exv10w1






Exhibit 10.1




FEDERAL SIGNAL CORPORATION

SHORT TERM INCENTIVE BONUS PLAN





	1.	 	Objectives. Federal Signal Corporation (the “Company”) hereby establishes the Federal Signal
Corporation Short Term Incentive Bonus Plan (the “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.
	 
	2.	 	Definitions. The following terms shall have the meanings indicated when used in the 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. For
purposes of this definition, the terms “control”, “controlled by” and “under common
control with” mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.
	 
	 	(b)	 	“Annual Operating Plan” (AOP) means and represents management’s view of
the potential performance of the Company as a whole and its individual businesses for
the coming 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)	 	“Benefits Committee” means the Benefits Planning Committee of the Company.
	 
	 	(f)	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time or
any successor thereto. Reference to any specific Section of the Code shall include any
successor Section, as well as any guidance thereunder.
	 
	 	(g)	 	“Company” means Federal Signal Corporation, a Delaware corporation, and its
subsidiaries (also referred to as the “Enterprise”).
	 
	 	(h)	 	“Compensation Committee” means the Compensation and Benefits Committee of the
Board.
	 
	 	(i)	 	“Corporate Staff” means certain Participants located at the corporate office
that supports the Company.




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	 	(j)	 	“Division” means and refers to a specific management reporting unit, as defined
from time to time by the Executive Committee. For illustrative purposes only, Elgin Sweeper
is a Division comprised of Elgin Sweeper Company and FS Depot-Elgin.
	 
	 	(k)	 	“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
management-level employee or other employee of the Company or an Affiliate.
	 
	 	(l)	 	“Enterprise” means the Company.
	 
	 	(m)	 	“Executive Committee” means the Executive Committee of the Company as determined
from time to time by the Chief Executive Officer.
	 
	 	(n)	 	“Financial Performance Component(s)” has the meaning ascribed thereto
in Section 7 (i) below.
	 
	 	(o)	 	“Individual Objective Component(s)” shall have the meaning ascribed thereto in
Section 7 (i) below.
	 
	 	(p)	 	“Group” means and refers to 1) the Environmental Solutions Group (ESG);
2) the Safety and Securities Systems Group (SSG); and 3) the Fire Rescue Group (FRG),
which are each comprised of Divisions that have related products.
	 
	 	(q)	 	“Levels of the Corporation” means and refers to the following designations:
Enterprise, Group, Division, and Corporate Staff.
	 
	 	(r)	 	“Maximum Bonus Percentage” means and refers to 200% of the Target Bonus
Percentage.
	 
	 	(s)	 	“Maximum Financial Performance” means and refers to the financial performance
required to receive the Maximum Bonus Percentage Payout.
	 
	 	(t)	 	“Participant” means an Eligible Employee selected and designated by the Benefits
Committee to participate in the Plan.
	 
	 	(u)	 	“Performance Period” means the period beginning on January 1 and ending on the
next following December 31.
	 
	 	(v)	 	“Plan” has the meaning ascribed thereto in Section 1 above.
	 
	 	(w)	 	“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 Plan, as the same may be amended from time to time.




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	 	(x)	 	“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.
	 
	 	(y)	 	“Target Bonus Percentage” means the percentage of base salary
distributed to a Participant upon achievement of the Target Financial Performance
goals.
	 
	 	(z)	 	“Threshold Bonus Percentage” means and refers to 50% of the
Participant’s Target Bonus Percentage.
	 
	 	(aa)	 	“Threshold Financial Performance” means and refers to the financial
performance required to receive the Threshold Bonus Percentage payout.






	3.	 	Eligible Employees; Participation in the Plan. Present and future Eligible Employees shall
be eligible to participate in the Plan. The Benefits Committee from time to time shall select
those Eligible Employees who shall be designated as Participants.
	 
	4.	 	Bonus Awards. Bonus Awards under the 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.
	 
	5.	 	Establishing Financial Performance Ranges. Financial performance ranges will be developed
after the approval of the AOP and shall be subject to the approval of the Compensation and
Benefits Committee. The financial performance ranges will include; Threshold Financial
Performance, Target Financial Performance and Maximum Financial Performance.
	 
	6.	 	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 for direct reports of the Chief
Executive Officer, excluding administrative support, will be determined by the Compensation
Committee based on market data on an annual basis. For all other Participants, Bonus Target
Percentages will be determined by the Executive Committee (some Bonus Target Percentages are
inconsistent with the applicable percentage for the salary grade due to grandfathering of a
Participant’s bonus opportunity).
	 
	7.	 	Bonus Award Criteria. The Bonus Award is based upon two components: (i) the Financial
Performance Component, which is weighted at 70% of the total Bonus Award, and is based upon
the extent to which actual financial results meet AOP objectives for the Level(s) of the
Corporation that the Participant is deemed to be associated with for the purposes of this
Plan; and, (ii) the Individual Objective Component which is weighted at 30% of the total Bonus
Award, and is related to the numerical score achieved by the Participant in his/her annual
performance review.
	 
	 	 	(i) Financial Performance. The Financial Performance Component of the Bonus Award
shall be calculated based on the earnings and cash flow financial measures for the following
various Level(s) of the Corporation: Enterprise, Group, Division and
Corporate Staff. The Compensation Committee retains discretion regarding adjustments to
financial measures.





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The Level(s) of the Corporation the Participant is deemed to be associated with shall be
weighted based on the job responsibilities of the Participant and the level in the Company
that the Participant has the ability to impact in accordance with the following guidelines:




     1. For Executive Committee members who are Group Presidents, the Financial Performance
Component of the Bonus Award shall be weighted 40% on Enterprise financial measures and 60%
on Group financial measures.




     2. For Executive Committee members who are not Group Presidents, the Financial
Performance Component of the Bonus Award shall be weighted 100% on Enterprise financial
measures.




     3. For all other Participants, the Financial Performance Component of the Bonus Award
will be allocated among Enterprise, Group, Division and Corporate expense management
financial measures as determined by the Executive Committee.




(ii) Individual Objectives. The 30% 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 Executive Committee shall determine
the performance rating/bonus opportunity scale for the Individual Objectives Component of
the Bonus Award and communicate it to all Participants.




Except as set forth in paragraph 10 (a), Bonus Award payments shall be made as soon as
practicable after the Executive Committee makes the certifications described in Section
10(d) of the 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 of payment of the Bonus Award.




	8.	 	Termination of Employment.






	 	(a)	 	Except as provided in subsections (b) and (c) below, a Participant must be
employed by the Company or an Affiliate on the last day of the Performance Period in
order to be entitled to receive payment of a Bonus Award for the Performance Period.
If a Participant’s employment is terminated for any reason other than set forth in
subsections (b) and (c) below prior to the last day of the Performance Period, he or
she shall forfeit any right to receive payment in respect of such Bonus Award.
	 
	 	(b)	 	If the Company or an Affiliate terminates the employment of a Participant such
that the Participant is eligible for benefits under the Federal Signal Corporation
Executive General Severance Plan, the Federal Signal Corporation General Severance Pay
Plan, the Federal Signal Corporation Executive Change in Control Severance Agreement,
or any successor thereto (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




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	 	 	 	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 and who is not eligible to receive severance benefits
under the applicable Severance Plan shall forfeit any right to receive payment in
respect of such Bonus Award.
	 
	 	(c)	 	If the Participant’s employment with the Company or an Affiliate is terminated
due to the Participant’s death or total and permanent disability (as determined by the
Executive Committee in accordance with any finding of disability made under the
Company’s other employee benefit programs), 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 on the payment schedule
specified in Section 7 above.






	9.	 	Beneficiaries. A Participant may designate a beneficiary (or beneficiaries) to receive any
payments remaining under the Plan in the event of his or her death. The Participant shall
also have the right to revoke any such designation and to designate a new beneficiary (or
beneficiaries) of his or her choosing. Any such designation or revocation shall only be
effective if made in writing and received by the Company’s Corporate Secretary prior to the
Participant’s death. If the Participant dies without having an effective beneficiary
designation or if all named beneficiaries predecease the Participant, then any amounts
remaining to be paid under the Plan shall be paid to the Participant’s estate.
	 
	10.	 	Administration.






	 	(a)	 	The Plan shall be administered by the Executive Committee; provided, however,
that the payment of Bonus Awards to Executive Committee members and Section 16 officers
of the Company shall be subject to review and approval by the Compensation Committee.
	 
	 	(b)	 	The Executive Committee shall have complete authority and discretion to
interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to
the Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan; provided, however, that the Executive Committee must obtain
the prior approval of the Compensation Committee in the event that a material change in
the Plan is proposed or in the event of any proposed change in the terms and
conditions applicable to any Participant who is a member of the Executive Committee or
a Section 16 officer of the Company. Except as otherwise set forth herein above and in
subparagraph (g) below, determinations made by the Executive Committee in good faith
shall be binding and conclusive on all persons. Benefits under the Plan will be paid
only
if the Executive Committee decides in its discretion that the claimant is entitled
to them.




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	 	(c)	 	In addition to any other powers set forth in the Plan, the Executive Committee
has the following powers:






	 	(i)	 	To establish, amend and rescind appropriate rules and regulations
relating to the 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 the
Plan or to any Bonus Awards; and
	 
	 	(iii)	 	Generally, to administer the Plan, and to take all such steps
and make all such determinations in connection with the Plan and the Bonus
Awards granted thereunder as it may deem necessary or advisable.






	 	(d)	 	The Executive Committee shall certify in writing that the performance goals and
other material terms have been satisfied before payment of a Bonus Award is made.
	 
	 	(e)	 	The Executive Committee shall hold its meetings at such times and places as it
shall deem advisable. A majority of members shall constitute a quorum and all
determinations shall be made by a majority of such quorum. Any determination reduced
to writing and signed by all of the members of the Executive Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and held.
	 
	 	(f)	 	The Executive Committee and each member thereof shall be entitled to, in good
faith, rely or act upon any report or other information furnished to him or her by any
executive officer of the Company, other officer or employee of the Company or of one of
its subsidiaries, the Company’s independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members of the Executive Committee and any
officer or employee of the Company or one of its subsidiaries acting at the direction
or on behalf of the Executive Committee shall not be personally liable for any action
or determination taken or made in good faith with respect to the Plan, and shall, to
the extent permitted by law, be fully indemnified and protected by the Company with
respect to any such action or determination.
	 
	 	(g)	 	Notwithstanding anything to the contrary herein, the Executive Committee shall
have no authority or discretion to make determinations pursuant to this Plan that
specifically affect member(s) of the Executive Committee or Section 16 officers of the
Company, but shall defer all authority in such matters to the Compensation Committee.




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	11.	 	Amendment or Termination of the Plan. The Compensation Committee or its authorized designee
may from time to time amend or revise the terms of the Plan in
whole or in part, or may terminate the Plan at any time. Notwithstanding the foregoing,
the Compensation Committee or its authorized designee reserves the right to terminate the
Plan and cancel any Bonus Awards granted before termination in its sole discretion, at any
time and for any reason.






	12.	 	Effective Date. The Plan is effective January 1, 2009.
	 
	13.	 	Withholding Taxes. The obligations of the Company to make Bonus Award payments under the
Plan shall be subject to applicable federal, state, and other taxes and withholding
obligations.
	 
	14.	 	Non-Exclusivity of Plan. The adoption of the Plan shall not be construed as creating any
limitations on the power of the Board to adopt such other compensation arrangements as it may
deem desirable, including, without limitation, the granting of stock options or the awarding
of stock or cash or other benefits otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only to specific individuals.
	 
	15.	 	Non-Alienation. Except as expressly provided herein, no Participant or beneficiary shall
have the power or right to transfer (other than by will or the laws of descent and
distribution), alienate, or otherwise encumber the Participant’s interest under the Plan.
	 
	16.	 	No Right to Employment. Participation in the Plan will not give any Participant a right to
be retained as an employee or director of the Company, its subsidiaries, or an Affiliate, or
any right or claim to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan. An individual’s status as an Eligible Employee shall not give him or
her the right to participate in the Plan.
	 
	17.	 	Unfunded Status of Awards. The 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 the 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.
	 
	18.	 	Recovery of Compensation. In the event that: (a) the payment of any performance-based bonus
paid under this Plan to any of the Company’s “Named Executive Officers” (as defined in Item
402(a)(3) of Regulation S-K under the Securities Exchange Act) was predicated upon the
achievement of certain financial results or other 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 of Directors that such
performance results were materially inaccurate; and (c) based upon the restated financial
results or otherwise corrected performance results, the amount of such performance-based bonus
would have been less than the amount previously paid to such Named Executive Officer, then the
Board, to the extent practicable, shall require reimbursement from each such Named Executive
Officer, in an amount equal to the amount by which such Named Executive Officer’s performance-




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	 	 	based bonus 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.
	 
	19.	 	Rules of Construction.






	 	(a)	 	Governing Law and Venue. The construction and operation of the Plan
are governed by the laws of the State of Illinois without regard to any conflicts or
choice of law rules or principles that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction, and any
litigation arising out of the Plan shall be brought in Illinois. If the Participant is
dissatisfied with the decision of the Executive Committee hereunder, he shall have the
right to appeal the matter to mandatory, binding arbitration in accordance with the
labor arbitration rules of the American Arbitration Association, provided that he
submit a request for arbitration to the Executive Committee, in writing, within sixty
(60) days of receipt of the decision. If an appeal to arbitration is requested, the
Executive Committee shall submit to the arbitrator a copy of the record upon which the
Executive Committee’s decision was made. The decision of the arbitrator shall be final
and binding upon the Executive Committee, the Participant, and upon all other parties
whose interests are affected thereby. The expenses of arbitration shall be borne
equally by the Participant and the Company, unless otherwise ordered by the arbitrator.
	 
	 	(b)	 	Severability. If any provision of the 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 the Plan in such circumstances is not consistent with
its purposes.
	 
	 	(c)	 	Undefined Terms. Unless the context requires another meaning, any term
not specifically defined in the Plan shall be used in the sense given to it by the
Code.
	 
	 	(d)	 	Headings. All headings in the Plan are for reference only and are not
to be utilized in construing the Plan.
	 
	 	(e)	 	Conformity with Section 409A of the Code. The 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 the Plan except as
permitted under Section 409A and the express terms of the Plan.
	 
	 	(f)	 	Gender. Unless clearly inappropriate, all nouns of whatever gender
refer indifferently to persons of any gender.
	 
	 	(g)	 	Singular and Plural. Unless clearly inappropriate, singular terms
refer also to the plural and vice versa.






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