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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 (S) 240.14a-11(c) or (S) 240.14a-12
FEDERAL SIGNAL
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF FEDERAL SIGNAL CORPORATION]
1415 West 22nd Street
Oak Brook, Illinois 60523
Notice of Annual Meeting of Shareholders
To Be Held on April 20, 2000
To the Stockholders of
Federal Signal Corporation
The Annual Meeting of Shareholders of Federal Signal Corporation
("Federal") for the year 2000 will be held at the Marriott Hotel-Oak Brook,
1401 West 22nd Street, Oak Brook, Illinois, on Thursday, April 20, 2000, at
11:00 a.m., local time, for the following purposes:
1. To elect two directors of Federal; and
2. To consider and act on a proposed resolution of a shareholder.
3. 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 23, 2000,
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 Financial Statements and its Annual Report for the year
ended December 31, 1999 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 10, 2000
<PAGE>
1415 West 22nd Street
Oak Brook, Illinois 60523
MAILING DATE
on or about
March 10, 2000
----------------
Proxy Statement for Annual Meeting of Shareholders
To Be Held on April 20, 2000
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 Shareholders to be held on Thursday, April
20, 2000, 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 and against the shareholder proposal.
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 23, 2000, will be entitled to vote at the meeting. At
such record date, there were outstanding 45,689,536 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. A plurality of votes cast at the meeting is
required for the election of directors and approval of a majority of shares
entitled to vote is required for all other matters submitted to shareholders
for a vote.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
The following table sets forth information as of December 31, 1999 (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(2) Class
---- ------------ ----------
<S> <C> <C>
Beneficial Owner of More than 5% of Federal's
Common Stock:
Perkins, Wolf, McDonnell & Company............ 2,803,400 6.1%
AMVESCAP PLC (7 companies).................... 3,197,750 7.0%
Each Director and Five Executive Officers and
Executive Officers and Directors as a
Group: (1)
Charles R. Campbell, Director................. 47,637 .10%
James C. Janning, Director (3)................ 10,000 .02%
Paul W. Jones, Director (3)................... 3,131 .01%
James A. Lovell, Jr., Director................ 33,864 .07%
Thomas N. McGowen, Jr., Director.............. 34,667 .07%
Joseph J. Ross, Director and Executive
Officer...................................... 950,688 2.08%
Richard R. Thomas, Director................... 123,848 .27%
Henry L. Dykema, Executive Officer............ 71,488 .16%
Richard G. Gibb, Executive Officer............ 256,789 .56%
Richard L. Ritz, Executive Officer............ 80,936 .18%
Kim A. Wehrenberg, Executive Officer.......... 236,487 .52%
All Directors and Executive Officers as a
group (15 persons)........................... 2,123,026 4.65%
</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 figures include options shares exercisable within 60 days as
follows: Mr. Lovell, 16,835; Mr. Jones, 1,131; Mr. Ross, 338,333; Mr.
Dykema, 29,500; Mr. Wehrenberg, 70,500; Mr. Ritz, 39,666; and Mr. Gibb,
82,500. 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. Ross, 24,250; Mr. Dykema, 7,125; Mr.
Wehrenberg, 5,250; Mr. Ritz, 3,250 and Mr. Gibb 11,000.
(3) As of February 15, 2000.
ELECTION OF DIRECTORS
Federal's Board of Directors consists of seven directors divided into three
classes with one class term expiring each year. Messrs. James C. Janning and
Joseph J. Ross are nominated as Class I directors for election at this Annual
Meeting for a term to expire at the 2003 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
2
<PAGE>
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 Corporate Governance 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)
---- --- ---------- ------------ --------------------
<C> <C> <C> <C> <S>
Nominees:
James C. Janning....... 52 1999 2000 Mr. Janning is Group
President of Harbor
Group Ltd., a
diversified holding
company and has held
various executive
positions at Harbor
Group since 1987.
Joseph J. Ross......... 54 1986 2000 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.
Continuing Directors:
Charles R. Campbell.... 60 1998 2002 Mr. Campbell is a
principal in The Everest
Group, a management
consulting firm and was
Senior Vice President
and Chief Financial and
Administrative Officer
of Federal Signal
Corporation from 1985 to
1995. He is a director
of Home Products
International, Inc., a
houseware products
company.
Paul W. Jones.......... 51 1998 2002 Mr. Jones has been
Chairman, President and
Chief Executive Officer
of U.S. Can Company
since April, 1998 and
was President and Chief
Executive Officer of
Greenfield Industries,
Inc. a tool
manufacturer, from 1989
to 1998.
James A. Lovell, Jr.... 71 1984 2002 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. He is a
director of AASI
Aircraft Company, a
manufacturer of
aircraft, Magellan
Corporation, a GPS
precision and navigation
systems company.
Thomas N. McGowen, Jr.. 74 1974 2001 Mr. McGowen is an
attorney. He is also a
director of Energy West
Corporation.
Richard R. Thomas...... 66 1994 2001 Mr. Thomas retired in
1994 as President of the
Tool Group of Federal
Signal Corporation.
</TABLE>
- --------
(1) The information contained in this table is based upon information furnished
to Federal by the individuals named above.
3
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
Pursuant to its by-laws, Federal has established standing audit, corporate
governance, compensation and benefits and executive committees.
The Board of Directors has adopted a Charter for the Audit Committee which
includes the following duties. 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 Charles Campbell, Chairman, James Janning and Richard
Thomas.
The Corporate Governance 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 Corporate
Governance Committee are James Lovell, Jr., Chairman, Paul Jones and Charles
Campbell.
The Compensation and Benefits Committee reviews and recommends to the Board
of Directors policies, practices and procedures relating to compensation of
managerial employees and the establishment, investment of funds, and
administration of employee benefit plans. The members of the Compensation and
Benefits Committee are Paul Jones, Chairman, Thomas McGowen, Jr. and
James Janning.
During 1999, 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 McGowen, Jr.,
Chairman, James Lovell, Jr., Joseph Ross and Richard Thomas. During 1999, the
Compensation/Stock Option Committee held five meetings; the Nominating
Committee held four 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.
Directors who are not officers of Federal receive the following
compensation. Director and committee fees for Mr. McGowen are $37,500 and Mr.
Lovell--$36,000. These directors are eligible for a retirement benefit of
$15,000 per year for up to 10 years after retirement. The pension plan was
replaced by stock option grants for all other directors. Messrs. Campbell,
Janning, Jones and Thomas receive an annual retainer of $25,000 and $1,000 per
Board meeting fees. They also received an initial grant of 5,000 shares of
stock options, plus 2,000 shares of options per year. All directors may elect
to receive stock options in lieu of cash fees as described in the Stock
Benefit Plan. Directors are also reimbursed for their expenses relating to
attendance at meetings.
4
<PAGE>
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 1999 fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation AWARDS
---------------------- ------------------
Restricted Number
Name and Principal Stock of All Other
Position Year Salary Bonus Awards(1) Options Compensation(2)
- ------------------ ---- -------- -------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Ross.......... 1999 $417,000 $ 0 $547,500 60,000 $21,325
Chairman, President 1998 405,000 295,650 315,875 60,000 40,789
and Chief Executive
Officer 1997 405,000 294,500 228,375 55,000 45,197
Richard G. Gibb......... 1999 208,000 0 191,625 20,000 19,458
Executive Vice
President 1998 200,000 127,750 180,500 10,000 15,614
1997 172,000 21,130 203,000 25,000 14,793
Henry L. Dykema......... 1999 204,000 74,358 82,125 16,000 8,351
Vice President and 1998 197,000 107,858 67,687 7,000 9,428
Chief Financial Officer 1997 197,000 132,975 88,812 12,000 4,719
Kim A. Wehrenberg....... 1999 171,000 66,177 95,812 16,000 11,140
Vice President, General 1998 165,000 90,338 78,968 7,000 13,810
Counsel and Secretary 1997 165,000 111,375 88,812 12,000 14,291
Richard L. Ritz......... 1999 120,000 40,950 54,750 8,000 12,810
Vice President,
Controller 1998 115,000 59,657 56,405 7,000 12,669
1997 115,000 67,922 50,750 10,000 12,353
</TABLE>
- --------
(1) Stock awards generally vest 25% on each anniversary date after date of
grant. The number and aggregate value of unvested stock awards as of
December 31, 1999 were: for Mr. Ross 24,250 shares ($389,516), for Mr.
Dykema 7,125 shares ($114,445), for Mr. Gibb 11,000 shares ($176,687), for
Mr. Wehrenberg 5,250 shares ($84,328) and for Mr. Ritz 3,250 shares
($52,203). 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 $4,800, $16,525, $0, $0; Mr. Dykema
$4,800, $3,551, $0, $0; Mr. Wehrenberg $4,800, $340, $0, $6,000; Mr. Ritz
$4,800, $810, $0, $7,200; Mr. Gibb $4,800, $5,658, $0, $9,000.
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,
2000, termination salary under this agreement was $417,000 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
5
<PAGE>
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>
Grant Date
Individual Grants Value
- ------------------------------------------------------------------ -------------
Number of Securities
Underlying Options
Granted 12/9/99 at % of Total Grant Date
$16.0625 per share Options Present Value
exercise or base Granted to $ Based on
price and expire Employees in Black-Scholes
12/9/09 Vesting Fiscal Year Method (2)
-------------------- ------- ------------ -------------
<S> <C> <C> <C> <C>
Joseph J. Ross.......... 60,000 3 years 13.7% $183,112
Richard G. Gibb......... 20,000 4 years 4.2% 61,037
Henry L. Dykema......... 16,000 4 years 3.4% 48,830
Kim A. Wehrenberg....... 16,000 4 years 3.4% 48,830
Richard L. Ritz......... 8,000 3 years 1.7% 24,415
</TABLE>
- --------
(1) No SARs were granted.
(2) The following assumptions were used under the Black-Scholes method:
volatility .23; risk free rate of return 6.4%; dividend yield 4.8%;
expected life 6.7 years.
Option Exercises and Year-End Value Table
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Value
<TABLE>
<CAPTION>
Number of Secur- Value of
ities Underlying Unexercised In-
Unexercised the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) (1) Unexercisable Unexercisable (2)
- ---- --------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Joseph J. Ross.......... 45,000 $613,125 338,333 $453,432
120,000 0
Richard G. Gibb......... 0 0 82,500 127,446
55,000 0
Henry L. Dykema......... 0 0 24,500 0
45,000 0
Kim A. Wehrenberg....... 11,251 237,677 70,500 133,040
35,000 0
Richard L. Ritz......... 7,471 112,497 39,666 40,384
35,000 0
</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 $16.0625 on December 31, 1999.
(3) Mr. Ross has stock option exercise loans totaling $2,129,935, including
$59,972 of interest. $59,972 of interest accrued in 1999 at rates ranging
from 5.93% to 6.01%. Such loans are available to all employees
participating in the Plan.
6
<PAGE>
Retirement Plans
Federal's Retirement Plan provides retirement benefits for salaried and
hourly 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 1999. 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 individual
Social Security benefits. Estimated credited years of service are as follows:
Mr. Ross, 15.5, Mr. Dykema, 4; Mr. Wehrenberg, 12; Mr. Ritz, 14.5 and Mr.
Gibb, 23.2.
Pension Plan Table
<TABLE>
<CAPTION>
Average Annual
ompensationCfor
theFive Consecutive Approximate Annual Straight-Life Annuity
ClendaraYears of Pension Upon Retirement at 65
hetLast Ten for ------------------------------------------------------
hichWCompensa- 10 years 15 years 20 years 25 years 30 years
iontis 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
900,000................ 150,000 225,000 300,000 375,000 450,000
</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, an officer of Federal may
be entitled to pension supplement which has the effect of assuring that,
regardless of his actual years of service, if he remains in the employment of
Federal until age 65, he will receive benefits as if he had been continuously
employed by Federal since his thirty-fourth birthday. Giving effect to such
pension supplement, the additional years of service credited under Federal's
Supplemental Retirement Plan as of December 31, 1999 to Mr. Ross is 3 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
officer's 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
30% of their salary.
7
<PAGE>
Because of the decline in the price of the Company's stock in 1999, the
Company's total return to shareholders has been negative over the last five
years. The Company's earnings performance in 1999 compared to 1998 was down
slightly. Mr. Ross did not receive a salary increase for 2000 and the other
four officers received an average salary increase of 2.9% for 2000. Messrs.
Ross and Gibb did not receive any bonus for 1999 even though the plan provided
for bonuses based on the Company's earnings.
The officers' bonuses are tied directly to the Company's financial
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 2000.
The 1999 bonus target achievement was 44%. The other three officers' bonuses
constituted about 36% 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. The Performance Graph below shows that Federal has
underperformed the Standard & Poor Industrials and the Dow Jones Industrial-
Diversified Index. To give the officers an incentive to increase shareholder
value and to compensate them in accordance with such increases in shareholder
value, the Compensation Committee intends to grant the officers additional
stock options and restricted stock awards in 2000. The compensation officers
receive from stock options and awards is down significantly because of the
performance of the Company's stock price. The Committee subjectively
determines the number of shares to be granted and there is no mechanical
relationship between the number of options and restricted share awards to be
granted, nor is there a mechanical relationship to prior grants.
WALTER R. PEIRSON PAUL W. JONES THOMAS N. MCGOWEN, JR.
Comparison for Five Year Cumulative Total Return* for Federal Signal
Corporation
[LINE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
94 95 96 97 98 99
- -------------------------------------------------------------------------
FSC 100 129 132 114 148 91
- -------------------------------------------------------------------------
S&P Ind. 100 135 165 217 290 369
- -------------------------------------------------------------------------
DJIDI 100 128 163 211 239 258
</TABLE>
Assumes $100 invested on December 31, 1994 in Federal Signal Corporation
Common Stock (FSC), S&P Industrials Index (S&P Ind.), the Dow Jones
Industrial-Diversified Index (DJIDI).
*Total return assumes reinvestment of dividends and is based on fiscal years
ending December 31.
8
<PAGE>
SHAREHOLDER RESOLUTION
The following resolution is proposed by a shareholder (whose name and
address is available upon request) holding 1,000 shares of Federal Signal
Corporation stock. THE FEDERAL SIGNAL CORPORATION BOARD OF DIRECTORS
RECOMMENDS A VOTE "AGAINST" THIS RESOLUTION.
MAXIMIZE VALUE RESOLUTION
Resolved that the shareholders of Federal Signal Corporation urge the
Federal Signal Corporation Board of Directors to arrange for the prompt sale
of Federal Signal Corporation to the highest bidder.
The purpose of the Maximize Value Resolution is to give all Federal Signal
Corporation shareholders the opportunity to send a message to the Federal
Signal Corporation Board that they support the prompt sale of Federal Signal
Corporation to the highest bidder. A strong or majority vote by the
shareholders would indicate to the board the displeasure felt by the
shareholders of the shareholder returns over many years and the drastic action
that should be taken. Even if it is approved by the majority of the Federal
Signal Corporation shares represented and entitled to vote at the annual
meeting, the Maximize Value Resolution will not be binding on the Federal
Signal Corporation Board. The proponent however believes that if this
resolution receives substantial support from the shareholders, the board may
choose to carry out the request set forth in the resolution:
The prompt auction of Federal Signal Corporation should be accomplished by
any appropriate process the board chooses to adopt including a sale to the
highest bidder whether in cash, stock, or a combination of both. It is
expected that the board will uphold its fiduciary duties to the utmost during
the process.
The proponent further believes that if the resolution is adopted, the
management and the board will interpret such adoption as a message from the
company's stockholders that it is no longer acceptable for the board to
continue its current management plan and strategies.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION
----------------
RESPONSE OF THE FEDERAL SIGNAL CORPORATION
BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS RESOLUTION FOR THE
FOLLOWING REASONS:
Maximizing shareholder value is a critical concern of the Board of
Directors and management of Federal Signal Corporation; that is why we are
continuously analyzing acquisitions and divestitures of our businesses to
create additional shareholder value. For example, in January we announced our
intention to explore the sale of our Sign business which has lower operating
margins than our other businesses where we have added more than $50 million in
annualized revenue in the last year through acquisitions including Clapp &
Haney Tool Co., Inc. acquired in July, 1999 and P.C.S. Company acquired last
month. Unfortunately, the proposed resolution, contrary to its title, will not
maximize value to Federal Signal shareholders.
The sale of a company involves an examination of a complex array of
factors, including the changing competitive environment, the state of the
economy, availability of potential buyers, long-term and short-term prospects
of the businesses and many other factors. Acting hastily to force a sale of
Federal Signal in an auction or otherwise would obstruct the ability of the
Board of Directors to maximize shareholder value for both the short-term and
long-term. The proposed resolution would also undermine the confidence of our
customers, causing a potential decline in revenue, profits and ultimately
shareholder value.
9
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In summary, the Board of Directors and management of Federal Signal are
committed to maximizing the value of the Company for all shareholders. Such
commitment has been demonstrated by the announced intention to explore the
sale of Sign, the numerous profitable acquisitions we have made, the
repurchase of company stock, the Company's "Bold Goals" initiatives to control
and reduce costs and by tying employee compensation to the financial
performance of the Company. BECAUSE THE BOARD OF DIRECTORS DOES NOT BELIEVE
THAT THIS PROPOSAL IS IN THE BEST INTERESTS OF ALL OF THE SHAREHOLDERS, THE
BOARD UNANIMOUSLY OPPOSES THIS RESOLUTION.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
AGAINST THE ADOPTION OF THIS RESOLUTION.
ACCOUNTING INFORMATION
Ernst & Young has been selected by Federal to serve as its independent
public accountants for the fiscal year ending December 31, 2000. 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 2001
Annual Meeting of Shareholders, stockholder proposals must be received by
Federal on or before November 25, 2000.
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
10
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PROXY FEDERAL SIGNAL CORPORATION PROXY
1415 W. 22nd Street, Oak Brook, Illinois 60523
Proxy for Annual Meeting of Stockholders on April 20, 2000
This Proxy is Solicited on Behalf of the Board of Directors
Thomas N. McGowen, Jr. 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 2000
Annual Meeting of Stockholders to be held at the Marriott Hotel-Oak Brook, 1401
W. 22nd Street, Oak Brook, Illinois on Thursday, April 20, 2000 at 11:00 a.m.,
and at all adjournments thereof as indicated on this card for the proposals
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 and AGAINST Proposal 2.
[_] Check here for address change.
New Address: _________________
______________________________
(Continued and to be signed on reverse side.) ______________________________
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4998--Federal Signal Corporation
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FEDERAL SIGNAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
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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 and AGAINST Proposal 2.
FOR WITHHOLD
ALL ALL FOR ALL (Except Nominee(s) written below)
1. Election of Directors-- [] [] []
Nominees: 01-James C. Janning and
02-Joseph J. Ross. ----------------------------------------------------
FOR AGAINST ABSTAIN
2. Shareholder Maximize Value Resolution. [] [] []
Please vote, sign, date and return this Proxy Card
promptly using the enclosed envelope.
Dated: , 2000
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Signature(s)
----------------------------------------------------------
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Please sign exactly as name appears hereon. Joint owners
should each sign. Where applicable, indicate official
position or representative capacity.
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. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
4998 - Federal Signal Corporation
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