SCHEDULE 14A
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-12
Integrated Electrical Services
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[INTEGRATED ELECTRICAL SERVICES LOGO]
December 18, 2002
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite all stockholders to
attend the Annual Meeting of Integrated Electrical Services, Inc. to be held on
Thursday, January 30, 2003, at 10:30 a.m. at the Doubletree Post Oak, 2001 Post
Oak Blvd., Houston, TX 77056. Proxy Materials, which include a Notice of the
Meeting, Proxy Statement and proxy card, are enclosed with this letter. The
Company's 2002 Annual Report, which is not a part of the proxy materials, is
also enclosed and provides additional information regarding the financial
results of the Company for its fiscal year ended September 30, 2002.
We hope that you will be able to attend the Annual Meeting. Your vote is
important. Whether you plan to attend or not, please execute and return the
proxy card in the enclosed envelope so that your shares will be represented. If
you are able to attend the meeting in person, you may revoke your proxy and vote
your shares in person. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee that holds the shares to provide you with evidence of your share
ownership. We look forward to seeing you at the meeting.
Sincerely,
/S/ HERBERT R. ALLEN
Herbert R. Allen
President and Chief Executive Officer
INTEGRATED ELECTRICAL SERVICES, INC.
1800 WEST LOOP SOUTH, SUITE 500
HOUSTON, TEXAS 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 30, 2003
TO THE STOCKHOLDERS OF INTEGRATED ELECTRICAL SERVICES, INC.,
Notice is hereby given that the Annual Meeting of the Stockholders of
Integrated Electrical Services, Inc., a Delaware corporation, will be held at
the Doubletree Post Oak, 2001 Post Oak Blvd., Houston, TX 77056, on Thursday,
January 30, 2003, at 10:30 a.m. Central Time, for the following purposes:
1. To elect two directors to the Company's board to serve until the
annual stockholders' meeting held in 2006 or until their successors have
been elected and qualified.
2. To ratify the appointment of Ernst & Young LLP, independent
auditors, as the Company's auditors for the fiscal year 2003.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The holders of record of the Company's common stock and of the Company's
restricted voting common stock at the close of business on December 4, 2002 are
entitled to notice of and to vote at the meeting with respect to all proposals,
except that restricted voting common stock shall not be entitled to vote on the
proposal for the election of directors. We urge you to sign and date the
enclosed proxy card and return it promptly by mail in the enclosed envelope,
whether or not you plan to attend the meeting in person. No postage is required
if mailed in the United States. If you do attend the meeting in person, you may
withdraw your proxy and vote personally on all matters brought before the
meeting.
/s/ MARK A. OLDER
Mark A. Older
Secretary
Houston, Texas
December 18, 2002
INTEGRATED ELECTRICAL SERVICES, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
WHEN AND WHERE IS THE 2003 ANNUAL MEETING OF STOCKHOLDERS BEING HELD?
The 2003 Annual Meeting will be held on Thursday, January 30, 2003, and any
adjournments thereof. The annual meeting will be held at 10:30 a.m. Central
Time, at the Doubletree Post Oak, 2001 Post Oak Blvd., Houston, TX 77056.
WHAT DATE WILL THE PROXY STATEMENT FIRST BE SENT TO THE STOCKHOLDERS?
The approximate date on which this Proxy Statement will first be sent to
stockholders is December 18, 2002.
WHO IS SOLICITING MY VOTE?
The accompanying proxy is solicited by the Board of Directors of Integrated
Electrical Services, Inc. (the "Company") for use at the 2003 Annual Meeting of
Stockholders.
HOW ARE VOTES BEING SOLICITED?
In addition to solicitation of proxies by mail, certain directors,
officers, representatives and employees of the Company may solicit proxies by
telephone and personal interview. Such individuals will not receive additional
compensation from the Company for solicitation of proxies, but may be reimbursed
for reasonable out-of-pocket expenses in connection with such solicitation.
Banks, brokers and other custodians, nominees and fiduciaries also will be
reimbursed by the Company for their reasonable expenses for sending proxy
solicitation materials to the beneficial owners of common stock of the Company.
WHO IS PAYING THE SOLICITATION COST?
The expense of preparing, printing and mailing proxy solicitation materials
will be borne by the Company.
HOW MANY VOTES DO I HAVE?
Each share of Common Stock is entitled to one vote upon each of the matters
to be voted on at the meeting. Each share of Restricted Voting Common Stock is
entitled to one-half of one vote upon each of the matters to be voted on at the
meeting, except for the election of directors, upon which each share of
Restricted Voting Common Stock has no vote, but the Restricted Voting Common
Stock shall be entitled to elect one director to the Company's board. The
holders of Restricted Voting Common Stock are entitled to elect one member of
the board of directors and have nominated C. Byron Snyder to be elected as a
Class II director at the 2003 Annual Meeting to serve until the 2006 Annual
Meeting or until his successor is elected and qualified.
HOW DO I VOTE?
When such proxy is properly executed and returned, the shares it represents
will be voted at the meeting in accordance with the directions noted thereon; or
if no direction is indicated, it will be voted in favor of the proposals set
forth in the notice attached hereto.
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CAN I CHANGE MY VOTE?
Any stockholder giving a proxy has the power to revoke it by oral or
written notice to the Secretary of the Company at any time before it is voted.
Stockholders submitting proxies may revoke them at any time before they are
voted (i) by notifying Mark A. Older, Secretary of the Company, in writing of
such revocation, (ii) by executing a subsequent proxy sent to Mr. Older, or
(iii) by attending the Annual Meeting in person and voting in person. Notices to
Mr. Older referenced in (i) and (ii) should be directed to Mark A. Older,
Secretary, Integrated Electrical Services, Inc., 1800 West Loop South, Suite
500, Houston, Texas 77027. Stockholders who submit proxies and attend the
meeting to vote in person are requested to notify Mr. Older at the Annual
Meeting of their intention to vote in person at the Annual Meeting.
HOW ARE ABSTENTIONS AND BROKER NON-VOTES COUNTED?
Pursuant to the Company's bylaws, shares not voted on matters, including
abstentions and broker non-votes, will not be treated as votes cast with respect
to those matters, and therefore will not affect the outcome of any such matter.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
The presence, in person or by proxy, of at least a majority of the sum of
the outstanding shares of Common Stock and Restricted Voting Common Stock is
required for a quorum to ratify the appointment of the independent certified
public accountants and to transact such other business as may properly come
before the meeting. The presence, in person or by proxy, of at least a majority
of the outstanding shares of Common Stock is required for a quorum to elect
directors, except with respect to the election of the director which holders of
the Restricted Voting Common Stock are entitled to elect ("Restricted Voting
Director"). The presence, in person or by proxy, of at least a majority of the
outstanding shares of Restricted Voting Common Stock is required for a quorum to
elect the Restricted Voting Director.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on December 4, 2002, the record date for the
determination of stockholders of the Company entitled to receive notice of, and
to vote at, the Annual Meeting of Stockholders or any adjournments thereof, the
Company had outstanding 36,815,745 shares of common stock, par value $.01 per
share (the "Common Stock"), and 2,605,709 shares of restricted voting common
stock, par value $.01 per share (the "Restricted Voting Common Stock").
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The following table reflects the beneficial ownership of the Company's
Common Stock as of October 31, 2002, with respect to (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding shares
of the Company's Common Stock; (ii) the directors and nominees for director;
(iii) each named executive officer; and (iv) the Company's directors and
executive officers as a group.
NUMBER OF PERCENT
SHARES OWNED OF
NAME OF BENEFICIAL OWNER BENEFICIALLY CLASS(O)
------------------------ ------------ --------
Herbert R. Allen(a)......................................... 1,037,734 2.8%
Richard China(b)............................................ 143,527 *
C. Byron Snyder(c).......................................... 2,609,924 6.6
Donald Paul Hodel(d)........................................ 35,055 *
Alan R. Sielbeck(d)......................................... 80,359 *
Donald C. Trauscht(e)....................................... 7,047 *
Bob Weik(f)................................................. 1,480,000 4.0
James D. Woods(g)........................................... 16,179 *
Danniel J. Petro(h)......................................... 459,125 1.2
William W. Reynolds(i)...................................... 198,176 *
Robert Stalvey(j)........................................... 106,496 *
H. David Ramm(k)............................................ 783,008 2.1
Directors and officers as a group (16 persons)(l)........... 7,477,973 18.5
Dimensional Fund Advisors(m)................................ 3,007,800 8.1
Jeffrey L. Gendell(n)....................................... 2,084,500 5.3
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* Indicates ownership of less than one percent of the outstanding shares of
Common Stock of the Company.
(a) Includes 200,000 shares of Common Stock owned by HRA Investment Group, LP
as to which Mr. Allen disclaims beneficial ownership and 133,334 shares of
Common Stock underlying options which are exercisable within 60 days.
(b) Includes 69,999 shares of Common Stock underlying options which are
exercisable within 60 days.
(c) The shares attributed to Mr. Snyder are as follows (i) 2,585,829 shares are
held in the 1996 Snyder Family Partnership (the "Partnership"), (ii) 699
shares are held in the 1998 Snyder Family Partnership Management Trust,
(iii) 9,599 shares are held by the Worth Byron Snyder Trust, (iv) 9,582
shares are held by the Gregg Layton Snyder Trust, and (v) 1,215 shares are
held directly. The shares attributed to Mr. Snyder comprise all of the
Company's outstanding Restricted Voting Common Stock. Such shares may be
converted to Common Stock in specific circumstances. Mr. Snyder disclaims
beneficial ownership as to 1,118,193 of these shares which are attributable
to the interests in the Partnership held by Mr. Snyder's children. Includes
3,000 shares of Common Stock underlying options which are exercisable
within 60 days.
(d) Includes 22,000 shares of Common Stock underlying options which are
exercisable within 60 days by each of Mr. Hodel and Mr. Sielbeck. Mr.
Hodel's address is P.O Box 23099, Silverthorne, CO 80498. Mr. Sielbeck's
address is 6 Cadillac Drive, #410, Brentwood, TN 37027.
(e) Includes 6,000 shares of Common Stock underlying options which are
exercisable within 60 days. Mr. Trauscht's address is 4 Arden Court, Oak
Brook, Illinois 60523.
(f) Includes 74,536 shares of Common Stock owned by two related trusts, as to
which Mr. Weik disclaims beneficial ownership, 74,536 shares of Common
Stock held by the Bob Weik Annuity Trust of 1997, and 68,852 shares of
Common Stock underlying options which are exercisable within 60 days.
(g) Includes 9,000 shares of Common Stock underlying options which are
exercisable within 60 days. Mr. Woods address is 6602 Chase Tower, 600
Travis, Houston, TX 77002.
(h) Includes 55,000 shares of Common Stock underlying options which are
exercisable within 60 days.
(i) Includes 187,001 shares of Common Stock underlying options which are
exercisable within 60 days.
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(j) Includes 36,910 shares of Common Stock underlying options which are
exercisable within 60 days.
(k) Information is as of last date of employment and includes 346,670 shares of
Common Stock underlying options which are exercisable within 60 days.
(l) Includes 2,605,709 shares of Restricted Voting Common Stock described in
Note (c) above and 1,034,433 shares of Common Stock underlying options
which are exercisable within 60 days.
(m) An investment advisor registered under Section 203 of the Investment
Advisors Act of 1940 which furnishes investment advice to four investment
companies registered under the Investment Company Act of 1940. Includes
sole voting and sole dispositive power with respect to all of the shares,
but disclaims beneficial ownership. Dimensional Fund Advisors' address is
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401. Information is based
solely on the 13G/A filed by Dimensional Fund Advisors on February 12,
2002.
(n) Mr. Gendell has shared voting and shared dispositive power in (i) Tontine
Partners, L.P., 953,920 shares, (ii) Tontine Power Partners, L.P., 25,000
shares, (iii) Tontine Management, L.L.C., 978,920 shares, (iv) Tontine
Associates, L.L.C., 20,000 shares, and (v) Tontine Overseas Associates,
L.L.C., 970,280 shares. Mr. Gendell holds 115,300 shares with sole voting
and sole dispositive power. Mr. Gendell's address is 237 Park Avenue, 9th
Floor, New York, NY 10017. Information is based solely on the 13D filed by
Jeffrey L. Gendell on January 7, 2002.
(o) Restricted Voting Common Stock is treated as options which are exercisable
within 60 days in the percent of class calculation.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Company's Amended and Restated Certificate of Incorporation, as
amended, and bylaws provide that the number of directors on the Board shall be
fixed from time to time by the Board of Directors but shall not be less than one
nor more than fifteen persons. The Certificate of Incorporation divides the
Board of Directors into three classes, designated as Class I, Class II and Class
III. Each class of directors is to be elected to serve a three-year term and is
to consist, so far as possible, of one-third of the number of directors required
at the time to constitute a full Board. If the number of directors is not evenly
divided into thirds, the Board of Directors shall determine which class or
classes shall have one extra director. In connection with the resignation of Mr.
Richard L. Tucker as a Class II director, Mr. Snyder resigned his position as a
Class I director and was appointed by the Board of Directors as a Class II
director. The Board of Directors set the number of directors at eight, two in
Class I, three in Class II and three in Class III, whose terms of office expire
with the 2005, 2003 and 2004 annual meetings, respectively, and until their
successors are elected and qualified. The holders of the Restricted Voting
Common Stock are entitled to elect one director and are not entitled to vote on
other directors.
The term of office of each of the current Class II Directors expires at the
time of the 2003 Annual Meeting of Stockholders, or as soon thereafter as their
successors are elected and qualified. Mr. Allen has been nominated to serve an
additional three-year term as a Class II Director to be elected by the holders
of the Common Stock. The holders of Restricted Voting Common Stock have
indicated that they will elect Mr. Snyder as a Class II director. Each of
Messrs. Allen and Snyder has consented to be named in this Proxy Statement and
to serve as a director if elected. Mr. Weik will not stand for re-election and
with the expiration of his term the number of directors will be set at seven.
It is the intention of the holders of Common Stock and Restricted Voting
Common Stock named in the accompanying proxy card to vote for the election of
the nominees named below for which the stockholders are entitled to vote,
respectively, unless a stockholder has withheld such authority. The affirmative
vote of holders of a plurality of the Common Stock or Restricted Voting Common
Stock present in person or by proxy at the 2003 Annual Meeting of Stockholders
and entitled to vote is required for election of the nominees, respectively.
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If, at the time of or prior to the 2003 Annual Meeting of Stockholders, any
of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy may be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required. No
proxy will be voted for a greater number of persons than the number of nominees
named herein.
DIRECTORS
NOMINEES -- CLASS II DIRECTORS (THE TERMS SHALL EXPIRE AT THE 2006 ANNUAL
MEETING OF STOCKHOLDERS)
CLASS II
The Class II Directors, whose present term of office as directors expire at
the 2003 Annual Meeting of Stockholders, and certain additional information with
respect to each of them, are as follows:
HERBERT R. ALLEN DIRECTOR SINCE 2001
Mr. Allen, 62, has been Chief Executive Officer of the Company since
October 2001. From May 2001 to October 2001, Mr. Allen was Chief Operating
Officer of the Company. From January 2000 to May 2001, Mr. Allen was Senior Vice
President -- East Area of the Company. From June 1998 to January 2000, Mr. Allen
was a Regional Operating Officer of the Company. Prior to that time, Mr. Allen
was the President of H.R. Allen, Inc., one of the Company's subsidiaries.
C. BYRON SNYDER DIRECTOR SINCE 1997
Mr. Snyder, 54, has been Chairman of the Board of Directors of the Company
since its inception. Mr. Snyder was a founding member and Senior Managing
Director of Main Street Equity Ventures II, LP, a Houston-based private equity
investment firm. Mr. Snyder was the President and owner of Sterling City
Capital, L.L.C., a private investment company. Mr. Snyder was owner and
President of Relco Refrigeration Co., a distributor of refrigerator equipment,
from 1992 to 1998. Prior to 1992, Mr. Snyder was the owner and Chief Executive
Officer of Southwestern Graphics International, Inc., a diversified holding
company which owned Brandt & Lawson Printing Co., a Houston-based general
printing business, and Acco Waste Paper Company, an independent recycling
business. Brandt & Lawson Printing Co. was sold to Hart Graphics in 1989, and
Acco Waste Paper Company was sold to Browning-Ferris Industries in 1991. Mr.
Snyder is a member of the Board of Directors of United Glass Corporation, the
largest glass fabrication and services company in North America.
DIRECTORS CONTINUING IN OFFICE
CLASS I
The Class I Directors, whose present term of office as directors will
continue after the meeting and expire at the 2005 Annual Meeting of
Stockholders, and certain additional information with respect to each of them,
are as follows:
RICHARD CHINA DIRECTOR SINCE 2001
Mr. China, 44, has been the Chief Operating Officer of the Company since
October 2001. From May 2001 to October 2001, Mr. China was the Chief Executive
Officer of IES Communications, Inc., one of the Company's subsidiaries. From
August 2000 to May 2001, Mr. China was a Regional Operating Officer for the
Company. Prior to that time, Mr. China was President of Primo Electric Company,
one of the Company's subsidiaries.
ALAN R. SIELBECK DIRECTOR SINCE 1998
Mr. Sielbeck, 49, has served as Chairman of the Board and Chief Executive
Officer of Service Experts, Inc., a publicly traded heating, ventilation and air
conditioning service company, since its inception in March 1996 until January
2000. Mr. Sielbeck has served as Chairman of the Board and President of AC
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Service and Installation Co. Inc. and Donelson Air Conditioning Company, Inc.
since 1990 and 1991, respectively. From 1985 to 1990, Mr. Sielbeck served as
President of RC Mathews Contractor, Inc., a commercial building general
contractor and Chief Financial Officer of RCM Interests, Inc., a commercial real
estate development company. Mr. Sielbeck serves as a director for Midsouth Wire
Products and Nashville Wire.
CLASS III
The Class III Directors, whose present term of office as directors will
continue after the meeting and expire at the 2004 Annual Meeting of
Stockholders, and certain additional information with respect to each of them,
are as follows:
DONALD PAUL HODEL DIRECTOR SINCE 1998
Mr. Hodel, 67, is Managing Director of Summit Group International, Ltd.
(and related companies), an energy and natural resources consulting firm he
founded in 1989. Mr. Hodel served as United States Secretary of the Interior
from 1985 to 1989 and United States Secretary of Energy from 1982 to 1985. Mr.
Hodel has served as director of both publicly traded and privately held
companies and is the recipient of the Presidential Citizens Medal and honorary
degrees from three universities. Mr. Hodel serves on the boards of directors of:
Salem Communications, Inc., a NASDAQ listed company; and the North American
Electric Reliability Council.
DONALD C. TRAUSCHT DIRECTOR SINCE 2002
Mr. Trauscht, 69, has been the Chairman of BW Capital Corporation, a
private investment company, since January 1996. From 1967 to 1995, Mr. Trauscht
held various positions with Borg Warner Corporation, including Chairman and
Chief Executive Officer. Mr. Trauscht is a director of ESCO Technologies Inc.,
Global Motorsport Group Inc. and OMI Corporation Inc.
JAMES D. WOODS DIRECTOR SINCE 2001
Mr. Woods, 71, is the retired Chairman and Chief Executive Officer of Baker
Hughes Incorporated. He was Chief Executive Officer of Baker Hughes from April
1987 and Chairman from January 1989 until January 1997. Mr. Woods is a director
of Varco International Inc., ESCO Technologies Inc., OMI Corporation Inc., USEC
Inc. and Foster Wheeler Inc.
The executive officer information is incorporated by reference from the
section titled "Item 4A. Executive Officers" in the Company's Annual Report on
Form 10-K for the year ended September 30, 2002.
COMMITTEES
The Board of Directors has established the Audit, Compensation,
Nominating/Governance, and Executive Committees to assist in the performance of
its functions of overseeing the management and affairs of the Company. The
Audit, Compensation and Nominating/Governance Committees are composed entirely
of independent directors under current New York Stock Exchange policies and have
the authority to retain and compensate counsel and experts. During fiscal year
2002 each member of the Board of Directors attended 75% or more of the meetings
of the Board of Directors, which met eight times, and the committees of which he
was a member.
Audit Committee. The Audit Committee, which met eight times during fiscal
year 2002, is comprised of Messrs. Sielbeck (Chairman), Trauscht and Woods.
Pursuant to its written charter, a copy of which is attached as Appendix "A",
the Audit Committee assists the Board of Directors in:
- fulfilling its responsibility to oversee management's implementation of
and the integrity of the financial statements of the Company;
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- monitoring the qualifications, independence and performance of the
Company's internal and independent auditors;
- monitoring the compliance by the Company with legal and regulatory
requirements; and
- preparing the report that SEC rules require be included in the Company
annual proxy statement.
In fulfilling these duties the Audit Committee, in general:
- reviews the annual financial statements with management and the
independent auditor;
- recommends to the Board of Directors whether the Company's annual audited
financial statements and accompanying notes should be included in the
Company's Annual Report on Form 10-K;
- reviews with management and the independent auditor the effect of
regulatory and accounting initiatives as well as contingent liabilities
and off-balance sheet structures, if any, on the Company's financial
statements;
- reviews with management and the independent auditor the Company's
quarterly financial statements filed on Form 10-Q;
- discusses periodically with Company management the Company's major
financial risk exposure and steps implemented to monitor and control
same;
- reviews major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors
or management;
- has the sole authority to engage, oversee and evaluate the performance of
and, when the Audit Committee determines it to be appropriate, to
terminate the Company's independent auditors, to approve all audit
engagement fees and terms and approves all significant non-audit
engagements, if any, with the independent auditors. The independent
auditors report directly to the Audit Committee;
- reviews the independence of the independent auditor, giving consideration
to the range of audit and non-audit services performed by the independent
auditor;
- reviews periodically (i) the experience, qualifications and performance
of the senior members of the Company's internal auditing team and (ii)
the internal audit activities, staffing and budget;
- reviews significant reports to management prepared in connection with
internal audit and management's responses;
- reviews with the independent auditor any problems or difficulties the
auditor may encounter and any management letter provided by the auditor
and the Company's response to that letter;
- advises the Board of Directors with respect to the Company's policies and
procedures regarding conflicts of interest and compliance with material
laws and regulations;
- reviews legal matters that may have a material impact on the financial
statements, the Company's compliance policies and any material reports or
inquiries received from regulators or government agencies; and
- establishes procedures (i) to handle complaints regarding the Company's
accounting practices, internal controls or auditing matters and (ii) to
permit confidential anonymous submission to the Audit Committee of
concerns by employees regarding accounting or auditing matters.
Compensation Committee. The Compensation Committee, which met four times
during fiscal year 2002, is comprised of Messrs. Woods (Chairman), Hodel and
Trauscht. Pursuant to its written charter, copy of which is attached as Appendix
"B", the Compensation Committee assists the Board of Directors in:
- discharging its responsibilities relating to compensation of Company
executives, and
- producing an annual report on executive compensation for inclusion in the
Company's annual proxy statement.
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In fulfilling these duties, the Compensation Committee generally:
- establishes the Company's compensation philosophy and ensures that the
compensation program is aligned with the Company's objectives consistent
with the interest of the Company's stockholders;
- reviews and approves new compensation plans;
- evaluates the performance of the Chief Executive Officer and recommends
to the Board of Directors the total compensation for the Chief Executive
Officer;
- reviews salaries, salary increases and other compensation of executive
officers and evaluates the competitiveness of total compensation levels
for executives;
- receives recommendations regarding, and the selection of officers and key
employees for participation in incentive compensation plans and receives
recommendations regarding the establishment of performance goals and
awards for those officers and key employees who participate in such
incentive plans;
- reviews and monitors benefits under all employee plans of the Company;
- makes recommendations to the Board of Directors with respect to the
management organization of the Company;
- reviews and approves incentive compensation and equity based plans; and
- evaluates, periodically, compensation paid to outside members of the
Board of Directors including monitoring the competitiveness and
composition of director compensation.
Nominating/Governance Committee. The Nominating/Governance Committee,
which met three times during fiscal year 2002, is comprised of Messrs. Trauscht
(Chairman), Sielbeck and Woods. Pursuant to its written charter, a copy of which
is attached as Appendix "C", the Nominating/Governance Committee assists the
Board of Directors in:
- establishing standards for Board of Directors and Nominating/Governance
Committee members and oversees the performance of the Board of Directors
and its members;
- recommends to the Board of Directors whether existing Board of Director
members should be nominated for new terms or replaced and whether more or
fewer members are appropriate;
- establishes criteria to select new directors and recommends to the Board
of Directors a process for orientation of new Board of Director or
committee members;
- identifies individuals qualified to become members of the Board of
Directors and recommends same to the Board of Directors as nominees to
fill any existing or expected vacancy;
- evaluates the Company's corporate governance procedures and recommends to
the Board of Directors changes that the Nominating/Governance deems
appropriate; and
- considers persons nominated as a director by any of our stockholders,
provided the nomination is made in accordance with our by-laws and
applicable law.
Executive Committee. The Executive Committee, which met three times during
fiscal year 2002, is comprised of Messrs Allen, Snyder and Trauscht. Pursuant to
its written charter the Executive Committee is authorized to:
- act upon any urgent issues that arise between regularly scheduled
meetings of the Board of Directors.
The Executive Committee however, may not:
- approve, adopt or recommend to the stockholders any matter or action
expressly required by Delaware General Corporation Law to be submitted to
the stockholders for approval, or
- adopt, amend or repeal any bylaw or the Company,
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DIRECTOR COMPENSATION
Directors of the Company who are not officers or employees of the Company
receive a $12,000 annual retainer paid quarterly, one-half in cash and one-half
in shares of Company Common Stock. Committee chairmen receive an additional
annual retainer of $3,000, paid one-half in cash and one-half in stock. Non-
employee directors are also paid a meeting fee of $1,250 for each regular or
special Board or committee meeting. Board members are paid $500 for telephonic
meetings. In addition, each non-employee director of the Company receives a
grant of an option to purchase 3,000 shares of Company Common Stock upon initial
election as a director and an option to purchase 3,000 additional shares on each
September 30 on which such director remains a non-employee director. The Company
paid aggregate fees of $134,211 to non-employee directors in connection with the
Board of Directors' and committee meetings in fiscal year 2002. Employee
directors receive no additional compensation for attending Board of Directors or
committee meetings.
REPORT OF THE AUDIT COMMITTEE
The information contained in this report shall not be deemed to be
"soliciting material" or "filed" or incorporated by reference in future filings
with the SEC, or subject to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into a document filed under the Securities Act of 1933, as amended, or the
Exchange Act.
TERMINATION OF ARTHUR ANDERSEN LLP; ENGAGEMENT OF ERNST & YOUNG LLP
On June 6, 2002, the Audit Committee of the Board of Directors of Company
(the "Audit Committee") dismissed Arthur Andersen LLP as its independent
auditors for the fiscal year 2002 and engaged Ernst & Young LLP as our
independent auditors for the fiscal year 2002. The decision to change was not
the result of any disagreement between the Company and Arthur Andersen LLP on
any matter of accounting principles or practices, financial statement
disclosures, or auditing scope or procedure.
REVIEW OF OUR COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2002
The Audit Committee has reviewed and discussed our audited financial
statements for the fiscal year ended September 30, 2002 with our management. The
Audit Committee has discussed with Ernst & Young LLP, our independent auditors,
the matters required to be discussed by Statement on Auditing Standards No. 61
(Communications with Audit Committees).
The Audit Committee has received the written disclosures and the letter
from the independent auditors required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and the Audit Committee
has discussed with the independent auditors the auditors' independence from
management and the Company.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2002 for filing with the Securities and Exchange Commission. The
Audit Committee and the Board of Directors have also recommended Ernst & Young
LLP serve as the Company's independent auditors for Fiscal year 2003, subject to
stockholder ratification.
Alan R. Sielbeck (Chairman)
Donald C. Trauscht
James D. Woods
9
AUDIT FEES
The following table shows the fees paid or accrued by the Company for the
audit and other services provided by Ernst & Young LLP for fiscal year 2002.
Audit:(1)................................................... $336,000
Financial Information System Design and Implementation:..... 0
All Other Fees:(2).......................................... 2,700
--------
Total............................................. $338,700
========
---------------
(1) Audit-related includes services traditionally performed by the auditor such
as review of Forms 10-Q and completion of annual audit.
(2) All other fees represent fees for tax advice and preparation of certain
filings performed prior to the engagement of Ernst & Young LLP as
independent auditors.
The Audit Committee has considered whether the provision of the non-audit
services listed as "Other" in the table above is compatible with maintaining the
independence of Ernst & Young LLP.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of Integrated
Electrical Services, Inc. (the "Compensation Committee") is pleased to present
the 2002 report on executive compensation. This report of the Compensation
Committee documents the components of the Company's executive officer
compensation program and describes the basis on which the compensation program
determinations were made by the Compensation Committee with respect to the
executive officers of the Company. The Compensation Committee meets regularly
and is comprised of Messrs. Woods (Chairman), Hodel and Trauscht. The duty of
the Compensation Committee is to review compensation levels of senior members of
management, as well as administer the Company's various incentive plans
including its annual bonus plan and its stock option plan.
EXECUTIVE COMPENSATION PROGRAM PHILOSOPHY
The Company's compensation philosophy and program objectives are directed
by two primary guiding principles. First, the program is intended to provide
levels of compensation sufficient to attract, motivate and retain talented
executives. Second, the program is intended to create an alignment of interests
between the Company's executives and stockholders such that a portion of each
executive's compensation is directly linked to maximizing stockholder value.
In support of this philosophy, the executive compensation program is
designed to reward performance that is directly relevant to the Company's
short-term and long-term success. As such, the Company provides both short-term
and long-term incentives. The Committee has structured the executive
compensation program with three primary underlying components: base salary,
annual incentives, and long-term incentives. The Company's compensation
philosophy is to (i) compensate its executive officers at a base level that is
near the average salaries paid by companies of similar size and nature; (ii)
provide the opportunity for its executive officers to earn additional
compensation in the form of annual bonuses if individual and business
performance goals are met; and (iii) design long-term incentive plans to focus
executive efforts on the long-term goals of the Company and to maximize total
return to the Company's stockholders.
BASE SALARY
The Committee utilizes market compensation data that is reflective of the
markets in which the Company competes for employees. Based on such data, the
Committee believes that the salaries paid to the Company's executive officers
are at or below executive officers' compensation in similar companies. The
Committee intends to insure that the executive officer's compensation is
consistent with its stated policies. Therefore, as part of its responsibilities,
the Committee reviews the salaries for the Company's executive
10
officers. Individual salary changes are based on a combination of factors such
as the performance of the executive, salary level relative to the competitive
market, level of responsibility, growth of Company operations and the
recommendation of the Chief Executive Officer.
ANNUAL BONUS
The Company's annual bonus is intended to reward key employees based on
Company and individual performance, motivate key employees, and provide
competitive cash compensation opportunities. Target award opportunities vary by
individual position and are expressed as a percentage of base salary. The
individual target award opportunities are set at market median levels, but
actual payouts may vary based on performance so that actual awards may fall
below the 50th or above the 75th percentile. The amount a particular executive
may earn is directly dependent on the individual's position, responsibility, and
ability to impact the Company's financial success. During the 2002 fiscal year,
no bonuses were paid.
LONG-TERM INCENTIVES
The Company's long-term incentive plan is designed to focus executive
efforts on the long-term goals of the Company and to maximize total return to
our stockholders. The key devices the Committee used during 2002 were stock
options. Stock options align the interests of employees and stockholders by
providing value to the executive through price appreciation.
CEO COMPENSATION
In May 2002, the Committee undertook a detailed review of the performance
of the Chief Executive Officer. A twenty-two point evaluation was developed that
highlighted all material aspects of the position with Mr. Allen being rated on
each item by the Board of Directors, the Company's senior management, a select
group of subsidiary presidents and Mr. Allen himself. In order to insure
anonymity the results of the evaluation were forwarded to the Company's
independent auditors for compilation.
Mr. Allen's salary was adjusted from $310,000 to $380,000 in connection
with his election to the position of Chief Executive Officer. In addition to and
as a result of the above evaluation, Mr. Allen's salary was adjusted to $475,000
effective October 1, 2002. Mr. Allen did not receive a bonus payment for fiscal
year 2002.
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries. The following members of the
Compensation Committee have delivered the foregoing report.
James D. Woods (Chairman)
Donald Paul Hodel
Donald C. Trauscht
The foregoing report and the performance graph and related description
included in this proxy statement shall not be deemed to be filed with the
Securities and Exchange Commission except to the extent the Company specifically
incorporates such items by reference into a filing under the Securities Act of
1933 or Securities Exchange Act of 1934.
11
EXECUTIVE OFFICERS
The following table summarizes certain information regarding aggregate cash
compensation, stock option and restricted stock awards and other compensation
earned by the Company's Chief Executive Officers, each of the four other most
highly compensated executive officers of the Company, and one other individual
qualified under Item 402(a)(3)(iii) for services rendered in all capacities to
the Company for the years ended September 30, 2002, 2001, and 2000:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION SECURITIES
---------------------------------------------- RESTRICTED UNDERLYING
FISCAL OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(D) AWARD (NUMBER) COMPENSATION(H)
--------------------------- ------ -------- -------- --------------- ---------- ---------- ---------------
Herbert R. Allen............... 2002 $380,002 -- -- -- 330,000 $ 2,727
President and Chief 2001 292,500 $120,000 -- -- 30,000 2,678
Executive Officer............ 2000 229,326 180,000 -- -- 36,000 3,439
Richard L. China............... 2002 $309,997 -- -- -- 185,000 $ 2,330
Chief Operating Officer...... 2001 237,211 $175,000 -- -- 30,000 2,808
2000 164,506 399,002 -- -- 10,000 2,818
William W. Reynolds(a)......... 2002 $275,002 -- -- -- 80,000 $ 75,548
Executive Vice President..... 2001 275,000 $ 55,000 -- -- 345,000 74,744
and Chief Financial 2000 84,439 15,000 -- -- 100,000 109,469
Officer....................
Danniel Petro.................. 2002 $285,000 -- -- -- 70,000 $ 1,844
Regional Operating Officer... 2001 242,500 $171,038 -- -- 30,000 2,774
2000 163,845 157,500 -- -- 26,000 2,159
Robert Stalvey................. 2002 $249,997 -- -- -- 60,000 $ 1,930
Senior Vice President........ 2001 229,295 $ 58,500 -- 30,000 1,076
2000 166,355 160,000 -- 10,000 2,525
Bob Weik(b).................... 2002 $325,000 -- 50,000 $ 2,180
President -- Bexar 2001 325,000 $162,078 -- -- 30,000 3,341
Electric...................
Company, Ltd................. 2000 326,338 180,000 -- $ 72,095(e) 40,000 4,175
H. David Ramm(c)............... 2002 $ 85,560 -- -- -- -- $701,250(i)
2001 453,556 -- -- $ 195,000(f) 675,000 1,894
2000 188,461 $495,000 -- 2,275,000(g) 132,500 --
---------------
(a) Mr. Reynolds was named Executive Vice President and Chief Financial Officer
on June 12, 2000.
(b) Mr. Weik was President -- Western Area, IES Operations Group, Inc from
December 2001 to September 2002.
(c) Mr. Ramm no longer serves as President and Chief Executive Officer of the
Company.
(d) No executive officer received perquisites or other personal benefits in
excess of 10% of their total annual salary and bonus during the fiscal year
ended September 30, 2002.
(e) The dollar value of the restricted stock appearing in the table is based on
the closing sales price of the Integrated Electrical Services' Common Stock
on December 15, 1999 ($8.8125) the date of the award. The restricted stock
vested 50% on May 31, 2000 and 50% on August 31, 2000. As of September 30,
2002, the 8,181 shares had an aggregate value of $30,597. The Company does
not pay dividends.
(f) The dollar value of the restricted stock appearing in the table is based on
the closing sales price of the Integrated Electrical Services' Common Stock
on December 11, 2000 ($5.375) the date of the award. The restricted stock
was immediately vested on the grant date. As of September 30, 2002, the
36,279 shares had an aggregate value of $135,683. The Company does not pay
dividends.
(g) The dollar value of the restricted stock appearing in the table is based on
the closing sales price of the Integrated Electrical Services' Common Stock
on March 20, 2000 ($5.6875) the date of the award. The restricted stock
vests over four years with 100,000 shares vesting on each anniversary of
his date of hire (March 20, 2000). As of September 30, 2002, the 400,000
shares had an aggregate value of $1,496,000. The Company does not pay
dividends.
12
(h) All other compensation for fiscal year 2002 consists of Company
contributions to the IES Corp. Executive Savings Plan and the IES, Inc.
401(k) Retirement Savings Plan. In addition, for 2001 and 2002, Mr.
Reynolds received $73,333 per his employment agreement (paid 50% in cash
and 50% in IES common stock). For 2000, Mr. Reynolds received a $40,000
sign-on award, $59,107 which is 70% of his base salary between June 12,
2000 and September 30, 2000, and a payment of $10,562 relating to his
relocation.
(i) In addition to the cash payments described, Mr. Ramm received as part of
his severance agreement (i)100% reimbursement for a period of 17 months for
both Mr. Ramm and his spouse for COBRA medical coverage, (ii) removal of
most restrictions on 300,000 shares of IES Common Stock, (iii) an
automobile, (iv) artwork and (v) 5% interest of the Company's interest in
EPV Holdings LLC.
OPTION GRANTS IN LAST FISCAL YEAR
PERCENTAGE OF
TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO GRANT DATE
UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME OPTIONS GRANTED(A) FISCAL YEAR SHARE DATE VALUE(B)
---- ------------------ ------------- --------- ---------- ----------
Herbert R. Allen............... 65,000 3.2% $5.25 10/1/2011 $224.250
200,000 9.8% 3.65 11/9/2011 478,255
65,000 3.2% 3.74 9/30/2009 146,534
Richard L. China............... 40,000 2.0% $5.25 10/1/2011 $138,000
100,000 4.9% 3.65 11/9/2011 239,127
45,000 2.2% 3.74 9/30/2009 101,447
William W. Reynolds............ 40,000 2.0% $5.25 10/1/2011 $138,000
40,000 2.0% 3.74 9/30/2009 90,175
Danniel Petro.................. 40,000 2.0% $5.25 10/1/2011 $138,000
30,000 1.5% 3.74 9/30/2009 67,631
Robert Stalvey................. 30,000 1.5% $5.25 10/1/2011 $103,500
30,000 1.5% 3.74 9/30/2009 67,631
Bob Weik....................... 50,000 2.5% $5.25 10/1/2011 $172,500
H. David Ramm.................. -- -- -- -- --
---------------
(a) Stock options vest one-third on each anniversary of the grant date until
fully vested (standard vesting).
(b) Present value is determined by using the Black-Scholes Option Pricing
Model. The material assumptions and adjustments incorporated into the
Black-Scholes model in making such calculations include the following: (1)
an interest rate representing the treasury strip rate as of the date of
grant, with a term to maturity equal to that of the expected life of the
stock option grant; (2) volatility representing the annualized standard
deviation of the log normal monthly returns; and (3) a 3% annual adjustment
for risk of forfeiture during vesting. The ultimate values of the options
will depend on the future market prices of the Common Stock, which cannot
be forecasted with reasonable accuracy. The actual value, if any, that an
optionee will recognize upon exercise of an option will depend on the
difference between the market value of the Common Stock on the date the
option is exercised and the applicable exercise price.
13
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the value of
exercised and unexercised options held by the executive officers of the Company.
Value at September 30, 2002 is measured as the difference between the exercise
price and fair market value on September 30, 2002.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2002 AND OPTION VALUES AT SEPTEMBER
30, 2002
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS HELD AT MONEY OPTIONS HELD AT
SHARES SEPTEMBER 30, 2002 SEPTEMBER 30, 2002
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Herbert R. Allen.......... -- -- 34,000 362,000 $ 0 $18,000
Richard L. China.......... -- -- 16,666 208,334 0 9,000
William W. Reynolds....... -- -- 167,002 357,998 0 0
Danniel Petro............. -- -- 32,334 98,666 0 0
Robert Stalvey............ -- -- 20,243 84,229 0 0
Bob Weik.................. -- -- 57,185 83,334 0 0
H. David Ramm............. -- -- 346,670(a) -- 0 0
---------------
(a) Options remain exercisable for a two year period from March 1, 2002.
EMPLOYMENT AGREEMENTS
On March 20, 2000, the Company entered into a three year employment
agreement with H. David Ramm for the position of President and Chief Executive
Officer. Under this agreement, Mr. Ramm's initial salary was $350,000. Mr. Ramm
also received 132,500 stock options and a restricted stock award of 400,000
shares.
On June 12, 2000, the Company entered into a three year employment
agreement with William W. Reynolds for the position of Executive Vice President
and Chief Financial Officer. Under this agreement, Mr. Reynolds initial salary
was $275,000. Mr. Reynolds also received 100,000 stock options, and $73,333
payable each year for three years in a combination of cash and stock.
The Company entered into employment agreements with Messrs. Allen, Weik,
and China, with the agreements expiring on May 21, 2003, January 29, 2003, and
January 12, 2004 respectively, that initially provided for annual salaries of
$150,000, $85,000, and $150,000, respectively. Each agreement is subject to
annual review by the Compensation Committee. In addition, the employment
agreements generally restrict these individuals from competing with the Company
for a period of two years after the date of the termination of employment with
the Company. In the event of a change of control of the Company, such employees
may be entitled to receive a multiple of the then remaining benefits under the
agreements.
14
STOCK PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
stockholder return on its Common Stock with the cumulative total return of (i)
the S&P 500 Index, (ii) the Russell 2000, and (iii) a peer group stock index
(the "Peer Group") selected in good faith by the Company made up of the
following publicly traded companies: Comfort Systems USA, Inc., Dycom Industries
Inc., Emcor Group Inc., Encompass Services Corp, Fluor Corp (Massey Energy
Company was distributed as a dividend to Flour Corp shareholders on December 22,
2000 and the value of such dividend is reflected as a reinvestment), Jacobs
Engineering Group, Mastec Inc., and Quanta Services Inc. Due to activities such
as reorganizations and mergers, additions and deletions are made to the Peer
Group from time to time and as the result of a reorganization Washington Group
International (formerly known as Morrison Knudson) has been removed from the
Peer Group. The cumulative total return computations set forth in the
Performance Graph assume the investment of $100 in the Company's Common Stock,
the S&P 500 Index, the Russell 2000, and the Peer Group, on January 27, 1998.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG INTEGRATED ELECTRICAL SERVICES, INC., THE S&P 500 INDEX
AND THE RUSSELL 2000 INDEX
[PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN
-------------------------------------------------------------------------------------------------
1/27/98 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99 3/00 6/00
INTEGRATED ELECTRICAL
SERVICES, INC........... 100.00 137.07 138.79 102.59 153.45 110.34 111.21 109.05 69.40 36.21 35.34
S & P 500................ 100.00 113.95 117.71 106.00 128.58 134.98 144.50 135.48 155.64 159.20 154.97
RUSSELL 2000............. 100.00 110.06 104.93 83.79 97.45 92.17 106.50 99.77 118.17 126.54 121.76
PEER GROUP............... 100.00 113.30 108.06 91.45 118.55 119.06 149.35 118.84 130.69 225.03 218.08
CUMULATIVE TOTAL RETURN
------------------------------------------------------------------------------
9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02
INTEGRATED ELECTRICAL
SERVICES, INC........... 47.41 40.95 39.31 67.24 37.24 35.31 34.48 43.10 25.79
S & P 500................ 153.47 141.46 124.69 131.99 112.62 124.65 125.00 108.25 89.55
RUSSELL 2000............. 123.10 114.60 107.14 122.56 97.00 117.45 122.13 111.93 87.97
PEER GROUP............... 166.68 157.54 136.04 153.85 107.11 115.39 120.14 104.63 68.32
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to several lease agreements expiring on October 31, 2005 and one
lease agreement expiring on December 10, 2006, Bexar Electric Company Ltd.
agreed to lease certain facilities owned by Mr. Weik and his immediate family.
Such lease agreements provide for an annual rent of approximately $364,176 which
the Company believes is not in excess of fair rental value for such facilities.
During 2002, Main Street Equity Ventures ("Main Street"), a venture capital
firm in which Mr. Snyder served as a Senior Managing Director, was subcontracted
by a third party engaged by the Company to perform work for the Company. Main
Street received $80,000 in 2002 for the services performed. The Company believes
that the amount paid to Main Street for services was reasonable under the
circumstances.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2002, no executive officer of the Company served as (i)
a member of the Compensation Committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Compensation Committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of the Company or its subsidiaries.
During fiscal year 2002, no member of the Compensation Committee (or board
committee performing equivalent functions) (i) was an officer or employee of the
Company or (ii) was formerly an officer of the Company or (iii) had any business
relationship or conducted any business with the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons holding more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission ("SEC") and any stock exchange or automated quotation
system on which the Common Stock may then be listed or quoted (i) initial
reports of ownership, (ii) reports of changes in ownership and (iii) annual
reports of ownership of Common Stock and other equity securities of the Company.
Such directors, officers and ten-percent stockholders are also required to
furnish the Company with copies of all such filed reports.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
2002, the Company believes that all Section 16(a) reporting requirements related
to the Company's directors and executive officers were timely fulfilled during
2002.
PROPOSAL TWO
RATIFICATION OF SELECTION
INDEPENDENT AUDITORS
On June 6, 2002, the Audit Committee of the Board of Directors of
Integrated Electrical Services, Inc. (the "Audit Committee") dismissed Arthur
Andersen LLP ("AA") as our independent auditors for the fiscal year 2002 and
engaged Ernst & Young LLP as our independent auditors for the fiscal year 2002.
The Audit Committee has appointed Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending September 30, 2003, subject to
ratification by the Company's stockholders.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting of Stockholders and will have an opportunity to make a statement,
if they desire to do so, and to respond to appropriate questions from those
attending the meeting.
During the two fiscal years ended September 2000 and 2001, and the
subsequent interim period through June 6, 2002, there were no disagreements
between the Company and AA on any matter of accounting
16
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to AA's satisfaction, would have
caused AA to make a reference to the subject matter of the disagreement in
connection with its reports.
The audit reports of AA on our consolidated financial statements as of and
for the fiscal years ended September 30, 2000 or 2001 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope or accounting principles.
During the two fiscal years ended September 2000 and 2001, and the
subsequent interim period through June 6, 2002, the Company did not consult with
Ernst & Young LLP regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.
The affirmative vote of holders of a majority of the shares of Common Stock
voted at the 2003 Annual Meeting of Stockholders is required to ratify the
appointment of Ernst & Young LLP as the Company's independent auditors for
fiscal 2003.
If the stockholders fail to ratify the appointment, the Audit Committee
will reconsider its selection. Even if the appointment is ratified, the Audit
Committee, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if the Audit Committee
determines that such a change would be in the Company's and its stockholders'
best interests.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF ERNST & YOUNG LLP'S APPOINTMENT, AND PROXIES EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
OTHER BUSINESS
The Board knows of no business that will come before the meeting except
that indicated above. However, if any other matters are properly brought before
the meeting, it is intended that the persons acting under the proxy will vote
hereunder in accordance with their best judgment.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Pursuant to the Company's bylaws, stockholder proposals submitted for
consideration at the Company's 2003 Annual Meeting of Stockholders must be
delivered to the Corporate Secretary no later than 80 days before the date of
the 2003 Annual Meeting of Stockholders; provided, however, that if less than 90
days notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be received no
later than the close of business on the tenth day following the date of which
such notice was mailed or such public disclosure made. If such timely notice of
a stockholder proposal is not given, the proposal may not be brought before the
Annual Meeting. If timely notice is given but is not accompanied by a written
statement to the extent required by applicable securities laws, the Company may
exercise discretionary voting authority over proxies with respect to such
proposal if presented at the Company's 2003 Annual Meeting of Stockholders.
A proposal of a stockholder intended to be presented at the next annual
meeting must be received at the Company's principal executive offices no later
than August 20, 2003 if the stockholder making the proposal desires such
proposal to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such meeting.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
In some cases only one copy of this proxy statement or annual report is
being delivered to multiple stockholders sharing an address unless we have
received contrary instructions from one or more of the stockholders. We will
deliver promptly, upon written or oral request, a separate copy of this proxy
statement or annual report to a stockholder at a shared address to which a
single copy of the document was delivered. To request a separate delivery of
these materials now or in the future, a stockholder may submit a written request
17
to the Corporate Secretary, Integrated Electrical Services, Inc., 1800 West Loop
South, Suite 500, Houston, TX 77027 or an oral request by calling the Corporate
Secretary at (713) 860-1500.
By Order of the Board of Directors
/s/ MARK A. OLDER
--------------------------------------
Mark A. Older
Secretary
18
APPENDIX "A"
INTEGRATED ELECTRICAL SERVICES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in (1)
fulfilling its responsibility to oversee management's implementation of and the
integrity of the financial statements of the Company, (2) monitoring the
qualifications, independence and performance of the Company's internal and
independent auditors, (3) monitoring the compliance by the Company with legal
and regulatory requirements, and (4) preparing the report that SEC rules require
be included in the Company's annual proxy statement.
MEMBERSHIP
The Audit Committee shall be comprised of three or more directors as
determined by the Board. Each member of the Audit Committee shall satisfy the
independence, financial literacy (as such term is interpreted by the Board in
its business judgment) and experience requirements as promulgated by the New
York Stock Exchange (with respect to financial literacy, a person may become
financially literate within a reasonable time after his or her appointment).
Prior to appointment and annually thereafter the Board must affirmatively
determine that each member of the Audit Committee has no relationship with the
Company that would interfere with the exercise of his or her independent
judgment and is otherwise independent within the meaning of Section 10A of the
Securities Exchange Act of 1934, as amended (the " '34 Act"), and the rules and
regulations of the SEC promulgated thereunder. At least one member of the Audit
Committee shall have accounting or related financial management expertise (as
such qualification is established by the Board) and shall otherwise be a
"financial expert" (as such term is defined by the SEC). In considering whether
an Audit Committee member is able to devote the time necessary to perform his
duties as such a member, the Board shall consider, among other things, whether
simultaneous service as a member of any other company audit committee would
materially impair such member's effectiveness on the Audit Committee. The only
compensation that will be paid by the Company to members of the Audit Committee
will be director's fees payable by the Company.
The Audit Committee shall meet from time to time, as determined by the
Chairman of the Committee or at the request of management or at the request of
the Company's senior most internal audit executive or the independent public
accounting firm engaged by the Company to perform audit services on behalf of
the Company (also referred to herein as the "independent auditor"). The Audit
Committee shall keep regular minutes of its proceedings. For the transaction of
any business at any meeting of the Audit Committee, a majority of the members
shall constitute a quorum.
The Audit Committee shall have the authority and appropriate funding to
retain special legal, accounting or other consultants to advise the Audit
Committee as the Audit Committee determines to be appropriate to carry out its
duties. The Audit Committee has the authority to conduct any investigation
appropriate to fulfill its responsibilities, and may request any officer or
employee of the Company or the Company's inside or outside counsel or
independent auditor to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee. The Audit Committee may
also meet with any of the Company's investment bankers or financial analysts who
follow the Company.
The Audit Committee shall conduct an annual evaluation of its performance.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall have the following responsibilities:
CHARTER
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes in the Charter to the Board for approval.
2. Publish this Charter in accordance with applicable SEC and NYSE rules
and regulations.
19
FINANCIAL MATTERS
3. Review the annual audited financial statements with management and the
independent auditor, including major issues regarding accounting and auditing
principles and practices and judgments, as well as the adequacy and
effectiveness of accounting and financial internal controls that could
significantly affect the Company's financial statements. Such review shall
include a review of the Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
4. Recommend to the Board of Directors whether the Company's annual audited
financial statements and accompanying notes should be included in the Company's
Annual Report on Form 10-K.
5. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including an analysis of the
effect of alternative GAAP methods on the Company's financial statements and a
description of any transaction as to which management obtained a Statement on
Accounting Standards No. 50 letter.
6. Review with management and the independent auditor the effect of
regulatory and accounting initiatives as well as contingent liabilities and
off-balance sheet structures, if any, on the Company's financial statements.
7. Prior to the filing of its Form 10-Q, review with management and the
independent auditor the Company's quarterly financial statements, including the
Company's disclosures under "Management's Discussion and analysis of Financial
Condition and Results of Operations", and the results of the independent
auditor's review of same.
8. Discuss periodically with Company management the Company's major
financial risk exposure and the steps implemented to monitor and control same,
including a discussion of the appropriateness of existing guidelines and
procedures in place to govern the risk assessment and management process. To the
extent the Audit Committee determines that changes to such guidelines or
procedures appear appropriate, to recommend such changes.
9. Discuss with management the types of information proposed to be
disclosed in Company earnings press releases, as well as the type of financial
information and earnings guidance to be provided to analysts and ratings
agencies.
AUDITING AND ACCOUNTING
10. To assist the Audit Committee in performing its duties to evaluate an
independent auditing firm's qualifications, performance and independence, on an
annual basis to obtain and review a report by the independent auditing firm
retained by the Company describing the following:
- such firm's quality control procedures;
- any material issues raised by the most recent internal quality-control
review, or peer review, of such firm or by any investigation by
governmental or professional authorities within the preceding five years
regarding one or more independent audits by such firm and any measures
taken by such firm in respect of those issues; and
- all relationships between the Company and such firm.
11. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor, internal
auditors or management.
12. The Audit Committee shall have the sole authority to engage, oversee
and evaluate the performance of and, when the Audit Committee determines it to
be appropriate, to terminate the Company's independent auditors, to approve all
audit engagement fees and terms and approve all significant non-audit
engagements, if any, with the independent auditors. The independent auditors
shall report directly to the Audit Committee. The Audit Committee shall
implement procedures to assure that the independent auditors engaged by the
20
Company to audit the Company's financial statements do not provide any non-audit
services prohibited by applicable law or the rules and regulations promulgated
by the Public Company Accounting Oversight Board, the SEC or the NYSE.
13. Meet with the independent auditor prior to the audit to review the
planning procedures and staffing of the audit.
14. Obtain from the independent auditor assurance that such firm and the
Company have complied with the audit requirements of Section 10A of the '34 Act.
15. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit. Such discussions shall also include the independent auditor's
judgment about the quality of the Company's accounting principles, including
such matters as the consistency of application of the Company's accounting
policies, as well as the clarity and completeness of the Company's accounting
information contained in the financial statements and related disclosures filed
with the Securities and Exchange Commission.
16. Review the independence of the independent auditor, giving
consideration to the range of audit and non-audit services performed by the
independent auditor. In this connection, the Audit Committee is responsible for
ensuring the independent auditor furnish, at least annually, a formal written
statement delineating all relationships with the Company, consistent with
Independence Standards Board Standard 1. To evaluate the independence of the
independent auditor, the Audit Committee shall review the statement, conduct an
active discussion with the independent auditor with respect to any disclosed
relationships or services that may affect the objectivity and independence of
the firm consider the effect of non-audit services, if any, performed by the
independent auditor; take any other appropriate action in response to the firm's
statement or other communications to satisfy itself of the independence of the
firm; and if so determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of such firm.
17. On an annual basis, present to the Board the conclusions of the Audit
Committee relating to the continued qualifications, performance and independence
of the independent auditor engaged by the Company and, if so determined by the
Audit Committee, its conclusion that such firm should be replaced.
18. Review periodically (i) the experience, qualifications and performance
of the senior members of the Company's internal auditing team and (ii) the
internal audit activities, staffing and budget.
19. Assure the regular rotation of the lead audit partner of the
independent auditing firm engaged by the Company as required by law (Section 10A
of the '34 Act now mandates rotation of the lead or coordinating audit partner
and the reviewing audit partner every five years).
20. In accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and
any rules and regulations that may be promulgated by the SEC thereunder, the
Audit Committee shall assure that the independent auditor shall attest to, and
report on, the assessment of the effectiveness of Company's internal control
structure and procedure for financial reporting to be made as of the end of each
of the Company's fiscal years included in each annual report of the Company in
accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and any rules or
regulations promulgated by the SEC with respect thereto.
21. Review the significant reports to management prepared in connection
with internal audits and management's responses.
22. Review with management and the independent auditor any correspondence
with regulators or governmental agencies, or any employee complaints or
published reports, that raise material issues regarding the Company's financial
statements or accounting policies.
21
23. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the auditor
and the Company's response to that letter. Such review should include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities, access to
required information or significant disagreements with management.
b. Any changes required in the planned scope of the internal and
external audits.
c. The internal audit responsibilities, budget and staffing.
24. Review with the independent auditor any issues, including matters of
audit quality and consistency, on which the Company's audit team consulted the
national office.
LEGAL MATTERS
25. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
26. Advise the Board with respect to the Company's policies and procedures
regarding conflicts of interest and compliance with material laws and
regulations.
27. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance policies
and any material reports or inquiries received from regulators or governmental
agencies.
28. As the Audit Committee determines it to be appropriate, to obtain
advice and assistance from outside legal, accounting or other advisers.
29. Meet with the Company's Chief Executive Officer and Chief Financial
Officer from time to time as appropriate to permit such officers to provide the
attestations or certifications required by the rules and regulations of the SEC
or NYSE.
30. Establish policies for approval by the Board regarding hiring employees
or former employees of the independent auditors engaged by the Company.
31. Establish procedures (i) to handle complaints regarding the Company's
accounting practices, internal controls or auditing matters and (ii) to permit
the confidential, anonymous submission to the Audit Committee of concerns by
employees regarding accounting or auditing matters.
EXECUTIVE SESSIONS
32. Meet periodically (not less often than quarterly), with management,
internal auditing personnel and the independent auditor engaged by the Company
in separate executive sessions.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits, to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles or
to certify or otherwise attest to the Company's financial statements. This is
the responsibility of management and the independent auditor. Nor is it the duty
of the Audit Committee to conduct investigations, to resolve disagreements, if
any, between management and the independent auditor or to assure compliance with
laws and regulations.
22
APPENDIX "B"
INTEGRATED ELECTRICAL SERVICES, INC.
COMPENSATION COMMITTEE CHARTER
The Compensation Committee is appointed by the Board to assist the Board in
discharging its responsibilities relating to compensation of Company executives
and to produce an annual report on executive compensation for inclusion in the
Company's annual proxy statement in accordance with applicable rules and
regulations.
MEMBERSHIP
The Compensation Committee shall be comprised of three or more directors as
determined by the Board. Each member of the Compensation Committee must (i) meet
the independence requirement as promulgated by the NYSE, (ii) constitute a
"Non-Employee Director," as such term is defined in Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the " '34 Act"), and (iii)
satisfy the requirements of an "outside director" for purposes of Section 162(m)
of the Internal Revenue Code of 1986, as amended. Prior to appointment and
annually thereafter, the Board must determine that each member of the
Compensation Committee has no relationship with the Company that would otherwise
interfere with the exercise of his or her independent judgment, and otherwise
satisfies the criteria specified in the preceding sentence. Members of the
Compensation Committee may be removed at any time upon the determination of the
Board.
The Compensation Committee shall meet from time to time, as determined by
the Committee's Chairman or upon the request of the Chairman of the Board or the
Chief Executive Officer. The Compensation Committee shall keep regular minutes
of its meetings. For the transaction of business at any meeting of the
Compensation Committee, a majority of the members shall constitute a quorum.
The Compensation Committee shall have the authority and appropriate funding
to retain legal counsel or compensation or other consultants to assist the
Compensation Committee in the performance of its duties, as the Compensation
Committee determines to be appropriate to perform its duties or to protect the
interests of the Company's stockholders, all on such terms as the Compensation
Committee may determine to be appropriate.
The Compensation Committee shall conduct an annual evaluation of its
performance.
The Compensation Committee shall make regular reports to the Board.
DUTIES
The Compensation Committee shall have the following responsibilities:
Charter
1. Review and assess the adequacy of this Charter annually and recommend
any proposed changes in the Charter for Board approval.
2. Publish this Charter in accordance with applicable SEC and NYSE rules
and regulations.
Responsibilities
3. To establish the Company's compensation philosophy and to ensure that
the compensation program is aligned with the Company's objectives, consistent
with the interests of the Company's stockholders.
4. To review and approve new compensation plans, ensuring that they are
designed to achieve the stated compensation philosophy.
5. To evaluate the performance of the Chief Executive Officer, and to
recommend for Board approval total compensation for the Chief Executive Officer
accompanied by a written rationale for such recommenda-
23
tion. In determining the long-term incentive component of the compensation
package for the Chief Executive Officer, the Compensation Committee will include
an evaluation of the Company's performance and relative return to stockholders
and the level of similar incentive awards to CEOs at the comparable companies.
6. To review salaries, salary increases and other compensation, including,
without limitation, incentive compensation, of executive officers and to
evaluate the competitiveness of total compensation levels for executives on an
annual basis or at such times as it shall be requested by the Board and to
report to the Board.
7. To receive recommendations regarding, and to select officers and key
employees for participation in, incentive compensation plans and to receive
recommendations regarding and to establish performance goals and awards for
those officers and key employees who participate in such incentive compensation
plans and to report on same to the Board.
8. To review and monitor benefits under all employee plans of the
Corporation and to report thereon at such times as the Compensation Committee
deems it appropriate, to the full Board.
9. To consider and make recommendations to the Board from time to time with
respect to the management organization of the Company, including recommending
the election and appointment of officers of the Company and reviewing the
Company's plans for executive development, the orderly succession of the
officers of the Company (including the Chief Executive Officer and Chief
Financial Officer) and contingency plans for management succession in the event
of the unexpected departure of any senior executive officer.
10. To review and approve incentive compensation and equity-based plans,
including the financial and operating measures as may be required by such plans
and make recommendations to the Board with respect to same.
11. Make all decisions or determinations that may be required to be made by
the Compensation Committee under the Company's compensation or benefit plans or
as the Compensation Committee determines to be appropriate for the operation of
any such plan and the distribution, award or payment of benefits thereunder.
12. Periodically to evaluate compensation paid to outside members of the
Board including periodically monitoring the competitiveness and composition of
Director compensation.
24
APPENDIX "C"
INTEGRATED ELECTRICAL SERVICES, INC.
NOMINATING/GOVERNANCE COMMITTEE CHARTER
MEMBERSHIP
The Nominating/Governance Committee shall be comprised of three or more
directors as determined by the Board. The members of the Nominating/Governance
Committee shall meet the independence requirements as promulgated by the New
York Stock Exchange. Prior to appointment and annually thereafter the Board must
determine that each member of the Nominating/Governance Committee has no
relationship with the Company that would interfere with the exercise of his or
her independent judgment. Members of the Nominating/Governance Committee may be
removed at any time upon the determination of the Board.
The Nominating/Governance Committee shall meet from time to time, as
determined by the Committee's Chairman or upon the request of the Chairman of
the Board. The Nominating/Governance Committee shall keep regular minutes of its
meetings. For the transaction of business at any meeting of the Nominating/
Governance Committee, a majority of the members shall constitute a quorum.
The Nominating/Governance Committee shall have the authority and
appropriate funding to retain special legal or other consultants to advise the
Nominating/Governance Committee in the performance of its duties, all on such
terms as the Nominating/Governance Committee may determine to be appropriate.
The Nominating/Governance Committee shall conduct an annual evaluation of
its performance.
The Nominating/Governance Committee shall make regular reports to the
Board.
DUTIES
The Nominating/Governance Committee shall have the following
responsibilities:
Charter
1. Review and assess the adequacy of this Charter annually and recommend
any proposed changes in the Charter for Board approval.
2. Publish this Charter in accordance with applicable SEC and NYSE rules
and regulations.
Responsibilities
3. The Nominating/Governance Committee shall establish standards for Board
and committee members and shall oversee the performance evaluation of the Board
and its members.
4. Based upon such evaluations, the Nominating/Governance Committee shall
recommend to the Board whether existing Board members should be nominated for
new terms or replaced and whether more or fewer members are appropriate.
5. The Nominating/Governance Committee shall assist the Board in
establishing criteria to select new directors and shall recommend to the Board a
process for orientation of new Board or committee members. Such criteria and new
member orientation process shall be reviewed by the Nominating/Governance
Committee annually, and the Nominating/Governance Committee shall recommend to
the Board such modifications as the Committee determines to be appropriate.
6. The Nominating/Governance Committee shall identify individuals qualified
to become members of the Board and shall recommend same to the Board as a
nominee to fill any existing or expected vacancy.
7. The Nominating/Governance Committee shall have the sole authority to
retain and terminate any search firm on behalf of the Company to identify
director candidates, which shall also include the sole authority to approve any
such search firm's fees and other retention terms.
25
8. The Nominating/Governance Committee shall evaluate the Company's
corporate governance procedures and recommend to the Board changes that the
Nominating/Governance Committee determines to be appropriate. In addition to
such other matters as the Nominating/Governance Committee determines to be
appropriate, the Committee shall evaluate (i) the structure and operation of the
committees of the Board (including whether any committee or subcommittee should
have the authority to delegate any of its responsibilities to a sub-committee)
and recommend to the Board any changes thereto that the Nominating/ Governance
Committee determines to be appropriate, (ii) the size and membership of each
committee and recommend to the Board any changes thereto that the
Nominating/Governance Committee determines to be appropriate, and (iii) the
effectiveness of the committee reporting process to the Board.
The Nominating/Governance Committee shall establish such rules, policies
and procedures as it may from time to time determine to be appropriate to
perform its duties.
The Governance Committee is appointed by the Board to identify individuals
qualified to become Board members, to recommend same to the full Board, to
develop and recommend to the Board a set of corporate governance principles
applicable to the Company and to oversee the evaluation of the Board.
26
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INTEGRATED ELECTRICAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS OF INTEGRATED ELECTRICAL SERVICES, INC.
The undersigned hereby appoints C. Byron Snyder, Herbert R. Allen and Mark
A. Older, and each of them individually, as proxies with full power of
substitution, to vote all shares of Common Stock of Integrated Electrical
Services, Inc. that the undersigned is entitled to vote at the Annual Meeting
of Stockholders thereof to be held on Thursday, January 30, 2003, at 10:30 a.m.
at the Doubletree Post Oak, 2001 Post Oak Blvd., Houston, TX 77056 or at any
adjournment or postponement thereof, as follows:
Any executed proxy which does not designate a vote shall be deemed to
grant authority for any item not designated.
PROPOSAL 1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY for all nominees
listed below
01-Herbert R. Allen to hold office until the 2006 Annual Meeting and until
his successor is elected and qualified. INSTRUCTION: to withhold authority to
vote for any individual nominee or nominees, write the appropriate name or
names in the space provided here.
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PROPOSAL 2. APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS FOR THE COMPANY
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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Please check the following box if you plan to attend the Annual Meeting of
Stockholders in person. [ ]
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P
R
O
X
Y
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ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED "FOR" PROPOSAL 1 (ALL NOMINEES), AND "FOR" PROPOSAL 2,
AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH
RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO A VOTE THEREON.
Dated:
------------------, ------
Signature(s)
-------------------
Please sign exactly as name
appears on this card. Joint
owners should each sign.
Executors, administrators,
trustees, etc., should give their
full titles.
PLEASE COMPLETE, SIGN AND
PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED ENVELOPE.
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