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EXHIBIT 10.3 FEDERAL SIGNAL CORPORATION SHORT TERM INCENTIVE BONUS PLAN WHEREAS,
Federal Signal Corporation (the “Company”) has previously established the
Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “2015
Plan”); WHEREAS, pursuant to Section 12 of the 2015 Plan, the Compensation
Committee (as defined herein) has the authority to issue cash incentive and
bonus awards to any Participant (as defined herein). Such awards are intended to
qualify as “performance-based compensation” under Section 162(m) of the Code (as
defined herein); and WHEREAS, the Compensation Committee, pursuant to the
authority granted to it in the 2015 Plan, hereby establishes the Federal Signal
Corporation Short Term Incentive Bonus Plan (this “Plan”), as a sub-plan under
the 2015 Plan, as an incentive for selected employees of the Company to improve
corporate performance by providing each participating employee with an
opportunity to receive a cash bonus payment based upon the attainment of certain
performance criteria. 1. Definitions. The following terms shall have the
meanings indicated when used in this Plan: (a) “Affiliate” means any entity
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, the Company. The term “control,” as used in this Plan,
means the power to direct or cause the direction of the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. “Controlled” and “controlling” have
meanings correlative to the foregoing. (b) “Annual Operating Plan” or “AOP”
means and represents management’s view of the potential performance of the
Company as a whole and its individual businesses for a particular year based on
identified challenges, risks and opportunities. The AOP process culminates with
a Board review of each business’ annual plan during which the Board assesses the
credibility of the plan. Based on the final annual plans of the businesses,
management prepares the Company’s annual operating plan, which is also reviewed
and approved by the Board of Directors. (c) “Bonus Award” means the annual bonus
award calculated and distributed pursuant to this Plan. (d) “Board” means the
Board of Directors of the Company. (e) “Code” means the Internal Revenue Code of
1986, as amended, and any successor thereto. Reference in this Plan to any
section of the Code shall be deemed to include any regulations or other
interpretative guidance under such section, and any amendments or successor
provisions to such section, regulations or guidance.

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- 2 - (f) “Company” means Federal Signal Corporation, a Delaware corporation,
and its subsidiaries. (g) “Compensation Committee” means the Compensation and
Benefits Committee of the Board or subcommittee thereof as may be appointed
pursuant to Section 4(a) of the 2015 Plan, or such other committee of the Board
consisting of at least two people as the Board may appoint to administer the
2015 Plan, or, if no such committee has been appointed by the Board, the Board.
(h) “Disability” means with respect to any Participant, the meaning ascribed to
such term in a long-term disability plan applicable to such Participant except
as otherwise provided in an award agreement issued hereunder. (i) “Eligible
Employee” means any executive officer of the Company, as defined under Rule
3-b(7) of the Securities Exchange Act of 1934, as amended, or any individual
employed by the Company or an Affiliate. (j) “Financial Performance
Component(s)” has the meaning ascribed thereto in Section 6(a) below. (k)
“Individual Objective Component(s)” shall have the meaning ascribed thereto in
Section 6(b) below. (l) “Maximum Bonus Percentage” means and refers to 200% of
the Target Bonus Percentage. (m) “Maximum Financial Performance” means and
refers to the financial performance required to receive the Maximum Bonus
Percentage Payout. (n) “Negative Discretion” means the discretion authorized by
the 2015 Plan, and adopted in this Plan, to be applied by the Compensation
Committee to eliminate or reduce the size of a Bonus Award consistent with
Section 162(m) of the Code and the 2015 Plan. (o) “Participant” means an
Eligible Employee selected and designated by the Compensation Committee to
participate in this Plan. (p) “Performance Period” means the period beginning on
January 1 and ending on December 31 of the same year. (q) “Plan” has the meaning
ascribed thereto in the recitals above. (r) “Severance Plan(s)” shall mean and
refer collectively to the Company’s Executive General Severance Plan, the
General Severance Pay Plan, and the Federal Signal Corporation Executive Change
in Control Agreement, as the same may be amended from time to time, and any
successor plans to any of the foregoing.

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- 3 - (s) “Target Financial Performance” means and refers to the financial goals
set forth in the AOP, achievement of which qualifies Participants for
distribution at the Target Bonus Percentage. (t) “Target Bonus Percentage” means
the percentage of base salary distributed to a Participant upon achievement of
the Target Financial Performance goals. (u) “Threshold Bonus Percentage” means
and refers to 50% of the Participant’s Target Bonus Percentage. (v) “Threshold
Financial Performance” means and refers to the financial performance required to
receive the Threshold Bonus Percentage payout. (w) “162(m) Performance Criteria”
has the meaning ascribed thereto in Section 9(d) below. 2. Participation in this
Plan. The Compensation Committee from time to time shall select those Eligible
Employees who shall be designated as Participants. 3. Bonus Awards. Bonus Awards
under this Plan shall be granted on an annual basis, and each Bonus Award shall
be based on the accomplishment of the performance criteria set forth below. 4.
Establishing Financial Performance Ranges. Financial performance ranges will be
developed after the approval of the AOP and shall be approved by the
Compensation Committee. The financial performance ranges will include: Threshold
Financial Performance, Target Financial Performance and Maximum Financial
Performance. 5. Establishing Target Bonus Percentages. Each Participant shall
have a Target Bonus Percentage established annually which shall in most cases be
the same for all Participants in the same salary grade level. The applicable
Target Bonus Percentages will be determined by the Compensation Committee based
on market data. 6. Bonus Award Criteria. The Bonus Award is based upon two
components: (i) the Financial Performance Component, which is based upon the
extent to which actual financial results meet AOP objectives; and (ii) the
Individual Objective Component, which is related to the numerical score achieved
by the Participant in his/her annual performance review. The Compensation
Committee shall periodically determine the weighting between these components as
applied to the Bonus Award, which weightings may vary among Participants taking
into account job responsibilities, salary grade level and ability to impact
Company performance. (a) Financial Performance. The Financial Performance
Component of the Bonus Award shall be calculated based on financial measures to
be selected periodically by resolution of the Compensation Committee. The
Compensation Committee retains discretion regarding adjustments to financial
measures as permitted by the 2015 Plan.

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- 4 - (b) Individual Objectives. The Individual Objective Component of the
Participant’s Bonus Award is calculated based on the numerical rating that the
Participant receives on his or her annual performance review. The Compensation
Committee shall determine the performance rating/bonus opportunity scale for the
Individual Objective Component of the Bonus Award and communicate it to
Participants. Bonus Award payments shall be made as soon as practicable after
the Compensation Committee makes the certifications described in Section 9(d) of
this Plan, but in no event later than the March 15th immediately following the
end of the applicable Performance Period. The Compensation Committee shall have
absolute discretion regarding the form and timing (subject to the preceding
sentence) of payment of the Bonus Award. 7. Termination of Employment. (a)
Except as provided in Section 7(b) and (c) below, a Participant must be employed
by the Company or an Affiliate on the date payment of awards for the Performance
Period is made to earn a Bonus Award, unless otherwise expressly approved by the
Compensation Committee. If a Participant’s employment is terminated for any
reason other than as set forth in Section 7(b) and (c) below prior to the date
payment of awards for the Performance Period is made, the Participant shall
forfeit any right to earn and receive payment in respect of such Bonus Award,
unless otherwise expressly approved by the Compensation Committee. (b) If the
Company or an Affiliate terminates the employment of a Participant such that the
Participant is eligible for benefits under a Severance Plan (it being understood
that this shall not include a termination of the Participant’s employment by the
Company or an Affiliate due to the death or Disability of such Participant), the
Participant shall receive Bonus Award payments to the extent provided and in
accordance with the terms of the applicable Severance Plan. In no event shall
the Participant be entitled to claim Bonus Awards under both this Plan and the
applicable Severance Plan. A Participant whose employment has been terminated by
the Company or an Affiliate prior to date payment of awards for the Performance
Period is made and who is not eligible to receive severance benefits under the
applicable Severance Plan shall forfeit any right to earn and receive payment in
respect of such Bonus Award, unless otherwise expressly approved by the
Compensation Committee. (c) If the Participant’s employment with the Company or
an Affiliate is terminated due to the Participant’s death or Disability, the
Participant shall receive a Bonus Award payment in an amount equal to the
Participant’s unpaid Bonus Award at the Target Bonus Percentage established for
the Performance Period during which such termination occurs, multiplied by a
fraction, the numerator of which shall be the number of days from the beginning
of Performance Period to and including the date of termination and the
denominator of which shall be 365. Such payment shall be paid as soon as
administratively feasible following termination of employment.

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- 5 - 8. Beneficiaries. Each Participant may file with the Compensation
Committee a written designation of one or more persons as the beneficiary(ies)
who shall be entitled to receive the amounts due under this Plan upon his or her
death. A Participant may, from time to time, revoke or change his or her
beneficiary designation without the consent of any prior beneficiary by filing a
new designation with the Compensation Committee. The last such designation
received by the Compensation Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Compensation Committee prior to the Participant’s death, and in
no event shall it be effective as of a date prior to such receipt. If no
beneficiary designation is filed by a Participant, the beneficiary shall be
deemed to be his or her spouse or, if the Participant is unmarried at the time
of death, his or her estate. 9. Administration. (a) This Plan shall be
administered by the Compensation Committee. (b) The Compensation Committee shall
have complete authority and discretion to interpret this Plan, to prescribe,
amend, and rescind rules and regulations relating to this Plan and to make all
other determinations deemed necessary or advisable for the administration of
this Plan. Determinations made by the Compensation Committee in good faith shall
be binding and conclusive on all persons. Benefits under this Plan will be paid
only if the Compensation Committee decides in its discretion that the claimant
is entitled to them. (c) In addition to any other powers set forth in this Plan,
the Compensation Committee has the following powers: (i) To establish, amend and
rescind appropriate rules and regulations relating to this Plan; (ii) To contest
on behalf of the Company or Participants, at the expense of the Company, any
ruling or decision on any matter relating to this Plan or to any Bonus Awards;
and (iii) Generally, to administer this Plan, and to take all such steps and
make all such determinations in connection with this Plan and the Bonus Awards
granted thereunder as it may deem necessary or advisable. (d) In addition to
satisfaction of the Bonus Award criteria set forth in Section 6 above, no Bonus
Award shall be paid hereunder for any applicable performance period unless the
performance criteria for the Participants and targets identified annually by the
Compensation Committee under the 2015 Plan for purposes of this Plan under
Section 162(m) of the Code (the “162(m) Performance Criteria”) have also been
achieved and properly certified. Following the completion of a performance
period, the Compensation Committee shall review and certify in writing whether,
and to what extent, the performance goals and other material terms have been
achieved and, if so, calculate and certify

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- 6 - in writing that amount of the Bonus Awards earned for the period based
upon the components set forth in the 162(m) Performance Criteria and in Section
6. In determining the actual amount of a Bonus Award for a Performance Period,
the Compensation Committee may reduce or eliminate the amount of the Bonus Award
through the use of Negative Discretion if, in its sole judgment, such reduction
or elimination is appropriate. In no event shall a Bonus Award exceed the
maximum amount allowed to be payable to any single Participant under Section
5(b) of the 2015 Plan. 10. Amendment or Termination of this Plan. The
Compensation Committee or its authorized designee may from time to time amend or
revise the terms of this Plan in whole or in part, or may terminate this Plan at
any time. Notwithstanding the foregoing, the Compensation Committee or its
authorized designee reserves the right to terminate this Plan and cancel any
Bonus Awards granted before termination in its sole discretion, at any time and
for any reason. 11. Effective Date. This Plan is effective as of January 1,
2016. This Plan replaces the Federal Signal Corporation 2009 Short Term
Incentive Bonus Plan (as amended and restated in March 2013) as of the Effective
Date. 12. Withholding Taxes. The obligations of the Company to make Bonus Award
payments under this Plan shall be subject to applicable federal, state, and
other taxes and withholding obligations. 13. Non-Exclusivity of Plan. The
adoption of this Plan by the Board shall not be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting of stock
options or other awards otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases. 14.
Non-Alienation. No interest under this Plan may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant other
than by will or by the laws of descent and distribution and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any of its Affiliates;
provided, that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance. 15.
No Right to Employment. Neither this Plan nor any action taken hereunder shall
be construed as giving any Participant any right to be retained in the employ or
service of the Company or any of its Affiliates, nor shall it be construed as
giving any Participant any rights to continued service on the Board. The Company
or any of its Affiliates may at any time dismiss a Participant from employment
or discontinue any consulting relationship, free from any liability or any claim
under this Plan, unless otherwise expressly provided in this Plan or any award
agreement.

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- 7 - 16. Unfunded Status of Awards. This Plan is intended to constitute an
“unfunded” plan. With respect to any payments not yet made to a Participant or
his or her beneficiary, as applicable, nothing contained in this Plan or any
Bonus Award shall give any such Participant or such beneficiary, as applicable,
any rights that are greater than those of a general creditor of the Company. 17.
Recovery of Compensation. In the event that: (a) the payment of any Bonus Award
paid or issued under this Plan to officers designated as such under Rule
16a-1(f) of the Securities Exchange Act of 1934, as amended, was predicated upon
the achievement a Financial Performance Component or other financial or
performance results; (b) subsequent to such payment, the Company is required to
prepare an accounting restatement with respect to such financial results or it
is otherwise determined by the Board that such performance results were
materially inaccurate; and (c) based upon the restated financial results or
otherwise corrected performance results, the amount of such Bonus Award based
upon a Financial Performance Component would have been less than the amount
previously paid to such executive officer, then the Board, to the extent
practicable, shall require reimbursement from each such executive officer, in an
amount equal to the amount by which such executive officer’s Bonus Award based
upon a Financial Performance Component for the relevant period exceeded the
lower payment that would have been made based on the restated financial results
or corrected performance results, plus a reasonable rate of interest. All Bonus
Awards (including any proceeds, gains or other economic benefit actually or
constructively received by a Participant upon any receipt of any Bonus Award)
shall be subject to the provisions of any additional clawback policy implemented
by the Company, including, without limitation, any clawback policy adopted to
comply with the requirements of applicable law, including without limitation the
Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or
regulations promulgated thereunder, to the extent set forth in such clawback
policy and/or applicable award agreement. 18. General. (a) Relationship with
2015 Plan. If there is any inconsistency between the terms of this Plan and the
terms of the 2015 Plan, the 2015 Plan’s terms shall completely supersede and
replace the conflicting terms of this Plan. (b) Award Agreement. Each Bonus
Award under this Plan shall be evidenced by an award agreement, which may be a
certificate or statement, which shall be delivered to the Participant (whether
in paper or electronic medium (including email or the posting on a web site
maintained by the Company or a third party under contract with the Company)) and
shall specify Bonus Award criteria and any other terms and conditions of the
Bonus Award. The terms of any Bonus Award issued hereunder shall be binding upon
the executors, administrators, beneficiaries, successors and assigns of the
Participant.

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- 8 - (c) Governing Law and Venue. Except to the extent that provisions of this
Plan are governed by applicable provisions of the Code or other substantive
provisions of Federal law, this Plan shall be governed by and construed in
accordance with the internal laws of the State of Delaware applicable to
contracts made and performed wholly within the State of Delaware, without giving
effect to the conflict of laws provisions thereof. (d) Severability. If any
provision of this Plan is determined to be illegal or invalid for any reason,
the remaining provisions are to continue in full force and effect and to be
construed and enforced as if the illegal or invalid provision did not exist,
unless the continuance of this Plan in such circumstances is not consistent with
its purposes. (e) Undefined Terms. Unless the context requires another meaning,
any term not specifically defined in this Plan shall be used in the sense given
to it by the Code. (f) Headings. All headings in this Plan are for reference
only and are not to be utilized in construing this Plan. (g) Conformity with
Section 409A of the Code. This Plan is intended to be exempt from coverage from
Section 409A of the Code and shall be interpreted and construed in a manner
consistent with such intention. There shall be no acceleration or subsequent
deferral of the time or schedule of any payment under this Plan except as
permitted under Section 409A and the express terms of this Plan. (h) Gender.
Unless clearly inappropriate, all nouns of whatever gender refer indifferently
to persons of any gender. (i) Singular and Plural. Unless clearly inappropriate,
singular terms refer also to the plural and vice versa.

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