2018 Annual Meeting of Stockholders

Letter from the Independent Directors

Dear Fellow Stockholders:

As members of the Board of Directors, we want to thank you for your continued investment in Southern Company. As Directors, we strive to govern Southern Company in a prudent and transparent manner that helps the Company achieve long-term value for you, its stockholders. We proactively oversee business strategy, corporate governance and executive compensation, among other matters. We are pleased to share with you our progress on specific actions undertaken over the past year.

Oversight of Business Strategy

One of our Board’s key responsibilities is overseeing Southern Company’s strategy of maximizing long-term value to stockholders through a customer-, community- and relationship-focused business model anchored by our premier, state-regulated utilities in order to deliver strong and sustainable risk-adjusted returns over time. By focusing on our long-term outlook, we are best able to support our common goal of creating enduring value for customers and stockholders alike.

At each Board meeting and during our strategy planning sessions, we contribute to management’s strategic plan by engaging senior leadership in robust discussions about overall strategy, business priorities and long-term growth opportunities. In particular, in 2017, we focused considerable time on the effects of the bankruptcy filing of the former contractor for Plant Vogtle Units 3 and 4 and on matters related to construction and regulatory recovery of the Kemper County energy facility. Our Board has been and will continue to be committed to the oversight of long-term strategy for the enterprise.

Corporate Governance

This year, we reinforced our commitment to Board governance, Board refreshment and Board succession planning.

During 2017, we engaged a nationally-recognized search firm to assist our search for Board candidates with qualifications, attributes, skills and experiences compatible with our strategic imperatives that drive long-term value. We also engaged an independent outside law firm to conduct a comprehensive review of our corporate governance structure and practices to assist in ensuring the optimal governance structure is in place.

In March 2018, Dr. Ernest Moniz joined our Board as an independent Director. A former United States Secretary of Energy and a distinguished physicist, Dr. Moniz serves on the Operations, Environmental and Safety Committee and the Nominating, Governance and Corporate Responsibility Committee. In addition, he serves on the Business Security Subcommittee, which focuses on cyber and physical risks across the Southern Company system. With this election, we have added four independent Directors over the last four years. We remain focused on continuing to refresh our Board over the coming years.

We appointed Dr. Steven R. Specker to succeed Larry D. Thompson as our Lead Independent Director effective as of the adjournment of the annual meeting on May 23, 2018, assuming Dr. Specker is re-elected.

Executive Compensation

At last year’s annual meeting, the Say on Pay vote did not receive the same high level of support as in previous years. In response, we reached out to stockholders, listened to what they had to say and acted on what we heard. These engagements included active involvement of several of our independent Directors. The message we heard from our stockholders was a concern about the exclusion of 2016 charges to earnings related to the Kemper County integrated gasification combined cycle (Kemper IGCC) facility in determining incentive compensation payouts to our Chief Executive Officer.

In 2017, there were many significant accomplishments and advances for Southern Company, led by the Chief Executive Officer and the executive team. However, in overseeing executive compensation, it is our responsibility to balance the significant Southern Company successes against the ultimate actions taken during 2017 with respect to the Kemper IGCC to ensure that pay is aligned with financial performance and stockholder interests.

Based on the feedback from stockholder engagement, thoughtful consideration by the Compensation and Management Succession Committee and consultation with its independent compensation consultant, the Compensation and Management Succession Committee applied discretion to reduce calculated payouts to the Chief Executive Officer and certain other members of the senior management team for both the annual and long-term incentive awards in 2017. Payout decisions made by the Compensation and Management Succession Committee with respect to the Chief Executive Officer are discussed with and ratified by the independent Directors.

Thank you for the trust you place in us. We value your support, and we encourage you to share your opinions, suggestions and concerns with us. You can do so by writing to us at Southern Company, 30 Ivan Allen Jr. Boulevard NW, Atlanta, Georgia 30308, Attention: Corporate Secretary. You can also send an email to corpgov@southerncompany.com. The email address can also be accessed from the Corporate Governance webpage at investor.southerncompany.com under the link entitled Governance Inquiries.

We are grateful for the opportunity to serve Southern Company on your behalf.


Juanita Powell Baranco
Jon A. Boscia

Henry A. “Hal” Clark III

David J. Grain

Veronica M. Hagen

Warren A. Hood, Jr.

​Linda P. Hudson

Donald M. James

John D. Johns

Dale E. Klein

Ernest J. Moniz

William G. Smith, Jr.

Steven R. Specker

Larry D. Thompson

E. Jenner Wood III