amounts.

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Executive Compensation Tables

	SBP-P ($)	SERP ($)	SRA ($)	AGL Excess Benefit Plan ($)	Total ($)
Tom Fanning	17,860,526	6,488,571	0	0	24,349,096
Art Beattie	7,889,974	2,995,842	0	0	10,885,817
Paul Bowers	8,662,795	2,886,534	0	0	11,549,329
Mark
Crosswhite	1,560,916	826,779	3,789,012	0	6,176,706
Drew Evans	0	0	0	1,044,505	1,044,505

The pension benefit amounts in the tables above were calculated as of December 31, 2016 assuming payments would begin as soon as possible under the terms of the plans. Accordingly, appropriate early retirement reductions were applied. Any unpaid annual performance-based compensation was assumed to be paid at 1.30 times the target level. Pension Plan and AGL Pension Plan benefits were calculated assuming each NEO chose a single life annuity form of payment, because that results in the greatest monthly benefit. The single sum values were based on a 2.95% discount rate for the Pension Plan and a 4.39% discount rate for the AGL Pension Plan.

Annual Performance Pay Program and Southern Plan Company Gas Annual Incentive Plan

The amount payable if a change in control had occurred on December 31, 2016 is the greater of target or actual performance. Because actual payouts for 2016 performance were above the target level for all of the NEOs, the amount that would have been payable was the actual amount paid as reported in the Summary Compensation Table. There is no enhancement or acceleration of payments upon a change in control under the Southern Company Gas Annual Incentive Plan.

Stock Options, Performance Shares and Restricted Stock Units (Equity Awards)

Equity Awards would be treated as described in the Termination and Change-in-Control charts above. If Southern Company consummates a merger and is not the surviving company, all Equity Awards vest. However, there is no payment associated with Equity Awards in that situation unless the participants’ Equity Awards cannot be converted into surviving company awards. In that event, the value of outstanding Equity Awards would be paid to the NEOs. In addition, if there is an Involuntary Change-in-Control Termination or Voluntary Change-in-Control Termination for Good Reason, Equity Awards vest.

For stock options, the value is the excess of the exercise price and the closing price of common stock on December 31, 2016. The value of performance shares and restricted stock units is calculated using the closing price of common stock on December 31, 2016.

The chart below shows the number of stock options for which vesting would be accelerated and the amount that would be payable if there were no conversion to the surviving company’s stock options. It also shows the number and value of performance shares and restricted stock units that would be paid.

| | Number of Equity Awards with Accelerated Vesting
(#) — Stock Options | Performance Shares | Restricted Stock
Units | Total
Number of Equity Awards Following Accelerated Vesting
(#) — Stock Options | Performance Shares | Restricted Stock
Units | Total Payable in Cash
without Conversion of Equity
Awards ($) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Tom
Fanning | 341,818 | 341,462 | - | 2,337,146 | 341,462 | - | 31,421,932 |
| Art
Beattie | 93,881 | 81,790 | - | 367,202 | 81,790 | - | 6,113,236 |
| Paul
Bowers | 109,750 | 95,153 | - | 1,406,893 | 95,153 | - | 19,150,039 |
| Mark
Crosswhite | 83,636 | 76,884 | - | 267,442 | 76,884 | - | 5,363,685 |
| Drew
Evans | - | 85,357 | 84,035 | - | 85,357 | 84,035 | 8,332,392 |

DCP, SBP and AGL NSP

The aggregate balances reported in the Nonqualified Deferred Compensation table would be payable to the NEOs as described in the Traditional Termination and Change-in-Control-Related Events charts above. There is no enhancement or acceleration of payments under these plans associated with termination or change-in-control events, other than the lump-sum payment opportunity described in the above charts. The lump sums that would be payable are those that are reported in the Nonqualified Deferred Compensation table.

Healthcare Benefits

All of the NEOs except Mr. Evans are retirement-eligible. Healthcare benefits are provided to retirees, and there is no incremental payment associated with the termination or change-in-control events, except in the case of a change-in-control-related termination, as described in the Change-in-Control-Related Events chart. The estimated cost of providing healthcare insurance premiums for up to a maximum of three years is $32,996 for Mr. Evans.

76 Southern Company 2017 Proxy Statement

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Executive Compensation Tables

Financial Planning Perquisite

An additional year of the financial planning perquisite, which is set at a maximum of $8,700 per year, will be provided after retirement for retirement-eligible NEOs.

There are no other perquisites provided to the NEOs under any of the traditional termination or change-in-control-related events.

Severance Benefits

The NEOs are participants in a change-in-control severance plan. The plan provides severance benefits, including outplacement services, if within two years of a change in control they are involuntarily terminated not for cause or they voluntarily terminate for good reason. The severance benefits are not paid unless the NEO releases the employing company from any claims the NEO may have against the employing company.

| — | The severance payment is three times
the base salary and target payout under the annual Performance Pay Program
for Mr. Fanning and two times the base salary and target payout under the
annual Performance Pay Program for the other NEOs. |
| --- | --- |
| — | The estimated cost of providing the
six months of outplacement services is $6,000 per NEO. |
| — | If any portion of the severance
amount constitutes an “excess parachute payment” under Section 280G of the
tax code and is therefore subject to an excise tax, the severance amount
will be reduced unless the after-tax “unreduced amount” exceeds the
after-tax “reduced amount.” Excise tax gross-ups will not be provided on
change-in-control severance payments. |

The table below estimates the severance payments that would be made to the NEOs if they were terminated as of December 31, 2016 in connection with a change in control.

	Severance Amount ($)
Tom
Fanning	8,775,000
Art
Beattie	2,669,369
Paul Bowers	3,021,631
Mark Crosswhite	2,494,577
Drew Evans	3,200,000

Equity Compensation Plan Information

The following table provides information as of December 31, 2016 concerning shares of common stock authorized for issuance under the Southern Company Omnibus Incentive Compensation Plan (Omnibus Plan). The Omnibus Plan was approved by stockholders in 2011. In 2016, stockholders approved the material terms of the performance-based compensation under Section 162(m) of the tax code to preserve our ability to deduct, for federal income tax purposes, certain performance-based awards granted under the Omnibus Plan.

| Plan
category | Number of securities to be
issued upon exercise of outstanding options, warrants, and
rights (a) | Weighted-average
exercise price of outstanding options, warrants,
and rights (b) | Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a)) (c) | |
| --- | --- | --- | --- | --- |
| Equity compensation | | | | |
| plans approved by | | | | |
| security holders | 24,585,864 | $41.28 | 14,046,518 | (1) |
| Equity compensation | | | | |
| plans not approved by | | | | |
| security holders | n/a | n/a | n/a | |

(1) Represents shares available for future issuance under the Omnibus Plan.

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Table of Contents

Compensation Related Company Proposals

Item 3
As described in the CD&A
beginning on page 40, our compensation program is designed to link pay and
performance to align our executive officers with both stockholder and
customer interests and remain competitive with our industry peers. We
believe our compensation program provides the appropriate mix of fixed and
“at risk” compensation, with a significant portion of target compensation
subject to the achievement of both short-term and long-term performance
goals
●	The Board recommends a vote FOR approval of executive
compensation.

We believe our compensation program provides the appropriate mix of fixed and short- and long-term performance-based compensation that ties pay to Company performance, rewards achievement of financial and operational goals and relative TSR and is aligned with stockholder interests.

Our financial and operational achievements in 2016 and our relative TSR performance over the 2014 through 2016 performance period resulted in the following:

| — | We had strong financial and
operational performance for 2016, exceeding our overall targets for the
year. In addition, individual performance was above target. Accordingly,
payouts for all executive officers in the Performance Pay Program were
above target. |
| --- | --- |
| — | Performance shares granted in 2014
for the three-year performance period from 2014 through 2016 could be
earned based on our relative TSR performance against a group of industry
peer companies. Because our three-year relative TSR was below threshold
performance, no payouts were earned by any participant in the Performance
Share Program, including the executive
officers. |

Stockholders are voting to approve, on an advisory basis, the following resolution:

“RESOLVED, that the stockholders approve the compensation of the named executive officers described in the Compensation Discussion and Analysis, the Summary Compensation Table and the other compensation tables and accompanying narrative in the proxy statement.”

Although it is non-binding on the Board, the Compensation Committee will review and consider the vote results when making future decisions about the executive compensation program.

The Board recommends a vote FOR approval of executive compensation.

Item 4
We are required to hold an advisory vote on the frequency of
the advisory vote to approve executive compensation (Say on Pay) at least
once every six years. In 2011, the Board recommended and the stockholders
voted overwhelmingly in favor of an annual Say on Pay vote. The Board
continues to believe that the Say on Pay vote should be held every year
(on an annual basis).
●	The Board
recommends a vote for the frequency of the advisory vote on executive
compensation every ONE YEAR (on an annual basis).

In addition to requiring a Say on Pay advisory vote to approve executive compensation, the securities laws require us to hold an advisory vote on the frequency of the Say on Pay vote (Say on Frequency) at least once every six years. The last Say on Frequency vote was held in 2011, where the Board recommended and stockholders voted for an annual Say on Frequency. We have provided an annual Say on Pay vote each year since 2011.

We are again asking stockholders to indicate their preference for how often to hold the Say on Pay vote – every one year (annual), every two years (biennial) or every three years (triennial). After considering the options, the Board determined that having a Say on Pay vote every one year (on an annual basis) continues to be the most appropriate option for the Company.

The Compensation Committee carefully considers executive compensation program decisions each year, taking stockholder feedback into account in making those decisions. The Board believes that an annual Say on Pay vote is an important part of that process.

Although it is not binding on the Board, the indicated preference of stockholders as expressed through this Say on Frequency vote will be taken into consideration when making future decisions regarding the frequency of future Say on Pay votes.

The Board recommends a vote for the frequency of the advisory vote on executive compensation every ONE YEAR (on an annual basis).

78 Southern Company 2017 Proxy Statement

PART 18

Table of Contents

Audit Committee Matters

Item 5
The Audit Committee has
appointed Deloitte & Touche as our independent registered public
accounting firm for 2017. This appointment is being submitted to
stockholders for ratification.
●	The Board recommends a vote FOR ratification of the appointment of Deloitte & Touche
as our independent registered public accounting firm for
2017.

The Audit Committee of the Board of Directors is directly responsible for the appointment, retention and oversight of the independent registered public accounting firm retained to audit our financial statements, including the compensation of such firm and the related audit fee negotiations.

Deloitte & Touche has served as our independent registered public accounting firm since 2002. To ensure continuing independence, the Audit Committee periodically considers whether there should be a change in the independent registered public accounting firm. The Audit Committee and its Chair also participate in the selection of Deloitte & Touche’s lead engagement partner in connection with the mandatory rotation requirements of the SEC.

The Audit Committee has appointed Deloitte & Touche as our independent registered public accounting firm for 2017. This appointment is being submitted to stockholders for ratification, and the Audit Committee and the Board of Directors believe that the continued retention of Deloitte & Touche to serve as our independent registered public accounting firm is in the best interests of the Company and our stockholders.

Representatives of Deloitte & Touche will be present at the 2017 annual meeting to respond to appropriate questions from stockholders and will have the opportunity to make a statement if they desire to do so.

The Board recommends a vote FOR ratification of the appointment of Deloitte & Touche as our independent registered public accounting firm for 2017.

Principal Independent Registered Public Accounting Firm Fees

The following represents the fees billed to us for the two most recent fiscal years by Deloitte & Touche.

	2016	2015
	(in thousands)
Audit Fees (1)	$15,368	$12,525
Audit-Related
Fees (2)	672	2,056
Tax Fees	-	-
All Other Fees (3)	50	81
Total	$16,090	$14,662

| (1) | Includes services performed in
connection with financing transactions. |
| --- | --- |
| (2) | Includes non-statutory audit
services in both 2015 and 2016. |
| (3) | Represents registration fees for
attendance at Deloitte & Touche-sponsored education seminars in 2015
and 2016, subscription fees for Deloitte & Touche’s technical
accounting research tool in 2015 and 2016 and travel expenses for Deloitte
& Touche’s training facilitator in
2015. |

| Ratio of
Audit to Non-Audit Fees | |
| --- | --- |
| ● | ● |
| 2015 | 2016 |

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Table of Contents

Audit Committee Matters

Audit Committee Report

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for establishing and maintaining adequate internal controls over financial reporting, including disclosure controls and procedures, and for preparing the Company’s consolidated financial statements.

In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited consolidated financial statements of the Company and its subsidiaries and management’s report on the Company’s internal control over financial reporting in the 2016 annual report with management. The Audit Committee also reviews the Company’s quarterly and annual reporting on Forms 10-Q and 10-K prior to filing with the SEC. The Audit Committee’s review process includes discussions of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and estimates and the clarity of disclosures in the financial statements.

The independent registered public accounting firm is responsible for expressing opinions on the conformity of the consolidated financial statements with accounting principles generally accepted in the United States and the effectiveness of the Company’s internal control over financial reporting with the criteria established in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Audit Committee has discussed with the independent registered public accounting firm the matters that are required to be discussed by the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16, Communications with Audit Committees and SEC Rule 2-07 of Regulation S-X, Communications with Audit Committees . In addition, in accordance with the rules of the PCAOB, the Audit Committee has discussed with and has received the written disclosures and letter from the independent registered public accounting firm regarding its independence from management and the Company. The Audit Committee also has considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with maintaining the firm’s independence.

The Audit Committee discussed their overall audit scopes and plans separately with the Company’s internal auditors and independent registered public accounting firm. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their audits, evaluations by management and the independent registered public accounting firm of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting. The Audit Committee also meets privately with the Company’s compliance officer. The Audit Committee held ten meetings during 2016.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board approved) that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and filed with the SEC. The Audit Committee also reappointed Deloitte & Touche as the Company’s independent registered public accounting firm for 2017. Stockholders are being asked to ratify that selection at the 2017 annual meeting.

●	●	●	●
John D.
Johns	Juanita
Powell Baranco	Jon A.
Boscia	Warren A.
Hood, Jr.
Chair

80 Southern Company 2017 Proxy Statement

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Audit Committee Matters

Policy on Audit and Non-Audit Services

The Audit Committee’s Policy on Engagement of the Independent Auditor for Audit and Non-Audit Services includes requirements for the Audit Committee to pre-approve services provided by the Company’s principal independent registered public accounting firm. All services included in the chart above were pre-approved by the Audit Committee.

| — | Under the policy, the independent registered
public accounting firm delivers an annual engagement letter which provides
a description of services anticipated to be rendered to the Company by the
independent registered public accounting firm for the Audit Committee to
approve. The Audit Committee’s approval of the independent registered
public accounting firm’s annual engagement letter constitutes pre-approval
of all services covered in the letter. |
| --- | --- |
| — | In addition, under the policy, the
Audit Committee has pre-approved the engagement of the independent
registered public accounting firm to provide services related to the
issuance of comfort letters and consents required for securities sales by
the Company and services related to consultation on routine accounting and
tax matters. |
| — | The Audit Committee has delegated
pre-approval authority to the Chair of the Audit Committee with respect to
permissible services up to a limit of $50,000 per engagement. The Chair of
the Audit Committee is required to report any pre-approval decisions at
the next scheduled Audit Committee meeting. |
| — | Prohibited non-audit services are
services prohibited by the SEC to be performed by the Company’s
independent registered public accounting firm. These services include
bookkeeping or other services related to the preparation of accounting
records or financial statements of the Company, financial information
systems design and implementation, appraisal or valuation services,
fairness opinions or contribution-in-kind reports, actuarial services,
internal audit outsourcing services, management functions or human
resources, broker-dealer, investment advisor or investment banking
services, legal services and expert services unrelated to the audit, and
any other service that the PCAOB determines, by regulation, is impermissible. In addition, officers
of the Company may not engage the independent registered public accounting
firm to perform any personal services, such as personal financial planning
or personal income tax services. |

investor.southerncompany.com 81

Table of Contents

Stock Ownership Information

Stock Ownership of Directors and Executive Officers

The following table shows the number of shares of common stock beneficially owned by Directors, nominees for Director and executive officers as of December 31, 2016. The shares owned by all Directors, nominees and executive officers as a group constitute less than one percent of the total number of shares of common stock outstanding.

| Directors, Nominees, and Executive Officers | Shares Owned Directly or Indirectly (1) | Deferred Common
Stock Units (2) | Shares Individuals Have Rights to Acquire within 60
Days (3) | Total
Shares Beneficially Owned (4) |
| --- | --- | --- | --- | --- |
| Juanita Powell
Baranco (5) | 723 | 86,433 | - | 87,156 |
| Art P.
Beattie | 19,844 | - | 367,202 | 387,046 |
| Jon A.
Boscia | 59,000 | 29,541 | - | 88,541 |
| W. Paul
Bowers | 66,840 | - | 1,406,893 | 1,473,733 |
| Henry A. Clark
III | - | 22,587 | - | 22,587 |
| Mark A.
Crosswhite | 16,731 | - | 267,442 | 284,173 |
| Andrew W.
Evans | 11,316 | - | - | 11,316 |
| Thomas A.
Fanning | 63,106 | - | 2,337,146 | 2,400,252 |
| David J.
Grain | 10,791 | 21,031 | - | 31,822 |
| Veronica M.
Hagen | - | 51,578 | - | 51,578 |
| Warren A. Hood,
Jr. | 726 | 61,295 | - | 62,021 |
| Linda P.
Hudson | - | 8,427 | - | 8,427 |
| Donald M.
James | - | 118,105 | - | 118,105 |
| John D.
Johns | - | 34,658 | - | 34,658 |
| Dale E.
Klein | - | 19,405 | - | 19,405 |
| William G.
Smith, Jr. | 7,397 | 73,599 | - | 80,996 |
| Steven R.
Specker | - | 18,584 | - | 18,584 |
| Larry D.
Thompson | 12,227 | 11,388 | - | 23,615 |
| E. Jenner
Wood | 5,000 | 27,648 | - | 32,648 |
| Directors and
Executive Officers as | | | | |
| a Group (27
people) (6) | 404,366 | 584,278 | 6,397,211 | 7,385,855 |

| (1) | Includes shares held by family
members as follows: Mr. Beattie – 51; Mr. Smith – 962; and Directors and
Executive Officers as a Group – 1,013. |
| --- | --- |
| (2) | Represents the number of deferred
common stock units held under the Director Deferred Compensation Plan that
are payable in common stock or cash upon departure from the
Board. |
| (3) | The shares in this column
represent stock options. |
| (4) | Beneficial ownership means the
sole or shared power to vote, or to direct the voting of, a security, or
investment power with respect to a security, or any combination
thereof. |
| (5) | In addition to the shares
reported for her, Ms. Baranco also owns 12,478 deferred share
equivalents. |
| (6) | This item includes all executive
officers serving as of December 31, 2016. |

82 Southern Company 2017 Proxy Statement

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Stock Ownership Information

Stock Ownership of 5% Beneficial Owners

According to a Schedule 13G/A filed with the SEC on January 27, 2017 by BlackRock, Inc. and a Schedule 13G/A filed with the SEC on February 13, 2017 by The Vanguard Group (collectively, the Ownership Reports), the following reported beneficial ownership of more than 5% of the outstanding shares of common stock as of December 31, 2016.

| Title of Class | Name
and Address | Shares Beneficially Owned (1) | Percentage of Class Owned (2) |
| --- | --- | --- | --- |
| Common
stock | BlackRock,
Inc. | 60,647,455 | 6.1% |
| | 55 East
52 nd Street | | |
| | New York, NY 10022 | | |
| Common
stock | The Vanguard
Group | 66,069,284 | 6.7% |
| | 100 Vanguard
Blvd. | | |
| | Malvern, PA 19355 | | |

(1)
According to the Ownership
Reports:

| — | BlackRock Inc. has sole voting power
with respect to 51,723,559 of its shares and sole dispositive power with
respect to all 60,647,455 of its shares. |
| --- | --- |
| — | The Vanguard Group has sole voting
power with respect to 1,630,652 of its shares, shared voting power with
respect to 223,466 of its shares, sole dispositive power with respect to
64,352,906 of its shares, and shared dispositive power with respect to
1,716,378 of its shares. |

(2) Calculated based on 991,880,417 shares outstanding as of January 31, 2017.

Section 16(a) Beneficial Ownership Reporting Compliance

Based on our review of Forms 3, 4 and 5 and written representations furnished to us, we believe that the reports required to be filed by reporting persons pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, were filed on a timely basis, except that the Form 4 for each of the independent directors reporting the quarterly grant of deferred shares on April 1, 2016 was filed late due to an administrative error.

investor.southerncompany.com 83

PART 19

Table of Contents

Stockholder Proposal

Item 6
●	The Board recommends a vote AGAINST Item
6.

Whereas:

The 2014 Intergovernmental Panel on Climate Change (IPCC) Synthesis Report warns that global warming will have “severe, pervasive and irreversible impacts for people and ecosystems”. Costs of failing to address climate change are significant and are estimated to have an average value at risk of $4.2 trillion globally. To mitigate the worst impacts of climate change and limit warming to below 2 degrees Celsius (2°C), as affirmed by the Paris Agreement, the International Energy Agency (lEA) estimates that US energy utilities overall need to limit their carbon dioxide emissions to 100g/kWh by 2030, moving toward a 90% global emissions reduction by 2050.

In June 2016, the credit rating agency Moody’s indicated that they would begin analyzing carbon transition risk based on scenarios consistent with the Paris Agreement, noting the high carbon risk exposure of the power sector.

Southern Company has had a proactive response toward the low-carbon transition by adding more than 4,000 MW of renewable projects since 2012, developing “clean coal” technology, adding nuclear energy generation, and completing the issuance of investment-grade Green Bonds to finance renewable energy valued at $1.2 billion.

However, accelerated efforts are necessary: Southern is the third largest carbon dioxide emitter in the country and ranked 26th out of 29 utility companies for life cycle energy efficiency savings in a benchmarking report produced by Ceres in 2016.

Regulatory and technology changes are underway that will profoundly impact the utility business model. Meanwhile, developments in new technologies are leading to sharply declining costs, increasing competitiveness of renewable energy generation and storage.

Rates must be designed for maximum flexibility to achieve climate objectives while providing just and universal access to electricity services, including affordable services to low-income customers.

Recognizing the unique constraints on innovation for the low-carbon transition in each regulated market, Southern’s subsidiary companies can demonstrate a willingness to work with regulators to develop frameworks to catalyze the low-carbon transition. In Minnesota, utilities, rate-payers, and regulators collaborate to map the transition to a regulatory model that enables innovation, customer options, and realizes public policy goals.

Proponents offer this supportive but stretching resolution to urge Southern to position itself to thrive for the long-term in a decarbonized energy sector.

RESOLVED: Shareholders request that Southern Company commit by November 30, 2017 to issue a report at reasonable cost and omitting proprietary information, on Southern’s strategy for aligning business operations with the IEA 2°C scenario, while maintaining the provision of safe, affordable, reliable energy.

SUPPORTING STATEMENT:

Proponents believe this report should include:

| ● | Strategic goals and
milestones for reducing emissions in accordance with IEA emission
reduction targets for US utilities. |
| --- | --- |
| ● | Plans to integrate
technological, regulatory, and business model innovations such as:
distributed energy resources (storage and generation), demand response,
smart grid technologies, increased customer energy efficiency, and
corresponding revenue models and rate designs. |
| ● | Information on aligning
incentives, research and development, public policy positions, engagement
strategy with state regulators, and board governance with Southern’s
business plan compatible with this
strategy. |

84 Southern Company 2017 Proxy Statement

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Stockholder Proposal

Statement of Opposition

The Board recommends a vote AGAINST Item 6 for the following reasons:

Southern Company’s regulated electric utilities have a responsibility to balance environmental objectives with their commitment to provide affordable power to customers in a safe and reliable manner. To deliver on this customer-focused commitment, the Southern Company system is strategically developing the full portfolio of energy resources – natural gas, 21st century coal, nuclear and renewables, both utility scale and distributed – with an emphasis on energy efficiency. As an industry leader in the research, development and deployment of technologies that reduce carbon dioxide (CO2) emissions, the Company has committed substantial financial and human resources to these efforts since the 1960s.

| — | Southern Company is researching and developing
a portfolio of new, hardened, lower emitting technology options which
include: technologies that ensure efficient and reliable grid operations;
advanced nuclear generation; advanced renewables and energy storage;
integrating fuel cells; improving existing generation resources; emerging
end-use technologies and products; new non-fossil power generation
concepts; electric vehicles; hydrogen-based technologies; and bridging
gaps between fundamental research and development and large-scale
commercial demonstration of carbon capture technologies. |
| --- | --- |
| — | The Southern Company system’s robust resource
planning process, furthermore, addresses many of the concerns contained in
the proposal. |

| — | The Company recognizes that it may likely be
operating in a future regulatory environment that includes carbon
mandates. Using a scenario planning approach, the Southern Company system
evaluates varying potential stringencies of future carbon requirements
when making unit retirement, retrofit control and new generation addition
decisions. |
| --- | --- |
| — | To best meet commitments to both customers and
investors, the Southern Company system has been planning and will continue
to plan for potential carbon constraints in the near and long term. |
| — | The Southern Company system’s short- and
long-range resource planning and decision-making process has considered
the potential of a carbon-constrained future for more than a decade. |
| — | The Southern Company system’s commitment to the
development of the full portfolio of resources, industry-leading research,
development and deployment of lower emitting technologies and a multiple
scenario planning process has resulted in substantial reduction of
greenhouse gas (GHG) emissions. The preliminary estimate of the Southern
Company system’s GHG emissions in 2016 based on facility ownership or
financial control of the facilities is approximately 28 percent lower than
2005 levels. |
| — | The Southern Company system is also making
great strides in promoting increased efficiency in the use of electricity
by customers, which contributes to reduced emissions. Since 2000, energy
efficiency and demand response programs have helped the Southern Company
system reduce peak demand for electricity by more than 4,500 megawatts.
The Southern Company system has also saved over 2.7 billion kilowatt-hours
of energy use, or enough energy to power over 1,000,000 homes, through a
portfolio of incentive measures for residential and business customers,
critical peak pricing programs and audits. |

— Much of the information requested for inclusion in the report is available from other Company sources.

| — | The Company already engages in extensive
reporting in this area, including with respect to the Environmental
Protection Agency’s (EPA) Greenhouse Gas Reporting Program. |
| --- | --- |
| — | The Company has created a number of reports,
which are updated regularly and are readily available through the
Company’s external website, that disclose the Southern Company system’s
actions related to GHG and other emissions. The Company intends to include
Southern Company Gas’ data in this year’s reports, which are expected to
be updated prior to the annual meeting of
stockholders. |

| — | The Company’s Corporate Responsibility Report
includes data on emissions and actions being undertaken to address
emissions. |
| --- | --- |
| — | The Company’s Carbon Disclosure Report
describes specific current and long-term activities to address GHG
emissions. |

| — | Since 2011, the Company has held environmental
stakeholder forums, webinars, calls and meetings covering a range of
topics – including regulatory and policy issues, system risk and planning
related to renewables, energy efficiency and GHG matters – to actively
engage its stakeholders in addressing environmental matters. |
| --- | --- |
| — | The Southern Company system is also subject to
extensive regulations at both the state and federal levels, including
regulation by state and federal environmental agencies, state PSC and the
Federal Energy Regulatory Commission (FERC). State PSCs or other
applicable state regulatory agencies have broad powers of supervision and
regulation over Southern Company’s regulated utilities within their state,
which generally includes, among other things, supervision and regulation
of their resource planning, operations, rates and the terms and conditions
of service. Additionally, the regulated electric utilities as well as the
Company’s unregulated generation subsidiaries are subject to the rate,
financial and accounting jurisdiction of the FERC under the Federal Power
Act. The Southern Company system’s planning process, including its
environmental compliance strategy, is |

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Table of Contents

Stockholder Proposal

designed to assure compliance with all applicable laws and regulations and to provide service at the lowest reasonable cost to customers.

In summary, the Board does not believe it is in the best interests of the Company or its stockholders to prepare such a report at this time due to (1) the Southern Company system’s already robust research, development and deployment efforts, including new CO2 emission reduction technologies, (2) the Company’s current resource planning and decision-making consideration of varying stringencies of potential future carbon constraints and its substantial efforts to increase efficiency of energy use by customers, (3) the extensive regulation of the Company’s business, including resource planning and operations, at the state and federal level and (4) the Company’s ongoing practice of reporting emissions data, emission reduction results, investments and significant policy engagement. Developing a separate report as requested in the proposal would be duplicative and an inefficient use of Company resources.

The Board recommends a vote AGAINST the stockholder proposal.

86 Southern Company 2017 Proxy Statement

PART 20

Table of Contents

Appendix A

The text of the proposed amendments to Article Eleventh of the Certificate of Incorporation, marked to show changes to the current Article Eleventh, is set forth as follows:

ELEVENTH: The corporation reserves the right to increase or decrease its authorized capital stock, or any class or series thereof, or to reclassify the same, and to amend, alter, change or repeal any provision contained in the Certificate of Incorporation or in any amendment thereto, in the manner now or hereafter prescribed by law, and all rights conferred upon stockholders in said Certificate of Incorporation or any amendment thereto are granted subject to this reservation; provided, however, that the corporation shall not, unless authorized by the affirmative vote in favor thereof of the holders of at least two-thirds a majority of the issued and outstanding common stock of the corporation given at any annual meeting of stockholders or at any special meeting called for that purpose, (a) authorize or create any class of stock preferred as to dividends or assets over the common stock or reclassify the common stock or change the issued shares of common stock into the same or a greater or less number of shares of common stock either with or without par value or reduce the par value of the common stock. or (b) amend, alter, change or repeal subdivision (2) of Article Ninth, Article Twelfth, this provision or any provision contained in the Certificate of Incorporation or in any amendment thereto which provides for the vote of the holders of at least two-thirds of the issued and outstanding common stock.

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Reconciliation of Non-GAAP Information

In the CD&A that starts on page 40, we show EPS as calculated in accordance with U.S. generally accepted accounting principles (GAAP) and adjusted EPS which does not reflect EPS as calculated in accordance with GAAP. Southern Company management uses this non-GAAP measure to evaluate the performance of Southern Company’s ongoing business activities and its annual performance on a basis consistent with the assumptions used in developing applicable performance targets and to compare certain results to prior periods. Southern Company believes this presentation is useful to investors by providing additional information for purposes of evaluating the performance of its business activities. This presentation is not meant to be considered a substitute for financial measures prepared in accordance with GAAP.

| (In millions, except earnings per share) | Year Ended December
31, — 2016 | | 2015 | | 2014 | |
| --- | --- | --- | --- | --- | --- | --- |
| Net Income - GAAP | $2,448 | | $2,367 | | $1,963 | |
| Average Shares Outstanding | 951 | | 910 | | 897 | |
| Basic Earnings Per Share | $2.57 | | $2.60 | | $2.19 | |
| Net Income - GAAP | $2,448 | | $2,367 | | $1,963 | |
| Non-GAAP Excluding
Items: | | | | | | |
| Kemper
IGCC Impacts (1) | 428 | | 365 | | 895 | |
| Tax
Impact | (164 | ) | (139 | ) | (342 | ) |
| Acquisition
and Integration Costs (2) | 120 | | 41 | | - | |
| Tax
Impact | (38 | ) | (10 | ) | - | |
| Additional
MCAR Settlement Costs (3) | - | | 7 | | - | |
| Tax
Impact | - | | (3 | ) | - | |
| Equity
Return Related to Kemper IGCC Schedule Extension (4) | (29 | ) | - | | - | |
| Tax
Impact | (5 | ) | - | | - | |
| Southern
Company Gas Earnings, Net of Acquisition and Integration
Costs (5) | (231 | ) | - | | - | |
| Tax
Impact | 90 | | - | | - | |
| Acquisition
Debt Financing Costs (5) | 175 | | - | | - | |
| Tax
Impact | (67 | ) | - | | - | |
| Net Income - Excluding Items | $2,727 | | $2,628 | | $2,516 | |
| Adjusted Average Shares Outstanding (5) | 942 | | 910 | | 897 | |
| Basic Earnings Per Share - Excluding Items | $2.89 | | $2.89 | | $2.80 | |

| (1) | The estimated probable losses
relating to Mississippi Power Company's construction and associated rate
recovery of the Kemper IGCC significantly impacted the presentation of
earnings and earnings per share for the twelve months ended December 31,
2016, 2015 and 2014. Similar charges of uncertain amounts may occur with
uncertain frequency in future periods. In addition, earnings for the
twelve months ended December 31, 2014 include the effect of reversing
revenues previously recognized in 2014 and 2013 as a result of the 2015
Mississippi Supreme Court decision that reversed the Mississippi PSC’s
March 2013 Kemper IGCC rate order. |
| --- | --- |
| (2) | Earnings for the
twelve months ended December 31, 2016 and 2015 include costs related to
the acquisition of Southern Company Gas and earnings for the twelve months
ended December 31, 2016 include costs related to the acquisitions of
PowerSecure International, Inc. and the 50% interest in Southern Natural
Gas Company, L.L.C. (SNG). Further costs are expected to continue to occur
in connection with the related integration activities; however, the amount
and duration of such expenditures is uncertain. |
| (3) | Earnings for the twelve months
ended December 31, 2015 include additional costs related to the
discontinued operations of Mirant Corporation and the March 2009
litigation settlement with MC Asset Recovery, LLC. Further charges are not
expected to occur. |
| (4) | Earnings for the twelve months
ended December 31, 2016 include additional allowance for funds used during
construction (AFUDC) equity as a result of extending the schedule for the
Kemper IGCC construction project. Southern Company's February 2016
earnings guidance assumed construction would be complete and AFUDC equity
would cease by August 31, 2016. As a result, Southern Company believes
presentation of earnings per share excluding these amounts provides
investors with information comparable to the February guidance. Management
also used such measures to evaluate Southern Company's performance in
2016. |
| (5) | Earnings for the twelve months
ended December 31, 2016 include the earnings of Southern Company Gas since
July 1, 2016 (the date of acquisition), as well as debt financing costs
related to the acquisition. Earnings of Southern Company Gas since
September 1, 2016 include amounts related to its acquisition of a 50%
ownership interest in SNG. In addition, earnings per share for twelve
months ended December 31, 2016 include the impact of 22.3 million shares
($1.1 billion) of common stock issued in August 2016 to finance a portion
of the purchase price for the SNG acquisition. |

88 Southern Company 2017 Proxy Statement

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Reconciliation of Non-GAAP Information

| The timing of completion of the
acquisition of Southern Company Gas was uncertain at the time Southern
Company issued earnings per share guidance in February 2016, and Southern
Company's agreement to acquire a 50% interest in SNG did not occur until
July 2016. Accordingly, Southern Company's February 2016 guidance did not
reflect any earnings contribution from these acquisitions or the financing
costs related to the acquisitions. As a result, Southern Company believes
presentation of earnings per share excluding these items provides
investors with information comparable to the February guidance. Management
also used such measures to evaluate Southern Company's performance in
2016. |
| --- |
| In addition to earnings and
earnings per share calculated in accordance with GAAP, Southern Company
intends to continue to present earnings and earnings per share excluding
the impact of the Wholesale Gas Services business of Southern Company Gas
in future periods. Presenting earnings and earnings per share excluding
Wholesale Gas Services provides investors with an additional measure of
operating performance that excludes volatility that results from
mark-to-market and lower of weighted average cost or current market price
accounting adjustments. Management also expects to use earnings and
earnings per share excluding Wholesale Gas Services to evaluate Southern
Company's performance. For the six months ended December 31, 2016, the
pre-tax loss from Wholesale Gas Services and the related tax benefit were
$3.7 million and $3.5 million,
respectively. |

Cautionary Note Regarding Forward-Looking Statements

Southern Company’s 2017 proxy statement contains forward-looking statements based on current expectations and plans that involve risks and uncertainties. Forward-looking statements include, among other things, statements concerning customer and stockholder value and the construction and startup of the Kemper IGCC and Plant Vogtle 3 and 4. Southern Company cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized.

The following factors, in addition to those discussed in Southern Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information:

| — | the impact of recent and future federal and
state regulatory changes, including environmental laws regulating
emissions, discharges and disposal to air, water
and land, and also changes in tax and other laws and regulations to which
Southern Company and its subsidiaries are
subject, including potential tax reform legislation, as well as changes in
application of existing laws and regulations; |
| --- | --- |
| — | current and future litigation, regulatory
investigations, proceedings or inquiries; |
| — | the effects, extent and timing of the entry of
additional competition in the markets in which Southern Company’s
subsidiaries operate; |
| — | variations in demand for electricity and
natural gas, including those relating to weather, the general economy and
recovery from the last recession, population and
business growth (and declines), the effects of energy conservation and
efficiency measures, including from the
development and deployment of alternative energy sources such as
self-generation and distributed generation technologies, and any potential economic impacts resulting from federal
fiscal decisions; |
| — | available sources and costs of natural gas and
other fuels; |
| — | limits on pipeline capacity; |
| — | effects of inflation; |
| — | the ability to control costs and avoid cost
overruns during the development, construction and operation of facilities,
which include the development and construction of
generating facilities with designs that have not been finalized or
previously constructed, including changes
in labor costs and productivity, adverse weather conditions, shortages and
inconsistent quality of equipment, materials and labor, sustaining nitrogen supply, contractor or supplier delay,
nonperformance under construction, operating, or other agreements, operational readiness, including specialized
operator training and required site safety programs, unforeseen
engineering or design problems, start-up
activities (including major equipment failure and system integration)
and/or operational performance (including additional costs to satisfy any operational parameters ultimately
adopted by any PSC); |
| — | the ability to construct facilities in
accordance with the requirements of permits and licenses, to satisfy any
environmental performance standards and the
requirements of tax credits and other incentives and to integrate
facilities into the Southern Company system upon completion of construction; |
| — | investment performance of the Southern Company
system’s employee and retiree benefit plans and nuclear decommissioning
trust funds; |

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Cautionary Note Regarding Forward-Looking Statements

—	advances in technology;
—	ongoing renewable energy partnerships and
development agreements;
—	state and federal rate regulations and the
impact of pending and future rate cases and negotiations, including rate
actions relating to fuel and other cost recovery
mechanisms;
—	legal proceedings and regulatory approvals and
actions related to Plant Vogtle Units 3 and 4, including Georgia PSC
approvals and Nuclear Regulatory Commission
actions;
—	actions related to cost recovery for the Kemper
IGCC, including the ultimate impact of the 2015 decision of the
Mississippi Supreme Court, the Mississippi PSC’s
December 2015 rate order, and related legal or regulatory proceedings,
Mississippi PSC review of the prudence of
Kemper IGCC costs and approval of further permanent rate recovery plans,
actions relating to proposed securitization, satisfaction of requirements to utilize grants and the ultimate
impact of the termination of the proposed sale of an interest in the
Kemper IGCC to South Mississippi Electric
Power Association (now known as Cooperative Energy);
—	the ability to successfully operate the
electric utilities’ generating, transmission and distribution facilities
and Southern Company Gas’ natural gas distribution
and storage facilities and the successful performance of necessary
corporate functions; the inherent risks involved in operating and constructing nuclear generating
facilities, including environmental, health, regulatory, natural
disaster, terrorism and financial
risks;
—	the inherent risks involved in transporting and
storing natural gas;
—	the performance of projects undertaken by the
non-utility businesses and the success of efforts to invest in and develop
new opportunities;
—	internal restructuring or other restructuring
options that may be pursued;
—	potential business strategies, including
acquisitions or dispositions of assets or businesses, which cannot be
assured to be completed or beneficial to Southern
Company or its subsidiaries;
—	the possibility that the anticipated benefits
from the merger with Southern Company Gas cannot be fully realized or may
take longer to realize than expected, the
possibility that costs related to the integration of Southern Company and
Southern Company Gas will be greater than
expected, the ability to retain and hire key personnel and maintain
relationships with customers, suppliers or other business partners and the diversion of management time on
integration-related issues;
—	the ability of counterparties of Southern
Company and its subsidiaries to make payments as and when due and to
perform as required;
—	the ability to obtain new short- and long-term
contracts with wholesale customers;
—	the direct or indirect effect on the Southern
Company system’s business resulting from cyber intrusion or terrorist
incidents and the threat of terrorist
incidents;
—	interest rate fluctuations and financial market
conditions and the results of financing efforts;
—	changes in Southern Company’s and any of its
subsidiaries’ credit ratings, including impacts on interest rates, access
to capital markets, and collateral
requirements;
—	the impacts of any sovereign financial issues,
including impacts on interest rates, access to capital markets, impacts on
foreign currency exchange rates, counterparty
performance and the economy in general, as well as potential impacts on
the benefits of the U.S. Department of
Energy loan guarantees;
—	the ability of Southern Company’s electric
utilities to obtain additional generating capacity (or sell excess
generating capacity) at competitive prices;
—	catastrophic events such as fires, earthquakes,
explosions, floods, tornadoes, hurricanes and other storms, droughts,
pandemic health events such as influenzas, or
other similar occurrences;
—	the direct or indirect effects on the Southern
Company system’s business resulting from incidents affecting the U.S.
electric grid, natural gas pipeline infrastructure
or operation of generating or storage resources; and
—	the effect of accounting pronouncements issued
periodically by standard-setting bodies.

Southern Company expressly disclaims any obligation to update any forward-looking information.

90 Southern Company 2017 Proxy Statement

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Operations in 19 States

Approximately 46,000 mw of Generating Capacity _ Nearly 200,000 Miles of Power Lines _ More than 80,000 Miles of Natural Gas Pipelines _ 190 Bcf of Natural Gas Storage Capacity 11 Electric & Natural Gas Utilities _ 32,000 Total Employees _ 9 Million Utility Customers _ More than 1 Million Retail Customers

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If you vote by internet or phone, please do not mail this form.

VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the internet to transmit your voting instructions until 11:59 p.m. Eastern Time on May 23, 2017. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by The Southern Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that you agree to receive materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. Eastern Time on May 23, 2017. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL Mark, sign and date this proxy card and return it in the enclosed postage-paid envelope we have provided or return it to The Southern Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

THANK YOU VIEW PROXY STATEMENT AND ANNUAL REPORT ON THE INTERNET www.proxyvote.com

| TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS: | |
| --- | --- |
| E23369-P90313 | KEEP THIS PORTION FOR YOUR
RECORDS |
| | DETACH AND
RETURN THIS PORTION ONLY |
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. | |

| THE SOUTHERN
COMPANY | | | | | |
| --- | --- | --- | --- | --- | --- |
| The Board of Directors
recommends a vote FOR each nominee in Item 1. | | | | | |
| 1. | ELECTION OF
DIRECTORS: | | For | Against | Abstain |
| | 1a. | Juanita Powell Baranco | ☐ | ☐ | ☐ |
| | 1b. | Jon A. Boscia | ☐ | ☐ | ☐ |
| | 1c. | Henry A. Clark III | ☐ | ☐ | ☐ |
| | 1d. | Thomas A. Fanning | ☐ | ☐ | ☐ |
| | 1e. | David J. Grain | ☐ | ☐ | ☐ |
| | 1f. | Veronica M. Hagen | ☐ | ☐ | ☐ |
| | 1g. | Warren A. Hood, Jr. | ☐ | ☐ | ☐ |
| | 1h. | Linda P. Hudson | ☐ | ☐ | ☐ |
| | 1i. | Donald M. James | ☐ | ☐ | ☐ |
| | 1j. | John D. Johns | ☐ | ☐ | ☐ |
| | 1k. | Dale E. Klein | ☐ | ☐ | ☐ |
| | 1l. | William G. Smith, Jr. | ☐ | ☐ | ☐ |
| | 1m. | Steven R. Specker | ☐ | ☐ | ☐ |
| | 1n. | Larry D. Thompson | ☐ | ☐ | ☐ |
| | 1o. | E.
Jenner Wood III | ☐ | ☐ | ☐ |

| The Board of Directors recommends a
vote FOR Items 2, 3 and 5 and 1 YEAR on Item 4. | | | For | Against | Abstain |
| --- | --- | --- | --- | --- | --- |
| 2. | APPROVAL OF AN AMENDMENT TO THE CERTIFICATE TO REDUCE
THE SUPERMAJORITY VOTE REQUIREMENTS TO A MAJORITY VOTE | | ☐ | ☐ | ☐ |
| 3. | ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION | | ☐ | ☐ | ☐ |
| | | 1 Year | 2 Years | 3 Years | Abstain |
| 4. | ADVISORY VOTE TO APPROVE THE FREQUENCY OF FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION | ☐ | ☐ | ☐ | ☐ |
| | | | For | Against | Abstain |
| 5. | RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2017 | | ☐ | ☐ | ☐ |
| The Board of Directors recommends a
vote AGAINST Item 6. | | | | | |
| 6. | STOCKHOLDER PROPOSAL ON 2° CELSIUS SCENARIO
REPORT | | ☐ | ☐ | ☐ |

UNLESS OTHERWISE SPECIFIED ABOVE, THE SHARES WILL BE VOTED "FOR" ITEMS 1, 2, 3 AND 5, "1 YEAR" ON ITEM 4 AND "AGAINST" ITEM 6.

NOTE: The last instruction received in either paper or electronic form prior to the deadline will be the instruction included in the final tabulation.

Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date

Table of Contents

ADMISSION TICKET (Not Transferable)

2017 Annual Meeting of Stockholders 10 a.m. ET, May 24, 2017

The Lodge Conference Center at Callaway Gardens Highway 18 Pine Mountain, GA 31822

Please present this Admission Ticket, along with photo identification, in order to gain admittance to the meeting.

Ticket admits only the stockholder(s) listed on the reverse side and is not transferable.

Directions to Meeting Site:

From Atlanta, GA - Take I-85 south to I-185 (Exit 21), then take Exit 34, Georgia Highway 18. Take Georgia Highway 18 east to Callaway.

From Birmingham, AL - Take U.S. Highway 280 east to Opelika, AL, then I-85 north to Georgia Highway 18 (Exit 2). Take Georgia Highway 18 east to Callaway.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The proxy statement and the annual report are available at www.proxyvote.com.

E23370-P90313

FORM OF PROXY AND TRUSTEE VOTING INSTRUCTION FORM FORM OF PROXY AND TRUSTEE VOTING INSTRUCTION FORM

PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS AND PLAN TRUSTEES

If a stockholder of record, the undersigned hereby appoints Thomas. A. Fanning, Art P. Beattie and James Y. Kerr II, or any of them, Proxies, with full power of substitution in each, to vote all shares the undersigned is entitled to vote at the Annual Meeting of Stockholders of The Southern Company, to be held at The Lodge Conference Center at Callaway Gardens in Pine Mountain, Georgia, on May 24, 2017, at 10:00 a.m., ET, and any adjournments thereof, on all matters properly coming before the meeting, including, without limitation, the items listed on the reverse side of this form.

If a beneficial owner holding shares through The Southern Company Employee Savings Plan (ESP), AGL Resources Retirement Savings Plus Plan (AGL Plan) or Nicor Gas Thrift Plan (Nicor Plan), the undersigned directs the trustee of the relevant plan (Trustee) to vote all shares the undersigned is entitled to vote at the Annual Meeting of Stockholders, and any adjournments thereof, on all matters properly coming before the meeting, including, without limitation, the items listed on the reverse side of this form. Procedures are in place to safeguard the confidentiality of your voting instructions. If you do not provide the Trustee with timely voting instructions, the following will occur in accordance with the applicable plan provision and/or policy for unvoted shares:

● ESP: The Pension Fund Investment Review Committee may direct the Trustee how to vote these shares.

● AGL Plan: The plan’s Investment Committee will direct the Trustee how to vote these shares.

● Nicor Plan: The Trustee may vote these shares in the same proportion as it votes shares owned by Nicor Plan participants who voted their shares.

This Form of Proxy and Trustee Voting Instruction Form (Form of Proxy) is solicited jointly by the Board of Directors of The Southern Company and the Trustee of the relevant plan pursuant to a separate Notice of Annual Meeting and Proxy Statement. If not voted electronically, this Form of Proxy should be mailed in the enclosed envelope to the Company’s proxy tabulator at 51 Mercedes Way, Edgewood, NY 11717. The deadline for receipt of the Form of Proxy for the Trustees is 11:00 a.m., ET, on Tuesday, May 23, 2017. The deadline for receipt of shares of record voted through the Form of Proxy is 9:00 a.m., ET, on Wednesday, May 24, 2017. The deadline for receipt of instructions provided electronically is 11:59 p.m., ET, on Tuesday, May 23, 2017.

The proxy tabulator will report separately to the Proxies named above and to the Trustees as to proxies received and voting instructions provided, respectively.

THIS FORM OF PROXY AND TRUSTEE VOTING INSTRUCTION FORM WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS INDICATED, THE SHARES WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS.

Continued and to be voted and signed on reverse side.