-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S1t7jB/oWXyV2a3VKVHhsX1qt8OXULDElkZ6BAy64HbS0WozR1dmNzPgw9rjSffz wVzlWbLqDQ5029Tehun0GA== 0000950129-98-000277.txt : 19980128 0000950129-98-000277.hdr.sgml : 19980128 ACCESSION NUMBER: 0000950129-98-000277 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980313 FILED AS OF DATE: 19980126 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: POWELL INDUSTRIES INC CENTRAL INDEX KEY: 0000080420 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 880106100 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-12488 FILM NUMBER: 98512874 BUSINESS ADDRESS: STREET 1: 8550 MOSLEY DR STREET 2: POST OFFICE BOX 12818 CITY: HOUSTON STATE: TX ZIP: 77075 BUSINESS PHONE: 7139446900 MAIL ADDRESS: STREET 1: 8550 MOSLEY DRIVE P O BOX 12818 STREET 2: 8550 MOSLEY DRIVE P O BOX 12818 CITY: HOUSTON STATE: TX ZIP: 77075 FORMER COMPANY: FORMER CONFORMED NAME: PROCESS SYSTEMS INC DATE OF NAME CHANGE: 19780926 DEF 14A 1 POWELL INDUSTRIES, INC. 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! ================================================================================ -----END PRIVACY-ENHANCED MESSAGE-----