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                                                                    EXHIBIT 10.1



                            POWELL INDUSTRIES, INC.
                      INCENTIVE COMPENSATION PLAN FOR 1999

                                  JANUARY 1999



1.   PLAN PURPOSE

     The purpose of the plan is to recognize and reward key corporate and
     subsidiary employees for their contributions to the growth and
     profitability of Powell Industries, Inc. and its operating subsidiaries
     through the opportunity to earn incentive compensation, in addition to
     their base salaries, based on the performance of the Company or subsidiary.

2.   GENERAL DESCRIPTION

     Key corporate and subsidiary executives and managers will be selected for
     participation on an annual basis. For each participant, a maximum incentive
     compensation opportunity will be established, and expressed as a percentage
     of the individual's base salary at the beginning of the plan year. The
     actual amount of incentive compensation earned by each participant will be
     based on the performance of the Company or subsidiary against
     pre-established performance measures. The performance measures for the
     subsidiary participants will include "return on revenues" and "revenue
     growth". For corporate participants, the performance measures will include
     "Powell Industries, Inc. earnings per share" and "revenue growth". Specific
     performance levels will be established each year based on an assessment of
     historical results, the budgeted performance for the plan year, and general
     business conditions.

     The plan will be administered by the Compensation Committee of the Board of
     Directors, in conjunction with the Chief Executive Officer.

3.   ELIGIBILITY AND INCENTIVE COMPENSATION OPPORTUNITY

     On an annual basis, key corporate and subsidiary participants will be
     identified for participation. Participation in one year does not guarantee
     participation in the following year.

     Subsidiary presidents will submit their recommended participants to the CEO
     for approval. In addition, each subsidiary president may identify a general
     incentive "pool", which may be used to recognize the contributions of
     individuals within the subsidiary who are not named participants.

     The CEO will recommend corporate participants for approval by the
     Compensation Committee. The CEO may identify a general incentive "pool"
     which may be used to recognize the contributions of individuals who are not
     named participants.

     For each named participant, their "maximum incentive opportunity" will be
     identified, which is expressed as a percentage of base salary at the
     beginning of the plan year.




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4.       PERFORMANCE MEASURES AND WEIGHTS

         The following performance measures will be used to measure the
         performance of the Company and determine the incentive award earned by
         each participant. The weighting percentage reflects the relative weight
         given to each performance measure.

         SUBSIDIARY PARTICIPANTS

         Refer to your specific targets and funding levels (attached). The
         attached also includes graphs showing how this funding works in
         relationship to the targets.

         CORPORATE PARTICIPANTS

         o   70% Powell Industries, Inc. Earnings Per Share
         o   30% Percent Growth of Total Revenues Over Prior Year

         Prior to the beginning of the plan year, the performance standards for
         each subsidiary and Powell Industries, Inc. will be finalized, approved
         by the Compensation Committee, and communicated to participants. The
         performance standards will be based on historical results, management's
         expectations for the coming year, and the general business environment.
         The CEO will approve subsidiary performance standards and the
         Compensation Committee will approve the company-wide performance
         standards.

5.       COMPUTATION OF AWARDS

         For each subsidiary and Powell Industries, Inc., an Incentive
         Compensation Calculation Form will be prepared at the beginning of the
         plan year, which will include a listing of the participants, their base
         salary, and maximum incentive opportunity. For each performance
         measure, a funding table will be attached which establishes the amount
         of incentive compensation earned at various performance levels. The
         Incentive Compensation Calculation Form is attached.

         In order to activate the plan for each subsidiary, the threshold Return
         on Revenue (ROR) must be achieved. If the ROR threshold is not
         achieved, no incentive awards will be paid, regardless of the revenue
         growth percentage.

         In order to activate the plan for corporate participants, the threshold
         Earnings Per Share (EPS) must be achieved. If the EPS threshold is not
         achieved, no incentive awards will be paid, regardless of the revenue
         growth percentage.

         In computing performance results, ROR and EPS will be net of the
         accrued incentive compensation payments.


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     In addition to the incentive award computed under this plan, the
     Compensation Committee may, in its sole discretion, make additional
     discretionary awards to recognize significant individual contributions.
     This discretionary award is limited to no more than 30% of the individual's
     maximum incentive opportunity.

     The Compensation Committee, in conjunction with the CEO, may make
     adjustments to the subsidiary or Company performance results to eliminate
     the impact of extraordinary charges to earnings, both positive and
     negative. The purpose of any such adjustment is to better reflect the
     performance of the subsidiary or Company. Each August, the Committee will
     meet to review the interim performance results of the Company and determine
     if extraordinary charges have occurred or are likely to occur that should
     be eliminated.

6.   PAYMENT OF AWARDS

     The annual incentive awards will be determined after the end of the plan
     year and paid as soon as practical. Prior to payment of awards, the
     Compensation Committee will review and certify the incentive awards for all
     participants.

     Incentive awards will be computed based on the participant's base salary at
     the beginning of the plan year.

     A participant must be an active employee on the last day of the plan year
     in order to receive an incentive award.

     Participants added to the plan after the beginning of the plan year, will
     be eligible to receive a prorated award based on their salary when they
     became eligible.

     Participants who die, retire, or become disabled during the plan year will
     be eligible for a prorated award based on the number of months of active
     participation during the plan year.

7.   ADMINISTRATION OF PLAN

     The plan will be administered by the Compensation Committee, in conjunction
     with the CEO. The Committee reserves the right to amend or terminate the
     plan at any time, except that such amendment or termination will not affect
     any awards that have been earned but not paid.


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