<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
Integrated Electrical Services, 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE> 2
[INTEGRATED ELECTRICAL SERVICES LOGO]
December 28, 2000
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite all stockholders to
attend the Annual Meeting of Integrated Electrical Services, Inc. to be held on
Wednesday, February 7, 2001, at 10:30 a.m. at the Sheraton Suites Houston, 2400
West Loop South, Suite 500, Houston, TX 77027. Proxy Materials, which include a
Notice of the Meeting, Proxy Statement and proxy card, are enclosed with this
letter. The Company's 2000 Annual Report, which is not a part of the proxy
materials, is also enclosed and provides additional information regarding the
financial results of the Company for its fiscal year ended September 30, 2000.
We hope that you will be able to attend the Annual Meeting. Your vote is
important. Whether you plan to attend or not, please execute and return the
proxy card in the enclosed envelope so that your shares will be represented. If
you are able to attend the meeting in person, you may revoke your proxy and vote
your shares in person. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee that holds the shares to provide you with evidence of your share
ownership. We look forward to seeing you at the meeting.
Sincerely,
/S/ H. DAVID RAMM
H. David Ramm
President and Chief Executive
Officer
<PAGE> 3
INTEGRATED ELECTRICAL SERVICES, INC.
1800 WEST LOOP SOUTH, SUITE 500
HOUSTON, TEXAS 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 7, 2001
TO THE STOCKHOLDERS OF INTEGRATED ELECTRICAL SERVICES, INC.
Notice is hereby given that the Annual Meeting of the Stockholders of
Integrated Electrical Services, Inc., a Delaware corporation, will be held at
the Sheraton Suites Houston, 2400 West Loop South, Houston, TX 77027, on
Wednesday, February 7, 2001, at 10:30 a.m. Central Time, for the following
purposes:
1. To elect three directors to the Company's board to serve until the
annual stockholders' meeting held in 2004 or until their successors have
been elected and qualified.
2. To appoint Arthur Andersen LLP, independent certified public
accountants, as the Company's auditors for the fiscal year 2001.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The holders of record of the Company's common stock and of the Company's
restricted voting common stock at the close of business on December 15, 2000 are
entitled to notice of and to vote at the meeting with respect to all proposals,
except that restricted voting common stock shall not be entitled to vote on the
proposal for the election of directors. We urge you to sign and date the
enclosed proxy card and return it promptly by mail in the enclosed envelope,
whether or not you plan to attend the meeting in person. No postage is required
if mailed in the United States. If you do attend the meeting in person, you may
withdraw your proxy and vote personally on all matters brought before the
meeting.
/s/ JOHN F. WOMBWELL
John F. Wombwell
Executive Vice President -- Legal
and Administration
Houston, Texas
December 28, 2000
<PAGE> 4
INTEGRATED ELECTRICAL SERVICES, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
WHEN AND WHERE IS THE 2001 ANNUAL MEETING OF STOCKHOLDERS BEING HELD?
The 2001 Annual Meeting will be held on Wednesday, February 7, 2001, and
any adjournments thereof. The annual meeting will be held at 10:30 a.m. Central
Time, at the Sheraton Suites Houston, 2400 West Loop South, Houston TX 77027.
WHAT DATE WILL THE PROXY STATEMENT FIRST BE SENT TO THE STOCKHOLDERS?
The approximate date on which this Proxy Statement will first be sent to
stockholders is December 28, 2000.
WHO IS SOLICITING MY VOTE?
The accompanying proxy is solicited by the Board of Directors of Integrated
Electrical Services, Inc. (the "Company") for use at the 2001 Annual Meeting of
Stockholders.
HOW ARE VOTES BEING SOLICITED?
In addition to solicitation of proxies by mail, certain directors,
officers, representatives and employees of the Company may solicit proxies by
telephone and personal interview. Such individuals will not receive additional
compensation from the Company for solicitation of proxies, but may be reimbursed
for reasonable out-of-pocket expenses in connection with such solicitation.
Banks, brokers and other custodians, nominees and fiduciaries also will be
reimbursed by the Company for their reasonable expenses for sending proxy
solicitation materials to the beneficial owners of common stock of the Company.
WHO IS PAYING THE SOLICITATION COST?
The expense of preparing, printing and mailing proxy solicitation materials
will be borne by the Company.
HOW MANY VOTES DO I HAVE?
Each share of Common Stock is entitled to one vote upon each of the matters
to be voted on at the meeting. Each share of Restricted Common Stock is entitled
to one-half of one vote upon each of the matters to be voted on at the meeting,
except for the election of directors, upon which each share of Restricted Common
Stock has no vote. The holders of Restricted Common Stock are entitled to elect
one member of the board of directors and have elected at the 1999 Annual Meeting
C. Byron Snyder as a Class I director to serve until the 2002 Annual Meeting or
until his successor is elected and qualified.
HOW DO I VOTE?
When such proxy is properly executed and returned, the shares it represents
will be voted at the meeting in accordance with the directions noted thereon; or
if no direction is indicated, it will be voted in favor of the proposals set
forth in the notice attached hereto.
CAN I CHANGE MY VOTE?
Any stockholder giving a proxy has the power to revoke it by oral or
written notice to the Secretary of the Company at any time before it is voted.
Stockholders submitting proxies may revoke them at any time before they are
voted (i) by notifying John F. Wombwell, Secretary of the Company, in writing of
such revocation,
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(ii) by execution of a subsequent proxy sent to Mr. Wombwell, or (iii) by
attending the Annual Meeting in person and voting in person. Notices to Mr.
Wombwell referenced in (i) and (ii) should be directed to John F. Wombwell,
Secretary, Integrated Electrical Services, Inc., 1800 West Loop South, Suite
500, Houston, Texas 77027. Stockholders who submit proxies and attend the
meeting to vote in person are requested to notify Mr. Wombwell at the Annual
Meeting of their intention to vote in person at the Annual Meeting.
HOW ARE ABSTENTIONS AND BROKER NON-VOTES COUNTED?
Pursuant to the Company's bylaws, shares not voted on matters, including
abstentions and broker non-votes, will not be treated as votes cast with respect
to those matters, and therefore will not affect the outcome of any such matter.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
The presence, in person or by proxy, of at least a majority of the sum of
the outstanding shares of Common Stock and Restricted Common Stock is required
for a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on December 15, 2000, the record date for the
determination of stockholders of the Company entitled to receive notice of, and
to vote at, the Annual Meeting of Stockholders or any adjournments thereof, the
Company had outstanding 38,212,032 shares of common stock, par value $.01 per
share (the "Common Stock") and 2,605,709 shares of restricted common stock, par
value $.01 per share (the "Restricted Common Stock").
The following table reflects the beneficial ownership of the Company's
Common Stock as of November 1, 2000, with respect to (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of the Company's Common Stock; (ii) the directors and nominees for director;
(iii) each named executive officer; and (iv) the Company's directors and
executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OWNED PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OF CLASS
------------------------ ------------ --------
<S> <C> <C>
H. David Ramm(a)............................................ 53,000 *
Ben L. Mueller(b)........................................... 1,256,562 3.3%
C. Byron Snyder(c).......................................... 2,655,709 6.5
Donald Paul Hodel(d)........................................ 19,314 *
Robert Kelly(e)............................................. 6,518 *
Richard Muth(f)............................................. 498,257 1.3
Alan R. Sielbeck(d)......................................... 64,314 *
Robert Stalvey(g)........................................... 95,413 *
Richard L. Tucker(d)........................................ 12,185 *
Bob Weik(h)................................................. 1,532,426 4.0
Jim P. Wise(i).............................................. 210,750 *
John F. Wombwell(j)......................................... 208,177 *
Herbert R. Allen(k)......................................... 946,000 2.5
Directors and officers as a group (16 persons)(l)........... 7,795,614 19.0%
</TABLE>
---------------
* Indicates ownership of less than one percent of the outstanding shares of
Common Stock of the Company.
(a) Includes 53,000 shares of Common Stock underlying options which are
exercisable within 60 days.
(b) Includes 7,000 shares held by a trust for the benefit of Mr. Mueller's
daughter and 7,500 shares of Common Stock underlying options which are
exercisable within 60 days.
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<PAGE> 6
(c) Includes 2,585,829 shares held by the 1996 Snyder Family Partnership,
50,000 shares held by CBStar Investment Partners, 19,181 shares held by the
Worth Byron Snyder Trust and the Gregg Layton Snyder Trust, and 699 shares
held by the 1998 Snyder Family Partnership Management Trust. This stock
consists entirely of Restricted Common Stock, which represents all of the
Company's outstanding Restricted Common Stock. Such shares may be converted
to Common Stock in certain circumstances. Mr. Snyder disclaims beneficial
ownership as to all of these shares.
(d) Includes 8,667 shares of Common Stock underlying options which are
exercisable within 60 days by each of Mr. Hodel, Mr. Sielbeck and Dr.
Tucker. Mr. Hodel's address is P.O. Box 23099, Silverthorne, CO 80498. Mr.
Sielbeck's address is 6 Cadillac Drive, #410, Brentwood, TN 37027. Dr.
Tucker's address is Center for Construction Industry Studies, ECJ 5.202,
The University of Texas at Austin, Austin, TX 78712.
(e) Includes 6,000 shares of Common Stock underlying options which are
exercisable within 60 days by Mr. Kelly. Mr. Kelly's address is
CountryWatch.com, Three Riverway, Suite 710, Houston, TX 77056.
(f) Includes 25,689 shares of Common Stock owned by Mr. Muth's wife, as to
which Mr. Muth disclaims beneficial ownership and 500 shares of Common
Stock owned by his children and 18,959 shares of Common Stock underlying
options which are exercisable within 60 days.
(g) Includes 3,455 shares of Common Stock underlying options which are
exercisable within 60 days.
(h) Includes 74,536 shares of Common Stock owned by two related trusts, as to
which Mr. Weik disclaims beneficial ownership, 74,536 shares of Common
Stock held by an Annuity Trust for Bob Weik, 74,536 shares of Common Stock
held by the Virginia Pat Weik Trust of 2000, and 27,186 shares of Common
Stock underlying options which are exercisable within 60 days.
(i) Includes 76,250 shares of Common Stock underlying options which are
exercisable within 60 days.
(j) Includes 100,417 shares of Common Stock underlying options which are
exercisable within 60 days
(k) Includes 200,000 shares of Common Stock owned by HRA Investment Group, LP
as to which Mr. Allen disclaims beneficial ownership and 6,000 shares of
Common Stock underlying options which are exercisable within 60 days.
(l) Includes 2,655,709 shares of Restricted Common Stock described in Note (c)
above and 352,102 shares of Common Stock underlying options which are
exercisable within 60 days.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Company's Amended and Restated Certificate of Incorporation, as
amended, and bylaws provide that the number of directors on the Board shall be
fixed from time to time by the Board of Directors but shall not be less than one
nor more than fifteen persons. The Certificate of Incorporation divides the
Board of Directors into three classes, designated as Class I, Class II and Class
III. Each class of directors is to be elected to serve a three-year term and is
to consist, so far as possible, of one-third of the number of directors required
at the time to constitute a full Board. If the number of directors is not evenly
divided into thirds, the Board of Directors shall determine which class or
classes shall have one extra director. The Board of Directors presently consists
of eleven directors, four in Class I, three in Class II and four in Class III,
whose terms of office expire with the 2002, 2003 and 2001 annual meetings,
respectively, and until their successors are elected and qualified. The holders
of the Restricted Common Stock are entitled to elect one director and are not
entitled to vote on other directors.
The term of office of each of the current Class III Directors expires at
the time of the 2001 Annual Meeting of Stockholders, or as soon thereafter as
their successors are elected and qualified. Messrs. Hodel, Mueller, and Ramm
have been nominated to serve an additional three-year term as Class III
Directors to be elected by the holders of the Common Stock. Each of Messrs.
Hodel, Mueller, and Ramm has consented to
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<PAGE> 7
be named in this Proxy Statement and to serve as a director if elected. Mr.
Stalvey will not stand for re-election.
It is the intention of the persons named in the accompanying proxy card to
vote for the election of all three nominees named below unless a stockholder has
withheld such authority. The affirmative vote of holders of a plurality of the
Common Stock present in person or by proxy at the 2001 Annual Meeting of
Stockholders and entitled to vote is required for election of the nominees.
If, at the time of or prior to the 2001 Annual Meeting of Stockholders, any
of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy may be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required. No
proxy will be voted for a greater number of persons than the number of nominees
named herein.
NOMINEES -- CLASS III DIRECTORS (THE TERMS SHALL EXPIRE AT THE 2004 ANNUAL
MEETING OF STOCKHOLDERS)
The Class III Directors, whose present term of office as directors expire
at the 2001 Annual Meeting of Stockholders, and certain additional information
with respect to each of them, are as follows:
DONALD PAUL HODEL DIRECTOR SINCE 1998
Donald Paul Hodel, 65, is Managing Director of Summit Group International,
Ltd. (and related companies), an energy and natural resources consulting firm he
founded in 1989. Mr. Hodel served as President of the Christian Coalition from
1997 to 1999. Mr. Hodel served as United States Secretary of the Interior from
1985 to 1989 and United States Secretary of Energy from 1982 to 1985. Mr. Hodel
has served as director of both publicly traded and privately held companies and
is the recipient of the Presidential Citizens Medal and honorary degrees from
three universities. Mr. Hodel serves on the board of directors of Salem
Communications, Inc. a NASDAQ listed company.
H. DAVID RAMM DIRECTOR SINCE 2000
Mr. Ramm, 49, has been the Chief Executive Officer and President of the
Company since March 2000. From 1997 to 2000, Mr. Ramm was employed by Enron
Corp., most recently as President of Enron Wind Corp., a world leader in the
renewable energy market with a focus on clean, environmentally benign power
generation. Prior to 1997, Mr. Ramm held various senior management positions
with United Technologies Corporation, including Senior Vice President of Pratt
Whitney Space Propulsion, Chairman and Chief Executive Officer of International
Fuel Cells Corporation and Sales and Marketing Vice President of Otis Elevator.
Mr. Ramm serves on the board of directors for CountryWatch.com, Millennium Cell
a NASDAQ listed company, and Fabrication Technologies Corp.
BEN L. MUELLER DIRECTOR SINCE 1998
Mr. Mueller, 53, has been Chief Operating Officer and a director of the
Company since 1998. Prior to that time, Mr. Mueller was the Executive Vice
President of Houston-Stafford Electric, Inc. ("Houston-Stafford"), one of the
Company's subsidiaries, since 1993 and served as vice president of
Houston-Stafford since 1975. Mr. Mueller is a past member of the board of the
IEC, Houston Chapter, and has served on the Electrical Board for the City of
Sugar Land, Texas.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE ABOVE-NAMED NOMINEES.
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<PAGE> 8
DIRECTORS CONTINUING IN OFFICE
CLASS I
The Class I Directors, whose present term of office as directors will
continue after the meeting and expire at the 2002 Annual Meeting of
Stockholders, and certain additional information with respect to each of them,
are as follows:
ALAN R. SIELBECK DIRECTOR SINCE 1998
Mr. Sielbeck, 47, has served as Chairman of the Board and Chief Executive
Officer of Service Experts, Inc., a publicly traded heating, ventilation and air
conditioning service company, since its inception in March 1996 until January
2000. Mr. Sielbeck has served as Chairman of the Board and President of AC
Service and Installation Co. Inc. and Donelson Air Conditioning Company, Inc.
since 1990 and 1991, respectively. From 1985 to 1990, Mr. Sielbeck served as
President of RC Mathews Contractor, Inc., a commercial building general
contractor and Chief Financial Officer of RCM Interests, Inc. a commercial real
estate development company.
BOB WEIK DIRECTOR SINCE 1998
Mr. Weik, 65, has been Senior Vice President -- West Area since January
2000 and has served as a Regional Operating Officer of the Company since May
1998 and as President of BW Consolidated, Inc. and related entities
("Bexar-Calhoun"), one of the Company's subsidiaries, since its inception in
1997.
JIM P. WISE DIRECTOR SINCE 1998
Mr. Wise, 57, has been a Vice Chairman of the Board since March 2000. He
previously served as Chief Executive Officer of the Company from November 1998
to March 2000 and President from November 1998 to May 1999. He initially joined
the Company in September 1997 as Senior Vice President and Chief Financial
Officer. From September 1994 to September 1997, he was Vice President -- Finance
and Chief Financial Officer at Sterling Chemicals, Inc., a publicly held
manufacturer of commodity petrochemicals and pulp chemicals. From July 1994 to
September 1994, he was Senior Vice President and Chief Financial Officer of U.S.
Delivery Systems, Inc., a delivery service consolidator. From September 1991 to
July 1994 he was Chairman and Chief Executive Officer of Neostar Group, Inc., a
private investment banking and financial advisory firm. Mr. Wise was employed by
Transco Energy Company as Executive Vice President, Chief Financial Officer and
was a member of the Board of Directors from November 1982 until September 1991.
C. BYRON SNYDER DIRECTOR SINCE 1997
Mr. Snyder, 52, has been Chairman of the Board of Directors of the Company
since its inception. Mr. Snyder is a founding member and Senior Managing
Director of Main Street Equity Ventures II, LP, a Houston-based private equity
investment firm. Mr. Snyder was the President and owner of Sterling City
Capital, L.L.C., a private investment company. Mr. Snyder was owner and
President of Relco Refrigeration Co., a distributor of refrigerator equipment,
from 1992 to 1998. Prior to 1992, Mr. Snyder was the owner and Chief Executive
Officer of Southwestern Graphics International, Inc., a diversified holding
company which owned Brandt & Lawson Printing Co., a Houston-based general
printing business, and Acco Waste Paper Company, an independent recycling
business. Brandt & Lawson Printing Co. was sold to Hart Graphics in 1989, and
Acco Waste Paper Company was sold to Browning-Ferris Industries in 1991. Mr.
Snyder is a director of Carriage Services, Inc., a publicly held death care
company. Mr. Snyder is Chairman of the Board of United Glass Corporation, the
largest glass fabrication and services company in North American. Mr. Snyder is
Chairman of the Board of Integrated Roofing & Waterproofing, Inc. a privately
held company providing roofing and waterproofing services.
5
<PAGE> 9
CLASS II
The Class II Directors, whose present term of office as directors will
continue after the meeting and expire at the 2003 Annual Meeting of
Stockholders, and certain additional information with respect to each of them,
are as follows:
RICHARD MUTH DIRECTOR SINCE 1998
Mr. Muth, 53, founded Muth Electric, Inc. ("Muth"), one of the Company's
subsidiaries, in 1970 and has been its president since that time. Mr. Muth
served on the South Dakota State Electrical Commission from 1980 to 1991 and the
Associated General Contractors Associate Division Board. Mr. Muth also received
the South Dakota Electrical Council "Man of the Year" award in 1993.
ROBERT C. KELLY DIRECTOR SINCE 2000
Mr. Kelly, 54, founded CountryWatch.com, which provides strategic
geo-political information on 191 countries throughout the world. From 1985 to
1997, Mr. Kelly was employed in various senior executive positions at Enron
Corp., including President of Enron Cogeneration Company; Chairman and Chief
Executive Officer of Enron Europe; Executive Vice President and Chief Strategy
Officer; and Chairman and Chief Executive Officer of Enron Renewable Energy
Company. From 1970 to 1981, Mr. Kelly served in the US Army, which included a
tour in Vietnam, troop duty with the 82nd Airborne Division and 4th Infantry
Division, and as an associate professor at West Point.
RICHARD L. TUCKER DIRECTOR SINCE 1998
Dr. Tucker, 65, is Director of the Center for Construction Industry Studies
and Professor of Civil Engineering at the University of Texas at Austin. Dr.
Tucker has been on the faculty at the University of Texas since 1976. Dr. Tucker
is a registered engineer.
COMMITTEES
Audit Committee. The Audit Committee is comprised of Messrs. Sielbeck
(Chairman), Tucker and Hodel. Pursuant to its approved Charter, the Audit
Committee's functions include making recommendations concerning the engagement
of independent auditors, reviewing with the independent auditors the plan and
results of the auditing engagement, reviewing the scope and results of the
Company's procedures for internal auditing, reviewing professional services
provided by the independent auditors, reviewing the independence of the
independent auditors, considering the range of audit and non-audit fees and
reviewing the adequacy of the Company's internal accounting controls.
Compensation Committee. The Compensation Committee is comprised of Messrs.
Hodel (Chairman), Sielbeck and Tucker. The functions performed by the
Compensation Committee in accordance with its approved Charter include:
reviewing executive salary and bonus structure; reviewing the Company's stock
option plan (and making grants thereunder); setting bonus goals; and approving
salary and bonus awards to key executives.
Nominating Committee. The Company has no standing Nominating Committee of
the Board of Directors.
MEETINGS
During fiscal year 2000, the Audit Committee had four meetings; the
Compensation Committee had seven meetings; and the Board of Directors had ten
meetings. During fiscal year 2000 each member of the Board of Directors attended
75% or more of the meetings of the Board of Directors and the committees of
which he was a member.
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<PAGE> 10
DIRECTOR COMPENSATION
Directors of the Company who are not officers or employees of the Company
receive a $12,000 annual retainer paid quarterly, one-half in cash and one-half
in shares of Company Common Stock. Committee chairmen receive an additional
annual retainer of $3,000, paid one-half in cash and one-half in stock. Non-
employee directors are also paid a meeting fee of $1,250 for each regular or
special Board or committee meeting. Board members are paid $500 for telephonic
meetings. In addition, each non-employee director of the Company receives a
grant of an option to purchase 3,000 shares upon initial election as director
and an option to purchase 3,000 shares on each September 30 on which such
director remains a non-employee director. The Company paid aggregate fees of
$145,000 to non-employee directors in connection with the Board of Directors'
and Committee meetings in fiscal 2000, and an additional $52,000 to Mr. Tucker
for services performed in connection with ad hoc committee services, and $25,875
and $1,500 to Mr. Kelly and Mr. Sielbeck, respectively, for consulting services
provided to the Company. Employee directors receive no additional compensation
for attending Board of Directors or committee meetings
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of Integrated Electrical
Services, Inc. (the "Audit Committee") oversees the Company's financial
reporting process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the audited financial statements
in the Annual Report with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In
addition, the Audit Committee has discussed with the independent auditors the
auditors' independence from management and the Company including the matters in
the written disclosures required by the Independence Standards Board.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report of Form 10-K for the fiscal year
ended September 30, 2000 for filing with the Securities and Exchange Commission.
The Audit Committee and the board have also recommended, subject to stockholder
approval, the selection of the Company's independent auditors.
A copy of the Audit Committee Charter as adopted by the Board of Directors
is attached hereto as Annex A.
The members of the Audit Committee have been determined to be independent
and financially literate (as independence and financial literacy is defined by
the New York Stock Exchange listing standards) by the Board of Directors.
Alan R. Sielbeck (Chairman)
Donald Paul Hodel
Richard L. Tucker
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<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of Integrated
Electrical Services, Inc. (the "Compensation Committee") is pleased to present
the 2000 report on executive compensation. This report of the Compensation
Committee documents the components of the Company's executive officer
compensation program and describes the basis on which the compensation program
determinations were made by the Compensation Committee with respect to the
executive officers of the Company. The Compensation Committee meets regularly
and is comprised of Messrs. Hodel (Chairman), Sielbeck and Tucker. The duty of
the Compensation Committee is to review compensation levels of senior members of
management, as well as administer the Company's various incentive plans
including its annual bonus plan and its stock option plan.
EXECUTIVE COMPENSATION PROGRAM PHILOSOPHY
The Company's compensation philosophy and program objectives are directed
by two primary guiding principles. First, the program is intended to provide
fully competitive levels of compensation in order to attract, motivate and
retain talented executives. Second, the program is intended to create an
alignment of interests between the Company's executives and stockholders such
that a significant portion of each executive's compensation is directly linked
to maximizing stockholder value.
In support of this philosophy, the executive compensation program is
designed to reward performance that is directly relevant to the Company's
short-term and long-term success. As such, the Company attempts to provide both
short-term and long-term incentive pay that varies based on corporate and
individual performance. To accomplish these objectives, the Committee has
structured the executive compensation program with three primary underlying
components: base salary, annual incentives, and long-term incentives. The
Company's compensation philosophy is to (i) compensate its executive officers at
a base level that is near the average salaries paid by companies of similar
size; (ii) provide the opportunity for its executive officers to earn additional
compensation in the form of annual bonuses if individual and business
performance goals are met; and (iii) design long-term incentive plans to focus
executive efforts on the long-term goals of the Company and to maximize total
return to the Company's stockholders.
BASE SALARY
The Committee utilizes market compensation data that is reflective of the
markets in which the Company competes for employees. The Committee believes,
based on consultations with compensation consultants, that generally these
salaries were below executive officers' compensation in similar companies;
however, the Committee intends to insure that the executive officer's
compensation becomes consistent with its stated policies. Therefore, as part of
its responsibilities, the Committee will review the salaries for the Company's
executive officers. The Committee intends to base individual salary changes on a
combination of factors such as the performance of the executive, salary level
relative to the competitive market, level of responsibility, growth of Company
operations and the recommendation of the Chief Executive Officer.
ANNUAL BONUS
The Company's annual bonus is intended to reward key employees based on
Company and individual performance, motivate key employees, and provide
competitive cash compensation opportunities. Target award opportunities vary by
individual position and are expressed as a percent of base salary. The
individual target award opportunities are set at market median levels, but
actual payouts may vary based on performance so that actual awards may fall
below the 50th or above the 75th percentile. The amount a particular executive
may earn is directly dependent on the individual's position, responsibility, and
ability to impact our financial success. During the 2000 fiscal year, the
Company executives were paid bonuses that generally reflected the achievement of
individual performance expectations and Company performance below expected
levels.
LONG-TERM INCENTIVES
The Company's long-term incentive is designed to focus executive efforts on
the long-term goals of the Company and to maximize total return to our
stockholders. The key devices the Committee used during 2000
8
<PAGE> 12
were stock options and restricted stock. Stock options align the interests of
employees and stockholders by providing value to the executive through price
appreciation only. Restricted stock aids in executive retention and provides
actual share ownership to executives. The Committee's philosophy is to target
long-term incentive awards at the market 75th percentile; however, during 2000
the Committee authorized awards below the market average to its executive
officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Ramm's base salary for fiscal year 2000 was $350,000. This amount was
established when Mr. Ramm was hired as Chief Executive Officer. In addition, Mr.
Ramm received a cash bonus of $300,000 and stock option and restricted stock
grants in accordance with his employment contract negotiated at the time of his
hire. See "Employment Agreements. The Committee awarded Mr. Ramm an additional
$195,000 bonus in recognition of his individual performance and improved Company
performance.
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries. The following members of the
Compensation Committee have delivered the foregoing report.
Donald Paul Hodel (Chairman)
Alan R. Sielbeck
Richard L. Tucker
The foregoing report and the performance graph and related description
included in this proxy statement shall not be deemed to be filed with the
Securities and Exchange Commission except to the extent the Company specifically
incorporates such items by reference into a filing under the Securities Act of
1933 or Securities Exchange Act of 1934.
EXECUTIVE OFFICERS
The following table summarizes certain information regarding aggregate cash
compensation, stock option and restricted stock awards and other compensation
earned by the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for services rendered in
all capacities to the Company for the years ended September 30, 2000, 1999 and
1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION SECURITIES
---------------------------------------------- RESTRICTED UNDERLYING
FISCAL OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(C) AWARD (NUMBER) COMPENSATION(G)
--------------------------- ------ -------- -------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. David Ramm(a)................ 2000 $188,461 $495,000 -- $2,275,000(d) 132,500 --
President and Chief Executive
Officer
Ben L. Mueller.................. 2000 $231,480 $230,000 -- 45,000 --
Chief Operating Officer 1999 200,740 -- -- -- -- $1,925
1998 133,333 -- -- -- -- 50
John F. Wombwell................ 2000 $245,224 $200,000 -- $ 146,904(e) 40,000 $2,625
Executive Vice President -- 1999 199,592 -- -- -- 3,750 1,198
Legal and Administration 1998 126,667 12,500 -- -- -- 285
Bob Weik........................ 2000 $326,338 $180,000 -- $ 72,095(f) 40,000 $2,625
Senior Vice President -- 1999 88,900 -- -- -- 20,519 974
West Area 1998 70,852 -- -- -- -- --
Herbert R. Allen................ 2000 $229,326 $180,000 -- -- 36,000 $2,541
Senior Vice President -- 1999 150,000 -- -- -- -- 1,688
East Area 1998 137,500 -- -- -- -- --
Jim P. Wise(b).................. 2000 $328,149 -- -- -- 32,500 --
1999 221,814 -- -- -- 43,750 $1,688
1998 166,247 $ 12,500 -- -- -- --
</TABLE>
9
<PAGE> 13
---------------
(a) Mr. Ramm was elected as the Chief Executive Officer and President on March
20, 2000.
(b) Mr. Wise served as Chief Executive Officer and President of the Company
until March 20, 2000.
(c) No executive officer received perquisites or other personal benefits in
excess of 10% of their total annual salary and bonus during the fiscal year
ended September 30, 2000.
(d) The dollar value of the restricted stock appearing in the table is based on
the closing sales price of the Integrated Electrical Services' Common Stock
on March 20, 2000 ($5.6875) the date of the award. The restricted stock
vests over four years with 100,000 shares vesting on each anniversary of
his date of hire (March 20, 2000). As of September 30, 2000, the 400,000
shares had an aggregate value of $2,750,000.
(e) The dollar value of the restricted stock appearing in the table is based on
the closing sales price of the Integrated Electrical Services' Common Stock
on December 15, 1999 ($8.8125) the date of the award. The restricted stock
vested 50% on May 31, 2000 and 50% on August 31, 2000. As of September 30,
2000, the 16,670 shares had an aggregate value of $114,606.
(f) The dollar value of the restricted stock appearing in the table is based on
the closing sales price of the Integrated Electrical Services' Common Stock
on December 15, 1999 ($8.8125) the date of the award. The restricted stock
vested 50% on May 31, 2000 and 50% on August 31, 2000. As of September 30,
2000, the 8,181 shares had an aggregate value of $56,244.
(g) The amounts in this column represent matching contributions by the Company
to the 401(k) plan account of such executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO GRANT DATE
UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME OPTIONS GRANTED FISCAL YEAR SHARE DATE VALUE(A)
---- ---------------- ------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
H. David Ramm................... 132,500 6.72% $5.6875 3/20/2010 $340,556
Ben L. Mueller.................. 22,500 5.2500 4/01/2010 28,736
22,500 15.3125 10/1/2009 142,122
------- --------
44,500 2.28% 170,858
John F. Wombwell................ 20,000 5.2500 4/01/2010 $ 25,543
20,000 15.3125 10/1/2009 126,331
------- --------
40,000 2.02% 151,874
Bob Weik........................ 20,000 5.2500 4/01/2010 $ 25,543
20,000 15.3125 10/1/2009 126,331
------- --------
40,000 2.02% 151,874
Herbert R. Allen................ 18,000 5.2500 4/01/2010 $ 22,989
18,000 15.3125 10/1/2009 113,698
------- --------
36,000 1.82% 136,687
Jim P. Wise..................... 32,500 1.65% 15.3125 3/31/2003 $205,287
</TABLE>
---------------
(a) Present value is determined by using the Black-Scholes Option Pricing
Model. The material assumptions and adjustments incorporated into the
Black-Scholes model in making such calculations include the following: (1)
an interest rate representing the interest rate on U.S. Treasury securities
with a maturity date corresponding to the option term; (2) volatility
determined using daily prices for the Company's Common Stock during the
year ended September 30, 2000; (3) a dividend rate of $0; and (4) an
expected option term of six years. The ultimate values of the options will
depend on the future market prices of the Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, that an
optionee will recognize upon exercise of an option will depend on the
difference between the market value of the Common Stock on the date the
option is exercised and the applicable exercise price.
10
<PAGE> 14
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the value of
exercised and unexercised options held by the executive officers of the Company.
Value at September 30, 2000 is measured as the difference between the exercise
price and fair market value on September 30, 2000.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000 AND OPTION VALUES AT SEPTEMBER
30, 2000
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS HELD AT MONEY OPTIONS HELD AT
SHARES SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. David Ramm............. -- -- 53,000 79,500 $62,938 $94,406
Ben L. Mueller............ -- -- -- 45,000 -- 36,563
John F. Wombwell.......... -- -- 93,750 40,000 0 32,500
Bob Weik.................. -- -- 20,519 40,000 0 32,500
Herbert R. Allen.......... -- -- -- 36,000 -- 29,250
Jim P. Wise............... -- -- 76,250 -- 0 --
</TABLE>
11
<PAGE> 15
STOCK PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
stockholder return on its Common Stock with the cumulative total return of (i)
the S&P 500 Index, (ii) the Russell 2000, (iii) a new peer group stock index
(the "New Peer Group") selected in good faith by the Company made up of the
following publicly traded companies: Comfort Systems USA, Inc., Dycom Industries
Inc., Emcor Group Inc., Encompass Services Corp, Fluor Corp, Jacobs Engineering
Group, Mastec Inc., Morrison Knudsen Corp., and Quanta Services Inc., and (iv)
an old peer group stock index (the "Old Peer Group") made up of the following
companies: Comfort Systems USA, Inc. and Encompass Services Corp. The Company
formerly compared its performance to the Old Peer Group stock index made up of
four companies of which two no longer exist. The Company has retained the two
remaining companies in the Old Peer Group Index. Such index will not be included
in future Proxy Statements. The cumulative total return computations set forth
in the Performance Graph assume the investment of $100 in the Company's Common
Stock, the S&P 500 Index, the Russell 2000, the Peer Group Index, and the
Consolidator Index on January 27, 1998.
COMPARISON OF 34 MONTH TOTAL RETURN*
AMONG INTEGRATED ELECTRICAL SERVICES, INC. THE S & P 500 INDEX
THE RUSSELL 2000 INDEX, A NEW PEER GROUP AND AN OLD PEER GROUP
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------------------------------
1/27/98 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99 3/00
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEGRATED ELECTRICAL SERVICES, INC. 100.00 137.07 138.79 102.59 153.45 110.34 111.21 109.05 69.40 36.21
S & P 500 100.00 114.01 117.78 106.06 128.65 135.06 144.58 135.55 155.72 159.29
RUSSELL 2000 100.00 113.25 107.97 86.22 100.28 94.84 109.59 102.66 121.60 117.37
NEW PEER GROUP 100.00 120.45 122.26 100.36 114.77 98.19 128.58 112.28 122.87 160.33
OLD PEER GROUP 100.00 111.47 119.63 100.02 87.15 75.13 89.72 69.99 51.94 34.81
<CAPTION>
CUMULATIVE TOTAL RETURN
------------------------
6/00 9/00 11/00
<S> <C> <C> <C>
INTEGRATED ELECTRICAL SERVICES, INC. 35.34 47.41 47.85
S & P 500 155.06 153.56 140.85
RUSSELL 2000 112.93 114.18 97.89
NEW PEER GROUP 156.75 130.77 126.39
OLD PEER GROUP 30.02 41.40 20.25
</TABLE>
12
<PAGE> 16
EMPLOYMENT AGREEMENTS
On March 20, 2000, the Company entered into a three year employment
agreement with H. David Ramm for the position of President and Chief Executive
Officer. Under this agreement, Mr. Ramm's initial salary was $350,000. Mr. Ramm
also received 132,500 options and a restricted stock award of 400,000 shares.
The Company entered into employment agreements with Messrs Mueller, Wombwell,
Weik, and Allen, with the agreements expiring on January 29, 2003 for all,
except that Mr. Allen's agreement expires on May 21, 2003, with annual salaries
of $230,000, $260,000, $325,000, and $225,000, respectively, plus other employee
benefits. Each agreement is subject to annual review by the Compensation
Committee. In addition, these employment agreements generally restrict these
individuals from competing with the Company for a period of two years after the
date of the termination of employment with the Company. In the event of a change
of control of the Company, such employees may be entitled to the then remaining
benefits under the agreements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to several 5-year lease agreements effective November 1, 1997,
Bexar-Calhoun agreed to lease certain facilities owned by Mr. Weik and his
immediate family. Such lease agreements provide for an annual rent of
approximately $171,744, which the Company believes is not in excess of fair
rental value for such facilities. In February 2000, Mr. Weik received a
short-term cash advance of $260,000 at an interest rate of 7% from a subsidiary
of the Company, which has been repaid in full by Mr. Weik. BW Air, Inc. of which
Mr. Weik is the owner received $255,276 from the Company for reimbursement
travel related expenses for rental of an airplane. The Company believes such
expenses were not in excess of fair rental value for the airplane.
Muth Electric, Inc. ("Muth") has provided certain real estate management
services to Muth Properties, L.L.C. for aggregate fees in excess of $60,000 for
the period of October 1, 1999 to September 30, 2000. Muth has completed various
electrical contracts for Pine Lane Estates, L.L.C., of which Mr. Muth is a
member. One was completed since October 1, 1999 for $15,000. Pursuant to several
5-year lease agreements effective January 30, 1998, Muth Electric, Inc. agreed
to lease certain facilities owned by Muth Properties, L.L.C. of which Mr. Muth
is a member. Such lease agreements provide for an annual rent of approximately
$137,400, which the Company believes is not in excess of fair rental value for
such facilities.
Pursuant to a 5-year lease agreement effective January 21, 1998, Ace
Electric, Inc. agreed to lease certain facilities owned by Stalvey Rentals, a
general partnership of which Mr. Stalvey is a partner. Such lease agreement
provides for an annual rent of $108,000, which the Company believes is not in
excess of fair rental value for such facilities.
Mr. Allen received $61,930 from the Company for reimbursement travel
related expenses for rental of an airplane owned by Mr. Allen, which the Company
believes is not in excess of fair rental value for the airplane.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, no executive officer of the Company served as (i) a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of the Company or its subsidiaries.
During fiscal 2000, no member of the compensation committee (or board
committee performing equivalent functions) (i) was an officer or employee of the
Company or (ii) was formerly an officer of the Company or (iii) had any business
relationship or conducted any business with the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons holding more than ten percent of a
registered class of the Company's equity securities to
13
<PAGE> 17
file with the Securities and Exchange Commission ("SEC") and any stock exchange
or automated quotation system on which the Common Stock may then be listed or
quoted (i) initial reports of ownership, (ii) reports of changes in ownership
and (iii) annual reports of ownership of Common Stock and other equity
securities of the Company. Such directors, officers and ten-percent stockholders
are also required to furnish the Company with copies of all such filed reports.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
2000, the Company believes that, other than the late filing of a form for the
cancellation of stock options held by Mr. Wise, all Section 16(a) reporting
requirements related to the Company's directors and executive officers were
timely fulfilled during 2000.
PROPOSAL TWO
APPROVAL OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending September 30, 2001,
subject to ratification by the Company's stockholders. Arthur Andersen LLP has
served as the Company's independent public accountants since the Company's
inception. Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting of Stockholders and will have an opportunity to make a
statement, if they desire to do so, and to respond to appropriate questions from
those attending the meeting.
The affirmative vote of holders of a majority of the shares of Common Stock
voted at the 2001 Annual Meeting of Stockholders is required to ratify the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for fiscal 2001.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF ARTHUR ANDERSEN LLP'S APPOINTMENT, AND PROXIES EXECUTED AND RETURNED WILL BE
SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Pursuant to the Company's bylaws, stockholder proposals submitted for
consideration at the Company's 2001 Annual Meeting of Stockholders must be
delivered to the Corporate Secretary no later than 10 days after December 28,
2000 the date this Proxy Statement was mailed. If such timely notice of a
stockholder proposal is not given, the proposal may not be brought before the
Annual Meeting. If timely notice is given but is not accompanied by a written
statement to the extent required by applicable securities laws, the Company may
exercise discretionary voting authority over proxies with respect to such
proposal if presented at the Company's 2001 Annual Meeting of Stockholders.
Pursuant to the Company's bylaws, stockholder proposals submitted for
consideration at the Company's 2001 Annual Meeting of Stockholders must be
delivered to the Corporate Secretary no later than 80 days before the date of
the 2001 Annual Meeting of Stockholders; provided, however, that in the event
that less than 90 days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received no later than the close of business on the tenth day following
the date of which such notice was mailed or such public disclosure made. If such
timely notice of a stockholder proposal is not given, the proposal may not be
brought before the Annual Meeting. If timely notice is given but is not
accompanied by a written statement to the extent required by applicable
securities laws, the Company may exercise discretionary voting authority over
proxies with respect to such proposal if presented at the Company's 2001 Annual
Meeting of Stockholders.
A proposal of a stockholder intended to be presented at the next annual
meeting must be received at the Company's principal executive offices no later
than August 30, 2001 if the stockholder making the proposal desires such
proposal to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such meeting.
14
<PAGE> 18
ANNUAL REPORTS AND ADDITIONAL FINANCIAL INFORMATION
STOCKHOLDERS MAY OBTAIN ADDITIONAL FINANCIAL INFORMATION FOR THE YEAR ENDED
SEPTEMBER 30, 2000 FROM THE COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. A COPY OF THE FORM 10-K MAY BE OBTAINED WITHOUT CHARGE BY
WRITTEN REQUEST TO THE SECRETARY, INTEGRATED ELECTRICAL SERVICES, INC., 1800
WEST LOOP SOUTH, SUITE 500, HOUSTON, TX 77027.
By Order of the Board of Directors
/s/ JOHN F. WOMBWELL
John F. Wombwell
Executive Vice President -- Legal
and Administration
15
<PAGE> 19
ANNEX A
INTEGRATED ELECTRICAL SERVICES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
independence and performance of the Company's internal and external auditors,
and (3) the compliance by the Company with legal and regulatory requirements.
The members of the Audit Committee shall meet the independence and
experience requirements as promulgated by the New York Stock Exchange. The Audit
Committee shall be comprised of three or more directors as determined by the
Board, each of who shall be independent nonexecutive directors, free from any
relationship that would interfere with the exercise of his or her independent
judgment. All members of the Audit Committee shall have a basic understanding of
finance and accounting and be able to read and understand fundamental financial
statements, and at least one member of the Audit Committee shall have accounting
or related financial management expertise.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Audit Committee. The Audit
Committee has the authority to conduct any investigation appropriate to fulfill
its responsibilities, and may request any officer or employee of the Company or
the Company's inside or outside counsel or independent auditor to attend a
meeting of the Audit Committee or to meet with any members of, or consultants
to, the Audit Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall have the following responsibilities:
CHARTER
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes in the Charter to the Board for approval.
2. Publish this Charter at least once every three years in accordance with
SEC regulations.
FINANCIAL MATTERS
3. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could significantly
affect the Company's financial statements.
4. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.
5. Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of its Form 10-Q.
6. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor and
control such exposures.
AUDITING AND ACCOUNTING
7. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors or
management.
8. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
16
<PAGE> 20
9. Meet with the independent auditor prior to the audit to review the
planning procedures and staffing of the audit.
10. Obtain from the independent auditor assurance that such auditor and the
Company have complied with the audit requirements of Section 10A of the
Securities Exchange Act of 1934, as amended.
11. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit.
12. Approve the fees to be paid to the independent auditor.
13. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board Standard 1,
discuss such reports with the auditor, and if so determined by the Audit
Committee, take or recommend that the full Board take appropriate action to
oversee the independence of the auditor.
14. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
15. Review the appointment and replacement of any senior internal auditing
executive.
16. Review the significant reports to management prepared in connection
with internal audits and management's responses.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the auditor
and the Company's response to that letter. Such review should include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to required
information.
b. Any changes required in the planned scope of the internal audit.
c. The internal audit responsibilities, budget and staffing.
LEGAL MATTERS
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
19. Advise the Board with respect to the Company's policies and procedures
regarding conflicts of interest and compliance with material laws and
regulations.
20. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance policies
and any material reports or inquiries received from regulators or governmental
agencies.
EXECUTIVE SESSIONS
21. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate executive
sessions.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations.
17
<PAGE> 21
--------------------------------------------------------------------------------
INTEGRATED ELECTRICAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS OF INTEGRATED ELECTRICAL SERVICES, INC.
The undersigned hereby appoints C. Byron Snyder, H. David Ramm and John F.
Wombwell, and each of them individually, as proxies with full power of
substitution, to vote all shares of Common Stock of Integrated Electrical
Services, Inc. that the undersigned is entitled to vote at the Annual Meeting of
Stockholders thereof to be held on Wednesday, February 7, 2001, at 10:30 a.m. at
the Sheraton Suites Houston, 2400 West Loop South, Houston, Texas 77027 or at
any adjournment or postponement thereof, as follows:
Any executed proxy which does not designate a vote shall be deemed to
grant authority for any item not designated.
PROPOSAL 1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY for all nominees
listed below
01-Donald Paul Hodel, 02- H. David Ramm, and 03-Ben L. Mueller to hold
office until the 2004 Annual Meeting and until their successors are elected and
qualified. INSTRUCTION: to withhold authority to vote for any individual nominee
or nominees, write the appropriate name or names in the space provided here.
--------------------------------------------------------------------------------
PROPOSAL 2. APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS FOR THE COMPANY
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--------------------------------------------------------------------------------
Please check the following box if you plan to attend the Annual Meeting of
Stockholders in person. [ ]
--------------------------------------------------------------------------------
P
R
O
X
Y
--------------------------------------------------------------------------------
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED "FOR" PROPOSAL 1 (ALL NOMINEES), AND "FOR" PROPOSAL 2,
AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH
RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO A VOTE THEREON.
Dated:____________________ , _______
Signature(s)________________________
Please sign exactly as name appears
on this card. Joint owners should
each sign. Executors, administrators,
trustees, etc., should give their
full titles.
PLEASE COMPLETE, SIGN AND
PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED ENVELOPE.
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