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EXHIBIT 10.9
FLUOR CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
AMENDED AND RESTATED
EFFECTIVE NOVEMBER 1, 1995
I. OBJECTIVE
It is the policy of Fluor Corporation ("Fluor") and its subsidiaries
(collectively the "Company") to provide its officers and key employees with
salary and incentive bonus award opportunities equal to or greater than the
average cash payments established with respect to comparable positions within
its industry. Management salaries are established and maintained under a formal
Company program of salary administration. This plan is intended to provide true
performance based incentive bonus awards for those officers and key employees of
the Company who can directly and significantly influence its profits.
II. ELIGIBILITY
Those officers and key employees of the Company approved in writing by the
Executive Compensation Committee of Fluor shall be participants in this Plan.
III. INCENTIVE COMPENSATION FUND (the "FUND")
The fund shall be established as provided herein with reference to the
consolidated net earnings of the Company for a fiscal year period. However, the
period of service of each participant for which individual Incentive
Compensation awards are payable shall be the calendar year within which the
applicable fiscal year ends.
A. Prior to the end of each fiscal year:
1. The Chairman of the Board of Fluor (the "Chairman") shall establish an
interim provisional Fund for such fiscal year in an amount not to exceed twenty
percent of the amount by which (a) estimated consolidated net earnings of the
Company for such fiscal year before deducting taxes and the fund, and excluding
amounts connected with extraordinary, unusual or infrequently occurring events
and transactions for such fiscal year, exceed (b) ten percent of the average
estimated consolidated shareholders' equity of the Company and the Chairman
shall notify the Senior Vice President and Chief Financial Officer of Fluor (the
"Chief Financial Officer") of the amount of said interim provisional Fund.
2. The Chief Financial Officer shall make a test calculation to determine
whether the estimated consolidated net earnings of the Company for such fiscal
year after taxes and said interim provisional Fund are not less than a return on
average estimated consolidated shareholders' equity of the Company for such
fiscal year calculated on the basis of the average yield for such fiscal year of
one-year United States Treasury Bills.
3. The Chief Financial Officer shall confirm to the Chairman that the interim
provisional Fund will result in at least the aforesaid return on consolidated
shareholders' equity or inform the Chairman of the least amount (the "adjusted
interim provisional Fund") which will result in
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the aforesaid return on consolidated shareholders' equity. Once the interim
provisional fund or the adjusted interim provisional fund, as applicable, has
been determined, then the final provisional Fund or the final adjusted
Provisional Fund as applicable, shall be determined by subtracting from the
interim amount, the amount of all expense accruals to be made during such year
by the Company for cash-based incentive awards under the Company's Special
Executive Incentive Plan, the 1988 Executive Stock Plan or any successor stock
appreciation rights plans, and the Directors' Achievement Award Program.
4. The Chief Financial Officer shall cause the consolidated financial
statement provision for the Fund for such fiscal year to be adjusted to an
amount equal to the final provisional Fund, or adjusted final provisional Fund,
as appropriate.
B. After the close of each fiscal year:
1. The Chairman shall establish a preliminary final Fund for such fiscal year
under the principles set forth above but on the basis of audited consolidated
financial statement information for such fiscal year, and the Chairman shall
notify the Chief Financial Officer of the amount of the preliminary final Fund.
2. The Chief Financial Officer shall make a test calculation under the
principles set forth above but on the basis of audited consolidated financial
statement information for such fiscal year.
3. The Chief Financial Officer shall notify the Chairman of the amount of the
preliminary final Fund, adjusted as required by the test calculation.
Upon approval of the Board of Directors of Fluor (the "Board"), the preliminary
final Fund as so determined shall become the final Fund for such fiscal year.
IV. DETERMINATION OF AWARD AMOUNTS
For Designated Executives (as defined below) the amount of each such
executive's Incentive Compensation Award to be payable out of the Fund for each
fiscal year, shall not exceed an amount determined by reference to objective
tests based on (a) one or more of the following financial objectives: growth in
earnings per share of the Company, growth in stockholder value relative to the
two year moving average of the S&P 500 Index, growth in stockholder value
relative to the two year moving average of the Dow Jones Heavy Construction
Index, revenue growth, growth in earnings (before interest and taxes),
improvement in the Company's credit rating and growth in contract backlog; and
(b) one or more of the following non-financial objectives: strategic plan
development and implementation, succession plan development and implementation,
retention of executive talent, improvement in workforce diversity and
improvement in safety records. Any of the foregoing may be measured either in
absolute terms, as compared to another company or companies or as compared to a
prior period or periods. Use of any other criterion will
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require ratification by the shareholders of the Company if failure to obtain
approval for the fiscal year would jeopardize the tax deductibility of future
Incentive Compensation Awards. The performance objectives for the fiscal year
and directly related payment schedules for each Designated Executive shall be
established not later than 90 days after the beginning of such fiscal year by
the Organization and Compensation Committee of Fluor (the "Committee"). The
Committee may, in its discretion, elect to award a Designated Executive less
than the amount determined in accordance with the payment schedule.
The maximum amount of Incentive Compensation Award to any Designated
Executive for any fiscal year shall not exceed $2,000,000. This maximum amount
may not be increased without stockholder approval if failure to obtain such
approval could result in future Incentive Compensation Awards not being tax
deductible to the Company.
"Designated Executives" shall mean the Chairman and Chief Executive Officer of
the Company and such other executive officers of the Company as may from time to
time be so designated by the Committee.
The determination of the portion of the Fund for each fiscal year applicable
to Fluor and to each of its subsidiaries and the amount of Incentive
Compensation award to each participant for the calendar year within which such
fiscal year ends shall be reviewed and recommended by the Executive Compensation
Committee of Fluor to:
1. The Organization and Compensation Committee of Fluor's Board with
respect to executive officers of Fluor (other than the Designated Executives).
2. Fluor's Board with respect to all other participants in the Plan
who are not executive officers of Fluor.
Awards with respect to the executive officers of Fluor (other than the
Designated Executives) are recommended to Fluor's Board by the Organization and
Compensation Committee. Final approval of the amount of the Fund for each fiscal
year and the amount of the award to each participant (other than the Designated
Executives) shall be by Fluor's Board.
V. DISTRIBUTION
Subject to the deferral provisions of the Fluor Corporation and Subsidiaries
Executive Deferred Compensation Program, the Incentive Compensation awards for
each calendar year shall be paid either in cash to participants on or before the
31st day of January of the following calendar year or in stock units granted
under the terms of the 1982 Fluor Shadow Stock Plan, all as determined by
resolution of the Board.
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