Exhibit 10.1

# Powell Industries, Inc. Incentive Compensation
Plan Guidelines

# Purpose

An incentive compensation plan
(Plan) is intended to promote business growth and profitability and to
attract, retain, motivate and reward key members of the management team by linking
incentive awards to the achievement of strategically directed financial and non-financial
goals on an annual basis. These guidelines are intended also to provide overall guidance
while providing flexibility to tailor certain elements of an incentive compensation plan
to meet specific business needs.

# Eligibility and
Participation

Key corporate and subsidiary
executives and managers will be designated annually to be Participants in the Plan.
Participation is determined principally by the degree to which an employee can have a
definitive influence on performance and profitability. Participation in one year does not
guarantee participation in the following year.

Participants must be active employees
on first day of the plan year to be eligible for a full annual award. Those hired or
promoted into eligible positions after the first day of a plan year will be eligible for
an annual award on a pro-rata basis assuming all other plan conditions are fulfilled.

Subsidiary presidents may also
recommend an incentive pool for employees of the subsidiary who are not Plan
participants.

The CEO will recommend corporate and
subsidiary participants and their maximum incentive compensation amount for approval by
the Compensation Committee of the Companys Board of Directors, and the CEO may
authorize use of the an incentive pool for employees of Powell Industries,
Inc. who are not Plan participants.

Participants in a plan are not
eligible for participation in any other annual incentive plan.

# Maximum Awards

Each Participant is assigned a maximum
incentive compensation award annually based on the Participants potential
contribution to the performance of the Company or subsidiary. This maximum award is a
percentage of participants base salary on the first day of the plan year. The Plan
year is the fiscal year of the Company.

Each Participant may earn between
zero and one hundred percent of this maximum incentive compensation award depending on how
the Company or subsidiary that employs the participant performs during the Plan year
against pre-established performance targets.

# Elements and Weighting
of the Plan

o Financial

| | Each
year as part of the budgeting process for each operation, specific goals are established
for the following elements: Return on Net Assets (RONA) (earnings before interest and
taxes divided by 13 months average of net total assets less current liabilities) and EBIT
(earnings before interest and taxes). The CFO will recommend the threshold and maximum
performance measures for RONA and EBIT for corporate and subsidiarys incentive
targets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

o Special Factors

| | Components
are significant measures typically focused on major process improvements related to
business objectives. While referred to as special factors, they may actually be
measurable in financial terms (e.g. accounts receivables, etc.). All special factors
measures shall be as specific as possible and have clear goals established for the
threshold and maximum performance levels. A maximum of two special factors are
recommended.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The weighting percentage reflects the
relative weight given to each performance measure. The following measures will be used to
measure the performance of each subsidiary and the Company overall:

| |                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Performance Measures for Subsidiary Participants
o       60% Weighting:  RONA
o       25% Weighting:  EBIT
o       15% Weighting:  Special FactorsPerformance Measures for Corporate Participants
o       50% Weighting:  Return on Equity
o       50% Weighting:  Earnings Per Share

Each subsidiary will have unique
targets. The CEO may authorize the use by a subsidiary of separate performance measures
and targets for that subsidiary or for certain of its Participants provided their use is,
in the best business judgment of the CEO, compatible and consistent with the purpose and
provisions of this Plan.

The CEO will approve measures and
targets for each subsidiary. The Compensation Committee will review performance measures
and targets for the Company.

# Payment of Awards

Annual incentive awards will be
determined after the audited financial statements of the Company for the Plan year are
complete, and paid in cash as soon as practical thereafter. (Computation of each
entitys performance must be net of (after) provision for the total of Incentive
Compensation amounts earned for that entity.) The awards will be made in a lump sum
subject to the usual payroll taxes and employee benefit plan deductions.

Incentive goals are based upon a full
plan year effort and are measured on a full plan year basis. Incentive compensation is not
deemed to be earned by a participant until all conditions of a plan have been fulfilled
including participants completion of the full plan year for which annual measures
and goals are established. However, at the Companys discretion, a prorated award may
be grated for those who were actively employed during a plan year but ceased active
employment with the Company under any of the following circumstances: death, retirement,
disability (in the first year of disability only), involuntary layoff and transfer.

Prior to payment of such amounts, the
Compensation Committee will review and certify the incentive awards for all participants.
Amounts due participants under the Plan are an unfunded, general obligation of the
Company.

# General

The establishment of measures and
goals under the plan does not guarantee employment or payment of an award, but rather
directs and prioritizes the participants activities for a plan year.

Neither a plan nor the establishment
of an individuals performance measures or goals is intended to create or constitute
a contract of employment or otherwise. An employees employment may be terminated
with or without cause or notice at any time at the option of either the Company or the
employee.

# Administration

The Compensation Committee of the
Companys Board of Directors is the plan administrator. The administrator shall have
the full power and discretionary authority to administer and interpret the plan. The
administrator will also establish rules for the administration of the plan, including, but
not limited to, the power and discretionary authority to determine issues concerning
eligibility, prorating or adjusting of awards and interpretation of the terms of the plan.

The decisions of the administrator
shall be final and binding.

The Companys Board of Directors
shall have the right to suspend, terminate or amend the plan, in whole or in part, at any
time, without notice.

Date Revised: December 5,
2002