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EXHIBIT 10.1
POWELL INDUSTRIES, INC.
INCENTIVE COMPENSATION PLAN FOR 1999
JANUARY 1999
1. PLAN PURPOSE
The purpose of the plan is to recognize and reward key corporate and
subsidiary employees for their contributions to the growth and
profitability of Powell Industries, Inc. and its operating subsidiaries
through the opportunity to earn incentive compensation, in addition to
their base salaries, based on the performance of the Company or subsidiary.
2. GENERAL DESCRIPTION
Key corporate and subsidiary executives and managers will be selected for
participation on an annual basis. For each participant, a maximum incentive
compensation opportunity will be established, and expressed as a percentage
of the individual's base salary at the beginning of the plan year. The
actual amount of incentive compensation earned by each participant will be
based on the performance of the Company or subsidiary against
pre-established performance measures. The performance measures for the
subsidiary participants will include "return on revenues" and "revenue
growth". For corporate participants, the performance measures will include
"Powell Industries, Inc. earnings per share" and "revenue growth". Specific
performance levels will be established each year based on an assessment of
historical results, the budgeted performance for the plan year, and general
business conditions.
The plan will be administered by the Compensation Committee of the Board of
Directors, in conjunction with the Chief Executive Officer.
3. ELIGIBILITY AND INCENTIVE COMPENSATION OPPORTUNITY
On an annual basis, key corporate and subsidiary participants will be
identified for participation. Participation in one year does not guarantee
participation in the following year.
Subsidiary presidents will submit their recommended participants to the CEO
for approval. In addition, each subsidiary president may identify a general
incentive "pool", which may be used to recognize the contributions of
individuals within the subsidiary who are not named participants.
The CEO will recommend corporate participants for approval by the
Compensation Committee. The CEO may identify a general incentive "pool"
which may be used to recognize the contributions of individuals who are not
named participants.
For each named participant, their "maximum incentive opportunity" will be
identified, which is expressed as a percentage of base salary at the
beginning of the plan year.
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4. PERFORMANCE MEASURES AND WEIGHTS
The following performance measures will be used to measure the
performance of the Company and determine the incentive award earned by
each participant. The weighting percentage reflects the relative weight
given to each performance measure.
SUBSIDIARY PARTICIPANTS
Refer to your specific targets and funding levels (attached). The
attached also includes graphs showing how this funding works in
relationship to the targets.
CORPORATE PARTICIPANTS
o 70% Powell Industries, Inc. Earnings Per Share
o 30% Percent Growth of Total Revenues Over Prior Year
Prior to the beginning of the plan year, the performance standards for
each subsidiary and Powell Industries, Inc. will be finalized, approved
by the Compensation Committee, and communicated to participants. The
performance standards will be based on historical results, management's
expectations for the coming year, and the general business environment.
The CEO will approve subsidiary performance standards and the
Compensation Committee will approve the company-wide performance
standards.
5. COMPUTATION OF AWARDS
For each subsidiary and Powell Industries, Inc., an Incentive
Compensation Calculation Form will be prepared at the beginning of the
plan year, which will include a listing of the participants, their base
salary, and maximum incentive opportunity. For each performance
measure, a funding table will be attached which establishes the amount
of incentive compensation earned at various performance levels. The
Incentive Compensation Calculation Form is attached.
In order to activate the plan for each subsidiary, the threshold Return
on Revenue (ROR) must be achieved. If the ROR threshold is not
achieved, no incentive awards will be paid, regardless of the revenue
growth percentage.
In order to activate the plan for corporate participants, the threshold
Earnings Per Share (EPS) must be achieved. If the EPS threshold is not
achieved, no incentive awards will be paid, regardless of the revenue
growth percentage.
In computing performance results, ROR and EPS will be net of the
accrued incentive compensation payments.
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In addition to the incentive award computed under this plan, the
Compensation Committee may, in its sole discretion, make additional
discretionary awards to recognize significant individual contributions.
This discretionary award is limited to no more than 30% of the individual's
maximum incentive opportunity.
The Compensation Committee, in conjunction with the CEO, may make
adjustments to the subsidiary or Company performance results to eliminate
the impact of extraordinary charges to earnings, both positive and
negative. The purpose of any such adjustment is to better reflect the
performance of the subsidiary or Company. Each August, the Committee will
meet to review the interim performance results of the Company and determine
if extraordinary charges have occurred or are likely to occur that should
be eliminated.
6. PAYMENT OF AWARDS
The annual incentive awards will be determined after the end of the plan
year and paid as soon as practical. Prior to payment of awards, the
Compensation Committee will review and certify the incentive awards for all
participants.
Incentive awards will be computed based on the participant's base salary at
the beginning of the plan year.
A participant must be an active employee on the last day of the plan year
in order to receive an incentive award.
Participants added to the plan after the beginning of the plan year, will
be eligible to receive a prorated award based on their salary when they
became eligible.
Participants who die, retire, or become disabled during the plan year will
be eligible for a prorated award based on the number of months of active
participation during the plan year.
7. ADMINISTRATION OF PLAN
The plan will be administered by the Compensation Committee, in conjunction
with the CEO. The Committee reserves the right to amend or terminate the
plan at any time, except that such amendment or termination will not affect
any awards that have been earned but not paid.
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