FEDERAL SIGNAL CORPORATION
            Corporate Management Incentive Bonus Plan



The incentive bonus plan has been established to provide an
incentive to key corporate officers and management employees of
Federal Signal Corporation to attain the highest performance
possible in each year.  The plan provides key executives with an
opportunity to add to their total annual compensation, if the
corporation attains prescribed levels of return on capital.  The
details of the plan follow.

I.   Incentive bonus calculations

 A)  Target bonus

     A target bonus amount will be established for each plan
     participant in the plan.  This target bonus amount will be
     based upon a specified percentage of the participant's
     salary.

 B)  Bonus goals

     1)  Seventy-five percent (75%) of the bonus amount will be
         based on corporate return on capital, (ROC).  For this
         purpose, ROC is defined as the percent of pre-tax,
         pre-bonus income excluding extraordinary items (see
         Section IID5) plus interest on long-term debt divided
         by the year's monthly average of the sum of
         stockholders equity plus long-term debt.

     2)  Twenty-five percent (25%) of the bonus amount is
         discretionary based on an evaluation of the
         participants performance.  (See Section IIC)  This part
         of your bonus also constitutes payment for any unused
         vacation and by accepting the bonus payment you waive
         any claims for payment for unused vacation.

 C)  Performance goals

     Each participant's bonus will be subject to calculation in
     accordance with the scale on Attachment A as appropriate,
     for total corporate performance.  The actual bonus
     available for the discretionary award may be at least 25%
     of the target bonus, even if the actual performance portion
     may be below the minimum target bonus.  If the actual
     performance portion is higher than target, the
     discretionary bonus will be calculated using the same bonus
     rate.

II.  Administration

 A)  Selection of participants and bonus level

     Selection of corporate participants and bonus levels will
     be made by the President of the corporation.  The
     Compensation/Stock Option Committee of the Board of
     Directors will review and give approval for recommended
     material changes to the plan as submitted.

 B)  Determination of bonus award

     Following the completion of the year-end audit, the actual
     bonus for each participant will be calculated as follows:

     1)  Calculate the return on capital (ROC) percentage
         according to Section IB.

     2)  Using Attachment A, find appropriate bonus ratio based
         on the ROC.

     3)  Multiply the target bonus by the bonus ratio as
         determined in Section IIB2.

     4)  If the bonus ratio is less than 1.0, the discretionary
         portion (25%) may still be paid at the amount of the
         target bonus for the discretionary portion (see Section
         IC).

 C)  Determination of discretionary award

     Each participant will be evaluated against the following
     criteria:

     1)  General performance of the participant's
         responsibilities.

     2)  Meeting the participant's objectives and/or priorities.

     3)  Evaluation of initiative, attitude, and dedication to
         the company.

     4)  Management development of self and subordinates.

     5)  Professional and personal conduct.

     The President, in his sole discretion, will determine the
     amount, if any, of this portion of the participant's bonus
     payment.  

 D)  Other considerations

     1)  Bonus awards will be paid only to participants who are
         actively employed as of the bonus payment date.

     2)  In the event of the retirement of a participant during
         the management incentive bonus plan year, the amount of
         bonus award will be based on the full year results with
         credit for the number of completed months worked as a
         percent of the full plan year.

     3)  The addition of new participants, including new
         employees to the plan during the year, and the bonus
         levels for those individuals, must be approved, in
         writing, by the President.  Any changes for
         participants regardless of the reason, (promotion,
         change of responsibility, upgrading of salary in the
         same position) must also be approved by the President. 
         Approval, in writing, in any case must be obtained
         prior to communication to the individual concerned.

     4)  Unless otherwise approved by the President, in writing,
         this incentive bonus plan will be the sole incentive
         plan under which participants included in this plan may
         participate.

     5)  Income will be inclusive of any changes in reserves,
         but will exclude any capital gains or losses and other
         unusual gains or losses such as proceeds of fire or
         casualty insurance or changes in accounting practices. 
         In cases of uncertainty, the decision of the President
         will be final.