Federal Signal Corporation 2005 Executive Incentive Compensation Plan Performance Based Restricted Stock Unit — Award Agreement
Exhibit 10.2
Federal Signal Corporation
2005 Executive Incentive Compensation Plan
Performance Based Restricted Stock Unit — Award Agreement
2005 Executive Incentive Compensation Plan
Performance Based Restricted Stock Unit — Award Agreement
You have been selected to receive a grant of Performance Based Restricted Stock Units pursuant
to the Federal Signal Corporation 2005 Executive Incentive Compensation Plan (the “Plan”), as
specified below:
| Employee: | ||||
| Date of Grant: | ||||
| Performance Based Restricted Stock Units Granted: | ||||
Performance Period: January 1, 2009 through December 31, 2011
This Award shall be subject to the terms and conditions prescribed in the Federal Signal
Corporation 2005 Executive Incentive Compensation Plan and in the Federal Signal Corporation
Performance Based Restricted Stock Unit Award Agreement No. 2009 attached hereto.
This document constitutes part of the prospectus covering
securities that have been registered under the Securities Act of 1933.
securities that have been registered under the Securities Act of 1933.
IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed on this
day of .
| FEDERAL SIGNAL CORPORATION | ||||||
 |
||||||
| By: | ||||||
1
FEDERAL SIGNAL CORPORATION
PERFORMANCE BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT NO. 2009
PERFORMANCE BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT NO. 2009
The Company established the Federal Signal Corporation 2005 Executive Incentive Compensation
Plan (the “Plan”) pursuant to which options, stock appreciation rights, restricted stock and stock
units and performance shares covering an aggregate of 4,000,000 shares of the Stock of the Company
may be granted to employees and directors of the Company and its subsidiaries;
The Board of Directors of the Company, and the Administrator of the Plan appointed by the
Board of Directors, has determined that the interests of the Company will be advanced by
encouraging and enabling certain of its employees to own shares of the common stock of the Company,
and that Employee is one of those employees;
NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein
contained, the parties agree as follows:
Section 1. Definitions
As used in this Agreement, the following terms shall have the following meanings:
A. “Award” means the award provided for in Section 2.
B. “Board of Directors” means the Board of Directors of the Company.
C. “Change in Control” shall have the meaning ascribed to such term in the Company’s Change in
Control Policy.
D. “Date of Award” of Performance Based Restricted Stock Units means the date set forth on the
Award instrument applicable those Units.
E. “Employee” means the individual shown as the recipient of an award of Performance Based
Restricted Stock Units, as set forth on the Award instrument applicable those Units.
F. “Performance Based Restricted Stock Unit” means the obligation of the Company to transfer
the number of shares of Stock to Employee prescribed in Section 2, at the time provided in Section
5 of this Agreement, provided such Performance Based Restricted Stock Unit is vested at such time.
G. “Performance Period” means the three consecutive calendar year period set forth in the
Award instrument.
2
H. “Permanent Disability” means Employee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than twelve
months.
I. “Stock” means the common stock of the Company.
J. “Subsidiary” means any corporation, other than the Company, in an unbroken chain of
corporations beginning with the Company if, at the relevant date, each of the corporations, other
than the last corporation in the unbroken chain, owns stock possessing fifty percent or more of the
total combined voting power of all classes of stock in one of the other corporations in such chain.
K. “Vesting Date” means the date specified in Section 4.
Section 2. Award
Subject to the terms of this Agreement, the Company awarded to Employee the number of
Performance Based Restricted Stock Units set forth on the Award instrument applicable those Units,
effective as of the Date of Award set forth on such instrument.
A Performance Based Restricted Stock Unit Award entitles the Employee to receive a whole
number of shares of Stock equal to a percentage, from zero to two hundred percent, based on the
Total Shareholder Return during the Performance Period, of the number of Performance Based
Restricted Stock Units that are subject to the Award, as described in this Section.
If the Company’s Peer Percentile Rank is less than 25%, the Employee shall be entitled to
receive no shares with respect to the Performance Based Restricted Stock Units subject to the
Award.
If the Company’s Peer Percentile Rank is at least 25% but less than 50%, the Employee shall be
entitled to receive shares equal to 25% percent of the Performance Based Restricted Stock Units
subject to the Award, plus three additional percent of the Performance Based Restricted Stock Units
subject to the Award for each whole percent of the Company’s Peer Percentile Rank above 25% (for a
total of 100% if the Company’s Peer Percentile Rank is 50%).
If the Company’s Peer Percentile Rank is at least 50% but less than 75%, the Employee shall be
entitled to receive shares equal to 100% percent of the Performance Based Restricted Stock Units
subject to the Award, plus two additional percent of the Performance Based Restricted Stock Units
subject to the Award for each whole percent of the Company’s Peer Percentile Rank above 50% (for a
total of 150% if the Company’s Peer Percentile Rank is 75%).
If the Company’s Peer Percentile Rank is at least 75% but less than 90%, the Employee shall be
entitled to receive shares equal to 150% percent of the Performance Based Restricted Stock Units
subject to the Award, plus three and one-third additional percent of the Performance Based
Restricted Stock Units subject to the Award for each whole percent of the Company’s
3
Peer Percentile Rank above 75% (rounded up to the nearest whole percent) (for a total of 200% if
the Company’s Peer Percentile Rank is 90% or more).
If the Company’s Peer Percentile Rank is 90% or more, the Employee shall be entitled to
receive 200% percent of the Performance Based Restricted Stock Units subject to the Award.
For example, if the Company’s Peer Percentile Rank is 40%, the Employee shall be entitled to
receive shares equal to 70% of the Performance Based Restricted Stock Units subject to the Award;
and if the Company’s Peer Percentile Rank is 60%, the Employee shall be entitled to receive shares
equal to 120% of the Performance Based Restricted Stock Units subject to the Award.
The Company’s Peer Percentile Rank shall be determined by dividing the number of corporations
in the Peer Group with a lower Total Shareholder Return (“TSR”) than the Company’s TSR, by thirty
(the total number of corporations in the Peer Group) (rounded up to the nearest whole percent),
where:
| (a) | The Peer Group of corporations is attached as Exhibit A; |
||
| (b) | TSR of a corporation means the sum of its Change in Stock Price plus dividends
paid by the corporation during the Performance Period, divided by its Beginning Stock
Price; |
||
| (c) | Change in Stock Price means the difference between the Ending Stock Price and
the Beginning Stock Price; |
||
| (d) | Beginning Stock Price means the closing price of the shares of the corporation
on the last business day immediately preceding the first day of the Performance Period;
and |
||
| (e) | Ending Stock Price means the closing price of the shares of the corporation on
the last business day of the Performance Period. |
For example, if the TSR of the Company was higher than the TSR of twenty of the thirty
corporations in the Peer Group, its Peer Percentile Rank would be 67%, and Employee would be
entitled to receive shares equal to 134% of the number of Performance Based Restricted Stock Units
subject to the Award.
This grant of Performance Based Restricted Stock Units shall not confer any right to the
Employee (or any other Employee) to be granted Performance Based Restricted Stock Units or other
Awards in the future under the Plan.
Section 3. Bookkeeping Account
The Company shall record the number of Performance Based Restricted Stock Units granted
hereunder to a bookkeeping account for Employee (the “Performance Based Restricted Stock Unit
Account”). Employee’s Performance Based Restricted Stock Unit Account shall be
4
debited by the number of Performance Based Restricted Stock Units, if any, forfeited in accordance
with Section 4 and by the number of Performance Based Restricted Stock Units with respect to which
shares of Stock were transferred to Employee in accordance with Section 5.
Section 4. Vesting
Subject to the accelerated vesting provisions provided below, the Performance Based Restricted
Stock Units subject to the Award shall vest on the last day of the Performance Period, if Employee
remains employed by the Company or its Subsidiaries through such date.
If, during the Performance Period, the Employee dies or terminates employment on account of
his Permanent Disability, the Performance Based Restricted Stock Units subject to the Award shall
be fully vested immediately.
If during the Performance Period, the Employee terminates employment by reason of retirement
(as determined by the Company, in its sole and absolute discretion), the Performance Based
Restricted Stock Units subject to the Award shall be fully vested immediately.
The Performance Based Restricted Stock Units subject to the Award also shall be fully vested
upon the occurrence of a Change in Control during the Performance Period or upon the occurrence of
the event(s) described in Section 4.1 below.
In the event of the termination of employment of Employee with the Company and its
Subsidiaries for any other reason before the end of the Performance Period, all Performance Based
Restricted Stock Units that are not vested at the time of such termination of employment normally
shall be forfeited.
Section 4.1 Acceleration of Vesting of Shares in the Event of Divestiture of Business Segment
In the event that the “Business Segment” (as that term is defined in this Section below) in
which the Employee is primarily employed as of the “Divestiture Date” (as that term is defined in
this Section below) is the subject of a “Divestiture of a Business Segment” (as that term is
defined in this Section below), and such divestiture results in the termination of the Employee’s
employment with the Company and its subsidiaries for any reason, the Performance Based Restricted
Stock Units subject to the Award shall be fully vested.
For purposes of this Agreement, the term “Business Segment” shall mean a business line which
the Company treats as a separate business segment under the segment reporting rules under generally
accepted accounting principles as used in the United States, which currently includes the
following: Safety and Security Group, Fire Rescue and Environmental Solutions Group. Likewise, the
term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a
Business Segment is finally consummated.
For purposes of this Agreement, the term “Divestiture of a Business Segment” means the
following:
5
| (a) | When used with reference to the sale of stock or other
securities of a Business Segment that is or becomes a separate corporation,
limited liability company, partnership or other separate business entity, the
sale, exchange, transfer, distribution or other disposition of the ownership,
either beneficially or of record or both, by the Company or one of its
subsidiaries to “Nonaffiliated Persons” (as that term is defined in this
Section below) of 100% of either (i) the then-outstanding common stock (or the
equivalent equity interests) of the Business Segment or (ii) the combined
voting power of the then-outstanding voting securities of the Business Segment
entitled to vote generally in the election of the board of directors or the
equivalent governing body of the Business Segment; |
||
| (b) | When used with reference to the merger or consolidation of a
Business Segment that is or becomes a separate corporation, limited liability
company, partnership or other separate business entity, any such transaction
that results in Nonaffiliated Persons owning, either beneficially or of record
or both, 100% of either (i) the then-outstanding common stock (or the
equivalent equity interests) of the Business Segment or (ii) the combined
voting power of the then-outstanding voting securities of the Business Segment
entitled to vote generally in the election of the board of directors or the
equivalent governing body of the Business Segment; or |
||
| (c) | When used with reference to the sale of the assets of the
Business Segment, the sale, exchange, transfer, liquidation, distribution or
other disposition of all or substantially all of the assets of the Business
Segment necessary or required to operate the Business Segment in the manner
that the Business Segment had been operated prior to the Divestiture Date. |
Section 5. Distribution of Shares
Subject to the provisions below (including a pro rata reduction in the number of shares
payable in the event of an early termination of employment or Change in Control), the number of
shares of Stock earned in accordance with Section 2, determined as of the end of the Performance
Period, with respect to Performance Based Restricted Stock Units that become vested in accordance
with Section 4, shall become distributable as of the end of the Performance Period (regardless of
whether the shares vest earlier).
If, during the Performance Period, the Employee dies, terminates employment on account of
Permanent Disability, or terminates employment by reason of retirement (as determined by the
Company in its sole and absolute discretion), the number of shares of Stock that otherwise would
be earned in accordance with Section 2 shall be prorated based on the number of days during the
Performance Period that the Employee remained employed. Such number of shares of Stock shall
become distributable as of the end of the Performance Period (regardless of whether the shares vest
earlier).
6
If during the Performance Period the Employee’s employment is terminated as a result of the
Divestiture of a Business Segment (as defined in Section 4.1), the number of shares of Stock that
otherwise would be earned in accordance with Section 2 shall be prorated based on the number of
days during the Performance Period that the Employee remained employed. Such number of shares of
Stock shall become distributable as of the end of the Performance Period (regardless of whether the
shares vest earlier).
If a Change in Control occurs during the Performance Period, notwithstanding anything in this
Agreement to the contrary, a number of shares equal to 100% percent of the Performance Based
Restricted Stock Units subject to the Award prorated based on the number of days during the
Performance Period before the date of the Change in Control shall become distributable on the date
of the Change in Control.
Such shares shall be distributed as soon as administratively feasible after the date
prescribed above; but no later than two and one-half months after the end of the calendar year in
which the specified date occurs.
Section 6. Shareholder Rights
Employee shall not have any of the rights of a shareholder of the Company with respect to
Performance Based Restricted Stock Units, such as the right to vote or the right to dividends.
Section 7. Death Benefits
Shares payable on account of death of an Employee during the Performance Period shall be
transferred to the Employee’s Beneficiary or Beneficiaries as soon as practical after the end of
the Performance Period (regardless of whether the shares vest earlier), but no later than two and
one-half months after the end of the calendar year in which the Performance Period ends.
Employee may designate a Beneficiary or Beneficiaries (contingently, consecutively, or
successively) of such death benefit and, from time to time, may change his or her designated
Beneficiary. A Beneficiary may be a trust. A beneficiary designation shall be made in writing in
a form prescribed by the Company and delivered to the Company while the Participant is alive. If
there is no designated Beneficiary surviving at the death of a Participant, payment of any death
benefit of the Participant shall be made to the persons and in the proportions which any death
benefit under the Federal Signal Corporation Employees’ Profit Sharing and Savings Plan is or would
be payable.
Section 8. Units Non-Transferable
Performance Based Restricted Stock Units awarded hereunder shall not be transferable by
Employee. Except as may be required by the federal income tax withholding provisions of the Code
or by the tax laws of any State, the interests of Employee and his Beneficiaries under this
Agreement are not subject to the claims of their creditors and may not be voluntarily or
involuntarily sold, transferred, alienated, assigned, pledged, anticipated, or encumbered. Any
7
attempt by Employee or a Beneficiary to sell, transfer, alienate, assign, pledge, anticipate,
encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void.
Section 9. Adjustment in Certain Events
If there is any change in the Stock by reason of stock dividends, split-ups, mergers,
consolidations, reorganizations, combinations or exchanges of shares or the like, the number of
Performance Based Restricted Stock Units credited to Employee’s Performance Based Restricted Stock
Unit Account shall be adjusted appropriately so that the number of Performance Based Restricted
Stock Units credited to Employee’s Performance Based Restricted Stock Unit Account after such an
event shall equal the number of shares of Stock a shareholder would own after such an event if the
shareholder, at the time such an event occurred, had owned shares of Stock equal to the number of
Performance Based Restricted Stock Units credited to Employee’s Performance Based Restricted Stock
Unit Account immediately before such an event.
Section 10. Tax Withholding
The Company shall not be obligated to transfer any shares of Stock until Employee pays to the
Company or a Subsidiary in cash, or any other form of property, including Stock, acceptable to the
Company, the amount required to be withheld from the wages of Employee with respect to such
shares. Employee may elect to have such withholding satisfied by a reduction of the number of
shares otherwise transferable under this Agreement at such time, such reduction to be calculated
based on the closing market price of the Stock on the day Employee gives written notice of such
election to the Company.
Section 11. Source of Payment
Shares of Stock transferable to Employee, or his Beneficiary, under this Agreement may be
either Treasury shares, authorized but unissued shares, or any combination of such stock. The
Company shall have no duties to segregate or set aside any assets to secure Employee’s right to
receive shares of Stock under this Agreement. Employee shall not have any rights with respect to
transfer of shares of Stock under this Agreement other than the unsecured right to receive shares
of Stock from the Company.
Section 12. Continuation of Employment
This Award Agreement shall not confer upon the Employee any right to continuation of
employment by the Company, nor shall this Award Agreement interfere in any way with the Company’s
right to terminate the Employee’s employment at any time.
Section 13. Amendment
This Agreement may be amended by mutual consent of the parties hereto by written agreement.
8
Section 14. Governing Law
This Agreement shall be construed and administered in accordance with the laws of the State
of Illinois.
9
FEDERAL SIGNAL CORPORATION
PERFORMANCE BASED RESTRICTED STOCK UNIT
PERFORMANCE BASED RESTRICTED STOCK UNIT
BENEFICIARY DESIGNATION
Employee:
|
Social Security No.: | |
Address:
|
Date of Birth: | |
Employee hereby designates the following individual(s) or entity(ies) as his or her
beneficiary(ies) pursuant to Federal Signal Corporation 2006 Equity Incentive Plan (Insert Name,
Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully
identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the
Trustee’s Name, the address of the trust, and the employer identification number of the trust):
Primary Beneficiary(ies)
Contingent Beneficiary(ies)
The Participant hereby reserves the right to change this Beneficiary Designation, and any such
change shall be effective when the Participant has executed a new or amended Beneficiary
Designation form, and the receipt of such form has been acknowledged by the Corporation, all in
such manner as specified by the Corporation from time to time, or on a future date specified by any
such new or amended Beneficiary Designation form.
IN WITNESS WHEREAS, the Participant has executed this Beneficiary Designation on the date
designated below.
Date: , |
||||||
| Signature of Employee | ||||||
Received: |
||||||
| Federal Signal Corporation | ||||||
Date: ,
|
By: | |||||
10
EXHIBIT A
TSR Peer Group
TSR Peer Group
▇.▇. ▇▇▇▇▇ Corporation
Ametek, Inc.
BorgWarner Inc.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Corporation
Caterpillar Inc.
▇▇▇▇▇▇ Industries, Inc.
Cummins, Inc.
Deere & Company
Dover Corporation
▇▇▇▇▇ Corporation
▇▇▇▇▇▇▇ Electric Co.
Honeywell International Inc.
▇▇▇▇▇▇▇ Incorporated
Illinois Tool Works Inc.
▇▇▇▇▇▇▇▇▇-▇▇▇▇ Company
▇▇▇▇▇▇▇ Controls, Inc.
L-3 Communications Corporation
Motorola, Inc.
Oshkosh Truck Corporation
PACCAR Inc.
Parker Hannifin Corporation
Raytheon Company
▇▇▇▇▇-Danfoss Inc.
Teleflex Incorporated
▇▇▇▇▇▇▇ Company
▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
The Timken Company
Valmont Industries, Inc.
▇▇▇▇▇▇▇▇ Governor Company
Worthington Industries, Inc.
Ametek, Inc.
BorgWarner Inc.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Corporation
Caterpillar Inc.
▇▇▇▇▇▇ Industries, Inc.
Cummins, Inc.
Deere & Company
Dover Corporation
▇▇▇▇▇ Corporation
▇▇▇▇▇▇▇ Electric Co.
Honeywell International Inc.
▇▇▇▇▇▇▇ Incorporated
Illinois Tool Works Inc.
▇▇▇▇▇▇▇▇▇-▇▇▇▇ Company
▇▇▇▇▇▇▇ Controls, Inc.
L-3 Communications Corporation
Motorola, Inc.
Oshkosh Truck Corporation
PACCAR Inc.
Parker Hannifin Corporation
Raytheon Company
▇▇▇▇▇-Danfoss Inc.
Teleflex Incorporated
▇▇▇▇▇▇▇ Company
▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation
The Timken Company
Valmont Industries, Inc.
▇▇▇▇▇▇▇▇ Governor Company
Worthington Industries, Inc.
11