<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FEDERAL SIGNAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FEDERAL SIGNAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
(2) Aggregate number of securities to which transaction applies:
45,318,063 shares eligible to vote on election of directors.
(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):
Not applicable.
(4) Proposed maximum aggregate value of transaction:
Not applicable.
(5) Total fee paid:
$125.00
/ / Fee paid previously with preliminary materials.
Not applicable.
/ / 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:
Not applicable.
(2) Form, schedule or registration statement no.:
Not applicable.
(3) Filing party:
Not applicable.
(4) Date filed:
Not applicable.
<PAGE> 2
[FED. SIGNAL LOGO]
1415 West 22nd Street
Oak Brook, Illinois 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 19, 1995
To the Stockholders of
Federal Signal Corporation
The Annual Meeting of Stockholders of Federal Signal Corporation
("Federal") for the year 1995 will be held at the Chicago Marriott Hotel-Oak
Brook, 1401 West 22nd Street, Oak Brook, Illinois, on Wednesday, April 19, 1995,
at 11:00 a.m., local time, for the following purposes:
1. To elect two directors of Federal;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business, February 20, 1995,
as the record date for determining the holders of Common Stock of Federal
entitled to notice of and to vote at the meeting or any adjournment thereof.
A copy of Federal's Annual Report for the year ended December 31, 1994 and
a proxy statement accompany this notice.
IMPORTANT! TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE
SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
NO POSTAGE IS REQUIRED IF THE PROXY IS MAILED IN THE UNITED STATES.
By order of the Board of Directors
KIM A. WEHRENBERG
Secretary
March 8, 1995
<PAGE> 3
[FED. SIGNAL LOGO]
1415 West 22nd Street
Oak Brook, Illinois 60521
MAILING DATE
ON OR ABOUT
MARCH 8, 1995
------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 19, 1995
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Federal Signal Corporation ("Federal") for
use at the Annual Meeting of Stockholders to be held on Wednesday, April 19,
1995, and any adjournment thereof. Costs of solicitation will be borne by
Federal. Following the original solicitation of proxies by mail, certain
officers and regular employees of Federal may solicit proxies by correspondence,
telephone, telegraph, or in person, but without extra compensation. Federal will
reimburse brokers and other nominee holders for their reasonable expenses
incurred in forwarding the proxy materials to the beneficial owners.
Each proxy solicited herewith will be voted as to each matter as the
stockholder directs thereon, but in the absence of such directions it will be
voted for the nominees specified herein. Any proxy solicited herewith may be
revoked by the stockholder at any time prior to the voting thereof, but a
revocation will not be effective until satisfactory evidence thereof has been
received by the Secretary of Federal.
VOTING SECURITIES
The holders of record of the Common Stock of Federal at the close of
business on February 20, 1995, will be entitled to vote at the meeting. At such
record date, there were outstanding 45,318,063 shares of Common Stock. A
majority of the outstanding shares will constitute a quorum at the meeting.
Abstentions and broker non-votes are counted to determine if a quorum is
present. Abstentions are counted as votes cast, whereas broker non-votes are not
counted as votes cast for determining whether a proposition has been approved.
Each stockholder of record will be entitled to one vote for each share of Common
Stock standing in the name of the holder on the books of Federal on the record
date.
1
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
The following table sets forth information as of December 31, 1994 (unless
otherwise noted) with respect to (i) any person who is known to Federal to be
the beneficial owner of more than 5% of Federal's Common Stock, which is
Federal's only class of outstanding voting securities, and (ii) each director,
and all directors and officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS
- ----------------------------------------------------- ------------------------- ----------
<S> <C> <C>
Beneficial Owner of More than 5% of Federal's Common
Stock: Munder Capital Management, Inc.............. 2,346,990 shares held for 5.2%
clients in trust and
other accounts.(2)
Each Director and Five Executive Officers and
Executive Officers and Directors as a Group:(1)
J. Patrick Lannan, Jr., Director................ 263,386(3) .58%
James A. Lovell, Jr., Director.................. 24,595(4) .05%
Thomas N. McGowen, Jr., Director................ 34,666 .08%
Walter R. Peirson, Director..................... 25,787(4) .06%
Joseph J. Ross, Director and Executive
Officer....................................... 694,447(4) 1.53%
Richard R. Thomas, Director..................... 149,191(4) .33%
Charles R. Campbell, Executive Officer.......... 119,556(4) .26%
Kim A. Wehrenberg, Executive Officer............ 152,975(4) .34%
Richard L. Ritz, Executive Officer.............. 49,885(4) .11%
Robert W. Racic, Executive Officer.............. 40,949(4) .09%
All Directors and Executive Officers as a group
(11 persons).................................. 1,581,380 3.49%
</TABLE>
- ---------------
(1) The information contained in this table is based upon information furnished
to Federal by the individuals named above. Except as set forth in the
following footnotes, each director claims sole voting and investment power
with respect to these shares.
(2) These shares are split about equally between shared and sole voting power
for Munder, and Munder has sole dispositive power over most of the shares.
(3) This figure includes 18,240 shares owned by Mr. Lannan's wife. Mr. Lannan
disclaims beneficial ownership with respect to these shares. It also
includes 18,848 shares for which he shares voting and investment power.
(4) These figures include options shares exercisable within 60 days as follows:
Mr. Lovell, 12,485; Mr. Peirson, 4,022; Mr. Ross, 511,942; Mr. Thomas,
4,000; Mr. Campbell, 27,333; Mr. Wehrenberg, 74,231; Mr. Ritz, 25,805; and
Mr. Racic, 9,099. These figures also include stock award shares pursuant to
Federal's Stock Benefit Plan which are subject to certain restrictions under
the plan as follows: Mr. Lovell, 0; Mr. Peirson, 0; Mr. Ross, 33,168; Mr.
Thomas, 0; Mr. Campbell, 0; Mr. Wehrenberg, 13,269; Mr. Ritz, 5,536 and Mr.
Racic, 2,836.
2
<PAGE> 5
ELECTION OF DIRECTORS
Federal's Board of Directors consists of six directors divided into three
classes with one class term expiring each year. Mr. Thomas N. McGowen, Jr. and
Richard R. Thomas are nominated as Class II directors for election at this
Annual Meeting for a term to expire at the 1998 Annual Meeting or until their
successors are elected and qualified.
The accompanying proxy card permits a stockholder to direct whether his or
her shares are to be voted for, or withheld from the vote for the nominees. Each
proxy will be voted as the stockholder directs thereon; however, if no such
direction is given, it is the present intention of the persons named in the
proxy card to vote such proxies for the election of the above-named nominees as
directors. If on account of death or unforeseen contingencies the nominees shall
not be available for election, the persons named in the proxy will vote the
proxies for such other persons as the Nominating Committee may nominate as
directors so as to provide a full board. The nominees receiving the highest
number of votes cast will be elected as directors.
Information regarding the nominees for election and the directors
continuing in office is set forth below:
<TABLE>
<CAPTION>
YEAR FIRST YEAR PRESENT PRINCIPAL OCCUPATION
BECAME TERM OR EMPLOYMENT FOR
NAME AGE DIRECTOR EXPIRES LAST FIVE YEARS(1)
- ---------------------------- ---- ---------- ------------ ---------------------------------------
<S> <C> <C> <C> <C>
Nominees:
Thomas N. McGowen, Jr. ..... 69 1974 1995 Mr. McGowen is an attorney. He is also
a director of Energy West Corporation
and Ribi Immunochem Research, Inc.
Richard R. Thomas........... 61 1994 1995 Mr. Thomas retired in 1994 as President
of the Tool Group of Federal Signal
Corporation.
Continuing Directors:
James A. Lovell, Jr. ....... 66 1984 1996 Mr. Lovell is President of Lovell
Communications (a consulting company).
He retired in 1990 as Executive
Vice President, Corporate Staff and as
a
director of Centel Corporation
(a telecommunications company).
Joseph J. Ross.............. 49 1986 1997 Mr. Ross is Chairman, President and
Chief Executive Officer of Federal. He
has served as President and Chief
Executive Officer since December, 1987
and also became Chairman in February,
1990 and is a director of Varlen
Corporation.
Walter R. Peirson........... 68 1987 1997 Mr. Peirson retired in 1989 as
Executive Vice President and as a
director of Amoco Corporation (a
petroleum company). He serves as a
director of American National
Corporation, American National Bank and
Trust Company of Chicago and
Consolidated Natural Gas Company.
J. Patrick Lannan, Jr. ..... 56 1978 1996 Mr. Lannan is President and a director
of the Lannan Foundation for the
support of the arts and rural native
American communities.
</TABLE>
- ---------------
(1) The information contained in this table is based upon information furnished
to Federal by the individuals named above.
3
<PAGE> 6
BOARD OF DIRECTORS AND COMMITTEES
Pursuant to its by-laws, Federal has established standing audit,
nominating, compensation/stock option, pension and executive committees.
The Audit Committee reviews and recommends to the Board of Directors
internal accounting and financial controls, auditing practices and procedures
and accounting principles to be employed in the preparation of Federal's
financial statements and the review of financial statements by independent
public accountants. The Audit Committee also makes recommendations concerning
the engagement of independent public accountants to audit the annual financial
statements and the scope of the audit to be undertaken by such accountants. In
addition, the Audit Committee considers the performance of non-audit services by
such accountants, including the effect which the performance of such non-audit
services may have upon the independence of the accountants. The by-laws prohibit
a director who is also an employee of Federal from serving on the Audit
Committee. The members of the Audit Committee are James A. Lovell, Jr.,
Chairman, J. Patrick Lannan, Jr. and Walter R. Peirson.
The Nominating Committee evaluates and recommends to the Board of Directors
candidates for election or re-election as directors. No determination has been
made regarding the consideration of or procedure for the recommendation of
nominees by stockholders. The members of the Nominating Committee are Joseph J.
Ross, Chairman, and Thomas N. McGowen, Jr.
The Compensation/Stock Option Committee reviews and recommends to the Board
of Directors policies, practices and procedures relating to compensation of
managerial employees and the establishment and administration of employee
benefit plans. The members of the Compensation/Stock Option Committee are Walter
R. Peirson, Chairman, James A. Lovell, Jr. and Thomas N. McGowen, Jr.
The Pension Committee reviews and recommends to the Board of Directors
policies, practices and procedures relating to Federal's various pension,
savings and similar retirement plans and programs and to the investment of the
funds associated with these plans. The members of the Pension Committee are J.
Patrick Lannan, Jr., Chairman, and Joseph J. Ross.
During 1994, the Board of Directors held a total of five meetings and the
Executive Committee of the Board, which generally exercises the power and
authority of the Board in the intervals between full board meetings, held one
meeting. The members of the Executive Committee are Thomas N. McGowen, Jr.,
Chairman, Joseph J. Ross and James A. Lovell, Jr. During 1994, the
Compensation/Stock Option Committee held five meetings; the Nominating Committee
held two meetings; the Audit Committee held two meetings; and the Pension
Committee met once. No director attended less than 75% of the meetings of the
Board and of each committee of which he was a member.
As compensation for services to Federal, each director who is not also an
officer of Federal receives director's fees at a current annual rate of $20,000.
In addition, each such director receives additional fees for serving on
committees of the Board as follows: Executive Committee chairman--$5,000, other
members--$2,500; Audit or Compensation/Stock Option Committee chairman--$3,500,
other members--$2,500; Pension Committee chairman--$3,500; and Nominating
Committee members--$2,500. Directors are also reimbursed for their expenses
relating to attendance at meetings. Mr. Thomas also received $15,000 for
consulting for the Tool Group in 1994. Directors may receive options in lieu of
director's fees, as described in the stock option section of this proxy
statement. Directors who retire as a director of Federal after attaining age 68
and meeting years of service requirements are eligible for a director retirement
benefit. The maximum benefit is $15,000 per year for ten years if the director
retires after age 70.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following is the Summary Compensation Table for the Chief Executive
Officer and four other top executive officers of Federal for compensation earned
during the 1994 fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
--------------------
ANNUAL COMPENSATION RESTRICTED NUMBER
NAME AND ---------------------------- STOCK OF ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) OPTIONS COMPENSATION(2)
- --------------------------------- ---- -------- -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Ross................... 1994 $325,000 $338,000 $ 159,375 30,000 $72,104
Chairman, President and Chief 1993 325,000 312,000 165,375 53,333 52,662
Executive Officer 1992 295,500 265,950 144,375 40,000 43,166
Charles R. Campbell.............. 1994 172,000 158,047 -- -- 4,500
Senior Vice President, Chief 1993 185,000 161,936 61,425 9,333 9,780
Financial and Admin. Officer 1992 182,000 141,334 -- -- 6,866
Kim A. Wehrenberg................ 1994 145,000 113,100 75,000 7,000 13,743
Vice President, General Counsel 1993 140,000 100,800 61,425 6,667 10,469
and Secretary 1992 133,000 89,775 51,563 13,333 12,865
Richard L. Ritz.................. 1994 96,000 62,275 46,875 4,000 10,365
Vice President, Controller 1993 90,000 54,000 35,438 13,333 12,672
1992 85,000 47,919 28,875 5,333 10,825
Robert W. Racic.................. 1994 96,000 61,452 20,625 1,000 3,146
Vice President, Treasurer 1993 92,500 55,876 18,900 1,333 5,758
1992 90,000 52,102 16,500 1,333 3,983
</TABLE>
- ---------------
(1) Stock awards generally vest 25% on each June 30 after date of grant or in
some cases 0% until four years after date of grant and then they are 100%
vested. The number and aggregate value of unvested stock awards as of
December 31, 1994 were: for Mr. Ross 33,168 shares ($675,798), for Mr.
Campbell 0 shares, for Mr. Wehrenberg 13,269 shares ($270,355), for Mr.
Ritz 5,536 shares ($112,796) and for Mr. Racic 2,836 shares ($57,783).
Dividends are paid at the regular rate to these people on the unvested
shares.
(2) This compensation consists of the Company matching contribution under
Federal's 401(k) savings plan in which most employees participate and
supplemental savings and retirement plans and auto allowance which break
out as follows, respectively, Mr. Ross $4,500, $6,896, $60,708, $0; Mr.
Campbell $4,500, $0, $0, $0; Mr. Wehrenberg $4,350, $3,393, $0, $6,000; Mr.
Ritz $3,165, $0, $0, $7,200; Mr. Racic $3,146, $0, $0, $0. Mr. Ross and Mr.
Wehrenberg put part of their bonus into the Company's supplemental savings
plan. Mr. Wehrenberg invested $113,100 of his bonus in Federal Signal
stock.
5
<PAGE> 8
EMPLOYMENT AGREEMENTS
Federal has an employment agreement with Joseph J. Ross. The agreement
continues until the December 31 following the employee's 65th birthday subject
to earlier termination by either Federal or the employee. As of January 1, 1995,
termination salary under this agreement was $348,000 for Mr. Ross and the annual
salary of Mr. Ross, which is approved by the Compensation Committee, is not set
by this employment agreement. In the discretion of the Board of Directors,
annual compensation may be increased during the term of the agreement. If
terminated by Federal under circumstances not involving cause, Federal would be
obligated to pay in monthly installments an amount equal to the then applicable
salary for one year (or, if less, the amount of minimum salary payable through
the December 31 following such employee's 65th birthday). In the event of death
prior to termination of employment, the employee's estate is entitled to receive
in monthly installments an amount equal to one year's minimum compensation. Mr.
Ross and Mr. Wehrenberg have change of control agreements. In the event Federal
is subject to a "change of control" (as specifically defined), the agreements
permit the employee to elect to terminate employment during a specified period
and to receive termination payments calculated as if Federal had terminated
employment without cause, except that such payment shall be based on three
years' W-2 compensation rather than one. Upon termination of employment for any
reason, each employee is obligated not to engage in specified competitive
activities for a period of three years.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL GRANT DATE VALUE
SECURITIES OPTIONS EXERCISE -----------------------
UNDERLYING GRANTED TO OR GRANT DATE PRESENT
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION VALUE $ BASED ON
NAME GRANTED(#)(1) FISCAL YEAR ($/SH.) DATE BLACK-SCHOLES METHOD(2)
- -------------------------- ------------- ------------ ---------- ---------- -----------------------
<S> <C> <C> <C> <C> <C>
Joseph J. Ross............ 30,000 14.6% $ 20.625 12/09/04 $ 225,225
Charles R. Campbell....... -- -- N/A N/A 0
Kim A. Wehrenberg......... 7,000 3.4% 20.625 12/09/04 52,252
Richard L. Ritz........... 4,000 2.0% 20.625 12/09/04 30,030
Robert W. Racic........... 1,000 .5% 20.625 12/09/04 7,507
</TABLE>
- ---------------
(1) No SARs were granted. These options become 50% and 100% exercisable one year
and two years after date of grant, respectively.
(2) The following assumptions were used under the Black-Scholes method:
volatility .22; risk free rate of return 7.9%; dividend yield 2.5%;
exercise period, 10 years.
6
<PAGE> 9
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)
------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE(2)
- --------------------------------------- --------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Joseph J. Ross......................... 0 $ 0 511,942 $7,268,936
109,867 324,030
Charles R. Campbell.................... 0 0 27,333 216,041
0 0
Kim A. Wehrenberg...................... 0 0 74,231 945,730
27,668 118,399
Richard L. Ritz........................ 4,359 73,550 25,805 328,693
20,000 19,000
Robert W. Racic........................ 0 0 9,099 83,823
1,667 896
</TABLE>
- ---------------
(1) Market value of underlying securities at exercise, minus the exercise or
base price.
(2) "Spread" calculated by subtracting the exercise or base price from the
closing stock price of $20.375 on December 31, 1994.
RETIREMENT PLANS
Federal's Retirement Plan for Salaried Employees provides retirement
benefits for salaried employees including officers. Contributions are made on an
actuarial group basis, and no specific amount of contributions is set aside for
any individual participant. Under the method of computing the annual
contribution, the Internal Revenue Service's full funding limitation prohibits a
contribution to the plan for 1994. The following table sets forth the
approximate annual pension benefit based on years of service and compensation,
but does not reflect dollar limitations under the Internal Revenue Code, as
amended, which limits the annual benefits which may be paid from a tax qualified
retirement plan. For employees covered by Federal's supplemental pension plan,
amounts in excess of such limitations will be paid from the general funds of
Federal, pursuant to the terms of such plan. The amount of pension benefits is
reduced by one-half of the amount of available
7
<PAGE> 10
individual Social Security benefits. Estimated credited years of service are as
follows: Mr. Ross, 10.5, Mr. Campbell, 8; Mr. Wehrenberg, 7; Mr. Ritz, 9.5 and
Mr. Racic, 20.75.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL COMPENSATION APPROXIMATE ANNUAL STRAIGHT-LIFE ANNUITY
FOR THE FIVE CONSECUTIVE PENSION UPON RETIREMENT AT 65
CALENDAR YEARS OF THE LAST ------------------------------------------------------------------
TEN FOR WHICH COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
IS HIGHEST OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
---------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
300,000..................... $ 50,000 $ 75,000 $ 100,000 $ 125,000 $ 150,000
400,000..................... 66,667 100,000 133,334 166,167 200,000
500,000..................... 83,334 125,000 166,667 208,334 250,000
600,000..................... 100,000 150,000 200,000 250,000 300,000
700,000..................... 116,667 175,000 233,333 291,667 350,000
800,000..................... 133,333 200,000 266,667 333,334 400,000
</TABLE>
For purposes of the Retirement Plan, an employee's compensation is his
Annual Compensation as set forth in the Summary Compensation Table.
Pursuant to Federal's supplemental pension plan, various officers of
Federal are entitled to pension supplements which have the effect of assuring
that, regardless of their actual years of service, if they remain in the
employment of Federal until age 65, they will receive benefits as if they had
been continuously employed by Federal since their thirty-fourth birthday. Giving
effect to such pension supplements, the additional years of service credited
under Federal's Supplemental Retirement Plan as of December 31, 1994 to Mr. Ross
is 3 1/4 years. The supplemental pension benefit for Mr. Ross makes up the
difference between his actual pension benefit and what it would have been with
30 years of service under the 1976 plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of three
independent outside directors. The Committee meets without the Chief Executive
Officer present to evaluate his performance and establish his compensation.
Compensation for Federal's executive officers consists of three major
components: salary, bonus and stock options/awards. The officers' compensation
is based on the individual's skill level, years of experience, job duties and
the individual's and Company's performance. The Committee uses its subjective
evaluation of these factors, without a mechanical weighting, to determine the
officers' salary and level of participation in the bonus plan; Mr. Ross
participates at 40% of his salary and the other officers participate at 25% to
35% of their salary.
The Company's total return to shareholders has been 26% for the last five
years. Based on the excellent performance of Mr. Ross and the entire management
team (among other items, this excellent performance included increasing cash
flow from operations from $49 million to $54 million, increasing return on
equity from 21.0% to 22.3%, increasing net income by 18% and improving the Sign
Group's profitability) and the Company over the last several years, the
Committee granted Mr. Ross 30,000 shares of stock options and 8,500 award shares
and Mr. Ross received a 7% increase to $348,000 in his base salary for 1995. In
the opinion of the Committee, the granting of options and awards further
emphasizes the relationship between Mr. Ross' performance and the interests of
all shareholders. The Committee also approved an average 1995 salary increase
for the other four officers of less than 3.3%. It should be noted that these
increases in salary are substantially below the increases in the Company's
performance, i.e., 20% increase in sales and 18% increase in income.
8
<PAGE> 11
The officers' bonuses are tied directly to company performance. Bonus
targets are established for the officers based on their level of responsibility.
The amount of bonus to which an officer is entitled is based on Federal's
pre-tax profits (before extraordinary items, interest on long-term debt and
bonus payments) as a percentage of Federal's average stockholders' equity plus
average long-term debt, as well as on goals for growth of the Company. The
officers' bonus targets remain the same for 1995. Therefore, if the Company's
profitability is the same as it was in 1994, the officers' bonuses will also be
about the same for 1995. The 1994, bonus target achievement was 104%. The
Company as a whole achieved its performance goals. The other officers' bonuses
generally constitute about 40% of their cash compensation.
The third major component of the officers' compensation consists of stock
options and awards. This is long-term compensation which provides value to the
officers based on the increased market value of the Company for all
stockholders. For example, over the last six years the total market value of the
Company has increased from about $197 million to more than $930 million of
stockholder value. The Performance Graph on page 10 shows that Federal has
substantially out-performed the Standard & Poor 400 and companies comparable to
Federal. In view of this performance, and to give the officers even greater
incentive to continue to increase shareholder value, the Compensation Committee
granted the officers the stock options and restricted stock awards set forth in
the Summary Compensation Table on page 5. The Committee subjectively determines
the number of shares granted and there is no mechanical relationship between the
number of options and restricted share awards granted, nor is there a mechanical
relationship to prior grants.
WALTER R. PEIRSON JAMES A. LOVELL, JR. THOMAS N. McGOWEN, JR.
9
<PAGE> 12
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Federal Signal Corporation 100 146 211 237 318 315
S & P 400 Index 100 99 130 132 144 150
Down Jones Industrial 100 87 108 123 146 131
Diversified Index
</TABLE>
ACCOUNTING INFORMATION
Ernst & Young has been selected by Federal to serve as its independent
public accountants for the fiscal year ending December 31, 1995. A
representative of that firm will be present at the Annual Meeting with the
opportunity to make a statement if he desires to do so and to respond to
questions of stockholders. The appointment of the auditors is approved annually
by the Board of Directors based upon the recommendation of the Audit Committee.
FUTURE STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy statement for the 1995
Annual Meeting of Stockholders, stockholder proposals must be received by
Federal on or before November 24, 1995.
10
<PAGE> 13
OTHER BUSINESS
As of the date hereof, the foregoing is the only business which management
intends to present, or is aware that others will present, at the meeting. If any
other proper business should be presented to the meeting, the proxies will be
voted in respect thereof in accordance with the discretion and judgment of the
person or persons voting the proxies.
By order of the Board of Directors
Kim A. Wehrenberg
Secretary
Federal Signal Corporation
IMPORTANT--PLEASE SIGN AND RETURN YOUR PROXY CARD.
11
<PAGE> 14
PROXY FEDERAL SIGNAL CORPORATION PROXY
1415 W. 22ND STREET, OAK BROOK, ILLINOIS 60521
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON APRIL 19, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Joseph J. Ross and Kim A. Wehrenberg, or either of them, with full power of
substitution, are hereby authorized to vote the shares of Common Stock of
Federal Signal Corporation which the undersigned is entitled to vote at the
1995 Annual Meeting of Stockholders to be held at the Chicago Marriott
Hotel--Oak Brook, 1401 West 22nd Street on Wednesday, April 19, 1995 at 11:00
a.m., and at all adjournments thereof as indicated on this card for the
proposal described in the Notice and Proxy Statement for such meeting and in
their discretion on other matters which may properly come before the meeting.
UNLESS OTHERWISE INSTRUCTED, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED
IN PROPOSAL 1.
/ / Check here for address change.
New Address:__________________
______________________________
______________________________
(Continued and TO BE SIGNED on the reverse side.)
<PAGE> 15
FEDERAL SIGNAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH SPECIFICATIONS MADE. IF NO CHOICES
ARE INDICATED, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN PROPOSAL 1.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS-- FOR WITHHOLD FOR ALL (Except Nominee(s) written below)
Nominees: Thomas N. McGowen, Jr. and / / / / / /
Richard R. Thomas. ___________________________________________
PLEASE VOTE, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated:_______________________________, 1995
Signature(s)_______________________________
___________________________________________
Please sign exactly as name appears
hereon. Joint owners should each sign.
Where applicable, indicate official
position or representative capacity.
</TABLE>
