Management Turnover as Change Agent

Monday, September 15, 2008

Nine Month CEO Search Over for Federal Signal Corp.

Back in December 2007 Richard Welding the CEO of street sweeper, fire truck and emergency products manufacturer Federal Signal Corporation's FSS (NYSE) (see previous blog) resigned.  Since that time the company was led by an interim CEO James Goodwin, a former CEO of United Airlines.  After a long and extensive search the company has finally selected a new CEO.  William Osborne a former top executive at Ford Motor Company who had been with the firm for 18 years has been picked to run the company.   He will take the CEO position immediately.  According to a piece by Bob Tita for the Chicago Business Journal,
(Osborne) resigned from Ford earlier this month after 18 years with the Dearborn, Mich.-based company.

Mr. Osborne had been head of Ford’s Australian business in recent months and led the automaker’s Canadian operations from 2005 to 2008. He also worked at automakers Chrysler and General Motors before joining Ford.
The search to find a permanent replacement for Richard Welding was often characterized by a high degree of acrimony and confusion.  An activist shareholder Warren 
Kanders who owns nearly 6% of the firm and was formerly the chairman and CEO of Armor Holdings  has been putting a great deal of pressure on Federal's board particularly as it relates 
to management. According to a story by James Miller of the Chicago Tribune back in August,
(Kanders) has been a vocal critic of Federal Signal Corp's management and the company's recent actions, called publicly for the resignation of Chairman James C. Janning , saying there is "reason to believe" that Janning and possibly several other current board members "may have been involved in a cover-up of insider trading" by family members of former Chairman and Chief Executive Joseph J. Ross.

The alleged cover-up, Kanders asserts in a letter to Federal's board, which he made public today, may be the reason for Janning's "sudden 'retirement' in November 2003."

Kanders, in his letter, said Federal signal's board "has no alternative but to call for Mr. Janning's immediate resignation" and to mount an investigation into Ross' "so-called 'retirement.' "

Kanders disclosed in June that he had compiled a 5.7 percent stake in Oak Brook-based Federal Signal, and not long afterward, launched a public campaign to be named CEO of the company.
The most prominent aspect of Kanders' complaints was his active attempt to become Federal Signal's new CEO.  The board was opposed to Kander as CEO and ultimately made it known that Kanders was never seriously under consideration.  The newly appointed CEO, William Osborne, appears to be a good choice.  He has vast experience with a durable goods manufacturer and understands the needs of a manufacturers' customers and what is needed to make a large manufacturing operation succeed.  

Stay tuned to the continuing drama.  See what steps Osborne takes to possibly placate Kanders and what he does to make Federal Signal improve overall results.

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