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      Form 8-K
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                STATES</strong></font></div>
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                AND EXCHANGE COMMISSION</strong></font></div>
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                D.C. 20549</strong></font></div>
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                8-K</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
                REPORT</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>PURSUANT
                TO SECTION 13 OR 15(d)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>OF</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>THE
                SECURITIES EXCHANGE ACT OF 1934</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
                of Report (Date of earliest event reported): January 30,
                2007</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>AGL
                RESOURCES INC.</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
                name of registrant as specified in its charter)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>58-2210952</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction of incorporation)</font></div>
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                File No.)</font></div>
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                Employer Identification No.)</font></div>
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                Peachtree Place NE, Atlanta, Georgia 30309</strong></font></div>
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                and zip code of principal executive offices) </font></div>
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                telephone number, including area code)</font></div>
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                Applicable</strong></font></div>
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                name or former address, if changed since last report)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
                the appropriate box below if the Form 8-K filing is intended to
                simultaneously satisfy the filing obligation of the registrant under
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                of the following provisions:</font></div>
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                Written communications pursuant to Rule 425 under the Securities
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                Soliciting material pursuant to Rule 14a-12 under the Exchange Act
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                Pre-commencement communications pursuant to Rule 14d-2(b) under the
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                Pre-commencement communications pursuant to Rule 13e-4(c) under the
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 67.5pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
      into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>General</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      year, the Compensation and Management Development Committee (&#8220;C&amp;MD
      Committee&#8221;) of the Board of Directors of AGL Resources Inc. sets base salary and
      target levels for annual incentive pay and long-term incentives for AGL
      Resources&#8217; executive officers. For benchmarking executive compensation practices
      and levels, the C&amp;MD Committee reviews data provided by the C&amp;MD
      Committee&#8217;s independent consultant for companies in the following three groups:
      AGL Resources&#8217; proxy peer group of natural gas service providers (&#8220;Proxy
      Peers&#8221;); energy service industry companies (&#8220;Industry Peers&#8221;); and companies in
      general industry.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      report contains disclosure about the 2007 compensation for AGL Resources&#8217;
president and chief executive officer along with the executive officers named
      in
      our proxy statement for the 2006 annual meeting of shareholders, except for
      our
      former president, chairman and chief executive officer who resigned from AGL
      Resources effective as of December 31, 2005. These five officers are hereinafter
      referred to as the &#8220;named executive officers.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Base
      Salary</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      January 30, 2007, the C&amp;MD Committee reviewed and set base salaries for
      executive officers for 2007. In reviewing base salaries, the C&amp;MD Committee
      considered pay for comparable positions reported in the Proxy Peer and Industry
      Peer data described above, tenure in position, increased scope of
      responsibilities, performance, retention and other considerations. The base
      salary for John W. Somerhalder, the president and chief executive officer was
      increased from $700,000 to $750,000, the base salary for Andrew W. Evans, the
      executive vice president and chief financial officer was increased from $360,000
      to $405,000; the base salary for Kevin P. Madden, the executive vice president,
      external affairs, was increased from $380,000 to $400,000; the base salary
      for
      R. Eric Martinez, the executive vice president, utility operations, was
      increased from $360,000 to $405,000; and the base salary for Paul R. Shlanta,
      the executive vice president, general counsel and chief ethics and compliance
      officer, was increased from $310,000 to $345,000. The base salaries for these
      five named executive officers were approved by the C&amp;MD Committee but are
      not otherwise set forth in a written agreement between AGL Resources and the
      executives.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Executive
      Performance Incentive Plan and Annual Incentive Plan</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AGL
      Resources&#8217; annual incentive compensation program for the named executive
      officers consists of the executive performance incentive plan (&#8220;EPIP&#8221;) and the
      annual incentive plan (&#8220;AIP&#8221;). The annual incentive compensation program for the
      named executive officers gives weight to both corporate and individual
      performance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>How
      the EPIP and AIP work. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      EPIP, the C&amp;MD Committee establishes objective performance measures from
      among a list of eligible measures set forth in the plan, and those performance
      measures must be met or exceeded in order for the named executive officers
      to
      receive a payout. The C&amp;MD Committee reviews the actual performance at the
      end of each year, compares it with the predetermined goals, and certifies the
      results under the plan. In order to attempt to maximize the deductibility,
      for
      federal income tax purposes, of corporate performance awards made to the named
      executive officers, the corporate performance portion of the named executive
      officers&#8217; annual incentive awards, which constitutes 75% of their total
      incentive opportunity, is covered under the shareholder-approved EPIP. The
      individual performance portion of the named executive officers&#8217; annual incentive
      awards, which constitutes 25% of their total incentive opportunity, is not
      eligible for the exemption from the federal income tax deductibility limit
      under
      Section 162(m) of the Internal Revenue Code of 1986, as amended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      annual incentive compensation program, each participant has a target annual
      incentive compensation opportunity, expressed as a percentage of earned base
      salary during the fiscal year. On January 30, 2007, the C&amp;MD Committee
      approved target annual incentive compensation opportunities for 2007, expressed
      as a percentage of 2007 annual base salary, for each of AGL Resources&#8217; named
      executive officers. For 2007, the incentive target level for Mr. Somerhalder
      was
      increased from 75% to 85% of annual base salary and will remain the same for
      all
      other named executive officers, which is 60% for Messrs. Evans, Madden and
      Martinez and 50% for Mr. Shlanta. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      noted
      above, annual incentive compensation for the named executive officers is
      calculated using the following weights: 75% corporate performance score, which
      is based on the earnings per share (&#8220;EPS&#8221;) goals described below, (covered under
      the EPIP) and 25% individual performance score (covered under the AIP). To
      determine a named executive officer&#8217;s annual incentive compensation, 75% of the
      individual named executive officer&#8217;s incentive target is multiplied by the
      corporate performance score and 25% is multiplied by the officer&#8217;s individual
      performance score. Maximum awards for the named executive officers may be up
      to
      200% of their overall target annual incentive compensation opportunity.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      January 30, 2007, the C&amp;MD Committee established the corporate EPS goals for
      the 2007 performance measurement period. The corporate EPS goals under the
      AIP
      and the EPIP for 2007 are:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table border="1" bordercolor="#000000" cellpadding="0" cellspacing="0" width="50%">

          <tr>
            <td valign="top" width="42%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Earnings
                Per Share Goal</strong></font></div>
            </td>
            <td valign="top" width="36%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Corporate
                Performance Score</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$2.65*</strong></font></div>
            </td>
            <td valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>0%</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$2.70</strong></font></div>
            </td>
            <td valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>50%</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$2.75</strong></font></div>
            </td>
            <td valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>75%</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$2.80</strong></font></div>
            </td>
            <td valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>100%</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$2.85</strong></font></div>
            </td>
            <td valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>150%</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="42%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>$2.98</strong></font></div>
            </td>
            <td valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>200%</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*The
      Company must surpass the EPS goal of $2.65 for the year ending December 31,
      2007
      in order for payments based on corporate or business unit performance to be
      made. Payouts for the portion of total performance based on individual
      performance may be made if EPS is less than $2.65 subject to C&amp;MD Committee
      approval.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      EPS
      goal is established by the C&amp;MD Committee solely for the purposes of
      performance measurement under the annual incentive compensation program and
      should not be considered an update to previously provided earnings guidance.
      For
      purposes of the AIP and EPIP, EPS has historically been defined as net income
      for the performance measurement period divided by total shares outstanding
      (basic), with net income being determined in accordance with generally accepted
      accounting principles (&#8220;GAAP&#8221;) subject to the potential exclusion of certain
      one-time items. For 2007, the C&amp;MD Committee is considering including in the
      definition of net income for purposes of the AIP and EPIP, the inclusion of
      economic value created, but not reflected in GAAP earnings, by the Company&#8217;s
      wholesale services business. This issue will be decided at a future meeting
      of
      the C&amp;MD Committee.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Long-Term
      Incentive Grants</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      January 30, 2007, the C&amp;MD Committee approved stock option grants,
      restricted stock unit awards and performance cash unit awards to certain of
      its
      executive officers, other officers and key employees, including the following
      named executive officers:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      STOCK OPTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="50%">

          <tr>
            <td valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number
                of Nonqualified </strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stock
                Options Awarded</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="20%">&#160;</td>
            <td align="left" valign="top" width="20%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
                W. Somerhalder</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">65,700</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">&#160;</td>
            <td valign="top" width="20%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Andrew
                W. Evans</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18,900</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">&#160;</td>
            <td valign="top" width="20%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kevin
                P. Madden</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20,000</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">&#160;</td>
            <td valign="top" width="20%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">R.
                Eric Martinez</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18,900</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="20%">&#160;</td>
            <td valign="top" width="20%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paul
                R. Shlanta</font></div>
            </td>
            <td valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9,900</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      grants were made pursuant to the Company&#8217;s Amended and Restated Long-Term
      Incentive Plan (1999) (the &#8220;Plan&#8221;), which was filed with the Securities and
      Exchange Commission with the Company&#8217;s Quarterly Report on Form 10-Q for the
      quarter ended March 31, 2002. A form of nonqualified stock option agreement
      was
      previously filed as Exhibit 10.1 to the Company&#8217;s Current Report on Form 8-K
      dated March 15, 2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      stock
      options are exercisable at a price of $38.96 per share and vest in accordance
      with the schedule set forth in the nonqualified stock option agreement. Subject
      to earlier termination as described in the Plan, the stock options expire ten
      years from the date of grant. Upon a change of control of the Company, or upon
      the optionee&#8217;s death, disability or retirement, all unvested options will become
      vested and exercisable. In the event of the optionee&#8217;s termination of employment
      for any reason other than death, disability or retirement, any portion of the
      option which has not become exercisable shall immediately
      terminate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      RESTRICTED STOCK UNITS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="70%">

          <tr>
            <td align="left" valign="top" width="24%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Performance
                </strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Measurement
                Period</strong></font></div>
            </td>
            <td valign="top" width="26%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number
                of Restricted</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stock
                Units Awarded</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="24%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
            <td align="left" valign="top" width="26%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
                W. Somerhalder</font></div>
            </td>
            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1
                year</font></div>
            </td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">28,900</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="24%">&#160;</td>
            <td valign="top" width="27%">&#160;</td>
            <td valign="top" width="26%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Andrew
                W. Evans</font></div>
            </td>
            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1
                year</font></div>
            </td>
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                Eric Martinez</font></div>
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                year</font></div>
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            <td align="left" valign="top" width="24%">
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                R. Shlanta</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1
                year</font></div>
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      awards were made pursuant to the Plan. A form of the restricted stock unit
      agreement was previously filed as Exhibit 10.2 to the Company&#8217;s Current Report
      on Form 8-K/A filed with the Commission on February 24, 2006. </font></div>
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      the
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      per share goal set forth in the restricted stock unit agreement, is met or
      exceeded, the restricted stock units will be converted to an equal number of
      shares of Company common stock and vest in accordance with the schedule set
      forth in the restricted stock unit agreement. If the performance measure set
      forth in the agreement is not attained, the restricted stock units will be
      forfeited. Upon a change in control of the Company, (i) the restricted stock
      units will convert to an equal number of shares of Company common stock and
      become 100% vested and nonforfeitable and (ii) any outstanding unvested shares
      of restricted stock will become 100% vested and nonforfeitable. Unless the
      C&amp;MD Committee, which administers the Plan, decides otherwise, if the
      recipient&#8217;s employment is terminated for any reason, all restricted stock units
      or shares of restricted stock will be forfeited and returned to the Company.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      PERFORMANCE CASH UNITS</strong></font></div>
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    <div align="left">
      <table cellpadding="0" cellspacing="0" width="50%">

          <tr>
            <td align="left" valign="top" width="26%" style="border-bottom: black thin solid;">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Measurement
                Period</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Multiple</strong></font></div>
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            <td align="left" valign="top" width="26%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
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            <td align="left" valign="top" width="26%">
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                W. Somerhalder</font></div>
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            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                years</font></div>
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            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.0x</font></div>
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            <td align="left" valign="top" width="26%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
          </tr>
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            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Andrew
                W. Evans</font></div>
            </td>
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                years</font></div>
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            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.6x</font></div>
            </td>
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            <td align="left" valign="top" width="26%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kevin
                P. Madden</font></div>
            </td>
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                years</font></div>
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            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.6x</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">R.
                Eric Martinez</font></div>
            </td>
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                years</font></div>
            </td>
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.6x</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
            <td align="left" valign="top" width="27%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paul
                R. Shlanta</font></div>
            </td>
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3
                years</font></div>
            </td>
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.4x</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      performance cash units are payable in cash, based upon the attainment of the
      performance measure set forth in the award agreement, which relates to the
      Company&#8217;s average annual growth in basic earnings per share plus the average
      dividend yield (the &#8220;Performance Measure&#8221;). As set forth in the award
      agreements, the formula used to calculate award payments is as follows: base
      salary, multiplied by the percent of growth in the Performance Measure,
      multiplied by the applicable performance multiple reflected in the table above.
      The award agreements also set forth a minimum Performance Measure percentage
      below which no award payments will be made and a maximum Performance Measure
      percentage at which award payments will be capped. Upon a change in control
      of
      the Company, performance cash units will become vested and nonforfeitable at
      the
      target payout level, as prorated on a daily-basis, based on the completed
      portion of the performance measurement period as of the date of the change
      in
      control. Unless the C&amp;MD Committee, which administers the Plan, decides
      otherwise, if the recipient&#8217;s employment is terminated for any reason, all
      performance cash units will be forfeited. A form of the performance cash unit
      agreement was previously filed as Exhibit 10.3 to the Company&#8217;s Current Report
      on Form 8-K/A filed with the Commission on February 24, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AGL
                RESOURCES INC.</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
                February 5, 2007</font></div>
            </td>
            <td align="left" valign="top" width="48%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>/s/
                Paul R. Shlanta</u></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">&#160;</td>
            <td align="left" valign="top" width="48%">
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                R. Shlanta</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Executive
                Vice President, General Counsel </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
                Chief Ethics and Compliance Officer</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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{"company-data": {"conformed-name": "AGL RESOURCES INC", "cik": "0001004155", "assigned-sic": "4924", "irs-number": "582210952", "state-of-incorporation": "GA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-14174", "film-number": "07581591"}, "business-address": {"street1": "TEN PEACHTREE PLACE", "city": "ATLANTA", "state": "GA", "zip": "30309", "phone": "4045844000"}, "mail-address": {"street1": "TEN PEACHTREE PLACE", "street2": "DEPT. 1109", "city": "ATLANTA", "state": "GA", "zip": "30309"}}
Form 8-K
UNITED
                STATES
SECURITIES
                AND EXCHANGE COMMISSION
Washington,
                D.C. 20549
FORM
                8-K
CURRENT
                REPORT
PURSUANT
                TO SECTION 13 OR 15(d)
OF
THE
                SECURITIES EXCHANGE ACT OF 1934
Date
                of Report (Date of earliest event reported): January 30,
                2007
AGL
                RESOURCES INC.
(Exact
                name of registrant as specified in its charter)
Georgia
1-14174
58-2210952
(State
                or other jurisdiction of incorporation)
(Commission
                File No.)
(I.R.S.
                Employer Identification No.)
Ten
                Peachtree Place NE, Atlanta, Georgia 30309
(Address
                and zip code of principal executive offices)
404-584-4000
(Registrant's
                telephone number, including area code)
Not
                Applicable
(Former
                name or former address, if changed since last report)
Check
                the appropriate box below if the Form 8-K filing is intended to
                simultaneously satisfy the filing obligation of the registrant under
                any
                of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities
                Act (17
                CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
                (17 CFR
                240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the
                Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the
                Exchange Act (17 CFR 240.13e-4(c))
Item
      1.01
Entry
      into a Material Definitive Agreement.
General
Each
      year, the Compensation and Management Development Committee ("C&MD
      Committee") of the Board of Directors of AGL Resources Inc. sets base salary and
      target levels for annual incentive pay and long-term incentives for AGL
      Resources' executive officers. For benchmarking executive compensation practices
      and levels, the C&MD Committee reviews data provided by the C&MD
      Committee's independent consultant for companies in the following three groups:
      AGL Resources' proxy peer group of natural gas service providers ("Proxy
      Peers"); energy service industry companies ("Industry Peers"); and companies in
      general industry.
This
      report contains disclosure about the 2007 compensation for AGL Resources'
president and chief executive officer along with the executive officers named
      in
      our proxy statement for the 2006 annual meeting of shareholders, except for
      our
      former president, chairman and chief executive officer who resigned from AGL
      Resources effective as of December 31, 2005. These five officers are hereinafter
      referred to as the "named executive officers."
Base
      Salary
On
      January 30, 2007, the C&MD Committee reviewed and set base salaries for
      executive officers for 2007. In reviewing base salaries, the C&MD Committee
      considered pay for comparable positions reported in the Proxy Peer and Industry
      Peer data described above, tenure in position, increased scope of
      responsibilities, performance, retention and other considerations. The base
      salary for John W. Somerhalder, the president and chief executive officer was
      increased from $700,000 to $750,000, the base salary for Andrew W. Evans, the
      executive vice president and chief financial officer was increased from $360,000
      to $405,000; the base salary for Kevin P. Madden, the executive vice president,
      external affairs, was increased from $380,000 to $400,000; the base salary
      for
      R. Eric Martinez, the executive vice president, utility operations, was
      increased from $360,000 to $405,000; and the base salary for Paul R. Shlanta,
      the executive vice president, general counsel and chief ethics and compliance
      officer, was increased from $310,000 to $345,000. The base salaries for these
      five named executive officers were approved by the C&MD Committee but are
      not otherwise set forth in a written agreement between AGL Resources and the
      executives.
Executive
      Performance Incentive Plan and Annual Incentive Plan
AGL
      Resources' annual incentive compensation program for the named executive
      officers consists of the executive performance incentive plan ("EPIP") and the
      annual incentive plan ("AIP"). The annual incentive compensation program for the
      named executive officers gives weight to both corporate and individual
      performance.
How
      the EPIP and AIP work.
Under
      the
      EPIP, the C&MD Committee establishes objective performance measures from
      among a list of eligible measures set forth in the plan, and those performance
      measures must be met or exceeded in order for the named executive officers
      to
      receive a payout. The C&MD Committee reviews the actual performance at the
      end of each year, compares it with the predetermined goals, and certifies the
      results under the plan. In order to attempt to maximize the deductibility,
      for
      federal income tax purposes, of corporate performance awards made to the named
      executive officers, the corporate performance portion of the named executive
      officers' annual incentive awards, which constitutes 75% of their total
      incentive opportunity, is covered under the shareholder-approved EPIP. The
      individual performance portion of the named executive officers' annual incentive
      awards, which constitutes 25% of their total incentive opportunity, is not
      eligible for the exemption from the federal income tax deductibility limit
      under
      Section 162(m) of the Internal Revenue Code of 1986, as amended.
Under
      the
      annual incentive compensation program, each participant has a target annual
      incentive compensation opportunity, expressed as a percentage of earned base
      salary during the fiscal year. On January 30, 2007, the C&MD Committee
      approved target annual incentive compensation opportunities for 2007, expressed
      as a percentage of 2007 annual base salary, for each of AGL Resources' named
      executive officers. For 2007, the incentive target level for Mr. Somerhalder
      was
      increased from 75% to 85% of annual base salary and will remain the same for
      all
      other named executive officers, which is 60% for Messrs. Evans, Madden and
      Martinez and 50% for Mr. Shlanta.
As
      noted
      above, annual incentive compensation for the named executive officers is
      calculated using the following weights: 75% corporate performance score, which
      is based on the earnings per share ("EPS") goals described below, (covered under
      the EPIP) and 25% individual performance score (covered under the AIP). To
      determine a named executive officer's annual incentive compensation, 75% of the
      individual named executive officer's incentive target is multiplied by the
      corporate performance score and 25% is multiplied by the officer's individual
      performance score. Maximum awards for the named executive officers may be up
      to
      200% of their overall target annual incentive compensation opportunity.
On
      January 30, 2007, the C&MD Committee established the corporate EPS goals for
      the 2007 performance measurement period. The corporate EPS goals under the
      AIP
      and the EPIP for 2007 are:
Earnings
                Per Share Goal
Corporate
                Performance Score
$2.65*
0%
$2.70
50%
$2.75
75%
$2.80
100%
$2.85
150%
$2.98
200%
*The
      Company must surpass the EPS goal of $2.65 for the year ending December 31,
      2007
      in order for payments based on corporate or business unit performance to be
      made. Payouts for the portion of total performance based on individual
      performance may be made if EPS is less than $2.65 subject to C&MD Committee
      approval.
The
      EPS
      goal is established by the C&MD Committee solely for the purposes of
      performance measurement under the annual incentive compensation program and
      should not be considered an update to previously provided earnings guidance.
      For
      purposes of the AIP and EPIP, EPS has historically been defined as net income
      for the performance measurement period divided by total shares outstanding
      (basic), with net income being determined in accordance with generally accepted
      accounting principles ("GAAP") subject to the potential exclusion of certain
      one-time items. For 2007, the C&MD Committee is considering including in the
      definition of net income for purposes of the AIP and EPIP, the inclusion of
      economic value created, but not reflected in GAAP earnings, by the Company's
      wholesale services business. This issue will be decided at a future meeting
      of
      the C&MD Committee.
Long-Term
      Incentive Grants
On
      January 30, 2007, the C&MD Committee approved stock option grants,
      restricted stock unit awards and performance cash unit awards to certain of
      its
      executive officers, other officers and key employees, including the following
      named executive officers:
STOCK OPTIONS
Name
Number
                of Nonqualified
Stock
                Options Awarded
John
                W. Somerhalder
65,700
Andrew
                W. Evans
18,900
Kevin
                P. Madden
20,000
R.
                Eric Martinez
18,900
Paul
                R. Shlanta
9,900
The
      grants were made pursuant to the Company's Amended and Restated Long-Term
      Incentive Plan (1999) (the "Plan"), which was filed with the Securities and
      Exchange Commission with the Company's Quarterly Report on Form 10-Q for the
      quarter ended March 31, 2002. A form of nonqualified stock option agreement
      was
      previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K
      dated March 15, 2005.
The
      stock
      options are exercisable at a price of $38.96 per share and vest in accordance
      with the schedule set forth in the nonqualified stock option agreement. Subject
      to earlier termination as described in the Plan, the stock options expire ten
      years from the date of grant. Upon a change of control of the Company, or upon
      the optionee's death, disability or retirement, all unvested options will become
      vested and exercisable. In the event of the optionee's termination of employment
      for any reason other than death, disability or retirement, any portion of the
      option which has not become exercisable shall immediately
      terminate.
RESTRICTED STOCK UNITS
Name
Performance
Measurement
                Period
Number
                of Restricted
Stock
                Units Awarded
John
                W. Somerhalder
1
                year
28,900
Andrew
                W. Evans
1
                year
8,300
Kevin
                P. Madden
1
                year
8,800
R.
                Eric Martinez
1
                year
8,300
Paul
                R. Shlanta
1
                year
4,400
The
      awards were made pursuant to the Plan. A form of the restricted stock unit
      agreement was previously filed as Exhibit 10.2 to the Company's Current Report
      on Form 8-K/A filed with the Commission on February 24, 2006.
If
      the
      performance measure for the restricted stock units, which is a basic earnings
      per share goal set forth in the restricted stock unit agreement, is met or
      exceeded, the restricted stock units will be converted to an equal number of
      shares of Company common stock and vest in accordance with the schedule set
      forth in the restricted stock unit agreement. If the performance measure set
      forth in the agreement is not attained, the restricted stock units will be
      forfeited. Upon a change in control of the Company, (i) the restricted stock
      units will convert to an equal number of shares of Company common stock and
      become 100% vested and nonforfeitable and (ii) any outstanding unvested shares
      of restricted stock will become 100% vested and nonforfeitable. Unless the
      C&MD Committee, which administers the Plan, decides otherwise, if the
      recipient's employment is terminated for any reason, all restricted stock units
      or shares of restricted stock will be forfeited and returned to the Company.
PERFORMANCE CASH UNITS
Name
Performance
Measurement
                Period
Performance
Multiple
John
                W. Somerhalder
3
                years
10.0x
Andrew
                W. Evans
3
                years
5.6x
Kevin
                P. Madden
3
                years
5.6x
R.
                Eric Martinez
3
                years
5.6x
Paul
                R. Shlanta
3
                years
3.4x
The
      performance cash units are payable in cash, based upon the attainment of the
      performance measure set forth in the award agreement, which relates to the
      Company's average annual growth in basic earnings per share plus the average
      dividend yield (the "Performance Measure"). As set forth in the award
      agreements, the formula used to calculate award payments is as follows: base
      salary, multiplied by the percent of growth in the Performance Measure,
      multiplied by the applicable performance multiple reflected in the table above.
      The award agreements also set forth a minimum Performance Measure percentage
      below which no award payments will be made and a maximum Performance Measure
      percentage at which award payments will be capped. Upon a change in control
      of
      the Company, performance cash units will become vested and nonforfeitable at
      the
      target payout level, as prorated on a daily-basis, based on the completed
      portion of the performance measurement period as of the date of the change
      in
      control. Unless the C&MD Committee, which administers the Plan, decides
      otherwise, if the recipient's employment is terminated for any reason, all
      performance cash units will be forfeited. A form of the performance cash unit
      agreement was previously filed as Exhibit 10.3 to the Company's Current Report
      on Form 8-K/A filed with the Commission on February 24, 2006.
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
AGL
                RESOURCES INC.
(Registrant)
Date:
                February 5, 2007
/s/
                Paul R. Shlanta
Paul
                R. Shlanta
Executive
                Vice President, General Counsel
and
                Chief Ethics and Compliance Officer