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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Powell Industries, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Dated Filed:
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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 19, 1999
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 19, 1999 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 2002; and
2. 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 January 20, 1999 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
J. F. Ahart
Vice President and
Secretary
Houston, Texas
January 8, 1999
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POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
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PROXY STATEMENT
JANUARY 8, 1999
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 19, 1999
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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 19, 1999 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, 1998, including consolidated financial statements, will be mailed to
stockholders on or about February 8, 1999. The cost of soliciting proxies in the
enclosed form will be borne by the Company. The Board of Directors of the
Company has fixed January 20, 1999, as the record date for determination of
stockholders entitled to receive notice of and to vote at the Annual Meeting.
There are 10,660,679 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 three persons receiving the greatest number of votes cast at the
meeting to fill the directorships with terms to expire in 2002 will be elected
as directors of the Company, class of 2002. 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 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.
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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 8, 1999 (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
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
------------------------------------ ----------------- ----------------
Thomas W. Powell...................................... 2,959,895(1) 27.61%
P.O. Box 12818
Houston, Texas 77217
Heartland Advisors, Inc............................... 1,053,300(2) 9.89%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Fidelity Management & Research Co..................... 1,027,500(3) 9.64%
82 Devonshire Street
Boston, Massachusetts 02109
Bonnie L. Powell...................................... 939,865(4) 8.82%
1435 Bendwood
Houston, Texas 77024
Wellington Trust Company, NA.......................... 817,500(5) 7.67%
75 State Street
Boston, Massachusetts 02109
Klein Bank,........................................... 755,066(6) 7.08%
Trustee of the Powell Industries, Inc.
Employee Stock Ownership Trust
and of the Powell Industries, Inc.
Frozen Stock Ownership Trust
P.O. Box 73249
Houston, Texas 77273
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(1) Mr. Powell has sole voting power and sole investment power with respect to
2,582,512 of such shares. Of those 2,582,512 shares, 947,007 are held
directly by Mr. Powell, 78,720 by his IRA, and 1,556,785 by Palfam,
Incorporated, a corporation controlled by Mr. Powell. Also includes 317,360
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 2,104 shares allocated to the account of Mr.
Powell under the Powell Industries, Inc. Employee Stock Ownership Plan (see
footnote (6) to this table) and 919 shares
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held in trust for the account of Mr. Powell under the Employees Incentive
Savings Plan of the Company. Mellon Bank, N.A. 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, 1998. Also includes 57,000 shares subject
to stock options which are currently exercisable by Mr. Powell.
(2) As of December 2, 1998, based on a NASDAQ report. According to a Schedule
13G dated February 2, 1998, Heartland Value Fund 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
held on February 2, 1998, and sole voting power as to 873,500 of such
shares.
(3) As of December 2, 1998, based on a NASDAQ report. According to a Schedule
13G dated February 14, 1998 filed by FMR Corp., the parent of Fidelity
Management & Research Company, such stock is held on behalf of Fidelity
Low-Priced Stock Fund. Also according to such Schedule 13G, such Fund's
Board of Directors 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.
(4) Mrs. Powell has sole voting power and sole investment power with respect to
594,365 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 2, 1998, based on a NASDAQ report. According to a Schedule
13G dated January 14, 1998 filed by Wellington Management Company, LLP, the
parent of Wellington Trust Company, NA, Wellington Management Company, LLP
had sole dispositive power over all shares held on such date, and sole
voting power as to 362,500 of such shares.
(6) Of such shares, 722,131 are held in the Powell Industries, Inc. Employee
Stock Ownership Trust (the "ESOP") and 32,935 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, 1998, approximately 214,865
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, 1998, 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, 1998 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 December 1, 1998.
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The following table sets forth, as of January 8, 1999, except for plan
share data (see footnotes (1) and (6) 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................................................ 37,395(2) *
Joseph L. Becherer........................................ 1,000 *
Eugene L. Butler.......................................... 2,000 *
David J. Dimlich.......................................... 12,623(3) *
Adam Janas................................................ 18,090(4) *
Bonnie L. Powell.......................................... 939,865(5) 8.82%
Thomas W. Powell.......................................... 2,959,895(6) 27.61%
Stephen W. Seale, Jr...................................... 3,000(7) *
Lawrence R. Tanner........................................ 2,500 *
M.M. Zeller............................................... 42,671(8) *
All Executive Officers and Directors as a group (13
persons)................................................ 4,047,655(9) 37.44%
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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 9,525 of such shares.
Also includes 1,870 shares allocated to Mr. Ahart's account in the ESOP. See
footnote (6) to the preceding table. Also includes 26,000 shares subject to
stock options which are currently exercisable by Mr. Ahart.
(3) Mr. Dimlich has sole voting and investment power over 3,000 of such shares.
Also includes 623 shares allocated to Mr. Dimlich's account in the ESOP. See
footnote (6) to the preceding table. Also includes 9,000 shares subject to
stock options which are currently exercisable by Mr. Dimlich.
(4) Mr. Janas has sole voting and investment power over 5,088 of such shares.
Also includes 1,902 shares allocated to Mr. Janas' account in the ESOP. See
footnote (6) to the preceding table. Also includes 11,100 shares subject to
stock options which are currently exercisable by Mr. Janas.
(5) See footnote (4) to the preceding table.
(6) See footnote (1) to the preceding table.
(7) Such shares are held by Seale Land & Cattle Co., a corporation controlled by
Mr. Seale.
(8) Mr. Zeller has sole vesting and investment power over 10,080 of such shares.
Also includes 1,891 shares allocated to Mr. Zeller's account in the ESOP.
See footnote (6) to the preceding table. Also includes 30,700 shares subject
to stock options which are currently exercisable by Mr. Zeller.
(9) Includes 925 shares that are held in trust for an executive officer not
named above under the Employees Incentive Savings Plan of the Company. See
footnote (1) to the preceding table. Also includes 2,351 shares held in
trust for the accounts of certain executive officers not named above under
the ESOP. See footnote (6) to the preceding table. Also includes 17,940
shares subject to stock options which are currently exercisable by certain
executive officers not named above. Also includes 7,400 shares over which
certain executive officers not named above have sole voting and investment
power.
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ELECTION OF DIRECTORS
The terms of three directors expire in 1999 under the bylaws of the
Company. The terms of the remaining directors continue after the Annual Meeting.
The Board of Directors has nominated J.F. Ahart, Eugene L. Butler, and Bonnie L.
Powell for election as directors with terms to expire in 2002. Each of such
nominees currently serves as a director of the Company with a term expiring in
1999. Although the Board of Directors does not contemplate that any of the
nominees 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 OFFICES HELD DIRECTOR TERM
NOMINEES AGE PAST FIVE YEARS(1) WITH COMPANY SINCE EXPIRES
-------- --- -------------------------------- --------------- -------- -------
J.F. Ahart..................... 57 Vice President, Secretary, (2) 1996(3) 1999
Treasurer, and Chief Financial
Officer of the Company since
1989(2)
Eugene L. Butler............... 58 Chairman of the Board and CEO of Director 1990 1999
Ponder Industries, Inc., an
oilfield services company, April
1997 to present (also has served
as director since January 1996);
Chairman of the Board,
Intercoastal Terminal, Inc.,
April 1991 to April 1997; CEO,
Chairman, and a director of
Petrominerals Corporation, April
1993-April 1995
Bonnie L. Powell............... 65 Private investor for more than Director 1986 1999
the past five years
DIRECTORS REMAINING PRINCIPAL OCCUPATION FOR OFFICES HELD DIRECTOR TERM
IN OFFICE AGE PAST FIVE YEARS(1) WITH COMPANY SINCE EXPIRES
------------------- --- -------------------------------- --------------- -------- -------
Stephen W. Seale, Jr........... 59 Retired; previously Director- Director 1985 2000
Operations, Materials and
Structures Division and other
assignments at Southwest
Research Institute, an
independent research and
development organization, until
January 1998
Thomas W. Powell............... 58 Chairman of the Board, President Director, 1984 2001
and Chief Executive Officer of Chairman of the
the Company since 1984 Board,
President and
Chief Executive
Officer
Lawrence R. Tanner............. 72 Manager, Technical Services for Director 1992 2001
Compaq Computer Corp.
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DIRECTORS REMAINING PRINCIPAL OCCUPATION FOR OFFICES HELD DIRECTOR TERM
IN OFFICE AGE PAST FIVE YEARS(1) WITH COMPANY SINCE EXPIRES
------------------- --- -------------------------------- --------------- -------- -------
Joseph L. Becherer............. 56 Retired; previously, Senior Vice Director 1997 2001
President of Eaton Corporation,
September 1995-October 1997 with
responsibility for the Cutler
Hammer Group; Operations Vice
President of Cutler Hammer, a
subsidiary of Eaton Corporation,
February 1994-September 1995;
Manager, Westinghouse Electric
Corporation's Distribution and
Control Business Unit, 1990-
January 1994 (which was sold to
Eaton Corporation and combined
with its Cutler Hammer
business).
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(1) None of the corporations listed (other than the Company) is an affiliate of
the Company.
(2) Mr. Ahart is the Chief Financial Officer, Vice President, Secretary, and
Treasurer of the Company. He also serves as a Vice President and the
Secretary and Treasurer of each subsidiary of the Company.
(3) Mr. Ahart also served as a director of the Company from January of 1990 to
March of 1992.
Bonnie L. Powell is the widow of William E. Powell, the father of Thomas W.
Powell and the founder of the Company.
Only those 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).
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
served.
The Board of Directors has a standing Audit Committee which met 4 times
during the last fiscal year. The Audit Committee consists of Messrs. Seale,
Butler, 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
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communication between other directors, the independent auditors, internal
auditor and management as their duties relate to financial accounting,
reporting, and controls.
The Board of Directors also has a standing Compensation Committee which met
4 times during the last fiscal year. The Compensation Committee consists of Mr.
Becherer, Mrs. Powell, and Mr. Seale. During the year it consults with
management regarding the compensation and benefits that are provided to the
directors, officers, and employees of the Company. The Compensation Committee
also administers the Stock Option Plan and Incentive Compensation Plan of the
Company.
The Board of Directors does not have a standing nominating committee.
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)
- ---- --- ----- -----------
Robert L. Mitchell..................... 65 1990 Controller of the Company
Thomas C. Burtnett..................... 55 1993 President of Unibus,Inc.
David J. Dimlich....................... 52 1994 President of Transdyn Controls, Inc.
("Transdyn")
Adam Janas............................. 60 1984 President of Delta-Unibus Corp.
("Delta")
Thomas W. Keiser....................... 54 1998 President of Powell-ESCO Company
M. M. Zeller........................... 60 1990 President of Powell Electrical
Manufacturing Company ("PEMCO")
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(1) Each of the corporations listed (other than the Company) is a subsidiary of
the Company.
Mr. Mitchell has been Controller of the Company since July 1, 1990.
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. He previously served as
Senior Vice President of Dynalectric Company and President of B & B Insulation
Company, specialty contractors.
Mr. Janas has served as President of Delta since 1984.
Mr. Keiser was elected as President of Powell-ESCO Company on September 25,
1998. From 1996 to 1998 he was the General Manager of Keiser, Inc. dba C&S
Trailer World, Inc., a dealer and manufacturer of horse, stock, utility, and
enclosed trailers. Previously, he had served as a General Manager of Siemens
Energy & Automation, Inc., a manufacturer of electrical equipment and a
subsidiary of Siemens AG.
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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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Donald W. Owen served as President of Powell-ESCO Company from April 1,
1998 to September 25, 1998 and failed to file a Form 3 required by Section 16 of
the Securities Exchange Act of 1934 upon his election to that office.
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
four most highly compensated executive officers for the last fiscal year (other
than the CEO) whose total annual salary and bonus exceeded $100,000, for each of
the Company's fiscal years ending October 31, 1998, October 31, 1997, and
October 31, 1996.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION AWARDS
----------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
RESTRICTED SECURITIES ALL
STOCK UNDERLYING OTHER
SALARY BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)(2)
- --------------------------- ---- ------- ------- ---------- ---------- ------------
Thomas W. Powell.................. 1998 287,000 114,125 0 33,029(3)
CEO 1997 275,000 262,575 30,000 32,979(3)
1996 270,000 260,000 0 32,729(3)
M.M. Zeller....................... 1998 185,502 149,762 0 4,800
President of PEMCO 1997 176,348 117,485 13,000 4,750
1996 165,000 155,000 0 4,500
David J. Dimlich.................. 1998 145,526 89,700 0 4,800
President of Transdyn 1997 139,961 100,535 9,000 4,750
1996 136,039 0 0 4,081
J.F. Ahart........................ 1998 165,681 49,805 0 4,800
CFO 1997 155,086 105,334 11,000 4,750
1996 144,467 104,177 0 4,500
Adam Janas........................ 1998 125,000 85,400 1,921 0 4,800
President of Delta 1997 119,375 115,000 6,827 10,000 4,750
1996 112,133 106,400 4,625 0 4,500
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(1) As of October 31, 1998, the only restricted stock awards to a named
executive officer the Company had outstanding were the awards reported. As
of October 31, 1998, the aggregate number of restricted shares subject to
such awards was 848, and the value of such shares as of such date was
$7,844. Mr. Janas has 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 Mr. Janas in connection with his 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, $4,800 for 1998, $4,750 for 1997, and $4,500 for 1996 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 $28,229 for all years were premiums paid by the Company with
respect to life insurance for the benefit of Mr. Powell.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
(A) (B) (C) (D) (E)
SHARES
ACQUIRED VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON EXERCISE REALIZED UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME (#) ($) AT OCTOBER 31, 1998 (#) AT OCTOBER 31, 1998 ($)
---- ----------- -------- ------------------------------ -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------------ -------------------------
Thomas W. Powell.......... 0 57,000/38,000 138,000/42,000
M.M. Zeller............... 0 30,700/17,800 75,800/22,200
David J. Dimlich.......... 0 9,000/12,000 21,600/14,400
J.F. Ahart................ 0 26,000/15,000 64,150/18,600
Adam Janas................ 2,200 15,125 11,100/13,000 24,000/15,000
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 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.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year of the Company, Joseph L. Becherer, Donald D.
Sykora, Bonnie L. Powell, Stephen W. Seale, Jr., and Ronald J. Wolny 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 its annual report to shareholders 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 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, 1998.
The Committee's responsibilities are to oversee the development and
administration of the compensation program for corporate officers and subsidiary
presidents, and administer the executive incentive and stock option plans. The
Committee met 4 times during the year.
EXECUTIVE COMPENSATION PHILOSOPHY
The objective of the executive compensation program is to create strong
financial incentive for corporate officers and managers and subsidiary
executives to increase profits and grow revenues. 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.
- 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.
Primary market comparisons are made to a broad group of manufacturing
companies, adjusted for size and job responsibilities. This group is broader
than the published industry index of companies included in the cumulative total
return performance graph presented elsewhere in this Proxy Statement and is used
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. Data sources include national survey databases, proxy statement
disclosures, and general trend data provided by consultants.
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
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that total compensation will generally approximate the market 50th percentile
when Company performance results are at target levels, and will exceed the 50th
percentile when performance exceeds targets.
The Internal Revenue Code (Section 162(m)) impose 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 1999. The Committee will continue to monitor this situation and will take
appropriate action if it is warranted in the future.
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 is reviewed individually on an annual basis. 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 control 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 success.
Subsidiary participants are measured on pre-tax return on sales and revenue
growth for the subsidiary. Return on sales is weighted 70% and revenue growth is
weighted 30% in determining the actual incentive awards. Historical performance
results, and budgeted profit levels and expected revenue growth for the plan
year are considered in setting the performance standards for each subsidiary.
For fiscal year 1998, corporate participants were measured on the Company's
earnings per share and revenue growth. Earnings per share were weighted 70%, and
revenue growth 30%.
If budgeted performance is achieved, the resulting incentive awards, in
combination with base salary, are targeted at the 50th percentile of the market.
If performance is above target, cash compensation will be above the market
median. Due to corporate performance below targeted levels in fiscal 1998,
executive total cash compensation levels for fiscal year 1998 were below
average, which is consistent with this strategy.
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
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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.
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
Stephen W. Seale, Jr.
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PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG POWELL INDUSTRIES, INC.,
NASDAQ MARKET INDEX AND PUBLISHED INDUSTRY INDEX
POWELL INDUSTRY BROAD
MEASUREMENT PERIOD INDUSTRIES INDEX (MG MARKET
(FISCAL YEAR COVERED) INC. GROUP) (NASDAQ)
10/29/93 100.00 100.00 100.00
10/31/94 75.86 104.91 106.32
10/31/95 94.83 96.20 126.11
10/31/96 144.83 107.11 148.10
10/31/97 203.45 172.90 194.09
10/30/98 127.59 142.21 219.46
ASSUMES $100 INVESTED ON OCTOBER 31, 1993
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED OCTOBER 31, 1998
INDEPENDENT AUDITORS
Arthur Andersen LLP has been selected to serve as independent auditors of
the Company for the fiscal year ending October 31, 1999, and also served as the
principal accountants of the Company for the fiscal year ending October 31,
1998. 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.
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. 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.
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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, 1998 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 2000 must be received at the office of the Secretary
of the Company no later than October 1, 1999 in order to be included in the
Company's proxy statement and form of proxy relating to that meeting.
By Order of the Board of Directors
J. F. AHART
Vice President and Secretary
Dated: January 8, 1999
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Front Side of Proxy
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POWELL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 19, 1999
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 19, 1999 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 2002, of J.F. Ahart, Eugene L. Butler, and Bonnie L. Powell.
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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BACK SIDE OF PROXY
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(continued from other side)
2. 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: 1999
--------------------------
IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE!
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