SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Preliminary Proxy Statement | ||
| Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)) | ||
| Definitive Proxy Statement | ||
| X | Definitive Additional Materials | |
| Soliciting Material Under Rule 14a-12 | ||
FEDERAL SIGNAL CORPORATION
(Name of Registrant as Specified in its Charter)
WARREN B. KANDERS
STEVEN R. GERBSMAN
NICHOLAS SOKOLOW
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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Kanders Group Files Definitive Proxy Materials and Sends Letter to Stockholders of
Federal Signal Corporation
Urges Stockholders to Vote FOR the Kanders Nominees on the GOLD Proxy Card Today
Stamford, CT., April 6, 2009 -- Warren Kanders, together with Steven R. Gerbsman and Nicholas Sokolow (together the “Kanders Group”), today announced that they have filed with the Securities and Exchange Commission definitive proxy materials in connection with Federal Signal Corporation’s (NYSE: FSS) 2009 Annual Meeting of Stockholders. Federal Signal stockholders of record as of the close of business on March 3, 2009 will be entitled to attend and vote at the April 29, 2009 Annual Meeting.
The Kanders Group strongly recommend that stockholders elect the Kanders Group’s highly-qualified independent nominees – Warren B. Kanders, Steven R. Gerbsman, and Nicholas Sokolow - by telephone, Internet or by signing, dating and returning the GOLD proxy card today.
In connection with its solicitation, the Kanders Group mailed the following letter to stockholders along with its proxy materials:
Dear Fellow Stockholders:
I am writing to you on behalf of myself, a long term shareholder of Federal Signal Corporation, and Mr. Steven R. Gerbsman and Mr. Nicholas Sokolow, who collectively own 1,382,356 shares (approximately 2.9%) of the outstanding common stock of the Company- more than 7.5 times as many shares owned by the entire current Board of Directors combined. We are extremely disappointed with the performance of the current Board of Directors and the 70.5% destruction in shareholder value during the past year. We are seeking your vote to elect our three highly qualified and independent nominees at the stockholders meeting scheduled to be held on April 29, 2009.
Our nominees have extensive experience and a proven track record of building value for shareholders. As you are probably aware, in September of 2008 the current Board appointed William H. Osborne as Chief Executive Officer. Mr. Osborne has virtually no experience in the Company’s core businesses or in running a public company. Since his appointment, shareholder value has eroded by 71.9%, from $15.71 per share on September 16, 2008, the day after he was appointed, to $4.42 on March 12, 2009, the day on which Mr. Osborne was interviewed by Bloomberg News and was quoted as saying the Company “needs a big internal merger” to reduce expenses due to a “history of acquisitions without integration.” While some of this decline may be attributable to general market conditions, we believe most of the decline reflects the market’s view that under the direction of this current Board, Mr. Osborne will be unable to reverse the Company’s declining fortunes. We believe that Mr. Osborne and other directors will benefit from the constructive participation of our nominees in the Boardroom.
Over the past three years, Federal Signal has significantly underperformed its peers in shareholder total returns
-61% vs. -29%, as well as in most other metrics of concern to
shareholders: return on equity 8.6% vs. 22.7%; return on assets 3.6% vs. 9.9%; and return on capital 5.6% vs. 14.1%.
Despite this poor performance, the Board has rewarded a parade of CEO’s with oversized compensation:
| Name | Base Salary | Bonus/Options/Other |
Total |
|||||
| Compensation | ||||||||
| Robert Welding | $686,700 |
$3,036,120 |
$3,722,820 (2007) |
|||||
| James E. Goodwin | $506,602 |
$293,248 |
$799,850 (2008) |
|||||
| William H. Osborne | $192,083 |
$1,268,891 |
$1,460,974 (2008) |
|||||
Is it any wonder that Glass Lewis & Co., a leading independent shareholder advisory firm, gave Federal Signal a grade of “F”, its lowest score, in its “pay for performance” model for the past three years, noting “Overall, the Company [FSS] paid more than its peers, but performed worse than its peers.” (Emphasis added). “F”-- for “Failure”! Based on its analysis, Glass Lewis recommended that shareholders “withhold” their vote from the Board’s nominees in its uncontested 2008 election of directors. During this same time, the average compensation paid to non employee members of the Board of Directors increased 60% from $87,700 in 2006 to approximately $140,000 per year in 2008.
WE BELIEVE THE BOARD AND SHAREHOLDERS NEED THE EXTENSIVE
EXPERIENCE OF OUR INDEPENDENT NOMINEES AT THIS IMPORTANT TIME
Between 1996 and 2007, I served as Chairman of the Board, and from 2003 also as Chief Executive Officer, of Armor Holdings, Inc., growing the company into a diversified global manufacturer of protective systems for the military, government, law enforcement agencies and commercial customers, competing directly with Federal Signal in the manufacture and sale of signal devices. Another of our nominees, Nicholas Sokolow, a practicing attorney specializing in corporate governance, also served on the Armor Board, as a member of its Compensation, Nominating/Corporate Governance and Audit Committees, as well as serving as a member of other public company boards.
During this period, Armor’s revenues and EBITDA increased from approximately $12 million and $1 million, respectively, in 1995 to approximately $2.36 billion of revenues and $286 million of EBITDA for fiscal 2006, with fiscal 2007 guidance of approximately $3.5 billion in revenues. According to the Armor Holdings Form 10-K for the year ended December 31, 1995, the average stock price in the quarter immediately
preceding Mr. Kanders’ initial investment was $2.125. The value of $100 invested in Armor Holdings at the average stock price of $2.125 would have been worth approximately $4,141 at the time the sale of Armor Holdings was announced in May 2007, which represents a compounded annual return to Armor Holdings’ shareholders of approximately 38.7% per annum for the 11.5 year period.
Our third nominee, Steven R. Gerbsman, has more than 30 years of experience in providing consulting, management, advisory and investment banking services to clients in a broad range of industries -- especially the “information business” that Federal Signal’s management has identified as key to its future. He has particular expertise in assisting companies in crisis management, expense reduction and turnaround situations.
WE ARE SEEKING TO HELP – NOT GAIN CONTROL OF THE BOARD
Our nominees, if elected, will constitute only three of ten members on the Board. Nonetheless, we believe we can be the catalyst, working collaboratively with other Board members, to create and direct the implementation of a new strategy that will expand the Company’s business, re-energize the Company’s dedicated work force, restore the Company’s image with its customers and create shareholder value -- putting concern for the shareholders ahead of the interests of the Board and management.
VOTE TO PROTECT YOUR INVESTMENT. VOTE TO PUT SHAREHOLDERS ON
THE BOARD WHO WILL FIGHT FOR YOUR INTEREST.
VOTE FOR THE ELECTION OF WARREN B. KANDERS,
NICHOLAS SOKOLOW AND STEVEN R. GERBSMAN BY SIGNING THE
ENCLOSED GOLD PROXY AND RETURNING IT TO MACKENZIE PARTNERS IN
THE SELF-ADDRESSED, POSTAGE-PAID ENVELOPE PROVIDED.
IMPORTANT: Remember, even if you have already voted management’s white proxy card, you can change your vote by voting the enclosed GOLD proxy card. Your vote is important.
If you have any questions, please feel free to call Mackenzie Partners at 800-322-2885 or collect at 212-929-5500 or email: Proxy@Mackenziepartners.com.
We appreciate your support.
| Very truly yours, | |||||
| /s/ Warren B. Kanders | /s/ Steven R. Gerbsman | /s/ Nicholas Sokolow | |||
| Warren B. Kanders | Steven R. Gerbsman | Nicholas Sokolow | |||
If you have any questions, require assistance with voting your GOLD proxy card,
or need additional copies of the proxy materials, please contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
proxy@mackenziepartners.com
(212) 929-5500 (Call Collect)
Or
TOLL-FREE (800) 322-2885
IMPORTANT
We urge you NOT to sign any white proxy card sent to you by Federal Signal. If you have already done so, you have every legal right to change your vote by using the enclosed GOLD proxy card to vote TODAY--by telephone, by Internet, or by signing, dating and returning the GOLD proxy card in the postage-paid envelope provided.
Important Information
The Kanders Group has filed with the Securities and Exchange Commission ("SEC") a Definitive Proxy Statement, in connection with the solicitation of proxies for the 2009 Annual Meeting of Stockholders. The Kanders Group advises its stockholders to read the Definitive Proxy Statement, because it contains important information. Stockholders may obtain a free copy of the Definitive Proxy Statement and other documents filed with the SEC at the SEC's website at www.sec.gov. The Definitive Proxy Statement and these other documents may also be obtained for free from MacKenzie Partners by calling toll-free: (800) 322-2885.
| Source: | Warren B. Kanders |
Contact: |
Warren B. Kanders |