FEDERAL SIGNAL CORP /DE/ — Proxy Solicitation & Information Statement 2009

Apr 6, 2009

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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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FEDERAL SIGNAL CORPORATION

Investor Presentation

By

Kanders Group

April 2009

Contents

Overview of Kanders Group 3

Federal Signal – Situation Analysis 7

Federal Signal Governance Profile 20

Our Approach 24

Summary 31

2

Overview of the Kanders Group

3

Overview of Kanders Group

Our approach is to invest in undervalued public companies with significant upside potential in industries with which we are familiar.
Track Record of Creating Shareholder Value

We are long-term investors who bring a disciplined approach to building public companies through organic growth and strategic acquisitions, utilizing the public capital markets to augment funds generated internally.

Direct Industry Experience

Investing Personal CapitalUnlike many investors, we invest significant amounts of our own personal capital, aligning our personal interests directly with those of other shareholders far in excess of any board compensation we may receive.

We approach investments as owners and not renters of stocks, and we are committed to building businesses in partnership with other shareholders over long periods of time, compared to others who are short-term profit oriented.

Our nominees have direct operating experience in the law enforcement and security and information technology industry, extensive M&A and acquisition integration expertise, experience with complex legal issues, and exemplary corporate governance records.

4

Armor Holdings (formerly NYSE:AH)

Building a Multi-Billion Dollar Diversified Defense Company

Business Description: Leading manufacturer and supplier of military vehicles and safety and survivability products to the global law enforcement and aerospace and defense markets, competing directly with Federal Signal in the signaling equipment markets

Investment Thesis: Positive global macros in security products space; public vehicle ideal for consolidating fragmented municipal markets

Strategic Actions Taken: Led company as Founder, Chairman and CEO building company from $12M in revenue to over $3.5B, spearheaded capital raising in excess of $1.4B, executed in excess of 30 acquisitions, created top 1% performer amongst all NYSE listed stocks during 11-year investment period

Corporate Governance: Exemplary corporate governance practices| Revenue | | Net Income | | Equity Value | | Armor | S&P | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| $4,000$4,000 | | $250$250 | $235$235 | $4,500$4,500 | | SinceHoldings | 500 | |
| $3,500$3,500 | $3,500$3,500 | | | $4,000$4,000 | $4,000$4,000 | 19962000 | 3420%590% | 119%(7%) |
| | | $200$200 | | | | 2004 | 236% | 23% |
| $3,000$3,000 | | | | $3,500$3,500 | | | | |

$2,500$2,500			$153$153	$3,000$3,000
		$150$150		$2,500$2,500
$2,000$2,000				$2,000$2,000
$1,500$1,500		$100$100			$1,416$1,416
	$980$980			$1,500$1,500
$1,000$1,000		$50$50		$1,000$1,000

$500$500$140$140		$17$17		$500$500$306$306
$0$0$31$31		$0$0$1$1		$0$0$14$14
1996199620002000	2004200420072007	1996199620002000	2004200420072007	1996199620002000	2004200420072007

5 Note: All financial data for 2007 reflects guidance given by Armor Holdings for fiscal 2007.

Comparable Stock Price Performance

Oct 2007 – Armor sold to BAE Systems for $4.5 billion or $88 per share

Value of $100 invested in each company at 1/2/2003 to present, including reinvestment of dividends Comparable companies include diversified industrials covered by Goldman Sachs Source: Prices from Yahoo! Finance6

Federal Signal – Situation Analysis

7

Chronology of Events Leading to the Solicitation

We originally invested in Federal Signal in November 2007 because it met our investment criteria:

Undervalued relative to its peers

Operating in an industry with which we are familiar as FSS competed with Armor Holdings

Significant upside potential to the stock provided that the Company was governed and managed properly

Since that time, we have witnessed the following:

Financial performance that reflects poor capital allocation decisions

Continuation of a revolving door in the executive ranks

Continuing to miss financial guidance resulting in a lack of investor confidence

Surfacing of governance conflicts that we believe are inconsistent with the transparency required of public companies

We believe, based on our experience in its industry, our success in prior investments, our experience with a strategy of growth through acquisition and integration, and our track record of institutional corporate governance practices, that we are very qualified to assist Federal Signal in achieving its potential.

88

Capital Allocation Compared with Cash Flows and Market Capitalization – Where Did the Cash Go?

Feb 2006 - FSS announces new growth strategy in continuation of “shrink to grow” $229 million spent on CapEx and Acquisitions between 2006-20082007 to present – 2/3 of senior management exits the Company

62% Decline in Market Capitalization

Poor capital allocation decisions have contributed to erosions in shareholder value and have not yielded returns on invested capital

2007 - FSS acquires three companies, touts “robust integration process” in 9/2/07 investor presentation

Source: CapitalIQ.
Company filings.99

Comparable Company Return on Equity

Company’s strategic plan indicated that acquisitions and business portfolio changes would improve profitability metrics

Comparable companies include diversified industrials covered by Goldman Sachs

Source: CapitalIQ.
1010

Comparable Company Return on Assets

However, investments in capital expenditures and acquisitions have not yielded improvements .

Comparable companies include diversified industrials covered by Goldman Sachs
Source: CapitalIQ.
1111

Comparable Company Return on Capital

And Federal Signal significantly lags its peers when measured by the ability to employ capital to produce financial results.

Comparable companies include diversified industrials covered by Goldman Sachs
Source: CapitalIQ.
1212

Federal Signal Stock Price Indexed Against its Peers

Federal Signal has produced a negative total return (including reinvestment of dividends) of -61%, while its peer group has declined an average of -29%.

While we acknowledge difficulties in the current market environment, we believe Federal Signal’s stock price is primarily the result of the Board and management’s actions.

Source: Stock prices including adjustments for dividend reinvestments from Yahoo! Finance.

1313

Federal Signal Balance Sheet Optionality Relative to Its Peers

Federal Signal’s balance sheet position relative to its earnings power leaves it with less flexibility to respond opportunistically to growth initiatives.

Balance sheet optionality defined as (2009 FCF less Dividend + Debt Capacity) / Current Market Cap Source: Goldman Sachs research report dated March 24, 2009.
1414

Management Turnover at Federal Signal

PositionTime of departure Key to this underperformance has been the exceedingly high management turnover at Federal Signal, which hinders strategic execution, damages morale and confuses customers.1. James Janning – Chairman of the BoardApril 2009 2. David McConnaughey – President, Safety Products GroupFebruary 2009 3. Stephanie Kushner – CFODecember 2008 4. John Gruber – VP of Corporate DevelopmentOctober 2008 5. James Goodwin – Interim CEOSeptember 2008 6. Paul Brown – VP and ControllerAugust 2008 7. Robert Welding – CEODecember 2007 8. Marc Gustafson – President, Fire Rescue GroupJuly 2007 9. Karen Latham – TreasurerAugust 2006 10. Paul Box – Chief Procurement OfficerMay 2007 11. Stephen Buck – President, Safety Products GroupMay 2006 12. Duane Doerle – VP Corp DevelopmentOctober 2005 13. Alan Ringler – President of Tool GroupOctober 2005 14. Alex Craig – Chief Information OfficerMay 2005 15. Matthew Saviello – Chief Procurement OfficerMay 2005 16. Richard Ritz – VP and ControllerMarch 2005 17. Harold Pinto – Head of Fire RescueJuly 2004 18. Kim Wehrenberg – General CounselMarch 2004 19. Joseph Ross - CEODecember 2003 1515

A Page from September 2007 Federal Signal Investor Presentation

The Company has been pursuing a strategy of “shrink to grow” since 2004.

Results:
Unfulfilled promises Lack of integration - No Board oversight

1616

Statements by Company Executives Over Time

What they said?The reality A long series of broken commitments to shareholders and Wall Street analysts has contributed to a serious credibility problem for Federal Signal, which we believe only Board level changes can address.
“We were able to extract $38 million of working capital from E-One prior to its sale”If true, this should have been disclosed when they sold the business. Not discernible on financial statements.

Jim Goodwin, October 2008

“$20 million expense reduction target in 2008”SGE&A expenses increased by $20 million

Earnings Call, Mar 2008 and May 2008

“Certain initiatives at Bronco will reduce our working capital”Working capital increased from $91 million to $159 million between Dec 07 and Dec 08

Jim Goodwin, Mar 2008

“Peter Guile has brought new optimism to E-One and customers are responding well”Company sold for 10% of revenues or 30% of expected price 9 months later

Robert Welding, October 2007

“Robust integration planning”History of acquisitions without integrations.
- Robert Welding, September 2007

1717

Analyst Reports Mirror Federal Signal’s Legacy of Unfulfilled Promises

Inconsistent performance, unrealistic expectations, and an inability to deliver even short-term results is reflected in analyst coverage.

ReportTakeaway June 13, 2007 Goldman Sachs“Federal Signal has been an underperformer for about a decade”

July 27, 2007 Goldman Sachs“2Q EPS below expectations, maintain sell”

October 25, 2007 Goldman Sachs“FSS misses earnings”

May 4, 2008 Goldman Sachs“Weak Q1 operating results”

October 30, 2008 Goldman Sachs“We maintain our sell rating following weak 3Q EPS accompanied by limited detail about potential cost cutting”

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CEO Bill Osborne was recently interviewed by Bloomberg news

Mr. Osborne’s statements confirm that the Board of Directors has failed to effectively oversee execution of the Company’s core strategy, has allowed acquisitions to occur with no integration planning, and has failed to hold management’s feet to the fire.The Company “needs a big internal merger ” to improve operating margins

“Given our history of acquisitions without integrations , we have some very good internal projects we can do.”

“It is no longer about boots and suits .”

In other words, the Company is now again advocating a strategy of “shrink to grow”

Source: Bloomberg News article dated March 12, 2009 by Melita Garza.

1919

Federal Signal Governance Profile

20

Federal Signal Board Deficiencies

IssueThe Facts A significant and troubling number of governance improprieties have arisen which we believe are inconsistent with the duties of the Board of Directors of a public company.
No TransparencyFormer CEO Joseph Ross was removed without severance following an allegation by a former General Counsel of insider trading by his family members. The Board did not disclose the existence of an investigation until five years later.

No TransparencyCompany disclosed nothing about the reasons behind Robert Welding’s sudden “retirement” while agreeing to treat his retirement as termination “without cause” for purposes of severance.

No TransparencyE-One was sold to a private equity firm founded by colleagues of Board Member Paul Jones and E-One management. The Company also did not obtain a fairness opinion or make the terms of the sale public.

Pay for FailureContinually rewarding managers with bonuses for declining financial performance.

2121

Federal Signal Board Deficiencies (continued)

IssueThe Facts A significant and troubling number of governance improprieties have arisen which we believe are inconsistent with the duties of the Board of Directors of a public company.
Classified Board of DirectorsClassified boards are unfriendly to shareholders and serve to entrench board members and managements.

By-Law ChangesThe Company changed its By-laws in 2008 to restrict the ability of activist shareholders to engage in proxy contests.

Ignoring Board PolicyBoard claims to have a CEO succession plan in place, yet takes 9 months to replace Robert Welding.

Share OwnershipBoard of directors has minimal personal capital invested in the Company’s common stock.

Tax Gross UpsThe Board adopts of a policy prohibiting contracts that include tax gross ups after granting Bill Osborne and Jennifer Sherman tax gross ups.

2222

The Board of Directors in Action

What has this Board been doing?

The statistics speak for themselves.

3 of 10 Board seats ensures a meaningful change.

23

Our Approach

24

Kanders Group Nominees Industry Experience and Success, Proven Track Record 1,382,356 Shares Owned, 2.9% of Outstanding Shares

Warren B. KandersMr. Kanders has served as the President of Kanders & Company since 1990. Prior to the acquisition by BAE Systems, plc on July 31, 2007 of Armor Holdings, Inc., formerly a New York Stock Exchange-listed company, a manufacturer and supplier of military vehicles, armed vehicles and safety and survivability products and systems to the aerospace and defense, public safety, homeland security and commercial markets, he served as the Chairman of the Board of Armor Holdings, Inc. from January 1996 and as its Chief Executive Officer from April 2003. From April 2004 until October 2006, Mr. Kanders served as the Executive Chairman, and since October 2006, has served as the Non-Executive Chairman of the Board of Stamford Industrial Group, Inc. [SIDG.PK], formerly named Net Perceptions, Inc., a publicly-held company that, through its subsidiary, Concord Steel, is a leading independent manufacturer of steel counterweights. Since November 2004, Mr. Kanders has served as the Chairman of the Board of Directors of Langer, Inc. [GAIT], a Nasdaq-listed manufacturer of skin-care products. Mr. Kanders has served since June 2002 as a member of the Board of Directors of Clarus Corporation [CLRS.PK], a publicly-held company, and as the Executive Chairman of Clarus Corporation’s Board of Directors since December 2002. Since May 2007, Mr. Kanders has served as a director of Highlands Acquisition Corp., a publicly-held special purpose acquisition company formed in 2007. From October 1992 to May 1996, Mr. Kanders served as Founder and Vice Chairman of the Board of Benson Eyecare Corporation, a manufacturer and provider of eye care products and services. Mr. Kanders also currently serves on the Board of Trustees for the Whitney Museum of American Art, the Board of Trustees of the Winston Churchill Foundation (Cambridge University), and the Board of Trustees of the Choate Rosemary Hall Foundation. Mr. Kanders received a B.A. degree in Economics from Brown University in 1979.

1,253,313 shares

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Kanders Group Nominees Industry Experience and Success, Proven Track Record 1,382,356 Shares Owned, 2.9% of Outstanding Shares

Nicholas SokolowSince 2007, Mr. Sokolow has been in private law practice as a partner in the firm of Lebow & Sokolow LLP. From 1994 to 2007, Mr. Sokolow was a partner in the law firm of Sokolow, Carreras & Partners. From June 1973 until October 1994, Mr. Sokolow was an associate and partner in the law firm of Coudert Brothers. Mr. Sokolow has served as a member of the Board of Directors of Stamford Industrial Group, Inc. since April 2004 and has served as a member of the Board of Directors of Clarus Corporation since June 2002. Prior to the acquisition by BAE Systems, Inc. of Armor Holdings, Inc. on July 31, 2007, Mr. Sokolow served as a member of the Board of Directors of Armor Holdings, Inc. since January 1996, serving on the Audit, Nominating and Corporate Governance Committees. Mr. Sokolow is a graduate of the Institut D’Etudes Politiques (Economics and Finance) and the Faculte de Droit (Law) and received a Masters of Comparative Law degree from the University of Michigan.

119,043 shares

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Kanders Group Nominees Industry Experience and Success, Proven Track Record 1,382,356 Shares Owned, 2.9% of Outstanding Shares

Steven R. GerbsmanSince 1980, Mr. Gerbsman has been a principal of Gerbsman Partners, a company providing consulting, management, advisory and investment banking services to its clients in a broad variety of industries. Mr. Gerbsman has significant experience in assisting companies in crisis management and turnaround situations and advising companies seeking to improve performance in specific balance sheet, financial or operating areas. Mr. Gerbsman has worked with a wide spectrum of senior and junior lenders, bondholder groups, venture capital and equity sources, private investors and institutional groups in maximizing enterprise, stakeholder and shareholder value. To date, Mr. Gerbsman has been involved in over $2.2 billion of restructuring, financing and M&A transactions. Prior to forming Gerbsman Partners in 1980, Mr. Gerbsman was President of four operating divisions of ITEL Corporation with responsibility in the technology, leasing and business sectors. Mr. Gerbsman began his business career at IBM Corporation in 1967. Mr. Gerbsman received a BS in Accounting from Hunter College, New York and attended the Baruch Graduate School of Business in New York. Mr. Gerbsman is also a guest lecturer at the University of San Francisco’s MBA program and at the Haas Graduate School of Business in Berkeley, California.

10,000 shares

27

FSS Nominees No Industry Experience, No Track Record, No Stock Ownership 38,317 Shares Owned, 0.08% of Outstanding Shares

Bill OsborneUntested as a manager of an independent company.
No experience in industries in which Federal Signal operates.
10,000 sharesNo experience as the CEO of a public company.
(excludes restricted shares)No experience as the Board Member of a public company.

James GoodwinServed as interim CEO in 2008 yet failed to implement any of the steps now advocated.

23,857 sharesReceived over $800,000 in compensation in 2008, including a bonus in a year in which financial results were poor.

We do not believe Mr. Goodwin is truly independent.
Primary business credential serving as CEO of United Airlines; reportedly being forced to resign after failing to control costs.

No experience in manufacturing or in the industries in which Federal Signal operates.

Jim WrightOnly director since 2008.
Nominated as the representative of a hedge fund which has since sold its position.
4,460 sharesHas not purchased shares of FSS common stock with his own funds, little alignment with shareholder interests.

No experience in the industries in which Federal Signal operates.

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What our solicitation means

We are here to help, not take the Company over.
What we are and are not trying to accomplish If elected, our nominees will only be 3 of 10 Board members

Federal Signal faces significant challenges and requires fresh input at the Board level to restore accountability, safeguard the Company’s capital, and provide new strategic vision.

Given the Board’s lack of responsiveness to the ongoing destruction of shareholder value, three board seats will send a message to the other directors that long-term value destruction is not acceptable to shareholders.

Our nominees can help restore the confidence of Wall Street, which will be required for the Company to raise growth capital.

Kanders raised over $1.4 billion in debt and equity in the four years prior to the sale of Armor Holdings.

Our nominees, with significant expertise in Federal Signal’s business, can provide guidance to the Board and management, which lacks experience in the Company’s industries.

No member of the Board or the top two executives has direct operating experience in FSS’ industries.

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Kanders Governance Platform Returning Accountability to Board and Management

Strategic Vision and Execution Federal Signal requires a fresh perspective at the Board of Directors to re-install basic fundamentals of managing this business.
Provide fresh perspective informed by experience in strategy, acquisitions, integration, capital allocation, legal matters, and raising capital

Accountability

Hold management accountable for performance

Utilize our experience to restore FSS credibility

Pay for performance, including elimination of outsized severance

Governance

Eliminate staggered board

Utilize pay for performance and align the financial interests of the Board and management with shareholders

Change by-laws to be shareholder friendly

The Board must “walk the walk” and abide by its own policies 30

Summary

31

Summary of the Kanders Group Solicitation Returning Accountability to Board and Management

Federal Signal’s Board of Directors requires new blood to navigate current challenges.

The current Board has presided over destruction of shareholder value and declining financial performance, and has been unresponsive to shareholder concerns.

The Kanders nominees have direct operating experience in Federal Signal’s industry and a track record of success.

The Kanders nominees are much better equipped than the current slate of nominees from Federal Signal given their respective experience.

The Kanders nominees collectively own 2.9% of the Company’s common stock purchased with personal funds – our interests are aligned with shareholders .

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