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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Powell Industries Inc.
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(Name of Registrant as Specified In Its Charter)
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[ ] Fee paid previously with preliminary materials.
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POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 16, 2001
To the Stockholders of Powell Industries, Inc.:
Notice is hereby given that the Annual Meeting of the Stockholders of
Powell Industries, Inc., a Nevada corporation (the "Company"), will be held at
the offices of the Company at 8550 Mosley Drive, in Houston, Texas on Friday,
March 16, 2001 at 11:00 a.m. Houston time, for the following purposes:
1. To elect three (3) members of the Company's Board of Directors,
class of 2004; and
2. To consider a proposed amendment to the Company's 1992 Stock Option
Plan to increase the maximum number of shares that may be issued under the
Plan from 1,500,000 to 2,100,000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The stock transfer books will not be closed. Stockholders of record as of
the close of business on February 16, 2001 are entitled to notice of, and to
vote at, the Annual Meeting or any adjournment thereof, notwithstanding any
transfer of stock on the books of the Company after such record date.
You are cordially invited to attend the meeting in person. YOU ARE URGED TO
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND TO RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
By Order of the Board of Directors
Thomas W. Powell
Chairman and Chief Executive Officer
Houston, Texas
January 31, 2001
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POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
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PROXY STATEMENT
JANUARY 31, 2001
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 16, 2001
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SOLICITATION AND VOTING RIGHTS
The accompanying proxy is solicited by the Board of Directors of Powell
Industries, Inc., a Nevada corporation (the "Company"), for use at the Annual
Meeting of Stockholders of the Company to be held on Friday, March 16, 2001 at
11:00 a.m., Houston time, at the offices of the Company at 8550 Mosley Drive, in
Houston, Texas, or at any adjournment thereof.
This Proxy Statement and proxy and the accompanying Notice of Annual
Meeting, Summary Annual Report to Stockholders, and Form 10-K for the year ended
October 31, 2000, including consolidated financial statements, will be mailed to
stockholders on or about February 20, 2001. The cost of soliciting proxies in
the enclosed form will be borne by the Company. The Board of Directors of the
Company has fixed February 16, 2001, as the record date for determination of
stockholders entitled to receive notice of and to vote at the Annual Meeting. As
of January 31, 2001, there were 10,329,909 shares of the Company's Common Stock,
par value $.01 per share ("Common Stock"), outstanding. Each holder of Common
Stock will be entitled to one vote for each share owned, except as noted below.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock of the Company is necessary to constitute a
quorum at the meeting. The holders of shares represented by proxies reflecting
abstentions or "broker non-votes" are considered present at the meeting and
count toward a quorum. Brokers holding shares of record for their customers
generally are not entitled to vote on certain matters unless they receive voting
instructions from their customers. When brokers complete proxy forms, they
generally vote on those matters as to which they are entitled to vote. On those
matters as to which brokers are not entitled to vote without instructions from
their customers and have not received such instructions, brokers generally
indicate on their proxies that they lack voting authority as to those matters.
As to those matters, such indications are called "broker non-votes."
The persons receiving the greatest number of votes cast at the meeting to
fill the directorships with terms to expire in 2004 will be elected as directors
of the Company, class of 2004. Thus, abstentions and broker non-votes will have
no effect on the election of directors.
Regarding other matters, the vote of a majority of the voting power
present, in person or by proxy, and entitled to vote on the matters, at a
meeting at which a quorum is present, is the act of the stockholders.
Accordingly, abstentions will have the effect of negative votes with respect to
any such other matters. Broker
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non-votes will have the effect of negative votes as to any such other matters as
to which the broker is entitled to vote, and no effect on those matters as to
which the broker is not entitled to vote.
The shares represented by each valid proxy received by the Company on the
form solicited by the Board of Directors will be voted in accordance with
instructions specified on the proxy. Under Nevada law, a stockholder giving a
duly executed proxy may revoke it before it is exercised only by filing with or
transmitting to the Secretary of the Company an instrument or transmission
revoking it, or a duly executed proxy bearing a later date.
COMMON STOCK OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of January 31, 2001 (except as otherwise
noted below), the number of shares of Common Stock owned by each person who is
known by the Company to own beneficially more than five percent (5%) of the
Company's outstanding Common Stock:
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
------------------- ----------------- ----------------
Thomas W. Powell...................................... 3,001,736(1) 28.45%
P.O. Box 12818
Houston, Texas 77217
Artisan Investment Corporation........................ 1,020,200(2) 9.88%
For itself and as general partner of Artisan
Partners Limited Partnership; Andrew A. Ziegler and
Carlene Murphy Ziegler c/o Bell, Boyd & Lloyd LLC
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207
Heartland Advisors, Inc. ............................. 816,300(3) 7.90%
789 North Water Street
Milwaukee, Wisconsin 53202
Bonnie L. Powell...................................... 942,419(4) 9.12%
P. O. Box 112
Warda, Texas 78960
Wellington Trust Company NA........................... 841,000(5) 8.14%
75 State Street
Boston, Massachusetts 02109
Fidelity Management & Research Co..................... 778,400(6) 7.54%
82 Devonshire Street
Boston, Massachusetts 02109
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AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
------------------- ----------------- ----------------
Klein Bank............................................ 702,900(7) 6.80%
Trustee of the Powell Industries, Inc. Employee
Stock Ownership Trust and of the Powell Industries,
Inc.
Frozen Employee Stock Ownership Trust
13845 Breck
Houston, Texas 77066
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(1) Mr. Powell has sole voting power and sole investment power with respect to
2,638,512 of such shares. Of those 2,638,512 shares, 78,720 are held by Mr.
Powell's IRA, and 2,523,792 are held by TWP Holdings, Ltd., a partnership
controlled by Mr. Powell. Also includes 297,360 shares held by the Thomas
Walker Powell Trust. Mr. Powell is a co-trustee of such trust and shares
voting and investment power with respect to the shares held by such trust
with the other co-trustees, Michael W. Powell and Holly C. Powell Arnold.
Also includes 2,485 shares allocated to the account of Mr. Powell under the
Powell Industries, Inc. Employee Stock Ownership Plan (see footnote (7) to
this table) and 919 shares held in trust for the account of Mr. Powell under
the Employees Incentive Savings Plan of the Company. Aetna Trust Company,
FSB is the sole trustee of the Employees Incentive Savings Plan and as such
has sole power to vote such shares as directed by the administrative
committee of the Plan. All data in this Proxy Statement with respect to
shares held in the Employees Incentive Savings Plan are as of October 31,
2000. Also includes 62,460 shares subject to stock options which are
currently exercisable by Mr. Powell.
(2) As of December 31, 1999, based on a Schedule 13G dated February 14, 2000.
According to such Schedule 13G, Artisan Investment Corporation for itself
and as general partner of Artisan Partners Limited Partnership, Andrew A.
Ziegler and Carlene Murphy Ziegler share dispositive and voting power over
all such shares.
(3) As of December 31, 2000, based on a Schedule 13G dated January 30, 2001.
According to such Schedule 13G, Heartland Advisors, Inc. has interests in
more than 5% of the Company's Common Stock. Also according to such Schedule
13G, Heartland Advisors, Inc. had sole dispositive power over all of such
shares and sole voting power as to 269,600 of such shares.
(4) Mrs. Powell has sole voting power and sole investment power with respect to
596,919 of such shares. Also includes 345,500 shares held by Testamentary
Trust No. 1, of which Mrs. Powell is a co-trustee. Mrs. Powell shares voting
and investment power with respect to such shares held by Testamentary Trust
No. 1 with J. Suzzanne May, the other co-trustee of such trust. Any act of
such co-trustees requires the approval of a majority of them.
(5) As of December 31, 1999, based on a Schedule 13G dated December 31, 1999,
filed by Wellington Management Company, LLP, the parent of Wellington Trust
Company, NA. According to such Schedule 13G, Wellington Management Company,
LLP owns beneficially 771,000 shares with shared dispositive power over all
such shares and shares voting power as to 591,000 of such shares. By letter
dated December 7, 2000, Wellington Management Company, LLP reports as of
September 30, 2000, it has beneficial ownership of 841,000 shares with
shared dispositive power over all 841,000 shares and shared voting power
over 731,000 shares.
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(6) As of December 31, 1999, based on a Schedule 13G dated February 14, 2000
filed by FMR Corp., the parent of Fidelity Management & Research Company
owned beneficially 674,500 shares or 6.318% of the common stock of Powell
Industries, Inc. According to such Schedule 13G, such stock is held on
behalf of Fidelity Low-Priced Stock Fund. Also according to such Schedule
13G, such Fund's Board of Trustees has the sole power to vote or direct the
voting of such shares, and each of such Fund, FMR Corp., and Edward C.
Johnson 3d, Chairman of FMR Corp., has the sole power to dispose of such
shares. By letter to the Company dated December 4, 2000, FMR Corp. reported
beneficial ownership as of October 31, 2000 of 778,400 shares or 7.20%.
(7) Of such shares, 674,569 are held in the Powell Industries, Inc. Employee
Stock Ownership Trust (the "ESOP") and 28,331 are held in the Powell
Industries, Inc. Frozen Employee Stock Ownership Trust (the "Frozen ESOP").
Klein Bank, as Trustee, but as directed by the administrative committee for
the ESOP appointed by the Board of Directors of the Corporation, votes and
disposes of shares not allocated to the accounts of participants, and
allocated shares as to which no direction is received from the participant.
Participants have the right to direct the voting and tender of shares
allocated to their accounts. As of October 31, 2000, approximately 259,772
of the shares held by the ESOP were allocated to the accounts of
participants. An additional 44,863 shares will be allocated to the accounts
of participants effective December 31, 2000, but the amount of this latter
allocation to each participant has not been determined as of the date of
this Proxy Statement. Accordingly, such shares to be allocated as of
December 31, 2000 are not included in the number of shares shown as owned by
executive officers in this proxy statement. All shares held in the Frozen
ESOP have been allocated to accounts of participants. Except as otherwise
specified, all data in this Proxy Statement with respect to shares held in
either the ESOP or the Frozen ESOP are as of November 30, 2000.
The following table sets forth, as of January 31, 2001, except for plan
share data (see footnotes (1) and (7) to the preceding table), the number of
shares of the Common Stock beneficially owned by each director and nominee for
director, each of the executive officers listed in the Summary Compensation
Table below, and all executive officers and directors of the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------ ----------------- --------
J.F. Ahart................................................. 12,551(2) *
Joseph L. Becherer......................................... 1,000 *
Thomas C. Burtnett......................................... 17,745(3) *
Eugene L. Butler........................................... 2,500 *
David J. Dimlich........................................... 24,344(4) *
Adam Janas................................................. 15,183(5) *
Bonnie L. Powell........................................... 942,419(6) 9.12%
Thomas W. Powell........................................... 3,001,736(7) 28.45%
Stephen W. Seale, Jr. ..................................... 3,000(8) *
Lawrence R. Tanner......................................... 3,241 *
Robert C. Tranchon......................................... 100 *
Ronald J. Wolny............................................ 5,137 *
M.M. Zeller................................................ 43,172(9) *
All Executive Officers and Directors as a group (16
persons)................................................. 4,082,665 39.52%
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* Less than one percent (1%).
(1) The persons listed have sole voting power and sole investment power with
respect to the shares beneficially owned by them, except as otherwise
indicated.
(2) Mr. Ahart has sole voting and investment power over 10,300 of such shares.
Also includes 2,251 shares allocated to Mr. Ahart's account in the ESOP.
See footnote (7) to the preceding table. J. F. Ahart, a director and
executive officer of the Company resigned all positions with the Company on
December 15, 2000.
(3) Mr. Burtnett has sole voting and investment power over 4,400 of such
shares. Also includes 1,345 shares allocated to Mr. Burtnett's account in
the ESOP. See footnote (7) to the preceding table. Also includes 12,000
shares subject to stock options which are currently exercisable by Mr.
Burtnett.
(4) Mr. Dimlich has sole voting and investment power over 3,500 of such shares.
Also includes 1,004 shares allocated to Mr. Dimlich's account in the ESOP.
See footnote (7) to the preceding table. Also includes 19,840 shares
subject to stock options which are currently exercisable by Mr. Dimlich.
(5) Mr. Janas has sole voting and investment power over 4,240 of such shares.
Also includes 2,283 shares allocated to Mr. Janas' account in the ESOP. See
footnote (7) to the preceding table. Also includes 8,660 shares subject to
stock options which are currently exercisable by Mr. Janas.
(6) See footnote (4) to the preceding table.
(7) See footnote (1) to the preceding table.
(8) Such shares are held by Seale Land & Cattle Co., an unincorporated business
controlled by Mr. Seale.
(9) Mr. Zeller has sole voting and investment power over 10,600 of such shares.
Also includes 2,272 shares allocated to Mr. Zeller's account in the ESOP.
See footnote (7) to the preceding table. Also includes 30,300 shares
subject to stock options which are currently exercisable by Mr. Zeller.
(10) Includes 2,337 shares held in trust for the accounts of certain executive
officers not named above under the ESOP. See footnote (7) to the preceding
table. Also includes 8,200 shares subject to stock options which are
currently exercisable by certain executive officers not named above.
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ELECTION OF DIRECTORS
The terms of three directors expire in 2001 under the bylaws of the
Company. The terms of the remaining directors continue after the Annual Meeting.
The Board of Directors has nominated Thomas W. Powell, Lawrence R. Tanner and
Joseph L. Becherer for election as directors with terms to expire in 2004. Mr.
Powell, Mr. Tanner and Mr. Becherer currently serve as directors of the Company
with terms expiring in 2001. Although the Board of Directors does not
contemplate that any nominee will be unable to serve, if such a situation arises
prior to the Annual Meeting, the persons named in the enclosed form of proxy
will vote in accordance with their best judgment for a substitute nominee.
The following table sets forth for each nominee and for each director whose
term of office continues after the Annual Meeting, his name, age, principal
occupation and employment for the past five years, offices held with the
Company, the date he first became a director, and the date of expiration of his
current term as director.
PRINCIPAL OCCUPATION FOR DIRECTOR TERM
NOMINEE AGE PAST FIVE YEARS(1) OFFICES HELD WITH COMPANY SINCE EXPIRES
------- --- ------------------------ ---------------------------- -------- -------
Thomas W. Powell............ 60 Chairman of the Board, Director, Chairman of the 1984 2001
President and Chief Board, President and Chief
Executive Officer of the Executive Officer(2)
Company since 1984
Lawrence R. Tanner.......... 74 Director, Technical Director 1992 2001
Services for Compaq
Computer Company
Joseph L. Becherer.......... 58 Retired; previously, Director 1997 2001
Senior Vice President of
Eaton Corporation,
September 1995 to
October 1997 with
responsibility for the
Cutler Hammer Group;
Operations Vice
President of Cutler
Hammer, a subsidiary of
Eaton Corporation,
February 1994 to
September 1995
Stephen W. Seale, Jr. ...... 61 Retired; previously Director 1985 2003
Director -- Operations,
Materials and Structures
Division and other
assignments at Southwest
Research Institute, an
independent research and
development
organization, until
January 1998
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PRINCIPAL OCCUPATION FOR DIRECTOR TERM
NOMINEE AGE PAST FIVE YEARS(1) OFFICES HELD WITH COMPANY SINCE EXPIRES
------- --- ------------------------ ---------------------------- -------- -------
Robert C. Tranchon.......... 60 President and CEO, Director 2000 2003
Reveille Technology, a
manufacturing system
software development and
consulting firm, 1995 to
present; President, CEO,
and Director of Ansaldo
Ross Hill, a
manufacturer of drives,
motors, and automation
systems, 1997 to
present; independent
consultant, 1995-1996;
previously President,
CEO and Chairman of the
Board of Directors of
Westinghouse Motor
Company
Eugene L. Butler............ 59 Chairman of the Board, Director 1990 2002
Intercoastal Terminal,
Inc., April 1991 to
April 1997; CEO,
Chairman, and a Director
of Petrominerals
Corporation, April 1993
to April 1995
Bonnie L. Powell............ 67 Private investor for Director 1986 2002
more than the past five
years
Ronald J. Wolny............. 61 Vice President, Fluor Director 2001 2002
Daniel, Inc. since
October 1, 1968; Member
of the Board of
Directors Fluor Daniel
Nigeria from 1990 to
2000; Member of the
Board of Directors of
the Company from March,
1992 to June, 1998(3)
---------------
(1) None of the corporations listed (other than the Company) is an affiliate of
the Company.
(2) Mr. Powell also serves as a director of each subsidiary of the Company.
(3) Mr. Wolny was appointed by the board of directors at its January 19, 2001
meeting to fill the unexpired term of Mr. J. F. Ahart who resigned as a
director and officer of the Company on December 15, 2000.
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Bonnie L. Powell is the widow of William E. Powell, the father of Thomas W.
Powell and the founder of the Company.
Only the directors who are not employees of the Company or any of its
subsidiaries or affiliates are entitled to receive a fee, plus reimbursement of
out-of-pocket expenses, for their services as directors. Under the Company's
standard arrangement for compensation of directors, outside directors receive a
quarterly retainer of $2,000 and a fee of $2,000 for each board meeting
attended. Members of a committee other than the chairman receive a fee of $600
for attending each committee meeting. Committee chairmen receive $1,000 for
attending each committee meeting.
In 1993, the Company adopted the Powell Industries, Inc. Directors' Fee
Program which permits directors to defer receipt of the directors' fees to which
they would otherwise be entitled and to have such deferred fees allocated to a
shadow account as if they were invested in Common Stock of the Company on the
date the fees were payable. Then upon expiration of the deferral period or the
retirement or death of the director, payment will be made in the form of shares
of Common Stock equal to the number of shares in his shadow account (plus any
distributions on the Common Stock that were credited to the shadow account).
In 2000, the Company adopted the 2000 Non-Employee Director Stock Option
Plan. The Board of Directors has reserved 24,000 shares of Common Stock for
issuance under the Plan. The Plan is administered by the Board of Directors.
Eligibility to participate in the Plan is limited to those individuals who are
members of the Board of the Company and who are not an employee of the Company
or any affiliate of the Company. The Plan became effective on June 25, 2000. On
June 26, 2000, each of the non-employee directors were issued options to acquire
2,000 shares of the Company's common stock.
Four meetings of the Board of Directors were held in the last fiscal year.
No incumbent director attended fewer than seventy-five percent (75%) of the
aggregate of (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by all committees of the Board on which he or
she served.
The Board of Directors has a standing Audit Committee which met four times
during the last fiscal year. The Audit Committee consists of Messrs. Butler,
Seale and Tanner. The Audit Committee has the responsibility to assist the Board
of Directors in fulfilling its fiduciary responsibilities as to accounting
policies and reporting practices of the Company and its subsidiaries and the
sufficiency of the audits of all Company activities. It is the Board's agent in
ensuring the integrity of financial reports of the Company and its subsidiaries,
and the adequacy of disclosures to shareholders. The Audit Committee is the
focal point for communication between other directors, the independent auditors,
internal auditor and management as their duties relate to financial accounting,
reporting, and controls. During fiscal 2000, the Board of Directors of the
Company adopted an Audit Committee Charter. The current members of the Audit
Committee are "independent" as that term is defined by Rule 4200(a)(15) of the
listing standards of the National Association of Securities Dealers. A copy of
the Audit Committee Charter is included as Appendix A to this Proxy Statement.
All meetings of the Audit Committee were separate and apart from the full Board
of Directors during fiscal 2000.
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AUDIT COMMITTEE REPORT
The Audit Committee has (1) reviewed the Company's audited financial
statements for fiscal 2000 and discussed them with Management, (2) discussed
with the Company's independent accountant the matters required to be discussed
by Statement of Auditing Standard 61, as amended, (3) received written
disclosures and a letter from the Company's independent accountants required by
Independence Standards Board Statement No. 1, and (4) discussed the independence
of the Company's accountants with the accountants. Based on the foregoing
discussions, the Audit Committee recommended to the Company's Board of Directors
that the Company's audited financial statements be included in its annual report
on Form 10-K for the year ended October 31, 2000.
The Audit Committee:
Eugene L. Butler
Stephen W. Seale, Jr.
Lawrence R. Tanner
The Board of Directors also has a standing Compensation Committee comprised
of Mr. Becherer, Mrs. Powell and Mr. Tranchon, all of whom are nonemployee
directors of the Company. The Compensation Committee, which held two meetings
during the last fiscal year, provides oversight on behalf of the full Board on
development and administration of the Company's executive compensation program
and each component plan in which officers and directors are eligible to
participate. The Compensation Committee also administers the Stock Option Plan,
the Director's Fee Program and the Incentive Compensation Plan of the Company.
The Board of Directors does not have a standing nominating committee.
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EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following table provides information regarding the executive officers
and/or significant employees of the Company and its subsidiaries who are not
also a director or a nominee for director. The officers of the Company serve at
the discretion of the Board of Directors of the Company, and officers of
subsidiaries serve at the discretion of the Board of Directors of the respective
subsidiaries.
NAME AGE SINCE POSITION(1)
---- --- ----- -----------
Thomas C. Burtnett................. 56 1993 President of Unibus, Inc.
("Unibus")
David J. Dimlich................... 53 1994 President of Transdyn Controls,
Inc. ("Transdyn")
John E. Frederick.................. 67 1997 President of Powell Power
Electronics Company, Inc. ("PPECO")
Robert B. Gregory.................. 45 2000 Controller of Company
Adam Janas......................... 61 1984 President of Delta-Unibus Corp.
("Delta")
William K. Reffert................. 50 2001 President of Powell-ESCO Company
("ESCO")
M. M. Zeller....................... 61 1990 President of Powell Electrical
Manufacturing Company ("PEMCO")
---------------
(1) Each of the corporations listed (other than the Company) is a subsidiary of
the Company except for PPECO which is a wholly-owned subsidiary of PEMCO.
Mr. Burtnett has served as President of Unibus, Inc. since 1993.
Mr. Dimlich became chief operating officer of Transdyn on June 30, 1994,
and was elected President of Transdyn on August 5, 1994.
Mr. Frederick has served as president of PPECO since 1997. Prior to 1997
Mr. Frederick served as President of Traction Power Systems, Inc., another
wholly-owned subsidiary of Company.
Mr. Gregory has been in the employ of the Company since July, 1991 and has
served in his current capacity as Controller of the Company since March 17,
2000.
Mr. Janas has served as President of Delta since 1984.
Effective January 2, 2001, William K. Reffert was elected as a director of
ESCO and appointed as its President to fill the unexpired term of Mr.
Thomas W. Keiser, who resigned as a director and officer of ESCO on
December 31, 2000. Prior to joining ESCO, Mr. Reffert was Senior Vice
President and General Manger of Operations for a wholly-owned subsidiary of
ABB, Inc. from October, 1999 until October, 2000 and was for more than five
years prior to that an employee of another wholly-owned subsidiary of ABB,
Inc.
Mr. Zeller has served as President of PEMCO since 1990.
None of the corporations mentioned in the descriptions of the business
backgrounds above is an affiliate of the Company (other than the
subsidiaries of the Company listed in the table above).
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EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the Chief Executive Officer of the Company, and of the Company's
five most highly compensated executive officers for the last fiscal year (other
than the CEO) whose total annual salary and bonus exceeded $100,000, for each of
the Company's fiscal years ending October 31, 2000, October 31, 1999, and
October 31, 1998.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------- -----------------------
(A) (B) (C) (D) (E) (F)
RESTRICTED SECURITIES (G)
STOCK UNDERLYING ALL OTHER
AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (#)(1) (#) ($)(2)
--------------------------- ---- --------- -------- ---------- ---------- ------------
Thomas W. Powell.................. 2000 315,000 0 6,000 0 33,329(3)
CEO of Company 1999 315,000 0 0 47,800 33,029(3)
1998 287,000 114,125 0 0 33,029(3)
David J. Dimlich.................. 2000 170,147 0 0 0 5,100
President of Transdyn 1999 153,470 97,684 0 12,200 4,800
1998 145,526 89,700 0 0 4,800
Adam Janas........................ 2000 145,612 124,164 707 0 5,100
President of Delta 1999 128,000 98,444 0 13,300 4,800
1998 125,000 85,400 1,921 0 4,800
M.M. Zeller....................... 2000 195,326 83,467 520 0 5,100
President of PEMCO 1999 191,000 0 0 20,000 4,800
1998 185,502 149,762 0 0 4,800
J.F. Ahart........................ 2000 174,000 0 2,005 0 5,100
CFO of Company(4) 1999 174,000 0 0 11,000 4,800
1998 165,681 49,805 0 0 4,800
Thomas C. Burtnett................ 2000 128,400 101,511 20 0 5,100
President of Unibus 1999 119,210 26,130 0 9,000 4,800
1998 113,500 71,400 0 0 4,800
---------------
(1) As of October 31, 2000, the aggregate number of shares of restricted stock
held by named executive officers of the Company was 10,043, and the value of
such shares as of such date was $109,870. These officers have the right to
receive dividends with respect to such restricted stock awards to the extent
dividends are paid generally on the Common Stock. However, the Company has
not previously paid dividends and it is not anticipated that dividends will
be paid in the immediate future. Such awards were made to these officers in
connection with their exercise of stock options granted by the Company,
pursuant to a provision in the stock option agreement designed to encourage
retention of shares received upon exercise of options.
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(2) Except as noted below with respect to Mr. Powell, each of the amounts in
this column are matching contributions by the Company to the executive
officer's account in the Company's Employees Incentive Savings Plan (a
401(k) plan).
(3) Of this amount, $5,100 for 2000, $4,800 for 1999, and $4,800 for 1998 were
matching contributions by the Company to Mr. Powell's account in the
Company's Employees Incentive Savings Plan (a 401(k) plan), and the
remaining $28,229 for all years were premiums paid by the Company with
respect to life insurance for the benefit of Mr. Powell.
(4) Mr. Ahart resigned all positions he held with the Company effective December
15, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ON EXERCISE REALIZED AT OCTOBER 31, 2000(#) OCTOBER 31, 2000($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- --------- ------------------------------ --------------------------
Thomas W. Powell........ 30,000 50,625.00 62,460/49,840 187,232.40/92,329.60
M. M. Zeller............ 17,000 57,375.00 30,300/21,200 96,525.00/39,040.00
David J. Dimlich........ -- 19,840/13,360 62,233.60/23,814.40
J. F. Ahart............. 14,500 24,468.75 24,300/13,200 78,063.00/21,472.00
Adam Janas.............. 6,600 22,275.00 16,160/14,640 41,665.00/25,961.60
Thomas Burtnett......... 1,300 10,968.75 12,000/10,400 29,718.00/17,568.00
Each of the named executive officers is covered by the Company's Executive
Severance Protection Plan, which provides severance pay and other specified
benefits upon termination of employment other than for cause (as defined in the
Plan) within three years of a change in control of the Company. The benefits
payable in such event (grossed up for taxes) are (1) three times the officer's
current annual base salary, plus (2) three times the maximum incentive
opportunity for the officer under the Company's then current Incentive
Compensation Plan, plus (3) continuation of medical, dental, and life insurance
benefits for three years or until the officer is covered under another plan,
whichever is earlier.
Thomas W. Powell is covered by the Company's Executive Benefit Plan.
Pursuant to Mr. Powell's Executive Benefit Agreement executed under such Plan,
he is entitled to the following payments: (1) if he should die while in active
employment with the Company, a lump sum benefit of $630,000 payable to his
designated beneficiary; (2) upon normal retirement on or after age 65 and the
completion of at least ten years of continuous employment, salary continuation
payments of $150,000 per year for five years and then $75,000 per year for ten
years; (3) upon termination of employment prior to qualifying for normal
retirement but after attaining age 55 and the completion of at least ten years
of continuous employment with the Company, the salary continuation payments
payable upon normal retirement, reduced by 1/2% for each month prior to age 65
that employment is terminated, commencing on the later of the date of retirement
or attainment of age 60; and (4) upon a sale of all or substantially all of the
property and assets of the Company other than in the usual course of its
business, or a merger of the Company wherein the Company is not the surviving
corporation, and within two years thereafter Mr. Powell's employment with the
Company is terminated or he resigns following a change of his position to one of
less responsibility, Mr. Powell would be entitled to receive salary continuation
payments of $150,000 per year for five years and then $75,000 per year
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for ten years. If Mr. Powell entered into competition with the Company following
termination or retirement described in (3) above, he would (a) forfeit all
further payments if the competition occurred within 36 months following
termination, or (b) not be entitled to any further payments until age 60, if the
competition occurred after 36 months following termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year of the Company, Joseph L. Becherer, Bonnie L.
Powell, and Robert C. Tranchon served on the Compensation Committee of the Board
of Directors of the Company. None of them has ever served as an officer of the
Company or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of your Board of Directors is
pleased to present to the shareholders its annual report on executive
compensation. This report summarizes the responsibilities of the Committee, the
compensation policy and objectives that guide the development and administration
of the executive compensation program, each major component of the program, and
the basis on which the compensation for the Chief Executive Officer, corporate
officers and other key executives was determined for the fiscal year ended
October 31, 2000.
The Compensation Committee, at the June 16, 2000 meeting of the Board of
Directors, recommended the adoption of a Non-Employee Director Stock Option Plan
for the benefit of members of the Board of Directors of the Company who, at the
time of their service, are not employees of the Company or any of its
affiliates, by providing them an opportunity to become owners of the common
stock of the Company, thereby advancing the best interest of the Company by
increasing their proprietary interest in the success of the Company and
encouraging them to continue in their present capacity. The Plan as presented by
the Compensation Committee was approved by the Board of Directors with an
effective date of June 25, 2000. The Plan provides, among other things, that a
total of 24,000 shares of the Company's common stock was reserved for issuance
under the Plan and that each eligible director would receive an annual grant of
an option to purchase 2,000 shares of the Company's common stock at the fair
market value of such stock on the date of such grant. At this same Board of
Directors meeting, grants of 2,000 shares each were made to the Company's six
non-employee directors.
The Compensation Committee, which held two meetings during the last fiscal
year, provides oversight on behalf of the full Board on development and
administration of the Company's executive compensation program and each
subcomponent plan under which officers or directors are eligible to participate.
The Compensation Committee also administers the Stock Option Plan, Directors Fee
Program and the Incentive Compensation Plan of the Company.
Executive Compensation Philosophy
The philosophy of the Committee is that the Company's executive
compensation program should be an effective tool for fostering the creation of
shareholder value. The following objectives guide the Committee in its
deliberations:
- Provide a competitive compensation program that enables the Company to
attract and retain key executives and Board members.
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- Assure a strong relationship between the performance results of the
Company or subsidiary and the total compensation received.
- Balance both annual and longer performance objectives of the Company.
- Encourage executives to acquire and retain meaningful levels of Common
Stock of the Company.
- Work closely with the Chief Executive Officer to assure that the
compensation program supports the management style and culture of the
Company.
In addition to normal employee benefits, the executive total compensation
program includes base salary, annual cash incentive compensation, and longer
term stock based grants and awards.
Comparisons are made and surveys taken periodically to determine
competitive compensation levels and practices for certain benchmark positions in
the Company. Such analysis covers broad group of manufacturing companies, and
the results are adjusted for differences in factors such as company size and
position responsibilities. This comparison group is broader than the published
industry index of companies included in the cumulative total return performance
graph presented elsewhere in this Proxy Statement because it is more
representative of the executive market in which the Company competes for talent
and provides a consistent and stable market reference from year to year. Other
comparative information from national survey databases, proxy statement
disclosures, and general trend data provided by compensation consultants is also
considered.
Variable incentives, both annual and longer term, are important components
of the program and are used to link pay and performance results. Variable
incentive awards and performance standards are calibrated such that total
compensation will generally approximate the market 50th percentile when Company
performance results are at target levels which approximate the recent historical
performance of the Company (subject to certain minimum target levels), and will
exceed the 50th percentile when performance exceeds targets. However, changes in
the mission and strategy of the Company or certain of its subsidiaries as well
as projected profit and growth are also important considerations in the
calibration of the Company's total executive compensation program.
The Internal Revenue Code (Section 162(m)) imposes a $1,000,000 limit, with
certain exceptions, on the deductibility of compensation paid to each of the
five highest paid executives. In particular, compensation that is determined to
be "performance based" is exempt from this limitation. To be "performance
based," incentive payments must use predetermined objective standards, limit the
use of discretion in making awards, and be certified by the Compensation
Committee made up of "outside directors." While the Committee believes that the
use of discretion is appropriate in specific circumstances, it believes that the
annual incentive compensation and longer term stock plans comply with the
provisions of Section 162(m) as "performance based." It is not anticipated that
any executive will receive compensation in excess of this limit during fiscal
year 2001. The Committee will continue to monitor this situation and will take
appropriate action if it is warranted in the future.
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Following is a discussion of each of the principal components of the
executive total compensation program.
BASE SALARY
The base salary program targets the median of the primary comparison group
for corporate officers and managers. Since subsidiary presidents generally have
a higher incentive opportunity relative to comparable positions in the market,
base salaries for subsidiary presidents are targeted somewhat below the market
median. Each executive's base salary is reviewed individually each year. Salary
adjustments are based on the individual's experience and background, performance
during the prior year, the general movement of salaries in the marketplace, and
the Company's financial position. Due to these factors, an executive's base
salary may be above or below the target point at any point in time.
ANNUAL INCENTIVE COMPENSATION
The Company administers an annual incentive plan for its corporate officers
and managers, and subsidiary presidents and selected subsidiary managers. The
goal of the plan is to reward participants in proportion to the performance of
the Company and/or the subsidiary for which they have direct responsibility, and
their individual contributions to the Company's performance.
The amount of annual incentive compensation each participant is eligible to
earn varies based on his potential contribution to the future performance of his
subsidiary or the Company. The amount of such compensation actually earned by
each participant is based on the actual financial performance of his subsidiary
or the Company for the year compared to profit and growth target ranges which
are set at the beginning of that year. Historical performance, current mission
and strategy, and projected profit and growth capability are considered in
setting the targets for each subsidiary and the Company.
STOCK BASED COMPENSATION
Stock ownership is encouraged through the use of a stock plan that provides
for the grant of stock options and stock awards. Stock option grants are made on
a periodic basis (typically every other year) and are based on competitive
multiples of base salary. Senior executives typically have a higher multiple
and, as a result, have a greater portion of their total compensation linked to
the longer term success of the Company. In determining the appropriate grant
multiples, the Company targets the market median among publicly held
manufacturing companies of similar size. To encourage stock retention,
participants who retain the shares obtained through the exercise of an option
receive a restricted stock award equal to one additional restricted share for
every five option shares retained for five years from the date they were
acquired.
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Compensation of the Chief Executive Officer
The Chief Executive Officer, Mr. Thomas W. Powell, participates in the
executive compensation program described in this report.
In establishing the total compensation program for Mr. Powell, the
Committee assessed the pay levels for CEOs in similar companies in the
manufacturing industry and the profit performance of the Company.
Respectfully submitted,
The Compensation Committee of the Board of Directors
Joseph L. Becherer, Chairman
Bonnie L. Powell
Robert C. Tranchon
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG POWELL INDUSTRIES, INC.,
NASDAQ MARKET INDEX AND PUBLISHED INDUSTRY INDEX
[PERFORMANCE GRAPH]
POWELL INDUSTRIES, INDUSTRIAL NASDAQ MARKET
INC. ELECTRICAL EQUIP. INDEX
------------------ ----------------- -------------
1995 100.00 100.00 100.00
1996 152.73 111.34 117.43
1997 214.55 179.74 153.90
1998 134.55 147.83 174.02
1999 110.91 186.00 287.23
2000 159.10 235.17 337.82
Assumes $100 Invested On October 31, 1995
Assumes Dividends Reinvested
Fiscal Year Ended October 31, 2000
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PROPOSAL TO APPROVE THE AMENDMENT
OF THE 1992 POWELL INDUSTRIES, INC.
STOCK OPTION PLAN
GENERAL
The Board of Directors believes that the Powell Industries, Inc. Stock
Option Plan (the "Plan") has been of material benefit to the Company. However,
the current Plan provides that the total number of shares of Common Stock of the
Company with the respect to which options and other awards may be granted under
the Plan is 1,500,000, and only 225,864 shares remain available for grants under
the Plan. The Board believes that it is in the best interest of the Company and
its stockholders to amend the Plan to increase the maximum number of shares of
Common Stock of the Company with the respect to which grants may be made under
the Plan from 1,500,000 to 2,100,000 to enable the Company to continue to
provide officers and other key employees an opportunity to acquire a proprietary
interest in the Company through the acquisition of its Common Stock, thereby
rewarding employees for meritorious service and helping them to develop a
stronger incentive to work for the continued success of the Company and
assisting the Company in attracting and retaining outstanding personnel in
today's competitive labor market.
On January 30, 2001 the Board of Directors approved such amendment of the
Plan, subject to and contingent upon approval by the Company's stockholders of
such amendment. At the annual meeting of stockholders, the stockholders will be
asked to approve the amendment to the Plan to increase the maximum number of
shares available under the Plan from 1,500,000 shares of the Company's Common
Stock to 2,100,000 shares (subject to adjustment in the event of stock
dividends, stock splits, and other contingencies).
DESCRIPTION OF THE PLAN
The description of the principal provisions of the Plan set forth herein is
intended solely as a summary and is subject to and qualified by the full text of
the Plan. The principal features of the Plan are as follows:
Administration. The Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"). The Committee has the authority,
subject to the provisions of the Plan, to determine the employees (except as
noted in "Eligibility" below) to whom awards, options, or stock appreciation
rights may be granted; to determine the number of shares and purchase or
exercise price of each award or option; to determine the terms, conditions, and
restrictions of each award or option; to determine whether or not to include in
any award or option the right of the recipient or optionee to surrender all or a
portion of an award or option and receive in exchange therefor an amount in cash
or other property and to determine the terms and conditions of any such
surrender rights; to determine the effect, if any, on an award or option of the
death, disability, retirement, or termination of employment of the employee
receiving an award or option; and to otherwise construe, interpret, and
administer the Plan.
Eligibility. Any employee of the Company or any subsidiary of the Company
is eligible to participate in the Plan, except that no member of the Committee
may receive an award or option if receipt of it would cause the individual not
to be a "Disinterested Person" as defined in Rule 16b-3 under the Securities
Exchange Act of 1934. There are approximately 1,300 employees of the Company and
its subsidiaries. However, since the Plan provides that future as well as
present employees may participate, it is not possible to determine the number of
employees who will be eligible to participate. Further, since receipt of
benefits under the Plan depends upon the particular grants made from time to
time by the Committee, in its discretion, it is not possible to determine the
amounts that will be received under the Plan as a result of this proposed
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amendment, or that would have been received during the last fiscal year had such
amendment been in effect, by the executive officers listed in the Summary
Compensation Table above, by all current executive officers as a group, or by
all employees (no current directors of the Company who are not executive
officers of the Company are currently eligible to participate in the Plan).
Purchase Price. The Committee has the authority to determine the purchase
price, if any, for awards of Common Stock and the exercise price for stock
options. The purchase price may be less than the fair market value of the stock.
The Committee may determine the consideration, if any, to be received by the
Company for granting or extending an award or stock option.
Awards and Options and Stock Appreciation Rights. The Plan provides for
the award of restricted stock, the grant of nonincentive stock options,
including reload options, and the grant of stock appreciation rights, all with
respect to the Common Stock of the Company.
AWARDS: The Committee may grant an award of Common Stock to a participant
pursuant to a Restricted Stock Agreement. The Committee may vary the terms and
conditions of each award, including without limitation, the period (not to
exceed 10 years) during which the award may be restricted or exercised, the
manner of exercise, the vesting period, the price to be paid for the stock, if
any, and the events which may result in termination of award rights. Unless
expressly provided otherwise in the award, the participant's unexercised rights
will expire upon termination of employment.
OPTIONS: Options granted under the Plan will be nonincentive or
nonqualified stock options ("NSO") which are options that do not meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). In 1999, the Board of Directors amended the Plan to provide that
the Plan would remain in effect until no grants and no further shares remain
outstanding or available under the Plan. This action by the Board of Directors
in renewing and amending the Plan had the effect of eliminating grants under the
Plan of incentive stock options meeting the requirements of Section 422 of the
Code. Additionally, the Plan authorizes the issuance of reload options and stock
appreciation rights ("SARs") (discussed below) as part of the stock options.
OPTION PRICE: The price and terms at which the participant may purchase
shares of Common Stock subject to a NSO or SAR shall be determined by the
Committee in its discretion, but the option price may not be less than the par
value of the stock. Shares purchased pursuant to options must be paid in full at
the time of exercise. Such payment may be made in the form of cash, Company
Common Stock, or other form of payment acceptable to the Committee. As of
January 30, 2001, the market value of the Common Stock was $13.50 per share.
TERMS OF OPTIONS: No option is exercisable after the expiration of ten
years from the date of grant, or five years in the case of a 10% shareholder.
Unless the option agreement provides otherwise, all options terminate
immediately upon severance of employment from the Company for any reason other
than death, retirement for age or disability under then established rules of the
Company, or severance for disability. In these cases, an extended exercise
period is provided, but the exercise period as extended cannot exceed the
original option period. At the time of exercise, the optionholder must satisfy
any additional conditions imposed by the Committee at the time of grant. Unless
the shares purchased pursuant to an option are effectively registered under the
Securities Act of 1933, as amended, at the time of exercise, the optionee must
represent and agree that such shares are being purchased for investment.
RELOAD OPTIONS: The Committee may grant reload options in connection with
issuance of an NSO. Under a reload option, if the exercise of the stock option
is paid in whole or in part in Common Stock, the
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reload option will (1) result in issuance of additional options for the same
numbers of shares of Company Stock surrendered; (2) be an NSO; and (3) be
subject to the same terms and conditions as the original option unless a change
is specifically provided.
STOCK APPRECIATION RIGHTS: The Plan provides that the Committee may, at
its discretion, grant stock appreciation rights ("SARs") to some or all
optionholders at the time of grant of an option. Each SAR granted with an option
will be exercisable at the times and to the extent that the related stock
options (the "Related Option") are exercisable. At the time of exercise, the
holder will become entitled to receive, in cash and/or shares of Common Stock at
the discretion of the Committee, the difference between the fair market value of
one share of Common Stock and the exercise price per share specified in the
Related Option, multiplied by the number of shares in respect of which the SAR
was exercised. The Plan also authorizes the Committee to issue SARs which are
not a part of a Related Option. The exercise price and terms of these SARs shall
be specified by the Committee in the Stock Appreciation Rights Agreement
granting the SAR.
PARTICIPATION: Stock options, SARs, and awards may be granted to officers
and key employees (including those who are directors, except as provided above),
as selected by the Committee. The Committee selects participants and determines
the conditions of exercisability of options.
FORFEITURE: If the Committee finds that a participant has been discharged
for fraud, embezzlement, theft, commission of a felony, or proven dishonesty in
the course of employment, which conduct has damaged the Company, or if a
participant has participated, engaged, or had a financial interest, whether as
an employee, officer, director, consultant, contractor, shareholder, owner or
otherwise, in any commercial endeavor in the United States which is competitive
with the business of the Company without the written consent of the Company, the
participant shall forfeit all options, reload options, SARs and awards which
have not vested and for which the Company has not delivered a stock certificate.
Amendment and Termination. The Board of Directors may suspend or
discontinue the Plan and may amend the Plan with respect to shares at the time
not subject to unexercised options of awards, but may not (except with
stockholder approval) change the number of shares subject to the Plan or change
the class of employees and others eligible to participate.
Tax Status. NSOs -- Under current interpretations of the Code, the grant
of a NSO to a Plan participant will not result in the recognition of any taxable
income by the participant. A participant will recognize income at the date of
exercise of a NSO on the difference between (i) the fair market value of the
shares acquired pursuant to the exercise of the NSO, and (ii) the exercise price
of the NSO. With regard to a participant who is an Insider, taxation arising by
virtue of the exercise of the NSO will be deferred until the sale of the shares
acquired would no longer subject the participant to the Section 16(b)
Restrictions, unless the participant elects to be taxed on the date of exercise
of the NSO. A participant who exercises his option more than six months after
the date of grant of such option would not be subject to Section 16(b)
Restrictions at the time of exercise.
The Company will be entitled to a deduction in the same amount as the
income recognized by a participant due to the exercise of a NSO.
SARs -- Under current interpretations of the Code, the grant of a SAR to a
participant will not result in recognition of any taxable income by the
participant. If a participant receives cash upon exercise of a SAR, he will
recognize ordinary income upon exercise in an amount equal to the payment
received. If a participant receives stock upon exercise of a SAR, he will
recognize ordinary income at the date of exercise in the same manner and amount
as described above with respect to the exercise of a NSO.
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The Company will be entitled to a deduction in the same amount as the
income recognized by the participant due to the exercise of a SAR.
Awards -- Generally, the participant will be taxed at the time the
restrictions on the subject stock lapse and the stock vests in the participant
or is transferable by the participant. At that time, the participant would
recognize ordinary income determined by the fair market value of the stock in
excess of the price, if any, paid by the participant for the stock.
The Company will be entitled to a deduction in the same amount as the
income recognized by the participant related to an award of stock, in the year
so recognized.
MATERIAL DIFFERENCE FROM THE EXISTING PLAN
The only difference between the existing Plan and the Plan as proposed to
be amended is that the maximum number of shares of the Common Stock of the
Company which may be issued under the Plan would be increased from 1,500,000 to
2,100,000 (subject to adjustment in the event of stock dividends, stock splits,
and other contingencies).
APPROVAL
Pursuant to the resolution of the Board of Directors approving this
amendment to the Plan, this amendment will not become effective until it is
approved by the holders of a majority of the shares of voting stock of the
Company present and entitled to vote at a meeting of the stockholders of the
Company at which a quorum is present.
The Board of Directors recommends a vote FOR approval of this amendment of
the Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater-than-ten percent stockholders are required by
the regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on the Company's review of the copies of such forms received
by it, or written representations from certain reporting persons that no Form 5
reports were required for those persons, the Company believes that all filing
requirements applicable to its officers and directors and greater-than ten
percent beneficial owners during the 2000 fiscal year were complied with, except
that Mr. Robert C. Tranchon, a director of the Company, failed to file one
report reflecting one transaction that was not reported on a timely basis, and
Mr. Thomas C. Burtnett, President of Unibus, filed one late report reflecting
one transaction that was not reported on a timely basis.
INDEPENDENT AUDITORS
Arthur Andersen LLP has been selected to serve as independent auditors of
the Company for the fiscal year ending October 31, 2001, and also served as the
principal accountants of the Company for the fiscal year ending October 31,
2000. Representatives of such firm are expected to be present at the Annual
Meeting of Stockholders. They will have the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to appropriate
questions.
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AUDIT FEES
The aggregate fees billed for professional services rendered by the
Company's independent auditors for the audit of the Company's annual financial
statements for the fiscal year ended October 31, 2000 and for the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year were approximately $246,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company's independent auditors did not perform any financial
information system design or implementation work for the Company during the
fiscal year ended October 31, 2000.
ALL OTHER FEES
The aggregate fees billed for all other professional services rendered by
the Company's independent auditors for the fiscal year ended October 31, 2000
were approximately $86,900. The Audit Committee considered whether, and has
determined that, the provision of these services is compatible with maintaining
the independent auditor's independence.
OTHER MATTERS
As of the date of this statement, the Board of Directors has no knowledge
of any business which will be presented for consideration at the meeting other
than the election of three directors of the Company and the proposed amendment
of the Company's 1992 Stock Option Plan. Should any other matters be properly
presented, it is intended that the enclosed proxy will be voted in accordance
with the best judgment of the persons voting the matter.
ANNUAL REPORT
A Summary Annual Report to Stockholders and an Annual Report on Form 10-K
covering the fiscal year of the Company ended October 31, 2000 are enclosed
herewith. These reports do not form any part of the material for solicitation of
proxies.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the Annual Meeting of
Stockholders to be held in 2002 must be received at the office of the Secretary
of the Company no later than October 1, 2001 in order to be included in the
Company's proxy statement and form of proxy relating to that meeting.
A shareholder that intends to present business at the 2002 annual meeting
and has not submitted such proposal by the date set forth above must notify the
Company no later than January 6, 2002. If such notice is received after January
6, 2002, then the notice will be considered untimely, and the Company is not
required to present such business at the 2002 annual meeting.
By Order of the Board of Directors
Thomas W. Powell
Chairman and Chief Executive Officer
Dated: January 31, 2001
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APPENDIX A
POWELL INDUSTRIES, INC.
AUDIT COMMITTEE CHARTER
WHEREAS, the Board of Directors of Powell Industries, Inc. has since its
inception maintained a standing committee designated the Audit Committee, and
WHEREAS, it is the intent of the Board in recognition of its
responsibilities to reaffirm and ratify the Statement of Duties and
Responsibilities of the Audit Committee,
THEREFORE, BE IT RESOLVED THAT,
AUTHORITY
The Audit Committee is granted the authority to perform each of the
specific duties listed under "Specific Duties" in this Charter and upon
direction of the Board of Directors to investigate any activity of the Company.
In addition, the Chairman of the Board may from time to time direct specific
assignments to the Audit Committee. All employees and consultants are directed
to cooperate as requested by members of the Committee to assist the Committee in
fulfilling its responsibilities. The Committee is required to notify the Board
of Directors of any intent to retain consultants and must have Board approval
before entering into any consulting agreement.
RESPONSIBILITY
The Audit Committee has the responsibility to assist the Board of Directors
in fulfilling its fiduciary responsibilities as to accounting policies and
reporting practices of the Company and all subsidiaries and the sufficiency of
the audits of all Company activities. It is the Board's agent in ensuring the
integrity of financial reports of the Corporation and its subsidiaries, and the
adequacy of disclosures to shareholders. The Audit Committee is the focal point
for communication between other Directors, the independent auditors, internal
auditors, and management as their duties relate to financial accounting,
reporting and controls.
The Audit Committee is responsible for ensuring its receipt from the
outside auditors a formal written statement delineating all relationships
between the auditors and the Company, consistent with Independence Standards
Board Standard No. 1, and that the Audit Committee is also responsible for
actively engaging in a dialogue with the auditors with respect to any disclosed
relationships or services that may impact the objectivity and independence of
the auditors and for taking, or recommending that the full Board take,
appropriate action to ensure the independence of the outside auditors.
The Audit Committee is responsible for inquiring of management and
determining that adequate internal control systems and policies are in place to
control business and financial reporting risks.
COMPOSITION
The Audit Committee shall be composed of not less than three Directors who
are qualified and independent. Members of the Committee shall be financially
literate or become financially literate within a reasonable period of time after
appointment to the Committee. At least one member of the Committee must
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have accounting or related financial management expertise. Committee members are
independent, if they have not for the past three years been employed by, or
currently have a significant business relationship with, Powell Industries,
Inc., its executives or an affiliate of Powell Industries, Inc.
One of the members of the Committee shall be appointed Committee Chairman
by the Chairman of the Board of Directors. Appointments of members and Chairman
shall be made at the Board meeting following the Annual Shareholders' Meeting.
An appointment to the Committee shall be made by nomination from the Chairman of
the Board, with approval of the Board and recorded in the Minutes of the Board
of Directors.
MEETING
The Committee shall hold quarterly meetings and as many additional special
meetings as necessary to complete their assigned duties. The quarterly meetings
are to be scheduled to review quarterly financial results and to review the
quarterly reports prior to release.
ATTENDANCE
All members of the Committee should be present at all meetings. All members
of the Board of Directors may attend any Audit Committee meeting. The Chairman
will designate any absences as "excused" or "unexcused" in the minutes of the
meeting. The report of attendance will reflect presence or absence without
reference to whether or not the absence is excused. The Chairman may request
that members of management, the Director of Internal Audit and representatives
of the independent accountants be present.
MINUTES
Minutes of each meeting will be prepared and distributed to all members of
the Board of Directors. The permanent file of the Minutes will be maintained by
the Secretary of the Corporation.
SPECIFIC DUTIES
The Audit Committee, in consultation with the Chief Executive Officer and
the Chief Financial Officer, shall perform an annual review of performance of
the independent accounting firm or firms and recommend to the Board of Directors
the firm or firms to be selected for examination of the financial statements of
the Corporation and its subsidiaries. The recommendation shall include the scope
of the audit and the estimated fees to be paid.
The Audit Committee shall review and approve the recommendation of
management for the scope of the annual audit.
The Audit Committee shall review and approve management's recommended
Annual Report to the Shareholders, and the annual financial statements,
including all financial discussions and disclosures.
The Audit Committee shall review with the independent public accountants
the recommendations included in the management letter and the informal
observance, competence and adequacy of the financial, accounting, and internal
audit control procedures of the Corporation and its subsidiaries. On the basis
of this review the Audit Committee shall make recommendations to the Board for
any changes which seem appropriate.
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The Audit Committee shall review with the independent public accountants
and financial management of the Company the disposition of the recommendation(s)
from the previous audits.
The Audit Committee shall make an independent determination whether any
professional services to be provided by the public accounting firm would
adversely affect the independence of the firm and its ability to render
impartial review and judgement.
The Audit Committee shall determine by interview with the public accounting
firm if there were restrictions imposed by management on the scope of conduct of
any audit or examination.
The Audit Committee shall consult with general counsel, corporation
financial management, and the independent accountants to confirm compliance with
public law and accounting practices relating to financial reports of the
Corporation and its subsidiaries, the absence of conflicts of interest of
Directors and officers, and compliance with the provisions of the Foreign
Corrupt Practices Act.
Annually, the Audit Committee shall review its own charter and report the
results of that review and any recommendations to the Board of Directors.
REPORTS
At each meeting of the Board of Directors the Chairman shall present an
oral report of activities and the status of any ongoing studies or
investigations.
The Audit Committee shall prepare and approve an Audit Committee Report to
be included in the Company's Proxy Statement stating that it has satisfied the
responsibilities under this Charter.
ANNUAL REVIEW
This Charter was revised by the Audit Committee in May, 2000 to ensure
compliance with (1) the new Securities and Exchange Commission Final Rule, 17
CFR Parts 210, 228, 229, and 240 (Release No. 34-42266; File No. S7-22-99) RIN
3235-AH83, and (2) the National Association of Securities Dealers Rulemaking:
Order Approving the Audit Committee Requirements and Notice of Filing and Order
Granting Accelerated Approval of Amendments No. 1 and No. 2 thereto, dated
December 14, 1999.
The Audit Committee shall include in its standing agenda for the January
meeting a self-assessment of skill requirements (including financial literacy
and independence). The results of that self-assessment and any skill enhancement
plans or issues will be reported to the Board of Directors
BOARD ACTION
By motion unanimously approved, the Board of Directors approved this
Resolution of June 16, 2000.
/s/ J. F. AHART
------------------------------------
J. F. Ahart
Secretary
/s/ THOMAS W. POWELL
------------------------------------
Thomas W. Powell
Chairman
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FRONT SIDE OF PROXY
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POWELL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 16, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Thomas W. Powell and Stephen W. Seale, Jr.,
and each of them, attorneys and agents with full power of substitution to vote
all shares of common stock of Powell Industries, Inc. which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of Powell Industries, Inc., to be held at the offices of Powell
Industries, Inc., 8550 Mosley, Houston, Texas, at 11:00 a.m. Houston time, on
March 16, 2001 and at any adjournment thereof, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF ALL NOMINEES
1. [ ] FOR the election (except as indicated below) to the Board of Directors,
class of 2004, of Thomas W. Powell, Lawrence R. Tanner and Joseph L.
Becherer.
Instructions: To withhold authority to vote for an individual
nominee, write that nominee's name on the line provided
below.
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[ ] WITHHOLD authority to vote for all nominees listed above.
(continued on reverse side)
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28
BACK SIDE OF PROXY
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(continued from other side)
2. [ ] FOR amendment of the Powell Industries, Inc. 1992 Stock Option Plan
[ ] AGAINST such amendment [ ] ABSTAIN with respect to such amendment
3. In their discretion with respect to (1) any other matters as may properly
come before the meeting and any adjournment thereof, (2) approval of the
minutes of the prior meeting, if such approval does not amount to
ratification of the action taken at that meeting, (3) the election of any
other person as a director if a nominee named above is unable to serve or
for good cause will not serve, and (4) matters incident to the conduct of
the meeting.
If properly executed, this proxy will be voted as directed above.
IF NO DIRECTION IS INDICATED WITH RESPECT TO THE ABOVE PROPOSALS, THIS
PROXY WILL BE VOTED "FOR" THE BOARD OF DIRECTORS' NOMINEES.
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(PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD
INDICATE THE CAPACITY IN WHICH SIGNING.)
DATED: __________________________, 2001
IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE!
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