SCHEDULE 14A
(RULE 14A - 101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTIONS 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
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FEDERAL SIGNAL CORPORATON
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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)
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[PASTEUP LOGO]
FEDERAL SIGNAL CORPORATION
1415 West 22nd Street
Oak Brook, Illinois 60523
Notice of Annual Meeting of Shareholders
To Be Held on April 15, 1999
To the Stockholders of
Federal Signal Corporation
The Annual Meeting of Shareholders of Federal Signal Corporation
("Federal") for the year 1999 will be held at the Emergency One, Inc.
Welcome Center, 1601 SW 37th Avenue, Ocala, Florida, on Thursday, April
15, 1999, at 11:00 a.m., local time, for the following purposes:
1. To elect three directors of Federal; and
2. To consider and act on a proposal to amend the Federal
Signal Corporation Stock Benefit Plan to increase the number of
shares of Common Stock subject to the Plan as set forth in the
accompanying proxy statement.
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
18, 1999, 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, 1998 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, 1999
[PASTE UP LOGO]
1415 West 22nd Street
Oak Brook, Illinois 60523
MAILING DATE
on or about
March 8, 1999
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Proxy Statement for Annual Meeting of Shareholders
To Be Held on April 15, 1999
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 15, 1999, 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 18, 1999, will be entitled to vote at the
meeting. At such record date, there were outstanding 45,533,921 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.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
The following table sets forth information as of December 31, 1998
(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:
Amount and
Nature of
Beneficial Percent of
Name Ownership (2) Class
---- ---------- ----------
Beneficial Owner of More than 5% of Federal's
Common Stock: Invesco companies (12) 4,626,000 10.16%
Each Director and Five Executive Officers and
Executive Officers and Directors as a Group:(1)
Charles R. Campbell, Director 47,637 .10%
Paul W. Jones, Director 1,000 0%
James A. Lovell, Jr., Director 32,641 .07%
Thomas N. McGowen, Jr., Director 34,667 .07%
Walter R. Peirson, Director 31,506 .07%
Joseph J. Ross, Director and Executive Officer 908,121 1.99%
Richard R. Thomas, Director 128,848 .28%
Henry L. Dykema, Executive Officer 52,562 .11%
Richard G. Gibb, Executive Officer 246,717 .54%
Richard L. Ritz, Executive Officer 80,353 .18%
Kim A. Wehrenberg, Executive Officer 227,790 .50%
All Directors and Executive Officers
as a group (14 persons) 1,791,842 3.93%
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(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, 18,531; Mr. Peirson, 9,741; Mr. Ross, 355,833;
Mr. Dykema, 19,500; Mr. Wehrenberg, 81,751; Mr. Ritz, 47,137; 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, 17,250;
Mr. Dykema, 12,250; Mr. Wehrenberg, 5,250; Mr. Ritz, 3,375 and Mr.
Gibb 11,250.
ELECTION OF DIRECTORS
Federal's Board of Directors consists of seven directors divided
into three classes with one class term expiring each year. Messrs.
Charles R. Campbell, Paul W. Jones and James A. Lovell, Jr. are nominated
as Class III directors for election at this Annual Meeting for a term to
expire at the 2002 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:
Year First Year Present Principal Occupation
Became Term or Employment for
Name Age Director Expires Last Five Years(1)
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Nominees:
Charles R. Campbell... 59 1998 1999 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... 50 1998 1999 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. He is a
director of Omni Quip,
Inc., a diversified
manufacturer.
James A. Lovell, Jr... 70 1984 1999 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, and
Astronautics
Corporation of America,
an avionics corporation.
Continuing Directors:
Thomas N. McGowen, Jr... 73 1974 2001 Mr. McGowen is
an attorney. He is also
a director of Energy
West Corporation and
Ribi Immunochem
Research, Inc.
Richard R. Thomas ... 65 1994 2001 Mr. Thomas
retired in 1994 as
President of the Tool
Group of Federal Signal
Corporation and is a
director of TE-CO
Tooling Components,
Inc., a tool
manufacturer.
Joseph J. Ross... 53 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 and is a
director of Varlen
Corporation.
Walter R. Peirson... 72 1987 2000 Mr. Peirson retired in
1989 as Executive Vice
President and as a
director of Amoco
Corporation (a
petroleum company).
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(1) The information contained in this table is based upon information
furnished to Federal by the individuals named above.
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, Richard R. Thomas 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, Charles R. Campbell
and Paul W. Jones.
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, Thomas N. McGowen,
Jr. and Paul W. Jones.
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 Charles R. Campbell, Chairman, Richard R.
Thomas and Walter R. Peirson.
During 1998, 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 two meetings. The members of the Executive Committee are
Thomas N. McGowen, Jr., Chairman, Joseph J. Ross and James A. Lovell, Jr.
During 1998, the Compensation/Stock Option Committee held five meetings;
the Nominating Committee held two meetings; the Audit Committee held
three 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 $35,500;
Mr. Lovell - $34,000; and Mr. Peirson - $34,000. These directors are
eligible for a retirement benefit of $15,000 per year for up to 10 years
after retirement. Messrs. Campbell, Jones and Thomas receive an annual
retainer of $25,000 and $1,000 per Board meeting fees. They also receive
an initial grant of 5,000 shares of stock options, plus 1,500 shares of
options per year. Mr. Thomas received $2,000 for consulting for the Tool
Group in 1998. 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.
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 1998 fiscal year:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
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Annual Compensation Restricted Number
Name and ------------------- Stock of All Other
Principal Position Year Salary Bonus Awards(1) Options Compensation(2)
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Joseph J. Ross 1998 $405,000 $295,650 $315,875 60,000 $40,789
Chairman, President 1997 405,000 294,500 228,375 55,000 45,197
and Chief Executive 1996 375,000 300,000 222,750 65,000 33,378
Officer
Richard G. Gibb 1998 200,000 127,750 180,500 10,000 15,614
Executive Vice 1997 172,000 21,130 203,000 25,000 14,793
President 1996 165,000 72,011 173,250 10,000 16,110
Henry L. Dykema 1998 197,000 107,858 67,687 7,000 9,428
Vice President and 1997 197,000 132,975 88,812 12,000 4,719
Chief Financial 1996 190,000 113,288 74,250 14,500 5,274
Officer
Kim A. Wehrenberg 1998 165,000 90,338 78,968 7,000 13,810
Vice President, 1997 165,000 111,375 88,812 12,000 14,291
GeneralCounsel and 1996 158,000 99,540 86,625 14,500 13,726
Secretary
Richard L. Ritz 1998 115,000 59,657 56,405 7,000 12,669
Vice President, 1997 115,000 67,922 50,750 10,000 12,353
Controller 1996 108,000 56,700 49,500 19,500 12,268
(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, 1998 were: for Mr. Ross 17,250 shares ($472,218),
for Mr. Dykema 12,250 shares ($335,343), for Mr. Gibb 11,250 shares
($307,968), for Mr. Wehrenberg 5,250 shares ($143,718) and for Mr.
Ritz 3,375 shares ($92,390). 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,
$18,345, $17,644, $0; Mr. Dykema $3,840, $5,588, $0, $0; Mr.
Wehrenberg $4,800, $3,010, $0, $6,000; Mr. Ritz $4,800, $669, $0,
$7,200; Mr. Gibb $4,800, $1,814, $0, $9,000. Of these officers who
put part of their bonus into the Company's supplemental savings
plan, Mr. Wehrenberg invested $95,338, and Mr. Dykema invested
$107,858 of their bonuses in Federal Signal stock.
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, 1999, 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 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 Grant Date
Individual Grants Value
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Number of Securities
Underlying Options
Granted 12/10/98 at % of Total Grant Date
$23.75 per share Options Present Value
exercise or base Granted to $ Based on
price and expire Employees in Black-Scholes
12/10/08 Fiscal Year Method (2)
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Joseph J. Ross 60,000 30.0% $313,500
Richard G. Gibb 10,000 5.0% 52,250
Henry L. Dykema 7,000 3.5% 36,575
Kim A. Wehrenberg 7,000 3.5% 36,575
Richard L. Ritz 7,000 3.5% 36,575
(1) No SARs were granted. These options become 100% exercisable on the
third anniversary date.
(2) The following assumptions were used under the Black-Scholes method:
volatility .204; risk free rate of return 4.6%; dividend yield 2.5%;
expected life 6.7 years.
Option Exercises and Year-End Value Table
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Value
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares FY-End (#) FY-End ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($)(1) Unexercisable Unexercisable(2)
- ---- ------------- --------------- ------------- -----------------
Joseph J. Ross 0 0 355,833 $3,936,396
87,500 408,281
Richard G. Gibb 0 0 82,500 831,559
35,000 209,687
Henry L. Dykema 0 0 19,500 78,687
34,000 213,625
Kim A.Wehrenberg 7,424 $140,638 81,751 995,674
19,000 108,625
Richard L. Ritz 0 0 47,137 503,481
27,000 147,250
(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 $27.375 on December 31, 1998.
(3) Mr. Ross has stock option exercise loans totaling $2,410,335,
including $75,852 of interest. $132,469 of interest accrued in 1998
at rates ranging from 5.93% to 7.61%. Such loans are available to
all employees participating in the Plan.
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 1998. 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, 14.5, Mr.
Dykema, 3; Mr. Wehrenberg, 11; Mr. Ritz, 13.5 and Mr. Gibb, 22.2.
Pension Plan Table
Average Annual
Compensation for
the Five Consecutive Approximate Annual Straight-Life Annuity
Calendar Years of Pension Upon Retirement at 65
the Last Ten for Which
Compensation is Highest 10 years 15 years 20 years 25 years 30 years
of Service of Service of Service of Service of Service
- ----------------- ---------- ---------- ---------- ---------- ---------
$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
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, 1998 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 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.
The Company's total return to shareholders has been an average of
about 8% per year for the last five years. The Company's earnings
performance in 1998 compared to 1997 was up slightly. Mr. Ross did not
receive a salary increase in 1998; therefore, the Committee determined
that there would be a 2.9% salary increase for Mr. Ross to $417,000 for
1999. The other four officers received an average salary increase of 3.9%
for 1999.
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 1999. Therefore, if the Company's return on capital is the same
as it was in 1998, the officers' bonuses will also be about the same for
1999. The 1998 bonus target achievement was 71%. The other officers'
bonuses generally constitute about 35% 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 eleven years the
total market value of the Company has increased more than fivefold from
about $200 million to over $1 billion of stockholder value. The
Performance Graph on page 10 shows that Federal has underperformed the
Standard & Poor Industrials and companies comparable to Federal. 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 1999. 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 THOMAS N. McGOWEN, JR.
[graph]
Comparison for Five Year Cumulative Total Return*
For Federal Signal Corporation
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93 94 95 96 97 98
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- -------------------------------------------------------------------------------
FSC 100 99 128 131 113 147
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S&P Ind. 100 104 140 172 225 301
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DJIDI 100 89 115 146 188 214
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Assumes $100 invested on December 31, 1993 in Federal Signal Corporation
Common Stock (FSC), S&P Industrials Index (S&P Ind.) and the Dow Jones
Industrial-Diversified Index (DJIDI).
*Total return assumes reinvestment of dividends and is based on fiscal
years ending December 31.
Amendment to the Stock Benefit Plan
On April 17, 1996 Federal's shareholders approved the Federal
Signal Stock Benefit Plan (the "Plan"). The Plan provides stock options,
awards and units to employees and directors of Federal, and below market
stock options to Federal directors in lieu of director fees (the amount
below market is equal to the amount of waived director fees). On April
15, 1998 the shareholders approved an amendment of the Plan to expand
participation in the Plan by deleting the definition of "key" employee.
The purpose of this was to allow a greater number of employees to
participate in the Plan therefore increasing their identification with
shareholders and giving them an incentive to further increase the
Company's shareholder value in the future similar to the more than
fivefold increase in value achieved over the last eleven years. As of
February 1, 1999 there were no shares available for future grants of
benefits under the Plan. Therefore, on December 10, 1998 the Board of
Directors of Federal Signal approved an amendment of the Plan, subject to
shareholder approval, to increase the number of shares of Common Stock
subject to the Plan by 1,500,000 shares.
For more information about the Plan, see the Executive
Compensation section of this Proxy Statement and Note I, Stock Based
Compensation of the Financial Statements.
The Plan, including the proposed amendment, is attached as Exhibit
A.
The Amendment will be effective upon the approval of a majority of
the outstanding shares of Common Stock voting at the meeting. The Board
of Directors recommends that the shareholders vote FOR the adoption of
the amendment to the Plan.
ACCOUNTING INFORMATION
Ernst & Young has been selected by Federal to serve as its
independent public accountants for the fiscal year ending December 31,
1999. 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 2000 Annual Meeting of Shareholders, stockholder proposals must be
received by Federal on or before November 20, 1999.
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
FEDERAL SIGNAL CORPORATION Exhibit A
STOCK BENEFIT PLAN
(as proposed to be amended)*
1. Purpose of the Plan.
The purpose of this Stock Benefit Plan (the "Plan") is to secure for
Federal Signal Corporation, a Delaware corporation (the "Corporation"),
and its stockholders the benefits of incentive compensation of the
management personnel of the Corporation and its subsidiaries and to
ensure a tax deduction for the Corporation for certain compensation under
the Plan. By virtue of the benefits available under the Plan, directors
and employees who are responsible for the future growth and continued
success of the Corporation have an opportunity to participate in the
appreciation in the value of the stock of the Corporation which furnishes
them with an incentive to work for and contribute to such appreciation
through the growth and success of the Corporation. In addition, it is
generally recognized that incentive compensation programs aid in
retaining and encouraging key employees of ability and in recruiting
additional able employees.
2. Shares Subject to the Plan.
An aggregate of 1,000,000 plus an additional 1,500,000 shares of
Common Stock ($1.00 par value) of the Corporation shall be subject to the
Plan and such shares may be issued under the Plan pursuant to Stock
Options, Stock Awards or such other Stock Unit Awards (collectively
"Benefits") as the Committee, as defined below, in its discretion, may
determine and the total number of Benefit shares or units that can be
granted under the Plan shall not exceed 1,000,000 plus an additional
1,500,000 shares except as set forth in the next paragraph. Such shares
may be either authorized but unissued shares or shares now or hereafter
held in the treasury of the Corporation.
In the event that any option under the Plan expires or is terminated
without being exercised for any reason prior to the end of the period
during which options may be granted under the Plan, the shares
theretofore subject to such option, or the unexercised portion thereof,
shall again become available for grant under the Plan. In the event that
any shares granted as stock awards or stock unit awards expire, terminate
or become the property of the Corporation pursuant to the Plan, the
number of such shares shall again become available for granting as
Benefits awards under the Plan.
3. Administration of the Plan.
A. The Committee.
The Plan shall be administered by the Compensation/Stock Option
Committee of the Board of Directors or such other committee as shall be
designated by the Board of Directors (the "Committee"). The Committee
shall consist of not less than two Directors of the Corporation, and
shall be appointed by the Board of Directors. Any decision or
determination reduced to writing and signed by all the members of the
Committee shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may
appoint a secretary (who need not be a member of the Committee) and may
make such rules and regulations for the conduct of its business as it
shall deem advisable. No member of the Committee shall be liable, in the
absence of bad faith, for any act or omission with respect to his or her
service on the Committee. Service on the Committee shall constitute
service as a Director of the Corporation so that members of the Committee
shall be entitled to indemnification and reimbursement as Directors of
the Corporation.
B. Authority of the Committee.
Subject to the express provisions of the Plan, the Committee shall
have plenary authority, in its discretion, to determine the employees to
whom, and the time or times at which, Benefits shall be granted and the
number of shares to be subject to each Benefit provided, however, no
individual may receive more than 100,000 of the shares per year under the
Plan. In making such determinations, the Committee may take into account
the nature of the services rendered or expected to be rendered by the
respective employees, their present and potential contributions to the
Corporation's success, the anticipated number of years of effective
service remaining and such other factors as the Committee in its
discretion shall deem relevant. Subject to the express provisions of the
Plan, the Committee shall also have plenary authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to
it, to determine the terms and conditions of the respective Benefits
(which terms and conditions need not be the same in each case), to impose
restrictions on any shares issued as or pursuant to the Benefits and to
determine the manner in which such restrictions may be removed, and to
make all other determinations deemed necessary or advisable in
administering the Plan. The Committee may specify in the original terms
of any Benefit or, if not so specified, shall determine whether any
authorized leave of absence or absence on military or governmental
service or for any other reason shall constitute a termination of
employment for purposes of the Plan. The Committee shall have the
authority to issue shares of Common Stock or pursuant to the Benefits and
to determine the consideration received by the Corporation for such
Benefits granted pursuant to the Plan. The determination of the Committee
on the matters referred to in this paragraph shall be conclusive.
- ------------------
*The proposed amendment is the portion of section 2 typeset in italics.
C. Granting Date.
The action of the Committee with respect to the granting of a Benefit
shall take place on such date as a majority of the members of the
Committee at a meeting shall make a determination with respect to the
granting of a Benefit or, in the absence of a meeting, on such date as a
written designation covering such Benefit shall have been authorized by
all members of the Committee. The effective date of the grant of a
Benefit (the "Granting Date") shall be the date specified by the
Committee in its determination or designation relating to the award of
such Benefit, provided that the Committee may not designate a Granting
Date with respect to any Benefit which shall be earlier than the date on
which the granting of such Benefit shall have been approved by the
Committee.
4. Eligibility.
Benefits may be granted to employees (which term shall be deemed to
include officers) who on the Granting Date (or, with respect to Benefits
that are not incentive stock options, within 30 days thereafter in the
instance of newly hired employees) are in the employ of the Corporation
or one of its then subsidiary corporations (the "subsidiaries"), as
defined in Section 425 of the Internal Revenue Code of 1954, as amended
(the "Code"), and Directors. Below market stock options may also be
granted to any Director of the Corporation in lieu of part or all of
their Directors' fees in accordance with Section 8 of this Plan.
5. Terms and Conditions of Options.
A. Purchase Price and Terms of Options.
(i) The purchase price of the Common Stock under each option shall be
determined by the Committee, but for options granted under Section 5 of
the Plan, the price shall not be less than 100% of the fair market value
of the Common Stock, as determined by the Committee, on the Granting Date
for such option.
(ii) Options granted under this Plan may be either Incentive Stock
Options (as defined in Section 422A of the Code) or Non-Incentive Stock
Options (i.e., options which are not within the Section 422A definition).
a. Incentive Stock Options: Subject to the minimum option price
specified in subparagraph 5(A)(i) hereof, the terms of each incentive
stock option granted under the Plan, which may be different in each
case, shall include those terms which are required by Section 422A of
the Code, and such other terms not inconsistent therewith as the
Committee may determine.
b. Non-Incentive Stock Options: Subject to minimum option price
specified in subparagraph 5(A)(i) hereof, the terms of each stock
option granted under this Plan that is not an incentive stock option,
which terms may be different in each case, shall be determined by the
Committee.
B. Term of Options.
The term of each option granted under the Plan shall be for a period
of ten years unless otherwise determined by the Committee. Each option
shall become exercisable, unless otherwise determined by the Committee in
its discretion, with respect to one-half the number of shares subject
thereto after the first anniversary following the Granting Date, and
shall be exercisable with respect to all shares subject thereto after the
second anniversary following the Granting Date.
C. Restrictions on Transfer and Exercise.
(i) Except as hereinafter provided, no option granted pursuant to the
Plan may be exercised at any time unless the holder thereof is then an
employee of the Corporation or of a subsidiary. Options granted under the
Plan shall not be affected by any change of employment so long as the
grantee continues to be an employee of the Corporation or of a
subsidiary. Retirement pursuant to the Corporation's then prevailing
retirement policies and plans shall be deemed to be a termination of
employment.
(ii) Unless the Committee determines otherwise, in the event of the
termination of employment of a grantee of an option (otherwise than by
reason of death), such option may be exercised (only to the extent that
the employee was entitled to do so at the termination of his employment)
at any time within (1) for options that are not incentive stock options,
(a) two years after such termination if such termination is due to
disability (as defined in Section 105(d)(4) of the Code) or retirement
unless, at the time of employment termination, the Committee extends the
period of exercise., (b) three months after such termination in all other
cases, unless such period shall be extended by the Committee in its
discretion; or (2) in the case of incentive stock options, (a) one year
after such termination if such termination is due to disability (as
defined in Section 105(d)(4) of the Code) or such lesser time as the
Committee may specify from time to time, or (b) three months after such
termination in all other cases unless such period shall be extended by
the Committee in its discretion. In no event shall an option be
exercisable after the expiration date of the option.
(iii) Unless the Committee determines otherwise, if a grantee shall
die while an employee of the Corporation or a subsidiary or within three
months after the termination of employment of the grantee, an option held
by such grantee may be exercised to the extent the option was exercisable
by such grantee at the date of death, by a legatee or legatees of such
option under the grantee's last will, or by the grantee's personal
representative or distributees, at any time within one year after the
grantee's death, provided that in no event shall the option be exercised
after the expiration of the period of the option.
(iv) No option granted under the Plan shall be transferable otherwise
than by will or the law of descent and distribution and an option may be
exercised, during the lifetime of the grantee thereof, only by the
grantee thereof.
D. Exercise of Options; Alternative Settlement Methods.
(i) Subject to the limitations set forth in the Plan and the original
terms of the option, any option granted and exercisable pursuant to the
Plan may be exercised in whole or in part from time to time. Except in
the case of the election of an alternative settlement method as
hereinafter provided, payment for shares of Common Stock purchased shall
be made in full at the time that an option, or any part thereof, is
exercised. Unless the Committee determines otherwise in its discretion, a
grantee holding an option may make all or a portion of payment upon
exercise of an option through delivery of shares of Common Stock of the
Corporation. Any shares so delivered shall be valued at the closing price
on the New York Stock Exchange on the date of the exercise of the option
(or, if no such closing price is available, the value shall be determined
in such other manner as the Committee may deem appropriate).
(ii) The Committee, in its discretion, may provide that any option
granted pursuant to the Plan may, by its terms, confer upon the grantee
the right to elect any of the alternative settlement methods set forth in
subparagraph (iv) below.
(iii) The Committee may, in its discretion and at the request of a
grantee holding an option granted pursuant to the Plan that does not by
its terms include the right to elect any of such alternative settlement
methods, permit the election of any of such alternative methods by the
grantee. The Committee, in its discretion, may at the request of the
holder of an option on the Common Stock of the Corporation, which option
is exercisable at the time of the request and which was granted pursuant
to any stock option plan or other similar plan heretofore established for
the benefit of employees of the Corporation, permit the election of any
of such alternative methods by such holder. The authority of the
Committee to permit such elections of alternative settlement methods
shall not confer upon the grantee or holder of any option the right to
such an election.
(iv) The alternative settlement methods are: (a) cash equal to the
excess of the value of one share of Common Stock over the purchase price
set forth in the option times the number of shares as to which the option
is exercised; (b) the number of full shares of Common Stock having an
aggregate value not greater than the cash amount calculated under
alternative (a); (c) any combination of cash and full shares having an
aggregate value not greater than the cash amount calculated under
alternative (a). Notwithstanding the other provisions of the Plan,
election of an alternative settlement method involving the receipt of
cash shall be subject to the approval of the Committee at the time of
such election. For purposes of determining an alternative settlement, the
value per share of Common Stock shall be the closing price on the New
York Stock Exchange on the date of the exercise of the option (or, if no
such closing price is available, the value shall be determined in such
other manner as the Committee may deem appropriate).
(v) In the event that an option granted or to be granted under the
Plan is not an incentive stock option under Section 422A of the Code,
then the Committee may, in its discretion, commit the Corporation to pay
to the option holder, at the time the taxes or an amount of cash equal to
the amount of income tax payable by the grantee as a result of the option
exercise and as a result of this tax reimbursement.
(vi) Exercise of an option in any manner, including an exercise
involving an election of an alternative settlement method, shall result
in a decrease in the number of shares which thereafter may be available
for purposes of granting options under the Plan by the number of shares
as to which the option is exercised.
E. Manner of Exercise.
An option shall be exercised by giving a written notice to the
Secretary of the Corporation stating the number of shares of Common Stock
with respect to which the option is being exercised and containing such
other information as the Secretary may request, including the election
requesting authorization of an alternative settlement method.
6. Stock Awards.
A. Award of Shares.
Stock awards will consist of shares of Common Stock of the Corporation
issued to eligible officers.
B. Restrictions on Transfer.
Stock awards shall be subject to such terms and conditions as the
Committee determines to be appropriate, including, without limitation,
restrictions on the sale or other disposition of such shares. Except as
hereinafter provided, or unless the Committee determines otherwise
(either at the time of the grant of a stock award or at any time
thereafter), shares granted as stock awards pursuant to the Plan shall
not be sold, transferred, assigned or otherwise disposed of by the
grantee. In the event of termination of full time employment (including,
but not limited to, the retirement of the grantee) for any reason prior
to the termination date of any restrictions pertaining to the stock
award, the shares then subject to restrictions shall become the property
of the Corporation, provided, however, that the obligation not to dispose
of shares acquired pursuant to a stock award and the right of the
Corporation to receive such shares shall lapse, unless the Committee
determines otherwise in its discretion, as to one-fourth (or such other
portion as the Committee shall establish in the stock award) of the
shares received in one stock award on each of the first four anniversary
dates following the Granting Date thereof (or on such other date(s) as
the Committee shall establish in the stock award), and provided further
that the Committee may determine (either at the time of the grant of a
stock award or at any time thereafter) that in the event a grantee's
employment is terminated on account of death, the permanent disability of
such grantee or upon such other conditions as the Committee may approve,
all restrictions remaining on shares granted to such grantee shall lapse
and such shares shall not become the property of the Corporation.
All restrictions applicable to any stock award shall apply to any
shares resulting from a stock dividend, stock split, or other
distribution of shares of the Corporation with respect to the stock
award, effective as of the Granting Date of such stock award.
All restrictions applicable to any stock award shall lapse (1) as to
all shares granted in such award, in the event any tender offer subject
to Section 14(d) of the Securities Exchange Act of 1934, or any successor
thereto, shall be made for any of the outstanding Common Stock of the
Corporation, or (2) as to any securities, property, cash or combinations
thereof received in exchange for stock award shares pursuant to any
merger, consolidation, liquidation or dissolution of the Corporation.
7. Stock Unit Awards.
In order to enable the Corporation and Committee to respond quickly to
significant developments in applicable tax and other legislation and
regulations and interpretations thereof, and to trends in executive
compensation practices, the Committee shall also be authorized to grant
to participants, either alone or in addition to other Benefits granted
under the Plan, awards of stock and other awards that are valued in whole
or in part by reference to, or are otherwise based on Common Stock of the
Corporation ("stock unit awards") such as phantom stock, below market
options, performance units, etc. Other stock unit awards may be paid in
Common Stock of the Corporation, cash or any other form of property as
the Committee shall determine.
The Committee shall determine the key employees to whom other stock
unit awards are to be made, the times at which such awards are to be
made, the number of shares to be granted pursuant to such awards and all
other conditions of such awards. The provisions of the stock unit awards
need not be the same with respect to each recipient. The participant
shall not be permitted to sell, assign, transfer, pledge, or otherwise
encumber the shares prior to the later of the date on which the shares
are issued, or the date on which any applicable restriction, performance
or deferral period lapses. Stock (including securities convertible into
stock) granted pursuant to other stock unit awards may be issued for no
cash consideration or for such minimum consideration as may be required
by applicable law. Stock (including securities convertible into stock)
purchased pursuant to purchase rights granted pursuant to other stock
unit awards may be purchased for such consideration as the Committee
shall determine which price shall not be less than par value of such
stock or other securities on the date of grant.
8. Director Options.
Directors of the Corporation may elect to receive below-market stock
options in lieu of part or all of their Director fees. Such options shall
be granted at a price of $1.00 (par value of the Common Stock) per share.
The number of shares to be granted shall be determined by dividing the
amount of Director fees (that the Director irrevocably elected to take in
the form of below market options instead of cash) by the fair market
value of a share of Common Stock on the date of grant after subtracting
the $1.00 option price from such fair market value. These options shall
be 100% vested on the date of grant, but shall not be exercisable until
six months after the date of grant. The term of these options shall be
for ten years and they shall not be transferable otherwise than by will
or the laws of descent and distribution and may only be exercised by the
Director, his guardian or legal representative during the Director's
lifetime. Election of an alternative settlement method shall not be
available for these options.
9. Stockholder and Employment Rights.
A holder of an option shall have none of the rights of a stockholder
with respect to any of the shares subject to option until such shares
shall be issued upon the exercise of the option.
Subject to the other provisions of the Plan, upon the date of issuance
of certificates representing a stock award, the grantee shall have all
the rights of a stockholder including the right to receive dividends and
to vote the shares. However, the certificates representing such shares
and any shares of the Corporation issued with respect thereto or in
exchange therefor shall be held by the Corporation for account of the
grantee and the grantee shall deliver to the Corporation upon request a
stock power or powers executed in blank, covering such shares. As and
when restrictions lapse, the certificates representing such shares shall
be released to the grantee.
Nothing in the Plan or in any Benefit granted pursuant to the Plan
shall, in the absence of an express provision to the contrary, confer on
any individual any right to be or to continue in the employ of the
Corporation or any of its subsidiaries or shall interfere in any way with
the right of the Corporation or any of its subsidiaries to terminate the
employment of any individual at any time.
10. Adjustments in Common Stock.
The aggregate number of shares of Common Stock of the Corporation on
which Benefits may be granted hereunder, the number of shares thereof
covered by each outstanding Benefit, the price per share thereof in each
such Benefit may all be approximately adjusted, as the Board of Directors
or the Committee may determine, for any increase or decrease in the
number of shares of Common Stock of the Corporation resulting from a
subdivision or consolidation of shares whether through reorganization,
recapitalization, stock split-up or combination of shares, or the payment
of a stock dividend or other increase or decrease in such shares effected
without receipt of consideration by the Corporation.
Subject to any required action by the stockholders, if the Corporation
shall be the surviving corporation in any merger or consolidation, any
Benefit granted hereunder shall pertain to and apply to the securities to
which a holder of the number of shares of Common Stock subject to the
Benefit would have been entitled pursuant to the merger or consolidation.
Upon a dissolution of the Corporation, or a merger or consolidation in
which the Corporation is not the surviving corporation, every Benefit
outstanding hereunder shall terminate, provided, however, that in the
case of such dissolution, merger or consolidation, then during the period
thirty days prior to the record date of such event, each holder of an
Benefit granted pursuant to the Plan shall have a right to exercise the
Benefit, in whole or in part, notwithstanding any other provision of the
Plan or Benefit agreement.
11. Amendment and Termination.
Unless the Plan shall theretofore have been terminated, the Plan shall
terminate on, and no Benefit shall be granted hereunder after, April 17,
2006, provided that the Board of Directors of the Corporation may at any
time prior to that date terminate the Plan.
The Board of Directors shall have complete power and authority to
amend the Plan, provided, however, that except as expressly permitted in
the Plan, the Board of Directors shall not, without the affirmative vote
of the holders of a majority of the voting stock of the Corporation,
increase the maximum number of shares on which Benefits may be granted
amend the formula for determination of the purchase price of shares on
which options may be granted, extend the period during which Benefits may
be granted, or amend the requirements as to the class of employees
eligible to receive Benefits.
No termination or amendment of the Plan may, without the consent of
the holder of any outstanding Benefit, adversely affect the rights of
such holder or grantee. The termination of the Plan shall not affect
restrictions applicable to any Benefits, outstanding or existing at the
time of such termination.
12. Effectiveness of the Plan.
The Plan shall become effective on adoption by the Board of Directors
of the Corporation, and approval by the holders of a majority of the
voting stock of the Corporation. Should such holders fail so to approve
it, the Plan and all actions taken thereunder shall be and become null
and void. Any other provisions of the Plan to the contrary
notwithstanding, no Benefits granted under the Plan may be exercised or
vested until after such stockholder approval.
13. Government and Other Regulations.
The obligation of the Corporation to sell or deliver shares under
Benefits granted pursuant to the Plan shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental
agencies as may be required.
PROXY FEDERAL SIGNAL CORPORATION PROXY
1415 W. 22ND Street, Oak Brook, Illinois 60523
Proxy for Annual Meeting of Stockholders on April 15, 1999
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 1999 Annual Meeting of Stockholders to be held at the Emergency
One, Inc. Welcome Center, 1601 S.W. 37th Avenue, Ocala, Florida on
Thursday, April 15, 1999 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 FOR Proposal 2.
{ } Check here for address change.
New Address:--------------------
--------------------------------
--------------------------------
(Continued and to be signed on reverse side.)
- -------------------------------------------------------------------------
FEDERAL SIGNAL CORPORATION
{ X } Please mark your votes as in this example.
{ }
SHARES
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 the Proposal 1 and FOR Proposal 2.
FOR WITHHOLD
ALL ALL FOR ALL (Except Nominee(s)
written below)
--------------------------------------------------
1. Election of Directors - { } { } { }
Nominees: Charles R. Campbell,
Paul W. Jones and James A. Lovell, Jr.
FOR AGAINST ABSTAIN
2. Approval of amendment to the
Federal Signal Corporation Stock { } { } { }
Benefit Plan
To increase shares by 1,500,000.
--------------------------------------------------
Please vote,
sign, date and
return this
Proxy Card
promptly using
the enclosed
envelope.
Dated:-------------------------1999
Signature(s)-----------------------
-----------------------------------
Please sign
exactly as name
appears hereon.
Joint owners
should each sign.
Where applicable,
indicate official
position or
representative
capacity.
- -------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.