Jennifer Sherman
FEDERAL SIGNAL CORP /DE/About Jennifer Sherman
Jennifer L. Sherman (age 60) has served as President and CEO of Federal Signal since January 1, 2016, and joined the Company in 1994; she has also been a director since 2016 . Under her tenure, FSS delivered record 2024 results: net sales $1.86B (+8% y/y), net income $216.3M (+37%), GAAP EPS $3.50 (+37%), and adjusted EBITDA $350.6M (18.8% margin, +220 bps) . Five-year total shareholder return (value of $100 investment) reached $298.52 through 2024, materially outpacing small/mid-cap benchmarks . 2024 pay-for-performance alignment is evidenced by maximum STIP payouts on financial metrics and individual goals and 2022 PSU vesting at 228% of target (top-quartile TSR modifier applied) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Federal Signal | President & CEO | 2016–present | Led multi-year margin expansion and record revenue/EBITDA; executed disciplined M&A (12 deals since 2016) and backlog growth . |
| Federal Signal | SVP & Chief Operating Officer | 2014–2015 | Drove operational execution and scaling as supply chains normalized . |
| Federal Signal | SVP, Chief Administrative Officer; General Counsel & Secretary | 2010–2014 | Oversaw governance, compliance, and enterprise administration . |
| Federal Signal | SVP, HR; General Counsel & Secretary | 2008–2010 | Integrated legal and HR leadership to support organizational development . |
| Federal Signal | VP, General Counsel & Secretary | 2004–2008 | Built internal legal/compliance frameworks supporting growth . |
| Federal Signal | Various roles (joined) | 1994–2004 | Progressive leadership culminating in C-suite appointments . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Franklin Electric Co., Inc. (NASDAQ: FELE) | Director | 2015–present | Public company directorship; governance/industry insights . |
| Field Museum; WTTW/WFMT | Non-profit board roles | n/a | Civic engagement and community leadership . |
Board Governance
- Board service: Director since 2016; not independent (as CEO) .
- Committee roles: None; she is not a member of Board committees .
- Structure and independence: Separate Chair and CEO; a Lead Independent Director provides independent oversight (executive sessions, agenda approval) .
- Attendance: All directors, including Ms. Sherman, attended at least 75% of Board/committee meetings in 2024; Board met six times .
- Dual-role implications: CEO plus Director (not Chair). Independence mitigants include a Lead Independent Director and fully independent committees .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary (paid) | $911,458 | $941,719 | $969,970 |
| Annualized Base Salary (policy) | — | — | $974,702 (effective 2024) |
| Target Bonus % of Salary | — | — | 110% |
| Target Bonus ($) | — | — | $1,072,172 |
| Actual STIP Payout ($) | $1,382,535 | $2,081,889 | $2,144,344 (200% of target) |
Perquisites and benefits (selected 2024 items):
- Auto allowance $13,800; company matching gifts $3,000; dividend income on unvested stock $25,686; other benefits (airline club, life insurance, identity protection) included in $264,504 “All Other Compensation” .
- Pension: only NEO in closed DB plan; 2024 actuarial increase $2,383; present value $388,788; 11 years of credited service .
- Deferred comp: Savings Restoration Plan contributions (Exec $585,952; Company $213,299); aggregate balance $9,434,298 at FY-end 2024 .
Performance Compensation
STIP (Annual Incentive) – 2024 design and outcomes
- Structure/weighting: Earnings (60%); Adjusted EBITDA margin (20%); Individual objectives (20%) .
- Targets and actuals:
| Financial Metric | Threshold | Target | Maximum | Actual | Result |
|---|---|---|---|---|---|
| Adjusted income before income taxes ($M) | $208.3 | $231.4 | $254.5 | $271.8 | Max payout on financial metric |
| Adjusted EBITDA margin (%) | 15.3% | 16.8% | 17.8% | 18.8% | Max payout on financial metric |
| Individual objectives | — | — | — | Maximum achieved | Max payout on individual component |
- Payout formula: Financial components and individual objectives each pay 0%–200%; 2024 aggregate outcome = 200% of target for NEOs incl. Sherman ($2,144,344) .
LTIP (Equity) – design and 2024 grants to CEO
- Mix: PSUs (50%); Stock Options (25%); Restricted Stock (25%) .
- PSU metrics: 3-year performance period; EPS from continuing operations (75%) and ROIC (25%); relative TSR modifier ±20% if top/bottom quartile vs S&P 600 Capital Goods; payout 0%–240% .
- 2024 CEO grants (5/2/24):
- PSUs: 24,467 target units; grant-date FV $2,100,003 .
- Options: 35,896 @ $82.31 strike; 10-year term; vest ratably over 3 years . Grant-date FV $1,049,958 .
- Restricted Stock: 12,757; cliff vest at 3 years ; grant-date FV $1,050,029 .
- Performance realization: 2022 PSU cycle (through 12/31/2024) earned at 228% of target (190% on financials plus +20% TSR modifier for top quartile); shares issued Q1’25 to eligible recipients .
Equity Ownership & Alignment
- Beneficial ownership: 1,093,081 shares (includes 59,747 in Retirement Savings Plan); 1.8% of outstanding .
- Options exercisable within 60 days: 475,401 shares (CEO) .
- Outstanding awards at 12/31/2024 (CEO):
| Instrument | Quantity | Key Terms | Valuation Basis |
|---|---|---|---|
| Unvested Restricted Stock | 12,757 | Cliff vest 3 yrs from 5/2/24 | $1,178,619 at $92.39 (12/31/24 close) |
| PSUs (2023 grant) – at max | 79,810 | Earn/vest at end of 3-yr period; TSR modifier ±20% | $7,373,609 (assumes 240%) |
| PSUs (2024 grant) – at max | 58,721 | Earn/vest at end of 3-yr period; TSR modifier ±20% | $5,425,215 (assumes 240%) |
| Options (2024 grant) | 35,896 unexercised | $82.31 strike; vest 1/3 annually 2025–2027; exp. 5/2/2034 | — |
- 2024 vesting realized: 114,428 shares vested (principally PSUs) with $10,433,469 value; no option exercises in 2024 .
- Ownership guidelines: CEO must hold 5x base salary; Ms. Sherman exceeded requirement as of 12/31/2024 .
- Hedging/pledging: Company policy prohibits hedging, short sales, holding in margin accounts, and pledging Company stock .
- 1Q’25 issuance from 2022 PSUs: Ms. Sherman received 54,327 net shares (after tax withholding) upon issuance in late Feb 2025, indicating near-term incremental float/supply from vesting .
Employment Terms
- Executive General Severance Plan (involuntary without Cause or for Good Reason): cash severance equals base salary + current target bonus for Tier I executives; pro-rata current-year bonus; health benefits continuation up to 12 months (Tier I); vested options exercisable for 3 months; restrictive covenants include 12-month non-compete and non-solicit; release required .
- Change-in-control (CIC): Company policy prohibits tax gross-ups (except limited relocation/expatriate cases) and caps severance at 2.99x salary+bonus unless stockholders approve; Ms. Sherman’s CIC agreement predates 2009 and is grandfathered under this policy (terms not amended by the cap) .
- Clawback: NYSE/SEC-compliant clawback adopted; recoupment of excess incentive-based pay upon accounting restatement; covers stock price/TSR awards and cash incentives; applies to current/former Section 16 officers .
- Insider trading: Policy bars trading on MNPI and prohibits option grants during blackout windows; recent practice grants annual LTIP on second business day after Q1 results .
Compensation Structure Analysis
- High at-risk mix: ~84% of CEO target pay is at-risk (STIP + LTIP), aligned with multi-year EPS/ROIC and relative TSR performance .
- Metrics rigor: 2024 financial targets for STIP were surpassed materially (pre-tax income and EBITDA margin exceeded maximums), supporting maximum cash payouts—consistent with record results .
- Equity tilt: Balanced PSU/options/RS approach links outcomes to EPS/ROIC, stock price, and retention; TSR modifier adds relative alignment while avoiding standalone TSR as a sole metric .
- Peer benchmark: Committee uses a defined industrial peer group (e.g., IDEX, SPX, Toro, Graco, Terex) and seeks median-competitive total compensation; 2024 base salary set near market midpoint .
- Say-on-Pay support: ~96% approval in 2024 indicates broad shareholder endorsement .
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Total Shareholder Return – $100 base | $104 | $137 | $148 | $247 | $299 |
| Net Sales ($B) | — | — | — | 1.72 | 1.86 |
| Adjusted EBITDA ($M) | — | — | — | 286.0 | 350.6 |
| Adjusted EBITDA Margin (%) | — | — | — | 16.6% | 18.8% |
| GAAP Diluted EPS ($) | — | — | — | 2.56 | 3.50 |
Additional operating highlights: $997M year-end backlog; strong cash generation (FY24 CFO $231M; 107% cash conversion); 2025 outlook calls for adjusted EPS $3.60–$3.90 and net sales $2.02–$2.10B, assuming stable costs and tariff impacts . Strategic M&A: Standard (2024) and HOG Technologies (Feb 12, 2025; ~$78M initial price) broaden ESG portfolio and aftermarket mix; Hog expected to be accretive to adjusted EPS in 2025 .
Risk considerations: municipal funding cycles, potential tariff regimes, residual supply-chain/chassis constraints, and product liability litigation (e.g., siren hearing loss suits managed corporately) . No related-party transactions requiring disclosure in 2024 .
Director Compensation (as applicable to dual role)
- As an employee director, Ms. Sherman receives no additional Board compensation; non-employee director compensation is stock-and-cash based with immediate vesting for equity .
Compensation Peer Group (benchmarking)
- 2024 peer group includes: Alamo Group, Allison Transmission, Barnes Group, Brady, Chart Industries, Columbus McKinnon, EnPro, Franklin Electric, Graco, IDEX, John Bean Technologies, MSA Safety, SPX Technologies, Standex, Tennant, Terex, The Toro Company, Wabash National .
Equity Ownership & Alignment Detail (multi-line)
| Item | Value |
|---|---|
| Total beneficial ownership | 1,093,081 shares (includes 59,747 in RSP) |
| % of shares outstanding | 1.8% |
| Options exercisable within 60 days | 475,401 shares |
| Unvested restricted stock (12/31/24) | 12,757 ($1,178,619 at $92.39) |
| Unearned PSUs at maximum (’23 grant) | 79,810 ($7,373,609) |
| Unearned PSUs at maximum (’24 grant) | 58,721 ($5,425,215) |
| 2024 stock vested (shares/value) | 114,428 / $10,433,469 |
| Ownership guideline and status | 5x salary; Exceeded as of 12/31/24 |
| Hedging/pledging policy | Prohibited (hedging, shorting, margin, pledging) |
Employment & Contracts (key terms)
- Severance plan (Tier I): cash = base + target bonus; pro-rata current-year bonus; 12 months benefits; 12-month non-compete/non-solicit; vested options exercisable for three months; release required .
- CIC policy: no tax gross-ups (limited exceptions); 2.99x cap without stockholder approval; Ms. Sherman’s pre-2009 CIC agreement is grandfathered .
- Clawback: restatement-triggered recovery of incentive-based compensation, including stock price/TSR-linked awards .
Investment Implications
- Alignment and performance: High at-risk mix, stringent EPS/ROIC/TSR metrics, and strong 2024 outperformance support robust pay-for-performance alignment; Say-on-Pay ~96% suggests low compensation controversy risk .
- Retention and succession: Significant unvested equity (PSUs through 2026; RS and options into 2027/2034) and ownership guidelines enhance retention; pension and sizable deferred compensation balance add “golden handcuffs” .
- Trading signals: Large 2022 PSU vest (228%) created issuance in Q1’25 (54,327 net shares to CEO), and 2024 grants vest on May anniversaries—monitor Form 4s around vest/blackout windows for potential supply; policy prohibits hedging/pledging, moderating adverse signals .
- Governance quality: Separate Chair/CEO with Lead Independent Director and fully independent committees mitigate dual-role concerns; no related-party transactions disclosed in 2024 .
- Execution risk: End-market cyclicality (municipal/industrial), prospective tariffs, and supply-chain exposure remain key risks; however, $1.0B backlog, diversified platform, and accretive M&A strategy underpin visibility into 2025 guidance .