Filed by the Registrant þ | ||
Filed by a Party other than the Registrant o | ||
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Check the appropriate box: | ||
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Preliminary Proxy Statement | |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
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Definitive Proxy Statement | |
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Definitive Additional Materials | |
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Soliciting Material Pursuant to §240.14a-12 |
Important Notice Regarding the Availability of Proxy
Materials for the Annual
Meeting of Stockholders to be Held on April 27, 2010 |
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The following materials, also included with this Notice, are available to be viewed, downloaded, and printed, at no charge, by accessing the following Internet address: http://www.federalsignal.com | ||
1. Proxy Statement for the Annual Meeting of Stockholders, and | ||
2. 2009 Annual Report to Stockholders | ||
| Use the toll-free telephone number shown on the enclosed proxy card; | |
| Go to the website address shown on the enclosed proxy card and vote via the Internet; or | |
| Sign, date and promptly return the enclosed proxy card in the postage-paid envelope provided. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting. |
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1. | To elect two (2) Class II directors; | |
2. | To consider and vote on a proposal to amend our Restated Certificate of Incorporation to (i) declassify our Board of Directors and (ii) fix the number of directors at no less than six nor more than twelve, as determined solely by the Board of Directors from time to time; | |
3. | To approve the 2005 Executive Incentive Compensation Plan (2010 Restatement); | |
4. | To re-approve performance goals under the Executive Incentive Performance Plan, as amended and restated; | |
5. | To ratify Ernst & Young LLPs appointment as our independent registered public accounting firm for 2010; and | |
6. | To transact such other business that may properly come before the meeting or any adjournment(s) or postponement(s) of such meeting. |
| By Telephone or Internet: You may vote by telephone or Internet by following the instructions included on the enclosed proxy card. | |
| By Written Proxy: You may vote by written proxy by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. | |
| In Person: If you are a record stockholder, you may vote in person at the Annual Meeting. You are a record stockholder if your shares are registered in your name. If your shares are in the name of your broker or bank, your shares are held in street name and you are not a record stockholder. If your shares are held in street name and you wish to vote in person at the Annual Meeting, you will need to contact your broker or bank to obtain a legal proxy allowing attendance at the Annual Meeting. If you plan to attend the Annual Meeting in person, please bring proper identification and proof of ownership of your shares. |
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2
| voting by telephone or Internet on a later date, or delivering a later-dated proxy card prior to or at the Annual Meeting, | |
| filing a written notice of revocation with our Corporate Secretary, or | |
| attending the Annual Meeting and voting your shares in person. Attendance alone at the Annual Meeting will not revoke a proxy. |
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| each person we know to beneficially own more than five percent of our common stock, which is our only class of outstanding voting securities; | |
| each of our directors and Board-proposed director nominees; | |
| each of our executive officers named in the Summary Compensation Table; and | |
| all of our directors and executive officers as a group. |
Amount and
|
Percent of
|
|||||||
Nature of
|
Outstanding
|
|||||||
Beneficial
|
Common
|
|||||||
Name
|
Ownership(1) | Stock(2) | ||||||
Beneficial Owners of More than Five Percent of our Common Stock:
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||||||||
Heartland Advisors, Inc.
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5,746,402 | (3) | 11.5 | % | ||||
789 North Water Street
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||||||||
Milwaukee, WI 53202
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||||||||
BlackRock, Inc.
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5,048,963 | (4) | 10.1 | % | ||||
40 East 52nd Street
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||||||||
New York, NY 10022
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||||||||
Franklin Mutual Advisers, LLC
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4,742,243 | (5) | 9.5 | % | ||||
101 John F. Kennedy Parkway
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||||||||
Short Hills, NJ 07078
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||||||||
Keeley Asset Management Corp.
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2,870,000 | (6) | 5.8 | % | ||||
401 South LaSalle Street
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||||||||
Chicago, IL 60605
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||||||||
Each Director, Director Nominee and Named Executive Officer, and
all Directors and Executive Officers as a Group: (7, 8)
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James E. Goodwin
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111,228 | * | ||||||
Charles R. Campbell
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78,100 | * | ||||||
Robert M. Gerrity
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46,585 | * | ||||||
Robert S. Hamada
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53,761 | * | ||||||
Paul W. Jones
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62,315 | * | ||||||
Dennis J. Martin
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20,903 | * | ||||||
John McCartney
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45,965 | * | ||||||
Brenda L. Reichelderfer
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44,026 | * | ||||||
Joseph R. Wright
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21,266 | * | ||||||
Richard R. Mudge
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1,000 | * | ||||||
Dominic A. Romeo
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0 | * | ||||||
William H. Osborne
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129,005 | * | ||||||
William G. Barker, III
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28,753 | * | ||||||
Jennifer L. Sherman
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124,912 | * | ||||||
Mark D. Weber
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164,291 | * | ||||||
All Directors and Executive Officers as a Group
(16 persons)(9)
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1,075,461 | 2.2 | % |
(1) | Totals include shares subject to stock options exercisable within 60 days of March 8, 2010, as follows: Mr. Goodwin, 62,210; Mr. Campbell, 28,659; Mr. Gerrity, 20,659; Mr. Hamada, 20,659; Mr. Jones, 28,659; Ms. Reichelderfer, 9,226; Mr. McCartney, 13,102; Mr. Osborne, 60,846; Mr. Barker, 11,163; Ms. Sherman, 74,026; and Mr. Weber, 110,351; and all directors and executive officers as a group, 521,011. Totals also include shares of restricted stock awarded pursuant to our benefit plans which are subject to certain restrictions under the plans, as follows: Mr. Goodwin, 25,161. Totals also include shares held in our 401(k) Plan as follows: Ms. Sherman, 14,728; Mr. Weber, 6,843. Totals do not include notional shares held in our Savings Restoration Plan (formerly Rabbi Trust), as follows: Mr. Osborne, 15,069; Ms. Sherman, 2,500; Mr. Weber, 270. Excludes |
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29,000 restricted stock units granted to an executive officer which vest in full on the third anniversary of the date of grant. | ||
(2) | Based upon 49,900,103 shares of common stock issued and outstanding as of March 8, 2010 and, for each director or executive officer or the group, the number of shares subject to stock options exercisable by such director or executive officer or the group within 60 days of March 8, 2010. The use of * denotes percentages of less than 1%. | |
(3) | Based solely on a Schedule 13G, Amendment No. 3, filed on February 10, 2010 with the Securities and Exchange Commission in which the stockholder reported that as of January 31, 2010, Heartland Advisors, Inc. had shared voting power with respect to 5,451,802 shares and shared dispositive power with respect to 5,746,402 shares as a registered investment advisor. These shares may be deemed beneficially owned by both Heartland Advisors, Inc., by virtue of its investment discretion and voting authority granted by certain clients, which may be revoked at any time and William J. Nasgovitz, as result of his ownership interest in Heartland Advisors, Inc. Mr. Nasgovitz disclaims beneficial ownership of any of these shares. The Heartland Value Fund, a series of the Heartland Group, Inc., a registered investment company, is reported to own 3,189,902 shares in the February 10, 2010 filing. | |
(4) | Based solely upon a Schedule 13G, Amendment No. 1, filed on March 9, 2010 with the Securities and Exchange Commission in which BlackRock, Inc. reported that as of February 26, 2010, it had sole and dispositive voting power over all of these shares. This Amendment to Schedule 13G filing by Blackrock was made to amend the most recent Schedule 13G filing made by BlackRock and the most recent Schedule 13G filing made by Barclays Global Investors, NA and certain of its affiliates (Barclays Global Investors, NA and such affiliates are collectively referred to as the BGI Entities). On December 1, 2009, BlackRock, Inc. completed its acquisition of Barclays Global Investors from Barclays Bank PLC. As a result, BGI Entities are now included as subsidiaries of BlackRock, Inc. for purposes of Schedule 13G filings. | |
(5) | Based solely upon a Schedule 13G, Amendment No. 5, filed on January 22, 2010 with the Securities and Exchange Commission in which Franklin Mutual Advisers, LLC reported that as of December 31, 2009, it had sole voting and dispositive power over all these shares in its capacity as an investment adviser to investment companies registered under the Investment Company Act of 1940 and other managed accounts. Franklin Mutual Advisers, LLC disclaims beneficial ownership of these shares. | |
(6) | Based solely on a Schedule 13G, Amendment No. 2, filed on February 12, 2010 with the Securities and Exchange Commission in which Keeley Asset Management Corp. reported that as of December 31, 2009, it had sole voting and dispositive power over these shares as an investment company registered under the Investment Company Act of 1940 and as an institutional investment manager. The filing was made on behalf of the stockholder and Keeley Small Cap Value Fund, a series of Keeley Funds, Inc. | |
(7) | The information contained in this portion of the table is based upon information furnished to us by the named individuals above and from our records. Except with respect to the 1,000 shares beneficially owned by Richard Mudge, which he jointly owns with his spouse, each director and officer claims sole voting and investment power with respect to the shares listed beside his or her name. | |
(8) | All of our directors and officers use our Company address which is 1415 West 22nd Street, Suite 1100, Oak Brook, IL 60523. | |
(9) | Excludes Mr. McConnaughey, who left our Company on December 31, 2009. |
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| With regard to Mr. Goodwin, his extensive background in global operations as well as his broad management experience and leadership skills. | |
| With regard to Mr. Campbell, his managerial, financial, and strategic planning expertise as well as his entrepreneurial know how and his deep knowledge and understanding of our Company and its operating companies and its lines of business. | |
| With regard to Mr. Jones, his extensive management and manufacturing experience with multinational companies as well as his financial expertise. | |
| With regard to Mr. Martin, his expertise in manufacturing and business process-engineering as well as his proven business acumen. | |
| With regard to Dr. Mudge, his expertise across multiple facets of the transportation industry, and his leadership in transportation technology, transportation finance, business, government policy, research, and experience growing businesses. | |
| With regard to Mr. Osborne, his expertise in building and leading complex global organizations as well as his strong background in product development, engineering and manufacturing operations. | |
| With regard to Ms. Reichelderfer, her expertise in growing technological businesses and extensive experience in operations, innovation, and new product development as well as her significant international business experience. | |
| With regard to Mr. Romeo, his expertise in financing acquisitions for several global industrial manufacturers, as well as his extensive experience in efficiently adapting company operations to changing market conditions and government regulations. | |
| With regard to Mr. Wright, his extensive entrepreneurial, operational and financial experience, as well as his distinguished background in the public sector. |
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Year
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Year
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|||||||||||||
First
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Present
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|||||||||||||
Became
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Term
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|||||||||||||
Name
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Age | Director | Expires |
Principal Occupation or Employment for Last Five Years(1)
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||||||||||
Class I Directors:
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James E. Goodwin
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65 | 2005 | 2012 | Mr. Goodwin served as interim President and Chief Executive Officer of our Company from December 2007 through September 15, 2008. Prior to that, he was an independent business consultant from October 2001 to December 2007. From July 1999 to October 2001, Mr. Goodwin served as Chairman and Chief Executive Officer of United Airlines, a worldwide airline operator (NASDAQ: UAUA). Mr. Goodwin also serves as a member of the Board of Directors of AAR Corp., a manufacturer of products for the aviation/aerospace industry (NYSE: AIR); John Bean Technologies Corporation, a manufacturer of industrial equipment for the food processing and air transportation industries (NYSE: JBT); and First Chicago Bank & Trust, serving in such positions since April 2002, September 2008, and May 2002, respectively. | ||||||||||
William H. Osborne
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49 | 2009 | 2012 | Mr. Osborne serves as our Companys President and Chief Executive Officer, and has served as such since September 15, 2008. Since August 2009, Mr. Osborne serves as a director of Navistar International Corporation, a truck, bus and diesel engine manufacturer (NYSE: NAV). Prior to joining the Company, Mr. Osborne held a number of senior level positions with Ford Motor Company. Most recently, from February 2008 to September 2008, he served as President and Chief Executive Officer of Ford of Australia. From November 2005 to January 2008, he served as the President and Chief Executive Officer of Ford of Canada; and from December 2003 to November 2005, he served as the Executive Director, Pickup Truck and Commercial Vehicles, North American Truck Business of Ford Motor Company. |
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Year
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Year
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|||||||||||||
First
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Present
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|||||||||||||
Became
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Term
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|||||||||||||
Name
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Age | Director | Expires |
Principal Occupation or Employment for Last Five Years(1)
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||||||||||
Joseph R. Wright
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71 | 2008 | 2012 | Mr. Wright is a Senior Advisor at The Chart Group, a merchant banking firm. Mr. Wright served as Chief Executive Officer from January 1, 2009 to December 31, 2009 and serves as a director (since September 2004) of Scientific Games Corporation, a supplier of technology-based products, systems and services to the gaming industry (NASDAQ: SGMS). Since November 2009, he also serves on the Board of Directors of Cowen Group, Inc., a research, trading and investment banking company (NASDAQ:COWN). He also serves as a Vice-Chairman of the Board of Directors (since April 2000) of Terremark Worldwide Inc., a global provider of utility-enabled managed IT infrastructure solutions (NASDAQ: TMRK). Mr. Wright previously served as Chairman of the Board of Intelsat Ltd., a leading global provider of fixed satellite services, from July 2006 to May 2008 and, prior to this position, he served as Chief Executive Officer from August 2001 to July 2006 and served as a director (from 1997 to 2006) of PanAmSat, a publicly-listed satellite-based services business which was acquired by Intelsat in 2006. Mr. Wright served in the U.S. Government under President Reagan as Deputy Director then Director of the Federal Office of Management and Budget in the Executive Office of the President and a member of the Cabinet, and earlier as Deputy Secretary of Commerce. He received the Distinguished Citizens Award from President Reagan. | ||||||||||
Class II Director Nominees:
|
||||||||||||||
Richard R. Mudge
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64 | N/A | N/A | Dr. Mudge serves as the Vice President of the U.S. Infrastructure Division of Delcan Corporation, a privately-held engineering and consulting company (since 2002). Dr. Mudge has served on the Board of Directors of Delcans U.S. subsidiary since 2005. Dr. Mudge previously served as President of Compass Services, the transportation subsidiary of U.S. Wireless Corporation, from 2000 to 2002, and as Managing Director of Transportation for Hagler Bailly, a world-wide provider of management consulting services to the energy and network industries (NASDAQ: HBIX), from 1998 to 2000. In 1986, Dr. Mudge co-founded Apogee Research Inc., an infrastructure consulting firm, and served as its President until 1995 and then as its Chairman of the Board from 1995 until 1997, when Apogee merged with Hagler Bailly. Dr. Mudge also worked for the Congressional Budget Office from 1975 to 1986 where he became Chief of the Public Investment Unit, and for the Rand Corporation where he served as Director of Economic Development Studies from 1972 to 1975. |
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Year
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Year
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|||||||||||||
First
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Present
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|||||||||||||
Became
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Term
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|||||||||||||
Name
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Age | Director | Expires |
Principal Occupation or Employment for Last Five Years(1)
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Dominic A. Romeo
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50 | N/A | N/A | Mr. Romeo serves as Vice President and Chief Financial Officer of IDEX Corporation, a leading global manufacturer of pump products, dispensing equipment, and other engineered products (NYSE: IEX), a position he has held since 2004. Prior to joining IDEX, Mr. Romeo served in several financial leadership positions at Honeywell International, Inc., a diversified technology and manufacturing company that services customers globally (NYSE: HON), including Vice President and Chief Financial Officer of Honeywell Aerospace from 2001 to 2004; Vice President and Chief Financial Officer of Honeywell Internationals Engine Systems and Services divisions from 1999 to 2001; and various other senior finance positions from 1994 to 1999. Mr. Romeo also served as Vice President of Finance for AAR Trading, an aircraft products and services provider from 1992 to 1994, and performed multiple financial roles in audit and financial planning for GE Aircraft Engines, a subdivision of the General Electric Company (NYSE: GE), from 1987 to 1992. | ||||||||||
Class III Directors:
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Charles R. Campbell
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70 | 1998 | 2011 | Mr. Campbell is a retired consultant previously working for The Everest Group, a management consulting firm. He was a partner in The Everest Group from 1997 to 2004. Prior to joining The Everest Group, Mr. Campbell was Senior Vice President and Chief Financial and Administrative Officer of our Company from 1985 to 1995. | ||||||||||
Paul W. Jones
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61 | 1998 | 2011 | Mr. Jones is Chairman and Chief Executive Officer of A.O. Smith Corporation, a manufacturer of water heating systems and electric motors (NYSE: AOS), serving as such since January 2006. From January 2004 until December 2005, Mr. Jones was President and Chief Operating Officer of A.O. Smith Corporation. Mr. Jones has served on the Board of Directors of A.O. Smith Corporation since December 2004. Mr. Jones serves as a director of Bucyrus International, Inc., a manufacturer of mining and construction machinery (NASDAQ: BUCY), which directorship began in July 2006. Mr. Jones also serves as a member of the Board of Directors of the United States Chamber of Commerce (since March 2008) and the National Association of Manufacturers (since October 2007), and on the Board of Trustees of Manufacturers Alliance/MAPI (since March 2006), and as a member of the Business Roundtable (since January 2006). | ||||||||||
Brenda L. Reichelderfer
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51 | 2006 | 2011 | Ms. Reichelderfer is Senior Vice President and Managing Director of TriVista Business Group, a boutique management consulting and advisory firm, a position she has held since June 2008. Ms. Reichelderfer also serves as a member of the Technology Transfer Advisory Board of The Missile Defense Agency, a division of the United States Department of Defense, and has served as such since November 2008. Until May 2008, Ms. Reichelderfer was Senior Vice President, Group President (from December 2002) and Corporate Director of Engineering and Chief Technology Officer (from October 2005) of ITT Corporation, a global engineering and manufacturing company (NYSE: ITT). |
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Year
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Year
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First
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Present
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|||||||||||||
Became
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Term
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|||||||||||||
Name
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Age | Director | Expires |
Principal Occupation or Employment for Last Five Years(1)
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Dennis J. Martin
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59 | 2008 | 2011 | Mr. Martin has been an independent business consultant since August 2005. Mr. Martin is Vice President of BD Martin Group LLC, a consulting firm, a position he has held since August 2005. From May 2001 to August 2005, Mr. Martin was the Chairman, President and Chief Executive Officer of General Binding Corporation, a manufacturer and marketer of binding and laminating office equipment. Mr. Martin also serves as a director of HNI Corporation, a provider of office furniture and hearths (NYSE: HNI), and of Coleman Cable, Inc., a manufacturer and innovator of electrical and electronic wire and cable products (NASDAQ: CCIX), serving in such capacities since July 2000 and February 2008, respectively. Mr. Martin also served on the Board of Directors of A.O. Smith Corporation, a manufacturer of water heating systems and electric motors (NYSE: AOS), from January 2004 until December 2005. |
(1) | The data contained in this table is based upon information furnished to our Company by the individuals named above. |
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| the integrity of our financial statements; | |
| the qualifications and independence of our independent registered public accounting firm; | |
| the performance of our internal audit function and independent registered public accounting firm; and | |
| our compliance with legal and regulatory requirements, including our Company Policy for Business Conduct for all employees and Code of Ethics for the Chief Executive Officer and senior financial officers. |
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Fees Earned
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||||||||||||||||||||
or Paid
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Option Awards ($)
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Name | in Cash ($)(1) | Stock Awards ($)(2) | (3) | Total ($) | ||||||||||||||||
Charles R. Campbell
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$ | 71,714 | $ | 60,000 | $ | 0 | $ | 131,714 | ||||||||||||
Robert M. Gerrity
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$ | 69,500 | $ | 60,000 | $ | 0 | $ | 129,500 | ||||||||||||
James E. Goodwin(4)
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$ | 103,803 | $ | 75,000 | $ | 0 | $ | 178,803 | ||||||||||||
Robert S. Hamada
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$ | 75,314 | $ | 60,000 | $ | 0 | $ | 135,314 | ||||||||||||
James C. Janning(5)
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$ | 40,847 | $ | 0 | $ | 0 | $ | 40,847 | ||||||||||||
Paul W. Jones
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$ | 59,900 | $ | 60,000 | $ | 0 | $ | 119,900 | ||||||||||||
Dennis J. Martin
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$ | 64,514 | $ | 60,000 | $ | 0 | $ | 124,514 | ||||||||||||
John McCartney
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$ | 65,300 | $ | 60,000 | $ | 0 | $ | 125,300 | ||||||||||||
Brenda L. Reichelderfer
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$ | 65,800 | $ | 60,000 | $ | 0 | $ | 125,800 | ||||||||||||
Joseph R. Wright
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$ | 59,400 | $ | 60,000 | $ | 0 | $ | 119,400 | ||||||||||||
(1) | Includes the following share amounts which were awarded in lieu of cash fees: Mr. Goodwin, 15,508 shares; Mr. Hamada, 5,749 shares; Mr. Martin, 4,927 shares; Ms. Reichelderfer, 10,040 shares; and Mr. Wright, 9,084 shares. The number of shares awarded in lieu of cash fees was determined using the closing share price of our common stock on the date of grant. | |
(2) | Each non-employee director is annually issued a stock award which is determined by dividing $60,000 ($75,000 in the case of the Chairman) by the closing price of the Companys common stock on the date of grant. Amounts stated reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The following awards were granted to the non-employee directors on April 30, 2009 at a closing stock price of $7.77: 9,652 shares of common stock to Mr. Goodwin as Chairman; and 7,722 shares of common stock to each of Messrs. Campbell, Gerrity, Hamada, Jones, Martin, McCartney and Wright, and Ms. Reichelderfer. As of December 31, 2009, each non-employee director had the following aggregate number of unvested restricted shares: Mr. Janning, 0 shares; Mr. Campbell, 410 shares; Mr. Gerrity, 410 shares; Mr. Goodwin, 410 shares; Mr. Hamada, 410 shares; Mr. Jones, 410 shares; Mr. Martin, 0 shares; Mr. McCartney, 410 shares; Ms. Reichelderfer, 410 shares; and Mr. Wright, 0 shares. As of December 31, 2009 each non-employee director held the following aggregate number of shares (excluding unvested restricted stock): Mr. Janning, 35,252 shares; Mr. Goodwin, 48,608; Mr. Campbell, 49,031 shares; Mr. Gerrity, 25,516 shares; Mr. Hamada, 35,564 shares; Mr. Jones, 33,246 shares; Mr. Martin, 20,903 shares; Mr. McCartney, 32,453 shares; Ms. Reichelderfer, 34,390 shares; and Mr. Wright, 21,266 shares. | |
(3) | There were no option awards granted to any of the non-employee directors during the fiscal year ended December 31, 2009. As of December 31, 2009 each non-employee director had options for the following number of shares outstanding: Mr. Janning, 0; Mr. Goodwin, 62,210; Mr. Campbell, 28,659; Mr. Gerrity, 20,659; Mr. Hamada, 20,659; Mr. Jones, 28,659; Mr. Martin, 5,000; Mr. McCartney, 13,102; Ms. Reichelderfer, 9,226; and Mr. Wright, 5,000. | |
(4) | Mr. Goodwin was elected Chairman on April 30, 2009. The fees include $67,207, a prorated portion of the annual cash retainer, Committee membership fees of $10,034, meeting fees of $17,000, and total per diem fees |
13
of $9,562. Mr. Goodwin deferred receipt of all of his 2009 share amounts, i.e., 25,161 shares, until he ceases to be a director, at which time these shares will be distributed in full on a one-for-one basis. | ||
(5) | Mr. Janning served as Chairman until April 30, 2009, when his term as a director expired. The fees include $26,807, a prorated portion of the annual cash retainer, Committee membership fees of $4,290, meeting fees of $7,500, and total per diem fees of $2,250. |
14
Cash Compensation of Our
Non-Employee Directors(1)
|
||||||||||||||||||||
January 1, 2009 - December 31, 2009 | ||||||||||||||||||||
Board Meeting
|
Board Meeting
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|||||||||||||||||||
Annual
|
Per Diem
|
Attended in
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Attended by
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Retainer | Fee | Person | Telephone | |||||||||||||||||
Chairman of the Board
|
$ | 78,750 | $ | 2,250 | (2) | $ | 3,000 | $ | 500 | |||||||||||
Non-employee director (excluding the Chairman)
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$ | 45,000 | | $ | 1,500 | $ | 500 | |||||||||||||
Committees
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Audit
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||||||||||||||||||||
Chair
|
$ | 13,500 | | | | |||||||||||||||
Member
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$ | 8,100 | | | | |||||||||||||||
Compensation & Benefits
|
||||||||||||||||||||
Chair
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$ | 9,000 | | | | |||||||||||||||
Member
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$ | 5,400 | | | | |||||||||||||||
Nominating and Governance
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Chair
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$ | 9,000 | | | | |||||||||||||||
Member
|
$ | 5,400 | | | | |||||||||||||||
Finance
|
||||||||||||||||||||
Chair
|
$ | 9,000 | | | | |||||||||||||||
Member
|
$ | 5,400 | | | | |||||||||||||||
Executive
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$ | 1,800 | | | | |||||||||||||||
(1) | The table sets forth our Companys general policy with respect to cash compensation payable to our directors. Directors are also reimbursed for their out-of-pocket expenses relating to attendance at meetings. | |
(2) | The Chairman of the Board also receives a per diem fee for other time spent on Company business of $2,250 (up to a maximum of $150,000 per year). |
Annual Equity Awards of our Non-Employee Directors(1)
|
|||||
January 1, 2009 - December 31, 2009 | |||||
Common Stock
|
|||||
Award | |||||
Chairman of the Board
|
$ | 75,000 | |||
Non-employee director (excluding the Chairman)
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$ | 60,000 | |||
(1) | The table sets forth our Companys general policy with respect to equity awards payable to our directors. These awards are made on the date of our Annual Meeting of Stockholders. |
15
16
17
Management, including named executive officers, did not receive
a 2009 base salary increase. Our President and Chief Executive
Officer elected to reduce his base salary by 5% beginning in
2009. Additionally, our Board of Directors reduced their
compensation by 10%.
We suspended the matching component under the 401(k) Plan and
the Savings Restoration Plan.
To help keep our benefit costs constant and improve the quality
of life of our employees, we instituted a Wellness Program in
the United States locations.
The Compensation and Benefits Committee engaged Watson Wyatt
Worldwide (now Towers Watson) as its compensation consultant to
assist in the establishment of executive compensation levels for
fiscal year 2009.
The Compensation and Benefits Committee adopted a new peer group
to account for the technology businesses within our
organization, and to align our revenue scope more appropriately.
The Economic Value program was replaced with a new plan under
which bonuses are paid upon the achievement of financial
measures and individual objectives. This new plan, the
Short-Term Incentive Bonus Plan, will pay bonuses based upon the
achievement of a combination of earnings (50%), cash flow (20%)
and individual objectives (30%).
The Compensation and Benefits Committee retains complete
discretion with respect to the Short-Term Incentive Bonus Plan,
which may include reductions of award amounts to participants.
The Short-Term Incentive Bonus Plan includes a
clawback or payment recapture feature under which
our Company will require, to the extent practicable, a named
executive officer to repay a portion of his or her performance
bonus payment plus a reasonable rate of interest upon the
occurrence of an accounting restatement or a determination by
our Board that the performance results were materially
inaccurate, resulting in an overpayment in the amount of any
such performance-based bonus.
In order for any business group to be eligible for the bonus
payout on working capital under the Short-Term Incentive Bonus
Plan, the business group must show an improvement in primary
working capital from year-end 2008 to year-end 2009 as a
threshold barrier.
The mix of awards between stock options, restricted stock and
performance shares shifted slightly in 2009 such that stock
options were weighted at 40%, with restricted stock and
performance share awards each weighted at 30%.
We adopted a prospective policy under which we will not enter
into agreements with named executive officers that provide for
tax
gross-up
payments (excluding
gross-ups
pursuant to a relocation or expatriate tax equalization plan,
policy or arrangement). The policy also provides that we will
not enter into compensation arrangements with named executive
officers which provide for severance payments (excluding the
value of any accelerated vesting of any equity based awards) in
excess of 2.99 times base salary and bonus unless stockholder
approval has been received.
During 2009, we made a commitment to align our pay practices and
our stockholders interests as evidenced by:
(i) having the Compensation and Benefits Committee review
all components of our President and Chief Executive
Officers compensation, and reviewing tally sheets for all
Section 16 officers that reflect payments under various
termination scenarios; (ii) disclosing performance measures
for all performance-based compensation; (iii) granting to
all named executive officers equity compensation of which more
than 50% is a combination of performance shares (i.e., relative
total shareholder return) or conventional stock options; and
(iv) granting the Compensation and Benefits Committee the
authority to engage or terminate our compensation consultant.
Our Company reinstituted the matching contribution on the
401(k) Plan and the Savings Restoration Plan effective
January 1, 2010.
18
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Our Company has delayed its annual equity awards to eligible
employees, including the named executive officers, from February
2010 until April 2010, in order to (i) complete a
comprehensive market analysis of our executive officer
compensation practices to ensure our equity distributions are
aligned with the market; and (ii) explore alternative
long-term incentive award programs in order to comply with
stockholder advisory group burn rate guidelines. Burn
rate is calculated as (i) the total number of equity
awards granted in shares in a year divided by (ii) the
number of common shares outstanding at the end of that year.
For the individual objectives component of the Short-Term
Incentive Bonus Plan, which accounts for 30% of the total bonus
opportunity, we modified the performance goals and competency
weightings. The performance goals weighting was changed from 70%
to 60%, and the competency weighting was changed from 30% to
40%. This change was designed to encourage behaviors that
effectively support our Company. In addition, the number of
competencies was reduced from fourteen to seven for our named
executive officers.
On March 3, 2010, the Board modified the Change in Control
Policy and the form of Executive
Change-in-Control
Severance Agreement to remove Board discretion on designating
transactions as a
change-in-control,
which applies prospectively.
Based on our Companys 2009 stock performance and
consistent with our objective to generally align management
compensation with stockholder returns, the Compensation and
Benefits Committee approved, in March 2010, a 30% reduction in
2009 financial incentive bonus payouts for executive officers.
To create alignment between compensation and business
performance by rewarding executives for the achievement of
strategic and tactical goals that successfully drive growth in
stockholder value for our Company;
To attract, motivate, and retain highly experienced executives
who are vital to our short and long-term success, profitability
and growth;
To differentiate executive rewards based on actual
performance; and
To provide targeted overall compensation levels that are
comparable to competitive market practice.
Establish the philosophy and set the broad objectives of our
executive compensation program to ensure that the compensation
program complies with and promotes our goals and objectives;
Determine the various elements of the executive compensation
program, including base salary, annual cash incentives,
long-term equity incentives, retirement and health and welfare
benefits and perquisites and other personal benefits;
Establish performance goals for the President and Chief
Executive Officer and oversee the establishment of performance
goals for the other executive officers and for each business
unit;
Evaluate annually each executive officers performance in
light of the goals established and associated competencies with
respect to the officer for the most recently completed year;
Establish each executive officers annual compensation
level based upon the executive officers performance, our
financial results and relative stockholder return, the value of
compensation paid to a comparable
19
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executive officer at comparable companies, the awards given to
the executive officer in past years and our capacity to fund the
compensation;
Review an annual report prepared by the President and Chief
Executive Officer on succession planning and related development
recommendations for his direct reports; and
Review benefit programs and plans to ensure incentive pay does
not encourage unnecessary risk taking.
20
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Powell Industries, Inc.
Robbins & Myers, Inc.
Sauer-Danfoss Inc.
Spartan Motors, Inc.
Standex International Corporation
Teleflex Incorporated
Tennant Company
Thomas & Betts Corporation
Valmont Industries, Inc.
Woodward Governor Company
Zebra Technologies Corporation
Johnson Controls, Inc.
L-3 Communications Corporation
Motorola, Inc.
Oshkosh Corporation
PACCAR Inc.
Parker Hannifin Corporation
Raytheon Company
Sauer-Danfoss Inc.
Teleflex Incorporated
Tennant Company
Thomas & Betts Corporation
The Timken Company
Valmont Industries, Inc.
Woodward Governor Company
Worthington Industries, Inc.
21
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22
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23
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Retirement Plans
In January 2007, we
introduced two new plans, the Retirement Savings Plan and the
Savings Restoration Plan. Certain executives also continue to
participate in defined benefit plans that have
24
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been frozen for service effective December 31, 2006, and
will be frozen for wage increases effective December 31,
2016. Effective December 31, 2006, the profit sharing
component of the 401(k) Retirement Plan-Elgin Sweeper was
terminated.
Health and Welfare Plans
Executives
participate in the same broad-based, market-competitive health
and welfare plans (medical, prescription, dental, vision,
wellness, life and disability insurance) that are available to
eligible employees.
Vehicle Allowances
Executives receive a
monthly vehicle allowance benefit in an amount that is
consistent with the executives position and level in the
organization and prevailing market practices.
Relocation Assistance
The Compensation and
Benefits Committee has authorized reimbursement of relocation
expenses pursuant to our Executive Relocation Reimbursement
Program or as approved by the Compensation and Benefits
Committee.
25
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26
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Bonus
Individual
Opportunity as
Financial-
Performance-
Percentage of
Based
Based
Total Target
Salary
Incentive
Incentive
Incentive
Name
(%)
($)
($)
($)
90
$
389,025
$
166,725
$
555,750
60
$
136,500
$
58,500
$
195,000
60
$
137,760
$
59,040
$
196,800
55
$
107,504
$
46,073
$
153,577
60
$
128,429
$
55,041
$
183,470
Payment Based
Payment Based
Payment Based
on Company
on Business Unit
upon Individual
Total STIP
Performance(1)
Performance
Performance
Payment
Name
($)
($)
($)
($)
$
256,757
N/A
$
133,380
$
390,137
$
90,090
N/A
$
46,800
$
136,890
$
$
$
$
$
70,953
N/A
$
90,000
(3)
$
160,953
$
12,637
$
33,906
$
55,041
$
101,584
(1)
Based on our Companys 2009 stock performance and
consistent with our objective to generally align management
compensation with stockholder returns, the Compensation and
Benefits Committee approved, in March 2010, a 30% reduction in
2009 financial incentive bonus payouts for executive officers.
(2)
Mr. McConnaughey no longer serves as our Safety and
Security Systems Group President, effective December 31,
2009. Mr. McConnaughey has received certain severance
payments pursuant to an agreement entered into with our Company,
as more fully described in the section titled
Executive
Compensation in the Last Fiscal Year
under the heading
Additional Information about the Compensation Paid to
the Named Executive Officers
beginning on page 32 of
this proxy statement.
(3)
With respect to Ms. Sherman, the Compensation and Benefits
Committee exercised its discretion to increase the individual
performance component of her bonus based on her contributions to
our Company in fiscal 2009.
Mr. Osborne, Mr. Barker, Mr. McConnaughey,
Ms. Sherman and Mr. Weber received options to purchase
107,400, 29,600, 25,400, 16,100 and 27,500 shares of our
common stock, respectively, at an exercise price of
27
Table of Contents
$6.68, the closing share price on the date of grant. The options
vest in three equal annual installments on the first three
anniversaries of the date of the grant.
Mr. Osborne, Mr. Barker, Mr. McConnaughey,
Ms. Sherman and Mr. Weber received restricted stock
awards of 33,600, 9,300, 8,000, 5,100 and 8,600 shares of
our common stock, respectively. The restricted shares vest fully
on the third anniversary of the date of the grant.
Mr. Osborne, Mr. Barker, Mr. McConnaughey,
Ms. Sherman and Mr. Weber received performance-based
restricted stock units of 32,000, 8,900, 7,600, 4,800 and
8,200 shares of our common stock, respectively. Each
performance-based restricted stock unit represents a right to
receive up to two shares of our common stock based upon
achieving a three-year performance metric during the performance
period
2009-2011.
In connection with any employment agreement, severance agreement
or change in control agreement entered into with any named
executive officer subsequent to the adoption of this
compensation policy, we will not make or agree to make any tax
gross-up
payments to such named executive officer, except for such
gross-up
provided pursuant to a relocation or expatriate tax equalization
plan, policy or arrangement; and
Unless approved by a vote of our stockholders entitled to vote
in an election of directors, we will not enter into any
compensation agreement with a named executive officer that
provides for severance payments (excluding the value of any
accelerated vesting of equity based awards) in an amount
exceeding 2.99 times the sum of: (i) the named executive
officers highest annual base salary for the year of
termination (determined as an annualized amount) or either of
the immediate two preceding years; plus (ii) either the
28
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named executive officers current target bonus, or the
highest annual bonus awarded to the named executive officer in
any of the three years preceding the year in which the named
executive officers termination of employment occurs
(excluding the value of any accelerated vesting of equity based
awards).
reviewed and discussed the Compensation Disclosure and Analysis
with management; and
following such review, the Compensation and Benefits Committee
recommended to the Board of Directors (and the Board has
approved) that the Compensation Disclosure and Analysis be
included in this proxy statement.
PAUL W. JONES
BRENDA L.
REICHELDERFER
JOSEPH R.
WRIGHT
29
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Change in
Pension Value
and
Non-Equity
Non-qualified
Stock
Option
Incentive Plan
Deferred
All Other
Salary
Bonus
Awards
Awards
Compensation
Compensation
Compensation
Name and Principal Position
Year
($)(1)
($)(2)
($)(3)
($)(4)
($)(5)
Earnings($)(6)
($)(7)
Total ($)
2009
$617,500
$
$469,248
$201,912
$390,137
$
$262,452
$1,941,249
2008
$192,083
$763,000
$891,651
$366,669
$34,525
$
$382,146
$2,630,074
2007
$
$
$
$
$
$
$
$
2009
$325,000
$
$130,209
$55,648
$136,890
$
$18,571
$666,318
2008
$18,541
$
$25,004
$8,320
$2,344
$
$665
$54,874
2007
$
$
$
$
$
$
$
$
2009
$339,552
$
$111,580
$47,752
$
$
$786,398
$1,285,282
2008
$326,000
$
$181,848
$86,868
$39,360
$
$24,598
$658,674
2007
$320,000
$
$132,020
$110,298
$247,889
$
$19,481
$829,688
2009
$279,231
$
$145,792
$74,139
$160,953
$27,218
$32,376
$719,709
2008
$277,528
$25,000
$115,353
$55,062
$30,715
$9,413
$64,483
$577,554
2007
$
$
$
$
$
$
$
$
2009
$305,196
$
$120,178
$51,700
$101,584
$
$29,289
$607,947
2008
$301,457
$
$195,870
$94,050
$36,694
$
$86,073
$714,144
2007
$288,475
$
$141,680
$110,298
$337,358
$
$56,146
$933,957
(1)
2008 base salary amounts include a salary increase that became
effective in April 2008.
(2)
Includes with respect to Mr. Osborne, in 2008, a signing
bonus and a housing allowance of $500,000 and reimbursement of
$263,000 for a retention bonus Mr. Osborne repaid to his
former employer. In 2008, Ms. Sherman received a special
bonus in the amount of $25,000 as a performance award and in
connection with her April 2008 promotion to the position of
Senior Vice President, Human Resources in addition to her
existing position as our General Counsel.
(3)
The stock award values represent the aggregate grant date fair
values for the fiscal years ended December 31, 2007, 2008
and 2009 computed in accordance with FASB ASC Topic 718. These
figures include amounts related to restricted stock awards and
performance-based restricted stock units granted under our
long-term incentive plan and discussed in further detail on
page 23 in the section titled
Compensation
Discussion and Analysis
-
Elements of Executive
Compensation
under the heading
Long-Term
Equity Incentives
. The restricted stock awards are
valued at the closing prices of our Companys common stock
on the date of grant. A Monte Carlo simulation model
is used to estimate the fair value of performance-based
restricted stock units, resulting in an estimated value of $7.65
for performance-based restricted stock units granted on
February 20, 2009, $25.01 for performance-based restricted
stock units granted on September 15, 2008, and $12.78 for
performance-based restricted stock units granted on
February 22, 2008.
(4)
The option award values represent the aggregate grant date fair
values for the fiscal years ended December 31, 2007, 2008
and 2009 computed in accordance with FASB ASC Topic 718. These
amounts reflect stock option grants awarded under our long-term
incentive plan, discussed in further detail on page 23 in
the section titled
Compensation Discussion and Analysis
-
Elements of Executive Compensation
under the
heading
Long-Term Equity Incentives
. The
Black-Scholes model is used to estimate the fair value of stock
options,
30
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resulting in an estimated value of $1.88 for options granted on
February 20, 2009; $3.03 for options granted on
August 7, 2009; $3.42 for options granted on
February 22, 2008; $4.88 for options granted on
September 15, 2008; $2.14 for options granted on
December 10, 2008; and $5.93 for options granted on
February 26, 2007.
(5)
For years 2007 and 2008, reflects the cash awards to the named
individuals under the Economic Value program. For year 2009,
reflects the cash awards to the named individuals under the
STIP. For a description of these programs, see page 22 in
the section titled
Compensation Discussion and Analysis
-
Elements of Executive Compensation
under the
heading
Annual Cash Incentive Payments
.
(6)
Reflects the actuarial increase in the present value of the
named executive officers benefits under all pension plans,
including supplemental pension plans, established by our Company
determined using interest rate and mortality rate assumptions
consistent with those used in our Companys financial
statements, and includes amounts which the named executive
officer may not currently be entitled to receive because such
amounts are not vested. Earnings on deferred compensation are
not reflected in this column because the return on earnings is
calculated in the same manner and at the same rate as earnings
on externally managed investments of salaried employees
participating in the tax-qualified 401(k) savings plan, and
dividends on our common stock are paid at the same rate as
dividends paid to stockholders.
(7)
All Other Compensation includes the following aggregate
perquisites and other items that equaled or exceeded $10,000:
Savings
Contribution to
Restoration
Tax
Auto
Retirement
Plan
Other
Gross-Ups
Severance
Allowance
Relocation
Savings
Contributions
Items
Totals
Name
($)(v)
($)
($)
($)
Plans(w)
($)(w)
($)(x)
($)
$4,749
$
$13,800
$10,573
$4,900
$208,140
(y)
$20,290
$262,452
$
$
$11,400
$
$4,900
$1,647
$624
$18,571
$
$764,240
(z)
$11,400
$
$9,800
$
$958
$786,398
$
$
$11,400
$
$14,700
$5,740
$536
$32,376
$
$
$11,400
$
$14,700
$2,202
$987
$29,289
(v)
Reflects a tax
gross-up
for amounts paid to Mr. Osborne with respect to his moving
expenses.
(w)
The Company suspended the matching component under the 401(k)
Plan and the Savings Restoration Plan in 2009.
(x)
Includes with respect to Mr. Osborne, $5,000 for Mr. and
Mrs. Osborne to attend the Congressional Black Caucus
Inaugural Ball; $500 for membership in the United Airlines Red
Carpet Club; $1,000 for membership in the Economic Club of
Chicago; $9,307 for fees and related expenses with respect to
attendance at a directors educational program at the Tuck
School of Business at Dartmouth; $3,235 for financial/tax
preparation services; and life insurance premium payments of
$1,248. For Mr. McConnaughey, includes subscription costs
for The Wall Street Journal and $630 for insurance premium
payments. For Mr. Weber, includes $400 for the United
Airlines Red Carpet Club and $587 for life insurance premium
payments. With respect to the other named executive officers,
amounts represent the dollar value of life insurance premium
payments made by our Company for the benefit of such named
executive officer.
(y)
With respect to Mr. Osborne, our Company is obligated
during his employment with our Company to credit his Savings
Restoration Plan account in the additional amount of $200,000
per year through 2017. In 2009, Mr. Osborne also received a
Company-paid retirement contribution in 2009 in the amount of
$8,140 as based on his years of service, age and employee status.
(z)
Includes the following severance components: cash severance,
$721,600; continuation of health and welfare benefits, $24,195;
life insurance and death benefit payments, $945; and
outplacement services, $17,500.
(8)
The Stock Awards and Option Awards
columns include with respect to Ms. Sherman, in 2009, a
special equity bonus awarded under our Companys 2005
Executive Incentive Compensation Plan in connection with her
outstanding performance, competitive factors and in recognition
of her efforts on behalf of our Company in connection with
specified events. This award, when granted, was valued at
approximately $150,000, consisting of: (i) a stock option
valued at approximately $75,000 using the Black-Scholes
valuation model to purchase 14,479 shares of our
Companys common stock at an exercise price of $8.53 per
share, the closing price of our Companys common stock on
August 7, 2009, the award date; and
(ii) 8,793 shares of restricted common stock of our
Company valued at approximately $75,000 based on the closing
price of our Companys common stock on the date of award.
The restricted stock shares will fully vest on the third
anniversary of the date of the award.
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All Other
All Other
Stock
Option
Awards:
Awards:
Exercise
Grant Date
Estimated Future Payouts Under
Number
Number of
or Base
Fair Value
Non-Equity Incentive Plan Awards
Estimated Future Payouts Under Equity
of Shares
Securities
Price of
of Stock
(1)
Incentive Plan Awards(2)
of Stock
Underlying
Option
and Option
Grant
or Units
Options
Awards
Awards
Name
Date
Threshold ($)
Target ($)
Maximum ($)
Threshold (#)
Target (#)
Maximum (#)
(#)
(#)
($/Sh)
(3)
$277,875
$555,750
$1,111,500
02/20/09
8,000
32,000
64,000
$224,800
02/20/09
33,600
$224,448
02/20/09
107,400
$6.68
$201,912
$97,500
$195,000
$390,000
02/20/09
2,225
8,900
17,800
$68,085
02/20/09
9,300
$62,124
02/20/09
29,600
$6.68
$55,648
$98,400
$196,800
$393,600
02/20/09
1,900
7,600
15,200
$58,140
02/20/09
8,000
$53,440
02/20/09
25,400
$6.68
$47,752
$76,789
$153,577
$307,154
02/20/09
1,200
4,800
9,600
$36,720
02/20/09
5,100
$34,068
02/20/09
16,100
$6.68
$30,268
08/07/09
8,793
$75,004
08/07/09
14,479
$8.53
$43,871
$91,735
$183,470
$366,941
02/20/09
2,050
8,200
16,400
$62,730
02/20/09
8,600
$57,448
02/20/09
27,500
$6.68
$51,700
(1)
See the section titled
Compensation Discussion and
Analysis Elements of Executive Compensation
under the heading
Annual Cash Incentive
Payments
in this proxy statement beginning on
page 22.
(2)
These columns include information regarding only
performance-based restricted stock unit grants. The
Threshold column represents the minimum amount
payable when threshold performance is met. If performance is
below the threshold performance, no amount is paid. The
Target column represents the amount payable if the
specified total stockholder return (TSR) performance
target relative to the comparator group is reached. The
Maximum column represents the full payout potential
under the plan if our three-year TSR is highest among all of the
companies in the comparator group. Shares are awarded, if any,
as a percentage of the pre-determined target shares for that
executive officer ranging from 0% to 200% determined by
percentile rank. For a more detailed discussion of the
performance-based restricted stock unit grants, see the section
titled
Compensation Discussion and Analysis
-
Elements of Executive Compensation
under the
heading titled
Long-Term Equity Incentives
beginning on page 23 of this proxy statement.
(3)
The grant date fair values are calculated based upon the
provision of FASB ASC Topic 718. Shares in the form of
restricted stock are valued at the closing price of our
Companys common stock on the date of the grant. The
Black-Scholes model is used to estimate the fair value of stock
options, resulting in an estimated value of $1.88 for options
granted on February 20, 2009 and $3.03 for options granted
on August 7, 2009. A Monte Carlo simulation
model is used to estimate the fair value of performance-based
restricted stock units, resulting in an estimated value of $7.65
for performance-based restricted stock units granted on
February 20, 2009.
32
Table of Contents
Option Awards
Stock Awards
Equity
Equity
Incentive
Incentive
Plan
Plan
Awards:
Awards:
Market or
Equity
Number of
Payout
Incentive
Market
Unearned
Value of
Number of
Plan Awards:
Value of
Shares,
Unearned
Number of
Securities
Number of
Number of
Shares or
Units, or
Shares,
Securities
Underlying
Securities
Shares or
Units of
Other
Units, or
Underlying
Unexercised
Underlying
Units of
Stock that
Rights that
Other
Unexercised
Options (#)
Unexercised
Option
Option
Stock that
Have Not
Have Not
Rights that
Options (#)
Unexercisable
Unearned
Exercise
Expiration
Have Not
Vested
Vested
Have Not
Name
Grant Date
Exercisable
(1)
Options(#)
Price($)(2)
Date
Vested (#)(3)
($)(4)
(#)(5)
Vested ($)
09/15/08
25,046
50,091
$14.93
09/15/2018
24,559
$147,845
20,991
$126,366
02/20/09
107,400
$6.68
02/20/2019
33,600
$202,272
32,000
$192,640
12/10/08
1,296
2,592
$7.60
12/10/2018
3,290
$19,806
02/20/09
29,600
$6.68
02/20/2019
9,300
$55,986
8,900
$53,578
03/06/06
15,000
$17.55
03/06/2016
02/26/07
12,400
6,200
$16.10
02/26/2017
02/22/08
8,467
16,933
$10.59
02/22/2018
02/01/01
1,000
$21.95
02/01/2011
02/06/02
1,000
$23.21
02/06/2012
02/06/03
5,000
$15.65
02/06/2013
02/12/04
5,000
$18.89
02/12/2014
03/10/04
5,000
$18.93
03/10/2014
02/10/05
15,700
$16.01
02/10/2015
02/08/06
13,525
$16.94
02/08/2016
02/26/07
7,800
3,900
$16.10
02/26/2017
5,500
$33,110
02/22/08
5,367
10,733
$10.59
02/22/2018
5,100
$30,702
4,800
$28,896
02/20/09
16,100
$6.68
02/20/2019
5,100
$30,702
4,800
$28,896
08/07/09
14,479
$8.53
08/07/2019
8,793
$52,934
02/01/01
1,000
$21.95
02/01/2011
02/06/02
1,000
$23.21
02/06/2012
04/17/03
10,000
$16.02
04/17/2013
02/12/04
10,000
$18.89
02/12/2014
02/10/05
22,700
$16.01
02/10/2015
02/08/06
19,500
$16.94
02/08/2016
02/26/07
12,400
6,200
$16.10
02/26/2017
8,800
$52,976
02/22/08
9,167
18,333
$10.59
02/22/2018
8,600
$51,772
8,200
$49,364
02/20/09
27,500
$6.68
02/20/2019
8,600
$51.772
8,200
$49,364
(1)
Stock options granted from 2005 to 2009 are subject to graded
vesting over a three-year period from the date of grant.
(2)
Prior to 2007, the exercise price for each option grant was the
lowest sale price of our common stock on the date of grant as
opposed to our current methodology of using the closing price
for our common stock, as reported by the New York Stock
Exchange, on the date of the grant of the option.
33
Table of Contents
(3)
Restricted stock awards granted from 2005 through 2009 provide
for vesting in full on the third anniversary of the grant date.
(4)
Based on the closing price of $6.02 per share of our common
stock on December 31, 2009.
(5)
The shares in this column will vest if we achieve the threshold
target relative to total stockholder return (TSR).
The target is based on our TSR compared to the TSR of the
comparator group over the three-year performance period. The
final relative TSR goal will not be determined until the end of
the three-year performance period, and the payout of this award
could range from 0% to 200% of the performance-based restricted
stock unit amount originally granted. The performance-based
restricted stock units vest in full at the conclusion of the
three-year performance period in 2010 for those awards granted
in 2008, and in 2011 for those awards granted in 2009. For a
more detailed discussion of the performance-based restricted
stock unit grants, see the section titled
Compensation
Discussion and Analysis Elements of Executive
Compensation
under the heading
Long-Term
Equity Incentives
beginning on page 23 of this
proxy statement.
(6)
Mr. McConnaughey has until March 31, 2010 to exercise
previously vested stock options. Unvested stock options totaling
48,533, restricted stock awards totaling 24,200, and 15,200
performance-based restricted stock units were forfeited.
Option Awards(1)
Stock Awards(2)
Number of Shares
Number of Shares
Acquired on
Value Realized on
Acquired on
Value Realized on
Name
Exercise (#)
Exercise ($)
Vesting (#)
Vesting ($)
18,900
$75,411
8,100
$63,504
5,600
$43,904
(1)
None of the named executive officers exercised any stock options
during the year ended December 31, 2009.
(2)
Reflects the lapse of time-based restrictions pursuant to the
terms of grant under our long-term incentive plan for the 2006
grant cycles. No amounts were deferred by the named executive
officers.
Present Value of
Number of Years
Accumulated
Payments During
Plan Name
Credited Service
Benefit
Last Fiscal Year
Name
(1)
(#)
($)
($)
FSC Retirement Plan
11.00
$
131,069
(1)
This retirement plan, which has been frozen, provides retirement
benefits for many salaried and hourly employees, including
executive officers. Contributions were made on an actuarial
group basis, and no specific contribution was set aside for any
individual participant. The approximate annual pension benefit
set forth in the table is based on years of service and
compensation, and reflects dollar limitations under the Internal
Revenue Code, as amended, which limits the annual benefits which
may be paid from a tax-qualified retirement plan. Participants
under this plan are eligible to receive a supplemental
transitional contribution to our new Retirement Savings Plan and
Savings Restoration Plan equal to 1% to 2% of their eligible
compensation.
34
Table of Contents
Executive
Registrant
Aggregate
Aggregate
Aggregate
Contribution in
Contributions in
Earnings/Loss in
Withdrawals/
Balance at Last
Name(1)
Last FY ($)(1)
Last FY ($)(2)
Last FY ($)(3)
Distributions ($)
FYE ($)(4)
$48,703
$208,140
$(14,322
)
$
$352,605
$0
$0
$0
$
$0
$4,941
$1,647
$(44
)
$
$6,544
$0
$0
$0
$
$0
$0
$0
$0
$
$0
$0
$0
$0
$
$0
$16,337
$5,740
$5,001
$
$72,931
$0
$0
$0
$
$0
$2,202
$2,202
$30,758
$
$135,114
$0
$0
$(515
)
$
$1,613
(1)
For each of the named executive officers, amounts are included
in the Salary column of the Summary Compensation
Table on page 30.
(2)
Amounts are included in the All Other Compensation
column of the Summary Compensation Table on page 30.
(3)
Aggregate earnings under the plan are not above-market and are
not included in the Summary Compensation Table.
(4)
Includes the following amounts that were deferred during fiscal
years 2008 and 2007, respectively, under the Savings Restoration
Plan: Mr. Weber, $88,610, $40,266; Ms. Sherman,
$35,777, $27,852; and for fiscal year 2008 for Mr. Osborne,
$200,000.
35
Table of Contents
36
Table of Contents
Execution of a general release;
Non-disclosure of confidential information to a third party;
Non-competition with our Company for a twelve month
period; and
Non-solicitation of employees for a twelve month period.
37
Table of Contents
A cash payment equal to the sum of the named executive
officers base salary and current target annual bonus;
Payment of a portion of the targeted annual bonus based on the
number of days worked in the current year;
Continuation of health and welfare benefits for up to eighteen
months following termination at the same premium cost and at the
same coverage level to the executive as in effect as of the
executives date of termination (with the value of medical
coverage treated as taxable income to the executive to the
extent necessary to comply with Section 409A of the
Internal Revenue Code);
Right to exercise vested options within three months from date
of termination (unvested options, performance-based restricted
stock units, restricted stock awards and restricted stock units
are forfeited); and
Earned amounts under our Retirement Savings Plan and Savings
Restoration Plan.
Accrued and unpaid base salary through the date of retirement;
Right to exercise vested options within three years from date of
termination (unvested options, restricted stock and restricted
stock unit awards are forfeited);
Immediate vesting of all performance-based restricted stock
units with performance shares distributed at the end of the
performance period based on actual performance and prorated
through the date of termination of employment; and
Earned amounts under our Retirement Savings Plan and Savings
Restoration Plan.
Accrued and unpaid base salary through the date of termination;
Immediate vesting of all outstanding and unvested stock options.
Named executive officers or their designated beneficiaries shall
have the right to exercise such options for one year from the
date of disability or death;
Immediate vesting or lapse of restrictions on all restricted
stock and restricted stock units, as applicable;
Immediate vesting of all performance-based restricted stock
units with performance shares distributed at the end of the
performance period based on actual performance and prorated
through the date of termination of employment; and
Earned amounts under our Retirement Savings Plan and Savings
Restoration Plan.
38
Table of Contents
Payment of any accrued and unpaid salary and prorated annual
cash incentive bonus target;
A lump-sum cash payment equal to two times the sum of the
executives base salary and current annual target bonus
opportunity established under the annual bonus plan in which the
executive participates;
A lump-sum cash payment equal to one times the sum of annual
base salary and annual cash incentive bonus target as
consideration for the eighteen month non-compete covenant;
Immediate vesting and lapse of restrictions on all equity-based
long-term incentives;
Immediate vesting and cash-out of all outstanding cash-based
long-term incentive awards;
Continuation of medical insurance coverage for up to thirty-six
months following termination at the same premium cost and at the
same coverage level to the executive as in effect immediately
prior to the termination of the executives employment
(with the value of medical coverage treated as taxable income to
the executive to the extent necessary to comply with
Section 409A of the Internal Revenue Code) and continuation
of other health and welfare benefits for up to eighteen months
at the same premium cost and at the same coverage level under
the Companys Executive General Severance Plan to the
extent not duplicative; and
If the value of the cash payments and the continuation or
acceleration of benefits upon termination under the severance
agreements would subject the executive officer to the payment of
a federal excise tax as excess parachute payments,
the executive would be entitled to receive an additional
gross-up
payment to cover the full cost of any excise tax and all of the
executives additional federal, state and local income,
excise and employment taxes that arise on the additional payment.
acquisition by any one person or group of beneficial ownership
of forty percent (40%) or more of the combined voting power of
our Companys then outstanding securities;
replacement of the majority of the directors during any period
of twenty-four consecutive months;
consummation of a merger or consolidation of our Company with
another corporation, other than (1) a merger or
consolidation in which the combined voting securities of our
Company immediately prior to such merger or consolidation
continue to represent more than sixty percent (60%) of the
combined voting power of the voting securities of our Company or
the surviving entity outstanding immediately after such merger
or consolidation; or (2) a merger or consolidation effected
to implement a recapitalization of our Company or similar
transaction in which no person or group acquires more than forty
percent (40%) of the combined voting power of our Companys
then outstanding securities;
approval by our stockholders of a plan or an agreement for the
sale or disposition of all or substantially all of our
Companys assets; or
any other transaction that our Board of Directors designates as
being a Change in Control.
39
Table of Contents
Date of termination was December 31, 2009.
A value of $6.02 per share was used as the value of our common
stock consistent with the closing price of our common stock on
December 31, 2009.
Executives are assumed to be subject to a 35% federal tax rate,
a 3% state tax rate and a 1.45% FICA tax rate.
With respect to performance-based restricted stock units, where
the number of shares paid out is contingent on certain
performance metrics and continued employment, such units have
been valued based on a prorated portion of the target number of
shares awarded in 2008 and 2009.
President & Chief Executive Officer
William H. Osborne
Involuntary
Change in
Termination
Control and
without Cause or
Termination
Voluntary
Without
Termination
Change in Control
Cause or
with Good Reason
Only
with Good Reason
Type of Payment
($)
Death($)
Disability($)
Retirement($)
($)
($)
$1,235,000
$
$
$
$
$3,519,750
$555,750
$
$
$
$
$555,750
$
$
$
$
$
$
$
$350,117
$350,117
$
$350,117
$350,117
$
$109,711
$109,711
$109,711
$109,711
$109,711
$
$
$
$
$
$
$24,860
$
$
$
$
$49,719
$854
$
$
$
$
$1,709
$
$
$
$
$
$1,481,153
$50,000
$
$
$
$
$50,000
$1,866,464
$459,828
$459,828
$109,711
$459,828
$6,117,909
40
Table of Contents
Senior Vice President & Chief Financial
Officer William G. Barker, III
Involuntary
Change in
Termination
Control and
without Cause or
Termination
Voluntary
without
Termination
Cause or
with
Change in Control
with Good
Good Reason
Only
Reason
Type of Payment
($)
Death ($)
Disability ($)
Retirement ($)
($)
($)
$520,000
$
$
$
$
$1,560,000
$195,000
$
$
$
$
$195,000
$
$
$
$
$
$
$
$75,792
$75,792
$
$75,792
$75,792
$
$15,364
$15,364
$15,364
$15,364
$15,364
$936
$
$
$
$
$936
$23,250
$
$
$
$
$46,499
$936
$
$
$
$
$936
$
$
$
$
$
$725,693
$
$
$
$
$
$
$740,122
$91,156
$91,156
$15,364
$91,156
$2,620,220
Former President, Safety and Securities Systems
Group David R. McConnaughey
Severance
Type of Payment
($)
$721,600
$24,195
Payout
$945
$17,500
$764,240
41
Table of Contents
Senior Vice President, Human Resources and General
Counsel Jennifer L. Sherman
Involuntary
Change in
Termination
Control and
without Cause or
Termination
Voluntary
without
Termination
Cause or
with Good
Change in Control
with Good
Reason
Only
Reason
Type of Payment
($)
Death($)
Disability($)
Retirement ($)
($)
($)
$432,808
$
$
$
$
$1,298,424
$153,577
$
$
$
$
$153,577
$
$
$
$
$
$
$
$147,448
$147,448
$
$147,448
$147,448
$
$26,162
$26,162
$26,162
$26,162
$26,162
$804
$
$
$
$
$804
$24,860
$
$
$
$
$49,719
$804
$
$
$
$
$804
$
$
$
$
$
$578,979
$
$
$
$
$
$
$612,853
$173,610
$173,610
$26,162
$173,610
$2,255,917
President, Environmental Solutions Group Mark D.
Weber
Involuntary
Change in
Termination
Control and
without Cause or
Termination
Voluntary
Without
Termination
Cause or
with Good
Change in Control
with Good
Reason
Only
Reason
Type of Payment
($)
Death($)
Disability($)
Retirement ($)
($)
($)
$489,254
$
$
$
$
$1,467,763
$183,470
$
$
$
$
$183,470
$
$
$
$
$
$
$
$156,520
$156,520
$
$156,520
$156,520
$
$44,693
$44,693
$44,693
$44,693
$44,693
$881
$
$
$
$
$881
$24,860
$
$
$
$
$49,719
$881
$
$
$
$
$881
$
$
$
$
$
$631,605
$
$
$
$
$
$
$699,346
$201,213
$201,213
$44,693
$201,213
$2,535,532
42
Table of Contents
ROBERT M.
GERRITY
ROBERT S.
HAMADA
DENNIS J.
MARTIN
43
Table of Contents
2009
2008
$
1,686
$
1,725
$
172
$
62
$
$
7
$
1,858
$
1,794
(1)
Audit Fees
These are fees for professional
services performed by Ernst & Young LLP for:
(a) the audit of our annual financial statements and review
of financial statements included in our
Form 10-Q
filings, and services that are normally provided in connection
with statutory and regulatory filings or engagements; and
(b) the audit of our system of internal controls over
financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002.
(2)
Audit-Related Fees
These are fees for the
assurance and related services performed by Ernst &
Young LLP that are reasonably related to the performance of the
audit or review of our financial statements.
(3)
Tax Fees
These are fees for professional
services performed by Ernst & Young LLP with respect
to tax compliance, tax advice and tax planning. Fees incurred
principally relate to review of tax returns, preparation of tax
returns or supporting documentation and consultation with regard
to various tax planning issues.
(4)
All Other Fees
These are fees for
miscellaneous other services performed by Ernst &
Young LLP that do not meet the above categories.
NUMBER OF DIRECTORS AT NO LESS THAN SIX NOR MORE THAN
TWELVE
44
Table of Contents
COMPENSATION PLAN (2010 RESTATEMENT)
45
Table of Contents
46
Table of Contents
47
Table of Contents
48
Table of Contents
UNDER THE FEDERAL SIGNAL CORPORATION EXECUTIVE
Net earnings or net income (before or after taxes);
Earnings per share;
Net sales or revenue growth;
Net operating profit;
49
Table of Contents
Return measures (including, but not limited to, return on
assets, capital, invested capital, equity, sales, or revenue);
Cash flow (including, but not limited to, operating cash flow,
free cash flow, cash flow return on equity, and cash flow return
on investment);
Earnings before or after taxes, interest, depreciation,
and/or
amortization;
Gross or operating margins;
Productivity ratios;
Share price (including, but not limited to, growth measures and
total shareholder return);
Expense targets;
Margins;
Operating efficiency;
Market share;
Customer satisfaction;
Working capital targets; and
Economic value added or EVA (net operating profit after tax
minus the sum of capital multiplied by the cost of capital).
50
Table of Contents
Number of
Securities to be
Issued upon
Weighted-Average
Number of Securities
Exercise of
Exercise Price of
Remaining Available for
Outstanding
Outstanding
Future Issuance under
Options, Warrants
Options, Warrants
Equity Compensation
and Rights (#)
and Rights ($)
Plans (#)
641,691
$
17.76
0
2,097,444
$
8.21
1,401,984
2,739,135
$
10.45
1,401,984
(1)
Our Company has no equity compensation plans which have not been
approved by stockholders.
(2)
No additional awards were available for grant under this plan
after April 17, 2006.
51
Table of Contents
52
Table of Contents
DECLASSIFY THE BOARD
A-1
Table of Contents
(2010 RESTATEMENT)
B-1
Table of Contents
B-2
Table of Contents
B-3
Table of Contents
B-4
Table of Contents
B-5
Table of Contents
AS AMENDED AND RESTATED
C-1
Table of Contents
C-2
Table of Contents
C-3
Table of Contents
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to create an electronic voting
instruction form.
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
123,456,789,012.12345
KEEP THIS PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION
ONLY
For
All
Withhold
All
For All
Except
The Board of Directors recommends that you
vote FOR the following:
o
o
o
1.
Election of Directors
Nominees
01
Richard R. Mudge
02 Dominic A. Romeo
For
Against
Abstain
2.
o
o
o
3.
o
o
o
4.
o
o
o
5.
o
o
o
For address change/comments, mark here.
(see reverse for instructions)
Yes
No
o
Investor Address Line 2
Investor Address Line 3
Investor Address Line 4
Investor Address Line 5
John Sample
1234 ANYWHERE STREET
ANY CITY, ON A1A 1A1
Please indicate if you plan to attend this meeting
o
o
JOB #
SHARES
CUSIP #
SEQUENCE #
Signature [PLEASE SIGN WITHIN BOX]
Date
Signature (Joint Owners)
Date
Table of Contents
FEDERAL SIGNAL CORPORATION
YOUR VOTE IS VERY IMPORTANT - PLEASE VOTE TODAY.