<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 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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
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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 15, 1996
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 15, 1996 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 1999; and
2. To consider a proposed amendment to the Company's 1992 Stock Option
Plan to increase the maximum number of shares that may be issued under the
Plan from 750,000 to 1,500,000.
3. 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 15, 1996 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 12, 1996
<PAGE> 3
POWELL INDUSTRIES, INC.
8550 MOSLEY DRIVE
HOUSTON, TEXAS 77075
---------------------
PROXY STATEMENT
JANUARY 12, 1996
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 15, 1996
---------------------
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 15, 1996 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, 1995, including consolidated financial statements, will be mailed to
stockholders on or about February 2, 1996. 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 15, 1996, as the record date for determination of
stockholders entitled to receive notice of and to vote at the Annual Meeting.
There are 10,542,704 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, except that for the
election of directors each holder shall be entitled to a number of votes equal
to the number of shares which he is entitled to vote multiplied by the number of
directors to be elected (three).
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. Abstentions and broker votes will be counted as shares
present in determining a quorum but broker non-votes will not be counted as
present. The three persons receiving the greatest number of votes cast at the
meeting to fill the directorships with terms to expire in 1999 will be elected
as directors of the Company, class of 1999. Thus, abstentions 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 will have the effect of negative votes
with respect to any such other matters. If a quorum is present, broker non-votes
will have no effect on the election of directors or on votes with respect to
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.
<PAGE> 4
COMMON STOCK OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of January 12, 1996 (except as otherwise
noted below with respect to shares held by employee benefit plans and with
respect to shares shown as beneficially owned on a Schedule 13G), 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 Companys' outstanding Common
Stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
--------------------------------------------------------- ------------ ------
<S> <C> <C>
Thomas W. Powell......................................... 3,589,751(1) 34.05%
P.O. Box 12818
Houston, Texas 77217
Bonnie L. Powell......................................... 1,457,225(2) 13.82%
435 Bendwood
Houston, Texas 77024
Heartland Advisors, Inc.................................. 1,166,900(3) 11.07%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Charter National Bank,................................... 817,332(4) 7.75%
Trustee of the Powell Industries, Inc.
Employee Stock Ownership Trust
and of the Powell Industries, Inc.
Frozen Stock Ownership Trust
P.O. Box 1494
Houston, Texas 77251-1494
Wellington Management Company............................ 686,700(5) 6.51%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Mr. Powell has sole voting power and sole investment power with respect to
2,812,512 of such shares. Of those 2,812,512 shares, 1,022,007 are held
directly by Mr. Powell, 78,720 by his IRA, and 1,711,785 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-trustee, Bonnie L. Powell. The shares
held by such trust are also included in the number of shares listed as
beneficially owned by Mrs. Powell. Also includes 445,500 shares held by
Testamentary Trust No. 1, of which Mr. Powell is a co-trustee. Mr. Powell
shares voting and investment power with respect to such shares held by
Testamentary Trust No. 1 with Bonnie L. Powell and Richard F. Margolin, the
other co-trustees of such trust. Any act of such co-trustees requires the
approval of a majority of them. The shares held by Testamentary Trust No. 1
are also included in the number of shares listed as beneficially owned by
Mrs. Powell. Also includes 1,460 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
2
<PAGE> 5
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, 1995. Also includes 12,000
shares stock options for which are currently exercisable by Mr. Powell.
(2) Mrs. Powell has sole voting power and sole investment power with respect to
694,365 of such shares. Also includes 317,360 shares held by the Thomas
Walker Powell Trust. Mrs. 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-trustee, Thomas W. Powell. The shares held by such trust
are also included in the number of shares listed as beneficially owned by
Mr. Powell. Also includes 445,500 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 Thomas W. Powell and Richard F. Margolin, the other co-trustees of
such trust. Any act of such co-trustees requires the approval of a majority
of them. The shares held by Testamentary Trust No. 1 are also included in
the number of shares listed as beneficially owned by Mr. Powell.
(3) Based on an amended Schedule 13G dated as of May 31, 1995 filed with the
Securities and Exchange Commission by Heartland Advisors, Inc. According to
such Schedule 13G, Heartland Advisors, Inc. has the sole power to dispose or
direct the disposition of all of such shares, but does not have the power to
vote or direct the vote of any of such shares.
(4) Of such shares, 780,484 are held in the Powell Industries, Inc. Employee
Stock Ownership Trust (the "ESOP") and 36,848 are held in the Powell
Industries, Inc. Frozen Employee Stock Ownership Trust (the "Frozen ESOP").
Charter National Bank-Houston, 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, 1995, 144,542 of the shares held by the ESOP were allocated to
the accounts of participants. An additional 54,356 shares will be allocated
to the accounts of participants effective December 31, 1995, 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, 1995 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 6, 1995.
(5) Based on a Schedule 13G dated February 3, 1995 filed with the Securities and
Exchange Commission by Wellington Management Company ("WMC"). According to
such Schedule 13G, such shares are owned by a variety of investment clients
of WMC, but WMC, in its capacity as investment advisor, may be deemed the
beneficial owner of such shares. Also according to such Schedule 13G, WMC
has shared voting power with respect to 436,700 of such shares and shared
dispositive power with respect to all of such shares.
3
<PAGE> 6
The following table sets forth, as of January 12, 1996, 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:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE
OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
-------------------------------------------------- -------- ------
<S> <C> <C>
J.F. Ahart........................................ 16,551(2) *
Thomas C. Burtnett................................ 2,936(3) *
Eugene L. Butler.................................. 500 *
Everett N. DeVault................................ 1,000 *
Adam Janas........................................ 12,288(4) *
Bonnie L. Powell.................................. 1,457,225(5) 13.82%
Thomas W. Powell.................................. 3,589,751(6) 34.05%
Stephen W. Seale, Jr.............................. 13,023(7) *
Elbert D. Stewart................................. 1,500 *
Donald D. Sykora.................................. 1,000 *
Lawrence R. Tanner................................ 2,500 *
Ronald J. Wolny................................... 0 0
M.M. Zeller....................................... 18,127(8) *
All Executive Officers and Directors as a group
(19 persons).................................... 4,386,235(9) 41.60%
</TABLE>
- ---------------
* 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 1,226 shares allocated to Mr. Ahart's account in the ESOP. See
footnote (4) to the preceding table. Also includes 5,800 shares stock
options for which are currently exercisable by Mr. Ahart.
(3) Includes 336 shares allocated to Mr. Burtnett's account in the ESOP. See
footnote (4) to the preceding table. Also includes 2,600 shares stock
options for which are currently exercisable by Mr. Burtnett.
(4) Mr. Janas has sole voting and investment power over 5,534 of such shares.
Also includes 1,258 shares allocated to Mr. Janas' account in the ESOP. See
footnote (4) to the preceding table. Also includes 1,096 shares held in
trust for Mr. Janas under the Company's Employees Incentive Savings Plan.
See footnote (1) to the preceding table. Also includes 4,400 shares stock
options for which are currently exercisable by Mr. Janas.
(5) See footnote (2) to the preceding table.
(6) See footnote (1) to the preceding table.
(7) Includes 3,000 shares held by Seale Land & Cattle Co., and 10,023 shares
held by the Michael William Powell Trust (a trust for the benefit of Michael
William Powell, the son of Thomas W. Powell), of which Mr. Seale is a
co-trustee. With respect to the shares held by such trust, Mr. Seale shares
voting and investment power with Sharon Thurman, the other co-trustee of
such trust.
(8) Mr. Zeller has sole vesting and investment power over 10,080 of such shares.
Also includes 1,247 shares allocated to Mr. Zeller's account in the ESOP.
See footnote (4) to the preceding table. Also includes 6,800 shares stock
options for which are currently exercisable by Mr. Zeller.
4
<PAGE> 7
(9) Includes 1,974 shares that are held in trust for certain executive officers
not named above under the Employees Incentive Savings Plan of the Company.
See footnote (1) to the preceding table. Also includes 4,770 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 8,000 shares stock options for which are currently exercisable by
certain executive officers not named above. Also includes 17,950 shares over
which certain executive officers not named above have sole voting and
investment power.
ELECTION OF DIRECTORS
The terms of three directors expire in 1996 under the bylaws of the
Company. The terms of the remaining directors continue after the Annual Meeting.
The Board of Directors has nominated J.F. Ahart, Eugene L. Butler, and Bonnie L.
Powell for election as directors with terms to expire in 1999. Mr. Butler and
Ms. Powell currently serve as directors with terms expiring in 1996. Mr. Ahart
is not currently a director, but previously served as a director of the Company
from January 1990 to March 1992. 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, 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.
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
FOR PAST FIVE OFFICES HELD DIRECTOR TERM
NOMINEES AGE YEARS(1) WITH COMPANY SINCE EXPIRES
- ------------------------- ---- ---------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
J.F. Ahart............... 54 Vice President, (2) (3) (3)
Secretary,
Treasurer, and
Chief Financial
Officer of the
Company since
1989(2)
Eugene L. Butler......... 54 Chairman of the Director 1990 1996
Board,
Intercoastal
Terminal, Inc.,
April 1991 to
present; CEO,
Chairman, and a
director of
Petrominerals
Corporation,
April 1993-April
1995; formerly
President, Chief
Executive
Officer, and
Director of
Weatherford
International
Incorporated, a
Houston-based
multi-national
energy
corporation,
from 1984 until
April, 1991
Bonnie L. Powell......... 62 Private investor Director 1986 1996
for more than
the past five
years
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
DIRECTOR WITH FOR PAST FIVE OFFICES HELD DIRECTOR TERM
EXPIRING TERM AGE YEARS(1) WITH COMPANY SINCE EXPIRES
- ------------------------ ---- ----------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Everett N. DeVault(4)... 70 President of Director 1988 1996
Cedar Hill Farms,
Inc., a ranching
and cattle
operation;
previously
General Manager
of Technology &
Manufacturing for
Construction
Equipment
Operations of
General Electric
Company until
retirement in
1988
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
DIRECTORS REMAINING FOR PAST FIVE OFFICES HELD DIRECTOR TERM
IN OFFICE AGE YEARS(1) WITH COMPANY SINCE EXPIRES
- ------------------------ ---- ----------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Stephen W. Seale, Jr.... 56 Director-Operations, Director 1985 1997
Materials and
Structures
Division and
other assignments
at Southwest
Research
Institute, an
independent
research and
development
organization, for
more than the
past five years
Donald D. Sykora........ 65 Office of the Director 1986 1997
Chairman, Houston
Industries
Incorporated,
since September
1, 1995;
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 and Trans
Texas Gas
Corporation
Ronald J. Wolny......... 56 Vice President, Director 1992 1997
Project
Management, Fluor
Daniel, Inc. for
more than the
past five years
Thomas W. Powell........ 55 Chairman of the Director, Chairman of 1984 1998
Board, President the Board, President
and Chief and Chief Executive
Executive Officer Officer
of the Company
since 1984
Elbert D. Stewart....... 69 Consultant for Director 1981 1998
Destec Energy,
Inc., a
subsidiary of Dow
Chemical Co.
specializing in
efficient
utilization of
energy sources,
for more than the
past five years
Lawrence R. Tanner...... 69 Engineering Director 1992 1998
Manager 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
</TABLE>
6
<PAGE> 9
- ---------------
(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 is not currently a director. He previously served on the Board of
Directors from January 1990 to March 1992.
(4) Mr. DeVault is retiring from the Board.
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 $1,500 and a fee of $2,000 for each board meeting
attended. Members of a committee other than the chairman receive a fee of $400
for attending each committee meeting. Committee chairmen receive $750 for
attending each committee meeting.
In 1993, the Company adopted the Powell Industries, Inc. Directors Fee
Program which permits directors to defer receipt of the directors fees to which
they would otherwise be entitled and to have such deferred fees allocated to a
shadow account as if they were invested in Common Stock of the Company on the
date the fees were payable. Then upon expiration of the deferral period or the
retirement or death of the director, payment will be made in the form of shares
of Common Stock equal to the number of shares in his shadow account (plus any
distributions on the Common Stock that were credited to the shadow account).
Four meetings of the Board of Directors were held in the last fiscal year.
No incumbent director attended fewer than seventy-five percent (75%) of the
aggregate of (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by all committees of the Board on which he
served.
The Board of Directors has a standing Audit Committee which met 4 times
during the last fiscal year. The Audit Committee consists of Messrs. Seale,
Butler, and Tanner. The Audit Committee has the responsibility to assist the
Board of Directors in fulfilling its fiduciary responsibilities as to accounting
policies and reporting practices of the Company and its subsidiaries and the
sufficiency of the audits of all Company activities. It is the Board's agent in
ensuring the integrity of financial reports of the Company and its subsidiaries,
and the adequacy of disclosures to shareholders. The Audit Committee is the
focal point for communication between other directors, the independent auditors,
internal auditors and management as their duties relate to financial accounting,
reporting, and controls.
The Board of Directors also has a standing Compensation Committee which met
4 times during the last fiscal year. The Compensation Committee consists of Mr.
DeVault, 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 of the Company.
The Board of Directors does not have a standing nominating committee.
7
<PAGE> 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.
<TABLE>
<CAPTION>
NAME AGE SINCE POSITION(1)
- ------------------------- --- ---- ------------------------------------------
<S> <C> <C> <C>
Kelly A. Shaw............ 44 1994 Vice President-Marketing of the Company
Robert L. Mitchell....... 62 1990 Controller of the Company
Glenn D. Auer............ 56 1991 President of Powell-Esco Company
Edwin G. Becnel.......... 66 1990 President of Powell-Process Systems, Inc.
Thomas C. Burtnett....... 52 1993 President of Unibus, Inc.
Larry D. Davis........... 51 1984 President of U.S. Turbine Corp.
David J. Dimlich......... 49 1994 President of Transdyn Controls, Inc.
Adam Janas............... 57 1984 President of Delta-Unibus Corp. ("Delta")
M. M. Zeller............. 57 1990 President of Powell Electrical
Manufacturing Company ("PEMCO"), Traction
Power Systems, Inc. and Powell-Innovative
Breaker Technologies, Inc.
</TABLE>
- ---------------
(1) Each of the corporations listed (other than the Company) is a direct or
indirect 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 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. Auer has been President of Powell-Esco Company since May of 1991. He
had previously served as Vice President-Apparatus Service Division of Powell
Electrical Manufacturing Company since 1981.
Mr. Becnel became President of Powell-Process Systems, Inc. on November 1,
1990. From March 1989 to July 1990 Mr. Becnel was Vice President and General
Manager of the Electric Metering Systems Operations of Westinghouse/ABB Power
T&D Company, which became the Electric Metering Business Area of ABB Power T&D
Company, Inc. in January 1990.
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. Davis has been President of U.S. Turbine Corp. since 1984.
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-Unibus Corp. since 1984.
8
<PAGE> 11
Mr. Zeller was elected President of Powell Electrical Manufacturing Company
in March of 1990. He became President of Traction Power Systems, Inc. upon its
organization in May of 1992 and President of Powell-Innovative Breaker
Technologies, Inc. upon its acquisition by PEMCO in June of 1993. He previously
served as an operations manager for Siemens, a manufacturer of low and medium
voltage switchgear.
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).
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 $100,000, for each of
the Company's fiscal years ending October 31, 1995, October 31, 1994, and
October 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG
TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS(1)
-------------------- ------
(a) (b) (c) (d) (e) (f)
SECURITIES ALL
UNDERLYING OTHER
SALARY OPTIONS COMPENSA-
NAME AND PRINCIPAL POSITION YEAR ($) BONUS($) (#) TION(2)($)
- ------------------------------------- ---- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Thomas W. Powell..................... 1995 255,767 158,250 35,000 32,729(3)
CEO 1994 250,000 101,250 0 32,729(3)
1993 250,000 0 30,000 32,728(4)
M.M. Zeller.......................... 1995 150,541 85,413 18,500 4,500
President of PEMCO 1994 147,264 61,543 0 4,500
1993 135,505 3,000 17,000 3,315
J.F. Ahart........................... 1995 138,902 74,736 15,500 4,500
CFO 1994 138,902 56,255 0 4,500
1993 132,000 13,200 14,500 3,889
Adam Janas........................... 1995 106,400 102,270 12,500 4,500
President of Delta 1994 97,405 89,895 0 4,500
1993 94,084 65,859 11,000 3,560
Thomas C. Burtnett................... 1995 87,072 55,188 9,000 4,288
President of Unibus, Inc. 1994 82,667 30,380 0 2,611
1993 78,824 28,773 6,500 0
</TABLE>
- ---------------
(1) As of October 31, 1995, the Company had outstanding a restricted stock
award, pursuant to which stock certificates are issued only for vested and
unrestricted shares as the award vests. As of October 31, 1995, the
aggregate number of shares subject to such award but for which stock
certificates had not been issued was 50,000, and the value of such shares as
of such date was $394,000.
(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).
9
<PAGE> 12
(3) Of this amount, $4,500 was a matching contribution 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 were premiums paid by the Company with
respect to life insurance for the benefit of Mr. Powell.
(4) Of this amount, $4,499 was a matching contribution by the Company to Mr.
Powell's account in the Company's Employees Incentive Savings Plan (a 401(k)
plan), and the remaining $28,229 were premiums paid by the Company with
respect to life insurance for the benefit of Mr. Powell.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------- --------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(1) YEAR ($/SH)(2) DATE(3) 5%($) 10%($) 0%($)
- ---------------------- ---------- ---------- -------- ---------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas W. Powell...... 35,000 13.58 6.25 6/24/02 89,040 207,515 0
M.M. Zeller........... 18,500 7.18 6.25 6/24/02 47,064 109,687 0
J.F. Ahart............ 15,500 6.02 6.25 6/24/02 39,432 91,900 0
Adam Janas............ 12,500 4.85 6.25 6/24/02 31,800 74,113 0
Thomas C. Burtnett.... 9,000 3.49 6.25 6/24/02 22,896 53,361 0
</TABLE>
- ---------------
(1) Such options become exercisable at the rate of 20% per year on each of the
first five anniversaries of June 25, 1995, 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 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.
10
<PAGE> 13
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
OCTOBER 31, AT OCTOBER 31,
1995(#) 1995 ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------------------- ------------------------- -------------------------
<S> <C> <C>
Thomas W. Powell....................... 12,000/53,000 1,500/24,125
M.M. Zeller............................ 6,800/28,700 850/12,837.25
J.F. Ahart............................. 5,800/24,200 725/10,775
Adam Janas............................. 4,400/19,100 550/8,637.50
Thomas C. Burtnett..................... 2,800/13,200 325/6,112.50
</TABLE>
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; 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, Everett N. DeVault, 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.
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, 1995.
During the fiscal year, the Committee was comprised of the following Board
members, all of whom were non-employee directors of the Company: Everett N.
DeVault, Chairman, Bonnie L. Powell, and Ronald J.
11
<PAGE> 14
Wolny. 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.
During fiscal year 1995, the Committee also reviewed market compensation trends
for outside directors. The Committee met 4 times during the year.
EXECUTIVE COMPENSATION PHILOSOPHY
The objective of the executive compensation program is to create strong
financial incentive for corporate officers and managers and subsidiary
executives to increase profits and grow revenues. The following objectives guide
the Committee in its deliberations:
- Provide a competitive compensation program that enables the Company to
attract and retain key executives and Board members.
- Assure a strong relationship between the performance results of the
Company or subsidiary and the total compensation received.
- Balance both annual and longer performance objectives of the Company.
- Encourage executives to acquire and retain meaningful levels of common
stock of the Company.
- Work closely with the Chief Executive Officer to assure that the
compensation program supports the management style and culture of the
Company.
In addition to normal employee benefits, the executive total compensation
program includes base salary, annual cash incentive compensation, and longer
term stock based grants and awards.
Primary market comparisons are made to a broad group of manufacturing
companies, adjusted for size and job responsibilities. This group is broader
than the published industry index of companies included in the cumulative total
return performance graph presented elsewhere in this Proxy Statement and is used
because it is more representative of the executive market in which the Company
competes for talent and provides a consistent and stable market reference from
year to year. Data sources include national survey databases, proxy statement
disclosures, and general trend data provided by consultants.
Variable incentives, both annual and longer term, are important components
of the program and are used to link pay and performance results. Variable
incentive awards and performance standards are calibrated such 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.
Recent changes to 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
intends to comply with the provisions of Section 162(m) with respect to the
longer term stock based incentives, it believes that the use of discretion in
evaluating the individual contributions of corporate management is appropriate.
As such, the Committee has taken no action to comply with Section 162(m) with
respect to annual incentive payments. It is not anticipated that any executive
will receive compensation in excess of this limit during fiscal years 1995 or
1996. The Committee will continue to monitor this situation and will take
appropriate action if it is warranted in the future.
12
<PAGE> 15
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 performance levels for the plan
year are considered in setting the performance standards for each subsidiary.
For fiscal year 1995, 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.
The actual corporate performance results and executive total cash compensation
levels for fiscal year 1995 were 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 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 Committee approved the
grant of options for 265,650 shares, approximately 2.5% of the total common
shares outstanding.
13
<PAGE> 16
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, the improvement in profit performance of the Company,
and Mr. Powell's efforts in seeking out growth opportunities for the Company and
controlling costs. During fiscal year 1995, Mr. Powell elected not to receive an
increase in base salary. For fiscal year 1995, Mr. Powell received an annual
incentive award of $158,250. During fiscal year 1995, Mr. Powell received stock
options for 35,000 shares with an option price of $6.25 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
Everett N. DeVault, Chairman
Bonnie L. Powell
Ronald J. Wolny
14
<PAGE> 17
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG POWELL INDUSTRIES, INC.,
NASDAQ MARKET INDEX AND PUBLISHED INDUSTRY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD POWELL INDUS- MG GROUP NASDAQ MARKET
(FISCAL YEAR COVERED) TRIES, INC. INDEX INDEX
<S> <C> <C> <C>
1990 100 100 100
1991 119.70 123.33 127.20
1992 96.97 126.31 123.22
1993 87.88 162.03 161.70
1994 66.67 182.42 171.91
1995 83.33 224.26 203.93
</TABLE>
ASSUMES $100 INVESTED ON OCTOBER 31, 1990
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED OCTOBER 31, 1995
15
<PAGE> 18
PROPOSAL TO APPROVE THE AMENDMENT
OF THE 1992 POWELL INDUSTRIES, INC.
STOCK OPTION PLAN
GENERAL
The Board of Directors believes that the 1992 Powell Industries, Inc. Stock
Option Plan (the "Plan") has been of material benefit to the Company. However,
the current Plan provides that the total number of shares of Common Stock of the
Company with the respect to which options and other awards may be granted under
the Plan is 750,000, and only 83,083 shares remain available for grants under
the Plan. The Board believes that it is in the best interest of the Company and
its stockholders to amend the Plan to increase the maximum number of shares of
Common Stock of the Company with the respect to which grants may be made under
the Plan from 750,000 to 1,500,000 to enable the Company to continue to provide
officers and other key employees an opportunity to acquire a proprietary
interest in the Company through the acquisition of its Common Stock, thereby
rewarding employees for meritorious service and helping them to develop a
stronger incentive to work for the continued success of the Company and
assisting the Company in attracting and retaining outstanding personnel in
today's competitive labor market.
On January 12, 1996 the Board of Directors approved such amendment of the
Plan, subject to and contingent upon approval by the Company's stockholders of
such amendment. At the annual meeting of stockholders, the stockholders will be
asked to approve the amendment to the Plan to increase the maximum number of
shares available under the Plan from 750,000 shares of the Company's Common
Stock to 1,500,000 shares (subject to adjustment in the event of stock
dividends, stock splits, and other contingencies).
DESCRIPTION OF THE PLAN
The description of the principal provisions of the Plan set forth herein is
intended solely as a summary and is subject to and qualified by the full text of
the Plan. The principal features of the Plan are as follows:
Administration. The Plan is administered by the Compensation Committee
of the Board of Directors (the "Committee"). The Committee has the
authority, subject to the provisions of the Plan, to determine the
employees (except as noted in "Eligibility" below) to whom awards, options,
or stock appreciation rights may be granted; to determine the number of
shares and purchase or exercise price of each award or option; to determine
the terms, conditions, and restrictions of each award or option; to
determine whether or not to include in any award or option the right of the
recipient or optionee to surrender all or a portion of an award or option
and receive in exchange therefor an amount in cash or other property and to
determine the terms and conditions of any such surrender rights; to
determine the effect, if any, on an award or option of the death,
disability, retirement, or termination of employment of the employee
receiving an award or option; and to otherwise construe, interpret, and
administer the Plan.
Eligibility. Any employee of the Company or any subsidiary of the
Company is eligible to participate in the Plan, except that no member of
the Committee may receive an award or option if receipt of it would cause
the individual not to be a "Disinterested Person" as defined in Rule 16b-3
under the Securities Exchange Act of 1934. There are approximately 950
employees of the Company and its subsidiaries. However, since the Plan
provides that future as well as present employees may participate, it is
not possible to determine the number of employees who will be eligible to
participate. Further, since receipt of benefits under the Plan depends upon
the particular grants made from time to time by the Committee, in its
discretion, it is not possible to determine the amounts that will be
received under the
16
<PAGE> 19
Plan as a result of this proposed amendment, or that would have been
received during the last fiscal year had such amendment been in effect, by
the executive officers listed in the Summary Compensation Table above, by
all current executive officers as a group, or by all employees (no current
directors of the Company who are not executive officers of the Company are
currently eligible to participate in the Plan).
Purchase Price. The Committee has the authority to determine the
purchase price, if any, for awards of Common Stock and the exercise price
for stock options. Except for incentive stock options, the purchase price
may be less than the fair market value of the stock. The Committee may
determine the consideration, if any, to be received by the Company for
granting or extending an award or stock option.
Awards and Options and Stock Appreciation Rights. The Plan provides
for the award of restricted stock, the grant of incentive stock options and
nonincentive stock options, including reload options, and the grant of
stock appreciation rights, all with respect to the Common Stock of the
Company.
Awards: The Committee may grant an award of Common Stock to a
participant pursuant to a Restricted Stock Agreement. The Committee may
vary the terms and conditions of each award, including without limitation,
the period (not to exceed 10 years) during which the award may be
restricted or exercised, the manner of exercise, the vesting period, the
price to be paid for the stock, if any, and the events which may result in
termination of award rights. Unless expressly provided otherwise in the
award, the participant's unexercised rights will expire upon termination of
employment.
Incentive Options and Nonincentive Options: An option granted under
the Plan may be either an incentive stock option ("ISO") meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or a nonincentive or nonqualified stock option
("NSO") which is not an ISO. See "Tax Status" below. Additionally, the Plan
authorizes the issuance of reload options and stock appreciation rights
("SARs") (discussed below) as part of the stock options.
Option Price: The price at which the participant may purchase shares
subject to an ISO shall not be less than 100% of the greater of the fair
market value or the aggregate par value of the optioned shares on the date
of grant. If the optionee owns more than 10% of the combined voting power
of all stock of the Company or affiliates (a "10% shareholder"), the
purchase price shall not be less than 110% of the fair market value of the
optioned shares on the date of grant. As of January 12, 1996, the market
value of the Common Stock was $8.375 per share. The price and terms at
which the participant may purchase shares of Common Stock subject to a NSO
or SAR shall be determined by the Committee in its discretion, but the
option price may not be less than the par value of the stock. Shares
purchased pursuant to options must be paid in full at the time of exercise.
Such payment may be made in the form of cash, Company Common Stock, or
other form of payment acceptable to the Committee.
Terms of Options: No option is exercisable after the expiration of
ten years from the date of grant, or five years in the case of a 10%
shareholder. Unless the option agreement provides otherwise, all options
terminate immediately upon severance of employment from the Company for any
reason other than death, retirement for age or disability under then
established rules of the Company, or severance for disability. In these
cases, an extended exercise period is provided, but the exercise period as
extended cannot exceed the original option period. At the time of exercise,
the optionholder must satisfy any additional conditions imposed by the
Committee at the time of grant. Unless the shares purchased pursuant to an
option are effectively registered under the Securities Act of 1933, as
amended, at the time of exercise, the optionee must represent and agree
that such shares are being purchased for investment.
17
<PAGE> 20
Reload Options: The Committee may grant reload options in connection
with issuance of an ISO or NSO. Under a reload option, if the exercise of
the stock option is paid in whole or in part in Common Stock, the reload
option will (1) result in issuance of additional options for the same
numbers of shares of Company Stock surrendered; (2) be an ISO or an NSO
depending on the previously granted option being exercised; and (3) be
subject to the same terms and conditions as the original option unless a
change is specifically provided.
Stock Appreciation Rights: The Plan provides that the Committee may,
at its discretion, grant stock appreciation rights ("SARs") to some or all
optionholders at the time of grant of an option. Each SAR granted with an
option will be exercisable at the times and to the extent that the related
stock options (the "Related Option") are exercisable. At the time of
exercise, the holder will become entitled to receive, in cash and/or shares
of Common Stock at the discretion of the Committee, the difference between
the fair market value of one share of Common Stock and the exercise price
per share specified in the Related Option, multiplied by the number of
shares in respect of which the SAR was exercised. SARs issued in connection
with ISOs shall meet certain additional conditions specified in the Plan.
The Plan also authorizes the Committee to issue SARs which are not a part
of a Related Option. The exercise price and terms of these SARs shall be
specified by the Committee in the Stock Appreciation Rights Agreement
granting the SAR.
Participation: Stock options, SARs, and awards may be granted on or
before March 16, 1999, to officers and key employees (including those who
are directors, except as provided above), as selected by the Committee. For
each ISO, the fair market value of the shares with respect to which options
first become exercisable by the optionholder during any calendar year,
determined as of the date of grant of the ISO, may not exceed $100,000. The
Committee selects participants and determines the conditions of
exercisability of options.
Forfeiture: If the Committee finds that a participant has been
discharged for fraud, embezzlement, theft, commission of a felony, or
proven dishonesty in the course of employment, which conduct has damaged
the Company, or if a participant has participated, engaged, or had a
financial interest, whether as an employee, officer, director, consultant,
contractor, shareholder, owner or otherwise, in any commercial endeavor in
the United States which is competitive with the business of the Company
without the written consent of the Company, the participant shall forfeit
all options, reload options, SARs and awards which have not vested and for
which the Company has not delivered a stock certificate.
Amendment and Termination. The Board of Directors may suspend or
discontinue the Plan and may amend the Plan with respect to shares at the
time not subject to unexercised options of awards, but may not (except with
stockholder approval) change the number of shares subject to the Plan,
change the class of employees and others eligible to participate, or reduce
the price at which ISOs may be granted under the Plan. No award, stock
option, or SAR may be granted pursuant to the Plan after March 16, 1999.
Tax Status. ISOs -- The grant of an ISO to a participant will not
result in any income tax consequences to the participant. Generally, the
exercise of an ISO will not result in any income tax consequences to a
participant if the ISO is exercised by the participant during his
employment with the Company or a subsidiary or within a specified period
after termination of employment due to death, retirement for age or
disability under then established rules of the Company, or severance for
disability. However, the excess of the fair market value of such shares as
of the date of exercise over the option price is a tax preference item for
purposes of determining a participant's alternative minimum tax. A
18
<PAGE> 21
participant who sells shares acquired pursuant to the exercise of an ISO
after the expiration of (i) two years from the date of grant of the ISO, or
(ii) one year from the date of exercise of the ISO (the "Waiting Period")
will generally recognize long term capital gain or loss on such sale.
A participant who sells his ISO shares prior to the expiration of the
Waiting Period (an "Early Disposition") generally will recognize ordinary
income in the year of sale in an amount equal to the excess, if any, of (a)
the lesser of (i) the fair market value of such shares as of the date of
exercise or (ii) the amount realized on such sale, over (b) the option
price. With regard to a participant who is an officer, director, or 10%
shareholder (an "Insider"), taxation arising by virtue of an Early
Disposition, and the determination of the fair market value of the ISO
Shares, will generally be deferred until the sale of the ISO shares would
no longer subject the participant to liability under Section 16(b) of the
Securities Exchange Act of 1934 ("Section 16(b) Restrictions"). However,
under the regulations applying Section 16(b) Restrictions, a participant
who exercises his option more than six months after the date of grant of
such option would not be subject to Section 16(b) Restrictions at the time
of exercise. Any additional amount realized on an Early Disposition would
be treated as capital gain to the participant, short or long term,
depending on such participant's holding period for the shares. If the
shares are sold for less than the option price, the participant will not
recognize any ordinary income but will recognize a capital loss, short or
long term, depending on the holding period.
Absent an Early Disposition, the Company will not be entitled to a
deduction either as a result of the grant of an ISO, the exercise of an
ISO, or the sale of ISO shares by the participant. If there is an Early
Disposition of ISO shares, the Company will be able to deduct the amount of
ordinary income recognized by the participant with respect to such sale.
NSOs -- Under current interpretations of the Code, the grant of a NSO
to a Plan participant will not result in the recognition of any taxable
income by the participant. A participant will recognize income at the date
of exercise of a NSO on the difference between (i) the fair market value of
the shares acquired pursuant to the exercise of the NSO, and (ii) the
exercise price of the NSO. With regard to a participant who is an Insider,
taxation arising by virtue of the exercise of the NSO will be deferred
until the sale of the shares acquired would no longer subject the
participant to the Section 16(b) Restrictions, unless the participant
elects to be taxed on the date of exercise of the NSO. A participant who
exercises his option more than six months after the date of grant of such
option would not be subject to Section 16(b) Restrictions at the time of
exercise.
The Company will be entitled to a deduction in the same amount as the
income recognized by a participant due to the exercise of a NSO.
SARs -- Under current interpretations of the Code, the grant of a SAR
to a participant will not result in recognition of any taxable income by
the participant. If a participant receives cash upon exercise of a SAR, he
will recognize ordinary income upon exercise in an amount equal to the
payment received. If a participant receives stock upon exercise of a SAR,
he will recognize ordinary income at the date of exercise in the same
manner and amount as described above with respect to the exercise of a NSO.
The Company will be entitled to a deduction in the same amount as the
income recognized by the participant due to the exercise of a SAR.
Awards -- Generally, the participant will be taxed at the time the
restrictions on the subject stock lapse and the stock vests in the
participant or is transferable by the participant. At that time, the
19
<PAGE> 22
participant would recognize ordinary income determined by the fair market
value of the stock in excess of the price, if any, paid by the participant
for the stock.
The Company will be entitled to a deduction in the same amount as the
income recognized by the participant related to an award of stock, in the
year so recognized.
MATERIAL DIFFERENCE FROM THE EXISTING PLAN
The only difference between the existing Plan and the Plan as proposed to
be amended is that the maximum number of shares of the Common Stock of the
Company which may be issued under the Plan would be increased from 750,000 to
1,500,000 (subject to adjustment in the event of stock dividends, stock splits,
and other contingencies).
APPROVAL
Pursuant to the resolution of the Board of Directors approving this
amendment to the Plan, this amendment will not become effective until it is
approved by the holders of a majority of the shares of voting stock of the
Company present and entitled to vote at a meeting of the stockholders of the
Company at which a quorum is present.
The Board of Directors recommends a vote FOR approval of this amendment of
the Plan.
INDEPENDENT AUDITORS
Arthur Andersen LLP has been selected to serve as independent auditors of
the Company for the fiscal year ending October 31, 1996, and also served as the
principal accountants of the Company for the fiscal year ending October 31,
1995. 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 directors and the proposed amendment of the Company's 1992
Stock Option Plan. Should any other matters be properly presented, it is
intended that the enclosed proxy will be voted in accordance with the best
judgment of the persons voting the matter.
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, 1995 are enclosed
herewith. These reports do not form any part of the material for solicitation of
proxies.
20
<PAGE> 23
STOCKHOLDERS PROPOSAL
Proposals of stockholders to be presented at the Annual Meeting of
Stockholders to be held in 1997 must be received at the office of the Secretary
of the Company no later than October 1, 1996 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 12, 1996
21
<PAGE> 24
1992 POWELL INDUSTRIES, INC.
STOCK OPTION PLAN
<PAGE> 25
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C> <C>
ARTICLE I Plan.................................................................... 1
1.1 Purpose................................................................. 1
1.2 Effective Date of Plan.................................................. 1
ARTICLE II Definitions............................................................. 1
2.1 Affiliate............................................................... 1
2.2 Award................................................................... 1
2.3 Board of Directors...................................................... 1
2.4 Code.................................................................... 1
2.5 Committee............................................................... 1
2.6 Company................................................................. 1
2.7 Disinterested Person.................................................... 2
2.8 Employee................................................................ 2
2.9 Fair Market Value....................................................... 2
2.10 Incentive Option........................................................ 2
2.11 Maturity Date........................................................... 2
2.12 Nonqualified Option..................................................... 2
2.13 Option.................................................................. 2
2.14 Option Agreement........................................................ 2
2.15 Plan.................................................................... 2
2.16 Reload Option........................................................... 2
2.17 Restricted Stock........................................................ 2
2.18 Restricted Stock Agreement.............................................. 2
2.19 Restricted Stock Purchase Price......................................... 2
2.20 Stock................................................................... 2
2.21 Stock Appreciation Right................................................ 2
2.22 Stock Appreciation Rights Agreement..................................... 3
2.23 10% Shareholder......................................................... 3
ARTICLE III Eligibility............................................................. 3
ARTICLE IV General Provisions Relating to Options, Reload Options, Stock
Appreciation Rights and Awards.......................................... 3
4.1 Authority to Grant Options, Reload Options, Stock Appreciation Rights
and Awards.............................................................. 3
4.2 Dedicated Shares........................................................ 3
4.3 Non-Transferability of Options, Reload Options, Stock Appreciation
Rights and Awards....................................................... 3
4.4 Requirements of Law..................................................... 4
4.5 No Rights as Stockholder................................................ 4
4.6 Changes in the Company's Capital Structure.............................. 4
4.7 Election Under Section 83(b) of the Code................................ 5
ARTICLE V Options and Reload Options.............................................. 5
5.1 Type of Option.......................................................... 5
5.2 Option Price............................................................ 5
5.3 Duration of Options..................................................... 6
5.4 Amount Exercisable...................................................... 6
5.5 Exercise of Options..................................................... 6
5.6 Exercise on Termination of Employment................................... 6
5.7 Reload Options.......................................................... 7
5.8 Substitution Options.................................................... 7
</TABLE>
i
<PAGE> 26
<TABLE>
<CAPTION>
PAGE
---
<S> <C> <C>
ARTICLE VI Stock Appreciation Rights............................................... 7
6.1 Stock Appreciation Rights Included in Options........................... 7
6.2 Stock Appreciation Rights Not Included in Options....................... 8
6.3 Payment on Exercise of a Stock Appreciation Right....................... 8
6.4 Exercise on Termination of Employment................................... 8
ARTICLE VII Awards.................................................................. 8
7.1 Award and Restricted Stock Agreement.................................... 8
7.2 Restriction Period...................................................... 8
7.3 Exercise on Termination of Employment................................... 8
ARTICLE VIII Administration.......................................................... 9
ARTICLE IX Amendment or Termination of Plan........................................ 9
ARTICLE X Miscellaneous........................................................... 10
10.1 No Establishment of a Trust Fund........................................ 10
10.2 No Employment Obligation................................................ 10
10.3 Forfeiture.............................................................. 10
10.4 Tax Withholding......................................................... 10
10.5 Written Agreement....................................................... 11
10.6 Indemnification of the Committee and the Board of Directors............. 11
10.7 Gender.................................................................. 11
10.8 Headings................................................................ 11
10.9 Other Compensation Plans................................................ 11
10.10 Other Options or Awards................................................. 11
10.11 Governing Law........................................................... 11
</TABLE>
ii
<PAGE> 27
ARTICLE I
PLAN
1.1 Purpose. This instrument amends Section 4.2 of the Plan and restates
the Plan. The Plan was originally adopted as the "1989 Powell Industries, Inc.
Stock Option Plan", effective March 17, 1989, and was previously amended and
restated effective January 1, 1992, which amendment and restatement renamed the
Plan the "1992 Powell Industries, Inc. Stock Option Plan." All Options and
Awards granted prior to December 31, 1991, will remain subject to all of the
terms and conditions of the Plan prior to the first amendment and restatement
which was effective January 1, 1992, and all Options, Reload Options, Stock
Appreciation Rights, and Awards issued on or after that date and prior to the
effective date of this amendment and restatement will be subject to the terms
and conditions of the Plan as first amended and restated. All Options, Reload
Options, Stock Appreciation Rights, and Awards issued on or after the effective
date of this amendment and restatement will be subject to the terms and
conditions of the Plan as hereby amended and restated. This Plan continues to be
a Plan for key employees of the Company and is intended to advance the best
interests of the Company and its shareholders by providing those persons who
have a substantial responsibility for the Company's growth with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue their employment with the
Company.
1.2 Effective Date of Plan. The Plan became effective on March 17, 1989
and the first amendment and restatement became effective January 1, 1992. This
amendment and restatement shall become effective on January 1, 1996, if within
one year of that date it shall have been approved by the holders of at least a
majority of the outstanding shares of voting stock of the Company voting in
person or by proxy at a duly held stockholders' meeting, or if the provisions of
the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, the approval by the holders of
that percentage, at a duly held meeting of stockholders. No Option, Reload
Option, Stock Appreciation Right, or Award shall be granted pursuant to the Plan
after March 16, 1999.
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in the definition unless the context in which any such word or phrase
appears reasonably requires a broader, narrower, or different meaning.
2.1 "Affiliate" shall mean any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50 percent or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain. The
term "subsidiary corporation" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
the action or transaction, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.
2.2 "Award" shall mean an award of Restricted Stock.
2.3 "Board of Directors" shall mean the board of directors of Powell
Industries, Inc.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.5 "Committee" shall mean the Compensation Committee of the Board of
Directors, exclusive of any person who is not a Disinterested Person.
2.6 "Company" shall mean Powell Industries, Inc., a Nevada corporation.
1
<PAGE> 28
2.7 "Disinterested Person" shall mean a "disinterested person" as that
term is defined in Rule 16b-3 under the Securities Exchange Act of 1934.
2.8 "Employee" shall mean a person employed by the Company or an Affiliate
to whom an Option, a Reload Option, a Stock Appreciation Right, or an Award is
granted.
2.9 "Fair Market Value" of the Stock as of any date shall mean (i) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (ii) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the NASDAQ National Market
System; or (iii) if the Stock is not listed on the NASDAQ National Market
System, the average of the high and low bid quotations for the Stock on that
date as reported by the National Quotation Bureau Incorporated; or (iv) if none
of the foregoing is applicable, the average between the closing bid and ask
prices per share of stock on the last preceding date on which those prices were
reported or that amount as determined by the Committee.
2.10 "Incentive Option" shall mean an Option granted under this Plan which
is designated as an "Incentive Option" and satisfies the requirements of Section
422 of the Code.
2.11 "Maturity Date" shall mean the date the Stock Appreciation Right
given in a Stock Appreciation Rights Agreement vests.
2.12 "Nonqualified Option" shall mean an Option other than an Incentive
Option.
2.13 "Option" shall mean an option granted under this Plan to purchase
shares of Stock.
2.14 "Option Agreement" shall mean the written agreement which sets out
the terms of an Option and/or Reload Option.
2.15 "Plan" shall mean the 1992 Powell Industries, Inc. Stock Option Plan,
as amended and restated as set out in this document and as it may be amended
from time to time.
2.16 "Reload Option" shall mean an Option which the Committee may, in its
sole discretion, grant in connection with the issuing of an Option if the
exercise price of the Option is paid in whole or in part, by exchanging Stock
owned by the Employee. A Reload Option shall be an Incentive Option or
Nonqualified Option depending on the type of Option previously granted under the
Option Agreement containing the Reload Option feature. The Reload Options will
be subject to the same restrictions and provisions of the Plan as the original
Option, except when specific changes are set out in the Option Agreement.
2.17 "Restricted Stock" shall mean stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan. The terms and
conditions of the Restricted Stock shall be determined by the Committee.
2.18 "Restricted Stock Agreement" shall mean the agreement between the
Company and the Employee under which the Employee is awarded or may purchase
Restricted Stock.
2.19 "Restricted Stock Purchase Price" shall mean the purchase price per
share of Restricted Stock subject to an Award. The Restricted Stock Purchase
Price shall be determined by the Committee. It may be greater than or less than
the Fair Market Value of the Stock on the date of the grant or Award.
2.20 "Stock" shall mean the common stock of the Company, $.01 par value
or, in the event that the outstanding shares of common stock are later changed
into or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.
2.21 "Stock Appreciation Right" shall mean a right granted to an Employee
under the terms of the Plan to receive an amount equal to the excess of the Fair
Market Value of one share of Stock as of the date of exercise of the Stock
Appreciation Right over the price per share of Stock specified in the Stock
Appreciation Rights Agreement or Option Agreement of which it is a part.
2
<PAGE> 29
2.22 "Stock Appreciation Rights Agreement" shall mean the written
agreement which sets out the terms of a Stock Appreciation Right. All of the
terms and conditions of a Stock Appreciation Right shall be determined by the
Committee.
2.23 "10% Shareholder" shall mean an individual who, at the time the
Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any Affiliate. An
individual shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its shareholders, partners,
or beneficiaries.
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Incentive Options,
Nonqualified Options, Reload Options, Stock Appreciation Rights, and Awards of
Restricted Stock shall be those key employees as the Committee shall determine
from time to time. However, no member of the Committee shall be eligible to
receive any Option, Reload Option, Stock Appreciation Right or Award of
Restricted Stock or to receive stock, stock options, or stock appreciation
rights under any other plan of the Company or any of its Affiliates, if receipt
of it would cause the individual not to be a Disinterested Person. The Board of
Directors may designate one or more individuals who shall not be eligible to
receive any Option, Reload Option, Stock Appreciation Right, or Award of
Restricted Stock under this Plan or under other similar plans of the Company.
ARTICLE IV
GENERAL PROVISIONS RELATING TO OPTIONS,
RELOAD OPTIONS, STOCK APPRECIATION RIGHTS AND AWARDS
4.1 Authority to Grant Options, Reload Options, Stock Appreciation Rights
and Awards. The Committee may grant to those key Employees as it shall from time
to time determine, Options, Reload Options, Stock Appreciation Rights, or Awards
of Restricted Stock under the terms and conditions of this Plan. Subject only to
any applicable limitations set out in this Plan, the number of shares of Stock
to be covered by any Option, Reload Option, Stock Appreciation Right or Award of
Restricted Stock to be granted to an Employee shall be as determined by the
Committee.
4.2 Dedicated Shares. The total number of shares of Stock with respect to
which Options, Reload Options, Stock Appreciation Rights and Awards may be
granted under this Plan shall be 1,500,000 shares. That number of shares shall
be subject to adjustment in accordance with the provisions of Section 4.6. The
shares may be treasury shares or authorized but unissued shares.
In the event that any outstanding Option, Reload Option, Stock Appreciation
Right or Award shall expire or terminate for any reason or any Option, Reload
Option, Stock Appreciation Right or Award is surrendered, the shares of Stock
and the Stock Appreciation Rights, if any, allocable to the unexercised portion
of that Option, Reload Option, Stock Appreciation Right or Award may again be
subject to an Option, Reload Option, Stock Appreciation Right or Award under
this Plan.
4.3 Non-Transferability of Options, Reload Options, Stock Appreciation
Rights and Awards. Options, Reload Options and Stock Appreciation Rights shall
not be transferable by the Employee otherwise than by will or under the laws of
descent and distribution, and shall be exercisable, during the Employee's
lifetime, only by him. Restricted Stock shall be purchased or earned under a
Restricted Stock Agreement during the Employee's lifetime, only by him. Any
attempt to transfer an Award other than under the terms of the Plan and the
Restricted Stock Agreement shall terminate the Award and all rights of the
Employee to that Restricted Stock.
3
<PAGE> 30
4.4 Requirements of Law. The Company shall not be required to sell or
issue any Stock under any Option, Reload Option, Stock Appreciation Right or
Award if issuing that Stock would constitute or result in a violation by the
Employee or the Company of any provision of any law, statute, or regulation of
any governmental authority. Specifically, in connection with any applicable
statute or regulation relating to the registration of securities, upon exercise
of any Option, Reload Option, Stock Appreciation Right or Award, the Company
shall not be required to issue any Stock unless the Committee has received
evidence satisfactory to it to the effect that the holder of that Option, Reload
Option, Stock Appreciation Right or Award will not transfer the Stock except in
accordance with applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed transfer complies
with applicable law. The determination by the Committee on this matter shall be
final, binding and conclusive. The Company may, but shall in no event be
obligated to, register any Stock covered by this Plan pursuant to applicable
securities laws of any country or any political subdivision. In the event the
Stock issuable on exercise of an Option, Reload Option, Stock Appreciation Right
or Award is not registered, the Company may imprint on the certificate
evidencing the Stock any legend that counsel for the Company considers necessary
or advisable to comply with applicable law. The Company shall not be obligated
to take any other affirmative action in order to cause the exercise of an
Option, Reload Option, Stock Appreciation Right or Award or the issuance of
shares under any of them to comply with any law or regulation of any
governmental authority.
4.5 No Rights as Stockholder. No Employee shall have any rights as a
stockholder with respect to Stock covered by his Option, Reload Option, Stock
Appreciation Right or Award until the date a stock certificate is issued for the
Stock unless the granting agreement specifically gives him a right.
4.6 Changes in the Company's Capital Structure. The existence of
outstanding Options, Reload Options, Stock Appreciation Rights, or Awards shall
not affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Stock outstanding, without receiving
compensation for it in money, services or property, then (a) the number, class,
and per share price of shares of Stock subject to outstanding Options or Reload
Options under this Agreement shall be appropriately adjusted in such a manner as
to entitle an Employee to receive upon exercise of an Option, for the same
aggregate cash consideration, the equivalent total number and class of shares as
he would have received had he exercised his Option or Reload Option in full
immediately prior to the event requiring the adjustment; and (b) the number and
class of shares of Stock then reserved to be issued under the Plan shall be
adjusted by substituting for the total number and class of shares of Stock then
reserved, that number and class of shares of Stock that would have been received
by the owner of an equal number of outstanding shares of each class of Stock as
the result of the event requiring the adjustment. In addition, if the Company
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction in
the number of shares of the Stock outstanding, without receiving compensation
for it in money, services or property, the Committee shall make an appropriate
adjustment in the number of Stock Appreciation Rights and/or Awards created
under the Plan.
If the Company is merged or consolidated with another corporation or if the
Company is liquidated or sells or otherwise disposes of substantially all its
assets while unexercised Options remain outstanding under the Plan, (a) subject
to the provisions of clause (c) below, after the effective date of the merger,
consolidation, liquidation, sale or other disposition, as the case may be, each
holder of an outstanding Option or Reload Option shall be entitled, upon
exercise of the Option or Reload Option, to receive, in lieu of shares of Stock,
the number and class or classes of shares of stock or other securities or
property to which the holder would have been entitled if, immediately prior to
the merger, consolidation, liquidation, sale or other disposition, the holder
had been the holder of record of a number of shares of Stock equal to the number
of shares as to which the Option and Reload Option shall be so exercised; (b)
the Board of Directors may waive
4
<PAGE> 31
any limitations set out in or imposed under this Plan so that all Options, from
and after a date prior to the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, specified by the
Board of Directors, shall be exercisable in full; and (c) all outstanding
Options may be canceled by the Board of Directors as of the effective date of
any merger, consolidation, liquidation, sale or other disposition, if (i) notice
of cancellation shall be given to each holder of an Option and (ii) each holder
of an Option shall have the right to exercise that Option and any underlying
Reload Option in full (without regard to any limitations set out in or imposed
under the Plan) during a period set by the Board of Directors preceding the
effective date of the merger, consolidation, liquidation, sale or other
disposition and, if in the event all outstanding Options and Reload Options may
not be exercised in full under applicable securities laws without registration
of the shares of Stock issuable on exercise of the Options or Reload Options,
the Board of Directors may limit the exercise of the Options and Reload Options
to the number of shares of Stock, if any, as may be issued without registration.
The method of choosing which Options and Reload Options may be exercised and the
number of shares of Stock for which Options and Reload Options may be exercised
shall be solely within the discretion of the Board of Directors.
After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Employee shall be entitled to have his
Stock Appreciation Rights and/or Award appropriately adjusted based on the
manner the Stock was adjusted under the terms of the agreement of merger or
consolidation. If the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation, or if the Company is liquidated, or sells or otherwise disposes of
substantially all of its assets to another corporation while unmatured Stock
Appreciation Rights remain outstanding under the Plan, all outstanding Stock
Appreciation Rights shall be cancelled as of the effective date of the merger,
consolidation, liquidation or sale but payment shall be made under the Agreement
prior to its cancellation as though each Stock Appreciation Right matured on the
effective date of the merger, consolidation, liquidation or sale.
The issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of rights or
warrants to subscribe for them, or upon conversion of shares or obligations of
the Company convertible into shares or other securities, shall not affect, and
no adjustment by reason of it shall be made with respect to, the number, class,
or price of shares of Stock then subject to outstanding Options, Reload Options,
Stock Appreciation Rights or Awards then subject to outstanding grants.
4.7 Election Under Section 83(b) of the Code. No Employee shall exercise
the election permitted under Section 83(b) of the Code without written approval
of the Committee. Any Employee doing so shall forfeit all Options, Reload
Options, Stock Appreciation Rights and/or Awards issued to him under this Plan.
ARTICLE V
OPTIONS AND RELOAD OPTIONS
5.1 Type of Option. The Committee shall specify whether a given Option
shall constitute an Incentive Option or a Nonqualified Option.
5.2 Option Price. The price at which Stock may be purchased under an
Incentive Option shall not be less than the greater of (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b) the
aggregate par value of the shares of Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares of
Stock may be purchased shall be more than 100% of Fair Market Value. In the case
of any 10% Shareholder, the price at which shares of Stock may be purchased
under an Incentive Option shall not be less than 110% of the Fair Market Value
of the Stock on the date the Incentive Option is granted.
The price at which shares of Stock may be purchased under a Nonqualified
Option shall be the price determined by the Committee in its discretion, so long
as the price is not less than the par value of the shares of Stock on the date
the Option is granted.
5
<PAGE> 32
5.3 Duration of Options. No Option shall be exercisable after the
expiration of 10 years from the date the Option is granted. A Reload Option
shall have a term which is no longer than the original term of the underlying
Option unless it is expressly provided otherwise in the Option Agreement. In the
case of a 10% Shareholder, no Incentive Option shall be exercisable after the
expiration of five years from the date the Incentive Option is granted.
5.4 Amount Exercisable. Each Option may be exercised from time to time, in
whole or in part, in the manner and subject to the conditions the Committee, in
its discretion, may provide in the Option Agreement, as long as the Option is
valid and outstanding. To the extent that the aggregate Fair Market Value
(determined as of the time an Incentive Option is granted) of the Stock with
respect to which Incentive Options first become exercisable by the Optionee
during any calendar year (under this Plan and any other incentive stock option
plan(s) of the Company or any Affiliate) exceeds $100,000, the Options shall be
treated as Nonqualified Options.
5.5 Exercise of Options. Options shall be exercised by the delivery of
written notice to the Committee setting forth the number of shares with respect
to which the Option is to be exercised, together with: (a) cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company for an amount equal to the option price of the shares, (b) Stock at the
Fair Market Value on the date of exercise, and/or (c) any other form of payment
which is acceptable to the Committee, and specifying the address to which the
certificates for the shares are to be mailed. As promptly as practicable after
receipt of written notification and payment, the Company shall deliver to the
Employee certificates for the number of shares with respect to which the Option
has been exercised, issued in the Employee's name. If shares of Stock are used
in payment, the Fair Market Value of the shares of Stock tendered must be less
than the Option Price of the shares being purchased and the difference must be
paid by check. Delivery shall be deemed effected for all purposes when a stock
transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the optionee, at the address specified by the
Employee.
5.6 Exercise on Termination of Employment. Unless it is expressly provided
otherwise in the Option Agreement, Options (including Reload Options) shall
terminate immediately upon severance of employment of the Employee from the
Company for any reason, with or without cause, other than death, retirement for
age or disability under the then established rules of the Company or severance
for disability. Whether authorized leave of absence or absence on military or
government service shall constitute severance of the employment of the Employee
shall be determined by the Committee at that time.
If, before the expiration of an Incentive Option, the Employee shall be
retired in good standing from the employ of the Company because of his age under
the then established rules of the Company, the Incentive Option shall terminate
on the earlier of the Option's expiration date or one day less than three months
after his retirement. If before the expiration of a Nonqualified Option, the
Employee shall be retired in good standing from the employ of the Company
because of his age under the then established rules of the Company, the
Nonqualified Option shall terminate on the earlier of the Option's expiration
date or one day more than six months after his retirement. In the event of
retirement for age the Employee shall have the right prior to the termination of
the Option to exercise the Option, but without the right to exercise any Reload
Option feature of the Option, to the extent to which he was entitled to exercise
it immediately prior to his retirement unless it is expressly provided otherwise
in the Option Agreement.
If, before the expiration of an Option, the Employee shall be retired for
disability under the then established rules of the Company, or severed from the
employ of the Company for disability, the Option shall terminate on the earlier
of the Option's expiration date or one day less than one year after the date he
retired or was severed because of disability. In the event that the Employee
shall be retired for disability under the then established rules of the Company
or severed from the employ of the Company for disability, the Employee shall
have the right prior to the termination of the Option to exercise the Option,
but without the right to exercise any Reload Option feature of the Option, to
the extent to which he was entitled to exercise it immediately prior to his
retirement or severance of employment for disability unless it is expressly
provided otherwise in the Option Agreement.
6
<PAGE> 33
If, before the expiration of an Option, the Employee, whether in the employ
of the Company or after he has retired for age or disability or was severed for
disability, dies the Option shall continue until the earlier of the Option's
expiration date or one year following the date of his death. After the death of
the Employee, his executors, administrators or any persons to whom his Option
may be transferred by will or by the laws of descent and distribution shall have
the right, at any time prior to the Option's termination, to exercise it, but
without the right to exercise any Reload Option feature, to the extent to which
he was entitled to exercise it immediately prior to the death unless it is
expressly provided otherwise in the Option Agreement.
In determining the employment relationship between the Company and the
Employee, employment by any Affiliate shall be considered employment by the
Company, as shall employment by a corporation issuing or assuming a stock option
in a transaction to which Section 424(a) of the Code applies, or by a parent
corporation or subsidiary corporation of the corporation issuing or assuming a
stock option (and for this purpose, the phrase "corporation issuing or assuming
a stock option" shall be substituted for the word "Company" in the definitions
of parent corporation and subsidiary corporation in Section 2.1, and the parent-
subsidiary relationship shall be determined at the time of the corporate action
described in Section 424(a) of the Code).
5.7 Reload Options. From time to time, the Committee may grant Reload
Options to Employees. The time of grant of a Reload Option shall be the time the
Employee surrenders the shares of Stock with respect to which the Reload Option
is granted. The Reload Option shall be for the number of shares of Stock
surrendered by the Employee as payment upon the exercise of the previously
granted Option. The Reload Option shall be subject to the following
restrictions: (a) the Reload Option shall be subject to the same restrictions on
exercise and other Plan rules that are imposed on the underlying Option which
contained the Reload Option feature; and (b) the Reload Option shall not be
exercisable until the expiration of any retention holding period imposed on the
disposition of any shares of Stock covered by the underlying Option which
contained the Reload Option Feature unless it is expressly provided otherwise in
the Option Agreement.
5.8 Substitution Options. Options may be granted under this Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in this Plan to the extent the Board of Directors, at the time of grant, may
deem appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 Stock Appreciation Rights Included in Options. Stock Appreciation
Rights may be included in any Option granted to permit the Employee to surrender
the Option or a portion of it which is then exercisable and receive in exchange
an amount equal to the excess of the Fair Market Value of the Stock covered by
the Option surrendered, or a portion of it, determined on the date of surrender,
over the aggregate Option price of the Stock. If authorized by the Committee, an
Employee may, by providing written notice to the Committee, elect to surrender
all or any portion of an Option for Stock Appreciation Rights.
Stock Appreciation Rights included in Options may be exercised only when
the Fair Market Value of the Stock covered by the Option surrendered exceeds the
Option price of the Stock. Each of the Stock Appreciation Rights included in an
Option (a) shall have a term no later than the term of the underlying Option,
(b) may be for no more than 100% of the difference between the exercise price of
the underlying Option and the Fair Market Value of a share of the Stock at the
time the Stock Appreciation Right is exercised, (c) is transferable only when
the underlying Option is transferable, and under the same conditions, and (d)
may be exercised only when the underlying Option is eligible to be exercised.
The limitations set out
7
<PAGE> 34
in this paragraph may be changed by the Committee in the grant of the Option
and/or Stock Appreciation Rights except when the grant is of Stock Appreciation
Rights granted in connection with an Incentive Option.
6.2 Stock Appreciation Rights Not Included in Options. The grant to an
Employee of a Stock Appreciation Right that is not a feature of an Option shall,
subject to the conditions contained in the Stock Appreciation Rights Agreement,
entitle the Employee to an amount equal to the excess of the Fair Market Value
of a share of Stock as of the date of exercise of the Stock Appreciation Right
over the Fair Market Value of a share of Stock as of the date that the Stock
Appreciation Right is granted. The Committee shall fix the term of the Stock
Appreciation Right which may not be in excess of 10 years from the date the
Stock Appreciation Right is granted. Within the 10 year period the Committee
may, in its discretion, provide that portions of the grant may mature at
intervals throughout the period.
6.3 Payment on Exercise of a Stock Appreciation Right. Upon exercise of
Stock Appreciation Rights, the Committee may pay the Employee in shares of Stock
valued at Fair Market Value, in cash, or partly in cash and partly in shares of
Stock as the Committee determines in the exercise of its sole discretion.
6.4 Exercise on Termination of Employment. Any Stock Appreciation Right
included in an Incentive Option shall expire because of termination of
employment at the time the underlying Option expires. Any Stock Appreciation
Right included in a Nonqualified Option or not included in an Option shall
expire as provided for Nonqualified Options in Section 5.6 generally unless it
is expressly provided otherwise in the Option Agreement and/or the Stock
Appreciation Rights Agreement.
ARTICLE VII
AWARDS
7.1 Award and Restricted Stock Agreement. Each Award granted shall be
evidenced by a written Restricted Stock Agreement dated as of the date of grant
of the Award and executed by the Company and the Employee. The Restricted Stock
Agreement may vary any terms and conditions as the Committee determines to be
appropriate, including without limitation: (a) conditions consistent with
Section 16(b) of the Securities Exchange Act of 1934 and the rules and
regulations promulgated under it, as the same may be amended from time to time,
(b) the period during which the Award may be exercised, (c) the manner of
exercising the Award, (d) the minimum number of shares of Stock for which the
Award may be exercised, (e) the withholding of taxes in connection with the
exercise of the Award, (f) the period during which the Restricted Stock may
vest, (g) termination of Award rights upon certain events and (h) any other
matters the Committee shall determine. If any payment is required to exercise
the Award, subject to any restrictions as the Committee, in its sole discretion,
may include in the Restricted Stock Agreement, upon payment by the Employee of
the Restricted Stock Purchase Price, the Employee shall have all of the rights
of a shareholder with respect to the Stock, including the right to vote the
shares and receive all dividends and other distributions paid or made with
respect to it.
7.2 Restriction Period. No Award granted may have restrictions continuing
beyond 10 years from the date of the Award.
7.3 Exercise on Termination of Employment. Any Award which has not been
exercised or upon which restrictions have not lapsed will expire upon
termination of the Employee's employment with the Company or its Affiliates
unless it is expressly provided otherwise in the Award.
8
<PAGE> 35
ARTICLE VIII
ADMINISTRATION
The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan, Options, Reload Options, Stock
Appreciation Rights, or Awards shall be subject to the determination of the
Committee. A majority of the members of the Committee shall constitute a quorum.
All determinations of the Committee shall be made by a majority of its members.
Any decision or determination reduced to writing and signed by a majority of the
members shall be as effective as if it had been made by a majority vote at a
meeting properly called and held. This Plan shall be administered in such a
manner as to permit the Options granted under it which are designated to be
Incentive Options to qualify as Incentive Options. In carrying out its authority
under the Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the Employees to whom and the time or times at which
Options and/or Reload Options (with or without Stock Appreciation Rights),
Stock Appreciations Rights, or Awards will be made,
(b) determine the number of shares and the purchase price of Stock
covered in each Option, Reload Option, Stock Appreciation Right, or Award,
(c) determine the terms, provisions and conditions of each Option,
Reload Option, Stock Appreciation Right and Award, which need not be
identical,
(d) define the effect, if any, on an Option, Reload Option, Stock
Appreciation Right or Award of the death, disability, retirement, or
termination of employment of the Employee,
(e) prescribe, amend and rescind rules and regulations relating to the
Plan, and
(f) make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of the
Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors may modify, revise or terminate this Plan at any
time and from time to time. However, without the further approval of the holders
of at least a majority of the outstanding shares of Stock, or if the provisions
of the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, without the degree of
stockholder approval thus required, the Board of Directors may not (a) change
the aggregate number of shares of Stock which may be issued under Incentive
Options or under all Options, Reload Options, Stock Appreciation Rights or
Awards which may be issued under this Plan, (b) change the class of individuals
eligible to receive Options, Reload Options, Stock Appreciation Rights, or
Awards or (c) decrease the option price for Incentive Options below the Fair
Market Value of the Stock at the time it is granted. The Board shall have the
power to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to qualify as an incentive
stock option or such other stock option as may be defined under the Code so as
to receive preferential federal income tax treatment.
9
<PAGE> 36
ARTICLE X
MISCELLANEOUS
10.1 No Establishment of a Trust Fund. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any
Employee under this Plan. All amounts at any time attributable to Stock
Appreciation Rights granted shall be solely a charge upon the Company, and all
Employees shall at all times rely solely upon the general credit of the Company
for the payment of any benefit which becomes payable under this Plan.
10.2 No Employment Obligation. The granting of any Option, Reload Option,
Stock Appreciation Right, or Award shall not constitute an employment contract,
express or implied, nor impose upon the Company or Affiliate any obligation to
employ or continue to employ any Employee. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or
affected by reason of the fact that an Option, a Reload Option, a Stock
Appreciation Right, or an Award has been granted to him.
10.3 Forfeiture. Notwithstanding any other provisions of this Plan, if the
Committee finds by a majority vote after full consideration of the facts that
the Employee, before or after termination of his employment with the Company or
an Affiliate for any reason (a) committed or engaged in fraud, embezzlement,
theft, commission of a felony, or proven dishonesty in the course of his
employment by the Company or an Affiliate, which conduct damaged the Company or
Affiliate, or disclosed trade secrets of the Company or an Affiliate, or (b)
participated, engaged in or had a financial or other interest, whether as an
employee, officer, director, consultant, contractor, shareholder, owner, or
otherwise, in any commercial endeavor in the United States which is competitive
with the business of the Company or an Affiliate without the written consent of
the Company or Affiliate, the Employee shall forfeit all outstanding Options,
Reload Options, and Stock Appreciation Rights, and all outstanding Awards which
have not fully vested, including all rights related to such matters, and
including all unexercised Options and/or Reload Options, and exercised Options
and/or Reload Options, Stock Appreciation Rights and other elections pursuant to
which the Company has not yet delivered a stock certificate, and any additional
Options not yet granted pursuant to a Reload Option. Clause (b) shall not be
deemed to have been violated solely by reason of the Employee's ownership of
stock or securities of any publicly owned corporation, if that ownership does
not result in effective control of the corporation, and if written notice of the
ownership is given the Committee by the Employee within 60 days after the later
of the date on which the Employee is notified of a grant of an Option, Reload
Option, Stock Appreciation Right, or Award under this Plan or the date on which
the Employee acquires the ownership.
The decision of the Committee as to the cause of the Employee's discharge,
the damage done to the Company or an Affiliate, and the extent of the Employee's
competitive activity shall be final. No decision of the Committee, however,
shall affect the finality of the discharge of the Employee by the Company or an
Affiliate in any manner. To provide the Company with an opportunity to enforce
this Section, no certificate for Stock may be issued under this Plan without the
certification by the Committee that no action forbidden by this provision has
been raised for their determination.
10.4 Tax Withholding. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Employee any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option, a Reload Option, a Stock Appreciation Right or an Award.
In the alternative, the Company may require the Employee (or other person
exercising the Option, Reload Option or Stock Appreciation Right or receiving
the Award) to pay the sum directly to the employer corporation. If the Employee
(or other person exercising the Option, Reload Option, the Stock Appreciation
Right, or receiving the Award) is required to pay the sum directly, payment in
cash or by check of such sums for taxes shall be delivered within 10 days after
the date of exercise. The Company shall have no obligation upon exercise of any
Option, Reload Option, Stock Appreciation Right or receipt of an Award until
payment has been received, unless withholding (or offset against a cash payment)
as of or prior to the date of exercise is sufficient to cover all sums due with
respect to that exercise. The Company shall not be obligated to advise an
Employee of the existence of the tax or the amount which the employer
corporation will be required to withhold.
10
<PAGE> 37
10.5 Written Agreement. Each Option, Reload Option, Stock Appreciation
Right and Award shall be embodied in a written Option Agreement, Stock
Appreciation Rights Agreement, or Restricted Stock Agreement which shall be
subject to the terms and conditions of this Plan and shall be signed by the
Employee and by a member of the Committee on behalf of the Committee and the
Company. The Option Agreement, Stock Appreciation Rights Agreement, or
Restricted Stock Agreement may contain any other provisions that the Committee
in its discretion shall deem advisable.
10.6 Indemnification of the Committee and the Board of Directors. With
respect to administration of the Plan, the Company shall indemnity each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including the amount of judgments and the amount of approved settlements made
with a view to the curtailment of costs of litigation, other than amounts paid
to the Company itself) reasonably incurred by him in connection with or arising
out of any action, suit, or proceeding in which he may be involved by reason of
his being or having been a member of the Committee and/or the Board of
Directors, whether or not he continues to be a member of the Committee and/or
the Board of Directors at the time of incurring the expenses. However, this
indemnity shall not include any expenses incurred by any member of the Committee
and/or the Board of Directors (a) in respect of matters as to which he shall be
finally adjudged in any action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of his duty as a member of
the Committee and the Board of Directors, or (b) in respect of any matter in
which any settlement is effected, to an amount in excess of the amount approved
by the Company on the advice of its legal counsel. In addition, no right of
indemnification under this Plan shall be available to or enforceable by any
member of the Committee and the Board of Directors unless, within 60 days after
institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
10.7 Gender. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.
10.8 Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
10.9 Other Compensation Plans. The adoption of the Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
10.10 Other Options or Awards. The grant of an Option, Reload Option,
Stock Appreciation Right, or Award shall not confer upon the Employee the right
to receive any future or other Options, Reload Options, Stock Appreciation
Rights or Awards under this Plan, whether or not Options, Reload Options, Stock
Appreciation Rights or Awards may be granted to similarly situated Employees, or
the right to receive future Options, Reload Options, Stock Appreciation Rights
or Awards upon the same terms or conditions as previously granted.
10.11 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas and, to the
extent applicable, the laws of the United States.
11
<PAGE> 38
Front Side of Proxy
POWELL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 15, 1996
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 15, 1996 and at any adjournment thereof, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2
1. [ ] FOR the election (except as indicated below) to the Board of
Directors, class of 1999, of J.F. Ahart, Eugene L. Butler, and
Bonnie L. Powell.
Instructions: To withhold authority to vote for an
individual nominee, write that nominee's
name on the line provided below.
_____________________________________________________________________
[ ] WITHHOLD authority to vote for all nominees listed above.
2. [ ] FOR amendment of the Powell Industries, Inc. 1992 Stock
Option Plan.
[ ] AGAINST such amendment [ ] ABSTAIN with respect to such
amendment
(continued on reverse side)
<PAGE> 39
BACK SIDE OF PROXY
(continued from other side)
3. 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" ITEMS 1 AND 2.
____________________________
____________________________
(PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES,
ETC., SHOULD INDICATE THE
CAPACITY IN WHICH SIGNING.)
DATED: __________________ 1996
IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE!
