1
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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(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:________
2) Aggregate number of securities to which transaction applies:___________
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):_____________________________
4) Proposed maximum aggregate value of transaction:_______________________
5) Total fee paid:________________________________________________________
[ ] 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:________________________________________________
2) Form, Schedule or Registration Statement No.:__________________________
3) Filing Party:__________________________________________________________
4) Dated Filed:___________________________________________________________
2
POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 13, 1998
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 Hobby Airport Hilton, 8181 Airport Boulevard, in Houston, Texas on Friday,
March 13, 1998 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 2001; 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 14, 1998 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 9, 1998
3
POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
---------------------
PROXY STATEMENT
JANUARY 9, 1998
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 13, 1998
---------------------
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 13, 1998 at
11:00 a.m., Houston time, at the Hobby Airport Hilton, 8181 Airport Boulevard,
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, 1997, including consolidated financial statements, will be mailed to
stockholders on or about January 30, 1998. 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 14, 1998, as the record date for determination of
stockholders entitled to receive notice of and to vote at the Annual Meeting.
There are 10,644,205 shares of the Company's Common Stock, par value $.01 per
share ("Common Stock"), outstanding and entitled to vote. Each holder of Common
Stock will be entitled to one vote for each share owned.
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 three persons receiving the greatest number of votes
cast at the meeting to fill the directorships with terms to expire in 2001 will
be elected as directors of the Company, class of 2001. Thus, abstentions and
broker non-votes will have no effect on the election of directors. Regarding
other matters, under Nevada law generally the vote of stockholders who hold at
least a majority of the voting power present at a meeting at which a quorum is
present is the act of the stockholders. Accordingly, abstentions and broker
non-votes will have the effect of negative votes with respect to any such other
matters.
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.
4
COMMON STOCK OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of January 9, 1998 (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..................................... 2,940,693(1) 27.59%
P.O. Box 12818
Houston, Texas 77217
Bonnie L. Powell..................................... 939,865(2) 8.85%
P.O. Box 112
Warda, Texas 78960
Heartland Advisors, Inc.............................. 929,500(3) 8.75%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Fidelity Management & Research Co.................... 926,000(3) 8.71%
82 Devonshire Street
Boston, Massachusetts 02109-3605
Klein Bank,.......................................... 766,863(4) 7.22%
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
Wellington Management Company........................ 722,500(3) 6.80%
75 State Street
Boston, Massachusetts 02109
- ---------------
(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 1,902 shares allocated to the account of Mr.
Powell under the Powell Industries, Inc. Employee Stock Ownership Plan (see
footnote (4) to this table) and 919 shares 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,
1997. Also includes 38,000 shares subject to stock options which are
currently exercisable by Mr. Powell.
(2) 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.
2
5
(3) As of December 26, 1997, based on a report by Computer Directions Advisors.
(4) Of such shares, 733,074 are held in the Powell Industries, Inc. Employee
Stock Ownership Trust (the "ESOP") and 33,789 are held in the Powell
Industries, Inc. Frozen Employee Stock Ownership Trust (the "Frozen ESOP").
Klein Bank, as Trustee, 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,
1997, 150,036 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, 1997, 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, 1997 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. All data in this Proxy
Statement with respect to shares held in either the ESOP or the Frozen ESOP
are as of December 12, 1997.
The following table sets forth, as of January 9, 1998, except for plan
share data (see footnotes (1) and (4) 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................................................ 28,994(2) *
Joseph L. Becherer........................................ 0 *
Eugene L. Butler.......................................... 1,000 *
David J. Dimlich.......................................... 6,221(3) *
Adam Janas................................................ 12,543(4) *
Bonnie L. Powell.......................................... 939,865(5) 8.85%
Thomas W. Powell.......................................... 2,940,693(6) 27.59%
Stephen W. Seale, Jr...................................... 3,000(7) *
Donald D. Sykora.......................................... 1,000 *
Lawrence R. Tanner........................................ 2,500 *
Ronald J. Wolny........................................... 1,937 *
M.M. Zeller............................................... 32,770(8) *
All Executive Officers and Directors as a group (16
persons)................................................ 3,992,828(9) 37.25%
- ---------------
* 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 1,668 shares allocated to Mr. Ahart's account in the ESOP. See
footnote (4) to the preceding table. Also includes 17,800 shares subject to
stock options which are currently exercisable by Mr. Ahart.
(3) Mr. Dimlich has sole voting and investment power over 1,000 of such shares.
Also includes 421 shares allocated to Mr. Dimlich's account in the ESOP. See
footnote (4) to the preceding table. Also includes 4,800 shares subject to
stock options which are currently exercisable by Mr. Dimlich.
(4) Mr. Janas has sole voting and investment power over 4,242 of such shares.
Also includes 1,701 shares allocated to Mr. Janas' account in the ESOP. See
footnote (4) to the preceding table. Also includes 6,600 shares subject to
stock options which are currently exercisable by Mr. Janas.
3
6
(5) See footnote (2) 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 1,690 shares allocated to Mr. Zeller's account in the ESOP.
See footnote (4) to the preceding table. Also includes 21,000 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 2,180 shares held in
trust for the accounts of certain executive officers not named above under
the ESOP or the Frozen ESOP. See footnote (4) to the preceding table. Also
includes 11,800 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.
4
7
ELECTION OF DIRECTORS
The terms of three directors expire in 1998 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, Joseph L. Becherer and
Lawrence R. Tanner for election as directors with terms to expire in 2001. Mr.
Powell and Mr. Tanner currently serve as directors of the Company, each with a
term expiring in 1998. Mr. Becherer was elected by the Board of Directors on
November 7, 1997 to replace Elbert D. Stewart, Jr., who had resigned on November
6, 1997 upon reaching retirement age for directors, to complete Mr. Stewart's
term which expires in 1998. Mr. Tanner has also reached retirement age, but the
Board has been unable to locate a suitable successor to nominate and accordingly
has requested that Mr. Tanner continue to serve until the Board can secure a
successor. 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
-------- --- ------------------------ ------------ -------- -------
Thomas W. Powell............... 57 Chairman of the Board, President Director, 1984 1998
and Chief Executive Officer of Chairman of the
the Company since 1984 Board,
President and
Chief Executive
Officer
Lawrence R. Tanner............. 71 Manager, Facilities Engineering Director 1992 1998
and Construction, for Compaq
Computer Corp., 1989 to present;
consultant for expansion program
for Compaq Computer Corp., 1988;
retired 1984-1988; previously
spent twenty-six years with
Arabian American Oil Company
(ARAMCO) Saudi Arabia, the last
eight as a Vice President
Joseph L. Becherer............. 55 Retired; previously, Senior Vice Director 1997 1998
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).
5
8
DIRECTORS REMAINING PRINCIPAL OCCUPATION FOR OFFICES HELD DIRECTOR TERM
IN OFFICE AGE PAST FIVE YEARS(1) WITH COMPANY SINCE EXPIRES
------------------- --- ------------------------ ------------ -------- -------
J.F. Ahart..................... 56 Vice President, Secretary, (2) 1996(3) 1999
Treasurer, and Chief Financial
Officer of the Company since
1989(2)
Eugene L. Butler............... 56 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............... 64 Private investor for more than Director 1986 1999
the past five years
Stephen W. Seale, Jr........... 58 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
Donald D. Sykora............... 67 Retired, previously Office of Director 1986 2000
the Chairman, Houston Industries
Incorporated, from September
1995 until September 1997;
President and Chief Operating
Officer of Houston Industries
Incorporated, July 1993-August
1995; previously President and
Chief Operating Officer of its
subsidiary, Houston Lighting &
Power Company; also serves as a
director of Pool Energy Services
Company, Trans Texas Gas
Corporation, ARS Services, and
Alstar Systems
Ronald J. Wolny................ 58 Vice President, Fluor Daniel, Director 1992 2000
Inc. for more than the past five
years
- ---------------
(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.
6
9
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).
During the Company's last fiscal year, the Company purchased approximately
$8,200,000 in electrical components from Cutler Hammer, a supplier and also a
competitor of the Company. During this same period Mr. Becherer, who has since
retired, served as Senior Vice President of the parent company of Cutler Hammer
with responsibility for its operations.
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 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
2 times during the last fiscal year. The Compensation Committee consists of Mr.
Sykora, Mrs. Powell, and Mr. Wolny. 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.
7
10
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)
---- --- ----- -----------
Kelly A. Shaw.................. 46 1994 Vice President-Marketing of the Company
Robert L. Mitchell............. 64 1990 Controller of the Company
Richard U. Benson.............. 49 1997 President of Powell-ESCO Company
Thomas C. Burtnett............. 54 1993 President of Unibus, Inc.
David J. Dimlich............... 51 1994 President of Transdyn Controls, Inc.
Adam Janas..................... 59 1984 President of Delta-Unibus Corp.
("Delta")
M. M. Zeller................... 59 1990 President of Powell Electrical
Manufacturing Company ("PEMCO")
- ---------------
(1) Each of the corporations listed (other than the Company) is a subsidiary of
the Company.
Mr. Shaw was elected Vice President-Marketing of the Company on July 22,
1994. He had previously served as a Vice President, Sales and Marketing, of ABB
Power T & D Company, Inc. for more than the past five years.
Mr. Mitchell has been Controller of the Company since July 1, 1990.
Mr. Benson was elected as the interim President of Powell-ESCO Company on
October 19, 1997. Mr. Benson also serves as the President of ENELEX, a
consulting engineering firm that Mr. Benson has owned and managed since December
1996 and with which the Company has contracted to provide the services of Mr.
Benson. Previously, Mr. Benson served since 1987 as the General Manager of
WESCOSA, a manufacturer or transformers and switchgear.
Mr. Burtnett was elected President of Unibus, Inc. on May 17, 1993.
Previously, he had served since 1981 as Engineering Manager of Kyle Distribution
Switchgear, an operation of the Cooper Power Systems Division of Cooper
Industries, Inc., a manufacturer of distribution switchgear.
Mr. Dimlich became chief operating officer of Transdyn Controls, Inc. on
June 30, 1994, and was elected President of Transdyn on August 5, 1994. He
previously served as Senior Vice President of Dynalectric Company, President of
B & B Insulation Company, and Chief Executive Officer of Comstock Canada Ltd.,
all specialty contractors.
Mr. Janas has served as President of Delta since 1984.
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).
8
11
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following persons failed to file on a timely basis reports required by
Section 16 of the Securities Exchange Act of 1934 with respect to the Common
Stock of the Company: (1) Richard U. Benson and Joseph L. Becherer each failed
to timely file a Form 3 upon his election as an officer or director of the
Company; and (2) Kelly A. Shaw failed to file on a timely basis two forms with
respect to an aggregate of two transactions.
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 $100,000, for each of
the Company's fiscal years ending October 31, 1997, October 31, 1996, and
October 31, 1995.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION AWARDS
----------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
RESTRICTED SECURITIES ALL
STOCK UNDERLYING OTHER
SALARY BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)(2)
--------------------------- ---- ------- ------- ---------- ---------- ------------
Thomas W. Powell................ 1997 275,000 262,575 30,000 32,979(3)
CEO 1996 270,000 260,000 0 32,729(3)
1995 255,767 158,250 35,000 32,729(3)
M.M. Zeller..................... 1997 176,348 117,485 13,000 4,750
President of PEMCO 1996 165,000 155,000 0 4,500
1995 150,541 85,413 18,500 4,500
J.F. Ahart...................... 1997 155,086 105,334 11,000 4,750
CFO 1996 144,467 104,177 0 4,500
1995 138,902 74,736 15,500 4,500
David J. Dimlich................ 1997 139,961 100,535 9,000 4,750
President of Transdyn 1996 136,039 0 0 4,081
Controls, Inc. 1995 135,519 15,000 12,000 4,125
Adam Janas...................... 1997 119,375 115,000 6,827 10,000 4,750
President of Delta 1996 112,133 106,400 4,625 0 4,500
1995 106,400 102,270 10,000 4,500
- ---------------
(1) As of October 31, 1997, the only restricted stock awards to a named
executive officer the Company had outstanding were the awards reported. As
of October 31, 1997, the aggregate number of restricted shares subject to
such awards was 907, and the value of such shares as of such date was
$13,378. 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
9
12
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.
(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, $4,750 for 1997 and $4,500 for 1996 and 1995 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 $28,229
for all years were premiums paid by the Company with respect to life
insurance for the benefit of Mr. Powell.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------------- ----------------------------
(A) (B) (D) (E) (F) (G) (H)
NUMBER OF (C)
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED(1) IN FISCAL YEAR ($/SH)(2) DATE(3) 5%($) 10%($) 0%($)
---- ---------- --------------- --------- ---------- -------- -------- ------
Thomas W. Powell..... 30,000 11.98 15.81 6/24/04 193,888 449,977 0
M.M. Zeller.......... 13,000 5.19 15.81 6/24/04 83,671 194,990 0
J.F. Ahart........... 11,000 4.39 15.81 6/24/04 70,799 164,991 0
Adam Janas........... 10,000 3.99 15.81 6/24/04 64,362 149,992 0
David J. Dimlich..... 9,000 3.59 15.81 6/24/04 57,926 134,993 0
- ---------------
(1) Such options become exercisable at the rate of 20% per year on each of the
first five anniversaries of June 25, 1997, the date of grant, provided that
the officer remains employed by the Company or one of its subsidiaries.
However, upon a change in control of the Company (as defined in the 1992
Powell Industries, Inc. Stock Option Plan and the Non-Qualified Stock Option
and Stock Award Agreements thereunder), all previously unexercised options
will become immediately exercisable. The officer will additionally be
entitled to receive one share of restricted Common Stock of the Company for
each five shares of stock acquired through exercise of an option. Such
restricted stock shall be forfeited if the officer disposes of the stock
acquired through exercise of the option within five years, or if during such
five-year period he voluntarily leaves the Company and its subsidiaries
other than due to retirement or is terminated for cause.
(2) The exercise price may be paid by check or in shares of the Common Stock of
the Company.
(3) An officer's options shall terminate earlier upon severance of employment
with the Company and its subsidiaries, except that (i) if an officer shall
retire at or after age 62, his options that are then currently exercisable
shall continue until the expiration date; (ii) if an officer is terminated
without cause or is terminated in connection with the sale of an operating
division or unit, his options that are then currently exercisable shall
continue until the earlier of the expiration date or 90 days after the date
of the officer's termination; (iii) if an officer shall retire or terminate
service for disability, or dies while in the employ of the Company or its
subsidiary, his options shall become 100% exercisable and may be exercised
until the earlier of the expiration date or one year following the date of
retirement or termination for disability or death; and (iv) if an officer
has retired for age or disability or was severed for disability and later
dies
10
13
prior to the date that his options would otherwise expire pursuant to the
foregoing, such options shall continue until the earlier of the expiration
date or one year following the date of his death.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
(A) (C)
(D) (E)
(B) NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT OCTOBER 31, 1997 (#) AT OCTOBER 31, 1997 ($)
ON EXERCISE REALIZED ------------------------------ -------------------------
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------------ -------------------------
Thomas W. Powell........... 0 38,000/57,000 311,000/226,500
M.M. Zeller................ 0 21,000/27,500 171,700/121,500
J.F. Ahart................. 0 17,800/23,200 145,500/102,250
Adam Janas................. 4,700 45,676 6,600/19,700 52,000/81,350
David J. Dimlich........... 0 4,800/16,200 40,800/61,200
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year of the Company, Donald D. Sykora, Bonnie L.
Powell, and Ronald J. Wolny served on the Compensation Committee of the Board of
Directors of the Company. No member of the Compensation Committee has ever
served as an officer of the Company or any of its subsidiaries.
11
14
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, 1997.
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 2 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 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
12
15
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 1998. 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 1997, 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 above targeted levels in fiscal 1997,
executive total cash compensation levels for fiscal year 1997 were above
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 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. During the year, the
13
16
Committee approved the grant of options for 250,500 shares, constituting
approximately 2.35% of the total shares outstanding.
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. During fiscal
year 1997, Mr. Powell received stock options for 30,000 shares with an option
price of $15.81 per share (fair market value on the date of grant). These
options become exercisable over five years and have a term of seven years.
Respectfully submitted,
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Donald D. Sykora, Chairman
Bonnie L. Powell
Ronald J. Wolny
14
17
PERFORMANCE GRAPH
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG POWELL INDUSTRIES, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
MEASUREMENT PERIOD POWELL INDUSTRIES INDUSTRY INDEX BROAD MARKET
(FISCAL YEAR COVERED) INC. (MG GROUP) (NASDAQ)
1992 100.00 100.00 100.00
1993 90.63 128.27 131.23
1994 68.75 144.42 139.52
1995 85.94 177.54 165.50
1996 131.25 255.59 194.35
1997 184.38 341.39 254.71
ASSUMES $100 INVESTED ON NOVEMBER 1, 1992
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED OCTOBER 31, 1997
INDEPENDENT AUDITORS
Arthur Andersen LLP has been selected to serve as independent auditors of
the Company for the fiscal year ending October 31, 1998, and also served as the
principal accountants of the Company for the fiscal year ending October 31,
1997. 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
15
18
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, 1997 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 1999 must be received at the office of the Secretary
of the Company no later than October 1, 1998 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 9, 1998
16
19
Front Side of Proxy
================================================================================
POWELL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 13, 1998
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 Hobby Airport
Hilton, 8181 Airport Boulevard, in Houston, Texas, at 11:00 a.m. Houston time,
on March 13, 1998 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 2001, 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.
___________________________________________________________________
[ ] WITHHOLD authority to vote for all nominees listed above.
(continued on reverse side)
================================================================================
20
BACK SIDE OF PROXY
================================================================================
(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.
____________________________________
____________________________________
(PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. JOINT OWNERS SHOULD EACH SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES,
ETC., SHOULD INDICATE THE CAPACITY IN
WHICH SIGNING.)
DATED: _________________________ 1998
IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE!
================================================================================