ex1032016stipplandocumen







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.     





 







 - 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.     





 







 - 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.     





 







 - 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.     





 







 - 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     





 







 - 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.      





 







 - 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.     





 







 - 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.